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going after any energy sector in particular LNG is important it really makes it hard for the leading company in Russia novatech to to figure out its business model behind the surface of this we're seeing that there is a cumulative effect of sanctions the European Union has agreed on a 14th set of sanctions against Russia focused for the first time on liquefied natural gas or LNG at present Russia accounts for around 16% of the eu's LNG Imports with France Spain and Belgium the main buyers the new sanctions will not prevent member states from buying Russian LNG but it will ban them from re-exporting it to other countries to break this all down for us I'm joining Now by Maria shagina she's a senior research fellow for economic sanctions at The International Institute for strategic studies Maria great to have you along maybe you can give us some context on this what countries does the EU currently reexport Russian lng2 and how significant a quantity are we talking about yes correct so we're talking about the now 14 package sanctions from the EU it was slightly delayed because of some oppositions from Germany on certain Provisions there but why is it important these days well because people were talking about sanctions fatigue and that any next sanctions package will not be possible yet V in into the LNG sector is actually quite a big deal because uh EU has been dependent on Imports of L from the US Norway and Russia as you said it doesn't really ban a supply of LNG to Europe directly but it really makes it hard for the leading company in Russia novatech to to figure out its business model because it really need to revamp its Supply chains it really relies on EU ports to send its LNG to third countries in the global South including China and India so that provision a trans shipment band on uh LG will make it harder uh to to do so in the next months you talked about the infrastructure aspect but in terms of quantity the reexport of LNG to the likes of China and India is not very great in volume is it will this actually hurt the Russian economy in any meaningful way if you expect some final blow on the Russian economy the sanctions package is not going to do the trick right so we have secondary sanctions from the US which have much more impact so this the this sanctions package as the previous one are about tightening of the existing restrictions um going after any energy sector in particular LNG is important but it's not going to collapse the Russian economy it it's not going to make it uh completely impossible to to do so and mainly this measure is looking forward so this is making sure that novatech will struggle to expand its LG supplies and build new LG plants so the impact will probably kick in um in a couple of years not really the um months to to look at okay and these sanctions aren't just about LNG though are they so right ing on X European commission president OA ferine said that they will also quote further deny Russia access to key Technologies how will they do that exactly absolutely Battlefield items have been really the key Focus From the European Union making sure that dual good use like chips semiconductors navigation equipment doesn't end up on the battlefield in Ukraine has been high on the agenda there is a lot homework that needs to be done in particular on the enforcement side and the 14 sanctions package addresses some of the issues as it expands they do Ed good list that still hasn't been included but there is one provision that has been halted by Germany and that is expansion of the so-called no Russia Clause that means that EU operators EU companies would have to step up their due diligence on part of export controls and to make sure that no of this critical items end up in Russia now a lot of these items are being rerooted bya third countries which makes it really hard for EU companies uh to track the end use of this technology so from Germany's perspective it's important to keep it narrow uh because they don't want the companies which are usually small and middle siiz companies to to be on the the wrong side here and to be subject to uh EU fines now you can say that this is hard for for Germany because it would affect the the pillar of its economy but ultimately if we talk about the improving the enforcement of sanctions that is really a weak spot in the current sanctions regime a lot of Western technology is being rerooted via China and then being rerooted to to Russia as the end point so Germany is on board now what kind of fudge has been made for that to happen so the the final expansion of this no Russia Clause has been delayed it's still been kept narrow to only military goods that means the the broader definition of dual use Goods which can include Electronics or Machinery something that a lot of German exporters are dealing with has been postponed to the next round of sanctions now we know that there are many Goods still entering Russia from the EU through secur circuitous routs as you mentioned that are very difficult to trace what power do EU authorities now actually have to stop this from happening I think the power on this would come from the US with the threat of secondary sanctions that what expanded a couple of weeks ago and here it's important to um to look at financial institutions they have become the key pillar of making sure that exper controls are being enforced in a more robust way so the US has expanded the definition of Russia's military industrial sector and it will U threaten with secondary sanctions any foreign financial institutions that is facilitating uh transactions with Russia's industrial sector now that means sparbank or vtb any civilian entity would be subject to that so making sure that um no one is dealing with