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| 12th package of sanctions against Moscow: 'No Russia clause' opposed from the 'innermost', EU members disagree. (Source: Interfax) |
EU members are studying the elements of the latest package of sanctions against Russia, proposed and promoted by the European Commission (EC), of which the most controversial is the “Russia-free clause”, which limits the financial retaliation and the implementation of sanctions on goods for personal use.
This will be the 12th package of sanctions against Russia since Russia launched its military campaign in Ukraine in February 2022, aiming to fix many loopholes in previous restrictive packages, which not only Moscow but also its partners can take advantage of to circumvent sanctions.
The new sanctions package, which is difficult and sensitive, is dividing member states. Some diplomats from the bloc’s larger members have also expressed concerns about the measures, questioning their legality and questioning whether it is feasible to demand guarantees and terms from importers. The Baltic states have come out in support of the EC’s proposals.
Some EU member states are concerned that the new proposal goes too far and will be counterproductive for the EU's global trade and, last but not least, it is unlikely to achieve its goals.
Article 12G in the proposed 12th package of sanctions against Russia – known as the “Russia-free clause” – has the potential to wreak havoc on European companies globally, several countries said at a meeting of ambassadors this week.
Under proposals put forward at the meeting, EU exporters would be forced to impose a re-export ban to Russia on all goods on the EC's customs code list, which includes many categories of everyday goods, rather than items of military use to Russia.
The buyer may also be required to deposit funds into an escrow account to ensure compliance with the requirements.
As such, "A small business in Brazil would have to execute contracts within such a complex system of regulations... The discussion should focus on items of high importance," commented one source, who declined to be identified due to the sensitivity of the discussions.
The EC has also recently proposed cutting trade with countries that can now re-export goods from the EU to Russia – thus helping Moscow bypass sanctions imposed by Brussels over its conflict with Ukraine.
It is known that in the proposed version earlier this week, an additional content to the new sanctions package was introduced to exempt the use of sanctioned goods for personal use, as the old sanctions package sometimes became a source of overcharging at the Russia-EU border.
For example, when citizens of any nationality cross the Russian border, their personal goods can be seized on grounds based on the list of sanctioned items that generate “potential revenue” for Russia.
While the EC has admitted this can happen with big-ticket items such as cars, other sources say even consumer essentials such as toothpaste are being seized.
A majority of countries at the 27-member bloc's ambassadors meeting did not support the proposed measures, which would require EU permission for "any transfer of funds" by a Russian entity or Russian citizen residing in Russia out of the EU, a source said. The proposed restrictions have been criticized as being pointlessly burdensome without a threshold above which transactions would be exempt.
So far, the core elements of the proposed package – including an indirect ban on Russian diamond imports and changes to how to better implement the G7’s oil price cap on Russia – have not been actively discussed, as the bloc awaits further action from the G7 in the coming weeks.
On oil, the EU and G7 are trying to tighten Russian oil trade below the crude price ceiling of $60/barrel.
Western countries say that although the sanctions package has had an effect for a while, Russia's oil revenues appear to be growing thanks to a growing "shadow fleet" of oil tankers, including aging Western vessels.
The EU also wants to add some metal products and liquefied petroleum gas (LPG) to the list of banned products in the 12th package of sanctions. Initially, the proposal included a three-month suspension period for the items, but for some iron products and LPG, the latest version of the sanctions proposes to extend the period to one year.
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