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EU ambassadors fail to reach consensus on sanctioning Russian oil

Monday’s meeting of EU member states’ ambassadors to Brussels fizzled out with no consensus reached on imposing sanctions on Russian oil.

“Hungary continues to make more demands concerning EU funds for the modernisation of its energy sector,” a diplomatic source in Brussels told Poland’s public broadcaster TVP, adding that Hungary “wants the modernisation to take place as soon as possible. However, it’s difficult to include the modernisation of Hungary’s energy sector in an EU resolution [on sanctioning Russian oil].”

“Budapest keeps saying that it could not accept the proposed resolution in its current form. The French presidency in the EU and the European Commission have been bending over backwards to implement provisions that could meet Hungary halfway,” the source said.

During Sunday’s meeting of EU ambassadors to Brussels, Hungary demanded that not only oil deliveries carried out via pipelines be exempt from sanctions but also those completed by oil tankers.

New ideas

Earlier the European Commission and the French presidency demonstrated a new proposal on sanctioning Russian oil – one that should break the hitherto deadlock amongst EU states. The most significant provision of the proposed resolution would be limiting sanctions to the oil that is transported on maritime vessels.

The proposal implies that pipeline deliveries of Russian oil would be exempt from sanctions. Should such a resolution come into force, it would mean that a third of Russian oil deliveries to the EU would end free from sanctions.

Simultaneously, a derogation was added to the proposed sanctions package. Until the end of 2024, Bulgaria would enjoy temporary exemption from the limitations resulting from sanctions. Also, Croatia would enjoy such privilege, albeit for a period of eight months. Earlier the proposal envisioned derogations for the Czech Republic, Slovakia and Hungary.

In terms of products purchased in Russia with the use of pipelines, a ban on their re-exporting would be implemented. This ban would also comprise products designed based on pipeline-transported Russian oil. Poland had earlier voiced the same demands. Six-and eight-month transitional periods would be upheld for those contracts which had already been concluded.

A stalemate

The EU has had little luck in agreeing on the sixth package of sanctions against Russia in response to its invasion of Ukraine. The package would impose an embargo on Russian oil. While some EU member states have been critical of the idea, unity of opinion is required for such sanctions to be implemented.

Hungary has been the most vocal opponent of the sanctions due to their heavy dependence on Russian oil. The Czech Republic and Slovakia also oppose the sanctions. The EU offered a temporary postponement of the embargo (until 2024) to the two countries.

Italy has proposed that EU member states cap the price of gas imports from Russia to help reduce inflation in the bloc, but other countries have raised doubts about the effectiveness of the idea.

East-central European states have been bringing attention to the necessary modernisation of fuel infrastructure as it is compatible with Russian gas. The costs of such a modernisation would have to be covered by the EU.

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