By Natalia Drozdiak, Alberto Nardelli and John Follain
Apr 7, 2022, 8:39 PM – Updated on Apr 7, 2022, 9:27 PM
The sanctions package, which also includes a ban on most Russian trucks and ships from entering the EU, was signed off by the bloc’s diplomats Thursday, France announced. It was also coordinated with the U.S. and the U.K. Member states have until Friday morning to lodge final objections before the sanctions are formally adopted.
The bloc had held back from hitting Russia’s energy sector in previous sanctions rounds after Germany and Hungary blocked the move given their reliance on Russian fossil fuels. Some member states continue to push for further measures on Russian energy imports and oil in particular, with countries due to discuss ideas like an escrow account to freeze additional profits driven by oil price rises since the start of the war.
EU nations sparred over the length of the phase-in period for the coal ban, as well as a growing list of exemptions to proposed trade bans before agreeing to the overall package, according to people familiar with the matter.
The ban may benefit U.S. miners that are likely to be called upon to increase exports to Europe. Peabody Energy Corp., the biggest American producer, and Arch Resources Inc., the second-biggest supplier, both gained more than 5.8% Thursday in New York on news of the EU’s approval. However, they may struggle to significantly increase shipments. Most of their output has already been sold through long-term contracts and labor shortages and transportation bottlenecks will make it difficult to boost production.
The sanctions package wasn’t enough to satisfy some EU nations, particularly when Europe continues to buy significant amounts of Russian oil and gas.
“Time is working against Europe because we’re losing our credibility by paying money to Russia, by helping it fight against Ukraine,” Lithuanian Foreign Minister Gabrielius Landsbergis told Lithuanian journalists in Brussels on Thursday, LRT reported.
As part of the package, the EU targeted more than a dozen entities in the defense sector and four banks that had been cut off from the SWIFT global payments system but hadn’t yet been fully sanctioned, including VTB Bank PJSC. The measures enter into force once published in the EU’s official journal.
The bloc is also strengthening its export control measures, with further restrictions on key technologies such as cloud computing and LNG equipment.
European Commission President Ursula von der Leyen said earlier this week the action on coal would amount to 4 billion euros ($4.4 billion) a year. Companies would be allowed four months to wind down contracts before they’d be banned from entering new ones, according to two people.
“As war continues, Russia faces a long descent into economic, financial & technological isolation,” von der Leyen tweeted.
Member states also agreed to start work immediately on a sixth package of sanctions, with several countries pushing to include oil restrictions in the next round, the people said.