The EU is already preparing measures to cut off Russian oil | International
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Once the path of the first energy sanctions on Russia has been cleared, with the official approval this Friday of a total embargo on Russian coal, the European Union is already preparing measures to take the next step and close the tap on Russian oil, the true flow of euros —along with the gas— to the Kremlin’s coffers. The resistance of countries reluctant to go down that road, such as Hungary, Austria or Germany, is increasingly unsustainable in view of attacks such as the one at the Kramatorsk train station this Friday. But community sources fear that the deeper the sanctions go, the more complex it will be for the Twenty-seven to speak with one voice.
The Russian coal embargo has marked a before and after. Its volume may be symbolic, although according to a community source, it has been “a clear political signal” of the direction that the EU is going to follow, always depending on the events on the battlefield. Other diplomatic sources recall that this latest package of sanctions (the fifth) was tightened overnight when Bucha’s atrocities were discovered: in less than 48 hours it was decided to include the first energy retaliation, which seemed unthinkable just a few days before. .
Viktor Orbán’s Hungary, in tune with the Russian front and very dependent on its fuel, has already warned that it will make it difficult: oil and gas are thick red lines for Budapest. Germany, on the other hand, estimates that it will not be able to unhook from Russian crude before the end of this year. A possible solution on the table –according to a high-ranking community source– would be to explore a political agreement from which some countries can opt out based on their energy needs.
In Brussels, different options are being considered to give the blow in a limited way, indicate community sources. Among them: go towards a partial embargo; establish a tariff on Russian oil, so that this fuel becomes more expensive while stimulating the search for alternative sources; or even create a kind of trust in which to enter the sums that the EU pays to Russia for its fuel, an account to which the Kremlin does not have access and that would be released when Putin stops the war.
The EU foreign ministers will have the opportunity to take their temperature at the meeting this coming Monday in the community capital, as announced on Thursday by the head of European diplomacy, Josep Borrell. “I think it will be discussed on Monday in the Council of Foreign Ministers,” he said of an oil embargo. “And sooner or later, I hope soon, it will happen.”
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The EU imports oil from Russia worth 42,000 million euros per year, 10 times more than coal, according to figures from the Center For Research on Energy and Clean Air (CREA); this item accounts for 44% of the total EU energy imports from Russia. But it is very unevenly distributed: in Hungary, Russian crude flows account for 59% of the total oil consumed; in Finland, dependency reaches 80%; in Germany, the largest importer of Kremlin crude from the EU, it reaches 34%; in the Netherlands, another of the main destinations, it accounts for 24%, according to 2020 figures from Eurostat, the EU statistical office. The different weight of this fossil source, in the end, is reflected in the myriad of sensitivities around the table.
The president of the European Commission, Ursula von der Leyen, was the first to warn that the debate is already underway: when announcing this week the first energy sanctions on coal, she assured that the Community Executive was already working on more retaliation, “including the oil”. The clamor to touch this resource has been joined this week by the President of the European Council, Charles Michel, to the European Parliament, which has approved a resolution calling for “a total and immediate embargo on Russian imports of oil, coal, nuclear fuel and gas ”.
Although some capitals resist or try to delay the discussion, addressing it has become almost inevitable and the idea that sooner or later the greatest source of income of the Vladimir Putin regime will have to be cut off, albeit gradually or partial. The way in which it is done and the moment that is chosen to take the step will be central issues to be discussed. And the negotiations will largely depend on the evolution of the war and the images that arrive from Ukraine.
The embargo on coal, worth about 4,000 million euros, has been agreed thanks to time management: Germany, for example, did not see itself capable of eliminating its dependence before the end of the summer, while other countries, such as Poland, They demanded more speed. Finally, after two days of intense debate in Brussels, the capitals have agreed to implement the measure over the next four months (120 days). That is to say: on August 8 they should have full effect.
Sanctions are usually valid for between six and 12 months, renewable at the end of each period. Those imposed against Russia in 2014 after the annexation of Crimea have been renewed and are still in force. These reprisals have been joined by the new people, companies and sectors sanctioned since the start of the war on February 24.
Negotiating an oil embargo is not going to be easy. The complexity is technical and political. A diplomatic source argues that cutting off the flow of oil could even generate a disastrous boomerang effect on world oil markets – already greatly stressed – that would ultimately impoverish the EU and enrich Russia: by closing the tap on Russian oil, the distortion would boost global prices; Moscow could end up placing its oil elsewhere, such as India (at a higher price) and the EU, which would have to import from new countries, would end up paying more.
And it also remains to be seen how Moscow would react, which could respond to the oil embargo with a closure of its gas pipelines, which provide 40% of imports of this fuel to the EU. Russia has already brandished this threat at the dawn of the invasion, when Berlin decided to put approval of the Nord Stream 2 gas pipeline on hold. And the Kremlin is increasingly hemmed in by sanctions. This Thursday, the vice president of the Russian Security Council, Dmitry Medvedev, has described them “as an act of aggression against Russia and a form of hybrid warfare”.
The Commission, from the beginning, has defended a mantra: sanctions cannot cause more damage to the community bloc than they do to Russia. To try to dodge the blow to prices, Washington, which decided to ban imports of Russian oil and gas more than a month ago (the contribution of these fuels is residual in the United States), announced at the end of March that it intends to release 180 million barrels of oil from its reserves to reduce prices.
The International Energy Organization has joined its call, which reached an agreement last week to flood world markets with 120 million barrels of its reserves, an unprecedented initiative in the organization’s history (half of the crude oil will be contributed by United States).
A high-ranking community source assures that reaching a nuclear pact with Iran may also be key to encourage taking the step. Although both discussions are not linked, in Brussels, the debates often end up braiding. Ever since then-US President Donald Trump trashed the 2015 nuclear deal in 2018, the EU has been trying to wring out a new compromise. If achieved, the Twenty-seven could count on Tehran crude to replace part of the Russian. But this hypothesis is today far away: Moscow is one of the parties that have to seal the pact; and Washington, another of the firms, has yet to compromise with removing Iran’s Revolutionary Guard from its blacklist of terrorist groups, an essential point that Tehran demands, according to this community source.
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