EU Ambassadors Seek Compromise on 21st Russia Sanctions Targeting Banks, LNG
EU Sanctions Package: Banking Sector and LNG Dispute
By Julia Payne
BRUSSELS, July 22 (Reuters) - EU ambassadors will meet on Wednesday in the hopes of reaching a compromise with Greece and passing a 21st package of sanctions against Russia over its invasion of Ukraine, EU diplomats said.
The new package targets the country's banking sector in an effort to squeeze Moscow's financial system at a vulnerable moment. However, Greece, which wants the EU to soften planned restrictions on Russian LNG supplies, has become the main obstacle to its adoption.
Greek Objections to LNG Restrictions
Athens argued last week a forthcoming transfer ban on Russian liquefied natural gas (LNG) would simply shift market share outside Europe and would not impact Russian revenues. Greece dominates Europe's LNG carrier market and is among the biggest players globally, competing with Japan, China and the United States.
Challenges to EU Unity
EU diplomats had hoped the departure of Hungary's Viktor Orban, who consistently delayed Ukraine aid and Russia sanctions, would translate to smooth sailing on future packages.
However, new cracks in the bloc's unity have come to the surface as the European Commission tries to close remaining loopholes for Russian business and put further pressure on Russia's vital energy revenues.
Banking and Cryptocurrency Measures
Sanctions on Russian Banks
Russia's major banks were disconnected in 2022 from SWIFT, a secure global financial payment instructions system, under Western sanctions. However, Russian companies have succeeded in maintaining trade and financial flows via small or regional lenders as well as cryptocurrency networks.
The package lists about 215 individuals and entities including 94 financial institutions. Close to 90 of these are banks, taking the total number of sanctioned banks to over 100, or more than half of Russia's 213 internationally connected lenders.
Potential Impact on Russian Economy
A European state intelligence service report, seen by Reuters, warned in June that Russia risked an "explosive" banking crisis and a new sanctions package targeting banks could trigger an economic shock. Russian authorities have dismissed warnings of a looming crisis.
EU diplomatic sources said the aim of the listings was to discourage third countries from dealing with these Russian lenders, given any EU ties are now minimal or non-existent.
Oil Price Cap Measures
Alongside the listings, the European Commission proposed to freeze the oil price cap at its current level of $44.10 a barrel for six months. The price cap was redesigned last year to track oil price movements and lowered from $60 a barrel.
EU envoys agreed last week to temporarily freeze the cap until July 23 in the hopes of finding a broad agreement. A scheduled review would have increased the price cap on the back of the Iran war and thus provided substantially higher earnings to Moscow.
(Reporting by Julia Payne, Editing by William Maclean)
