BRUSSELS - European Commission President Ursula von der Leyen on Wednesday proposed fresh sanctions against Russia over its war against Ukraine, including further trade restrictions, individual blacklistings and an oil price cap for third countries.

The proposal will now go to the bloc's 27 member countries, which will need to overcome differences on the new sanctions and reach unanimity to implement them.

That may take time despite the EU being spurred into action by Russia's partial military mobilisation, nuclear threats to the West and moving to annex a swath of Ukraine.

"We do not accept the sham referenda nor any kind of annexation in Ukraine. And we are determined to make the Kremlin pay the price for this further escalation," Ms von der Leyen told reporters.

"We are proposing a new package of biting sanctions against Russia."

The announcement came after Russia announced a partial mobilisation and staged widely condemned referendums on annexation in Ukrainian territory it’s occupying.

The United States is working with allies and partners to quickly impose severe economic costs on Moscow over the “sham” referendums held by Russia in occupied regions of Ukraine, according to prepared remarks from the US State Department’s head of sanctions coordination on Wednesday.  

Mr James O’Brien, in remarks to the Senate Foreign Relations Committee, said he expects that the Biden administration’s pace of announcing sanctions on Russia on average every six weeks will continue, as Washington continues to focus on chokepoints in the Russian economy and its military supply chains. 

“There will be more packages. We are working on more sanctions,” Mr O’Brien told the committee.  “Everything is on the table,” he said, adding that Washington would look to the financial sector and high technology, especially for energy exploitation and human rights violators.  

Moscow was poised on Wednesday to annex a swath of Ukraine, releasing what it called vote tallies showing support in four partially-occupied provinces to join Russia, after what Kyiv and the West denounced as illegal sham referendums held at gunpoint.  

Russian-backed authorities claim to have carried out the referendums over five days on territory that makes up around 15 per cent of Ukraine.  

The United States has imposed several tranches of sanctions targeting Moscow following Russia’s invasion of Ukraine in February, which has reduced cities to rubble and killed or wounded thousands.  

“Arguably what you’re doing is more important than what’s happening on the battlefield. The kinds of things that you’re doing are the ones that are going to bring Russia to heel,” said Senator James Risch, the top Republican on the committee, of Washington’s sanctions on Moscow.

The EU is proposing to sanction a range of individuals and entities, including senior Russian ministry officials and individuals involved in staging the recent referendums, the bloc’s top diplomat Josep Borrell said, speaking next to Ms von der Leyen.

“With the illegal referenda organised by Russia, the Kremlin is following the same playbook that we have already seen in Georgia in 2008 and Crimea in 2014,” he said in a statement, adding they were violations of international law and the principles of the United Nations charter.

Earlier on Wednesday, a senior economic adviser to Ukrainian President Volodymyr Zelensky called on the EU to further cut money flows to Russia from fossil fuel sales.

The G-7 group of industrialised countries - where EU countries Italy, France and Germany are also members - already agreed to put such an oil price cap in place via insurers.

"If you are doing nothing it means you are just prolonging this war with Ukraine, this is just ridiculous, the whole civilised world has to be united on that," Mr Oleg Ustenko told reporters.

While the EU already agreed to stop importing Russian oil starting later this year, Ustenko said the "blood money" would keep on flowing to Moscow unless European companies are banned from insuring seaborne shipments.

Unanimity

EU countries need unanimity to impose sanctions and Hungary - where Prime Minister Viktor Orban cultivates close ties with Russian President Vladimir Putin – has been their loudest critic inside the bloc, which is split on the oil price cap.

Mr Ustenko hoped Hungary would eventually change tack, and that EU countries with large shipping fleet – Greece, Malta and Cyprus – would also be on board with further measures hitting Russian oil revenues.

Ms von der Leyen said a new imports ban would cost Russia  €7 billion (S$9.7 billion) in lost revenues and that the bloc would also expand the list of prohibited exports “to deprive the Kremlin’s war machine of key technologies”.

Under the proposal, European companies would be barred from providing more services to Russia and European citizens would not be allowed to sit on boards of Russian state companies.

The Commission was due to present details of the proposal to EU member states at a closed-door meeting later on Wednesday and the 27 were expected to have a first discussion on Friday. REUTERS, BLOOMBERG