Key Points
- The EU and U.S. are working together to soften sanctions.
- Putin’s decision to relax rules offers some flexibility.
- Countries like Hungary and Turkey are pursuing sanctions waivers.
The United States and the European Union are collaborating to lessen the effects of sanctions without sacrificing their united front against Moscow.
EU and U.S. collaborate to reduce impact on energy trade
Since the U.S. imposed sanctions last month, Gazprombank, a major participant in Russian natural gas transactions, has taken centre stage in both geopolitical and energy strategy.
President Vladimir Putin’s decision to remove the rule that foreign buyers only use Gazprombank offers some flexibility, but it hasn’t done much to address the EU’s logistical and legal issues.
The main topic of discussion right now is whether payments can be made via other channels or a Gazprombank subsidiary located in Luxembourg. The stakes are high because, although Europe’s reliance on Russian pipeline gas has decreased dramatically, from over 40% of imports in 2021 to just 8% last year, Russia still supplies almost 15% of the EU’s total pipeline and LNG requirements.
At 30% and 19%, respectively, Norway and the United States have become Europe’s leading suppliers. Banks that handle petrol payments are still on the lookout for any slip-up that can breach penalties.
Hungary and Slovakia are in especially vulnerable situations. In an effort to safeguard its energy future, Hungary has even asked the United States to lift its sanctions.
Banks, countries seek alternatives amid ongoing sanctions concerns
Along with talking with Russian officials on the future of energy commerce and payments, Turkey is also seeking a waiver of U.S. sanctions to keep using the bank for energy imports from Russia.
In what it described as “another major step in implementing commitments made by G7 leaders to curtail Russia’s use of the international financial system to further its war against Ukraine,” the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Gazprombank last month.
