Why for some EU capitals, Russian oil is thicker than blood

Good morning and welcome to Europe Express, coming to you from blooming Washington this week — the place the FT’s first stateside Weekend Festival will happen on Saturday.

The EU is inching nearer in direction of sanctions on Russia’s oil exports, with German officers telling the Financial Times that Berlin nonetheless wants a number of months to get the whole lot prepared. Other capitals, notably Budapest and Bratislava, are nonetheless reluctant to endorse the plans, that are anticipated to be finalised tomorrow and put to EU ambassadors on Wednesday.

With EU power ministers gathering in Brussels in the present day to debate points surrounding the opposite Russian fossil gas imports — pure gasoline — after Russia minimize off Poland and Bulgaria’s provides, we’ll carry you the most recent on the place issues stand and what the central European arguments are.

Later this month, a second spherical of the EU-US Trade and Technology Council will happen in Paris — and we obtained our arms on the draft conclusions, which see an impetus for quicker and deeper transatlantic co-operation prompted by Russia’s warfare in Ukraine.

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Crude truths

Do you already know your Druzhba out of your Adria, and may you inform a barrel of Urals mix from Brent? As EU officers are discovering out this week, not all oil is created equal, write Henry Foy in Brussels and Marton Dunai in Budapest.

That the EU desires to cut back the amount of money it arms over every day to Vladimir Putin in alternate for his oil is not any secret. The drawback is easy methods to make it occur: member state ambassadors and European Commission officers will spend most of their waking hours this week wrestling with that challenge.

Some international locations — together with Germany — suppose the easiest way ahead is a tapered embargo, a countdown timer that provides international locations sufficient warning to seek out various provides till shipments are banned. Others suppose some type of worth cap mechanism that limits the Kremlin’s revenue is a greater technique: an concept publicly endorsed by Rome.

But discovering an settlement that can cross muster with all 27 members shouldn’t be going to be simple. And Hungary, lengthy criticised by extra hawkish members as too pro-Russian, has extra than simply its prime minister’s ties with Putin giving it second ideas.

Hungary, together with another japanese EU states, has constructed its oil infrastructure round piped Russian crude — particularly, Russia’s trademark Urals mix, shipped in from the sting of Siberia alongside the Druzhba pipeline.

Map showing the Druzhba pipeline

Just like gas to your automotive, crude varieties matter: you can not simply chop and alter what will get pumped right into a refinery — and altering refinery specs prices money and time. Most refineries have lower than every week of crude reserves at hand.

Hungary additionally lies on the Adria pipeline, which carries crude from the Croatian coast to south-east European markets. But even assuming the lengthy underinvested route might be upgraded to deal with the upper demand, Budapest would nonetheless have to discover a appropriate mix from one other producer to switch its lacking Russian provides.

That is much less of a difficulty for many western EU states who’ve various refineries tailor-made to US, North Sea or Middle Eastern crude varieties, or have extra flexibility with seaports to seek out options.

As with most EU stand-offs, there’s a potential resolution: cash.

Even since earlier than the invasion, in these halcyon days when officers mentioned what actions merely would possibly must be needed ought to Russia really assault Ukraine, the thought of solidarity funds — or balancing out the prices incurred by EU members on account of sanctions imposed on Russia — has been mooted.

Now that the time of hypotheticals has handed and the truth of warfare is right here, this week would be the first actual instance of that idea being firmly put to the check.

C for China

Russia’s assault on Ukraine has given recent impetus to the US-EU Trade and Technology Council, which meets for the second time on May 15-16, in Paris, write Andy Bounds and Javier Espinoza in Brussels.

The physique, initially arrange to cope with the rise of China, goals to harmonise rules to make sure the west units international guidelines in areas reminiscent of synthetic intelligence, information and labour requirements.

As one diplomat put it, the C in TTC doesn’t formally stand for China, “but maybe it should”.

