(Brussels) Representatives of the EU-27 discussed a new proposal on Sunday that would temporarily exempt a key oil pipeline for Hungary from a gradual EU embargo on Russian oil, in a bid to lift the blockade on their 6e package of sanctions against Moscow, on the eve of a European summit in Brussels.
Posted at 2:18 p.m.
Updated at 3:23 p.m.
This proposal put forward by the European institutions and France, which holds the rotating presidency of the EU, provides for an embargo on Russian oil delivered by boat by the end of the year, excluding “for the moment” that sent via the Druzhba pipeline, which supplies Hungary, Slovakia and the Czech Republic in particular, it was indicated in the Commission’s entourage.
“The question of Druzhba will be addressed again quickly”, we assured a European source.
Hungary, a landlocked country without access to the sea, which depends for 65% of its consumption on oil transported from Russia by Druzhba, is opposed to an embargo on this pipeline and has rejected the first offer of a two-year derogation which was offered. Budapest has requested at least four years and nearly 800 million euros in European funding to adapt its refineries.
In a context where Budapest’s post-COVID-19 recovery plan remains blocked by Brussels due to breaches of the rule of law in Hungary, it would seem difficult to grant it European funds.
The new proposal submitted to the ambassadors of the member states was not agreed on Sunday, and a new meeting will take place on Monday morning before the opening of the summit scheduled for 4 p.m. (2 p.m. GMT), and which must end Tuesday at midday.
Equity
“It is a difficult and complex discussion which requires time, we are trying to find a solution to allow the adoption of the new sanctions. We may not find an agreement” before the summit, warned a European official.
The exemption notably poses a “problem of fairness” between states for their oil purchases, which has been raised by some of them, according to this source.
“I hope we can reach an agreement tomorrow, but I’m not sure, it will depend on the leaders themselves,” said a European diplomat. The adoption of sanctions requires the unanimity of the Twenty-Seven.
“By targeting oil transported by sea, we would hit at least 2/3 of Russian oil exports,” argued the European official. EU sanctions aim to cut off funding for Russia’s war effort against Ukraine.
For the EU, the Russian oil import bill ($109 billion) was four times larger than that of gas in 2021.
“A limited embargo that would exclude pipelines will be much less painful for Putin’s Russia, because finding new customers supplied by tankers is much less difficult”, points out however Thomas Pellerin-Carlin of the Jacques Delors Institute.
“Pebble in the shoe”, “elephant in the room”: the Europeans fear that the absence of agreement on these new sanctions will cast a shadow over the meeting of Heads of State and Government, and they have accelerated the consultations the last days.
Ukrainian President Volodymyr Zelensky is due to speak at the start of the summit via videoconference as Kyiv pressures Westerners to “kill Russian exports” after more than three months of offensive.
In addition to the oil embargo, the sanctions package also aims to exclude the largest Russian bank, Sberkank (37% of the market), and two other banking establishments from the international financial system Swift, as well as an expansion of the list black of the EU to about sixty personalities.
Leaders must also discuss the need to ensure Ukraine’s liquidity to keep its economy functioning (the Commission has proposed aid of up to $12 billion in 2022) as well as food security, in reason in particular of the blocking of Ukrainian cereal exports, while the African continent fears a crisis.
The reconstruction of Ukraine, for which the EU wants to play the leading role, will also be on the agenda. Kyiv recently assessed the extent of the destruction (roads, infrastructure) at 600 billion dollars.