A New Rift Has Emerged in the EU Over Russia: What Stood in the Way of Sanctions
23 July 06:38
On July 22, European Union ambassadors once again attempted to agree on the 21st package of sanctions against Russia, but have not yet been able to reach a final compromise. The main obstacle remains Greece’s position, as it opposes restrictions on the transport of Russian liquefied natural gas to third countries.
Reuters reports on the progress of the negotiations, citing European diplomats, according to "Komersant Ukrainian"
Why the EU Cannot Agree on New Sanctions
The support of all European Union member states is required to approve sanctions. Currently, Greece remains the main opponent of the proposed restrictions.
The dispute centers on a potential ban on EU companies transporting and transshipping Russian liquefied natural gas (LNG) destined not for the European market but for third countries.
Greece argues that such restrictions could drive European carriers out of the global LNG market. According to Athens, companies from other countries would take their place, while Moscow’s export revenues would not be significantly reduced.
Which company is Greece seeking to protect?
Athens’ position is linked, in particular, to the interests of the Greek shipping company Dynagas, which uses specialized gas carriers to transport Russian LNG from the “Yamal LNG” project.
According to the Financial Times, the company owns a significant portion of the fleet of Arc7-class icebreaking tankers adapted for operation in the Arctic. It is difficult to quickly reroute such vessels to other routes, so the imposition of sanctions could result in significant financial losses for the carrier.
Greece insists that sanctions should inflict economic damage on Russia, rather than create competitive advantages for non-European shipping companies.
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What Compromise Is Being Discussed in the EU
European diplomats are considering several possible scenarios that would allow the 21st sanctions package to move forward.
Among them are:
- the introduction of a lengthy transition period before the ban takes effect;
- allowing the fulfillment of contracts signed before the new restrictions took effect;
- a temporary exemption for certain carriers;
- removing the controversial provision on LNG transportation from the sanctions package.
One of the compromise options provides that European companies will be able to continue transporting Russian LNG to third countries for a certain period, but the volume of such shipments may be capped at 2025 levels.
What the 21st Sanctions Package Against Russia Entails
The new package is intended to increase pressure on the Russian financial system, the energy sector, and companies involved in arms production.
According to preliminary data, the sanctions lists may include 215 legal entities, including 94 financial institutions. Measures are also planned against companies from third countries that help Russian banks circumvent previous restrictions and continue international transactions.
The price cap on Russian oil is now at risk
The dispute over LNG affects more than just gas restrictions. Along with the 21st package, EU countries must decide what to do about the price cap on Russian oil.
The European Union has temporarily maintained the oil price cap at $44.10 per barrel until July 23. This decision was made to prevent the cap from automatically rising in line with global prices while negotiations on a comprehensive sanctions package are ongoing.
If the current cap is lifted, the permissible price of Russian oil could rise. This would allow Moscow to generate more revenue from energy exports and channel additional funds toward financing the war against Ukraine.
The issue has taken on particular significance after global oil prices exceeded $95 per barrel amid the escalating situation in the Middle East.
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