(Bloomberg) -- As the European Union’s impasse over its supposedly imminent Russian oil embargo stretched into days and then weeks, one ambassador quoted Samuel Beckett’s play “Waiting for Godot” to his colleagues: “Nothing happens, nobody comes, nobody goes, it’s awful!”
Diplomats and officials are getting increasingly frustrated the EU may be reaching the limits of the short-term pain it can inflict on Russia already three months after its invasion of Ukraine.
Member states are failing to deliver on promises to hit President Vladimir Putin where it hurts: the lucrative energy industry. The focus has been on Hungary’s refusal to back sanctions, but other countries are yielding to Putin’s demands for gas payments in rubles.
The unflattering optics highlight the limits of the EU’s strategy to back tough rhetoric with action that requires unanimity among all its 27 members. Ahead of a two-day summit starting Monday, some leaders are now leaning toward a diluted agreement that would allow deliveries through a key pipeline to continue for Hungary and others.
Hungarian Prime Minister Viktor Orban, the EU leader closest to Putin, has urged his colleagues not to tackle a proposed ban on Russian oil. More talks are underway to try to reach a deal before then, even by removing oil from the package completely. If that attempt fails, leaders may discuss the ban anyway, according to EU diplomats.
But it’s not just Orban, who has clashed with the EU for years over everything from rule of law to gay rights in his country and threatened to torpedo its post-pandemic financial package. Companies elsewhere are pressing ahead with purchases of Russian gas through ruble accounts amid ambiguous warnings from the European Commission.
One minister noted at a recent meeting of EU ministers that it was regretful that some operators had opened accounts in rubles contrary to what they were communicating publicly.
“If we get stuck on oil, and the war drags on with no winner and no loser, we could see a scenario in which EU unity starts fraying,” said Nathalie Tocci, a former adviser to EU foreign policy chief Josep Borrell.
There’s also the effect on public opinion, she said. “The more the war drags on, the more European societies are unwilling to endure the pain of sanctions, and that slows down the momentum for sanctions,” said Tocci, now director of Rome’s Institute of International Affairs.
At a meeting of diplomats in Brussels on May 18, the ambassador who quoted Beckett also compared his group to unpromising students who risked failing in the eyes of their own citizens. The person declined to be named when talking about a confidential discussion.
Member states have also been split -- particularly between western and eastern nations -- over what weapons to send Ukraine, whether there was any use in talking to Putin, and what terms should Kyiv accept in any future peace deal.
It was always going to take time. Commission President Ursula von der Leyen first proposed the oil ban in early May with the words: “Let’s be clear: it will not be easy.” The EU has repeatedly overcome divisions to forge five wide-ranging sanctions packages so far. Several diplomats expect Orban to come round in the end to avoid isolation. This week, he called a state of emergency and imposed a windfall tax to raise money for the economy.
Indeed, EU members are finding it harder and harder to reach agreement because the sanctions being considered mean imposing higher burdens on their national finances, officials said.
Even if it’s agreed before or at the summit, the sixth package of sanctions has lost some of its punch. Proposed phase-out periods have been lengthened, and a ban on tankers shipping Russian oil to third countries anywhere in the world has been ditched after pressure from Greece.
EU governments are discussing a plan with the Commission that would stop seaborne oil shipments and exempt those through the giant Druzhba pipeline for a limited period, people familiar with the matter said on Friday.
Stripping pipeline oil would further weaken the package, which also targets the financial and property sectors. Russia shipped about 720,000 barrels a day of crude to European refineries through its main pipeline to the region last year. That compares with seaborne volumes of 1.57 million barrels a day from its Baltic, Black Sea and Arctic ports.
Russia is expected to earn about $320 billion from energy exports this year, up by more than a third from 2021. Banning Russian oil and gas immediately could play a key role in supporting Ukraine on the battlefield and then giving Kyiv a much stronger position in any peace talks, one of the diplomats said.
“At the beginning, the unity we showed after the 24th of February was quite extraordinary,” Dutch Defense Minister Kajsa Ollongren said in an interview. Now, it’s getting more difficult, she said, but “we’re good at solving, we’re good at finding compromises in the European Union.”
End of Unanimity?
After oil, the EU will turn to gas. It has signaled it wants to replace Russian gas by two thirds by the end of the year and end imports by 2027. That may prove too ambitious, the gas industry has said.
As tensions grew over Hungary keeping the EU in what one diplomat called a state of limbo, support is gaining traction for getting rid of the bloc’s unanimity criteria on sanctions and foreign policy, diplomats said. French President Emmanuel Macron and Italian Prime Minister Mario Draghi have urged ending the unanimity principle.
“The unanimity requirement will eventually have to go -- it will be difficult but the EU can’t continue to operate this way in foreign policy,” said Guntram Wolff, director of the Brussels-based think tank Bruegel. “Dropping it would allow us to be faster and bolder on sanctions.”
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