Eastern Europeans push for new penalties as EU sanctions fail to end Putin’s war  – POLITICO

Poland and the Baltic countries are proposing new punitive measures against the Russian economy, arguing that initial rounds of EU sanctions have failed in their stated goal of ending President Vladimir Putin’s ability to wage war.

In the days after the invasion, European Commission President Ursula von der Leyen promised to “cripple Putin’s ability to finance his war machine” and to ruin Russia’s economy. But frustration is running high that the Russian leader is still keeping his head well above water financially; Europe still pays Russia hundreds of millions of euros a day for energy, and the ruble has bounced back to pre-war levels.

“Some EU leaders are treating the sanctions as a smokescreen for their inaction,” Polish Prime Minister Mateusz Morawiecki tweeted today. “The sanctions are supposed to bring Ukraine peace, not to appease Europe’s guilty conscience.”

The Central and Eastern Europeans are at odds with their Western European counterparts over how hard to turn the screws now. Poland is proposing a prohibitively high tariff on Russian fuels, while Estonia is suggesting a special escrow account that will hold some of the payments for Russian energy until Russian forces withdraw from Ukraine.

The Western Europeans, by contrast, want to avoid such drastic steps and officials in Brussels are now preparing compliance measures to enforce existing penalties. European leaders last week agreed only to focus on implementation of the current sanctions and closing loopholes in them. “All our efforts should be on enforcing these sanctions and preventing circumvention and evasion,” von der Leyen said last week. 

As far as Poland and the Baltic nations see it, it is a mistake not to ramp up the pressure now. They point to the worsening humanitarian situation in Ukraine and to demands from the Ukrainian government itself. “Russia keeps bombing Ukrainian cities and murdering civilians, therefore sanctions must further increase,” Ukrainian Foreign minister Dmytro Kuleba told his French counterpart this week.

“We have taken a bit of a pause, but the feeling from our point is that the pause is lasting too long,” said one senior EU diplomat. “We have to continue putting pressure on the Russian regime.”

Second-best options

Calls from Poland and the Baltics for an all-out ban on Russian energy — or at least an embargo on Russian oil — are being blocked by Germany and others, so they are now scrambling for second-best options. 

“Far-reaching sanctions such as an energy ban will probably stay in the fridge for now,” the senior diplomat said. “There is no unity to move further. But that doesn’t mean we can’t move ahead with other things.”

This week, Morawiecki said Poland will end all imports of Russian energy by the end of the year. The government will move first with a ban on coal, which Poland wants to enter into force in April or May at the latest. He called on other EU countries to do the same. “This is our plan for the EU — to snatch this weapon from Putin’s hands, from Russia’s hands,” Morawiecki said.

The European Commission is currently “assessing” the announcements from the Polish government, a Commission spokesperson said. 

Poland also called on the European Commission to introduce a tariff on Russian fossil fuels, as Brussels has exclusive competences over the EU’s trade policy. A Polish official said “detailed proposals on this solution are being prepared.”

“We would like to make import of Russian fossil fuels unprofitable; this is where these proposals are coming from. However, we’ll keep on convincing our partners to support an embargo on Russian fossil fuels,” the official added.

Estonia is pushing another compromise, urging Brussels to hold back part of Russia’s energy income in a special account that Moscow could only access once Russia had pulled back its army. Fulminating that the EU had paid Russia €22 billion since the beginning of the war, Estonian Prime Minister Kaja Kallas this week wrote a letter to von der Leyen, seen by POLITICO, proposing the escrow system after she unsuccessfully pushed for the idea in last week’s European Council meeting with fellow heads of state and government.

Poland and the Baltics also called on the Commission for a ban on truck traffic to and from Russia and Belarus and restrictions on vessels’ access to EU ports. In a letter to the Commission last week and obtained by POLITICO the countries also asked that Russia and Belarus be excluded from international arrangements aimed at easing cross-border truck traffic.

New sanctions packages

Despite this mounting pressure from countries feeling the heat of Russian aggression, the focus in Brussels remains on closing the loopholes of the sanctions already in place. 

“We have to look backwards to see what kind of impact the measures that we have already taken” have had, Portugal’s outgoing Ambassador to the EU Nuno Brito said, and “what kind of loopholes we still have.” 

Therefore, the European Commission is preparing a “compliance package,” according to four EU diplomats and officials.

Amongst other things, this could focus on listing family members of oligarchs to avoid circumvention of the sanctions, the strengthening of export controls and potentially more sanctions against Russian propaganda channels, on top of the earlier sanctions against Kremlin-backed media RT and Sputnik.

In parallel, the Commission is also preparing further-reaching sanctions in case the EU needs to move fast, for example as a reaction to a chemical attack by Russia. But how such a broader sanctions package would go depends on the trigger and more consultation with EU countries, taking into account their sensitivities. 

“There are a lot of ideas floating around but it’s unclear for us which measures will be part of the next package and which won’t. It will also depend on the trigger of course,” said another EU diplomat.

Zosia Wanat, Zia Weise, Hanne Cokelaere, Stuart Lau and Jacopo Barigazzi contributed reporting.