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Coal, trucks, vodka and Putin's daughters: Here's what's in the latest round of EU sanctions

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By Jorge Liboreiro  & Pedro Sacadura
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Russian vodka, one of the country most emblematic exports, has been banned from entering the EU market.
Russian vodka, one of the country most emblematic exports, has been banned from entering the EU market.   -   Copyright  Gene J. Puskar/Copyright 2022 The Associated Press. All rights reserved

Following two days of long and heated negotiations, EU countries have agreed to slap Russia with a new round of sanctions that, for the first time, directly targets energy supplies.

The sanctions package – the fifth in total since the war in Ukraine began – comes in response to the alleged indiscriminate killings of civilians in Bucha, a suburb near Kyiv.

The images of bodies strewn across the streets prompted an outpouring of international condemnation against the Kremlin, which continues to deny any responsibility in the massacre.

"To take a clear stand is not only crucial for us in Europe, but also for the rest of the world. A clear stand against Putin's war of choice," said Ursula von der Leyen, president of the European Commission, earlier this week.

The new set of penalties has been described as "massive" and "far-reaching" by EU officials but they present exemptions and loopholes that might blunt its effectiveness.

So what exactly is in the latest package?

Coal ban

This is the most eye-catching and significant measure introduced by the 27.

After weeks of facing pressure from in and outside the bloc, member states have agreed to directly target Russian energy imports, on which the EU depends heavily.

Previous rounds of sanctions imposed restrictions on energy technology and energy investments, but this is the first time a specific energy product is being banned from entering the EU market.

The chosen product is coal, the cheapest and most polluting fossil fuel. Governments will have up to fourth months – 180 days – to terminate existing contracts with Russian providers. After that, member states will not be allowed to purchase any kind of Russian coal or related derivatives.

The initial draft suggested a three-month deadline but this was extended to four after Germany and Bulgaria raised concerns, Euronews understands.

The European Commission estimates the coal ban will deprive the Kremlin of €8 billion in annual revenue, a small fraction of the almost €99 billion the bloc paid for Russian fossil fuels in 2021.

All eyes turn now to oil and gas, Moscow's most profitable exports. Member states have different degrees of dependency on these two vital products, making consensus harder to achieve.

Hungarian Prime Minister Viktor Orbán has said sanctioning Russian oil and gas is a "red line" because the resulting economic disruption "will kill Hungary."

Gas is considered particularly difficult to replace due to the existing pipelines that interconnect several countries and the strong global demand for liquified alternatives.

"For the first time, Europe breaks the energy taboo and starts discussing energy in the framework of the sanctions. But it's very clear that this is far from being sufficient. Europe pays every day around €10 million for the coal it gets from Russia, while it pays every day more than €850 million for the oil and gas," Simone Tagliapietra, a senior fellow at Bruegel, a Brussels-based economics think tank, told Euronews.

"In order to have an impact, a real impact, Europe needs to talk oil and gas sanctions as of now. That's where we need to hit Putin. That's where his economic interests are. And we can do that by putting, for example, a tariff on the oil and gas we import from Russia in order to cut Putin's oil and gas rent, while at the same time minimising impacts on the European economy, keeping the flows going."

Ban on road and maritime transport

The EU is shutting down physical avenues to Russian trade.

In the latest round of sanctions, the bloc imposes a ban on road and maritime transport coming from Russia, further constraining commerce between the two neighbours.

Russian companies that operate trucks, vans and other sorts of vehicles will not be permitted to provide services across the EU. Similarly, vessels that sail under the Russian flag will be denied entry into EU ports.

Agricultural and food products, energy supplies, pharmaceuticals and humanitarian aid will be exempted, opening up a potential loophole.

Rail transport is equally excluded, which means trains coming from Russia will still be allowed to bring in authorised goods.

The transport ban comes more than a month after the EU closed its airspace to Russian flights.

New exports and imports ban

Western countries have for weeks been trying to cripple Russia's industrial and technological capacities in a bid to inflict economic pain and eventually force President Putin's hand.

The EU is now expanding its list of banned exports to include quantum computing, semiconductors, sensitive machinery, transportation, chemicals and catalysts used in refineries.

The selection was made according to Russia's vulnerability: the EU believes Moscow is overly dependent on these high-end components, most of which come from the West, and will struggle to find viable replacements in China, India and other non-aligned nations.

Altogether, these products represent €10 billion in trade.

At the same time, the 27 have agreed to stop buying a series of key Russian products, such as cement, pneumatic tires, fertilisers, wood, liquor, spirits, seafood, caviar, hunting gears and night sights.

Vodka, one of Russia's most emblematic products, can no longer be sold across the EU. According to the Commission, sales of Russian vodka amount to €50 million every year.

The blacklisted imports represent €5.5 billion in trade.

Given the economic weight of energy imports, the measures taken so far only affect a moderate share of the €158.5 billion in Russian goods that the EU bought in 2021.

Full transaction ban on four Russian banks

VTB Bank, Bank Otkritie, Novikombank and Sovcombank are being slapped with a full transaction ban and asset freeze.

This means no kind of financial operation will be allowed between them and EU-based institutions.

The four banks represent 23% of the Russian banking system and were already expelled from SWIFT, the high-security system that enables transactions all around the world.

They are all considered to have close links with the Kremlin and are seen as complicit, either directly or indirectly, in financing the war.

Sberbank and Gazprombank, the first and third largest banks in Russia, remain spared from any kind of sanction given their prominent role in processing energy-related payments.

The ongoing prohibition to provide Russia with euro banknotes has been expanded to include all official EU currencies: the Bulgarian lev, the Croatian kuna, the Czech koruna, the Danish krone, the Hungarian forint, the Polish złoty, Romanian leu and the Swedish krona.

Public procurement expulsion

The EU is kicking Russia out of its lucrative public procurement market.

Every year, over 250,000 public authorities across the bloc spend around €2 trillion buying services, works and all sorts of supplies.

Under the latest raft of sanctions, Russian citizens and companies are prohibited from taking part in public tenders and winning public contracts, although some exceptions could be allowed if no viable alternative can be found.

Additionally, the European Commission is suspending all payments under its research and education programmes, like Horizon Europe, Euratom, and Erasmus+, that had been allocated to Russian public bodies. No new agreements will be signed.

More blacklisted individuals and entities

Finally, the EU is enlarging its Russian blacklist by adding 217 individuals and 18 entities, which will be subject to travel bans and asset freezes.

Among those sanctioned are Vladimir Putin's daughters, Maria Vorontsova and Katerina Tikhonova, as well as the 179 members of the breakaway administrations of Donetsk and Luhansk, in Ukraine's eastern region of Donbas.

Since the invasion of Crimea in 2014, the EU has blacklisted 1091 individuals and 80 entities, including Putin himself.

European countries are now focused on freezing and seizing the assets of those placed in the blacklist, with law enforcement going after yachts, artworks and lavish apartments owned by oligarchs.

A recently created EU task force has frozen assets worth €29.5 billion and blocked €196 billion of transactions.