Russia: Europe poised to punish Russia with oil embargo

European Union leaders are poised to endorse an embargo on Russian oil after weeks of intensive talks, the bloc’s most far-reaching effort to punish Moscow for its invasion of Ukraine by depriving the Kremlin of a key stream of revenue and accelerating Europe’s independence from Russian fuel.To reach the proposed compromise at a summit in Brussels, however, negotiators were forced to capitulate to Hungary’s demand that it be practically indefinitely exempted from the measure.The exemption would barely dent the impact of the new sanctions on Russia: Given Hungary’s small size, its continued purchase of Russian oil offers little financial benefit for the Kremlin. medium91905573 But politically, it offered the most definitive sign yet that Hungary has peeled away from the EU in meaningful ways when it comes to Russia, with which it maintains close political links.After weeks of often fraught negotiations, the agreement will ban all Russian oil transported to the EU by tankers, while permitting pipeline delivery of crude oil. That would constitute an outright ban on two-thirds of all oil imported into the EU from Russia, based on the draft agreement that leaders were set to adopt Monday and which was seen by The New York Times.Russia is the world’s third-largest exporter of oil, and EU member states were spending around $23 billion per month on Russian crude since the war started and oil prices surged.While the move would likely deal the Kremlin a significant financial blow, it would come at a heavy economic cost for Europe, which depends heavily on Russian fossil fuels. The EU gets about 27% of its crude oil imports from Russia and a higher share of its oil products, paying billions of dollars a month. medium91905626Diplomats directly involved in the talks said that Germany, which receives Russian oil by pipeline, said it would verbally commit to cutting that off by the end of 2022. Slovakia and the Czech Republic were also expected to offer verbal assurances that they would shut down the supply via pipeline on an expedited timeline.The EU originally had proposed banning all Russian oil by the end of the year but giving Hungary, Slovakia and the Czech Republic a longer period of time to comply given their higher dependence on Russian oil.Hungary, however, would offer no such assurances. And the legal text of the sanctions would not include a so-called sunset clause, namely a date by which Hungary would need to comply with the embargo, diplomats said, scrapping a previous plan to give the country until the end of 2024. medium91905668Arriving at the summit, Prime Minister Viktor Orban of Hungary, who had insisted that an oil embargo would be like an “atomic bomb” for his country’s economy, lashed out against the EU in saying that there was “no agreement at all”. But he then went on to say that exempting oil arriving by pipeline “is not bad”.“It’s a good approach,” he told reporters, responding to questions on whether he was Russian President Vladimir Putin’s “puppet” by saying that was “fake news”.Orban has long been a spoiler within the EU’s ranks when it comes to Russia, and he maintains a warm relationship with Putin.The draft prepared for the leaders’ meeting in Brussels also did not mention a binding timeline for the piped oil to be phased out, noting only that the EU “agrees that the sixth package of sanctions against Russia will cover crude oil, as well as petroleum products, delivered from Russia into member states, with a temporary exception for crude oil delivered by pipeline”. medium91905703The work of fine-tuning and finalising the legal parameters will fall to negotiators.The president of the European Commission, Ursula von der Leyen, whose experts are key drivers of the sanctions-drafting process, said that the technical work would take a bit longer.“I have not too high expectations that we are going to solve it in the next 48 hours,” she said as she arrived at the summit on May 30. “My call is very clearly on the member states. The key to success was and is solidarity with Ukraine and unity of the European Union,” she added. medium91905359Europe wants cheap Russian oil too, but via India medium91905371