Negotiations among European Union member state ambassadors in Brussels have collapsed after four days, failing to produce an agreement on a proposed 21st package of sanctions against Russia. The impasse, which requires unanimous support from all member states to be implemented, has exposed profound internal divisions within the bloc and cast a shadow over its multi-year strategy of supporting Ukraine. Five diplomats involved in the talks warned that governments' refusal to back measures that could harm their national corporate champions is pushing the entire sanctions regime toward a crisis of credibility.
This deadlock threatens to undermine a four-year strategy of aid for Kyiv. Diplomats noted that declining internal solidarity, waning resolve to support Kyiv, and a sense that a peace deal might be imminent have all eroded the EU's willingness to make difficult decisions. "The moral imperative is playing a smaller and smaller role at the table," one diplomat stated. "Governments are all aligned on the tough talk and the talk of solidarity, and then it just evaporates."
Multiple Nations Seek Exemptions, Risking 'Empty Shell' Sanctions
The latest proposed sanctions package includes measures targeting Russian exports and its financial system, alongside a mechanism designed to artificially depress the price of Russian crude oil exports. However, a series of countries including Greece, France, Italy, Germany, Austria, and Portugal have demanded exemptions from the Brussels-drafted plan or have outright blocked proposed measures.
Portugal and Germany have sought the removal of a ban on buying Russian fish, citing the need to support their domestic fish-processing industries. France and Italy want to water down a ban on issuing EU visas to Russian soldiers who served on the front lines. Austria reiterated a longstanding demand: the unfreezing of €2 billion in Russian assets to compensate Raiffeisen Bank for a fine imposed by Moscow.
"This is a major crisis for the entire sanctions strategy. If everyone asks for exemptions and looks for loopholes, then at the end of the process, every package will be an empty shell," the diplomat said.
Among all the exemption requests, Greece's stance is the most prominent. Athens has refused to agree to the entire package unless it is permitted to transport Russian liquefied natural gas to third countries. Greece argues that otherwise, it would deal a heavy blow to prominent Greek shipping magnate George Procopiou.
Data from analytics platform Kpler shows that since the full-scale escalation of the Russia-Ukraine conflict, Procopiou's Dynagas company has transported over 30 million tonnes of LNG from the Arctic Yamal project. Estimates by the Financial Times based on price data from pricing agency Argus value this cargo at over $24 billion; the vessel Fedor Litke alone carried cargo worth over $4 billion.
"Clearly, Greece is not the only EU government trying to shield its interests from the cost of sanctions, but it is unusual for a government to lobby for a single company that has profited so much from Russian business," a former US sanctions official said.
Greek government officials argue that any new EU sanctions should make Russia pay a price "significantly higher" than the cost to the European economy itself and must be "carefully calibrated" to maximize pressure on Moscow while minimizing unintended consequences. Greek diplomats also noted that shutting out Dynagas would only hand a "strategic advantage" to global competitors, allowing third-country players to gain market share at the EU's expense. The company has used 11 vessels to make 144 round trips between Russian LNG ports over the past 18 months. Several Greek politicians have described what they see as overly zealous sanctions as "shooting oneself in the foot."
If trade in Russian gas with third countries is not allowed, Dynagas could be forced to sell its ice-class fleet, designed specifically to transport LNG from Russia's Arctic Yamal plant, when the EU-wide ban on Russian gas comes into effect next January. The company stated it is bound by "stringent contractual commitments extending as far as 2065," signed "many years before the current conflict erupted." "A full ban on transporting Russian LNG to third countries could result in a self-inflicted wound for Europe in terms of maritime leadership, strategic ownership, employment, and influence, without achieving its intended geopolitical goals," the company said.
Sanctions 'Approaching Their Limits,' Divergent Threat Assessments Deepen
Since two days before President Putin launched his military campaign, the EU has imposed 20 rounds of sanctions aimed at draining resources for his war effort and forcing him to the negotiating table. Previous bans on imports of Russian fertilizer, steel, and diamonds, along with plans to phase out purchases of Russian hydrocarbons, involved weeks of heated debate and required diplomatic pressure on affected member states before unanimous approval. However, diplomats say the scale of rejection by member state governments for the latest proposals is unprecedented.
Jacob Kirkegaard, a senior fellow at the Brussels-based think tank Bruegel, stated that the EU has "approached the limits of what is possible on Russia sanctions." "We have now reached the end of the road, where people realise... the most core national interests are now at stake in the view of political leaders in the member states," he said. "Fundamentally, the situation we are in now is that leaders feel they can no longer be humiliated, coerced, or in any other way forced to give ground on these issues, so these core interests are effectively red lines."
In the initial months of the conflict, European companies like Danish brewer Carlsberg and Finnish energy group Fortum suffered billions in losses as sanctions were imposed and Russian corporate entities were seized. Countries whose national companies bore that brunt are growing increasingly frustrated with allies protecting their own corporate interests or unilaterally demanding solidarity from them.
"Some member states did not sever commercial ties with Russia in 2022 and 2023," a second diplomat said. "The uncomfortable truth for those governments is that we are now effectively going after these sectors because they are the last cash cows. The money is there... so we are going for the jugular," the diplomat added. "But these [ambassadors] are pointing fingers at each other, as if to say: 'We can't possibly give up our commercial interests; it is better that you give up some of yours.'"
The delay and potential weakening of the 21st sanctions package comes as Ukraine exerts significant military pressure on Russia through long-range strikes targeting Moscow and key refineries. Western officials hope Kyiv's backers can present a united front to force Putin to the peace table. In recent weeks, several European governments have also warned that Russia could launch hybrid attacks against NATO countries to test the alliance's cohesion.
But diplomats say the root of some EU countries' reluctance to support harsher measures lies in divergent assessments among member state governments about whether Russia poses a direct threat to them. "Unfortunately, the actual debate we are having here is about the threat assessment of Russia," a third diplomat said. "[Those reluctant countries] say they have national interests. Of course, that's fine. But the point is, [four years ago] for the Nordics or the Baltics, it was worth the price because they understood the threat so profoundly. But today, these other countries don't think it's worth it."
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