US, EU discuss Russia sanctions ahead of Ukraine war's second anniversary

By Daphne Psaledakis and Gabriela Baczynska

WASHINGTON/BRUSSELS (Reuters) - The U.S., EU and other partners discussed Russia sanctions at a meeting in Brussels this week ahead of the two year anniversary of the war in Ukraine, which a senior U.S. official said Washington and its allies are prepared to mark with "robust" sanctions.

"Many of us are prepared to roll out quite robust anniversary packages," the official told Reuters, but declined to provide details. Russia invaded Ukraine on Feb. 24, 2022.

The new sanctions would come as the U.S. and its allies look to maintain pressure on Russia with U.S. military aid to Ukraine increasingly in doubt. President Joe Biden's administration has run out of money for Kyiv and a request for additional funds is languishing in the Republican-controlled House of Representatives.

While details of packages marking the anniversary of Russia's invasion - which has killed or wounded tens of thousands and reduced Ukrainian cities to rubble - were not the primary focus of the Brussels meeting, the official said the U.S. and its partners have packages planned.

Washington reiterated its commitment to enforce existing measures and coordinate on new actions at the sanctions coordinators forum with EU, UK and Ukrainian officials in Brussels, the official said.

The partners discussed the impact of measures imposed so far by the U.S., UK, EU and others, including on Russia's military industrial base and economy, as well as challenges and recommendations, said the official.

The official added that U.S. action going forward will include countering sanctions evasion as Washington seeks to curtail Russia's access to battlefield goods and revenue.

Separately, in Brussels on Wednesday EU envoys of the bloc's 27 member countries held a first discussion of what would be its 13th package of sanctions against Russia since the start of the war in Ukraine.

"All delegations expressed their support to the proposed package, except one who requested a bit more time to analyze the content of the proposals," said an EU official, pointing to Hungary.

There would be no new industry imports ban under the proposal, which now requires approval of all EU capitals. The official said, however, the new EU sanctions would blacklist almost 200 people and entities.

The U.S. anniversary sanctions package could include action against Russian state-owned institutions, people and companies, as well as the targeting of additional sectors in Russia's economy, said John Smith, former Director of the U.S. Treasury Department’s Office of Foreign Assets Control.

"It's likely that you will see a significant number of names of individuals and entities - likely over 100 - that are added to the sanctions list as the anniversary arrives," he said, adding Washington could also decide to use an executive order issued in December to target foreign financial institutions.

A Western source on Tuesday said the coalition that has imposed sanctions on Moscow needs to go further. That should include shutting down loopholes, targeting circumvention routes, driving Russia revenues further down and tightening oil price cap implementation – including action against the shadow fleet of tankers moving Russian oil.

"As we approach a sobering second anniversary of Russia's invasion of Ukraine, our next round of actions will serve as a clear signal that we continue to stand firm and are determined to go further," the source said.

The U.S. and its partners have imposed multiple waves of sanctions on Moscow since the invasion, including on banks, oligarchs and the Russian military.

"What that sanctioning coalition has done over the last two years have been pretty extraordinary," the western source said, adding it has denied Russia access to about $400 billion and degraded its military, among other factors.

Smith said the sanctions have had mixed results. On one hand, they have successfully limited Russia's access to cash and to U.S. and western technology. On the other, the war has continued and Russia is still able to access a significant amount of U.S. and third-country goods and services.

"The Russia sanctions program is both an extraordinary success and an extraordinary failure, depending upon one's point of view," said Smith.

(Reporting by Daphne Psaledakis in Washington and Gabriela Baczynska in Brussels; Editing by Don Durfee and Lincoln Feast.)