Rewriting The Rulebook: How Brussels and Berlin Govern Past Their Own Limits

On 23 July 2026, the EU adopted its 21st sanctions package against Russia as part of its efforts in the war it is waging against Russia over its invasion of Ukraine. Measures in the package include a price cap on Russian oil of $44 per barrel, permission for member states to sell confiscated oil, and a visa ban for Russian combatants. This brings the cumulative total of sanctioned individuals and entities to a record 3,100.

The EU, however, finds itself in a quagmire, with member states increasingly signalling resistance to the sanctions, a move that has come back to bite European states. This is particularly the case for small- to medium-sized states, which are materially affected by higher energy costs. For instance, electricity prices in the EU averaged twice those in the US in 2025 and were nearly 50% higher than China’s for energy-intensive industries.

In fact, there is little evidence that the sanctions had the damaging economic impact they were intended to have. In February 2026, CREA found that only 33% of Russian crude was carried by G7+ tankers, while 56% was carried by sanctioned shadow vessels. This indicates the cap's ineffectiveness in constraining export volumes or preventing Russia from selling above the cap. The shadow fleet carries around 60-70% of Russian oil exports, up from zero before the war.

All this time, Europeans have been castrating themselves by cutting off cheap, reliable Russian energy as part of their efforts to signal their virtue in opposing the SMO. While Russian growth slowed to around 1% in 2025, down from 4.9% in 2024, this reflects the impact of its central bank's high-interest-rate policy rather than sanctions. Instead, the sanctions merely redirected most trade away from Europe, as evidenced in May 2026, when India increased Russian crude imports by 23% to 1.9 mb/d.

But this imposes greater economic constraints on Germany in particular, which is undergoing seismic deindustrialisation as it embraces Net Zero, while its car manufacturing sector is in rapid decline amid Volkswagen’s threats to close plants and large-scale job cuts, all as it increases military spending. Deloitte found that the EU holds a competitive advantage in only three of 22 internationally benchmarked areas. Draghi highlighted that Europe’s loss of its most important energy supplier, Russia, has led to gas prices being 4-5 times higher than in the US.

The economic self-harm and backfiring of sanctions on member states are also evident in China’s retaliation against the inclusion of 14 Chinese and Hong Kong firms on the sanctions list. Despite the sanctions affecting only small trading and logistics operators, China’s immediate and unprecedented response was to add 14 EU entities to its export control list, cutting them off from access to Chinese dual-use goods and certain rare earth elements. Beijing's targets included Rheinmetall, Czech Tatra Trucks and Poland's Vigo Photonics - firms in defence, drones, photonics and semiconductors. The asymmetrical response from China indicates the extent to which the sanctions will impact EU member states economically.

Resistance to the sanctions packages among member states persists despite Viktor Orban's departure in May 2026. This is significant, given that most diplomats expected the sanctions to be easier to implement, as it was his regime in Hungary that made the most noise against further sanctions. That said, six weeks after the Commission's June proposal, there was still no agreement among the 27 states.

Hungary and Slovakia have exercised vetoes, leading to over 2,700 individuals and entities being blocked from having their sanctions renewed after the March 15^th 2026 deadline. As a result, the EU has discussed mechanisms it could employ to circumvent the need for unanimity in sanctions it deems vital to implement to continue Project Ukraine. The difficulty the EU faces is that the requirement of unanimity for sanctions is enshrined in its treaties. A change to this would require unanimity, which has led the EU to propose alternative procedural ways to circumvent this obstacle.

The FT reports that one idea under consideration is to adopt individual sanctions at the national level, or smaller packages, to avoid delays caused when states disagree over aspects of the package. The European Commission and Ukraine's strongest allies have raised this idea within the bloc. Greece held up the 21st package under the unanimity rule until member states agreed to exempt the shipping company Dynagas, owned by billionaire George Prokopiou, from an October 2025 measure banning the transport of Russian LNG to non-EU countries from January 2027.

Understandably, Greek officials were concerned that a ban would hurt Dynagas rather than the Russian economy, while competing shipowners from China, for instance, would benefit from new trade opportunities. However, Greece’s capacity to veto the sanctions bill may not be long-lasting, as EU officials discuss potential mechanisms, such as majority voting, to ensure the EU’s will is imposed regardless of the qualms individual medium-sized states have about the damage sanctions inflict on their economies. 

Austria also blocked the 19^th package in October 2025 and the 21^st, demanding that Brussels remove the restriction on Rasperia. This is to enable a €2.3bn Strabag stake to pass to Raiffeisen to offset the €2.1bn in penalties ordered by the Russian court. Critics note that unanimity has become weaponised by states to advance national commercial interests at the expense of the EU’s broader objectives in Ukraine. For instance, Raiffeisen’s Russian unit made over $1bn in nine months of 2024 and paid €277m into the Russian budget. However, the EU’s decision to interpret the move as a foreign policy matter rather than an economic management issue, and to make the veto obsolete, suggests the EU is happy to rewrite the rulebook at the expense of listening to its member states, who feel that escalating tensions with Russia threaten their national interests. 

