The EU countries have agreed on a compromise in the dispute over the planned oil embargo against Russia. At Hungary’s insistence, only Russian oil deliveries by sea are to be stopped for the time being, as confirmed by EU Commission President Ursula von der Leyen on Tuesday night after consultations with the heads of state and government in Brussels. Pipeline transports will continue to be possible for the time being.
Chancellor Olaf Scholz (SPD) nevertheless spoke of drastic sanctions against Russia. According to von der Leyen, the EU’s oil imports from Russia will be reduced by around 90 percent by the end of the year, despite the exception for pipeline deliveries.
The background to this figure is that Germany and Poland have already made it clear that they do not want to benefit from the pipeline oil exemption. Like Hungary, the Czech Republic and Slovakia, both countries are connected to the only pipeline coming from Russia. In Germany, the line known as “Druschba” (friendship) has so far supplied the large East German refineries in Schwedt and Leuna. So far, a third of Russian oil imports have come via the Druzhba, and two thirds have been transported by sea.
For weeks before the breakthrough at the summit of heads of state and government in Brussels, Hungary had referred to its heavy dependence on Russian oil and blocked an agreement on an embargo. This was also relevant because it is part of an entire package of sanctions. This also provides for the exclusion of the largest Russian bank, Sberbank, from the Swift financial communications network. In addition, the state television news channel Russia 24 (Rossiya 24) and the state channels RTR Planeta and TV Center are to be banned in the EU.
After the basic political agreement on the package at the summit, the formal sanctions decision is to be launched on Wednesday. It must be taken by written procedure or by a Council of Ministers. It is also conceivable that there will be further delays because not all details have been negotiated at the summit.
It was initially unclear what concessions Hungary received apart from the exemption for pipeline oil. The right-wing national head of government Viktor Orban had demanded guarantees in the event that, for example, due to an attack, pipeline oil could no longer be delivered to Hungary. This is seen as a possible scenario in Hungary as the pipeline goes through Ukraine. A sentence was then added to the summit conclusions, which stipulates that in the event of sudden supply disruptions, “emergency measures will be taken to ensure security of supply”. Details initially remained open.
In addition, Hungary demanded financial commitments for the conversion of its oil infrastructure. The government in Budapest put the cost of converting refineries to non-Russian oil at up to 550 million euros. In addition, 200 million would have to be invested in order to supply the country in the future via a pipeline that begins on the Adriatic coast.
Shortly before the compromise was agreed, Ukrainian President Volodymyr Zelenskyy expressed his incomprehension about the EU’s hesitant approach to the new sanctions package. “Why can Russia still earn almost a billion euros a day selling energy?” Zelenskyy asked via video link.
According to estimates by the EU think tank Bruegel, until recently, EU countries spent around 450 million euros a day on oil from Russia, plus around 400 million euros a day on gas.
The Commission’s original proposal was to completely stop imports of Russian crude oil in six months and oil products in eight months because of the Ukraine war. Only Hungary and Slovakia should be given 20 months. Import restrictions on gas from Russia were not even proposed because they are currently considered unenforceable. Germany also rejects an embargo because it is still heavily dependent on Russian gas and fears an economic crisis if imports are stopped too quickly.
In addition to the compromise on the oil embargo, the heads of state and government agreed to provide Ukraine with further financial aid of up to nine billion euros by the end of the year. Ukraine should be able to use the money to cover running costs such as pension payments and the operation of hospitals.