Why EU’s fresh Russia sanctions remain elusive

Good morning and welcome to Europe Express.

After multiple rounds of talks with the European Commission, a series of fresh restrictions on Russia centred on the implementation of a G7 oil price cap is coalescing. But ambassadors are bracing themselves for another protracted fight with Hungary (and possibly Cyprus and Malta). We’ll bring you the latest on sanctions package number eight.

Over in the UK, banking authorities sought to stop the bleeding as the pound hit a record low against the dollar, but investors continued the heavy selling over concerns with the sustainability of public finances.

Meanwhile a report by the European Court of Auditors fished out bad practices when enforcing rules against illegal fishing.

And over in Switzerland, direct democracy is trying to reduce the country’s funding for guards in charge of the Pope’s security at the Vatican.

Cherchez l’Orbán

The European Commission is homing in on a new Russia sanctions package it hopes will garner member state approval this week, but once again Brussels is fearful Hungary may scupper any deal, writes Henry Foy in Brussels.

Confessional chats over the weekend with member state ambassadors gave the commission a decent idea of a possible landing zone for the next package, and whether or not a long-discussed, long-debated cap on the price of oil can be squeezed past a recalcitrant Budapest.

Signing off the cap is the central peg of the package, officials say, even if the key details are still being haggled over among the G7 states that originally proposed it. But the commission is confident that it can make it stick by tweaking language already agreed by the 27 on the oil embargo imposed in the sixth package of sanctions.

Other measures included in the package are likely to be support acts: a ban on imports of Russian diamonds for non-industrial purposes (Belgium’s sole voice of opposition be damned), a ban on imports of swaths of steel products, measures targeting Russia’s IT and cyber security industry, more restrictions on banks (though not Gazprombank), and more travel bans and asset freezes for senior officials and executives.

A ban on imports of Russian nuclear energy products and a moratorium on Russian citizens purchasing property in the EU, both proposed by Poland and the Baltic states, are seen as being too difficult to win unanimity (even if Germany also endorsed banning nuclear materials in an attempt to hit back at France’s moral high ground over gas).

An idea to impose sanctions on people who assist with sanctions evasion impressed the commission but is seen as too much of a legal minefield to implement (given it would take the EU into secondary sanctions territory). 

The commission is keen to get a deal done sooner rather than later, in response to Russia’s sham referendums in occupied territories of Ukraine that conclude today, and President Vladimir Putin’s escalatory speech threatening nuclear weapons. The UK moved new sanctions yesterday targeting people involved in those votes.

People taking part in the EU horse-trading reckon that a draft text could be put on the table for ambassadors to discuss as soon as tomorrow, with the aim of adopting it by the end of the week. But this calendar could easily slip if Hungary — and to some extent Cyprus and Malta — refuse to play ball.

Viktor Orbán did not sound like he was in any mood to compromise yesterday.

“We can safely say that as a result of the sanctions, European people have become poorer while Russia has not fallen to its knees,” he told his parliament. “This weapon has backfired: with the sanctions Europe has shot itself in the foot.”

“Europe is waiting for an answer from Brussels on how long we will keep doing this,” he added.

Au contraire: Brussels is waiting for an answer from him.

Chart du jour: Pipe dreams

Read Barney Jopson and Leila Abboud’s dive into the intricate pipeline politics between Spain and France and why Emmanuel Macron is cool on connecting the Iberian peninsula to the rest of the European gas network.

Fishy fishing, exposed

The EU needs to “tighten the net on illegal fishing”, the European Court of Auditors reported yesterday, proof that even accountants cannot resist a piscatorial pun. Eva Lindström, the ECA member that led the audit of EU action to combat illegal fishing, had a serious point to make. Enforcement of controls varies hugely between member states and there is a “risk that products from illegal fishing end up on our plates”, writes Andy Bounds in Brussels.

Just four member states (one of which, the UK, has left) accounted for 76 per cent of reports of illegal fishing by their fleets between 2015 and 2019. Almost half the total were from Italy, suggesting that coastguards searching boats for migrants might be discovering illegal fish, too. Greece and Spain were the others.

Many countries barely enforced checks on whether fish had been caught beyond a boat’s quota or from the wrong species or sizes, Lindström told journalists. And there is almost no attempt to enforce a ban on discards of unwanted fish at sea.

“There is a reluctance. This is not at the top of the internal political agenda,” she said.

Fines for infringements also vary widely, from an average of €200 in Cyprus and the Baltic states to €7,000 in Spain. The European Commission has launched legal cases over poor enforcement and drawn up action plans with 15 member states to improve their controls. They include Belgium, the Netherlands, Germany and Sweden.

The EU is also not detecting illegal imports well enough, the ECA found. The bloc accounts for a third of global fish products trade but fraudsters can go “control shopping”, using countries with the weakest checks.

The commission has created an online reporting system for imports catchily called . . . CATCH. But no government uses it, preferring paper- based methods. Brussels is now trying to make it compulsory but faces resistance from member states.

Let the Pope pay

For five centuries, Swiss guards have stood to attention at the Vatican. But in Switzerland, disquiet is brewing over the plan to help pay for an upgrade to their living quarters, writes Sam Jones in Zurich.

In a popular referendum on Sunday, residents of the canton of Lucerne voted overwhelmingly against plans to donate public money towards a SFr45mn ($45.3mn) renovation project at the Vatican for the guards’ barracks.

Around 110 Swiss guards currently protect the Pope and are resident in the Vatican precincts. All must be Swiss, Catholic, male and between the ages of 18 and 30.

Architects’ drawings show guardsmen — in their distinctive bright blue, red, orange and yellow striped uniforms — lounging around an airy Scandinavian-style space of huge glass windows and clean, minimalist lines, in a stark contrast to the cramped and somewhat dilapidated accommodation the guards currently endure.

The Swiss government, which opened its first embassy in the Vatican earlier this year, has said it will donate SFr5mn to the project, with 17 of the country’s 27 cantons also expected to contribute.

Lucerne’s ruling conservative coalition had proposed to send an extra SFr400,000 to help with the bill, citing the city’s long links to the Swiss Guard and the many Lucerners that have commanded it over the centuries.

But Lucerne’s residents have not been won over: earlier this year, an alliance of atheist and leftwing campaigners in Lucerne forced a referendum on the subject, and on Sunday the canton’s 416,000 citizens were more than clear on what they thought: 72 per cent of them objected to the plan to donate money.

Now, campaigners say they will try to force votes in other cantons too. “This result is a clear rejection of conservatism in the canton of Lucerne,” said local Social Democratic party president David Roth.

What to watch today

1. The European Commission and the Ukrainian central bank organise roundtable with financial providers on simplifying the flow of remittances to Ukraine

2. Nato secretary-general Jens Stoltenberg meets Socialists and Democrats in the European parliament

3. So-called referendums in Ukraine’s regions occupied by Russia end

Notable, Quotable

Inflation is a poison for democracies, history has shown that

• French measures: France’s finance minister has pledged additional aid for larger companies hit by high energy prices, just as the ECB’s Christine Lagarde told the European parliament that the eurozone was facing “unprecedented shocks”.

• Keep calm and run: The Kremlin has sought to calm anxiety in Russian society over President Vladimir Putin’s decision to mobilise the army’s reserves by denying reports it has decided to close the border or introduce martial law.