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May 5, 2022
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EU countries line up to be exempted from oil embargo

EU countries line up to be exempted from oil embargo

Photo: Egor Aleev / TASS

The European Union is already preparing the sixth package of sanctions against Russia, within the framework of which it is proposed to completely ban the import of Russian oil into the EU. This was announced on May 4 by the head of the European Commission Ursula von der Leyen.

“This will be a complete ban on the import of oil from the Russian Federation, delivered by sea and pipelines, crude and refined oil,” she said during a speech in the European Parliament.

The Europeans are planning to phase out Russian oil gradually, because many EU countries are seriously dependent on these supplies. According to the head of the EC, it is necessary to find alternative suppliers and minimize the impact of anti-Russian sanctions on the oil markets.

Brussels hopes to complete the process of refusing Russian supplies by the end of 2022, but for some countries it may drag on for another year. Thus, it is assumed that an exception under existing contracts will be given to Hungary and Slovakia, which are seriously dependent on Russian oil, and they do not have the opportunity to receive it through ports or oil pipelines from other countries. As previously stated by the Slovak Minister of Energy Richard Sulikhis country cannot yet afford to join a possible EU oil embargo.

“We will, of course, insist on an exception,” he said.

Russian supplies almost completely meet the needs of Slovakia, and, as the minister explained, it will take several years for the Slovnaft refinery to switch to oil from other suppliers.

Representative of the Hungarian government Zoltan Kovac also declared the invariance of the country’s position regarding Russian energy carriers and refuted the information that appeared in the media about the withdrawal by Budapest of the right to veto the embargo. He also believes that the EU plan for Hungary and Slovakia does not solve the issue of energy security of the countries.

“We do not see any plan or guarantees in the current proposal for managing even the transition period, or anything that would guarantee Hungary’s energy security,” Bloomberg quoted him as saying.

Minister of Foreign Economic Relations and Foreign Affairs of Hungary Peter Siyarto after the negotiations held in Kazakhstan, he once again stated that the issue of ensuring energy supply remains the most important for the authorities of the country and they do not care what they think of them in the East or in the West.

“No one can expect from us that the Hungarian people pay the price of the conflict in Ukraine,” the Foreign Minister stressed, answering questions from journalists.

However, other countries are ready to join the queue for exclusion. According to Agence France-Presse, citing unnamed EU officials, including Bulgaria and the Czech Republic. There is a call in Austria to turn off the dangerous path with respect to Russian energy carriers. In the Netherlands, where Russia accounts for about a quarter of all oil deliveries, they decided to play it safe, so they are urgently buying Russian oil: the port of Rotterdam is preparing to receive at least eight tankers in the near future.

Leading expert of the National Energy Security Fund, lecturer at the Financial University under the Government of the Russian Federation Igor Yushkov suggests that the result of the EU oil embargo will be the emergence of hubs for the entry of Russian oil.

— Relatively speaking, one country receives an exception for Russian oil, but in reality it is engaged in re-export to the nearest states, so as not to create the impression that sanctions were introduced, but in the end they gave an exception to everyone and everyone buys it. For example, Hungary will be given an exception, and it will distribute oil and oil products throughout Central Europe.

It is quite possible that this will lead to a decrease in the processing of Russian oil in Europe. If earlier, for example, five refineries were operating, but all were underloaded, now everything will be concentrated on supplies to one refinery, which will be fully loaded and send oil products to other countries whose refineries will be stopped. That is, hubs will be formed so that Russian oil enters and is delivered to other countries, and so that it enters and is processed, and fuel is already distributed.

We see another effect: Asian countries (like India, China) are increasingly buying our oil, but not only. The same India buys large volumes of Russian oil, refines and already sends fuel to Europe. And everyone is happy: India, because it bought Russian oil at a discount, and sold fuel to Europeans at market prices.

“SP”: – But Europe in this case pays more.

Yes, but according to politically acceptable schemes for them. Politically neutral fuel. No one will accuse them of buying oil in Russia, they are buying in India, but where it comes from is not clear, they do not ask. Political weight is very important to them.

“SP”: – Only this leads to an increase in prices for everything, because energy carriers will pull it. Do European politicians realize that this threatens to collapse the EU economy?

– It will not lead to a collapse, it will lead to a decrease in growth rates or even a recession in the economy. But now no one uses economic logic, everyone proceeds from the political expediency of the decisions made.

“SP”: – Why is the EU in a hurry to introduce an oil embargo, if not all countries are ready to abandon Russian oil?

“Their logic is that the conflict in Ukraine continues and they cannot do anything, because it contradicts their policy of containing Russia.” etc. They believe that in order for Russia to change its foreign policy course, it is necessary to continue to put pressure on it.

To say that they have introduced the maximum number of sanctions that do not hit their economy, and further from the sanctions themselves is bad, they can. So it turns out that more and more sanctions need to be introduced, but at the same time, in reality, everything has already been introduced. All significant that remains is the trade in oil and gas, and in order to somehow hit the Russian economy, it is necessary to hit the hydrocarbon sector. The rest is trifles.

This is a painful measure, so you have to make such compromises when you say that you are imposing sanctions here and now, but in reality they will start work in six months or from the 23rd year. At the same time, there is hope that they may not have to be applied, that the situation in Ukraine will somehow be resolved, hostilities will stop and it will be possible to freeze the very sanctions that are painful for them. So it’s not a fact that the oil embargo will work. That is, they will not be canceled, but a moratorium will be introduced.

German political scientist, Dr. Gregor Spitzen believes that political games of democratic solidarity with Ukraine cost the European economy dearly.

“Even residents of such economic giants as Germany and France have already experienced the beauty of European sanctions and anti-sanctions, because it is enough to go to a gas station or go to a grocery store. Looking at the price tags for a liter of fuel, gradually approaching €2.50 per liter, many citizens feel uneasy.

However, if the German and French governments have at least some reserves to support the population in times of adversity, then the young new European economies may not be able to withstand the blow of the sanctions war. It is not surprising that countries whose economies are directly dependent on the supply of affordable energy, by hook or by crook, are trying not to assume obligations to support the embargo on the supply of Russian energy.

Hungary, which in recent years has become an ideological and economic ally of Moscow, despite the difficulties of the joint history of the two states, turned out to be the first in a series of countries that are not ready to suffer economic losses out of solidarity with the Ukrainian government, which has tarnished its reputation with corruption and cultural genocide against national minorities . However, it is difficult to say what turned out to be more in the intentions Viktor Orban – the desire to annoy the EU bureaucrats who hate him or to observe the objective interests of the national economy.

The situation in Slovakia is somewhat more complicated. Its economy is not as strong as the Hungarian one and is highly dependent on EU subsidies. But the Slovaks, too, having calculated the possible losses, quickly decided that political solidarity is entertainment for rich countries, to which Slovakia does not belong.

Poland was one of the first to advocate an anti-Russian energy embargo, but this was the position of the authorities in Warsaw. It should be assumed that entrepreneurs from the northeastern provinces, whose economy is based on affordable Russian gas and cheap Russian gasoline, do not quite agree with their wise leaders.

“SP”: – Then why introduce measures that hit their own economies?

– Everyone understands that the introduction of the embargo is an exclusively political step, made without thoughtful calculations of all the consequences for the European economy. But this step has been taken, and now one should somehow get out of the situation, saving face if possible. One of these states is Slovakia, which soberly assesses political and economic realities. However, the authorities of such states as Poland or the Baltic countries would rather leave their own population without gasoline and gas than allow Russia to feel like a winner. However, the queue of countries wishing to circumvent or ease the energy embargo will gradually lengthen. There is no doubt about this.

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