Berlin, Brussels The European Union wants to stop imports of Russian oil – but only after a months-long transition period. As the Handelsblatt learned from diplomats, the EU Commission’s proposal provides for a graduated embargo. Accordingly, the EU initially wants to dispense with petrol and diesel from Russia, and by the end of the year also with crude oil. The new sanctions are expected to be decided this week.
The biggest obstacles are the supply problems in Slovakia and Hungary. Both countries have so far been heavily dependent on Russian oil. As a rule, sanctions must be decided unanimously within the EU. Brussels therefore wants to help Slovakia and Hungary with longer transition periods. Germany, on the other hand, no longer needs exceptions.
Federal Finance Minister Christian Lindner (FDP) assesses an embargo on Russian oil for Germany as “economically viable”. In the event of an oil embargo, the Federal Republic would only have a “local problem”, said Federal Minister of Economics Robert Habeck (Greens). The region around Berlin would be particularly affected. The economy as a whole is no longer in danger.
Internationally, the Europeans are trying to find as many supporters as possible. The idea is to combine market power to dictate lower prices to the Russians for their oil. That would also lower inflationary pressures, so the US government supports the initiative. So far, emerging countries like India have not been willing to give up Russian oil.
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When Olaf Scholz (SPD) was first in office, the Chancellor gave his top officials a difficult task: take care of the Russia problem. Come up with ideas on how to prevent war. And in the event of war, plans for maintaining the energy supply.
>> Read here: Oil embargo against Russia: what would be the impact of the new sanctions?
According to government officials, back in December, the idea of a three-stage plan was born. It was clear quickly: Germany will remain dependent on Russian gas for a long time. Russian coal, on the other hand, could easily be dispensed with. Again, replacing Russian oil would take a few months. The government wanted to be independent of Russian oil by the end of 2022. But in the end we made better progress here than we thought.
The oil embargo is highly complex
And so phase two of the three-stage plan can now come into force: after the coal embargo, the EU, with the blessing from Berlin, will also impose an embargo on Russian oil this week. However, the planned months-long transition period shows how complex an oil embargo is – politically, economically and logistically.
Federal Finance Minister Lindner emphasized on Monday that one must wait and see how opinions are formed in the EU. There are different concerns that the government takes into account. This could also include helping each other.
Economics Minister Habeck emphasized that consideration must be given to countries that need more time to become independent of Russian oil. Care must also be taken to ensure that the higher oil price associated with an embargo does not hit poorer countries disproportionately hard and that Russia cannot bind them to itself with discounts on oil deliveries.
In addition to the EU, according to Handelsblatt information, the G7 countries are also dealing with the topic. In this round, upper price limits for Russian oil imports will also be discussed. However, the G7 also wants to ensure that as many countries as possible support the new sanctions package. The G7 wants to have the 40 or so states that support the sanctions against Russia on board.
Refinery in Schwedt remains a key problem
But even large countries like India, which have not openly condemned Russia’s war, should at least not evade sanctions. The topic is likely to have played a role at the German-Indian government consultations on Monday, alongside increased cooperation on the future technology of hydrogen.
But Germany itself also needs the transition period to initiate technical preparations. A central problem continues to be the oil refinery in Schwedt, Brandenburg, which is operated by the Russian Rosneft group and on which the energy supply of north-east Germany depends. In order for Schwedt to be able to be supplied with non-Russian oil, the port of Rostock would have to be deepened and the pipeline to Schwedt would have to be worked on.
Another option is to supply Schwedt via the port of Gdansk. Habeck met his Polish counterpart in Warsaw at the beginning of last week to discuss the possibility of supplying the Schwedt refinery. The Polish government is now exerting intense pressure, demanding an immediate and comprehensive energy embargo after Gazprom stopped gas supplies to Poland last week.
Despite these problems, an EU embargo on oil until the end of 2022 is “feasible and realistic,” said Bernd Westphal, economic policy spokesman for the SPD parliamentary group. However, other procurement channels are necessary, such as those organized by Federal Minister of Economics Habeck with Poland, for example, said the SPD politician. “We also have a responsibility to consider the impact on other countries of our increased demand.”
More: An oil embargo would be an experiment with an uncertain outcome – one comment