26 May 2023

...After largely playing solo in its opposition against Russian sanctions, Budapest is now getting support from Athens in its skepticism over the freshest measures against Russia, five EU diplomats told POLITICO.

The EU is currently discussing its 11th sanctions package against Russia after the start of Moscow’s full-scale invasion of Ukraine more than a year ago. Whereas the 10 previous sanctions packages focused on measures to empty Vladimir Putin’s war chest, Brussels now wants to avoid its sanctions being circumvented. In an unprecedented step for the bloc, the current package could target other countries helping Moscow dodge its trade embargo.

But Budapest and Athens have thrown a collective spanner in the works by linking their approval for the package to a separate thorny issue involving Ukraine. Kyiv has compiled a list of private companies it calls "war sponsors,” which includes a number of European companies. 

The odd couple wants some of their companies struck off this list before they will agree to the sanctions package. While these issues normally aren’t linked, Hungary and Greece are using the sanctions package as political leverage to get their companies off Ukraine’s list. 

This sparked tensions at a meeting of EU foreign ministers...where German Foreign Minister Annalena Baerbock directly criticized Hungary, according to diplomats familiar with the exchange...

“Greece reiterated that, should there be concrete evidence of violation of sanctions, these should be brought to the attention of the member states concerned, at the technical level, so that this be adequately investigated and then due action will be taken,” an EU diplomat familiar with the dossier said. “In the case of the Ukrainian name-and-shame list, the Greek companies are accused as International War Sponsors even though they are not violating the restrictive measures against Russia.”

Another EU diplomat said that while they empathized with the Greek position, “the question is how much does it damage [their economy], and Greece says it's very damaging. We don't have a problem with that position — but independently of that we of course want the next sanctions package."

Josep Borrell, the EU’s top diplomat, has already vowed to work through the differences on the Ukrainian list. Two of the diplomats said it is now up to him to work with the Ukrainians on a solution...

...Germany and others were again skeptical about naming and shaming other countries, as they are afraid it would hurt diplomatic relations or drive other countries suspected of facilitating sanctions busting into the arms of Russia or China...