EU leaders have agreed to implement a ban on 90 percent of Russian oil imports in the latest package of sanctions against Russia.
The European Union on Monday agreed to a sixth package of sanctions against Russia that will include a near-total ban on Russian oil imports to the bloc.
“We want to stop Russia’s war machine and cut the financing of Russia’s military capacity,” said the president of the European Council, Charles Michel, after late-night talks in Brussels. He said 75 percent of Russian oil imports into the EU will be immediately impacted, and that the ban was expected to cover 90 percent of all oil imports from Russia by the end of the year.
As part of the new sanctions package, the EU also removed access to Swift payments for Russia’s largest bank, Sberbank, and banned three more Russian state-owned broadcasters. Michel also announced a new aid package of €9bn for Ukraine.
What will the embargo cover?
EU leaders reached a compromise that will exempt Russian oil transported through the Soviet-era Druzhba pipeline to Hungary, Slovakia and the Czech Republic from the embargo. Hungary’s prime minister Viktor Orban had been the staunchest opponent of the plan since EU Commission President Ursula Von Der Leyen first said EU countries should stop buying Russian oil by the end of the year.
On Monday evening, Orban told reporters “the pipeline solution is not bad” as EU leaders reached a compromise that the ban would only affect oil arriving by sea.
Russia currently supplies around 25 percent of the EU’s oil imports and 40 percent of its gas.
EU countries have so far not imposed sanctions on Russian gas imports, although Germany did put a freeze on the certification of the Nord Stream 2 pipeline running through the Baltic Sea and financed by Russian state-owned Gazprom.
Russia has requested that “unfriendly countries” pay for gas in Russian rubles and has cut gas supplies to Poland, Bulgaria and Finland in response to their refusal to comply with the request. On May 31, Gazprom also cut supply to the Netherlands, whose wholesaler GasTerra said gas supplies wouldn’t be affected since the company had already bought gas elsewhere.
Von Der Leyen called the agreement “an important step forward.”
“The EU embargo is going to be a major blow to Russia, which will be forced to find new routes for its oil and to sell it at substantial discount,” said Simone Tagliapietra, an analyst at the Brussels-based think tank Bruegel.
“The EU should now stand ready for eventual retaliatory actions on natural gas by Russia. For this, strong coordination is needed at the EU level to prepare for a potential interruption of all Russian gas supplies to Europe,” he added.
Ukrainian officials and analysts have criticised the latest round of sanctions for being partial and not including gas.
"If you ask me, I would say far too slow, far too late and definitely not enough," said Ihor Zhovkva, deputy head of President Volodymyr Zelenskiy's office, said.
Russian president Vladimir Putin had previously said EU’s sanctions on Russia were “economic suicide” for the bloc.
How does the EU plan to fulfill its energy needs?
Europe’s reliance on Russia for its energy needs has triggered a cost-of-living crisis that has affected consumers across the continent.
Under the REPowerEU plan, aimed at reducing dependency on Russian gas and oil, the bloc aims to cut supplies of natural gas from Russia by two-thirds by the end of 2022. The plan includes accelerating the roll-out of renewable energy projects, however in the short-term the EU plans to step up Liquified Natural Gas (LNG) imports from non-Russian sources. The EU has recently reached a deal with the United States to buy an extra 15 bcm of its LNG, and is working on deals with Egypt and Israel to secure additional supplies.
The plan has been criticised by environmental groups, who say it fails to end Europe’s reliance on fossil fuels, and instead will “further line the pockets” of global energy giants like Shell and Saudi Aramco.