European unity against Russia tested as talks on oil embargo drag on

By Anna Cooban and James Frater, CNN Business

Europe’s united front against Moscow is being put to the test as countries struggle to agree a ban on Russian oil imports.

European Union diplomats failed to reach consensus Sunday on the terms of an embargo, but held further talks Monday in preparation for a summit of EU leaders in Brussels later in the day.

Arriving at the summit, German Chancellor Olaf Scholz said he believed there was a will to achieve consensus, but European Commission President Ursula von der Leyen cautioned that it was unlikely a deal would be struck before the meeting ends Tuesday.

Officials first proposed joining the United States and others in banning Russia’s oil a month ago as part of a sixth package of EU sanctions over the country’s invasion of Ukraine. But an agreement has been held up by some countries, like Hungary, that are particularly reliant on Russian crude delivered via pipeline.

EU leaders could agree to ban all Russian oil by the end of this year, but provide a temporary exemption to imports via pipeline, according to a draft of the summit conclusions viewed by Reuters. An EU official told CNN that banning all seaborne oil would cover more than two-thirds of imports from Russia.

“One thing is clear, if you decide to act in a group, you always have to consider the specific situations of all countries. We have done this in the past, and we will do this in the future,” Scholz said, when asked about possible exemptions for Hungary and others.

“Our strength comes from our ability to solve our problems together, and therefore can act together against the Russian aggression against Ukraine.”

Europe is the biggest buyer of Russian energy. Russian crude accounted for 27% of the bloc’s imports in 2021, according to Eurostat. That’s around 2.4 million barrels per day, data from the International Energy Agency shows. About 35% of that was delivered via pipelines to the bloc, according to the IEA.

But pipeline deliveries made up a much bigger share of Russian oil shipments to Hungary (86%), the Czech Republic (97%) and Slovakia (100%).

Hungarian Prime Minister Viktor Orban said Monday an embargo which excluded pipeline imports was a “good approach,” but cautioned that a back up plan was needed in case oil deliveries failed due to an accident.

Earlier this month, Hungary’s Foreign Minister Péter Szijjártó likened the EU’s proposals for a complete ban on Russian oil to an “atomic bomb” for his country’s economy. Its government has previously said it would need a minimum of three to five years to cease all imports.

Care must be taken, however, to ensure any exemptions do not unfairly benefit some countries over others, the senior EU diplomat told CNN.

“We have to be really careful in the legal sanctions text, that we preserve the [EU] internal market everywhere, and that we preserve the level playing field,” the diplomat said.

Europe has thus far maintained a united front against Russia over the war in Ukraine, imposing round after round of economic sanctions, which included an embargo of its coal imports. It is also aiming to slash imports of Russian natural gas by 66% by the end of this year.

But cracks have started to appear in recent weeks as soaring inflation and sluggish growth batter Europe’s economies.

“I am very worried about what a recession in Europe would do to European resolve to stick with it and continue to escalate the sanctions,” Jason Furman, a Harvard professor who previously served as President Barack Obama’s top economic adviser, told CNN Business at the World Economic Forum in Davos last week.

— Julia Horowitz contributed reporting.

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