EU proposes ‘complete ban’ on Russian oil imports within six to eight months

To minimise the impact on the economy and society, von der Leyen said the Russian oil phase out will be implemented “in an orderly fashion” in a way that allows securing alternative supply routes. [© European Union 2022 - Source : EP]

Updated with reactions

European Commission President Ursula von der Leyen unveiled the sixth package of sanctions against Russia on Wednesday (4 May), including a “complete ban on all Russian oil” and refined petroleum products within the next six months and more sanctions against banks.

“Today, we will propose to ban all Russian oil from Europe,” von der Leyen said in a much-awaited speech in front of the European Parliament in Strasbourg.

“This will be a complete import ban on all Russian oil – seaborne and pipeline, crude and refined,” she said, announcing the sixth round of EU sanctions to punish Russia for its invasion of Ukraine.

Oil prices rose immediately after the announcement, which also includes cutting Russia’s largest bank, Sberbank, from the SWIFT financial messaging system.

The president of the European Commission admitted that the ban “will not be easy” to implement “because some member states are strongly dependent on Russian oil.”

“But we simply have to do it,” she added, saying the measures will deprive the Russian economy of funds used to wage war, diversify and modernise.

To minimise the impact on the economy and society, von der Leyen said the Russian oil phase-out would be implemented “in an orderly fashion” in a way that allows for securing alternative supply routes.

“And this is why we will phase out supply of Russian crude oil within six months and refined products by the end of the year,” she added, saying this will maximise the pressure on Russia while minimising the collateral damage to the European economy.

Ambassadors from the EU’s 27 member states will hold the first exchange of views today to examine the proposal, which needs unanimous approval from EU countries before it can be passed. EU leaders will hold a special summit in Brussels on 30-31 May, where the package of sanctions is expected to be formally approved.

The full text of the proposal will be unveiled later today. In a document seen by AFP, von der Leyen’s proposal asked that Hungary and Slovakia, both hugely dependent on Russian oil, be given more time to meet the ban.

Slovakia, which like Hungary, is almost 100% dependent for fuel on Russian crude coming through the Druzbha pipeline, has said it will need several years.

The new sanctions package became possible after Berlin dropped its opposition, with Vice-Chancellor Robert Habeck telling EU ministers on Monday that “Germany is not against an oil ban on Russia”.

At 555,000 barrels per day, Germany imported 35% of its crude oil from Russia in 2021 but recently reduced it to 12%, the German economy ministry said on Sunday.

EU may offer Hungary, Slovakia exemptions from Russian oil embargo

The European Commission may spare Hungary and Slovakia from an embargo on buying Russian oil, now under preparation, wary of the two countries’ dependence on Russian crude, two EU officials said on Monday (2 May).

Parliament reactions focused on social, economic consequences

Reactions in the European Parliament were broadly supportive but focused on the necessity to deal with the economic consequences.

Esther de Lange, a Dutch MEP from von der Leyen’s same political family, the centre-right European People’s Party (EPP), backed the EU’s new sanctions on Russia, saying the immediate priority was to act against “Putin’s barbaric war” in Ukraine.

“But that being said, we should also talk about the economic consequences here and our capacity to act” by preserving a strong industrial base in Europe, she added, saying this was key to maintain Europe’s unity.

Addressing von der Leyen directly, de Lange said: “We badly need an analysis of the cumulative effect of the war – the rising energy prices, the shortages in raw materials, and new legislation on the table,” which she said risked having dire consequences on EU businesses and families struggling to pay their heating bills.

“To be very honest, we are asking a lot from our industries. And don’t get me wrong, the EPP wants to achieve the objectives of the ‘Fit for 55’ package and the climate law. But we may have to look at a legislative embargo for new legislation to make sure that we are not burdening certain industries” with “the cumulative effect” of higher energy prices, new climate legislation, and new regulations in areas like chemicals, she said.

Speaking on behalf of the Socialists and Democrats (S&D), Iratxe García Pérez said the next step in sanctions “has to be cutting off gas and oil” with renewed efforts to diversify gas supplies and fight climate change.

But “beating Putin” does not mean leaving EU countries on their own to phase out Russian oil and gas, she added, calling for greater solidarity between European countries to face the consequences of the war – for example, when dealing with refugees.

To address the social impacts of the ban, she also called on EU countries to tax the windfall profits made by energy companies since the start of the war. “While big energy companies make a lot of money, it’s the most vulnerable people that are suffering the consequences of this war,” she said.

Luis Garicano, a Spanish MEP from the centrist Renew Europe group, welcomed the EU’s proposed oil import ban but said this fell “far short” of a European Parliament resolution adopted last month, which called for “an immediate full embargo on oil, coal and gas” from Russia.

“While the debate goes on, the EU has sent to Russia €50 billion on energy imports since the war started – four times more than our aid to Ukraine. By the time the oil embargo is executed, Russia will have received over €100 billion more in revenue,” said Garicano, who hails from the Spanish Ciudadanos party.

“We are now in the worst of both worlds,” he stressed, saying Putin is currently receiving higher revenues from oil sales while consumers suffer from higher prices.

A more efficient way to punish Moscow, he continued, is to impose a tariff on Russian energy imports and use the revenues to compensate poor households for rising energy prices.

“A tariff on Russian energy would allow us to shift some of the extra revenues from higher gas prices to us – the consumers – from the Russian producers,” he said, adding this will at the same time “collapse Russian revenues, incentivise substitution, protect consumers, and even increase EU resources”.

Businesses and NGOs

Outside Parliament, reactions were broadly supportive as well.

Greenpeace, the environmental pressure group, hailed the oil ban as “a significant step towards deflating Putin’s war chest,” saying it was “long overdue”.

However, it believes the embargo will take effect too slowly and allow Russia the time to find new customers for its oil before the end of the year.

“The answer to Europe’s oil addiction cannot be to simply find new suppliers, but to get to the root of the problem by cutting oil consumption and accelerating the transition to renewable energy,” Greenpeace said in a statement.

VDMA, the German association of mechanical engineering, also applauded the move and said it should even come sooner. “The planned gradual introduction by the end of the year is not ambitious enough. If the sources of revenue for Putin’s war machine are to be effectively hit, the embargo must take effect much more quickly,” said VDM, which represents more than 3,400 small German firms.

Although the oil embargo will hit the machinery and plant engineering sector, VDMA said it sees “no alternative to a further tightening of sanctions” against Russia and called for the sanctions to be “as clearly defined as possible so that companies affected have the necessary legal certainty.”

EXPLAINER: Why the EU may find it tough to squeeze out Russian oil

The European Union has proposed a phased embargo of Russian oil but may find it tricky to implement, given Europe’s complex distribution network and challenges in tracking crude once it is blended or refined.

[Edited by Alice Taylor]

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