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21st May 2022

Kyiv calls for oil embargo but EU set for phased approach

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EU leaders gathered in Versailles on Thursday night (10 March) with a discussion about how to reduce their dependence on Russian gas and oil supplies on the agenda.

They were expected to agree to phase out their dependency on Russian gas, oil and coal imports — but only gradually compared with the US and the UK.

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Those countries banned oil imports from Russia earlier this week, and that has put pressure on EU leaders to do the same, despite their differing circumstances.

The pressure then increased after Ukraine's president Volodymyr Zelensky's top economic advisor, Oleg Ustenko, called for an "immediate embargo'' on Russian oil and criticised European governments for being too hesitant.

But Kyiv's call showed no signs of gaining traction at the summit meeting in Versailles.

An embargo on Russian oil still is not on the table, an EU diplomat told EUobserver.

Member states are deeply-divided over boycotting imports of Russian crude broadly because of the different economic and political consequences they'd face — and the possible punitive responses by Moscow.

Yet experts argue that an oil embargo would only really damage the Russian economy — if the EU joins the UK and US effort.

Such a move would be "very painful for Russia economically," said Hendrik Mahlkow, a researcher from Germany's Kiel Institute for the World Economy. Russia's GDP would fall by 1.2 percent — but EU countries including Estonia, Malta, Lithuania and Greece also would suffer long-term economic losses, Mahlkow found.

It is estimated that the 27 EU member countries are still making daily oil payments of $285m [€259m] to Russia.

A few countries, such as Lithuania and Latvia, support cutting all energy trading with Russia, while Poland has been trying to gain support for further and more far-reaching sanctions — including moving away from buying any Russian oil, gas and coal.

But Germany has rejected a total ban on Russian oil and gas, arguing that energy supply cannot be secured in any other way. Russian imports account for more than half of Germany's gas and coal, and a third of its oil.

Dutch prime minister Mark Rutte has adopted a similar position, admitting earlier this week that Europe's over-dependence on Russian energy supplies is "the uncomfortable truth".

Hungary also intends to speak against oil and gas sanctions during the summit, according to a spokesperson.

Member states even remain divided over how fast the bloc must cut imports of Russian fossil fuels.

While some have backed a 2030 cut-off date, others want 2027 — but some member states are expected to reach this goal earlier, a senior EU official said on Wednesday.

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