For Brussels, this week's agreement on a new sanctions package against Russia marks another milestone in the collective effort to undermine the economic engine sustaining Moscow's full-scale invasion of Ukraine. Yet beneath the surface of diplomatic success, the fraught negotiations have exposed growing cracks in the political unity underpinning the most ambitious sanctions regime in EU history. The 21st package, though adopted, was significantly watered down as member states prioritized national commercial interests over collective resolve.

European Commission President Ursula von der Leyen hailed the achievement: 'At a time when Ukraine has built military momentum, our sanctions continue to weaken the economic foundations of Russia's war effort.' High Representative Kaja Kallas added that the EU is 'hitting Putin where it hurts most: cutting off the financial lifelines he relies on to sustain his war.' However, the reality of the negotiations tells a more complicated story.

Key facts from the negotiations

• Greece used its veto to exempt shipping services for Russian LNG transported to non-EU countries beyond the January 2027 deadline. Athens argued that a full ban would harm Greek shipping giant Dynagas, which operates one of the world's largest fleets of LNG carriers. The exemption allows continued transport to third parties under certain conditions.
• Bulgaria threatened to veto the entire package unless Patriarch Kirill of the Russian Orthodox Church and Lukoil founder Vagit Alekperov were removed from the blacklist. Both names were dropped after Prime Minister Rumen Radev's government insisted on the concession.
• Portugal and Germany blocked proposed restrictions on Russian cod and pollock, citing risks to domestic fishing industries. The fisheries measures were scrapped entirely after several rounds of consultations.
• France and Italy opposed a proposal to restrict Russian soldiers' access to the Schengen Area. The entry ban was watered down to a 'legal basis' with minimal practical impact.
• Austria secured a commitment from EU ambassadors to consider lifting sanctions on Rasperia, a blacklisted company linked to Raiffeisen Bank International's €2.1 billion loss in Russia. The issue was deferred to a later stage, a tactical victory for Vienna.

National interests take center stage

The unanimous adoption of sanctions packages has become increasingly challenging as national interests collide. Under the EU's treaty framework, all 27 member states must agree on any sanctions measure, giving each country a de facto veto. Historically, Hungary under former Prime Minister Viktor Orbán was the primary obstacle, often delaying or blocking packages for weeks. With Orbán's departure, the dynamic has shifted. Other member states no longer have a convenient scapegoat, and their own domestic pressures come to the fore.

Greece's position was particularly revealing. Home to the world's largest merchant fleet, Athens faced intense lobbying from Dynagas, a major Greek shipping company that transports Russian LNG. The Greek government and Dynagas employed near-identical arguments for the exemption, leading to accusations that commercial interests trumped geopolitical solidarity. Swedish Foreign Minister Maria Malmer Stenergard vented her frustration: 'Energy revenues are at the heart of Russia's financing of the war, and the costs to Europe pale in comparison to the price the Ukrainian people are paying every day.'

Bulgaria's veto threat was similarly driven by domestic political calculations. The new government of Prime Minister Rumen Radev, who has previously voiced pro-Russian sentiments, sought to avoid antagonizing influential figures within the Orthodox Church and the energy sector. By securing the removal of Patriarch Kirill and Vagit Alekperov from the blacklist, Bulgaria signaled a shift toward a more pragmatic approach to sanctions.

Dilution of key measures

The package originally included ambitious proposals that were systematically diluted. The ban on Russian fisheries caught many diplomats off guard. Several governments described the proposal as poorly prepared and lacking impact analysis. Portugal and Germany, both with substantial seafood processing industries, warned of supply chain disruptions. The measures were dropped entirely, leaving Russia's fishing sector untouched.

Similarly, the attempt to restrict Russian soldiers' entry into the Schengen Area faced resistance from France and Italy. Both countries argued that such a ban would complicate diplomatic engagement and could be circumvented easily. The final text provides a legal basis for future action but has no immediate effect.

Growing difficulty in finding common ground

The European Commission is under increasing pressure to propose effective new sanctions, but fresh ideas are becoming scarce. In the early stages of the war, the EU targeted obvious sectors such as banking, energy, and defense. Four years on, the remaining options are more niche and often touch sensitive national industries. A senior EU diplomat acknowledged, 'It's getting more and more difficult to find common ground. We saw that this week.' Another diplomat noted, 'The Commission is running out of options for what to include. It has to become more creative, and every package is more complex and takes longer to negotiate.'

The commission's approach of bundling multiple measures into large packages now faces criticism. Some officials advocate adopting measures on a rolling basis, as is already done for blacklisting vessels linked to Russia's shadow fleet. This approach could reduce the drama of full package negotiations and allow for more targeted action. However, the unanimity requirement remains the ultimate hurdle, leaving national interests to dictate the outcome.

Historical context of EU sanctions

The EU first imposed sanctions on Russia in 2014 following the annexation of Crimea and the destabilization of eastern Ukraine. Those initial measures targeted individuals and entities responsible for undermining Ukraine's territorial integrity. The full-scale invasion in February 2022 prompted a radical escalation. Within weeks, the EU adopted its first comprehensive sanctions package, targeting the financial sector, energy imports, and dual-use goods. Since then, the EU has approved 20 more packages, progressively expanding the scope to include diamonds, gold, oil products, and services. Russia has become the most sanctioned country in the world, surpassing even Iran and North Korea.

Each new package has required painstaking negotiations. The unanimity rule gives every member state leverage, and the trade-off between collective security and national economic interests becomes starker with each round. Countries like Hungary, Greece, and Cyprus have frequently used their veto power to secure exemptions for energy imports or shipping services. The latest negotiations, however, involved a broader array of countries, indicating that the consensus is fraying across the bloc.

Implications for Ukraine and future action

Ukraine continues to push for more stringent sanctions, particularly targeting Russia's remaining energy exports and the shadow fleet that evades price caps. Ukrainian President Volodymyr Zelenskyy has repeatedly urged the EU to close loopholes and accelerate the implementation of existing measures. The latest package's exemptions, especially on LNG shipping, weaken the pressure on Moscow's energy revenues. While EU officials insist that the exemptions are limited to exports to third countries and do not affect imports into the bloc, critics argue that any exception undermines the credibility of the sanctions regime.

Looking ahead, the EU faces a strategic dilemma. To maintain pressure on Russia, it must continuously innovate and adopt new measures. Yet the political will to absorb economic pain is diminishing as the war drags on. Several member states are already facing domestic backlash over rising energy costs and inflation, which are partly attributed to sanctions. The balancing act between geopolitical objectives and national interests will only grow more delicate.

One potential solution is to move toward qualified majority voting on sanctions, which would eliminate the veto power. But treaty change requires unanimous consent, making it unlikely in the near term. Another option is to adopt more horizontal measures that apply across sectors, such as a general prohibition on services related to Russian energy exports, but these too face legal and political hurdles. For now, the EU will continue to negotiate packages under the shadow of the veto, with each round exposing deeper fissures in its united front.

Source: MSN News