The European Union is gearing up to implement its 17th sanctions package against Russia in response to its unwarranted invasion of Ukraine. However, the foundation of economic pressure that the West has exerted on Moscow appears to have been destabilized by the actions and declarations of former U.S. President Donald Trump, posing questions about the future of the transatlantic security alliance.
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Prior to any tangible concessions from the Kremlin, the Trump administration has expressed a willingness to ease sanctions on Russia, hinting at a potential strengthening of economic ties. This raises a provocative question: Is President Trump motivated by aspirations to establish a hotel on Red Square, or is he simply betting that Mr. Putin will offer generous concessions in return for relaxing sanctions?
A price cap on Russian oil exports was introduced, yet Moscow has managed to find ways around it. Regardless, this evolving situation presents yet another conundrum for the EU as it strives to maintain international pressure on Russia.
“We would not like to see concessions on sanctions made too early, nor in the context of a temporary ceasefire in Ukraine,” stated David O’Sullivan, the EU’s sanctions envoy. “Rather, we want to see any movements in this area occur within the framework of a more lasting and sustainable peace,” he added.
This dilemma traces back to a phone call on February 12 between Presidents Trump and Putin. After pressuring Ukraine’s President Volodymyr Zelensky to agree to an unconditional 30-day ceasefire, Mr. Trump accepted a significantly more limited ceasefire in the Black Sea when Mr. Putin declined to commit to the longer truce.
Notably, the ceasefire negotiated on March 25 between U.S. and Russian officials in Saudi Arabia appeared to benefit Russia more than Ukraine and came with surprising demands from Russia.
Russia requested the reconnection of the state-owned Rosselkhozbank to the SWIFT international payment system, along with pressure on Western companies, insurance brokers, and suppliers linked to food and fertilizer sectors to be exempt from sanctions. As an EU official succinctly put it, “The re-SWIFTing of Rosselkhozbank is a European decision.”
This has raised significant alarms in Brussels, as it reveals a tactical maneuver by Russia to introduce further tension into transatlantic relations. Experts have expressed confusion regarding Russia’s demands, especially since neither food nor fertilizer from Russia has been prohibitive under Western sanctions. “It is unclear why this evidently impossible demand was raised,” remarked Alexander Kolyander from the Centre for European Policy Analysis.
The event underscores a growing recognition that the unravelling of Western sanctions and the protraction of the ceasefire process are now interconnected strategies employed by the Kremlin.
Since Mr. Putin’s incursion into Ukraine in February 2022, the EU, alongside the G7 and other allies, has imposed an extensive array of sanctions designed to inhibit Russia’s military capabilities and economic strength. This approach has yielded significant outcomes: over 2,400 individuals have been sanctioned, coal and oil imports from Russia have been halted, and the export of dual-use goods and advanced technologies has been restricted.
The impact of these sanctions has been multifaceted: more than €200 billion of Russian Central Bank assets have been frozen, and Russian banks have been excluded from the SWIFT network. The result has been a dramatic decline in Russia’s share of EU global trade in goods, plummeting from €253 billion in 2021 to €68 billion in 2024.
While the immediate effects were less severe than expected, the Russian economy grew by 3.6% in 2023 and was projected to have expanded by 4.1% in the previous year. However, as the realities of a weakening ruble, chronic labor shortages, persistent inflation at 10%, and steep interest rates of 21% begin to mount, EU officials anticipate that the Russian economy could hit a critical juncture as early as 2025. “The indicators are flashing even redder than before,” a senior EU official cautioned.
Despite efforts to circumvent sanctions, the G7 has managed to deprive Russia of over $450 billion in revenue, thereby inflating military component costs and delaying battlefield deployments.
Resistance to the G7’s oil price gap has led Russia to develop a secret fleet of “ghost” tankers to transport oil worldwide above the capped price. But sanctions against about 400 of these vessels by the G7 have complicated these efforts, forcing flag states like Panama and Honduras to deregister the ships, complicating their access to international ports. “We can see from satellites that these ships are, in many cases, just floating around the ocean, with nowhere to go,” a senior EU figure noted.
This is why Mr. Trump’s overtures to Mr. Putin have sparked outrage among European capitals. By offering a potential lifeline to Russia, it inadvertently buoyed the ruble and provided a much-needed psychological boost to both the Putin regime and the Russian populace. Observations about the potential lifting of aviation sanctions remain murky, leaving European diplomats seeking clarity amid mixed signals from Washington.
Following renewed discussions on maintaining business ties and direct flights, Mr. Trump has included vague threats against Mr. Putin to impose tariffs or secondary sanctions if his ceasefire plan isn’t agreed upon. “The Americans have gone both ways,” a source mentioned, revealing the confusion among European officials, who are also wary of Hungary’s Viktor Orbán regarding potential obstacles in enforcing EU sanctions.
As the EU considers extending an extensive range of sanctions, including trade, finance, energy, and technology restrictions, unanimity among member states is crucial. Hungary could disrupt this collective effort, but if the Trump administration signals that sanctions serve to leverage Putin, Orbán might silently withdraw his resistance.
In response to these challenges, the EU is exploring various options, including formalizing sanctions in national laws or even triggering Article 7 of the Lisbon Treaty to address Hungary’s objections—a move regarded as a last resort. Additionally, there is growing speculation about phasing out Russian LNG, with the European Commission advocating for a target to eliminate reliance on Russian fossil fuels by 2027.
Despite these hurdles, the EU remains determined to preserve a united front. “The strength of the sanctions has been the degree of unity shown by the G7+ coalition,” affirmed O’Sullivan, reinforcing the belief that maintaining this unity is essential for the ongoing effectiveness of sanctions as a bargaining tool.
Even with conflicting messages from Washington, the overarching hope is that unity can be upheld, ensuring sanctions remain a pivotal asset in the geopolitical landscape.
Edited By Ali Musa
Axadle Times International – Monitoring.
