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May 31, 2024, 4:10pm EDT
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Semafor Signals

EU looks to further damage Russia’s war chest

Insights from Bloomberg, S&P Global, and the Carnegie Endowment

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Annegret Hilse/File Photo/Reuters
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The News

European Union countries are proposing new methods to limit Russian exports, after two years of sanctions have failed to cripple the Kremlin’s war chest.

EU ministers announced “prohibitive” tariffs on Russian grain Thursday, and are considering further tariffs, Politico reported. Tariffs would allow Europe to cut Russian profits while evading Hungary’s sanctions veto, as import taxes do not require approval from every EU member.

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Several EU countries are also pushing for the bloc to speed up the phasing out of the last Russian energy imports of liquefied natural gas, oil, and material for nuclear power stations, Bloomberg reported.

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SIGNALS

Semafor Signals: Global insights on today's biggest stories.

Europe has struggled to cut off Russian gas imports

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Sources:  
Bloomberg, Euractiv, The New York Times, S&P Global

The EU has cut energy imports from Russia by 80% since 2022. But the continent’s imports of Russian LNG increased last year, Bloomberg reported. Deliveries of Russian LNG to Spain have doubled, and Austria’s dependence on Russian gas has also increased. While the EU has sanctioned Russian oil and coal, gas imports have not faced restrictions, although countries including Germany, Poland, Bulgaria, and the Czech Republic have all stopped or nearly stopped the flow of Russian gas. While Europe is taking steps to reduce its reliance on Moscow, “it will be hard to completely stop the flow of Russian LNG,” a gas trader told S&P Global.

Russia’s economy set to weaken, researchers say

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Sources:  
Center for Economic Policy Research, Bank of Finland, Carnegie Endowment

While Russian officials crowed that they successfully defied Western sanctions to grow their economy last year, experts believe that Moscow’s economy will inevitably face a downturn. “The economy is approximately at full capacity so that further increases in military production will likely be met with high inflation or decreases in the civilian economy,” a recent report from the Center for Economic Policy Research said. A March forecast from the Bank of Finland said that “Russian economic growth will decelerate this year.” Russia’s economic stability “may last a long time, but it is not eternal,” a former Russian central bank official wrote.

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