The economy today

Why the European embargo on Russian oil is slipping

Audio 03:56

An oil refinery in Tartarstan, Russia.

Several Member States reject sanctions against Russia, which would be too harmful for their economy.

© REUTERS/Sergei Karpukhin

By: Dominique Baillard Follow

3 mins

The European embargo on Russian oil is deadlocked for lack of unanimity among the Twenty-Seven.

An agreement could be reached by the end of the week, promise the negotiators.

Several member states, including Hungary, reject sanctions that would be too harmful for their economy.

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Hungary is the most vehement.

For this landlocked country which depends on Russia for its main refineries, the embargo would be devastating, “ 

an economic nuclear bomb 

” affirms the Prime Minister.

Viktor Orban estimates that it will take five years and investments in billions of forints, the national currency, to transform the refineries connected to the Druzhba pipeline.

Five years is much longer than the two-year derogation proposed by the Commission to this country.

The visit of the president of the commission on Monday, May 9 in emergency, then the phone call from President Macron yesterday, have still not made it possible to remove Viktor Orban's reluctance.

On the contrary, he seeks to push his advantage as far as possible.

Because the Hungarian Prime Minister is also at odds with the commission

His government is suspected of corruption in the use of European subsidies.

This is why the commission refuses to pay him the 7.5 billion euros provided for in the framework of the post-covid-19 recovery fund.

A fortnight ago, it went even further in its standoff by triggering a procedure, which in the long term could deprive Hungary of other European funds.

For Viktor Orban, the opportunity is too good to regain control.

He has little chance of succeeding in imposing his own vision, favorable to Vladimir Putin's Russia, but he could obtain financial compensation from Brussels.

Other countries have stepped into the breach to bargain or soften the sixth round of sanctions

The Czech Republic and Slovakia, two other landlocked countries, have obtained temporary exemptions from the embargo.

Bulgaria is also calling for substantial aid to upgrade its Russian-dependent refinery.

She fears massive layoffs and a rise in the price of fuel too heavy to bear for her population.

Greece, Cyprus and Malta have blocked the ban on the transport of Russian crude by vessels under the European flag, as provided for in the initial text of the sixth set of sanctions.

Cyprus, very welcoming with large Russian fortunes, opposes the ban on real estate sales to Russian nationals also outlined in this new salvo of sanctions.

Is the solidarity of European countries with Ukraine finding its limits?

From the start, Germany has insisted on the risk of recession that the sanctions could cause.

And this risk has become the red line in all discussions.

Governments fear the reaction of their populations: for the moment European citizens adhere to the sanctions decided by the Twenty-Seven, they could quickly become disillusioned if the bill is too high for them, they are already very affected by the rise in prices, especially fuels.

It remains to prepare the minds.

Mario Draghi, the head of the Italian government, found the words in front of his parliament by declaring that it was necessary to choose between “ 

peace or air conditioning

 ”.

Italy is, like Germany, a country very dependent on Russian gas, up to 40% of its needs.

But Rome, like Berlin, is nevertheless playing the game and supporting the oil embargo.

For gas, the two countries are actively preparing for it.

Mario Draghi is increasing his trips abroad to find new suppliers, he was in Washington on May 10, received at the White House by President Joe Biden.

► IN BRIEF

Apple ends iPod production

Its digital music player, released in 2001, will be available in stores until stocks run out.

It has long been one of the brand's flagship products and the precursor to the iPhone, the smartphone is now the medium for online music for the majority of users.

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