EU releases Ukraine loan and tightens Russia sanctions

On April 22, the European Union made progress on two long-blocked decisions at the same time: the release of a 90 billion euro loan for Ukraine and the adoption of the 20th sanctions package against Russia. Both projects had been delayed in recent months, primarily due to reservations from Hungary and Slovakia. There was only movement in the negotiations when Russian oil began flowing to Central Europe again via the Druzhba pipeline. The EU ambassadors in Brussels initiated a written procedure that gives the member states up to 24 hours to raise any objections. Cyprus, which currently holds the Council Presidency, stated that the procedure is expected to be completed on the afternoon of April 23. The vote was previously closely linked to the debate on the Druzhba pipeline. In Budapest and Bratislava, it was insisted that the oil supply must be secured again before both governments give their approval to the EU decisions. The political situation also changed after the change of government in Hungary. Prime Minister Péter Magyar made it clear that he would only agree to a deal if supplies were restored. This condition was met shortly before the vote. Slovakia also insisted on a practical solution for the oil supply. Foreign Minister Juraj Blanár stated that Bratislava was prepared to support the sanctions package as soon as Russian oil was physically supplied again. According to diplomats, both Hungary and Slovakia wanted to wait for actual confirmation of the oil flow before giving their final approval. 90 billion euros for Ukraine The loan is considered urgently necessary in Brussels because Ukraine will be reliant on additional financing in the coming months. The package, which was agreed in principle in December, will be disbursed in two tranches of 45 billion euros each in 2026 and 2027. Of this, 28 billion euros per year is earmarked for defense spending and 17 billion euros for general budget purposes. Together, the package is intended to cover around two thirds of Ukraine's financing requirements during this period. Hungary, Slovakia and the Czech Republic were granted exemptions from participating in the joint EU borrowing to finance the package. The debate on the loan has once again shown how different priorities have become within the EU. National interests are visibly playing a greater role in financial and sanctions policy issues than they did a few years ago. This not only affects Budapest and Bratislava, but increasingly also other member states, which are paying more attention to their own leeway when it comes to energy and economic policy decisions. The 20th sanctions package: ambitious but limited The 20th sanctions package was originally planned for February. However, its adoption was delayed for weeks because several member states expressed reservations about individual points. In addition to Hungary and Slovakia, Greece and Malta also played an important role, particularly with regard to the measures against the so-called shadow fleet of Russian oil tankers. The original plan was to ban all EU ships from working for Russia. However, this clause was removed from the draft during the negotiations. At the same time, certain regulations for the purchase of Russian oil were adjusted in light of the tense situation on the energy market. The package is officially regarded as one of the most far-reaching extensions to the European sanctions framework in years. In its final form, however, it is likely to have only a limited impact on Russian oil flows. The most important measure - a complete ban on services related to the maritime transportation of Russian oil and oil products - has been agreed in principle, but will only come into force if Brussels reaches an agreement with the G7. This reluctance reflects the concern that additional restrictions on Russian oil supplies could put further pressure on international energy markets. Without coordination with Washington, such a step seemed neither economically nor politically realistic in Brussels. Focus on LNG and maritime infrastructure New measures against the Russian LNG sector, particularly in the Arctic, will take effect immediately. The EU is thus closing a gap that had long remained open in the previous sanctions framework. While Russian oil has been largely taboo in the EU for years, liquefied natural gas has so far been largely excluded for practical supply reasons. Now stricter restrictions are to follow step by step. Officially, the EU wants to end imports of Russian LNG completely by the beginning of 2027. In practice, however, import volumes are currently continuing to rise, as Europe needs to secure its gas supply. From April 25, technical, financial and brokerage services in connection with Russian icebreakers and LNG tankers will be prohibited. In January 2026, the EU had already decided to ban imports of Russian LNG from short-term contracts. From January 1, 2027, the ban will also apply to foreign icebreakers and LNG tankers used in Russia's interest for the Arctic LNG 2 project operated by Novatek. A significant proportion of the special ships for Russian Arctic projects are owned or operated by European companies. Many of these ships are also maintained in European shipyards. The new service ban aims to break precisely this technical and logistical link. However, because the rules are being introduced gradually, there is still time to make adjustments. In addition, the EU prohibits the direct and indirect provision of terminal services for LNG projects in which Russian companies hold a stake of more than 50 percent. This also affects Novatek, which holds a 50.1 percent stake in Yamal LNG. Energy supply remains Europe's weak point It remains to be seen how Europe intends to fully compensate for the loss of Russian LNG volumes. Before 2022, Russia supplied around 140 billion cubic meters of natural gas to Europe every year. Today, pipeline deliveries have fallen significantly, but LNG imports from Russia reached a peak of around 20 billion cubic meters in 2025 for the period since 2022. These volumes correspond to around 14% of the EU's total gas imports. Together with the remaining pipeline deliveries, the Russian share of European gas imports is still around 12% - significantly less than before, but still relevant. The USA is now Europe's most important LNG supplier. Here too, however, there are questions about reliability, as Europe is competing with Asian buyers, who often pay higher prices, as supply becomes scarcer. Several tankers destined for Europe have already been diverted to other markets recently. Shadow fleet and financial sanctions Another focus of the package is action against individual ships. A further 46 ships have been placed on the EU's blacklist. This brings the number of ships on the list to more than 600, targeting those tankers that Russia uses to supply oil to Asian customers outside of the price cap mechanism. In addition, the direct sale and resale of tankers to Russian companies will be prohibited in future. Special clauses must now be included in corresponding contracts. In this way, the EU wants to prevent Russia from further expanding its fleet by purchasing older ships. In the financial sector, the EU has placed 120 natural and legal persons on the sanctions list, including 20 banks and financial intermediaries. Institutions accused of playing a role in circumventing sanctions are also included. Transaction bans also apply to the ports of Murmansk and Tuapse, several Russian refineries and the oil companies Bashneft and Slavneft. What is also striking is who is not on the list: Gazprombank remains excluded, although its role in EU gas trading has recently become smaller. Kyrgyzstan is specifically mentioned in the package. Additional export bans are to apply to its role in the transfer of sanctioned goods, including machine tools and telecommunications equipment. The package also extends the legal options for European companies to claim compensation in the EU if they have suffered economic disadvantages as a result of decisions made in third countries. In this way, Brussels wants to give Western companies more protection if their assets in Russia are affected. The next package is already in preparation Following the end of the blockade, Brussels is now expecting a more regular rhythm of new measures. According to EU foreign policy chief Kaja Kallas, the 21st sanctions package is already being prepared. However, the most important unresolved issue remains the ban on services for the transportation of marine oil. Whether and when it will actually be activated depends on the assessment of the G7 and the USA in particular. As long as the situation on the global energy markets remains tense and passage through the Strait of Hormuz is unsafe, Brussels is likely to remain cautious here. The post EU releases Ukraine loan and tightens Russia sanctions appeared first on ostwirtschaft.de.