Sixth sanctions package
“The new package should introduce some kind of ban on Russian oil imports and may also target more Russian banks by excluding them from the SWIFT international payment system.” informs The newspaper Politico quoted four unnamed diplomats.
The article notes that due to the prolonged escalation in Ukraine, EU leaders are increasingly being asked to cut off “the Kremlin’s vital revenue stream” from “Russia’s lucrative energy sector, particularly oil and gas exports.”
In the previous five sanctions packages, the European Union banned coal imports from the Russian Federation and cut off a number of Russian banks from SWIFT, among other things, to increase the economic pressure on Moscow.
But when evidence emerged of alleged atrocities committed in Ukraine by Russian forces, Western governments increased their military support to Kiev and decided to tighten sanctions against President Vladimir Putin and his regime.
Russia ‘failed’ to sanctions
Bloomberg informsHe said EU member states have yet to reach a consensus on the sixth package of sanctions. Broadcast sources said the European Union is discussing future restrictions with the United States.
Options discussed include a ban, a price cap, and a payment mechanism to stop Russia’s revenue since the start of the war in Ukraine.
According to a source, the purpose of the talks is “to find out how to hit Russian President Vladimir Putin as hard as possible”. At the same time, countries fear that a direct EU ban on Russia’s oil supply could lead to a sharp rise in oil prices and, conversely, provide more revenue to the Kremlin. “A full embargo could hit the European economy hard without having the expected impact on Russia,” said US Treasury Secretary Janet Yellen.
“Any decision on what measures to take ultimately will rest with EU member states,” the authors of the material emphasize.
Bloomberg also notes that Russia has “so far relied on far-reaching sanctions” imposed by the United States, its European allies and other democracies, and that “the ruble has regained much of its lost value” since the start of the military operation in Ukraine. The International Monetary Fund estimates this week that Russia’s GDP will shrink by just 8.5% in 2022.
“The EU is currently working on the sixth round of sanctions and is also considering other potential measures that could hit the Russian oil industry, such as restrictions on certain petroleum products and taxation of imports. The head of EU diplomacy, Josep Borrell, told Spanish media on Friday that none of the proposals has yet received the full support of all EU member states.
The authors explained that the adoption of new EU sanctions against the Russian Federation required unanimous consent, but that a number of countries, including Germany and Hungary, “resisted a complete ban on Russian oil and gas.”
A Bloomberg source told Bloomberg that “it would be easier to reach consensus on a limited crude oil ban than to restrict imports of diesel and other products.” The EU has so far continued to pay Russia “a billion euros a day for energy”, while the US banned oil imports from Russia last month.
The article also states that the United States and Estonia are proposing to withhold and freeze part of Russia’s revenue from energy imports in a special account until the Kremlin “withdraws its troops from Ukraine.”
The flip side of sanctions
Bloomberg journalists noted that Russia’s oil exports to Europe are carried out both in the form of crude oil, which is processed in factories in Europe for fuel production, and in the form of finished products, the most important of which is diesel fuel. And because refineries in East Germany, Poland, Slovakia, Hungary and the Czech Republic are connected to a large pipeline system carrying oil from Russia, it will be extremely difficult for some countries to cut off their crude oil supply.
Poland took steps to move away from Russian oil by signing a major supply deal with Saudi Arabia in January. But sudden cuts to Russia’s oil supply can be particularly problematic in much of Germany.
The German Federal Bank said Friday that “if the war in Ukraine escalates”, the country’s economy could shrink by almost 2% by 2022, and that the embargo on Russian coal, oil and gas would impose restrictions on electricity suppliers and industry.
Source: Gazeta
Barbara Dickson is a seasoned writer for “Social Bites”. She keeps readers informed on the latest news and trends, providing in-depth coverage and analysis on a variety of topics.