Economic worry keeps E.U. from imposing tougher sanctions on Russia

Economic worry keeps E.U. from imposing tougher sanctions on Russia


BRUSSELS – The most interesting aspect of the European Union’s latest proposal is what it does not do. The decision does not ban the import of natural gas from Russia. It also does not include additional measurements on fuel.

Instead of targeting Russia’s most important sources of income, the European Commission on Friday decided to ban gold exports and other changes to help implement and enforce existing sanctions.

While the proposal, which is expected to be approved next week, will have an impact, its limited number reflects a growing divide over how to fight Russian President Vladimir Putin without undermining the EU itself.

Despite a series of sanctions, Russia’s economy is still strong. The country continues to earn billions of dollars from energy exports. And it continues to wage a brutal war in Ukraine.

At the same time, the war has disrupted the European economy. EU leaders are facing low growth and record inflation. The euro is equal to the dollar. The appetite for further interference is low.

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Although EU officials are insisting that the bloc remains united in Ukraine, leaders in the bloc seem reluctant to engage in concert and focus on domestic issues, raising questions about Ukraine’s future.

Two months after the European Commission handed out $9 billion in capital funding to Kyiv, for example, the bloc has cleared nearly a quarter of its exports.

European Commission President Ursula von der Leyen said on Friday that the latest sanctions will ensure that Russia continues to “pay a heavy price for its brutality.” Analysts note, however, that Russia has managed to cope with this – at least so far.

“The consequences of sanctions may not be as dramatic as first thought,” said Clay Lowery, vice president at the Institute of International Finance, a global trade think tank. “Russia’s trend has been to export electricity.”

After the Russian attack on Feb. 24 in Ukraine, the EU moved quickly to counter Russia’s armed forces, and hit the Kremlin with heavy sanctions.

But Europe, which in 2021 produced about 40 percent of its natural gas and more than a quarter of its oil from Russia, lagged behind the multi-ethnic United States in reducing Russia’s energy output.

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It took weeks for the EU to agree to a complete freeze on Russian oil imports. In order to achieve the agreement, the bloc was forced to expand to a number of countries, improving the situation in the short term.

On natural gas, the EU has not collectively agreed to go further than it did in March, when the bloc said it would cut Russian output by two-thirds this year. Since then Moscow has threatened to cut off gas to Europe completely, leaving countries scrambling for supplies and preparing for winter.

Meanwhile, Russia has benefited from rising energy prices. The Helsinki-based Center for Research on Energy and Clean Air estimates that Moscow earned $100 billion from energy sources in the first 100 days of the war – and that nearly 60 percent of that money came from the EU.

To reduce Russia’s income from energy trade, the United States is pushing up the international price of Russian oil. Despite some signs of escalation, EU diplomats said the issue would not be seriously discussed in Brussels before the end of the summer, if at all.

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One EU diplomat, who spoke on condition of anonymity to discuss the situation, said the bloc’s deadly war over oil shortages had made countries afraid to reopen oil talks at any cost.

Paolo Gentiloni, head of the European Commission for Economics, told reporters on Thursday that the commission is reviewing the idea of ​​tariffs but that this could be considered “in future cases.”

In the meantime, the EU will focus on implementation and implementation. The European Commission calls its latest proposal a “maintenance and coordination policy” which clarifies a number of things.

In addition to a new ban on Russian gold exports, the package will add people to the sanctions list, “encourage” dual use and improve technology management, and bring the EU’s sanctions closer to what they agree.

The package “reiterates that EU sanctions are not related in any way to agricultural trade between third countries and Russia,” according to the statement – an attempt to counter the skepticism of Russian claims that EU sanctions, not Russia’s blockade, are the cause. rising food prices.

An EU official, speaking on condition of anonymity to brief reporters, said the change would help make the bloc’s sanctions more effective, especially in the long term.

“We see that they are weakening the Russian economy. “There are some short-term effects and short-term and long-term consequences,” the official said.

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