The advantages of an import duty imposed by the EU could be played out immediately for the EU.
(Photo: Reuters)
Berlin Robert Habeck is not particularly fond of proverbs. The EU must be careful that the result of the oil embargo is not to trade in “lemons or stones or something,” he said recently. But the Vice-Chancellor is right with his statement: The planned import ban for Russian oil is likely to become a measure that people call ‘make things worse’: well meant, badly done.
An embargo will continue to drive oil prices higher. If the pipelines between Russia and the EU are no longer used and both have to open up new trade routes by ship, it’s more expensive – and drives up the price. Putin will benefit from this. Unlike gas, crude oil is easy to transport. If Putin can no longer sell his oil to Europe, he will get rid of a larger quantity elsewhere.
It is quite possible that the rising price neutralizes a significant part of the damage that Putin has suffered from the reduced sales opportunities. Then the West would only have lost because it would have to pay higher prices itself and it lacked oil. The EU can slow down this effect by imposing sanctions on the oil shipping companies, but cannot offset it.
A tariff on Russian oil, on the other hand, would be a better solution. At first glance, this sounds absurd because an import tax would be passed on to European customers. But this view is too short-sighted.
Top jobs of the day
Find the best jobs now and
be notified by email.
Russia is already having to accept price cuts of around 30 percent because fewer and fewer countries still want Russian oil. If the EU were to ban imports, the discount would certainly increase. But whether that would compensate for the rising price on the world market is questionable.
Income into the EU instead of Putin’s treasury
With a tariff, on the other hand, the EU would have full control. You could set the tariff just so high that it would be minimally lower than the price reduction for Putin. Then he would continue to sell to Europe. However, the world market price would rise much less than in the case of an embargo, so that Putin would probably earn less overall from customs than with a delivery stop.
It is true that the duty would be passed on to European businesses and consumers. But as described, prices will also rise during the embargo. The decisive question is where the additional income ends up. If there is an embargo, they go into Putin’s pocket, if there is a customs duty, they go into the coffers of the EU countries.
And the EU could use the tariffs collected to relieve companies and consumers of the price increases. It could also do this in a controlled manner, i.e. partially, in order to maintain incentives to save energy.
Other countries like India would be easier to convince of a tariff. Your cooperation is urgently needed if oil sanctions are to cause lasting damage to Putin. While an embargo requires breach of contract, a tariff is legal because Russia can no longer invoke the rules of the World Trade Organization.
But the EU will probably no longer allow itself to be dissuaded from its embargo plan. However, the announced transition period of several months gives Putin even more opportunities to look for alternative sources of purchase. The advantages of a tariff, on the other hand, could be played out immediately without any problems for the EU. At least for that transitional period, Brussels should introduce a tariff. Otherwise we deal in “lemons or stones or something”.
More: Up to half a trillion euros in damage from the energy embargo, according to a new study