20 November 2023 – The EU is negotiating new sanctions against Russia. The 12th package will now also include diamonds and probably also Russian aluminum. At the same time, forces in the EU are trying to negotiate exemptions for Russian steel. While the European Commission, at the behest of its own steel producers, is offending more and more allies instead of creating opportunities.
Steel and aluminum: 12th sanctions package against Russia
The European Commission is discussing its 12th package of sanctions against Russia, with measures that could impact European importers and disrupt the EU’s green agenda. The proposed sanctions focus on Russian military and information technology sectors and potentially include a ban on Russian aluminum products like wire rods and foil.
New sanctions a strategic shift?
Despite not yet being officially approved and facing dissent among EU member countries, these sanctions mark a strategic shift since February 2022. Critics warn that they might affect EU industries and consumers more than Russian exporters. For instance, aluminum wire rods from Russia, essential in renewable energy projects, represent a significant import for the EU, with major importers including Poland, Spain, and Italy.
Potential ban on aluminum imports
A potential ban on these imports could lead to price increases, reducing the competitiveness of EU manufacturers against global counterparts. Moreover, Russian aluminum wire rods are considered more environmentally friendly, and their exclusion could increase the EU’s carbon footprint, contrary to the aims of the European Green Deal.
EU Green Deal now the hot argument?
However, contrary to other reports, the EU Green Deal should not actually be the heavyweight among the arguments. After all, the biggest CO2 emitters in the EU still have a free pass when it comes to CO2 emissions, to the detriment of the environment, small and medium-sized enterprises and EU citizens.
And with allegedly up to 70% less CO2 emissions from Russian aluminum, the legitimate question arises as to why the world should continue to be forced to pay for the environmental sins of domestic steel, cement and aluminum producers at the EU’s external borders?
Steel: plugging sanctions loopholes instead of alienating allies
The Czech Republic, a major hub for automotive production with companies, heavily relies on steel for car manufacturing. Novolipetsk in Russia, a significant steel supplier to the Czech Republic, produces most of its steel products in Russia, with a substantial portion of its rolling operations in Europe, including Belgium, France, and Italy.
Facing rising energy costs and challenges in finding alternatives to Russian steel, the Czech Republic seeks to extend the transition period for banning imports of NLMK steel until 2028. This request, highlights the difficulty European companies face in substituting Russian steel products.
The automotive sector is crucial to the Czech economy, contributing about 10% to its GDP, one of the highest in the world.
Better to create opportunities than to close all gates
Why are there constant exceptions being made, especially when the EU steel industry reportedly has the world’s second-largest overcapacities? Instead of collaborating with allies, including those in Asia, why are they alienating them with unjustified and false claimed market protection proceedings, while their own steel industry struggles to fill the gap? What’s going wrong in Europe’s ruling houses?
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