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Economic worry keeps E.U. from imposing tougher sanctions on Russia

European Union flags outside E.U. headquarters in Brussels. (Yves Herman/Reuters)

BRUSSELS — The most interesting thing about the European Union’s latest sanctions proposal is what it does not do. The proposal does not ban imports of natural gas from Russia. Nor does it include additional measures on oil.

Instead of targeting these key sources of Russian revenue, the European Commission on Friday proposed a ban on gold imports and some tweaks to improve the implementation and enforcement of existing sanctions.

While the proposal, which is expected to be approved next week, will surely have some impact, its narrow scope reflects growing division over how to hit Russian President Vladimir Putin without putting greater strain on the E.U. itself.

Despite successive rounds of sanctions, Russia’s economy is still standing. The country continues to earn billions in revenue from energy exports. And it continues to wage a brutal war in Ukraine.

At the same time, the war has cast a long shadow over European economies. Leaders of E.U. countries face low growth and record inflation. The euro is at parity with the dollar. Appetite for additional disruption is low.

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Though E.U. officials insist that the bloc remains united on Ukraine, leaders in the bloc appear less inclined to act in concert and increasingly focused on domestic woes, raising questions about what comes next on Ukraine.

Two months after the European Commission proposed upwards of $9 billion in macro-financial aid for Kyiv, for instance, the bloc has greenlighted sending about a ninth of it.

European Commission President Ursula von der Leyen said Friday that the latest sanctions will ensure that Russia continues “to pay a high price for its aggression.” Analysts note, however, that Russia has been able to bear these costs — at least so far.

“The impact of the sanctions is probably not as stark as it was originally thought,” said Clay Lowery, executive vice president at the Institute of International Finance, the global trade organization for the financial services industry. “The off-ramp for Russia has been energy exports.”

In the immediate aftermath of Russia’s Feb. 24 invasion of Ukraine, the E.U. moved quickly to target Russia’s war chest, hitting the Kremlin with sweeping sanctions.

But Europe, which in 2021 imported about 40 percent of its natural gas and more than a quarter of its oil from Russia, has lagged behind the more-diversified United States in cutting Russian energy imports.

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It took weeks of fractious debate for the E.U. to agree to phase out imports of Russian oil. To reach a deal, the bloc was forced to grant extensions to several countries, moderating the short-term impact.

On natural gas, the E.U. hasn’t collectively agreed to go further than it did in March, when the bloc said it would cut Russian imports by two-thirds this year. Moscow has since threatened to turn off the gas to Europe entirely, which has left countries scrambling for alternate supplies and preparing for a difficult winter.

Meanwhile, Russia has benefited from soaring energy prices. The Helsinki-based Center for Research on Energy and Clean Air estimates that Moscow earned roughly $100 billion from energy imports in the first 100 days of the war — and that about 60 percent of that money came from the E.U.

To limit Russia’s revenue from energy sales, the United States is pushing for a global price cap on Russian oil. Though there are some signs of momentum, E.U. diplomats said the issue is unlikely to get a serious hearing before Brussels breaks for the summer, if at all.

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One E.U. diplomat, who spoke on the condition of anonymity to discuss ongoing negotiations, said the bloc’s bruising battle over the oil phaseout made countries nervous about reopening the oil talks under any circumstances.

Paolo Gentiloni, the European commissioner for economy, told reporters Thursday that the commission is reviewing the proposal on price caps but that such measures would be considered only in “extraordinary future scenarios.”

For now, the E.U. will focus on implementation and enforcement. The European Commission calls its latest proposal a “maintenance and alignment package” that clarifies a number of provisions.

In addition to the new import ban on Russian gold, the package will add people to the sanctions list, “reinforce” dual-use and advanced-technology export control, and bring E.U. sanctions closer in line with those of partners.

The package also “reiterates that E.U. sanctions do not target in any way the trade in agricultural products between third countries and Russia,” according to a statement — an effort to counter dubious Russian claims that E.U. sanctions, not Russian blockades, are to blame for rising food prices.

An E.U. official, speaking on the condition of anonymity to brief the media, said the tweaks will help give the bloc’s sanctions more power, particularly in the middle to long term.

“We are seeing that they are weakening Russia’s economy. There are some short-term impacts and certainly medium- and longer-term impacts,” the official said. “I hope we can convince you of our determination to continue to make the sanctions bite.”

War in Ukraine: What you need to know

The latest: Russian President Vladimir Putin announced a “partial mobilization” of troops in an address to the nation on Sept. 21, framing the move as an attempt to defend Russian sovereignty against a West that seeks to use Ukraine as a tool to “divide and destroy Russia.” Follow our live updates here.

The fight: A successful Ukrainian counteroffensive has forced a major Russian retreat in the northeastern Kharkiv region in recent days, as troops fled cities and villages they had occupied since the early days of the war and abandoned large amounts of military equipment.

Annexation referendums: Staged referendums, which would be illegal under international law, are set to take place from Sept. 23 to 27 in the breakaway Luhansk and Donetsk regions of eastern Ukraine, according to Russian news agencies. Another staged referendum will be held by the Moscow-appointed administration in Kherson starting Friday.

Photos: Washington Post photographers have been on the ground from the beginning of the war — here’s some of their most powerful work.

How you can help: Here are ways those in the U.S. can help support the Ukrainian people as well as what people around the world have been donating.

Read our full coverage of the Russia-Ukraine crisis. Are you on Telegram? Subscribe to our channel for updates and exclusive video.

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