Diplomats from the European Union failed to reach a consensus on Sunday on the terms of the embargo, but held further talks Monday in a bid to present an agreement for approval by EU leaders at a summit later in the day.
A senior EU diplomat told CNN that the bloc is “in the last resort” of agreeing on the terms of the oil embargo, but needs more time to persuade some member states, including Hungary, to join.
“We understand their special situation, we understand their problem with security of supply, we understand their search for guarantees so that they can resolve this,” the diplomat said.
European officials first offered to join the United States and others in banning Russian oil a month ago as part of the EU’s sixth package of sanctions over the country’s invasion of Ukraine. But the agreement has been hampered by the reluctance of some countries, which rely heavily on Russian crude oil supplied by pipeline. EU leaders could agree to ban all Russian oil by the end of this year, but provide a temporary exemption for imports via pipelines, according to a draft of the summit’s conclusions from Reuters. An EU spokesman told CNN that a ban on all marine oil would cover more than two-thirds of Russia’s imports.
Europe is the largest buyer of Russian energy. Russian crude oil accounts for 27% of the bloc’s imports in 2021, according to Eurostat. That’s about 2.4 million barrels a day, according to the International Energy Agency. About 35% of this was piped to the unit, according to the IEA.
But pipeline supplies account for a much larger share of Russian oil supplies to Hungary (86%), the Czech Republic (97%) and Slovakia (100%).
Earlier this month, Hungarian Foreign Minister Peter Siarto compared the EU’s proposals for a total ban on Russian oil to an “atomic bomb” for his country’s economy. His government had earlier said it would take at least three to five years to halt all imports.
However, care must be taken to ensure that all exceptions do not unfairly favor some countries over others, the senior EU diplomat told CNN.
“We have to be really careful in the text of the legal sanctions to keep it [EU] the internal market everywhere and that we maintain a level playing field, “the diplomat said.
So far, Europe has maintained a united front against Russia over the war in Ukraine, imposing round after round economic sanctions that include an embargo on coal imports. It also aims to reduce Russian natural gas imports by 66% by the end of this year. But in recent weeks, cracks have begun to emerge as rising inflation and slow growth hit European economies.
“I am very worried about what the recession in Europe would do if Europe decided to stick to it and continue to escalate sanctions,” said Jason Ferman, a Harvard professor who previously served as President Barack Obama’s chief economic adviser. CNN Business at the World Economic Forum in Davos last week.
– Julia Horowitz contributed to the report.
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