As sanctions move into sectors still connected to Russian trade, unanimity is turning each new EU package into a negotiation over shipping, banking, fisheries and other domestic economic interests.
European Union ambassadors are meeting in Brussels today in another attempt to agree the bloc’s 21st sanctions package against Russia, after Greece withheld its support over restrictions affecting the transport of Russian liquefied natural gas.
The immediate dispute concerns Greek shipping. The broader problem is that the EU has already sanctioned many of the most obvious Russian targets. The remaining measures increasingly affect specialised industries, companies and commercial relationships that individual member states are reluctant to sacrifice.
The package currently under negotiation is intended principally to restrict Russia’s banking sector, cryptocurrency networks, energy revenues and military supply chains. However, approval requires the support of all 27 member states. Under the EU’s procedure for adopting sanctions, decisions are taken unanimously by the Council.
That gives each capital considerable leverage. A government can hold up an entire package until a proposed restriction is amended, removed or accompanied by an exemption protecting a national economic interest.
Greece and the LNG dispute
Greece has become the principal obstacle because it wants the EU to soften restrictions on transporting Russian LNG to buyers outside Europe. Athens argues that prohibiting European ships from carrying the gas would not necessarily reduce Russian exports. Instead, the business could pass to competitors in China, Japan or the United States.
Greek officials have said that sanctions should weaken Russia without transferring European market share to non-EU shipping companies. Greece owns a large share of Europe’s LNG carrier fleet and is one of the largest participants in the sector globally.
The dispute also affects Dynagas, the Greek shipping company controlled by billionaire George Prokopiou. The company operates specialised vessels serving Russia’s Yamal LNG project. Some of those ice-capable carriers were built specifically for Arctic operations and cannot easily be transferred to conventional shipping routes.
Athens wants protection for existing contracts when the EU’s ban on purchasing, importing or transferring Russian LNG takes full effect in 2027. Other member states are concerned that revising an earlier decision could establish a precedent under which governments repeatedly reopen agreed sanctions to obtain national exemptions.
Other governments seek concessions
Greece is not the only country to have raised objections. Germany and Portugal opposed proposed restrictions on Russian fish and seafood, arguing that a ban could damage domestic processing industries dependent on relatively inexpensive Russian supplies.
France and Italy questioned a proposed entry ban covering Russian men who had served in the armed forces since the full-scale invasion of Ukraine. Their concerns included how consulates would identify former combatants and whether a broad prohibition would be legally and administratively workable. The visa provision has consequently been weakened and delayed.
Austria has separately sought a solution involving about €2 billion in frozen Russian assets connected to Rasperia, an investment company. Vienna wants to help Raiffeisen Bank International compensate for losses imposed through Russian court proceedings.
These objections do not necessarily mean that the governments concerned oppose sanctions against Russia. They show that support becomes more conditional when proposed restrictions carry identifiable costs for domestic companies, employees or consumers.
Focus on banks and cryptocurrency
Despite the concessions, the package retains potentially important financial measures. It reportedly covers about 215 individuals and organisations, including 94 financial institutions and close to 90 Russian banks. Adoption would bring the number of sanctioned Russian banks to more than 100.
Russia’s largest banks were disconnected from the Swift financial messaging system after the 2022 invasion. Russian companies have nevertheless maintained some international transactions through smaller regional lenders, banks in third countries and cryptocurrency platforms.
The new listings are intended to discourage foreign banks and companies from working with those institutions. They would also expand existing EU measures covering finance, energy, trade and sanctions circumvention.
The European Commission’s original proposal for the 21st package concentrated on energy, financial services, cryptocurrency, trade and former Russian combatants. Fisheries were included as a sanctions target for the first time.
Delay could raise Russian oil revenue
The negotiations have acquired additional urgency because of the EU-G7 price cap on Russian crude oil. The cap currently stands at $44.10 a barrel, but an automatic adjustment linked to market prices could raise it to about $58 following the increase in global oil prices.
EU governments temporarily froze that adjustment until July 23 while attempting to reach agreement. Without another decision, the higher cap could allow Russia to earn more from oil transported using European shipping, insurance and financial services.
The deadlock therefore has consequences beyond the contents of the new package. A failure to agree could weaken an existing restriction without governments formally deciding to relax it.
The 21st package is becoming a test of whether the EU can continue expanding sanctions once the easiest political targets have been exhausted. Later measures must address smaller banks, specialised shipping services, third-country intermediaries and the remaining areas of trade with Russia.
Those measures may be more precise, but they are also more likely to affect concentrated national interests. A compromise remains possible, although every exemption adds another layer to a sanctions system that is already difficult to monitor and enforce.
The question is therefore not simply whether the EU can announce a 21st package. It is whether the measures remaining after 27 governments have defended their most sensitive industries will still exert the pressure that the package was intended to deliver.
