Hungary and Greece continue to block EU's 11th sanctions package against Russia
According to the Russian news agency TASS, the two countries continued to block the revised 11th package of sanctions because Hungarian and Greek companies have been added to the list of war sponsors in Ukraine and want to be removed. Péter Szijjártó, Hungary's Minister for Foreign Affairs and Trade, made this quite clear in mid-May in connection with OTP Bank.
Whereas the 10 previous sanctions packages focused on measures to empty Vladimir Putin’s war chest, Brussels now wants to avoid its sanctions being circumvented. In an unprecedented step for the bloc, the current package could target other countries helping Moscow dodge its trade embargo.
Kyiv has compiled a list of private companies it calls "war sponsors,” which includes a number of European companies, such as Hungary's OTP Bank. While these issues normally are not linked, Hungary and Greece are using the sanctions package as political leverage to get their companies off Ukraine’s list.
Politico reported on Thursday that Athens and Budapest want some of their companies struck off this list before they will agree to the sanctions package. Several EU countries, including heavy-hitters Germany and France, have concerns about the anti-circumvention ban, as they fear it could hurt diplomatic relations, the portal added.
The European Commission has already watered down its initial proposals to accommodate these concerns, and one of the diplomats said that this issue seemed “solvable.”
Josep Borrell, the EU’s top diplomat, has already vowed to work through the differences on the Ukrainian list. Two of the diplomats said it is now up to him to work with the Ukrainians on a solution.
Politico noted recently in connection with the newest sanctions-related spat with Hungary that the EU is more frustrated with Budapest than with Athens, due to the Orbán cabinet's pro-Russia and pro-China line that has often prevented the EU from reaching unanimity on statements on Moscow and Beijing. Hungary is also blocking the approval of an eighth tranche of EU money to reimburse military aid to Ukraine.
The Commission presented another version of the sanctions proposal ahead of the meeting on Wednesday, but this still failed to lead to a deal, four diplomats told Politico. EU ambassadors will now discuss the proposal again at their meeting next Wednesday June 14, hoping to come to an agreement then. “We are getting closer,” one of the diplomats said, while acknowledging that the European Council at the end of the month can also be a final deadline.
Meanwhile, Jim O’Brien, sanctions coordinator at the U.S. State Department, told Politico that Western exports of key microchips and electronics that Russia needs to fuel its war machine are back to pre-invasion levels, as Moscow has ramped up efforts to circumvent sanctions.
The problem, O’Brien said, is that European companies are selling to other countries, which in turn resell the materials to Russia.
Sanctions circumvention remains a “substantial problem,” O’Brien said, adding the U.S. has identified issues with five countries in particular: Turkey, Kazakhstan, Georgia, the United Arab Emirates and Armenia. Hence, there is a chance that the 11th sanctions package will have to address these U.S. claims as well when it draws up the final framework of new restrictions.
Trade between Russia and several countries from the Caucasus and Central Asia close to Moscow — including Georgia, Kazakhstan, and Armenia — has surged since the start of the Kremlin's full-scale invasion of Ukraine, according to customs records seen by Politico.
Cover photo: European Union, a meeting of the European Council on 20 February 2022, with the Prime Minister of Greece (left) and Hungary (right).
