EU proposes Russian oil ban to make Putin pay high price for Ukraine
Crude would be phased out within six months, refined oil by the end of the year
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STRASBOURG – The chief executive of the European Union on Wednesday proposed a gradual oil embargo against Russia, sanctions against its main bank and a ban on Russian broadcasters from European airwaves in its toughest measures yet to punish Moscow for its war in Ukraine.
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The sixth round of EU sanctions, if accepted by member states, would be a turning point for the world’s largest trading bloc, which depends on Russian oil and gas and must find alternative supplies just as energy prices rise.
The reluctance to impose sanctions that will harm EU economies as well as Moscow has faded in recent weeks as Russia’s invasion of Ukraine has brought horrifying images of massacres in cities and concerns about a new offensive in the east of the country.
Reflecting widespread anger in the West over Russian President Vladimir Putin’s campaign – which Moscow says is a “special military operation” to defeat dangerous nationalists – the EU chief executive said Moscow must face the consequences .
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“Putin must pay a price, a high price, for his brutal aggression,” European Commission President Ursula von der Leyen told the European Parliament in Strasbourg.
“Today we will propose to ban all Russian oil from Europe,” she declared to the applause of the hemicycle.
The Commission’s measures include phasing out supplies of Russian crude oil within six months and refined products by the end of 2022. Von der Leyen pledged to minimize the impact on European economies.
The price of Brent crude rose about 3% to over $108 a barrel in early trading.
If accepted, the embargo would follow the United States and Britain, which have already imposed bans to cut off one of the most important streams of income from the Russian economy, as the West buys more half of its crude and petroleum products to Russia.
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“We are tackling our dependence on Russian oil. And let’s be clear, it won’t be easy because some member states are heavily dependent on Russian oil, but we just have to do it,” von der Leyen said.
Ambassadors from the 27 EU governments are expected to adopt the Commission’s proposals as early as this week, allowing them to become law soon after.
Hungary Tripwire?
However, Hungary has indicated it could trigger the EU’s latest sanctions package.
Although it – along with Slovakia – has until the end of 2023 to wean itself off Russian oil due to its heavy dependence, Budapest said the proposal did not specify how its energy security would be guaranteed.
“We see no plans or guarantees on how a transition could be handled based on the current proposals, and how Hungary’s energy security would be guaranteed,” Hungarian government spokesman Zoltan said. Kovacs.
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Simone Tagliapietra of the Brussels-based Bruegel think tank said a gradual embargo on Russian oil was risky.
“In the short term, this could leave Russian revenues high while implying negative consequences for the EU and the global economy in terms of higher prices – not to mention the risks of retaliation (by Russia) on the supply of natural gas,” he said.
Besides oil, the latest round of sanctions proposes hitting Sberbank, Russia’s top lender, adding it to several banks already cut off from the SWIFT messaging system.
“We hit banks that are systemically critical to the Russian financial system and Putin’s ability to wreak destruction,” von der Leyen said. “This will reinforce the complete isolation of the Russian financial sector from the global system.”
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Sberbank did not immediately respond to a request for comment. The lender, which exited nearly all of its European markets in March, has previously said further rounds of sanctions would not significantly impact its operations.
Von der Leyen said more senior Russian military officials would face asset freezes and EU travel bans, without giving names, and that the EU would also ban European accountants, consultants and spin-doctors who work for Russian companies.
Russian public broadcasters RTR-Planeta and R24 would be barred from the European airwaves under the latest sanctions, diplomats have said.
Von der Leyen also offered a recovery plan for Ukraine once the conflict is over, saying hundreds of billions of euros in funding are needed to rebuild the country.
“Ultimately, this will pave the way for Ukraine’s future in the European Union,” von der Leyen said.
© Thomson Reuters 2022