Daily Times

The EU is working on broadening sanctions on Russia to include oil and gas embargoes but such measures would take “several months”, European officials told AFP on Friday. The bloc last week announced a ban on Russian coal in a first step against Russian energy exports — together, Moscow’s main hard currency earner. But the coal sanction only kicks in from mid-August, and would hit around eight billion euros ($8.7 billion) in Russia’s sales abroad, annually.

Russian oil and gas sales to the EU account for a far higher amount of revenue: between a quarter of a billion to a billion euros per day, per different estimates. Public and political opinion in the EU is swinging towards a total energy ban as Moscow’s war in Ukraine grinds on and yields discoveries of atrocities. An EU official involved in discussions on cutting Russian energy imports said the European Commission is “thinking about options”. Commission chief Ursula von der Leyen has already come out publicly in favour of targeting Russian oil.

But, the official said, “adopting measures on oil means undoing existing contracts, finding alternatives and preventing circumvention”. “That can’t be don’t overnight. It requires at least several months.” Building EU outrage over the war is sweeping aside hesitation by the member states reliant on Russian oil and gas, such as the bloc’s biggest economy Germany, and Italy, Greece and Austria. Some EU countries, such as Lithuania, have already announced national bans on Russian oil and gas. One option to quickly stall revenues going to Russia’s war could be to pay for energy imports through an escrow account, which Moscow wouldn’t be able to touch until a postwar settlement. But there is also thinking about how Russia might retaliate, by cutting supplies to Europe, or — as President Vladimir Putin said this week — selling more to Asia.

In any case, it’s clear that European industry and consumers will have to consume less oil and gas — something economists call “demand destruction”. “Cutting demand will have an impact with price hikes,” another EU official said, echoing comments from several ministers in the bloc. They noted that the EU’s main ally in the sanctions, the US — which a month ago imposed its own ban on Russia’s energy imports — is leery of petrol price rises for American drivers.

“What’s more, if Russia sells oil snubbed by the Europeans to other buyers, the sanctions won’t work,” one EU official said. The Europeans and Americans are looking to avoid the sanctions being weakened by China and India. Brussels is telling Beijing and New Delhi the EU would find it “difficult to accept partners who undermine the sanctions,” one EU diplomat said.