EU Moves Ahead with New Penalties for Russia Despite Potential Talks

The European Union is moving forward with plans to implement another round of economic measures against Russia. This initiative proceeds even as there's a chance of direct negotiations this Thursday between Russia's leader, Vladimir Putin, and Ukraine's President, Volodymyr Zelenskyy, as reported by three sources in contact with CNBC.

Upcoming Sanctions Discussion

EU delegates representing the 27 nations are set to converge on Wednesday to deliberate over a new set of economic restrictions aimed at Russia. This will mark the 17th such package since the onset of Russia's comprehensive military operations in Ukraine.

This latest package proposes to cast a wider net over Russia's covert maritime operations exporting oil, which historically constitutes a major revenue stream for Moscow. Sanctions will also extend to entities and persons believed to assist in the war efforts. These proposed actions are still subject to modification in the upcoming days.

The package likely awaits final endorsement by Europe's foreign ministers in the forthcoming week.

Challenges and Consensus in the EU

An unnamed EU insider told CNBC that, until Monday, four countries within the union still had 'study reservations' concerning the measures. This implies ongoing consultations with their domestic authorities regarding the planned sanctions.

The same insider opined that though Hungary often plays an unpredictable role in EU decisions, the consensus on these sanctions seems nearly reached.

Hungary's spokesperson, Zoltán Kovács, during an exchange with CNBC on Tuesday, echoed Budapest's stance that sanctions might not yield desired results.

However, he indicated that provided the new measures don't impact Hungary’s energy supply, they would likely back the sanctions.

Historically critical of the EU's actions against Russia, Hungary has thus far sanctioned all previously proposed penalties.

The EU's rules require all members to consent to sanctions, which means unanimous approval is necessary. Hungary's leader, Viktor Orban, maintains close ties with Moscow, unlike most European government heads.

Overcoming Potential Obstacles

According to the Financial Times, the EU is contemplating strategies to bypass potential objections from Hungary on future measures against Russia. One strategy under consideration involves repositioning extensive portions of the sanctions, such as over 200 billion euros of immobilized Russian government assets, onto a different legal framework.

While the European Commission refrained from commenting on these reports, Kaja Kallas, the EU's chief diplomat, allegedly assured reporters that options exist if Hungary opts to wield its veto power.

A second EU official, also maintaining anonymity, confirmed discussions about managing the seized Russian assets without Hungarian interference have been ongoing among European nations for some time. These assets serve to financially support Ukraine.

A separate European official reiterated skepticism about Hungary's potential opposition to this new sanction package.

Impending Zelenskyy-Putin Dialogues

The initial EU source claimed work on the 17th installment of sanctions persists irrespective of forthcoming potential talks between Presidents Putin and Zelenskyy.

Ukraine's leader has publicly invited the Russian president to meet in Istanbul, with former U.S. President Donald Trump expressing an interest in attending to facilitate peace in the region.

At a recent briefing, Paula Pinho of the European Commission mentioned the EU is considering further sanctions if Russia refuses to implement a ceasefire agreement.