EU considers shelving ban on Russian oil as Hungary blocks sanctions

EU diplomats are weighing up a radical option to get around Hungarian Prime Minister Viktor Orbán’s reluctance to ban Russian oil: park the plan.

One idea circulating in Brussels would see other elements of the EU’s sixth package of Russia sanctions move ahead, with the support of all 27 member countries. But the complete ban on all imports of Russian crude and refined fuels could be put aside for now, while work continues on a compromise deal that Hungary can accept, EU diplomats told POLITICO.

Such a delay would be a major setback for the EU’s efforts to counter Vladimir Putin’s war in Ukraine. In particular, it would be a blow to European Commission President Ursula von der Leyen, who proposed the total prohibition of all imports of Russian oil in a draft sixth sanctions package on May 4.

The fact that diplomats are considering such a dramatic step shows how hard it is for the EU to escalate its economic offensive against the Kremlin and how painful it is to wean itself off Russian energy.

Cutting off the EU market for Russian fossil fuels is regarded in Brussels as a vital step in limiting a key stream of revenue that’s helping to finance Putin’s war.

Yet for landlocked countries such as Hungary and Slovakia, which rely heavily on pipeline supplies of Russian oil, banning crude will be painful. The Commission has tried to reach compromises with Orbán, but so far his government says it needs more time — and potentially more money — before it can agree.

“There is indeed an idea floating to split up the package as we’re agreed on 90 percent of it, so moving forward with everything but the oil ban,” one EU diplomat said. “It’s frustrating that we can’t move forward with the things that are agreed on. So why not do it like this, be pragmatic and then continue the energy discussion?”

The diplomat added that separating the oil ban from the rest of the sanctions package would “send a bad signal” and may well be opposed by other countries for that reason. Diplomats are due to meet on Friday, though it’s not yet clear whether they will discuss the Russia sanctions package.

Another EU diplomat said it would be better to approve the rest of the new sanctions package as fast as possible and return to the oil ban at a later stage. It would also be better to agree on 90 percent of the proposed oil ban than none of it all, the diplomat said.

One option could potentially involve separating the most contentious parts of the oil ban and moving ahead with other elements of the plan which Hungary could support. Budapest has previously suggested that deliveries by pipeline should continue to be permitted, with sanctions restricted to oil supplied by shipping.

Yet any dilution of the oil package would be damaging to the EU’s credibility, especially after von der Leyen and other political leaders have been so clear that hitting Putin’s oil industry is vital. The remainder of the sanctions package includes measures targeting pro-Russian propaganda, lobbyists and consultants, as well as Sberbank, Russia’s biggest bank. But the heart of the package was always meant to be a strike against the Kremlin’s energy industry.

Suzanne Lynch contributed reporting.