EU prepares new sanctions targeting Russia’s shadow fleet despite proposed Zelenskyy-Putin talks

LONDON — European countries are preparing new sanctions on Russia despite a potential direct meeting for peace talks between Kremlin leader Vladimir Putin and Ukrainian President Volodymyr Zelenskyy on Thursday, three sources told CNBC.

Ambassadors from the 27 EU member states are due to meet Wednesday to discuss what is likely to become the 17^th package of measures against the Russian economy since its full-scale invasion of Ukraine, the sources said.

The package includes sanctions on a wider list of vessels that make up Russia’s shadow fleet transporting Moscow’s oil barrels — historically the backbone of Russia’s revenues — as well as on individuals and companies that are deemed to be supporting the Kremlin’s war in Ukraine. The measures could still be altered over the coming days.

European foreign affairs ministers are expected to greenlight the new sanctions next week, the sources noted.

One EU official, who did not want to be named due to the sensitivity of discussions, told CNBC that, as of Monday, four member states still had “study reserves” on the list of measures — meaning they are still discussing the sanctions with their respective domestic administrations.

The same EU official said: “Though Hungary is always a wildcard, it seems pretty much a done deal.”

CNBC has reached out to the Kremlin for comment.

Speaking to CNBC on Tuesday, Hungary’s spokesperson Zoltán Kovács reiterated the general view in Budapest that “sanctions do not work.”

However, he signaled that, as long as the 17^th package of sanctions does not include measures that would impact Hungary’s energy sources, Budapest would likely have no issue approving it.

“We have always been sticking together with European colleagues,” he said.

Hungary has often criticized EU measures against Russia, but has so far approved all of the sanctions.

EU sanctions must be endorsed unanimously, according to the bloc’s policies. Hungary’s Prime Minister Viktor Orban has close ties with Moscow, in contrast to the majority of EU heads of state.

Separately, the Financial Times on Tuesday reported that the EU is preparing ways to overcome a potential veto, now or later, from Hungary on new measures toward Russia. One of the potential steps would be to move large portions of the sanctions, including 200 billion euros ($222 billion) in frozen Russian state assets, to a different legal basis.

The European Commission, the executive arm of the EU, told CNBC on Tuesday that it would not comment on this report.

The EU’s top diplomat, Kaja Kallas, who leads conversations within the EU on new sanctions on Russia, reportedly told reporters last week that the bloc has alternatives if Hungary decides to use its veto power, according to the Kyiv Independent.

A second EU official, who also did not want to be named due to the sensitivity of the topic, confirmed to CNBC on Tuesday that discussions have taken place among member states “for a while” on how to protect the frozen Russian assets as part of the broader measures against Moscow. The EU has been using the proceeds from these assets to support Ukraine financially.

A third source, who also chose to remain anonymous, told CNBC that the European Commission has been considering how to overcome potential vetoes from Hungary. The same official said it seems unlikely that Hungary would oppose the 17th package of sanctions.

The first EU official quoted above confirmed to CNBC that the work on the 17th package of sanctions takes place regardless of potential talks between Putin and Zelenskyy later this week.

The Ukrainian president challenged his Russian counterpart to meet in person in Istanbul on Thursday, with White House leader Donald Trump, who has been attempting to broker peace between the warring nations, on Monday saying he might also attend.

Paula Pinho, spokesperson for the European Commission, said at a briefing Tuesday that the EU is looking into further possible sanctions beyond the latest package in case Russia does not agree and hold a ceasefire.