| 26 February 2024, Monday |

EU nears deal on 12th Russia sanctions package, softens tanker sale ban

European Union countries are close to reaching an agreement on a proposed 12-piece package of sanctions against Russia that would prohibit diamonds from Russia and include additional steps to stop the flow of Russian oil, according to four people familiar with the situation.

The prohibition on non-industrial Russian diamonds is the most significant aspect of the new regulations, but the EU nations have also been trying to make it more difficult to get around the current sanctions, such as the G7 oil price cap.

The text includes tougher measures on how to prove Russian oil is traded under the ceiling as compliance has waned in recent months.

However, one element aimed at preventing Russia from growing its so-called “shadow fleet” has been watered down.

The Commission initially wanted to ban the sale of old tankers to Russian entities or for their use in Russia as well as to entities that might may use the tankers to circumvent the G7 oil price cap but this clause has been dropped. One of the sources said Mediterranean countries with strong shipping companies were concerned the measures could put them at a competitive disadvantage.

In the latest draft shipping companies now need only “report” such sales.

Officials from EU member states are meeting on Monday evening and are expected to further tweak the text but not substantially, the sources said, adding it could even be passed later on Monday.

“I think we have a more or less stable text,” one of them said.

The European Commission declined to comment.

Article 12G, or the “No Russia clause”, in the proposal has also been refined to a shorter list of dual-use goods, including weapons, as the majority of EU countries said the initial custom codes were too sweeping and would hurt their global trade.

In the proposed package, EU companies will have to make their counterparties sign contracts prohibiting re-export to Russia. The article will apply to pre-existing contracts with a transition phased, the sources said.

The latest working draft has also dropped the requirement for prior authorisation from member states for “any transfer of funds” by a Russian entity or Russian national residing in Russia out of the EU. Instead the banks and Russian entities or individuals will have to notify respective EU national regulators about transfers of at least 100,000 euros ($107,510), who would then report them to the EU executive.

The biggest point of contention remains the exemption of sanctioned goods for personal use, with member states at odds on whether to exempt cars with Russian license plates entering the EU.

Member states are also still negotiating transition times for import bans on some metal products, such as steel slabs and iron.

The most significant new measure is a direct ban on the import of non-industrial Russian diamonds from Jan. 1, which sources say has been agreed, as well as a phased indirect ban of Russian diamonds from other sources.

The latter will be done in concert with the Group of Seven countries that last week announced their own Russian diamond ban.

  • Reuters