European unity against Russia tested as oil embargo talks continue

European Union diplomats failed to reach a consensus Sunday on the terms of an embargo, but held further talks on Monday ahead of a summit of EU leaders in Brussels later in the day.

Coming to the summit, German Chancellor Olaf Scholz said he believed there was a desire to reach a consensus, but European Commission President Ursula von der Leyen warned it was unlikely an agreement is reached before the end of the meeting on Tuesday.

Officials first proposed joining the United States and others in banning Russian oil a month ago as part of a sixth EU sanctions package over the country’s invasion of Ukraine. But a deal has been blocked by some countries, such as Hungary, which are particularly dependent on Russian crude delivered by pipeline.
EU leaders could agree to ban all Russian oil by the end of this year, but grant a temporary exemption for pipeline imports, according to draft conclusions from the summit seen by Reuters. An EU official told CNN the ban on all oil transported by sea would cover more than two-thirds of imports from Russia.

“One thing is clear, if you decide to act as a group, you always have to take into account the specific situations of all countries. We have done this in the past and we will do it in the future,” said Scholz, when asked about possible exemptions for Hungary and others.

“Our strength comes from our ability to solve our problems together, and therefore to act together against Russian aggression against Ukraine.”

Europe is the biggest buyer of Russian energy. Russian crude accounted for 27% of the bloc’s imports in 2021, according to Eurostat. That’s about 2.4 million barrels per day, according to data from the International Energy Agency. About 35% of that was delivered via pipelines to the block, according to the IEA.

But pipeline deliveries accounted for a much larger share of Russian oil shipments to Hungary (86%), the Czech Republic (97%) and Slovakia (100%).

Hungarian Prime Minister Viktor Orban said on Monday that an embargo that excluded pipeline imports was a “good approach”, but warned that a back-up plan was needed if oil deliveries failed due to an accident.

Earlier this month, Hungarian Foreign Minister Péter Szijjártó compared EU proposals for a complete ban on Russian oil to an “atomic bomb” for his country’s economy. His government has previously said it would take a minimum of three to five years to stop all imports.

Care must be taken, however, that any exemption does not unfairly benefit some countries over others, the top EU diplomat told CNN.

“We have to be very careful in the text of legal sanctions, that we preserve the [EU] internal market everywhere and that we maintain a level playing field,” the diplomat said.

Europe's gas rush could cause the next energy shortage
Europe has so far maintained a united front against Russia on the war in Ukraine, imposing round after round of economic sanctions, including an embargo on its coal imports. It also aims to reduce imports of Russian natural gas by 66% by the end of this year.
But cracks have started to appear in recent weeks as soaring inflation and sluggish growth hit European economies.

“I’m very worried about what a recession in Europe would do to the European will to stick with it and continue to ramp up sanctions,” said Jason Furman, a Harvard professor who previously served as the chief economic adviser to the government. President Barack Obama, to CNN Business at the World Economic Forum in Davos last week.

— Julia Horowitz contributed reporting.

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