I mean... Just don't? What's Putler gonna do?

A guess is finding a proper and legal way to break contract is preferable for companies. An arbitrary breach of contract might make a company look unreliable, make it more difficult to sign any contract.

IANAL so I have no idea if they'd risk penalties as well.

If at all, the penalties would come from Russia and probably be monetary in nature. Just stop talking to them, they have no jurisdiction and I would be very surprised to see European officials enforce some kind of Russian penalty

Sue? The contracts are often with their own companies in the west and they, of course, have the full protection of the law. Break a contract, pay whatever the contract says about breaking it. And now the commission is trying to get laws in place that allow judges to rule that breaking such a contract is ok.

Just stop talking to them, they have no jurisdiction

If they try and claim there's no jurisdiction, the other party would likeky disagree. Especially if the contract has a provision that sets the jurisdiction and court response to resolve potential disputes.