U.S. officials have stepped in to try to persuade Poland and other EU countries to agree on a plan to hit Vladimir Putin’s war fund by capping the price paid for Russian oil.
As time runs out ahead of a Monday deadline for implementing the G7 price cap plan, Poland, Estonia and Lithuania have been pushing within the EU for a more severe limit, at a lower price, EU diplomats said.
The disagreement among EU countries has delayed progress on the measure, which is designed to cut the revenues Putin rakes in from sales of oil overseas. The European Commission this week proposed a cap of no more than $62 per barrel of Russian crude, down from its original suggestion of a cap between $65 and $70.
The trio of hawkish Eastern European countries argue that with Russian Urals crude currently trading at around the level of the proposed cap, the measure would fail to drive down Moscow’s oil revenues, which help fund its war in Ukraine.
EU ambassadors will meet again on Wednesday for a pre-scheduled discussion but it is not yet clear whether the oil price cap will be on the official agenda, although informal talks will continue, diplomats said.
A potential review mechanism for the price cap level has emerged as an important element of the discussions, one senior EU diplomat said.
The EU’s ban on seaborne Russian oil comes into force on Monday December 5, a date that had been planned to dovetail with the introduction of the price cap, which was originally devised by the G7.
Greece, Malta and Cyprus had been holding out for either a higher price cap or compensation for their shipping industries, which play a key role in transporting oil via tankers around the world. But their objections have now been “squared off,” an EU diplomat said.
EU diplomats said Washington was involved in helping to find an agreement with Warsaw through direct contacts, alongside the EU. “It always takes the Poles a little more time,” a second diplomat said.
U.S. Treasury Secretary Janet Yellen also spoke to Estonian Prime Minster Kaja Kallas on the issue last week, the Estonian public broadcaster ERR reported.
Although G7 countries are still determined to confirm the cap level before Monday, a third EU diplomat insisted the U.S. contact with EU countries had been an “exchange of views and facts,” not an attempt to apply pressure to agree the cap level specifically.
“Washington has reached out to the capitals, listened to arguments and explained,” the diplomat said. The hawkish countries, plus Latvia, have also now secured a promise from the European Commission that discussions on the next package of sanctions against Moscow will start as soon as this weekend, three senior diplomats said.
The Commission is set to start consultations with EU envoys on the bloc’s ninth package of Russia sanctions, the diplomats said.
It’s still unclear what will be in the new sanctions plan, apart from listings of more individuals. Diplomats played down expectations about the likely scope of the additional measures, as the EU has targeted Russia with several rounds of sanctions already, including on its oil, coal and banking sectors.
The U.S. Treasury was approached for comment.