Daring to Differ: EU's Single-Handed Approach to a Lower Price Cap on Russian Oil
The Question: Can the EU independently reduce oil price caps from Russia without American backing? It's a muddy issue.
In the face of ongoing conflict in Ukraine, the European Union is mulling over a bold move – implementing a lower price cap on Russian oil without the backing of the United States. This decision raises the question: Can the EU take this leap alone, and will it make a difference?
The EU has already outlined its intentions to tighten the screws on Russia with the 18th round of sanctions, targeting the financial sector, the "shadow fleet," and the Nord Stream pipelines. The leaders of the EU are pushing for a downward revision of the price cap on Russian oil to further weaken their adversary's finances and seek a ceasefire in Ukraine.
However, the U.S. has yet to endorse a lower price cap, adding a layer of complexity to the negotiations ahead at the G7 summit in mid-June. If the EU presses ahead, it must consider the consequences of going it alone and the implications for the EU-U.S. alliance.
The Cost of Going Solo
While the EU has the legal power to introduce new sanctions, the implementation of a lower price cap without U.S. support could pose several challenges:
Internal Disagreements
Any change to existing sanctions requires unanimous approval among member states. Securing agreement from all 27 countries to decrease the price cap further might be challenging, especially if Washington opposes the move. Even if the EU manages to push the proposal through, undercutting U.S. efforts could lead to tension within the alliance.
Legal Mess
The EU cap would co-exist with the U.S. cap, leading to a confusing situation for all involved. This dual-cap scenario could confuse service providers, weaken overall enforcement, and ultimately benefit Russia, which has long sought to exploit loopholes in international sanctions.
Fragmented Alliances
A solo move by the EU could damage the cohesion of the Price Cap Coalition, potentially creating fractures among G7 members. Russia, too, would face hurdles, as continued crackdowns on the "shadow fleet" could force the country to rely more on G7 insurance, making it easier for the EU to apply the revised measure.
A New Path Forward
Despite the challenges, the EU could potentially move forward with a lower price cap, but it would require a different institutional format. The EU could encourage the UK to join and implement measures on its own domestic ships and insurance companies. This approach would preserve the alliance while allowing the EU to take action independently of the U.S.
Conclusion
As the EU readies new sanctions against Russia, the question of going it alone with a lower price cap remains. While the EU has the potential to implement such a measure, it must carefully weigh the risks and potential consequences. A unified approach with the U.S. remains the most effective strategy to ensure the success of the sanctions and maintain the strength of the Western alliance.
Sources
[1] EU pitches security hub to protect Black Sea from Russia's threats and 'shadow fleet'
[2] Europe's long, arduous battle against Russia's 'shadow fleet' is far from over
[3] Ursula von der Leyen backs 'bone-crushing' US Senate bill to sanction Russia
The EU, despite possessing the legal power to introduce new sanctions, faces internal disagreements and legal complexities when considering to implement a lower price cap on Russian oil without the U.S. endorsement. A solo move by the EU could fragment alliances within the Price Cap Coalition and create a confusing legal scenario that might ultimately benefit Russia.
An alternative path for the EU could involve encouraging the UK to join and implement measures on its own domestic ships and insurance companies, preserving the alliance while allowing the EU to take action independently of the U.S., thus mitigating some of the risks associated with going it alone.
