The European Union has launched a new round of sanctions against Russia before the final findings of the Nord Stream natural gas pipeline leak.
According to CCTV News, on September 28, local time, European Commission President von der Leyen and EU High Representative for Foreign Affairs and Security Policy Borrell held a press conference at the EU headquarters in Brussels, Belgium, announcing the eighth round of sanctions against Russia.
In the latest sanctions, von der Leyen announced that it will completely ban the sale of Russian goods in the EU market, which will reduce Russia’s revenue by 7 billion euros; increase the list of goods, technologies and services that are prohibited from exporting to Russia; at the same time, the EU will also announce as Rosneft set the legal basis for price caps and took steps to punish attempts to evade EU sanctions on Russia. Borrell announced an increase in sanctions against Russian individuals and entities, including those of the Russian government, military and scientific research institutions.
According to the regulations, the above measures have yet to be reviewed and approved by the 27 EU member states. EU member states are expected to hold their first discussions on the 30th local time, and then EU leaders will meet in Prague on October 6-7, or formally announce the sanctions.
Since the outbreak of the Russia-Ukraine conflict in late February, Europe and the United States have jointly launched seven rounds of sanctions against Russia.
Diamonds not on sanctions list
Data from Eurostat shows that in 2021, for example, Russia is the fifth largest trading partner of the EU, with Russia-EU trade accounting for 5.8% of the EU’s total global trade, with bilateral trade reaching 257.5 billion euros. Among them, the EU’s imports from Russia are about 158.5 billion euros, and the EU’s exports to Russia are about 99 billion euros.
In terms of regions, Germany and the Netherlands are EU member states that mainly trade with Russia. In 2021, Russia’s import and export trade volume with Germany will be about 56.996 billion US dollars, a year-on-year increase of 35.90%; the import and export trade volume with the Netherlands will be about 46.440 billion US dollars, a year-on-year increase of 62.94%.
Fossil fuels, steel, wood and other bulk commodities are the main products imported by the EU from Russia; machinery and equipment, automobiles, and electronic products are the main products exported by the EU to Russia.
However, the proposed sanctions did not include more stringent measures such as a ban on the import of Russian diamonds previously proposed by Poland and the three Baltic countries. At present, Russia’s oil, natural gas, coal and gold have been included in the sanctions list, and the EU has also issued a relevant timetable to “decouple” from commodities such as Russian energy.
Russia is an important diamond producer in the world. According to Russian customs data, the diamonds produced in Russia each year account for 30% of the world‘s total diamond production that year. A related research report previously released by the US Treasury Department shows that diamonds are one of Russia’s top ten non-energy export commodities. Last year, diamond exports generated $4.5 billion in foreign exchange earnings for Russia. The EU is the main market for Russian diamond exports, and most of the diamonds used by luxury manufacturers in European countries currently come from Russia.
However, the Russian side does not trade diamonds directly with EU manufacturers, but through the World Diamond Exchange Center in Antwerp, Belgium. Therefore, once diamonds are included in the sanctions list, they will be excluded from the transaction in Antwerp, and the Belgian side will also lose a lot in commissions and diamond transactions. Some estimates show that Belgium will suffer an economic loss equivalent to 5% of the country’s total merchandise exports, and it will also cause the loss of about 3,000 Belgian labor jobs.
Russian oil price limit is real?
In the latest sanctions, the game on the price limit of Russian oil has once again become the focus. According to the EU timetable, from December 5 this year, Russia’s seaborne crude oil and most pipeline crude oil will be banned; from February 5 next year, the EU will further embargo Russian refined oil products.
Regarding the price cap on Russian oil, there has been a lot of opposition within the EU, such as Cyprus, Hungary and other countries. Hungarian Prime Minister Orban said again on the 26th that the EU should lift sanctions against Russia. He believes that the EU’s sanctions against Russia are the main reasons for the current soaring natural gas prices and rising EU inflation. “European countries are shooting themselves in the foot.”
Regarding the implementation of specific price limits, for example, what is the price ceiling for Russian oil and how to implement it, there is no consensus within the EU. Earlier, the Group of Seven (G7) including the United States, Germany and Italy agreed to impose oil price caps through insurance companies. U.S. Deputy Treasury Secretary Adeyemo said in an interview with the media in early September that the U.S. would set an initial “guide price” for Russia’s oil price caps at $44 a barrel, which was previously Russia’s own oil price limit. Giving an estimate of the cost of oil per barrel, “We will not set prices below the cost of production in Russia, the level of $44 will still encourage Russian oil production, but the country’s oil exporters will no longer be able to benefit from this energy. Profit from a crisis.”
However, whether this model can be implemented within the EU is also controversial. After all, Greece, one of the EU members and a major shipping country, has been making a lot of money in the entry of Russian oil into the EU market through the “curve”.
Russian Energy Minister Nikolay Shulginov told the media in early September that Russia will not sell natural gas or oil to countries that impose price caps on it, and Russia will definitely not sell at a loss or below cost. Putting limits will only make things worse in the West.”
Article source: First Financial