BRUSSELS — Russian oligarchs rejoice: You won’t have to say goodbye to your fancy BMW or Mercedes just yet.
Germany is opposing European Union efforts to close a loophole that allows high-end goods, including luxury cars, to reach Russia via Belarus, four EU diplomats told POLITICO.
Three of them said that France was also not on board.
The opposition from Berlin and Paris has led EU countries to weigh whether to split a 14th package of sanctions against Russia from similar measures against Belarus, three of the diplomats said, in order to have a deal in time for the annual G7 summit being held in Italy on June 13-15.
That would allow the EU to move ahead with major gas sanctions while kicking the fight over sanctions on Belarus down the road.
The EU hit Belarus with sanctions before Moscow invaded Ukraine, punishing Minsk over a fraudulent presidential election in 2020 that saw autocratic ruler Alexander Lukashenko claim victory and beat down peaceful protesters.
But the sanctions against Minsk aren’t as far-reaching as those since imposed against Moscow — enabling Belarus to become a way station for sanctioned goods to reach Russia. The two countries share a customs union and are closely integrated.
“If we take weak measures on Belarus while we know that goods arrive in Moscow via Minsk, it’s a bit ridiculous,” said one of the EU diplomats, who was granted anonymity like others interviewed for this story to talk about the confidential talks.
A top-of-the-range Mercedes limousine is the ultimate status symbol for any self-respecting Russian oligarch or apparatchik — with their blue light flashing, sirens blaring and accompanied by SUVs packing armed security guards they have long been a familiar sight on the streets of Moscow and other Russian cities.
President Vladimir Putin himself used to be driven around in an armored Mercedes Pullman before switching a few years ago to a Russian-made Aurus Senat.
“The principle is clear: Once a sanction is approved, all loopholes must be closed. When the export of luxury goods to Russia is prohibited, such goods must not reach Russia via third countries,” said Zsolt Darvas, a senior fellow at think tank Bruegel.
Imports surge
Imports of EU cars into Belarus grew last year to $2.6 billion, a more than fourfold increased compared to 2021, according to the German Economic Team, which advises countries including Ukraine and Kosovo on behalf of Germany’s Economy Ministry.
The researchers observed the highest relative increase in the luxury car sector, which accounted for two-thirds of the total increase in imports with a value of $1.4 billion. Given that the surge contradicts domestic car market developments in Belarus, it is “probably” linked to further reexport to Russia, they note.
A French diplomat stressed that Paris was in favor of “strong sanctions against countries that circumvent sanctions,” but said the focus should be “on goods that serve the Russian war effort.”
In a similar vein, a German diplomat emphasized that “Germany supports strong measures against sanctions circumvention, but that the focus should be on goods that are relevant to the Russian war of aggression.”
Opponents of luxury goods sales to Russia would counter that President Vladimir Putin wants to keep his elite on side — and his own position in the Kremlin secure — precisely by ensuring his top allies have gourmet foods and high-end cars.
European capitals are meanwhile close to agreeing on a ban on reexporting Russian liquefied natural gas — a historic first that could deprive Moscow of several billion in profits. France, Spain and Belgium have been major hubs for imports of Russian LNG, much of which is then reexported to countries including Germany and Italy.
But with Hungary a vocal opponent of energy-related sanctions and several other capitals wanting more details on the potential fallout, it remains unclear whether that part of the package will actually be agreed before next week’s G7 meeting — which had been floated as an unofficial deadline.
“If the three EU members of the G7 want to land in Puglia with a nice sanctions package in their bags, they will have to show some sense of consensus,” a fifth diplomat said.
Victor Jack contributed reporting. This story has been updated.