Analysis: EU unity on Russia sanctions falters as Europe’s economy wilts | Popgen Tech

BRUSSELS, Dec 19 (Reuters) – European Union unity on sanctions against Russia has begun to falter as jitters over the impact on Europe’s own stumbling economy weaken resolve to punish Moscow for war in Ukraine.

EU leaders agreed to a ninth package of sanctions on Thursday, but talks have been acrimonious, with Poland and the Baltic states pushing for tougher measures from neighboring Russia, while states further west, such as Germany, have been more reluctant.

Some, such as Belgium and Greece, as well as Hungary which still relies heavily on Russian energy imports, pushed back against further sweeping measures, EU diplomats told Reuters.

“It is becoming increasingly difficult to impose sanctions that hit Russia hard enough, without excessive collateral damage to the EU,” a Belgian government spokesman said ahead of the agreement at the EU leaders’ summit.

After Russia invaded Ukraine in February, setting off Europe’s biggest conflict since World War II, the European Union showed a united front and responded with swift action against Russia, unusual for the 27-nation bloc where opposing voices often debate turned into marathon meetings.

Sanctions have already been imposed on a range of Russian companies and individuals, while overflights by Russian aircraft have been banned and business with several Russian banks has been banned.

But now finding common ground has become more difficult.

After this week’s talks, Lithuanian Foreign Minister Gabrielius Landsbergis described the latest sanctions deal as a “missed opportunity” and said he was disappointed that EU states spent more time discussing exemptions than tougher measures.

The latest measures targeted entities linked to Russia’s military, stopped him on drones and froze assets of two Russian banks, among other curbs.

But tension was felt during talks. Lithuania and others objected to moves to secure carve-outs to free a handful of Russian oligarchs involved in agriculture and fertilizers, although that dispute was eventually defused, sources said.

Poland and the Baltic states, closer to the front line, have circulated a proposal in recent weeks for more far-reaching sanctions, including against Russian gas and its nuclear industry, and are arguing against exemptions, such as on sales of Russian steel and diamonds.

‘IT’S NOT FAIR’

Some in that group want Gazprombank, central to energy payments to Russia, to be targeted, one person familiar with the matter said. The person said many countries were hesitant, but added that these issues would be discussed in 2023.

For some European politicians, such as that of Poland, which faces fighting on its doorstep, the reluctance of other states to support tougher measures has been frustrating.

“We will demand that Germany change its policy. It is not fair that Germany relies on Poland to defend it against the threat of war,” said Radosław Sikorski, Poland’s former foreign minister and now a member of the European Parliament, said. “Just because you’re richer and bigger doesn’t mean you’re always right.”

Russia says sanctions have backfired against the West, driving up inflation as energy prices have soared higher. Moscow says its own economy is resilient.

Meanwhile, existing EU measures are not always watertight. The EU has put a price cap on the delivery of Russian oil at sea, but its crude is selling below that level, so revenue continues to flow to Moscow.

The cap has been billed as a further punishment for Russia, but some officials say the biggest impact is to water down the bloc’s own curbs on the oil trade as, provided the price stays below the cap, European insurers can underwrite Russian shipments.

The oil cap — designed to bring the entire EU into line with the United States — was tailored in a nod to Greece and Cyprus, which have large tanker fleets, people familiar with the matter said.

Speaking at this week’s talks, European diplomats and officials told Reuters the bloc was nearing its limits.

“Now we are careful with sanctions, so that we do not go so far as to cause total damage to the European economy,” said Edita Hrda, the ambassador to the European Union of the Czech Republic, which holds the EU presidency.

“If we take certain steps against Russia, it could cost some political leaders their jobs. We need to give the countries time to adjust. We need a prosperous Europe to help Ukraine,” said Hrda, who attended meetings of EU led countries. including those determining the form of the most recent sanctions.

Hungarian Prime Minister Viktor Orban has campaigned against sanctions at home using posters showing such punitive measures as bombs destroying Hungary’s economy.

Others are more discreet, while some have half an eye on a future relationship with Russia after the war ends.

German Chancellor Olaf Scholz said this month that the EU would “tighten the sanctions against Russia as long as Putin continues his war”.

He also said relations were now “reduced, reduced, reduced” but there should be an opportunity for economic cooperation again for “a Russia that ends the war”.

Writing by John O’Donnell; additional reporting by Andrius Sytas in Vilnius and Krisztina Than in Budapest; Editing by Edmund Blair

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