EU seeks trade sanctions on Russia over ‘sham’ Ukraine votes

European Union countries should impose “biting sanctions” on Russian trade and hit officials responsible for “sham referendums” held in parts of Ukraine, senior EU officials have said.

European Commission president Ursula von der Leyen said the Kremlin-orchestrated referendums on joining Russia “are an illegal attempt to grab land and change international borders by force”.

“We are determined to make the Kremlin pay for this further escalation,” she said.

“We propose sweeping new import bans on Russian products. This will keep Russian products out of the European market and deprive Russia of an additional seven billion euros (£6.2 billion) in revenue,” Ms von der Leyen told reporters in Brussels.

She said the EU’s executive branch also advises extending the bloc’s own export ban “to deprive the Kremlin’s military complex of key technologies”, including electronic components and specific chemical substances.

The proposals must still be endorsed by the 27 EU member countries.

The commission president also said the EU should “lay the legal basis” for a price cap on Russian oil, without elaborating.

The bloc already agreed to ban sea-borne crude oil starting on December 5, but some member countries still require Russian supplies at low prices.

Finance ministers from the Group of Seven industrial powers pledged this month to impose a cap on the price of Russian oil in a bid to limit the Kremlin’s revenues, while also curtailing the war’s impact on energy prices and inflation.

The ministers said they would impose the cap by barring insurance or shipping companies from helping Russia sell oil at prices above the set limit.

On top of that, Ms von der Leyen recommended a ban on EU nationals sitting on the governing bodies of Russian companies, saying that “Russia should not benefit from European knowledge and expertise”.

People who help Russia to circumvent sanctions could also face sanctions themselves, under the proposal outlined on Wednesday.

EU foreign policy chief Josep Borrell said asset freezes and bans on travel in Europe would be imposed on the “proxy Russian authorities” in the Donetsk, Kherson, Luhansk and Zaporizhzhia regions.

Officials there said on Wednesday that they would ask President Vladimir Putin to incorporate their provinces into Russia.

Mr Borrell said he also wants to target senior Russian Defence Ministry officials and those who support the armed forces by providing them with equipment and weapons, or who help to recruit the 300,000 reservists that Mr Putin has called up.

“Sanctions work. Sanctions matter. But they have to be maintained over time and … not circumvented,” he said.

The European Commission has drawn up several rafts of sanctions against Russia since President Vladimir Putin launched an invasion of neighbouring Ukraine seven months ago.

Banks, companies and markets have been hit – even parts of the sensitive energy sector – with asset freezes and travel bans slapped on more than 1,200 officials.

But the hard work is yet to come.

The economies of the EU’s 27 member countries have been battered by the Covid-19 pandemic and are now struggling against high inflation, with skyrocketing electricity and natural gas prices.

Sanctions are getting harder to agree as they also inflict damage at home.

The last round of sanctions was announced on May 4 and took four weeks to gain bloc-wide approval as concerns over oil restrictions divided member countries.

In July, rather than impose fresh measures, the EU adopted a “maintenance and alignment” package that mostly closed loopholes on sanctions already agreed upon.

The actions ultimately agreed on this time are likely to be less ambitious than the commission’s recommendations and imposed only after much debate and hand-wringing among the 27 countries in coming weeks.