The Smartest EU Sanction on Russia
In the face of Russia's aggression in Ukraine, Europe’s leaders have been scrambling to devise “smart sanctions” – measures that inflict maximum pain on Russia and minimal pain on the EU. A tariff on gas imports from Russia has a lot to recommend it.
FLORENCE – As Russian forces continue to shell civilian areas of Ukraine indiscriminately, the question of whether the European Union – or individual member states – should ban gas imports from Russia is becoming increasingly urgent. While the United States has already taken that step, a ban in Europe – which purchased nearly three-quarters of Russia’s natural-gas exports last year – would do far more damage to Putin’s war effort.
But a ban on Russian gas imports would also carry very severe short-run economic consequences for Europe, to the point that it might not be sustainable. Fortunately, there is another way, which would minimize economic disruption in the EU: the bloc can introduce an import tariff on Russian gas.
In normal times, such a tariff would violate World Trade Organization rules. But, given Russia’s aggression, the EU could invoke the national-security exemption contained in Article XXI of the General Agreement on Tariffs and Trade. Moreover, Russia has long imposed a 30% export tax on gas. The EU can claim that its import tariff simply compensates for this distortion.