EU squeezes Russia financially to reach ‘peace through strength' in Ukraine

Al Jazeera

4 hours ago

The European Commission floated a plan last week to phase out all Russian gas imports by the end of 2027.
The plan, unveiled on Tuesday at the end of the Group of Seven summit in Canada's Kananaskis resort, would immediately ban new contracts to buy Russian gas. It would allow existing short-term contracts to run their course by next June, and cut short any long-term contracts at the end of 2027.
'To achieve peace through strength, we must put more pressure on Russia to secure a real ceasefire, to bring Russia to the negotiating table, and to end this war,' said Commission President Ursula von der Leyen. 'Sanctions are critical to that end.'
Russia unleashed 32 missiles and 440 drones on Kyiv as the plan was unveiled, killing 26 people and injuring 134. The attack damaged railway infrastructure and lit fires. Odesa was also hard hit.
'[Russian president Vladimir] Putin is doing this deliberately – right during the G7 summit. It's a clear signal of total disrespect toward the United States and other partners calling for an end to the violence,' said Ukrainian Foreign Minister Andrii Sybiha.
Putin had done the same right after a phone call with Trump on Sunday, sending 183 strike drones and 11 missiles of different types into Ukraine.
The European Union has dramatically reduced its imports of Russian energy during the war – by almost 80 percent, according to the commission. But it still spent about 22 billion euros ($25bn) buying 19 percent of its gas and about 3 percent of its oil from Russia last year.
The Centre for Research on Energy and Clean Air recently estimated that eliminating that revenue would deprive the Kremlin of 22 percent of its gross revenues.
Hungary and Slovakia have been the main holdouts, arguing against an outright import ban. They argue that being landlocked, they have few alternatives to Russian oil and gas.
Slovak premier Robert Fico called Ukrainian President Volodymyr Zelenskyy 'an enemy of Slovakia' in January because Ukraine shut down the Yamal pipeline that carries Russian gas across Ukraine to Slovakia. The only remaining functional Russian pipeline to Europe is TurkStream.
The day before the commission's announcement, Hungary vetoed a statement of support for the ban.
The EU banned Russian coal and oil imports in 2022, and has since planned to ban gas.
The EU and G7 in December 2022 also launched a $60 per barrel price cap on Russian oil sold to anyone else in the world, by threatening to uninsure tankers selling above that price.
'It is no secret that we wanted the price to be lower,' Estonian then-premier Kaja Kallas, now the EU's foreign policy chief, wrote on Twitter. 'A price between 30-40 dollars is what would substantially hurt Russia,' she said.
There was speculation that the EU and G7 would lower the cap to $45 this week.
That's because even if the EU were to stop buying Russian energy, Moscow would still make an estimated 215 billion euros ($248bn) from sales to others.
But the EU announced it was shelving the plan due to rising energy prices – partly the effect of Israel's war on Iran.
The current $60 cap 'had little effect' while oil was cheap, 'but in the last days, we have seen that the oil price has risen [and] the cap in place does serve its function,' von der Leyen told reporters on the sidelines of the G7 meeting. 'So for the moment, there's little pressure on lowering the oil price cap.'
Ukraine's President Volodymyr Zelenskyy disagreed. 'If Russian oil is sold at no more than $30 a barrel, then Moscow will suddenly sound peaceful,' he wrote on the Telegram messaging platform.
That is estimated to be Russia's cost of extraction, leaving it no profit margin to help it prosecute wars.
Russia partly circumvented the oil cap by purchasing a 'shadow fleet' of tankers not insured in EU and G7 countries. On Tuesday, the UK sanctioned 20 tankers in addition to 100 last month. The next day, Australia imposed restrictions on 60 vessels, its first targeted sanctions strike on the shadow fleet.
On Friday, US Republican Senator Lindsey Graham said he and Democrat Richard Blumenthal were working with the Trump administration to finalise a sanctions package that would impose secondary sanctions on countries that still import Russian energy.
'We now have more than 84 co-sponsors in the Senate and 70 co-sponsors in the House of Representatives on a bill to impose severe sanctions and tariffs on Russia and its financial backers,' Graham wrote in a column.
That figure was up from 50 senators on April 1. Trump has opposed sanctions, preferring to cajole rather than confront Putin.
Zelenskyy decried that approach in an interview with US outlet Newsmax on Saturday.
'Today, America's dialogue with the Russians resembles a warm conversation,' he said. 'Let's be frank: this will not stop Putin. A change of tone is needed. Putin must clearly understand that America will stand by Ukraine, including by imposing sanctions and supporting our army.'
Politico reported on Thursday that the EU was also considering transferring about 200 billion euros in frozen Russian assets from the Euroclear system in Belgium to a 'special purpose fund'.
Currently, Euroclear can only invest through the Belgian central bank, which is safe but offers low returns. The new fund would be allowed to make riskier investments, potentially increasing income that could be directed to support Ukraine.
Russia has continued to assault Ukrainian positions over the past week, making tiny gains.
Zelenskyy told Bild last week that Ukrainian and Russian forces were in day 18 or 19 of a Russian offensive designed to create a breakthrough. The Ukrainian side had defeated a key section of the Russian advance, preventing Russian units from coming together, he said.
Russian troops seized the village of Horikhove in Ukraine's eastern Donetsk region on Saturday.
That, and other Russian incremental gains, have come at a great cost to life.
Britain's Defence Intelligence on June 12 estimated that Russia had suffered a million casualties in the war, of whom 40-50 percent were likely irrecoverable losses – killed, missing and presumed dead or irrevocably wounded.
Some 200,000 of those casualties were estimated to have been inflicted in the first five months of this year, suggesting that Russia's casualty rate is rising.
The Institute for the Study of War, a Washington-based think tank, broke down Russian casualties and found they have roughly doubled each year of the war.
Based on Ukrainian General Staff figures, it estimated that in 2022, Russian forces sustained 340 casualties a day, rising to 693 casualties a day in 2023 and 1,177 casualties a day in 2024. This year, Russian daily casualties have averaged 1,286.