Russia's industrial sector and procuring this technology this this threat is actually more powerful coming from the US than from the EU now we're used to countries like Hungary objecting to tough sanctions against Russia but the fact that it was Germany this time came as a bit of a surprise how did the other member states react to Germany's stance in these negotiations well indeed Germany has been known for its reluctant or rather wary approach to any expansion of sanctions not just this time uh we know that the energy sector initially was uh something that Germany opposed because of the fears of how much would impact its economy with Hungary they they object economic sanctions against Russia on principle with Germany at least the explanation from the chancell that they were really um worried that this would negatively impact their economy making sure that there are no higher cost on Germany than on Russia was really on their mind so tweaking the sanctions package uh at least in the next round of sanctions will be the the way to to go about it and to expand them further but I think this is uh sore point for many Baltic and Baltic states in Poland where Germany is opposing and thinking about its economy first rather than making sure the sanctions are more impactful on Russia yeah and these sanctions also add a few dozen entities and individuals to an EU Blacklist that already numbers well over 2,000 how much difference do these addition make it's all incremental right it's not going to be this final blow on the Russian economy um so it's again making sure that any loopholes within the existing framework of sanctions do not exist making sure the enforcement is more water tied than we have seen so far this incremental approach has its value but it also shows that Russia has been rather successful in adapting it because Western governments give Russia time with this incremental approach to find new Supply chains to find new buyers so after two years of economic Warfare the the results of sanctions have been mixed yes they have disrupted quite a bit on the Russian economy initially but Russia has been rather successful in adapting it looking at the macroeconomic picture might not be the the right uh focus and might not be the the right attention to pay to and this is something that Kremlin wants you to look at that its macroeconomic picture is rather stable and resilient behind the surface of this we're seeing that there is a cumulative effect of sanctions so we have to give them time to unfold but also making sure that inforcement is not as um as poor as it has been up till now you've talked about how the Russian economy has adapted to these sanctions Russia has found new buyers for its oil and gas won't the same just happen with its LG know since it doesn't ban it so we can't say it's going to be the same measure uh but finding alternative to EU ports will be really difficult because novatech really doesn't have technology to build its own LG vessels which means it used to purchase them from countries like South Korea it has one route which would um deprive them from any EU Nexus um uh and that is via the Northern sea route but going shipping lngg via the Northern sea route is really complicated during winter season um so they they would have a way out of it and they wouldn't be affected by the trans shipment band but only during summer times but uh the whole business model has been relying up till now on re-exporting LNG by European ports because they don't have technology and don't have LNG vessels uh of their own okay so this could hit in the winter I do want to ask you though this is the 14th set of sanctions does it make strategic sense to approach these things in such a peacemeal incremental way that does indeed pose a question about the strategy of Western sanctions and whether we could have been more agile and swifter with some of the packages and also with the severity of them um as I mentioned before the whole strategy has been relied on the idea that we shouldn't harm ourselves Western economies more than we heard Russia and that poses the question how resilient have we been to um to the economic Warfare have we been prepared to to wage it against Russia and the energy sector has been the probably the weakest one up until now the the change in strategy comes with the escalation of secondary sanctions which could change change the track how Russia acts with third countries including Chinese Banks which can be deterred from procuring either um uh energy from Russia or Battlefield items but it does indeed pose a question whether we could have been more swifter with our measures um after 2022 finally if you were tasked with designing a 15th set of sanctions what kind of measures would you include I think the the key pillars are the same that is tightening sanctions around the energy sector and that is looking not so much at l& but at oil we have the price cap which has been working to a certain extent but also Russia has been successful in um bypassing it with building its own uh Shadow Fleet and also using its own insurance so lowering the price cap is one measure that has to be included um up to 50 or even $40 per borrow would be much more effective than we have now which is60 dollars per barel targeting vessels as part of Russia's Shadow Fleet going after them as much as possible would also deplete Russia's capabilities to to bypass it and then uh finally looking at Battlefield items um making sure that it's Western companies who who know and understand their own Supply chains whether their critical items end up in Russia uh using the foreign financial institutions uh to really stop the flow would really make a big difference here all right Maria shagina thank you so much for speaking with us thank you so much for having me