Why the EU’s 12th Russia sanctions package is almost ready for action

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Good morning. News to start: The head of the IMF has warned Ukraine’s allies that it needs billions of dollars in fresh aid in “a couple of months” or risk the country’s tentative economic recovery, in an interview with the Financial Times.

Today, our trade correspondent explains the EU’s latest Russia sanctions package which should — finally — be agreed by member states today. And our man in the Balkans reports on the outcome of Serbia’s snap election yesterday.

12th package for Christmas

The long-delayed 12th package of EU sanctions on Russia should be adopted this week after Austria lifted its objection, according to diplomats. But its measures are still not tight enough, according to some countries and industry groups, writes Andy Bounds.

Context: Vienna had told other member states its lawyers needed more time to assess the proposal, but several EU diplomats said its main concern was Ukraine’s inclusion of Raiffeisen Bank International on a blacklist as an “international sponsor of war”. Ukraine’s government website on Saturday said it had “suspended” its listing while it holds talks with the European Commission.

The Austrian bank continues to operate in Russia despite the war against Ukraine. Although it is cutting back its business, the country accounted for half its profits this year.

With the other 26 member states already signed up, diplomats said the sanctions package would be adopted today. “It is now a formality,” said one.

Officially, Austria says there is no link between the bank and the sanctions approval.

The main features of the sanctions package are well known. There will be a ban on Russian diamonds, as agreed by the G7 group of rich countries, starting January 1. The enforcement of the western price cap on Russian oil — at $60 a barrel — will be tightened after widespread circumvention. 

Russian aluminium will be sanctioned for the first time, with a ban on imports of wires, foil, tubes and pipes. However, the EU industry is lobbying for far more, noting the products covered account for just 15 per cent of imports.

“If aluminium sanctions are to have any effect on the Russian economy and its ability to wage war, a much more comprehensive measure will be required,” European Aluminium, the industry group, wrote to the commission on December 8.

There is also a weakening of import controls on luxury goods. EU citizens will now be allowed to keep cars they drive out of Russia, provided the country where they cross the border agrees.

Several countries asked for the move, diplomats said, although not those on Russia’s border who must enforce the rules.

“We will allow this only in very, very specific cases,” said one frontier state diplomat.

Chart du jour: Not so low-cost

Ryanair’s shares are up by more than 50 per cent this year, a surge that has cemented the low-cost carrier’s position as by far the most valuable airline in Europe — and setting up boss Michael O’Leary to earn a €100mn bonus.

Vučić victorious

The incumbent Serbian Progressive Party (SNS) of President Aleksandar Vučić is on course to command enough parliamentary seats to govern alone in a snap election on Sunday marred by repeated complaints of voting irregularities, writes Marton Dunai.

Context: The victory solidifies the rule of the embattled president, who faced massive protests for months after a pair of school shootings in May that killed 17, mostly young people. Vučić, who has refused to sanction Russia and maintains close ties with China, has also faced tensions in Kosovo that threatened to spiral out of control.

Pollsters Ipsos and CeSID put SNS voter backing at 47 per cent, while the opposition Serbia Against Violence group was a distant second with about a quarter of the vote.

“Welcome to the celebration,” Prime Minister Ana Brnabić, who is expected to step down despite the victory, told party supporters as the first results and polling numbers began to trickle in. Although final results will take some time to crystallise, Brnabić said initial numbers showed SNS would gain at least half of the 250-seat Serbian parliament.

Although popular dissatisfaction fell far short of challenging Vučić in a meaningful way, the voting irregularities — which included lots of people bussed from other parts of Serbia to vote in opposition-leaning Belgrade — would require a thorough review.

“Concentration of buses, pick-up vans and cars was observed on several spots in Belgrade, transferring voters to polling stations across the city to vote,” the Center for Research, Transparency and Accountability, a rights group, wrote in a statement. CRTA added that New Belgrade, across the Sava river from the city centre, was a “place of gathering” for voters from as far a field as Bosnia or Kosovo.

Brnabić called the reports “fake news”.

What to watch today

1. Hungarian Prime Minister Viktor Orbán to host Turkish President Recep Tayyip Erdoğan in Budapest.

2. European leaders, ministers and business executives gather for the inaugural Grand Continent Summit.

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