Energy on the table as EU foreign ministers meet on Ukraine, defence

As EU foreign and defence ministers meet in Brussels on Monday (21 March), the question is how far the bloc is prepared to go should the war in Ukraine escalate further.

EU foreign ministers will most likely discuss a fifth sanction package on Russia before US President Joe Biden arrives in Brussels on Thursday for summits with NATO, the EU and the Group of Seven (G7) format, including Japan.

The EU and its Western allies have levied significant sanctions against Russia and Belarus so far, including removing several Russian banks from SWIFT, finance and trade, and 685 Russians and Belarusians.

Economically the toughest choice will be this week whether to target Russian oil, as the US and UK have done. The EU has not done so yet, given its dependence on Russian gas for energy.

Earlier, the European Commission pledged to reduce EU purchases of Russian gas by two thirds this year through diversification of suppliers and an increase in renewable hydrogen production.

According to some EU diplomats, last week, there was “not too much appetite” to move quickly with a fifth sanctions package that could include painful energy options.

Eastern Europeans, especially Poland and Lithuania, have said they are ready to hit Russian oil, gas and coal and have repeatedly warned that “sanctions fatigue” could incentivise Putin to go even further.

Poland is proposing to add a trade blockade to this package of sanctions as soon as possible,
“[including] both of its seaports (…) but also a ban on land trade,” Polish Prime Minister Morawiecki said.

The EU relies on Russia for 40% of its gas, with Germany among the most dependent of the EU’s large economies.

Germany, the largest EU buyer of Russian crude oil, is leading the reluctant camp of member states, warning against acting too quickly because of already high energy prices in Europe.

Bulgaria, almost entirely dependent on gas supplies from Russia’s Gazprom, has said it might seek an opt-out.

Southern Europeans, meanwhile, mull energy market reform.

France, who heads the EU’s six-month presidency, has said that if the situation worsens in Ukraine, there should be no “taboos” in terms of sanctions.

EU diplomats also indicated ahead of Monday’s meeting that a Russian chemical weapons attack in Ukraine, or a heavy bombardment of the capital Kyiv, could trigger an energy embargo.

Russian forces broadened their bombardment of the besieged Ukrainian city of Mariupol over the weekend.

EU defence ministers will hear more about the situation from their Ukrainian counterpart Oleksii Reznikov, joined via video link, later on, Monday.

However, it was unclear whether EU foreign ministers would be expected to sign off on a new round of €500 million for the European Peace Facility (EPF) for Ukraine, despite the idea having been floated at the Versailles summit earlier this month.

One of the reasons was that Germany required parliamentary approval for major defence decisions, one EU diplomat told reporters before the meeting.

Strategic Compass

In a joint session, foreign and defence ministers are set to greenlight the EU’s future military strategy, the Strategic Compass, which will go for final approval to EU leaders by the end of the week.

Russia’s invasion of Ukraine has prompted a significant rewrite of the document, with the security threat of Moscow’s aggression becoming the red thread in the latest versions of the paper.

Over the past week, the document has seen some last-minute but significant changes, mostly related to political messaging and investment.


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