EU makes eleventh-hour push for deal on Russia oil sanctions

© Reuters. FILE PHOTO: European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, January 18, 2018. REUTERS/Francois Lenoir/File Photo

By Jan Strupczewski and John Chalmers

BRUSSELS (Reuters) - Top European Union diplomats met on Monday for a last-ditch attempt to agree on Russian oil import sanctions before their leaders meet later in the day, seeking to avoid a display of disunity over the bloc's response to the war in Ukraine.

According to a new draft of the summit conclusions, the 27 leaders should agree that their next round of sanctions will cover oil with a temporary exemption for crude delivered by pipeline, a compromise that ambassadors had failed to agree on Sunday.

The text seen by Reuters, which might yet be revised again, would confirm an agreement on seaborne oil sanctions, with pipeline oil supplied to landlocked Hungary, Slovakia and the Czech Republic to be sanctioned at some point.

However, the leaders gathering in Brussels in the afternoon would not finalise the terms for that temporary exception, the text suggested.

Instead, they will ask diplomats and ministers to find a solution that would also ensure fair competition between those still getting Russian oil and those cut off.

One EU diplomat said it represented "limited progress", with too many details still to be determined for a full agreement at the two-day summit, where leaders will have few concrete results if the impasse over an oil embargo holds up a wider package of sanctions on the table.

And in another sign of how EU leaders are struggling to agree on more sanctions, a planned ban on Russians acquiring property in the EU was dropped after Cyprus objected to it, one EU diplomat said.

"After Russia's attack on Ukraine, we saw what can happen when Europe stands united," German Economy Minister Robert Habeck said on Sunday. "With a view to the summit tomorrow, let's hope it continues like this. But it is already starting to crumble and crumble again."

EU AID

The EU leaders will declare continued support for Ukraine to help it fend off Russia's assault and they will discuss how to deal with the impact of the conflict, especially the spike in energy prices and an impending food supply crisis.

However, the talks will be overshadowed by their month-long struggle to agree on a sixth round of sanctions against Moscow, notably held up by Hungary.

Other elements of the latest package of sanctions include cutting Russia's biggest bank, Sberbank, from the SWIFT messaging system, banning Russian broadcasters from the EU and adding more people to a list whose assets are frozen.

The most tangible outcome of the summit will be agreement on a package of EU loans worth 9 billion euro ($9.7 billion), with a small grants component to cover part of the interest, for Ukraine to keep its government going and pay wages for about two months.

A decision on how to raise the money will be made later.

According to a draft of the summit conclusions seen by Reuters, leaders will also back the creation of an international fund to rebuild Ukraine after the war, with details to be decided later, and will touch on the legally fraught question of confiscating frozen Russian assets for that purpose.

The leaders will pledge to accelerate work to help Ukraine move its grain out of the country to global buyers via rail and truck as the Russian navy is blocking the usual sea routes and to take steps to faster become independent of Russian energy.

The draft showed leaders would explore ways to curb rising energy prices, including the feasibility of introducing temporary price caps, to cut red tape on rolling out renewable sources of energy and invest in connecting national energy networks across borders to better help each other. ($1 = 0.9296 euros)