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EU proposes total ban on Russian oil imports as war in Ukraine grinds on

South China Morning Post logo South China Morning Post 04/05/2022 Finbarr Bermingham
  • Commission President Ursula von der Leyen proposes staggered ban on imports, but some member states may be reluctant to support measure
  • Meanwhile, reports say China has been buying discounted oil from Russia without reporting it - a move that risks sanctions from the US

The European Union is to propose a ban on all Russian oil imports as part of a sixth package of sanctions triggered by the ongoing war in Ukraine.

The staggered ban would hit all Russian oil products, "seaborne and pipeline, crude and refined", Ursula von der Leyen, the European Commission President, said on Wednesday.

The embargo would be phased-in, with crude oil banned within six months and refined oil by the end of 2022.

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EU countries will now discuss the proposal, which needs to be approved by all 27 member states.

There is reluctance to back a total ban without viable alternatives in some countries with high dependencies on Russian energy.

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The move comes during a cost-of-living crisis that has sent inflation in the euro zone soaring by an estimated 7.5 per cent in April compared with a year earlier, according to the Statistical Office of the European Union, while growth languished at 0.2 per cent.

European lawmakers, while supportive of the measures, warned that the bloc needs to address the economic and social effects of the war and the sanctions.

"We need to address the consequences also on families, some of them are not even turning on their heating because they can no longer afford to do so," said Esther de Lange, a Dutch MEP from the centre-right European People's Party.

Luis Garicano, a Spanish MEP from the centre-left Renew Group, argued that the ban needed to be brought in immediately, calculating that since the start of the year, "the EU has sent the Russians Euro52 billion" (US$54.7 billion), a figure that could rise to Euro100 billion by the year's end.

In light of the economic pressure, the commission has pledged to pump extra funds into the economy, and to quickly find new energy suppliers.

On Wednesday, it also approved a German scheme worth Euro11 billion to support companies affected by the war.

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It also comes amid reports that China has been picking up discounted Russian energy products, in a move that risks secondary sanctioning by the United States.

The Financial Times reported on Tuesday that refineries had been buying Russian oil without reporting it, to avoid scrutiny and sanctions.

US sanctions would automatically kick in against companies from third countries that are found to be dealing with sanctioned Russian entities.

The EU does not have a secondary sanctioning mechanism, but has publicly warned China not to help Russia circumvent sanctions that they say are designed to cripple Vladimir Putin's war machine.

India has also been hoovering up cheap Russian energy, but has attracted a smaller backlash from the West so far.

German industry figures warned on Wednesday that the energy crisis had been compounded by coronavirus lockdowns in China, which have disrupted key supply chains.

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German exports fell 3.3 per cent in March compared with February, amid a 62.3 per cent collapse in shipments to Russia. However, exports rose 8.8 per cent compared with March last year.

"Dark clouds are gathering over the German economy in view of the Ukraine war and the Chinese government's zero-Covid strategy. German industry fears a downward spiral for the export economy - with enormous challenges for industrial production," said Joachim Lang, managing director of the Federation of German Industries, a powerful business lobby group.

Almost half of German companies depend on imports from China, said Carsten Brzeski, global head of macroeconomics at ING.

"New lockdowns in China and a continuation of, instead of easing, last year's supply chain disruptions will leave significant marks on German industry," he wrote in a note.

The proposed sanctions package will also target military officials connected to alleged war crimes in the Ukrainian town of Bucha, and those linked to the wanton destruction of Mariupol, a coastal city that has seen some of the heaviest fighting of the 10-week war.

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Von der Leyen announced plans to remove more Russian banks from the Swift network, including Sberbank, the country's largest.

Three state broadcasters would be banned from EU airwaves, while consultants, accountants and "spin doctors" would be banned from working with Russian companies, the German official said.

"We have identified these TV channels as mouthpieces that amplify Putin's lies and propaganda aggressively, and we should not give them a stage anymore to spread these lies," she told the European Parliament.

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