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(Bloomberg) -- The European Union needs to discuss the option of raising joint debt to finance the heavy spending required to bolster its defenses against Russia, the bloc’s top diplomat Kaja Kallas said.
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“We have a clear crisis now that requires more spending in defense,” Kallas said in an interview Tuesday with Bloomberg Television’s Oliver Crook. “It’s wiser and cheaper for everybody to also raise capital together.”
With President-elect Donald Trump returning to the White House next week, the EU is trying to find ways to ramp up its defense spending to rearm the continent while also putting pressure on Russia to join possible peace talks over Ukraine.
“We have to put the political, economic pressure on Russia. We have a lot of economic might on our side,” said Kallas, who’s high representative for foreign affairs and security policy as well as vice-president of the European Commission.
One of the tools at the EU’s disposal is a cap on the price of Russian oil and Kallas argued that Ukraine’s allies should work toward lowering the cap to squeeze a key source of Kremlin revenue.
“I’m really pushing for this to be lowered because it has a clear effect,” Kallas said. “Russia is struggling because their national fund is depleted and they don’t get the same revenues that they did from oil and gas. But there is still room that we can use. Definitely countries need to discuss that.”
Group of Seven nations are exploring ways to toughen the price cap, Bloomberg reported last month. Options under consideration range from a full ban on handling Russian crude to lowering the price threshold from the current $60 to about $40.
A 16th EU sanctions package is in preparation, however, and officials are aiming to finalize it before the third anniversary of Russia’s full-scale invasion in February. A group of 10 EU nations is pushing to toughen sanctions against Russia by introducing further restrictions on natural gas and bolstering the enforcement of a price cap on oil, Bloomberg previously reported.
The EU, Kallas said, is “constantly working on new sanctions packages.”
It’s unclear how the incoming Trump administration will handle the war. With planners on Trump’s team floating several ideas, there is no blueprint for Ukraine that can be enacted after the Jan. 20 inauguration, European and Ukrainian officials said.
“A ceasefire needs to be wanted on both sides,” Kallas said. “Putin hasn’t had any wish for any kind of peace. He just wants to conquer Ukraine. Previous ceasefires we have had, Russia didn’t keep them, they just used the ceasefire to regroup rearm and come back stronger.”