By Julia Payne
BRUSSELS (Reuters) – EU countries are digging in against parts of the Commission’s latest proposed package of sanctions on Russia, namely the so-called “no Russia clause”, retaliatory financial limits and dual-use goods for personal use, six sources said.
The package, which would be the bloc’s 12th since Russia invaded Ukraine in February 2022, also seeks to close more loopholes on sanctions circumvention.
However some member states, which the sources declined to identify, say the new proposal goes too far and would backfire on EU global trade and ultimately, fail in its aims.
Countries said at an ambassadorial meeting this week said Article 12 G in the proposal, dubbed the “No Russia clause”, could potentially create havoc for European companies globally, the sources familiar with the discussions said.
Under the proposals aired at the meeting, the sources said, EU exporters would be forced to insert a re-export prohibition to Russia across all goods in the Commissions list of custom codes, which encompasses more items of daily use than those of military utility for Russia.
“A small entrepreneur in Brazil would have to fulfil contracts in such a complex system … the discussion should be focused on highly critical goods,” one source said, who like them all declined to be named owing to the sensitivity of the discussions.
In Tuesday’s version of the proposal, three of the sources say, another addition was made to exempt the use of sanctioned goods for personal use from this latest package as that has become a source of abuse at Russia-EU borders since previous packages came into force.
When citizens of any nationality cross the border into Russia, personal goods that could be resold are seized by border guards. They justify the moves based on a sanctions list of items that could be used a “potential revenue” for Russia.
While the EU Commission has acknowledged this happening with big ticket items such as cars, two of the sources said items such as toothpaste were also being confiscated – leading to the attempt to make a provision for items of personal use.
One source said a majority of countries at the ambassadorial meeting of the 27 member bloc did not support proposed measures that would require EU authorisation for “any transfer of funds” by a Russian entity or Russian national residing in Russia out of the EU, criticising them as pointlessly burdensome without having thresholds below which a transaction would be exempt. Another source said “many” countries objected.
The core elements of the proposed package – an indirect ban on Russian diamond imports and changes to how better implement the Group of Seven (G7) Russian oil price cap – have not been actively discussed as the bloc awaits G7 technical direction, which is expected within weeks.
On the oil side, the EU and G7 are trying to tighten the trade of Russian oil under their $60 per barrel crude oil price cap. Western countries said while it worked for a while, Russian oil revenues were rising thanks to growing “shadow fleet” of tankers made up of aging Western ships.
The EU wants to add some metals products and liquefied petroleum gas (LPG) to its list of banned products in the 12th package. Initially, the proposal included a 3-month wind-down period for the items but for some iron products and LPG, the latest version of the proposed packaged extended the wind-down to one year.
(Reporting by Julia Payne; Editing by Alison Williams)
