EU capitals demand major exemptions in new sanctions package — FT
EU ambassadors fail to secure consensus on new sanctions measures after four days of talks (Photo: REUTERS/Francois Lenoir)
A coordinated push by several European Union member states demanding significant carve-outs from proposed trade restrictions has plunged the bloc's four-year strategy to support Ukraine into jeopardy, Financial Times wrote on July 19.
Greece, France, Italy, Germany, Austria, and Portugal are actively pushing for an array of exemptions in the upcoming sanctions package. According to five EU diplomats, this emerging trend signals that Europe is rapidly losing its willingness to tolerate secondary economic consequences for domestic companies that continue to generate substantial revenues from bilateral trade with Russia.
The diplomatic impasse deepened last week during a grueling four-day marathon of negotiations among EU ambassadors, which concluded without an agreement. The gridlock has fueled growing anxieties within Brussels that deteriorating internal solidarity, a weakening political resolve to back Kyiv, and a pervasive sense that a peace settlement may be on the horizon are severely undermining the willingness of capitals to make difficult geopolitical choices.
"At the negotiating table, the moral imperative is exercising less and less influence. All capitals readily agree to tough rhetoric and declarations of solidarity, but then it all dissolves," one diplomat observed.
The latest iteration of the proposed embargo includes targeted measures against Russian exports and its financial infrastructure, alongside a regulatory mechanism designed to artificially cap the export price of Russian crude oil. However, this entire framework is now under immediate threat due to numerous national veto threats.
National demands halting the draft
The specific exemptions demanded by individual member states span multiple sectors:
The Greek LNG Safeguard: Athens refused to approve the collective package unless granted a specific authorization to continue transporting Russian liquefied natural gas (LNG) to third-party global markets. The carve-out directly protects the business interests of prominent Greek shipping billionaire George Prokopiou. His firm, Dynagas, has transported more than 30 million tons of LNG — valued at an estimated 24 billion dollars — from Russia's Arctic Yamal project since the 2022 invasion.
Fish and Food Processing: Portugal and Germany successfully demanded the removal of a proposed ban on Russian fish imports, citing the critical supply needs of their localized domestic fish-processing sectors.
Visa Relaxations: France and Italy are lobbying to soften the terms of an EU visa ban on Russian men who have actively participated in the war against Ukraine.
Asset Thaws: Austria reiterated its long-standing demand to unfreeze 2 billion euros in sanctioned Russian assets to help compensate Raiffeisen Bank International for heavy financial penalties imposed on it by Moscow.
"This represents a profound crisis for our entire approach to sanctions," a diplomat warned.
"If every capital demands specific derogations and loopholes, the process will inevitably yield a package that is nothing more than an empty box."
Unprecedented resistance in Brussels
Insiders noted that the sheer scale of the pushback against the current proposals has reached an unprecedented level. A second diplomat emphasized that certain member states deliberately chose not to sever commercial ties with Russia in 2022 or 2023, and are now revolting because Brussels is finally targeting the residual sectors providing Moscow with its core revenues.
In response, Greek government representatives argue that any new EU restrictions must impose significantly higher costs on the Russian economy than on European markets. They maintain that measures must be carefully balanced to maximize pressure on Moscow while eliminating unintended collateral damage. Multiple Greek politicians have gone so far as to describe the proposed restrictions as a self-inflicted "shot in the foot."
The current gridlock follows the adoption of the prior 20th sanctions package on June 15, which targeted the Russian military-industrial complex, its maritime shadow fleet, and hybrid warfare networks. European media reported on July 15 that the formal passage of the 21st package had been delayed by at least a week due to the firm objections raised by Austria and Greece. EU representatives are scheduled to make a fresh attempt to finalize the text on July 22 during a meeting of the Permanent Representatives Committee (Coreper).
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