EU keeps on doing business with Russia despite sanctions
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[March 29, 2023]
By Gabriela Baczynska
BRUSSELS (Reuters) - With ten rounds of sanctions since Russia invaded
Ukraine in February last year, the European Union has rolled out its
toughest punishment ever against a foreign country.
The EU says its sanctions are meant to cut Moscow revenues and access to
technology used in war. But the impact "will not be severe enough to
limit Russia's ability to wage war against Ukraine in 2023," a European
Parliament research note said.
Much trade still flows between the bloc's 27 countries and Russia - a
result of successful lobbying, the EU's unwillingness to take a harder
economic hit, and concerns about ripple efffects on global supply
chains.
Rather than seek new sanctions, the EU now wants to crack down on
bypassing those already imposed and officials identified the UAE,
Turkey, Armenia, Georgia, Kazakhstan and Kyryzstan as potential
circumvention routes.
Here is a list of areas where the EU keeps on doing business with
Russia.
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TRADE FLOWS
In 2021, Russia was the EU's fifth-largest trading partner with goods
exchange worth 258 billion euros, according to the EU executive European
Commission. The main EU imports were fuel, wood, iron and steel and
fertilizers.
Since the invasion in 2022, the value of EU imports from Russia fell by
a half to around 10 billion euros last December.
In total, the EU imported 171 billion euros worth of goods from Russia
starting from March, 2022 until the end of January, 2023, according the
latest data available from Eurostat, the EU statistics office.
That figure thwarts the 60 billion the EU last month said it had
assigned to Ukraine over the year since the invasion, though that total
does not include the value of modern tanks Kyiv got since, or the latest
deal on ammunition supplies.
LNG
The EU sanctioned imports of Russian coal and seaborne oil last year.
Gas is not covered by EU sanctions, but Moscow slashed pipeline
deliveries to Europe since the invasion. In 2022, the EU received about
40% less Russian gas than in recent years.
Liquefied natural gas is another story. Russian LNG deliveries to Europe
increased since the war - to 22 billion cubic metres in 2022, up from
around 16 bcm in 2021, according to EU analysis.
The LNG volumes are smaller than Russia's pipeline gas deliveries, which
were about 155 bcm per year before the war. But the uptick has led some
countries to ask for a legal option under EU law to block LNG imports.
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NUCLEAR
Similarly, there have been no sanctions against Russia's nuclear
industry, something Hungary - where Russian state nuclear energy company
Rosatom is due to expand the Paks power plant - and Bulgaria openly
oppose.
EU imports of Russian nuclear industry products totalled nearly 750
million euros in 2022, according to Eurostat. EU nuclear agency Euratom
said Russia provided a fifth of uranium used by EU utilities in 2021,
the latest data available, as well as a fourth of conversion and a third
of enrichement services.
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A general view shows a commercial port
in Vladivostok, Russia, February 15, 2023. REUTERS/Tatiana Meel
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The French energy ministry disputed parts of a report by Greenpeace,
which last month said Paris had sharply increased imports of
enriched uranium from Russia since the invasion. Paris said its
contracts with Russia would be more expensive to halt than continue.
DIAMONDS
The EU bought 1.4 billion euros worth of Russian diamonds last year,
according to Eurostat, as it banned neither the gem imports nor
blacklisted Russian state-controlled miner Alrosa.
Belgium, home to the world's biggest diamond trading hub Antwerp,
has upset the bloc's hawks by lobbying against the EU going solo on
Russian diamonds.
The EU, the United States and other G7 economies are now working on
a traceability system to squeeze out Russian diamonds together. The
Antwerp World Diamond Centre said that needed to include India - not
in a G7 member - to be effective.
CHEMICALS AND RAW MATERIALS
EU imports of Russian fertilizers were worth 2.6 billion euros last
year, more than 40% up from 2021 as price rise beat reduced volumes,
according to Eurostat.
Potash from Russia and ally Belarus is heavily restricted or banned
in the EU. But other fertilisers including urea flow freely, said
Sean Mackle of industry lobby Fertilizers Europe, adding that the
patchy approach weighed on implementation.
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Disagreement among the 27 EU countries over proposed exemptions to
keep fertilizers going to Africa is blocking more sanctions against
Belarus for aiding Russia's war.
Among raw materials unaffected by sanctions is nickel, mostly used
for stainless steel production. The EU imported 2.1 billion euros
worth of nickel in 2021, up to 3.2 billion euros last year,
according to Eurostat.
BIG NAMES AND SECONDARY SANCTIONS
Alrosa and Rosatom are missing from the EU's blacklist that
currently covers nearly 1,700 individuals and entities banned from
the bloc. Gazprombank - the financial arm of Russia's gas monopoly
Gazprom - and Russia's privately-owned, second-largest oil producer
Lukoil are also missing.
Transparency International has long called for a cut in Russia's
access to EU lobbying and for secondary sanctions to punish those
helping others already under sanctions, as is standard practice in
the United States.
(Reporting by Gabriela Baczynska, Additional reporting by Forrest
Crellin and Kate Abnett, Editing by Angus MacSwan)
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