Germany will support the Russian oil embargo in the new sanctions package prepared by the EU | International
The European embargo on Russian oil is getting closer. Germany, the largest EU economy and until now one of the most reluctant partners, has changed its mind. Berlin will support the inclusion of oil in the sixth package of sanctions that the European Union is preparing and that could be approved this week. Brussels would thus have the forceful response that it longed for after the last challenge of the Russian president, Vladimir Putin, to the Twenty-seven: the cut off of the gas supply to Poland and Bulgaria for their refusal to pay in rubles.
The ban on Russian crude imports would be gradual, or at least imply a transition period, as happened with the coal embargo. In early April, shortly after the chilling atrocities in the Ukrainian town of Bucha became known, community partners agreed on a fifth retaliation package that, for the first time, targeted Russian energy, the Moscow gold mine. Already then the negotiations showed the first cracks in the unity of the Twenty-seven. The agreement went ahead, among other things, because they accepted the four-month moratorium demanded by Germany to give it time to unhook its thermal power plants from Russian coal.
Saved the main stumbling block – the Yes of a Germany so far reluctant to put oil on the table—the difficulties will be concentrated in other partners such as Italy, Austria, Greece and Slovakia. The four expressed their reluctance at a meeting held last week, as published by Frankfurter Allgemeine, who has accessed the minutes of the meeting. Hungary directly expressed its opposition. The high dependence on Russian crude oil and the fear of an increase in prices that will be passed on to the population are the main reasons for the countries apparently opposed to the embargo.
The turn of Berlin was a blow that caught many partners by surprise, but the coalition government of the Social Democrat Olaf Scholz had already dropped a clue. The Minister of Economy and Climate, the green Robert Habeck, assured in a visit to Warsaw last week that the oil embargo was “manageable”. The next day, the government spokesman had to clarify that this did not mean that Germany could do without oil overnight. But yes, in a few months, perhaps a lot less than what the experts had initially calculated, who were betting on the end of the year to stop paying Putin for Russian crude.
Habeck’s efforts to find alternatives have had an effect. When Moscow launched the invasion, Germany imported 35% of Russia’s oil. Two months later, that percentage has dropped to 12%. Importing companies have managed to close deals with other suppliers. A single black hole remains: the Schwedt refinery, in the eastern state of Brandenburg, which runs on the type of crude that Russia exports and where there is no incentive to look for substitutes: majority ownership is in the hands of Rosneft, the Russian state oil company. .
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Germany will not be able to gain independence from Moscow as long as Schwedt, a city of 35,000 in the former GDR where the refinery is the largest employer, remains connected to the pipeline that pumps crude directly from Russia. The tube is called Druzhba, which means friendship in Russian, and it is one of the largest and longest in the world. Minister Habeck has suggested that the government could eventually take control of the refinery, as it did last month with the German subsidiary of Russia’s state gas company Gazprom.
change of speech
The new energy security law, approved by Scholz’s cabinet a few days ago, even allows expropriation in the event of a threat to security of supply. After passing through the Bundestag, it could enter into force at the end of May. The change of operator would mean that the refinery would be fed with crude oil delivered by ship to the port of Rostock. Schwedt supplies much of eastern Germany, including Berlin. It produces gasoline, diesel, heating oil and kerosene for aircraft. Habeck has warned that ditching Russian oil would lead to higher prices and perhaps bottlenecks, but “would no longer lead to total catastrophe.” The change of speech in a matter of weeks has been remarkable.
The European Commission, headed by the German Ursula von der Leyen, wants to present the draft of a new sanctions package as soon as possible to increase pressure on the Moscow government. The oil embargo would send a political message, but it would also deal a crushing blow to Russian finances. In the two months since the invasion of Ukraine, on February 24, Moscow has received 63,000 million euros from its hydrocarbon exports, according to figures from the thinktank CREA (Center for Research on Energy and Clean Air). The decline in sales to the EU has been offset by high energy prices.
Only Germany has contributed to that amount with 9,100 million euros —Italy follows closely, with 6,900—, mainly for the natural gas that it imports through gas pipelines such as the Nord Stream 1 or the Yamal. Gas is now Berlin’s main concern. Their dependency is very high, despite having managed to reduce it in record time. From the 55% that it was before Putin launched the war of aggression against Ukraine, it has dropped to 35%.
The experts who advise Scholz and much of the German industry, which has underpinned its competitiveness in recent decades thanks to cheap Russian gas, warn that a sharp cut would be catastrophic for the country’s economy. Berlin defends that it will need to maintain Russian gas imports until mid-2024. It needs that margin to build regasification plants that allow it to import liquefied natural gas by ship – it currently does not have any – and ensure other supply routes. Minister Habeck recently traveled to Qatar in search of alliances.
To the external pressure of partners such as Poland and the Baltics has been added the internal one, more noisy as the weeks go by. More and more voices from all parties, including those of the government coalition, made up of Social Democrats, Greens and Liberals, demand that the chancellor support the prohibition of Russian hydrocarbons. Germany, they argue, must stop financing the Kremlin’s war machine. Banning oil would mean hitting the largest item of energy imports to the EU from Russia (42,000 million euros per year, more than gas, according to CREA). With Berlin in favor, the chances of Brussels approving the embargo have skyrocketed.
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