Russia: Sanctions ‘devastating’ economy says commentator

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The EU looks set to avoid including a price cap on Russian oil and nuclear energy in its next sanctions as members continue to lock horns over the measure. It comes as the European Commission met with member states over the weekend as the bloc continues to ruminate over the policy with a renewed sense of urgency following Russian President Vladimir Putin’s nuclear threats.

While the bloc has agreed in a previous sanctions package to ban the export of Russia’s oil to the EU, it did involve exemptions for countries that are overly reliant on Russia’s pipeline oil, such as Hungary. 

Now, as the 27-member union considers slapping a price cap on Russian oil to deal a blow to the country’s economy in an effort to halt its war efforts in Ukraine, nations like Hungary and Cyprus are reportedly pushing back against the measure.

As the furious back-and-forth drags on, it risks delaying the floated proposal, which requires unanimous backing from all members of the bloc before any proposal can be turned into action. 

But the proposal was, in fact, first agreed upon not by the Commission, but by the G7. However, following Russia’s threat to use nuclear weapons in the war in Ukraine, the EU was prompted to bring forward proposals for its seventh sanctions package against Moscow that Commission officials had been earlier working on behind the scenes. 

The EU’s foreign policy chief Josep Borrell said on Wednesday after Putin’s nuclear threats: “Additional restrictive measures against Russia will be brought forward immediately, as soon as possible in cooperation with our partners.”

But according to reports, the price cap on oil may not be included in the new package due to the internal backlash. This is despite the EU still proving to be the biggest market for Russian oil, although its comes bloc readying to ban imports of Russian crude from December to slash billions in revenue from Kremlin.

Some states had also called for Russian nuclear energy to have a cap imposed too, which will also reportedly be missing from the fresh sanctions package imposed on Moscow. 

According to diplomats who were present at talks with the Commission over the weekend, the proposal to sanction Russian nuclear energy sparked concerns among certain member states over the maintenance of Europe’s nuclear power plant. 

A diplomat was quoted by EURACTIV saying the measure would have impacted “the construction of facilities or installation of equipment for, or the provision of services, equipment or technology for, activities related to power generation or electricity production both in Russia or abroad”.

They reportedly added the proposal to include a price cap on Russian oil exports was also not warmly welcomed by all countries in the bloc.

However, it is thought members may push to reach a preliminary deal ahead of an informal gathering of EU leaders in Prague on October 6. 

But it remains unclear as to how the EU would be able to implement an oil cap alongside the import embargo agreed upon earlier this year. The bloc has also previously agreed on a measure to ban the services needed to ship Russian oil.

The EU’s economy chief Paolo Gentiloni has said the commission would attempt to get all nations of the EU to agree on the measure.

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But convincing some members, such as Hungary, remains a huge challenge. Hungarian Foreign Minister Peter Szijjarto has previously said: “If Russian supplies of natural gas and crude oil were to cease, then Hungary’s entire economy may stop working. That’s why it’s very important for us to have predictable supplies from Gazprom.”

It comes after Hungary delayed the earlier sanctions package in June that targeted crude oil. Budapest managed to exempt itself from the measure in the end, so the landlocked country could access Russia’s pipeline oil, which is also crucial for other landlocked countries like Slovakia.

Now, following threats to put a cap on Russian oil imports, Putin has responded by threatening to tear up existing contracts and let Europe “freeze”.

The Russian President said at the Eastern Economic Forum: “Will there be any political decisions that contradict the contracts? Yes, we just won’t fulfill them. We will not supply anything at all if it contradicts our interests. We will not supply gas, oil, coal, heating oil — we will not supply anything. We would only have one thing left to do: as in the famous Russian fairy tale, we would let the wolf’s tail freeze

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