Europe should do more to implement Russian sanctions, according to a leading European Commissioner speaking at the World Economic Forum annual meeting in Davos.
The continent is buying Russian gas at record rates and LNG volumes totalled 17.8 million tonnes last year, up two million tonnes year-on-year, which is funding Putin’s war on Ukraine.
Valdis Dombrovskis, Commissioner for Economy and Productivity, Implementation and Simplification, European Commission said, “Certainly domestic politics plays a role, and the dynamics are different in different EU states. To agree on sanctions, we need unanimity from all 27 EU member states. We must remember that Russia’s largest source of revenue is their energy exports. The G7 has introduced a Russian oil cap at $60 a barrel but we could and should do more. I would say overall, our sanctions are working.”
EU sanctions on Russia introduced last summer included a ban on the transshipment of Russian LNG to third countries but fell short of a full ban.
The US Department of the Treasury recently introduced new sanctions to reduce Russian energy revenues by blocking Gazprom Neft and Surgutneftegas, and imposing new measures to tackle the ‘shadow fleet’ of opaque operations and traders.
Read more: US imposes new sanctions on Russia and rolls out IRA and clean fuels credits
Dombrovskis was confident ‘ghost fleet’ ships are not entering European waters and more tankers have been added to the sanctions list.
Elisabeth Svantesson, Minister of Finance, Ministry of Finance in Sweden, said, “We are doing a lot and we will do more.”
She said Russian inflation was running at 20-22% and “much higher” than public figures suggest. “We can see from satellites that Moscow is much darker and using less electricity – so that might tell us that GDP might have gone even under zero.”
Tipped German leader backs gas and nuclear
Germany’s Leader of the Opposition Friedrich Merz – widely tipped to be the next German Chancellor at the upcoming election on February 23 – has cited energy as a key priority. Merz has identified the need to build 50 gas-fired power plants as quickly as possible, according to recent media reports.
Speaking at Davos, he said, “The Germany economy has been lagging behind its potential for years now, not just since 2021 when the running government came into office. In my view, manufacturing industry is key, it’s stiill one-quarter of our GDP. This is the backbone of our economy. Every day, every decision of my future government will only have one question: is it good for the competitiveness of this country?”
Turning to energy, he said energy prices remain a major issue. “We have the opportunity to pay some of the grid costs out of our Federal budget,” he said. “We made two mistakes, one was in 2011 to get out of nuclear, and the second big mistake, and this was terrible for our economy, was closing the last three nuclear plants in Apriil 2023 – this was crazy, a big mistake. We are open to new nuclear plants in terms of fourth and fifth generation, including fusion.”
He echoed the importance of collaboration, highlighted by European Commission President von der Leyen, in establishing relations with the new US government. “As soon as we are having a common European position, we are seen as a strong partner in Washington DC,” he said.
“Remember during the first Trump administration we had tariffs on steel and aluminium and the reponse from Europe was a common response to put tariffs on Levi jeans, whiskey and Harley Davidsons, and within six months the problem was resolved. Let’s work with him. He’s a deal maker, so let’s think about what we can give.”
