EU moves closer to new Russia sanctions after proposals weakened

European Union member states are slowly moving toward an agreement on an 11th sanctions package over Russia’s invasion of Ukraine, as a number of proposals originally put forward by the bloc’s executive arm are set to be watered down.

Plans to ban ships transporting prohibited goods from entering EU ports are likely to be partly dropped, while restrictions relating to ship-to-ship transfers and vessels that switch off their navigation systems will include a grace period of about 30 days, according to people familiar with the latest legal texts under discussion.

The European Commission put forward a set of proposals early last month with the key aim of closing loopholes, tackling sanctions circumvention and strengthening enforcement. The aim had been to sign off on the measures around the time of a Group of Seven summit that took place in Japan on May 19-21, but the package has been in limbo for weeks over a number of issues raised by member states.

One area of concern was a mechanism to target third countries that aren’t doing enough to prevent Russia from evading sanctions. The primary aim of the tool would be to deter governments from helping Russia and crack down on trade channels that Moscow may be exploiting. If diplomatic pressure proves ineffective, the mechanism would allow targeted export restrictions on key goods.

However, that tool’s original criteria have been weakened during back-and-forth negotiations between diplomatic envoys raising the bar to when it can be used. Several member states, including Germany, also remain concerned about the prospect of listing countries and would rather list companies first, said the people, who spoke on condition of anonymity to discuss private matters.

Meanwhile, Hungary and Greece continue to want to see some of their companies removed from a Ukrainian blacklist of what Kyiv calls “international sponsors of war.” Discussions on that issue are ongoing, the people said.

Separately, other nations are worried about proposals to extend trade restrictions to several Chinese firms that have allegedly shipped banned goods to Russia, the people added.

Other proposed measures in the new package include banning many goods from transiting through Russia and putting a formal end to the country’s oil flows through the northern leg of the Druzhba pipeline, Bloomberg previously reported.

The EU hopes that the package will be agreed next week, one of the people said.