The EU’s plan to cap Russia’s energy prices has suffered successive setbacks. Bloomberg quoted sources as saying on September 26 that the European Union plans to delay setting a price cap on Russian oil due to opposition from countries including Cyprus and Hungary. Just two weeks ago, a leaked EU draft suggested that the EU might also drop a price cap on Russian gas following member states failed to agree.
The report quoted sources as saying that EU countries are working to reach an agreement on a price cap on Russian oil. Over the past weekend, the European Commission held talks with member states on the issue, trying to find a compromise. But with opposition from countries such as Cyprus and Hungary, plans to cap the price might be delayed until a broader sanctions package is reached.
Hungarian Prime Minister Viktor Orban said on Monday that the European Union should lift sanctions on Russia. Orban said EU sanctions once morest Russia were the main reason for soaring natural gas prices and inflation. “We can safely say that because of the sanctions, the people of Europe have become poorer, and Russia will not give in,” Orban said. “The sanctions backfired and European countries shot themselves in the foot.”
The source said there are still many details to be confirmed on the price cap, such as what price to set the cap at. In addition, many member states have their own ideas on price caps. For example, EU countries that import Russian pipeline oil hope to continue to be exempted, while countries that import Russian oil by sea hope that the price cap policy will be fair. In addition, shipping countries such as Greece, Cyprus and Malta may also try to protect their respective industries from these price caps.
In June this year, the EU reached a compromise on the Russian oil import ban. The ban only targets seaborne oil, while Hungary and other Central European countries are most concerned regarding pipeline oil. But in any case, any EU price caps would need to take effect by December 5, as this is the date the EU’s ban on Russian oil imports comes into effect.
Sources predict that member states may push for a tentative deal ahead of an informal meeting of EU leaders on Oct. 6.
Sources also said that EU member states are closer to agreeing on a plan to limit exports of military electronic components to Russia than to cap Russian oil prices. EU member states consider it “one of the most effective tools” once morest Russian forces.
While the EU has not given up on Russian energy price caps, the Bloomberg report admits that it is unclear how effective the price cap mechanism will be, especially given that major buyers of Russian energy such as China and India have not joined the West. Putting a price cap on Russia also means EU member states need to put their national interests aside for so-called European solidarity.
It is worth mentioning that, in addition to oil, the EU’s idea of a price cap on Russian gas is also not going well.
The British “Guardian” said on September 14 that a leaked EU draft showed that the EU may give up setting price caps on all imported natural gas, including the “Russian gas price limit” that has previously sparked many heated discussions. The draft shows that the EU is moving forward with a “windfall tax on excess energy profits” as a solution, with a tax of at least 33% of its excess profits. In fact, it was reported as early as early September that the proposal was shelved due to the disapproval of the member states to limit the price of Gazprom. Some member states’ energy ministers have demanded that the price caps should not specifically target Russia. Judging from the “Guardian” report, the EU seems to have given up its intention to cap prices on all imported natural gas as a whole.
EU plans to cap Russian gas prices on hold.
Russian Energy Minister Shuliginov said in an interview with Russian media in early September that Russia will not sell natural gas or oil to countries that impose price caps on it, and Russia will definitely not sell at a loss or below cost. Shuliginov warned that capping Russian oil and gas prices would only make things worse for the West.
After Russia announced local mobilization last week and pushed for referendums on membership in Donetsk, Luhansk, Kherson and Zaporozhye states, the EU is planning to impose tougher sanctions on Russia, with an eighth round A sanctions package is already in the works.
The EU’s major decision-making process adopts the principle of consensus, and each member state has the right to “one-vote veto”. In order to allow the sanctions plan to be implemented as soon as possible, the EU is considering removing the veto power of member states when voting on Russia-related measures.
