The European Union (EU) has announced plans to ban Russian oil by the end of the year (2022) as part of a six-package of sanctions in response to the country’s invasion on Ukraine.
European Commission President, Ursula von der Leyen, while addressing the bloc’s parliament in Strasbourg, intimated that member states will cease to purchase oil supplies within six months, and associated refined products from Russia by the end of 2022.
In Mrs. von der Leyen’s proposal, she said“This will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined. It will not be easy. Some member states are strongly dependent on Russian oil. But we simply have to work on it.” She continued to say that “Putin must pay a price, a high price, for his brutal aggression”, she said to applause across the parliament’s chamber. The Kremlin responded by saying it was evaluating its options.
The sanctions are yet to be formally approved by the 27 national governments, but could be vetoed by countries that deeply rely on supplies from Russia (such as Hungary and Slovakia), without any form of exemption conditions and energy security guarantees agreed upon.
Hungary and Slovakia Could Veto EU’s Decision
The EU’s move followed a similar measure announced by Britain in early March 2022, but the UK relies far less on oil and oil products from Russia than many EU member states.
Hungary and Slovakia already threatened to veto any outright ban before the announcement though they are to be given until the end of 2023 to eliminate Russian oil. While the EU uses around 26% of Russian supplies, Slovakia secures over 90% of its oil source from Russia. In addition, the majority of Hungary’s oil is also sourced from Russia.
Germany, which was initially reluctant to support such measures, has managed to pull its share of Russian oil imports down to 25% from 35% and signalled that it could now cope with an embargo. However, the country’s economy minister admitted on Wednesday, May 4, 2022, that there are no guarantees that supplies across the region would not face disruption, with EU countries likely to face higher prices in their quest to replace Russian outputs.
A Skeptical Move for Hungary
Hungary however remains sceptical and could yet bring down the pending agreement. According to Hungary’s Secretary of State for Public Diplomacy and Relations, Zoltan Kovacs, “We do not see any plans or guarantees on how a transition could be managed based on the current proposals, and how Hungary’s energy security would be guaranteed”.
What About Gas Imports?
By far, there has been no announcement from the Commission on any measures targeting gas imports. But Mrs. von der Leyen said there would be new sanctions to outlaw Russian broadcasters RTR-Planeta and R24 and target banks, including Sberbank. She said Russia’s largest lender and two others would be added to the list of those excluded from the SWIFT financial messaging system. Additionally, more high-ranking Russian military officials will face asset freezes and travel bans, without revealing their names.
Simone Tagliapietra, a Senior Researcher at the Bruegel, an economic think-tank, disclosed that the energy strategy by the EU is dangerous, in that, it risks adding to Europe’s existing inflation problem.
“In the short term, it might leave Russian revenues high while implying negative consequences for the EU and the global economy in terms of higher prices, not to mention retaliation risks (by Russia) on natural gas supplies.”
Simone Tagliapietra – Senior Researcher at the Bruegel think-tank
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