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Wider Europe Briefing: A Consensus On New Russian Oil Caps; And Why Ukraine's EU Plans Are Too Ambitious


Europe had already banned Russian coal as well as most crude oil. It has now also imposed a ban on Russian diesel fuel and other refined oil products. (file photo)
Europe had already banned Russian coal as well as most crude oil. It has now also imposed a ban on Russian diesel fuel and other refined oil products. (file photo)

Welcome to Wider Europe, RFE/RL's newsletter focusing on the key issues concerning the European Union, NATO, and other institutions and their relationships with the Western Balkans and Europe's Eastern neighborhoods.

I'm RFE/RL Europe Editor Rikard Jozwiak, and this week I'm drilling down on two major issues: the debates over Belarus sanctions and Russian oil caps, and what they really have in common; and why Ukraine is being overly ambitious in its attempts to join the European Union in two years.

Brief #1: Russian Oil Caps, Sanctions On Belarus, And The Battle For The 'Global South'

What You Need To Know: Over the last week, EU ambassadors have grappled with three separate, but intertwined topics directly related to the war in Ukraine: a new sanctions package on Belarus, the possibility of setting two new price caps on Russian oil products, and a review of the already existing price cap on Russian crude oil that was agreed in December 2022.

While there is consensus among the 27 EU member states that all three are needed, views differ on both the content and the timeline.

All three issues also concern the EU's relationship with the so-called Global South, in this case meaning countries, especially in Asia and Africa, that tend to be economically poorer than European nations but are playing an increasingly important role in world politics due to their steady economic growth.

Within the context of the war in Ukraine, Brussels has been keen to secure the support of many of these southern nations when it comes to votes in the United Nations condemning Moscow.

But the EU is also extremely wary of Kremlin propaganda, which portrays the bloc's Russia sanctions as damaging for the world economy and for creating shortages of food and fuel globally.

Deep Background: Perhaps the easiest bit for EU officials and diplomats to agree on is the new price caps.

This is because they are in agreement with the Group of Seven (G7) leading advanced economies that the cap should be $100 for Russian petroleum products, such as diesel, and $45 for other cheaper products made from oil, such as liquid paraffin and industrial lubricants.

There was also a strong desire to agree on this by February 5 when the EU embargo on buying these types of Russian oil products enters into force.

With most shipping and insurance companies based in the EU and G7 countries, the caps are meant to reduce the revenue that Moscow gets from sales to non-EU/G7 countries, while ensuring vital supplies continue to flow to the Global South.

The same idea was behind the EU/G7 cap on Russian crude oil, set at $60 per barrel in early December 2022. While that cap has contributed to the Kremlin losing out on crucial cash to fund its invasion of Ukraine, the Baltic trio of Estonia, Latvia, and Lithuania, as well as Poland, wanted an immediate review undertaken by the European Commission with the view to potentially lowering the cap to $40-50.

And they wanted this to happen before green lighting any agreement on the new caps. For most other EU countries, the United States, and the European Commission, the review can wait until March.

Drilling Down:

  • The European Commission analysis is that the price cap works: lower prices without the disruption of deliveries to third countries. The commission has also noted that China uses the cap to further negotiate the price down.
  • The Baltic trio, on the other hand, has pointed to the EU regulation, agreed in December 2022, that stipulates that the oil price cap "shall be reviewed, as of mid-January 2023 and every two months thereafter." The trio also notes that Brussels agreed that the cap should be at least 5 percent below the average market price for Russian oil.
  • With Russian oil currently selling around $50 per barrel, the Baltic countries are arguing that a $60 cap is an empty gesture, pointing to some estimates that show Russia still gets $600 million per day from the sale of various fossil fuels.
  • Other EU member states, however, shoot back that the G7 isn't bound by the EU regulation and that a review first in March will allow a rather volatile market to adjust to the cap introduced just two months ago.
  • In the end, EU ambassadors agreed on February 3 on the two new petroleum product price caps at the expected rate of $100 and $45. And to placate the Baltic trio and Poland, a clear legal procedure spelt out how the March review of the oil cap will be carried out.
  • The need not to disrupt the flow of oil to the EU's southern partners is the overriding fear here. That apprehension is noticeable in the EU's latest sanctions package on Belarus, the first since the summer of 2022. The proposal mirrors some of the measures already applied to Russia, such as an EU ban on providing IT services, consulting, polling services, and luxury goods to the country and a prohibition on the import of Belarusian steel and gold.
  • But just as with the last EU sanctions package on Russia, agreed at the end of 2022, there is also a derogation when it comes to fertilizers and food products. The Belarus proposal, seen by RFE/RL, notes that this is "in order to further address food security concerns in third countries" and that individuals who play "a significant role in international trade in agricultural and food products, including wheat and fertilizers" can have their assets unfrozen by Brussels.
  • For Minsk, this could mean Belarusian tycoon Ivan Halavaty and Russian billionaire Mikhail Gutseriyev, who has been supportive of Belarusian leader Alyaksandr Lukashenka, could potentially see EU asset freezes against them dropped.

Brief #2: Ukraine's Overly Ambitious Plan To Join The EU

What You Need To Know: Possibly the biggest talking point from last week's EU-Ukraine get-together in Kyiv was the timeline for Ukraine's EU membership.

Ahead of the meeting, Ukrainian Prime Minister Denys Shmyhal confidently proclaimed that his country had a very ambitious plan to join the club within two years.

