After several weeks of drawn-out negotiations mostly stalled by Hungary, EU leaders on Monday (30 May) struck a political compromise to ban seaborne imports of Russian oil by the end of the year, but fell short of a full embargo.
Under the compromise agreed by EU leaders, the partial embargo will include oil and petroleum products but will crucially allow a temporary exemption for crude delivered by pipeline.
“This immediately covers more than 2/3 of oil imports from Russia, cutting a huge source of financing for its war machine. Maximum pressure on Russia to end the war,” European Council President Charles Michel said.
EU ambassadors are expected to take the legal decision on Wednesday (1 June) to approve the oil embargo and the 6th Russia sanctions package, Michel told reporters after Monday’s talks.
European Commission President Ursula von der Leyen said the move “will effectively cut around 90% of oil imports from Russia to the EU by the end of the year” as Germany and Poland had committed to renouncing deliveries via a pipeline to their territory.
Since the start of Russia’s war on Ukraine, the EU has sent a total of €56.5 billion to Russia in return for fossil fuel supplies, with payments for oil reaching almost €30 billion being accounted for in crude oil supplies – money being used to fund Moscow’s invasion.
Nevertheless, the agreement falls short of the initial proposal by the European Commission, which envisioned banning all oil imports.
This was not agreed on due to fierce opposition from several EU countries, which heavily rely on supplies of Russian oil via pipelines.
Keeping pipelines out of any Russian oil embargo has been a key demand of Hungary, which feared a ban would put its economy at risk given its reliance on oil delivered by the Druzhba pipeline from Russia.
Landlocked Hungary, which imports 65% of its oil from Russia through the Druzhba pipeline continued to oppose the sanction long into Monday, and, along with Slovakia and the Czech Republic, have asked for an exception from the import ban.
Hungary’s blockage drew much criticism from other EU countries, particularly Poland, the Nordics and the Baltic States.
EU leaders did not agree on how long any exemptions of oil supplied via pipeline would last, with the final summit communiqué stating they would “revert to the issue of the temporary exception for crude oil delivered by pipeline as soon as possible”.
They are now expected to task EU diplomats and ministers with finding a solution that would also ensure fair competition between those still getting Russian oil and those being cut off.
Moreover, Hungary’s Prime Minister, Viktor Orban, had told reporters arriving at the summit in Brussels, that he would also seek guarantees that it could purchase oil by sea if Russian oil shipments stopped coming via the Druzhba pipeline, the country’s main source of crude imports.
“In case of sudden interruptions of supply, emergency measures will be introduced to ensure the security of supply,” EU leaders stated, in a veiled gesture towards Budapest’s concerns.
Germany and Poland, which could benefit from the pipeline exemption, have committed themselves to a de facto shutdown of the northern Druzhba pipeline by the end of the year, EU diplomats told reporters.
An EU official said the Czech Republic secured an 18-month long exemption from the ban to cover the resale of oil products.
Other measures proposed as part of the sixth sanctions package include the exclusion of the largest Russian bank, Sberbank, from the SWIFT international payment system, banning three further Russian state-owned broadcasters and listing individuals who have committed war crimes in Ukraine.
The final deal on the sixth sanctions package would need to be agreed upon by all 27 member states.
Shortly before the announcement, Ukrainian President Volodymyr Zelenskyy had called the EU too soft on Moscow when it appeared leaders would not reach an agreement on the oil ban.
“Why are you dependent on Russia, on their pressure, and not vice-versa? Russia must be dependent on you. Why can Russia still earn almost a billion euros a day by selling energy?” Zelenskyy asked EU leaders during his virtual address.
“Why are terrorist banks still working with Europe and the global financial system? Serious questions,” he added.
Several EU diplomats hinted that the seventh EU sanctions package could include the next steps towards a full oil ban and include pipeline-borne Russian oil.
Originally published on Euractiv.com