EU Moving Toward Russian Energy Sanctions, Russian Economist Says
Although the EU has been reluctant to impose an embargo on Russian oil and gas (see 2203230037), the bloc could soon take steps to impose some energy-related trade restrictions, Vladimir Milov, a Russian economist and opposition politician, said during a March 24 event hosted by Chatham House. He said the EU will eventually introduce some “gradual embargo measures,” potentially against refined products or liquefied natural gas. “In terms of European unity, my understanding is they're moving,” he said. “There will be movement in that direction.”
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Some EU states, such as Poland, are ready to impose an embargo, Milov said. He said Poland has “extremely high public support for” measures to hurt the Kremlin, and can possibly make up for the loss of oil imports by buying more from other producers, such as Saudi Arabia. “There's nothing interfering with Poland declaring this embargo tomorrow,” Milov said. “I think they can do it.”
But other EU member states, including Germany, may be less willing. A Russian oil embargo could drop several percentage points off Germany’s GDP, but that cost may be justified compared with the defense spending it would need to defend against Russia over the next decade, said Timothy Ash, a strategist with BlueBay Asset Management. “We have to step up and stop [Russian President Vladimir] Putin now,” he said, “otherwise we're going to be living in fear for a long time to come.”
Ash also suggested global messaging on sanctions could be stronger, particularly to convince other countries that haven’t yet penalized Russia to do so. He said government sanctions agencies, such as the U.S. Office of Foreign Assets Control, should increase sanctions awareness in Dubai and Turkey to inform companies of secondary sanctions risks.
The agencies “need to be telling them that these are the rules, and if we find you are doing stuff to undermine sanctions, we're going to be all over you,” Ash said. “I think the messaging around sanctions is really, really important to be out there telling the Russians, telling the market what's coming next.”