As Europe Piles Sanctions on Russia, Some Sacred Cows Are Spared

BRUSSELS — Eight months into the war in Ukraine, and eight rounds of frantic negotiations later, Europe’s sanctions against Russia run hundreds of pages long and have in many places cut to the bone.

Since February, the European Union has named 1,236 people and 155 companies for sanctions, freezing their assets and blocking their access to the bloc. It has banned the trade of products in nearly 1,000 categories and hundreds of subcategories. It has put in place a near-total embargo on Russian oil. About one-third of the bloc’s exports to Russia by value and two-thirds of imports have been banned.

But even now some goods and sectors remain conspicuously exempted. A look at just a few items reveals the intense back-room bargaining and arm-twisting by some nations and by private industry to protect sectors they deem too valuable to give up — as well as the compromises the European Union has made to maintain consensus.

The Belgians have shielded trade in Russian diamonds. The Greeks ship Russian oil unimpeded. France and several other nations still import Russian uranium for nuclear power generation.

The net impact of these exemptions on the effectiveness of Europe’s penalties against Russia is hard to assess, but politically, they have allowed the 27 members of the bloc to pull together an otherwise vast sanctions regime with exceptional speed and unanimity.

“Ultimately, this is the price of unanimity to hold together this coalition, and in the grander scheme of things the sanctions are really working,” said Jacob Kirkegaard, a senior fellow in the Brussels office of the research group the German Marshall Fund, citing Russia’s diminished access to military technology as evidence.

“We would love to have everything included, diamonds and every other special interest hit, but I am of the opinion that, if sparing them is what it takes to keep everyone together, so be it,” he added.

The Ukrainian government has criticized some of the exemptions, with President Volodymyr Zelensky chiding European nations for continuing to permit business with Russia, saying they are skirting sacrifices.

“There are people for whom the diamonds sold in Antwerp are more important than the battle we are waging. Peace is worth much more than diamonds,” Mr. Zelensky said to the Belgian Parliament during an address by video link in late March.

Keeping Diamonds Coming

The continued success of Belgium and the broad diamond sector in keeping the Russian diamond trade flowing exemplifies the sacred cows some E.U. nations refuse to sacrifice, even as their peers accept pain to punish the Kremlin.

Exports of rough diamonds are very lucrative for Russia, and they flow to the Belgian port of Antwerp, a historically important diamond hub.

The trade, worth 1.8 billion euros a year — about $1.75 billion — has been shielded in consecutive rounds of the bloc’s sanctions, despite being raised as a possible target soon after the Russian invasion of Ukraine in late February.

The Belgian government has said that it has never asked the European Commission, the E.U. executive body that drafts the measures, to remove diamonds from any sanctions list and that if diamonds were added, it would go along.

Technically speaking, that may be true. But the latest round of penalties, adopted this month, exposed the intensive interventions when a coordination error occurred among the various services in the bloc that are involved in the technical preparation of sanctions.

The incident, described to The New York Times by several diplomats involved as “farcical,” shows how the lobbying works. The diplomats spoke anonymously in order to describe freely what happened.

The European Commission over the course of September prepared the latest round of sanctions and left diamonds off that list.

But the European External Action Service — the E.U.’s equivalent of a foreign service or state department, which works with the commission to prepare sanctions — did not get the memo that diamonds should remain exempted and included in its own draft listings Alrosa, the Russian state-owned diamonds company.

Once Alrosa had been put on the draft document, removing it became difficult. Spotting the error, Poland and other hard-line pro-Ukraine countries in the bloc dragged out the negotiations over the package as much as they could on the basis that Alrosa should indeed face sanctions.

In the end, the need for unanimity and speed prevailed, and Alrosa continues to export to the European Union, at least until the next round of sanctions is negotiated. In proposals for a fresh, ninth round of sanctions, presented by Poland and its allies last week, diamonds were again included, but formal talks on the new set of penalties have not yet begun.

A spokesman for the European External Action Service declined to comment, saying it does not comment on internal procedures involved in preparing sanctions.

Nuclear Power

Most exemptions have not been as clear-cut as diamonds because they have involved more complex industries or services, or affected more than one country.

Uranium exported from Russia for use in civil nuclear power production falls under this category. Nuclear power plants in France, Hungary, Slovakia, Finland and other countries depend on Russian civilian uranium exports.

The trade is worth 200 million euros, or about $194 million, according to Greenpeace, which has been lobbying for its ban. Germany and other E.U. countries have supported the calls to ban civilian nuclear imports from Russia, making this another issue likely to come up in the next round of sanctions talks.

In August, Mr. Zelensky also highlighted the persistent protection of the Russian nuclear exports to Europe just as Ukraine’s Zaporizhzhia nuclear power plant came under fire.

Some supporters of keeping Russian uranium running say that France and the other countries’ ability to generate electricity by operating their nuclear power plants during an acute energy crisis is more important than the political or financial gains that could come from a ban through E.U. sanctions, at least for now.

Tankers in the Night

One of the most complex and important lobbying efforts to protect a European industry from sanctions is the one mounted by Greek diplomats to allow Greek-owned tankers to transport Russian oil to non-European destinations.

This has facilitated one of the Kremlin’s biggest revenue streams. More than half of the vessels transporting Russia’s oil are Greek-owned, according to information aggregated from MarineTraffic, a shipping data platform.

Supporters of the Greek shipping industry say that if it pulled out of that business, others would step in to deliver Russian oil to places like India and China. Experts say lining up enough tankers to make up for a total Greek pullout would not be simple, considering the sheer size of Greek-interest fleets and their dominance in this trade.

According to European diplomats involved in the negotiations, their Greek counterparts were able to exempt Greek shipping companies from the oil embargo in a tough round of talks last May and June.

Since then, the E.U. has come around to a United States-led idea to keep facilitating the transport of Russian oil, in order to avert a global oil-market meltdown, but to do so at a capped price to limit Russia’s revenues.

The Greeks saw an opening: They would continue to transport Russian oil, but at the capped price. The bloc offered them additional concessions, and Greece agreed that the shipping of Russian oil would be banned if the price cap was not observed.

Even if the economic benefits of such exemptions are hard to define, from a political perspective, the continued protection of some goods and industries is creating bad blood among E.U. members.

Governments that have readily taken big hits through sanctions to support Ukraine, sacrificing revenues and jobs, are embittered that their partners in the bloc continue to doggedly protect their own interests.

The divisions deepen a sense of disconnect between those more hawkish pro-Ukraine E.U. nations nearer Ukraine and those farther away, although geographical proximity is far from the only determinant of countries’ attitudes toward the war.

And given that the bloc is a constant negotiating arena on many issues, some warn that what goes around eventually will come around.

“This may be a raw calculation of national interests, but it’s going to linger,” Mr. Kirkegaard said. “Whoever doesn’t contribute now through sacrifice, next time there’s a budget or some other debate, it’s going to come back and haunt them.”