Attempts to negotiate an eleventh-hour compromise to get Hungary to back a full Russian oil ban before an EU emergency summit later on Monday (30 May) have made no progress. Reportedly, leaders don’t want to squabble and will look at “the bigger picture”.
EU ambassadors throughout Sunday examined a compromise slated to enable them to break the deadlock on a Russian oil embargo, which since May has prevented the bloc from imposing the sixth round of sanctions on Moscow over its war in Ukraine.
As the new sanctions bite on member states, the stage has been reached, as German Economy Minister Robert Habeck has put it, when EU unity is “starting to crumble”.
Hungary continues to block the plans, citing fears for its energy supply as the country is dependent for 65% of its oil needs on Russian crude supplied via the Druzhba pipeline, which runs from Russia to various points in eastern and central Europe.
Budapest has rejected as inadequate a proposal to allow it two years longer than other EU states to wean itself off Russian oil.
It wants at least four years and at least €800 million in EU funds to adapt its refineries to process non-Russian crude and boost pipeline capacity to neighbouring Croatia.
Tabled compromise
A compromise solution, tabled by France and put to national negotiators, consisted in excluding the Druzhba pipeline “for the time being” from a future oil embargo and only imposing sanctions on oil shipped to the EU by tanker vessel, European diplomats said.
The Druzhba pipeline accounts for a third of all EU oil supplies from Russia, while seaborne oil accounts for the remaining two thirds.
Slovakia and the Czech Republic, also supplied by the Druzhba pipeline, accepted exemptions of two and half years, EU diplomatic sources said.
The proposal envisages ending the purchases of Russian oil within six months and Russian petroleum products by the end of the year.
It would also impose additional sanctions on Russian banks and expand the list of Russian individuals blacklisted by the bloc.
‘Level playing field’
However, EU ambassadors did not find agreement on the compromise, with EU officials saying the compromise proposal raised questions of fairness on the sanctions burden shouldered by member states.
According to some EU capitals, the bloc’s single market “level playing field” would be tilted by the compromise plan to ban Russian oil delivered by tankers while still allowing oil to flow via pipeline.
On Sunday, some Western European member states complained the pipeline exemption would unfairly benefit countries like Germany and Poland that aren’t at risk of fuel shortages, while granting them an unfair economic advantage.
EU ambassadors are set to meet again on early Monday morning as some EU officials seemed hopeful for an agreement.
“It might not work, it might work, but I think we have a duty to try,” one EU official said.
“There is a willingness from all member states to work on oil and to ban (Russian) oil from European markets. The question is, how to do it and how to cater for national specificities,” he added but was far more optimistic than others have been throughout the weekend.
If no deal is reached, which under current circumstances seems likely, the issue will likely be discussed by EU leaders at the European Council, something several EU countries wanted to avoid.
A European Commission official toned down expectations for a summit sanctions deal by saying leaders will “only be briefly informed” on Monday evening and that an agreement is expected later in the week at the level of EU ambassadors.
The option to postpone the entire package of new sanctions until a solution can be found to provide Hungary with alternative oil supplies is also on the table.
The European Commission has been arguing that since a ban would not take place before years’ end, there would be no rush to have agreement quickly.
Pledging support, but
However, expectations are that Ukraine’s President Volodymyr Zelenskyy, who is set to address EU leaders virtually, will press the bloc to “kill Russian exports” three months after the invasion of Ukraine.
A previous summit in March featured an emotional plea for help and more sanctions, but also shamed Hungarian Prime Minister Viktor Orbán for his blockage of previous measures.
According to the latest draft conclusions, seen by EURACTIV, EU leaders are set to discuss how best to aid Ukraine four months into Russia’s invasion and how to deal with the conflict’s impacts of high energy prices, an impending food shortage and the EU’s defence needs.
However, little in terms of new decisions on any of the main topics is expected.
One of the pledges includes political backing for a €9 billion package of EU loans, with a small grants component to cover part of the interest, so that Ukraine can keep its government going and pay wages for around two months.
But the decision is only expected after the European Commission makes a proposal on how to raise the money.
The draft summit conclusions also suggest EU leaders will back the creation of an international fund to rebuild Ukraine after the war, with no details, and want to look into the possibility of confiscating frozen Russian assets for that purpose.
Asked about not feeling the urgency by reporters, a senior EU diplomat defended the bloc’s record in responding to Russia’s war against Ukraine war, saying that there was an over-focus on sanctions.
‘The broader picture’
“The EU does not lose the broader picture,” the diplomat said.
“We are continuously working on different particularities related to the war: financial support, food security, support for refugees, etc. It can be also clearly seen from the Council’s agenda. Perhaps media consider the sanctions more attractive to follow,” the diplomat said.
Despite EU capitals starting to feel the heat that a decision needs to come soon, a delay in the oil embargo has been convenient for some because it prevents the focus from moving toward banning Russian gas.
“Gas is going to be even more difficult,” another senior EU diplomat said, adding that the technicalities of the oil embargo have yet to be worked out.
“If we want a carve-out for one or two member states for specific security of supply reasons, we should make sure that legally (…) we’ll do it in such a way that we’ll not have more damage done to the internal market than we intended to do,” the diplomat said.
“It has to be done very carefully. And this is a technical, legalistic issue, and this we are still working on,” he added.