Bulgaria vetoed the inclusion of Patriarch Kirill, head of the Russian Orthodox Church, and of Lukoil founder Vagit Alekperov. Italy similarly supported the exclusion of Kirill from the sanctions after pressure from the Vatican. The veto followed the April 2026 landslide victory of Rumen Radev, Bulgaria's pro-Russian former president, who has argued that the war cannot be resolved on the battlefield and has criticised continued European military support for Kyiv. The emergence of democratic mandates opposing the war in Ukraine extends beyond Orban’s influence, making it more troubling for the EU, which is determined to use whatever tools are necessary to ensure these voices remain suppressed.

The EU, a political entity that concentrates power at the centre, is willing to do what it can to preserve the status quo on issues such as Ukraine and to resist nationalist populism. One way it has sought to do this is through Qualified Majority Voting (QMV). On 11th December 2025, EU governments used this voting method to approve the indefinite immobilisation of €210 billion in Russian sovereign assets. This would remain in effect until there is no immediate threat to the Union's economic interests, a criterion that is clearly open to interpretation and manipulation. The legal basis for this was Article 122 TFEU, under which the Council may adopt measures appropriate to the economic situation "in a spirit of solidarity between Member States".

The voting procedure departs from the conventional six-monthly unanimous rollovers, which would prevent Hungary or Slovakia from pursuing efforts to obfuscate the renewal of the frozen assets. In practice, QMV would require approval from at least 15 of the 27 member states, representing around 65% of the EU population. Article 122 was used during the COVID-19 pandemic to enact emergency measures and is now being repurposed for foreign policy purposes.

The Belgian PM Bart De Wever has directly questioned the legal basis: “Where is the emergency? There is an emergency in Ukraine. But Ukraine is not in the European Union.” While the Commission would argue that Russia poses a threat to Ukraine that affects the EU's finances and prosperity, invoking Article 122 raises concerns about the EU's democratic and constitutional integrity. Specifically, the EU centre can choose to change how its measures - that would historically have been implemented under the Common Foreign Security Policy and require unanimous six-month renewal - are passed by using QMV. This is a strategic legal manoeuvre that ensures that immobilisation and broader sanctions can continue without debate among member states.

Debate over freezing Russian assets is paramount, given that Euroclear's CEO, Valérie Urbain, warned that using the assets could destabilise the international financial system. Euroclear itself has an estimated €16–17bn immobilised in Russia, and Russia's central bank has sued it in a Moscow court over the loan plan.

Concerns about the EU’s anti-democratic use of QMV to circumvent resistance to Russian sanctions or the freezing of Russian assets are reflected in the efforts of Max Planck scholars Armin von Bogdandy and Dimitri Spieker, who have been developing legal options to overcome vetoes since early 2025. They argue that when member states breach the EU’s solidarity principle, a veto, such as unanimity, may be deemed not legally required if the EU's peace or values are in jeopardy. 

Germany has shown similar disdain for democratic conventions in plans it has allegedly drawn up, specifically by Merz, to stop what the Telegraph characterised as pro-Kremlin traitor states from obstructing the deployment of NATO troops. Moreover, the Telegraph’s joint investigation with Die Welt found that the Merz government is laying out mechanisms to override state governments' decision-making powers in a crisis, such as a war with Russia. Given Germany's federal constitutional setup, its 16 states have powerful regional administrations, and it has been described as the roundabout of NATO. 

This circumvention of Germany’s constitutional safeguards comes at a time when Merz recognises an apparent inadequacy in the existing emergency laws, which require a two-thirds majority in the Bundestag to declare a state of tension. The Merz Coalition would need support from either Die Linke or the AfD to achieve this, which he has ruled out. Unable to meet the two-thirds threshold, Merz is more than happy to pivot around the democratic rulebook, just as the EU has done with Article 122.

This is relevant because if the AfD wins two upcoming elections on 6 and 20 September 2026 in Saxony-Anhalt and Mecklenburg-Vorpommern, it would gain control of internal security, the police, and administration in those regions. Infratest places the AfD at 41% in Saxony-Anhalt, while the CDU is at 24%, putting an absolute majority within reach, though that outcome depends on whether the SPD, Greens, FDP and BSW are below the 5% threshold. In Mecklenburg-Vorpommern, meanwhile, the AfD is at 36% in the polls, seven points ahead of the SPD. 

Given the AfD’s aversion to war and support for de-escalating tensions with Russia, it could seek to obstruct troop and equipment movements by resorting to bureaucratic procedures, such as denying the military priority access to local roads. For example, Defence Minister Boris Pistorius suggested that AfD-linked state officials be prevented from accessing intelligence briefings due to their alleged ties with Russia. 

Like the EU, Germany would rather drop the democratic façade than risk reneging on its commitment to Project Ukraine. Even if NATO officials have intelligence that Putin may use political allies to obstruct a response to an attack on the eastern flank, meddling with the constitution to protect a policy that manufactures adversaries rather than seeking to consolidate peace is a recipe for disaster and undermines the credibility of the liberal democratic credentials it proclaims to hold dear.

Image: Wikimedia Commons/Europinion Union (2026)

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