Europe's push to punish Putin fails to live up to rhetoric

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Diplomats and officials are growing more concerned that the EU may have reached the limit of the short-term damage it can inflict on Russia three months after its invasion of Ukraine.

As the European Union's standoff over its ostensibly coming Russian oil embargo dragged on for days and then weeks, one diplomat told his colleagues, “Nothing happens, nobody comes, nobody goes, it’s awful!”

Member states are failing to follow through on vows to hit President Vladimir Putin where it hurts: the rich energy sector. The spotlight has been on Hungary's unwillingness to support sanctions, while other nations are caving into Putin's demands for ruble-based gas payments.

The ugly images illustrate the EU's goal of backing severe talk with action, which requires unanimous agreement from all 27 countries.

Some leaders are reportedly pushing toward a modified deal that would allow deliveries via a vital pipeline to continue for Hungary and others ahead of a two-day meeting on Monday.

Hungary's PM today stated that there is no agreement at all regarding the EU's oil embargo on Russian oil.

The PM stated that only if energy security solutions were discovered for his landlocked nation, he would agree to the sixth package of penalties.

Read more: Budapest not to back Russian oil ban over energy concerns

Not only Orban but other companies are also going ahead with Russian gas purchases through ruble accounts, despite EU warnings.

According to Nathalie Tocci, a former advisor to EU foreign policy chief Josep Borrell, “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."

She also noted the public opinion problem. “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."

Read more: Scholz admits German economy suffers losses from anti-Russia sanctions

Member states have also been divided, notably between western and eastern nations, on what armaments to supply Ukraine, whether talking to Putin was worthwhile, and what terms Kiev should accept in any future peace settlement.

It will be hard

In early May, when the EU proposed the ban, the Commission's President Ursula von der Leyen stated, “Let’s be clear: it will not be easy.”

Indeed, EU countries are finding it increasingly difficult to achieve an agreement since the measures under consideration would impose greater demands on their national coffers, according to officials.

Even if it is agreed upon before or at the meeting, the sixth package of penalties has lost some of its stings. Following pressure from Greece, proposed phase-out dates have been delayed, and a prohibition on ships delivering Russian oil to other nations anywhere in the globe has been dropped.

According to persons familiar with the situation, EU nations are negotiating with the Commission a scheme that would suspend seaborne oil exports while exempting those via the massive Druzhba pipeline for a limited time.

The removal of pipeline oil would undermine the package, which also targets the banking and real estate industries. Last year, Russia delivered around 720,000 barrels of oil per day to European refineries via its major pipeline to the area. This compared to 1.57 million barrels of seaborne volume per day from its Baltic, Black Sea, and Arctic ports.

Russia's oil exports are forecast to generate almost $320 billion this year, rising more than a third from 2021.

Dutch Defense Minister Kajsa Ollongren stated that "at the beginning, the unity we showed after the 24th of February was quite extraordinary,” noting that "now it's getting more difficult."

Read more: EU unity on Russia sanctions ‘crumbling’: Germany

Following oil, the EU will move to gas. It has stated that it intends to replace two-thirds of Russian gas by the end of the year and eliminate imports by 2027. According to the gas business, this may be overly ambitious.

As tensions rose over Hungary's decision to keep the EU in limbo, officials said, support for scrapping the bloc's unanimity rules on sanctions and foreign policy was growing. The unanimity concept has been recommended to be abandoned by French President Emmanuel Macron and Italian Prime Minister Mario Draghi.

Guntram Wolff, director of the Brussels-based think tank Bruegel, stated that "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,” adding that dropping it would allow us to be faster and bolder on sanctions."