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G7 nations agree to coordinate tougher sanctions on Russia

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But Trump's view on more measures "the great unknown of

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situation" - EU sanctions chief

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China won't engage with EU on circumvention - EU sanctions

chief

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EU expected to list Chinese refineries

By Julia Payne

BRUSSELS, Oct 8 (Reuters) - Sanctions are clearly

hurting the Russian economy but U.S. President Donald Trump is

keeping his allies guessing whether he will sign off on more

measures, despite Washington being party to the G7's deal to

coordinate steps against the Kremlin, the EU's sanctions chief

told Reuters.

Last week the Group of Seven (G7) nations - the U.S., Japan,

Canada, Britain, France, Germany and Italy - agreed to

coordinate and intensify sanctions against Moscow over its war

in Ukraine by targeting countries that buy Russian oil and

thereby enable sanctions circumvention.

Those countries were not named but India, China, NATO-member

Turkey and others have significantly increased their Russian

crude purchases since Moscow invaded Ukraine in February 2022.

The U.S. has imposed an extra 25% tariff on imports from

India to pressure New Delhi to halt its purchases of discounted

Russian crude oil, bringing total punitive duties on Indian

goods to 50%.

But Washington made no such move towards other Russian crude

importers. It is also not clear if Washington would support any

further sanctions against the Kremlin.

"That's sort of the great unknown of the situation," EU

sanctions envoy David O'Sullivan told Reuters in an interview.

"There are signs he (Trump) is losing patience with

President Putin ... but whether that will lead him to conclude

that America should put additional sanctions on Russia is an

open question," he said, adding the U.S. needed to catch up to

the rest of the G7 on sanctions after its earlier focus on peace

between Russia and Ukraine.

For example, the EU, Britain, and Canada lowered the G7

price cap on Russian crude oil to $47.60 a barrel as of early

September from $60 previously, but the U.S. did not join, a move

O'Sullivan called "regrettable".

Trump has been pushing for tariffs on major importers of

Russian crude, but O'Sullivan said many countries in the EU, as

well as Canada and Britain, are "less convinced" they would work

and believe pressure on ports, the shadow fleet, and

refineries would be more effective.

Western powers want to capitalise on Russia's slowing economy by

cutting off more of Moscow's still significant revenues from oil

and gas.

O'Sullivan said he would welcome more U.S. pressure on EU

members Slovakia and Hungary to end their oil and pipeline gas

purchases - a sticky issue for the bloc. Meanwhile, the EU wants

to accelerate the phase-out of its Russian liquefied natural gas

(LNG) imports in its proposed 19th package of sanctions.

O'Sullivan said western sanctions against Russia were

clearly working. "All the indicators in the Russian economy are

flashing red," he said.

"All of this is indicative of the extent of the pressure

Russia is under as a result of our sanctions. But of course,

they are constantly creating new means of circumvention and new

ideas about how to get around these sanctions, and we have to

close those loopholes."

TOUGHER ON CHINA

With U.S. commitment to additional sanctions uncertain, the

EU is pursuing a parallel strategy by targeting Russia's key

enabler: China.

The EU, Ukraine and its allies view China as a central node

in Moscow's sanctions evasion network by facilitating the flow

of battlefield goods and advanced microelectronics used in

drones and missiles.

Efforts to engage Beijing have stalled as China denies doing

anything other than "normal trade" with Russia three years into

the Ukraine war.

"For example drones, which maybe are technically speaking

non-military until they're made military - but ... they don't

accept that this is circumvention," O'Sullivan said.

"We are slowly starting to address the issue of bad actors

in China."

Brussels began listing more significant entities in third

countries in its recent sanctions. Its 18th package added two

Chinese banks and India's second-largest refining complex while

the 19th package, which is still being negotiated, is expected

to list independent Chinese refineries and central Asian banks.

"We do see evidence that China is a platform for the import

and re-export to Russia of quite significant numbers of

battlefield goods ... We would infinitely prefer to have a more

constructive, systemic dialogue with China, but so far they seem

unwilling," he added.