EU: Nordstream transactions will be banned under 18th sanctions package
EU chiefs say that the bloc’s proposed 18th sanctions package includes ‘hard-biting’ measures targeting Russia’s energy and finance sectors – including a ban on transactions with the Nordstream pipelines.
But some measures could be quashed by Hungary and Slovakia exercising a veto or limited in effect if the United States fails to align, experts say.
In a 12 June statement, European Commission High Representative Ursula von der Leyen and Commission Vice-President Kaja Kalla said,
‘[O]n the energy side. For the first time, we propose a transaction ban for Nord Stream 1 and Nord Stream 2. This means that no EU operator will be able to engage directly or indirectly in any transactions regarding the Nord Stream pipelines. There is no return to the past,’ adding that the EU proposed to lower the oil price cap from 60 dollars to 45 dollars per barrel, to reflect the reduction in the market price of oil since the cap was first imposed.
Swift action
On the finance side, she said the EU would be targeting the Russian banking sector ‘by limiting its ability to raise funding and conduct transactions’, and is proposing to ‘transform the existing prohibition to use the SWIFT system into a full transaction ban [which it would extend] to another 22 Russian banks.’
Another proposed target, she said, is the Russian Direct Investment Fund, its subsidiaries and its investment projects. Designating the fund would limit ‘an important channel for financing projects to modernise the Russian economy and strengthen its industrial base’.
In comments emailed to WorldECR, Maria Shagina, Senior Research Fellow at the International Institute for Strategic Studies told Risk Journal that while the moves to ban transactions with the Nordstream pipelines, and to ‘de-SWIFT’ more Russian banks do not require alignment with US policy, lowering the price cap would require US ‘buy-in’.
‘As it is designed to be a buyer’s cartel, the cap needs the US to be part of it, and von der Leyen has already explicitly stated that it must be a G7 decision. However, the White House has already rejected the idea of lowering the price cap.’
