J. Wellington European Union

From Lawrence Norman’s Wall Street Journal report on the European Union’s pledge to end its imports of Russian oil by the end of the year:

By holding up a deal on oil sanctions for weeks, Mr. Orban exposed the EU’s divisions on how ambitiously to target Moscow’s coffers in response to Mr. Putin’s invasion of Ukraine.

Mr. Orban, who called the idea of an embargo on Russian oil an “atomic bomb” for Hungary’s economy, agreed to a compromise at an EU leaders’ summit on Monday night that largely exempts Hungary from the bloc’s oil sanctions, but that lets the EU advance with one of its strongest measures so far to hit Russia’s finances.

EU officials expect the oil sanctions, which they estimate will end 90% of the bloc’s oil purchases from Russia by the end of this year, to be formally approved by Thursday.

“Tonight, as Europeans, united and in solidarity with the Ukrainian people, we are taking decisive new sanctions,” French President Emmanuel Macron said after Monday’s summit.

After long and fraught negotiations over an oil embargo, the EU has managed to preserve its unity in the face of Russia’s invasion of Ukraine. But the oil dispute has also exposed the limits of the EU’s ability to divorce itself from Russia’s energy exports, which help fund Moscow’s budget and its war effort.

EU officials say there are no plans for more major sanctions against Russia before the summer, and that sanctions on Russian gas are off the table for now.

That’s a step in the right direction but it’s a baby step. The “end of the year” is a long time from now. The war could be over by then. Or it could have spread.

There was a character in the old Popeye comic strip, J. Wellington Wimpy, who had the tagline “I will gladly pay you Tuesday for a hamburger today”. Our European allies are getting high marks for solidarity and support of the war effort that has yet to materialize. As I’ve said before I’ll be a lot more impressed when they actually do it.

The graph at the top of the post illustrates European and British imports of Russian energy products, mostly oil and gas. My back of the envelope calculation suggests that a 90% reduction in oil imports means about a 2/3s reduction in the dollar value of their Russian imports. The longer they put it off, the less likely it is they’ll need to do it at all, the higher the price of oil is likely to be which reduces the impact of the promised “embargo”, and the more likely it is that Russia will just cut them off. After all two can play at the economic sanctions game. Additionally, the longer they delay the easier it will be for Russia to line up other buyers.