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May 31, 2022
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Europe grinds out sixth round of sanctions

Opportunities for the European Union to impose new sanctions against Russia are close to exhaustion

At the end of April, the media reported that Brussels had prepared the next, sixth package of EU sanctions against Russia. There are many points in the package: disconnecting Sberbank from SWIFT, a ban on broadcasting three Russian TV channels in the EU, and individual sanctions. However, the main feature of the sixth package is the oil embargo. The European Union expected to give up 100 percent of the purchase of “black gold” from Russia within six months. In the oil imports of the EU countries as a whole, according to Eurostat, Russia accounts for 25% (according to the results of 2020). Brussels decided that half a year would be enough to reorient itself to alternative sources of oil supplies.

However, already at the end of April, a number of EU countries began to oppose such a radical measure. The mentioned 25 percent is “the average temperature for a European hospital”. There are a number of countries heavily dependent on Russian oil. For example, Slovakia (78.4%), Lithuania (68.8%), Poland (67.5%), Finland (66.8%), Hungary (44.6%). And Germany, by the way, has an indicator above the EU average – 29.7%.

Not only did many European countries get hooked on oil from Russia, some of them also got hooked on the oil pipeline. In general, in the EU for the supply of Russian oil through the pipelinee “Druzhba” accounts for 35% of “black gold” imports (most of the rest of Russian oil goes by sea). But Hungary depends on oil supplies through the pipeline by 86%, the Czech Republic – by 97%, Slovakia – by 100%. These countries do not have access to the sea, for them alternative sources of supplies of “black gold” are problematic.

In general, throughout May, EU member states were busy discussing the issue of an oil embargo as part of the sixth package of anti-Russian sanctions. However, they could not agree. Finally dot over “I» Officials from Brussels decided to arrange for an unscheduled EU summit on May 30-31.

Following the results of the first day of the summit in Brussels, they corrected the position of a month ago on oil: the embargo will not be complete, but partial. It will be introduced in relation to oil entering Europe by sea. And it will start at the end of the year. According to the head of the European Commission Ursula von der Leyenby the end of 2022, the EU will give up almost 90% of Russian oil imports. The summit press release notes: “The heads of state and government of the EU countries agreed that “the sixth package of sanctions against Russia will apply to crude oil, as well as oil products supplied from Russia to member states, with the temporary exception of crude oil supplied by pipeline “.

Head of the European Council Charles Michel May 30 summed up: “Tonight the European Council was able to reach an agreement on the sixth package of sanctions, which will ban Russian oil with a temporary exception that concerns oil coming through the pipeline.” On the other hand, the Prime Minister of Hungary Viktor Orban On May 31, he stated with relief that the EU embargo on Russian oil imports would not affect Hungary. However, the Belgian Prime Minister Alexander De Croo advised that the exemption for Hungary was not absolute. It will only work for a while. And the European Commission will have to determine the deadlines for the validity of exemptions for Hungary. For Hungary itself, the situation is aggravated by the fact that the country’s oil refineries are “sharpened” for Russian oil. Switching to other varieties will require a major reconstruction of Hungarian enterprises.

For some reason, the media reported that exceptions were made only for two countries – Hungary and the Czech Republic. The fate of Slovakia, which is 100% dependent on Russian oil supplies through the Druzhba pipeline, is not clear.

Following the results of the first day of the summit, the representative of the European Council said that the announced decision on the oil embargo was political. It must be followed by a technical procedure. Only after its completion, the decision will enter into force. The exact timing of the introduction of these restrictions has not yet been announced.

It can be seen that the possibilities for the European Union to impose new sanctions against Russia are close to exhaustion. The first five packages of sanctions were prepared and adopted quickly, it took two months. And the sixth package is slipping. Apparently, the seventh package is already being prepared, but the likelihood of its rapid adoption is very low.

Initially, the sixth package included such a sanction as a ban on the acquisition by Russian citizens of real estate in the EU. The measure did not apply to those with citizenship or residence in the European Economic Area or Switzerland, it caused a lot of controversy and was eventually removed from the package (“due to pressure from Cyprus,” according to Bloomberg). The discussion of the issue was postponed to May 31.

In addition to the oil embargo, the second major issue on the agenda of the summit is the legalization of the confiscation of Russian assets in EU jurisdiction. It was also postponed to the second day. However, it can be said in advance that there will be no clear decision on this issue. On the eve of the summit Ursula von der Leyen stated that the European Union continues to look for ways to use the frozen assets of Russian businessmen to finance the reconstruction of Ukraine after the end of the conflict. Even earlier Josep Borrell invited the countries of the community to consider withdrawing the frozen Russian foreign exchange reserves in order to direct these funds to the restoration of Ukraine.

Laws in EU member states do not allow such expropriation. It takes painstaking work to amend the legislation and perhaps even the adoption of a special law. It is extremely difficult to synchronize such work in the 27 member states of the European Union. Europe can undermine confidence in the “sanctity” of the institution of property. On the eve of the summit, the European Commissioner for Economics Paolo Gentiloni commented on the idea of ​​confiscation: “Yes, it is being considered. But we know that from a legal point of view, the transition from freezing to confiscation is very difficult.” Somewhat earlier, the head of the German Ministry of Finance Christian Lindner said that his government was ready to consider a proposal to confiscate the frozen foreign assets of the Central Bank of the Russian Federation, but added that he did not approve of the idea of ​​​​confiscating the personal assets of Russians to finance the restoration of Ukraine at their expense.

Summing up, I will say that, in my opinion, the sixth EU sanctions package may be the last.

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