The war in Ukraine. Poles and Lithuanians surprised by the new guidelines of the European Commission on sanctions

The EU’s actions against the war in Ukraine were on Tuesday (20/09/2022) one of the topics of the Brussels meeting of EU ministers from 27 EU countries. – There was broad support among my colleagues for ensuring continued financial and military support for Ukraine. We agree that timely and effective help is crucial. The leaders will be discussing further details at the EU summit, said Minister Mikulasz Bek, who chaired the session on behalf of the Czech presidency. However, today in Brussels, an unexpected dispute broke out over the newly published guidelines of the European Commission on how to implement the existing sanctions against Russia. – This is a very broad text. It creates a risk of abuse, i.e. bypassing sanctions, argues one of our interlocutors in the EU institutions.

Coal transport allowed

The new guidelines of the European Commission indicate that, inter alia, the transport of certain additional goods, including coal and related products (to non-EU countries) “should be allowed to combat global food and energy insecurity”. Earlier, the Commission explained that EU sanctions prohibit EU companies from transporting coal and providing financial services, including insurance, for such products from Russia. However, a representative of the Commission was to explain to ministers today that the purpose of the new guidelines is to fight the energy and food crisis in the world. From the very beginning, Brussels emphasized that the sanctions did not apply to food or fertilizer transport from Russia to countries outside Europe, but today in a new text – to the surprise of Lithuanians and Poles – such sanctions exemptions also apply to, among others, wood.

– First of all, this text surprised us. We are trying to analyze it quickly – explains one of the diplomats. The threat to bypassing sanctions was first caught by Latvians, then Poland and the rest of the Baltic countries joined. – It is possible that experts from other countries have not yet managed to read in – convinces another of our interlocutors in Brussels. There will probably be official requests from the European Commission to narrow down the exemptions included in the new guidelines.

EU representatives went to the UN General Assembly this week with the will – as one of them explained – to “continue to regain” the field in the “battle of narratives with Russia”, which still manages to convince many African and Latin American countries that it is the Union, no Russia is to blame for the disturbances in the energy and food markets. Brussels insistently reminds us that first it was Russia who attacked Ukraine. Secondly, EU sanctions do not affect trade in Russian food or fertilizers with countries outside the EU. – Perhaps in this struggle of narratives, the Commission stumbled upon new clues. Although by not consulting them with EU countries – says one of the diplomats. The Commission has not yet officially addressed these allegations.

The EU Council today finally approved € 5 billion of more aid loans to Ukraine. The EU summit in May already promised 6 billion in aid (the first billion was paid out in August), so the financing of the remaining billion remains to be agreed. During the meeting of the ambassadors of 27 EU countries a few days ago, the European Commission warned that the reserves in the seven-year EU budget for 2021-27 have already run out, so the leaders of the EU countries should start looking for new funds in October, e.g. for the needs of Ukraine.

What about the price for gas

During the debates of the ambassadors, among others Poland, the Baltic states, Ireland, Denmark and Finland called for work on additional sanctions against Russia. Poland promotes new restrictions also in the energy sector. However, the majority of the EU now focuses on increasingly precise enforcement of the existing restrictions, and has no appetite to negotiate additional sanction packages. Poland, Italy, Romania and Belgium are still demanding a price cap for gas from Russia (including Poland – also for all gas imported to the EU, including Norway). Hungarians and Slovaks are now speaking loudly about its fear that the Kremlin would retaliate against all supplies to Europe. But Germany also demands further analysis of the impact of the price cap on security of supply.

Oil price cap

On the other hand, the European Commission is preparing for the price limit for oil from Russia, already preliminarily agreed at the G7 group level, which has been strongly pushed for several months by the United States.

The EU embargo on oil from Russia, which does not only cover the pipeline to Hungary, Slovakia and the Czech Republic, comes into force on December 5 (and for refining products in March 2023), so it is a price cap for buyers from outside the EU and thus a sharp reduction Russia’s income. How to do it? Over 90 percent ships that transport oil around the world are insured by the London-based international group of insurers, the International Group of P&I Clubs. EU in agreement with the UK Britain has included a ban on insuring ships carrying Russian oil in the sanctions system, which will soon make its sea transport much more expensive. Meanwhile, the idea of ​​a price cap set by the G7 is based on the modification of EU sanctions so that European insurers can work on the transport of oil from Russia, but only below the price limit supported by the West.

Fight against veto

Today, EU ministers also debated the idea of ​​further limiting the unanimity rule, so that, inter alia, in matters of foreign policy, the EU could decide by majority vote. This is promoted by Germany, or at least with regard to some areas of foreign policy, is supported by France, Denmark, Sweden and the Netherlands. On the other hand, Poland is in a large group of countries against the changes. But supporters of limiting veto rights use the example of Hungary slowing down the adoption of sanctions to encourage skeptics to think seriously about the limits of the unanimity requirement. There are suggestions that further steps in the accession process, including Ukraine will depend on the consent of the entire EU to limit the right of veto in the EU Council. The problem is that Hungary would also have to agree to such a radical – though not requiring changes to the treaties – reform.

– Many EU countries are not ready to abandon the principle of unanimity altogether. However, we asked them to indicate the most concrete cases of the application of qualified majority that they would be ready to accept. We’ll see. I am neither an optimist nor a pessimist, said Czech Minister Bek after Tuesday’s deliberations.