The TTC options European commissioners Margrethe Vestager, Valdis Dombrovskis and Thierry Breton with secretary of state Antony Blinken, secretary of commerce Gina Raimondo and commerce consultant Katherine Tai on the US aspect.

A prolonged draft assertion seen by Europe Express comprises numerous pledges to work collectively however few concrete achievements.

However, it does embody a dedication to not take authorized motion towards assist schemes for inexperienced know-how and to keep away from “subsidy races” within the semiconductor business because the US and EU appeal to chip factories to cut back reliance on Chinese manufacturing.

The two sides can even present early warning of chip provide issues and collaborate fairly than compete on sourcing uncommon uncooked supplies.

Cecilia Bonefeld-Dahl, director-general of DigitalEurope, which represents the tech business, has simply returned from Washington and mentioned the extent of engagement from policymakers was “impressive”. 

“The US administration and many members of Congress are really on board. They are really enthusiastic about it.

“The Russian attack on Ukraine is a real game changer on many things but especially cyber security and AI. We need systems that are interoperable if we are to defend ourselves.”

EU and US counterparts are additionally engaged on a joint disaster mechanism for co-operation on exchanging data the place digital performs a outstanding position in gentle of the risk from “foreign information manipulation and interference” and the threats to silence “independent voices”.

As a part of the concerted efforts, the 2 sides are contemplating:

  • the monitoring of knowledge manipulation (together with disinformation, propaganda, authorities managed media) and the position of on-line platforms for its unfold, amplification and mitigation

  • the position of on-line platforms as a part of efforts to extend digital safety of Ukrainians and different focused teams (together with entry to high quality media overlaying Ukraine)

  • mapping of sensible devices for speedy deployment in disaster conditions, together with funding, digital and assist companies.

The draft provides: “We will look ahead to the actions necessary to address future digital threats around the globe, that are resulting from, or inspired by, Russia’s unlawful aggression. In the event of future crises, when the EU-US crisis protocol is triggered, it could be broadened to include also other partners.”

Chart du jour: Sharing prices

Charts showing that telecoms groups complain of weak growth compared to big tech. First chart shows revenues, the second shows Market Capitalisation (2015 vs 2021) both for Fang, Japan telcos, US telcos and EU telcos

Telecoms corporations have been embroiled in an extended debate with regulators about whether or not large tech corporations, which expend a good portion of community information, must be made to pay for a number of the billions being spent on 5G and full fibre rollout. A brand new business report says the EU ought to make Big Tech and streaming corporations pay not less than a number of the estimated €28bn they value European telecoms teams.

What to observe in the present day

  1. EU power ministers maintain emergency council on Ukraine warfare fallout, gasoline funds to Russia

  2. European parliament holds its plenary session in Strasbourg

. . . and later this week

  1. EU finance ministers tune in just about for a council to approve the nationwide restoration plans of Bulgaria and Sweden tomorrow

  2. EU oil embargo proposal to be mentioned by ambassadors on Wednesday

  3. Italian Prime Minister Mario Draghi speaks within the European parliament on Wednesday

  4. FT Weekend Festival in Washington and on-line on Saturday

Notable, Quotable

  • Ukrainian returnees: Of the 5mn Ukrainians who fled overseas to security after Moscow launched its full-scale invasion in February, greater than 1mn have returned, after Russian troops have withdrawn from Kyiv’s environment.

  • Fresh cash: The EU is exploring easy methods to speed up a Ukraine cost of €600mn underneath the bloc’s current emergency assist plan and to carry ahead a brand new spherical of lending.

  • French May Day: Tens of 1000’s of individuals joined May Day marches throughout France yesterday, to protest towards president Emmanuel Macron’s plan for pensions reform, after an election season dominated by issues over the price of residing and hovering gas costs.

  • Moldova angst: Born in Chisinau to the sound of shelling, in 1992, Paula Erizanu writes about how the frozen battle in Transnistria was a continuing setback for Moldova’s independence from Russia. “No one believed that a real war might re-emerge. That has now changed.”

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