He repeated the same thing at the press conference after his government had met with the 16 visiting European commissioners, although he did add the caveat that the approval process in EU member states might well take longer.

On that point he's certainly not wrong: There is a need for all 27 to agree to opening accession talks, and the same unanimity is needed to open and close every one of the 33 negotiation chapters.

European Commission President Ursula von der Leyen, who was standing next to Shmyhal, diplomatically dodged the question of timelines, simply adding bureaucratic platitudes such as "the accession process is merit-based."

She did note, however, that Kyiv's "speed and ambition and determination, while being in an atrocious war, is impressive."

Deep Background: Ukraine has every right to be optimistic about its chances. Last year, it received candidate status three months after applying -- something of a record -- and there is still widespread political and popular support across the EU for Ukraine and Ukrainians.

The fact that over half of the college of European commissioners travelled together to Kyiv is significant.

And, while there, they did agree on measures that will help Ukraine get closer to the bloc, including a road map to improve the country's access to the European Union's lucrative single market in areas such as public procurement and industrial products.

Import duties for Ukrainian goods will be waived for another year and the "solidarity lanes" -- transport links between the EU and Ukraine -- will be given a funding boost of 1 billion euros ($1.1 billion).

Drilling Down:

  • Yet, there is a hard road ahead. When Ukraine got its candidate status, it also received seven conditions to fulfil in order to open accession talks, including the enactment of new anti-oligarch and media laws, greater protection for national minorities, and reforming the country's Constitutional Court and anti-corruption bureau.
  • While Shmyhal says that all seven conditions have been either met or that considerable progress has been made, several EU officials I spoke to on condition of anonymity said that only about 50 percent of the work has been accomplished so far.
  • The European Commission will come with its big assessment on Ukraine's progress in October and, while Kyiv hopes for a positive review and the start of accession talks by the end of the year, there is every chance that the EU will come with more conditions before any talks can start. That would push the timeline to 2024 and possibly even beyond.
  • It is also worth noting that, while in Kyiv, the European Commission quietly published its assessment on how aligned Ukraine, as well as the other EU hopefuls Georgia and Moldova, are with EU legislation in all policy fields. Out of 33 chapters, Ukraine is deemed to have "a good level of preparation" in only four, including energy and foreign policy. To adopt all the necessary EU legislation within a year will be something of a Herculean task.
  • Then there is also the skepticism, notably among western member states, about rushing Ukraine into the EU. While some eastern member states wanted something akin to an official midterm report on Kyiv's accession progress already in the spring, that idea was shot down and will now simply be an "oral update" by the European Commission that won't have much legal bearing.
  • For more EU foot-dragging, look no further than the EU-Ukraine summit declaration that EU ambassadors haggled over for days. The main bone of contention was this sentence: "The EU acknowledged the considerable efforts that Ukraine demonstrated in the recent months towards meeting the objectives underpinning its candidate status for EU membership." In early drafts, the word "progress" was used in the sentence, however a good number of western EU member states objected, and it was replaced with "efforts." As a diplomat from one eastern member state noted to me: "Ukraine might be ambitious, but I really sometimes wonder if we are."

Looking Ahead

A week after travelling to East Asia to visit Japan and South Korea, NATO Secretary-General Jens Stoltenberg will spend most of this week in the United States, meeting with both the U.S. secretaries of state and defense, the National Security Council, and members of Congress. Expect a full range of issues to be discussed, including more arms to Ukraine, preparation for the meeting of NATO defense ministers in Brussels in mid-February, and the NATO summit in Vilnius in July.

EU leaders will gather in Brussels on February 9-10 for their first summit of the year. The focus will be on migration issues, amid a recent spike in asylum requests in the EU. The issue mainly concerns the bloc's southern borders, so the influx of Ukrainian refugees since Russia's full-scale invasion in February 2022 is not on the table. It's likely that EU candidate countries in the Western Balkans will be asked to do more to combat migrant smuggling along the so-called "Western Balkan route" leading to the EU.

That's all for this week. Feel free to reach out to me on any of these issues on Twitter @RikardJozwiak or on e-mail at jozwiakr@rferl.org.

Until next time,

Rikard Jozwiak

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    Rikard Jozwiak

    Rikard Jozwiak is the Europe editor for RFE/RL in Prague, focusing on coverage of the European Union and NATO. He previously worked as RFE/RL’s Brussels correspondent, covering numerous international summits, European elections, and international court rulings. He has reported from most European capitals, as well as Central Asia.

About The Newsletter

Wider Europe

The Wider Europe newsletter briefs you every Monday on key issues concerning the EU, NATO, and other institutions’ relationships with the Western Balkans and Europe’s Eastern neighborhoods.

For more than a decade as a correspondent in Brussels, Rikard Jozwiak covered all the major events and crises related to the EU’s neighborhood and how various Western institutions reacted to them -- the war in Georgia, the annexation of Crimea, Russia’s support for separatists in eastern Ukraine, the downing of MH17, dialogue between Serbia and Kosovo, the EU and NATO enlargement processes in the Western Balkans, as well as visa liberalizations, free-trade deals, and countless summits.

Now out of the “Brussels bubble,” but still looking in -- this time from the heart of Europe, in Prague -- he continues to focus on the countries where Brussels holds huge sway, but also faces serious competition from other players, such as Russia and, increasingly, China.

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