EU Should Build Up to Russia Oil Embargo With Tariffs, Expert Says
If Europe is unable to impose a complete embargo on Russian energy imports, it should at least consider an import tax to begin reducing European demand for Russian oil, said Andreas Goldthau, an energy policy expert and professor at the University of Erfurt. Goldthau, speaking during an April 14 event hosted by the Washington International Trade Association, said revenue from the tariffs could also help the EU source and distribute gas from other suppliers.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
“You would shift the rent from producers to consumers and curb income for [Russian President Vladimir] Putin and Russia,” Goldthau said, “whilst at the same time essentially generating some income that you can use to buffer some of the negative effects of doing so.”
EU officials have said they are considering some tax measures to dissuade purchases of Russian oil, but some member states, including Germany, are reluctant to impose a full embargo (see 2204050076 and 2203240026). Goldthau suggested that some states may be more willing to impose less severe measures now and build up to a stronger ban once the oil can be sourced elsewhere. “It might look a little bit more complicated,” he said, “but it might be a smarter option than just to say, ‘let's go cold turkey.’”
The U.S. and the EU launched an effort in March to reduce European dependency on Russian energy, which includes plans to improve the EU's liquefied natural gas import infrastructure and increase U.S. LNG exports to Europe (see 2203250035). “A lot of energy ministers are running around across the globe trying to strike deals,” Goldthau said.
But even if the EU can secure more energy imports from other suppliers, including the U.S. and Qatar, it still won’t be enough to replace 100 billion cubic meters of gas from Russia, Goldthau said. “The adjustment needs to come through the demand side and that essentially means economic contractions, big time,” he said. “And that's precisely why it is so politically charged and that's why the Germans have been so hesitant.”
And even if the EU bans Russian oil, the U.S. and others may still have to come up with new methods, including potentially more sanctions, to stop Russia from finding other suppliers. Although the U.S. will soon enforce its own embargo, officials have said they aren’t asking other countries, including India, to stop importing Russian oil (see 2204110037).
“The sanctions regime needs to respond, and we need to think very carefully about how to do this,” Goldthau said. “It would probably take things like targeting ships or ports, all the way down to refineries.”