New EU sanctions target Russia’s financial system as diplomats work to overcome Greek objections to LNG restrictions.
The European Commission proposes freezing the Russian oil price cap for six months. EU ambassadors will meet on Wednesday in the hopes of reaching a compromise with Greece and passing a 21st package of sanctions against Russia over its invasion of Ukraine, EU diplomats said.
The new package targets the country's banking sector in an effort to squeeze Moscow's financial system at a vulnerable moment. However, Greece, which wants the EU to soften planned restrictions on Russian LNG supplies, has become the main obstacle to its adoption. Athens argued last week a forthcoming transfer ban on Russian liquefied natural gas would simply shift market share outside Europe and would not impact Russian revenues.
Greece dominates Europe's LNG carrier market and is among the biggest players globally, competing with Japan, China and the United States. EU diplomats had hoped the departure of Hungary's Viktor Orban, who consistently delayed Ukraine aid and Russia sanctions, would translate to smooth sailing on future packages.
However, new cracks in the bloc's unity have come to the surface as the European Commission tries to close remaining loopholes for Russian business and put further pressure on Russia's vital energy revenues. Russia's major banks were disconnected in 2022 from SWIFT, a secure global financial payment instructions system, under Western sanctions.
However, Russian companies have succeeded in maintaining trade and financial flows via small or regional lenders as well as cryptocurrency networks. Close to 90 of these are banks, taking the total number of sanctioned banks to over 100, or more than half of Russia's 213 internationally connected lenders. , warned in June that Russia risked an "explosive" banking crisis and a new sanctions package targeting banks could trigger an economic shock.
EU diplomatic sources said the aim of the listings was to discourage third countries from dealing with these Russian lenders, given any EU ties are now minimal or non-existent. Alongside the listings, the European Commission proposed to freeze the oil price cap at its current level of $44.10 a barrel for six months. EU envoys agreed last week to temporarily freeze the cap until July 23 in the hopes of finding a broad agreement.
A scheduled review would have increased the price cap on the back of the Iran war and thus provided substantially higher earnings to Moscow. War in Middle East increases energy concerns: IEAASEAN urges US, Iran to show restraint, saying renewed conflict threatens peace effortsASEAN opens high-stakes summit with call for unity amid global turmoil
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