The EU remains reluctant to use the most effective economic weapon against Russia: an import ban on Russian oil and gas. The discussion about a European embargo on Russian energy supplies is not over: on the Tuesday after Easter, for example, French Finance and Economy Minister Bruno Le Maire called for an oil embargo.
However, the European Commission, which is currently working on a sixth sanctions package, does not currently see sufficient support from EU member states for a full embargo on Russian oil and gas. This also applies to alternative sanctions, such as a punitive tariff on Russian oil and gas supplies, EU foreign policy representative Josep Borrell said in an interview with WELT and other European media.
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“A stop on oil and gas imports or a punitive tariff would be important to put pressure on Putin and bring him to the negotiating table,” Borrell said. “But at the moment we in the EU do not have a unified position on this issue.” The topic will be discussed again at the next EU summit and the discussion will continue until then. However, the aforementioned summit will only take place in five weeks, on the 30th and 31st of May. Apparently, the EU’s top diplomat does not expect any decisions beforehand.
Some EU countries are resolutely opposed to import bans. Germany and Austria, which source much of their natural gas from Russia, have spoken out strongly against stopping oil and gas supplies until they find sufficient alternative sources of supply. The mantra of the German federal government, but also of the Austrian federal government is: Dependence on Russian energy supplies must be reduced – but in a way that does not harm the affected EU countries any more than Russia.
Borrell frustrated with member states
Hungary has categorically ruled out an import ban. The newly re-elected prime minister, Viktor Orbán, is close to Russian President Vladimir Putin and has only half-heartedly supported the EU’s other sanctions against Russia. Immediately after his re-election, he called Putin. Orbán recently stated that he would veto any form of energy embargo; such a move would “kill” Hungary.
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This is frustrating for Borrell. “Some member states have said very clearly that they would not support an embargo or punitive tariff on Russian oil or gas. This means that we still don’t have unanimity in the EU to decide on an embargo or a tariff at this point,” said the Spanish politician. “So a final proposal for an oil and gas embargo is not yet on the table.” that there is consensus among the capitals on the next measures.
In principle, an oil embargo is more likely than a gas import ban because it is easier for EU countries to find alternative suppliers. Many producers around the world can increase their production, at least in the medium term. In addition, a lot of oil already arrives on ships in the EU, while most of the gas flows through pipelines. This makes the infrastructure more flexible.
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The example of Germany shows how quickly new oil suppliers can be found: the Federal Republic obtains a third of its oil from Russia and is therefore more dependent on Russia in this area than most other EU countries. However, the federal government has declared that it intends to stop using Russian oil by the end of the year. If supplies are guaranteed, she could agree to an oil embargo.
Hurt Russia without harming other countries
The US government, of all people, had warned of a European oil embargo on Thursday. “In the medium term, Europe obviously needs to reduce its energy dependence on Russia. But we have to be careful when we talk about a full European embargo on things like oil,” US Treasury Secretary Janet Yellen told reporters at the International Monetary Fund’s annual meeting.
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It’s about hurting Russia, but an EU oil embargo “would clearly raise oil prices around the world and hurt Europe and other parts of the world.”
Following Commission President Ursula von der Leyen’s visit to Ukraine, the EU Commission is working hard to stop Russian energy exports to Europe. Von der Leyen wants to make a proposal for a sixth package of sanctions on member states this week. It should also deal with oil – though not with an immediate total ban on imports, but with other measures.
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Several alternatives are currently being discussed in Brussels. Italy’s Prime Minister Mario Draghi has repeatedly proposed a price cap as an alternative to oil and gas sanctions. Oil customers in EU countries would be forced to pay less for Russian oil than Russia is asking.
When it comes to gas, agreeing to an embargo is harder
Leading economists also advocate a punitive tariff on Russian oil and gas. There is also talk of giving Russia only part of the money for oil and gas supplies and putting the other part in an escrow account, where it will be frozen until Moscow ends the war. It is also possible to sanction only certain types of oil that are particularly easy to replace.
In the case of gas, agreeing to an embargo is often much more difficult because it takes longer to develop alternative sources. EU countries are in the process of becoming independent from Russian gas in full force, Borrell said. “The whole EU is in crisis mode. Every time I call a foreign minister from a member country and ask where he is in the world, they reply that they are buying gas. They are in the Middle East, in Congo, in Algeria, anywhere in the world, buying gas there.”
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The EU’s chief diplomat assumes that other member countries will announce new agreements with alternative suppliers in the coming days. Late last week, the Dutch government announced that the country would be independent from Russian gas and oil by the end of the year. However, this is easier for the Netherlands than for Germany, for example: in the Netherlands, which has gas reserves, Russian supplies represent only 15% of the natural gas consumed. For comparison: in Germany it is 55 percent.
“The EU has already drastically reduced its dependence on Russian energy supplies in just a few weeks, and Putin will soon realize that financially,” Borrell said. “We need sufficient alternative sources of gas supply if we are to do without Russian gas. At some point that will happen, and then Russia will painfully feel that the revenues from the oil and gas business will be lost.”
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The EU’s chief diplomat also admits that EU countries and the Union itself were very naive towards Vladimir Putin. “Europe has recognized too late how dangerous Putin is,” Borrell said. “We should have reduced our dependence on Russian oil and gas much sooner, and it can be rightly criticized that we didn’t.” When Putin annexed Crimea from Ukraine in 2014, Europeans and others reacted by having to look for energy providers.
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