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European Union Proposes a Total Ban on Russian Oil as Sanctions Grow over Ukraine War

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The European Union has announced a plan for a total ban on Russian oil by 2023. The move is backed by Germany, one of the countries most dependent on Russian fuel. World leaders hope that stricter sanctions on Russia will cut off financing for the war in Ukraine. We go to Ukraine to speak with economist Tymofiy Mylovanov about what the European oil ban would mean for the conflict; possible alternative buyers for Russia’s oil surplus, such as China and India; military escalations Russia might be planning for its Victory Day on May 9; and more.

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StoryApr 07, 2022Europe Buys $38B in Russian Energy Since Invasion; 30% of the Gas Comes Via Pipelines in Ukraine
Transcript
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Nermeen Shaikh.

The European Union has unveiled a proposal to ban all Russian oil imports by the end of the year as part of a sixth round of sanctions over Russia’s invasion of Ukraine. European Commission President Ursula von der Leyen spoke Wednesday.

URSULA VON DER LEYEN: Today we are addressing our dependency on Russian oil. And let’s be clear: It will not be easy, because some member states are strongly dependent on Russian oil. But we simply have to do it. So, today, we will propose to ban all Russian oil from Europe. This will be — this will be a complete import ban on all Russian oil, seaborne and pipeline, crude and refined.

AMY GOODMAN: Under the proposal, EU member nations would phase out crude oil imports within six months and refined oil imports by the end of the year. The European Union is considering giving exemptions to Hungary and Slovakia to allow them to keep importing Russian oil for a longer period of time because they’re so dependent on it. On Wednesday, Kremlin spokesperson Dmitry Peskov responded to the proposed ban.

DMITRY PESKOV: [translated] The sanction aspirations of the Americans, Europeans and other countries, this is a double-edged weapon. In trying to harm us, they, too, have to pay a heavy price. They’re already doing it, paying a big price. And the cost of these sanctions for European citizens will increase every day.

AMY GOODMAN: To talk more about the EU’s proposed ban on Russian oil, we’re joined by Tymofiy Mylovanov. He is president of the Kyiv School of Economics, an associate professor at University of Pittsburgh, former minister of economic development, trade and agriculture of Ukraine under President Zelensky.

We welcome you back to Democracy Now!, Tim. If you can start off by just responding to this announcement this week of the total Russian oil ban by the European Union, though there will be some exceptions?

TYMOFIY MYLOVANOV: That has been in the books or in planning for a while. And I personally have been in a number of groups which have been discussing the details of it. There are a lot of details, because, on paper, it looks good; in practice, you need to have these waivers, and you need discuss what really constitutes Russian oil. For example, if you buy some Russian oil and mix it with non-Russian oil, at which percentage it stops being Russian oil? So, there will be tons of attempts to bypass it, but hopefully the final document will be sufficiently proper that this ban is implementable.

NERMEEN SHAIKH: And do you think, Tim? What would the effects of this ban be?

TYMOFIY MYLOVANOV: Financial on Russia. It will lose several hundred million a day. And to put it in perspective, Russia recently paid a coupon on its foreign debt, and there was a discussion of default or not. And the total payment was between 600 and 700 million euros. So, you know, we are talking about Russia today, in daily receipts from the EU, getting much more than it is spending, and regardless of the sanctions, it has enough liquidity to continue to finance the war. So, it’s a step forward. But it also receives a lot of funding from gas, and that will continue to be sold to Europe. So some of the funding will continue to go to Russia.

NERMEEN SHAIKH: And what about — how do you respond to those who say, in fact, that Russia will just find alternative buyers once this goes into effect — China, possibly India?

TYMOFIY MYLOVANOV: In theory, that’s how we teach economics in classes. In practice, it depends on logistics and the politics of the relationship with other countries. So, China cannot simply, you know, increase the capacity to pump through the existing pipelines, and so there are some limits. And India, while there could be ways to deliver that, but India is also trying to navigate relationships with other countries. And in this package and in the discussions I have been a part of, there have been mechanisms suggested to encourage other countries not to help Russia bypass. And furthermore, data shows that already Russia’s exports in oil, in terms of actual volume — not prices, but volume — has dropped during the war by 30%, which shows that de facto sanctions are already taking place. So, it’s a theoretical construction that they will simply substitute different buyers.

AMY GOODMAN: Even if Russia substitutes different buyers, what about Europe and the countries that it will become more reliant on? They talk about the reason, of course, for cutting off the oil from Russia is because of what Russia has done in Ukraine, and supporting democracy, not autocracy, but turning to places like, oh, Saudi Arabia. It’s now understood that William Burns, the CIA director, just made a secret trip there.

TYMOFIY MYLOVANOV: That is correct that many of the suppliers of oil and the alternative suppliers, they are regimes. The question, however, is, unfortunately, we are dealing in the world with regimes, and some of these regimes are with aggressive military powers, and others are not. So, you know, the calculus is that for the time being, while the Russia continues to be an aggressive military power, we have to be dealing with less aggressive states. And we will have to find a way to build the future with Russia when it is not using the military force that aggressively.

NERMEEN SHAIKH: And, Tim, could you talk about the political and also symbolic significance of Germany coming out in supporting this ban? Germany itself very reliant on Russian oil, though, of course, there have been reports that Germany agreed to this only once it had found alternative sources. But Germany’s position on Russia has been very different over the last several decades. So, what is the significance of Germany taking this position now?

TYMOFIY MYLOVANOV: That is true. It’s a seismic shift, I would say. And, you know, in many ways, it’s scandalous that a very prudent country, Germany, has come to depend so much on one supplier and — prior to the war. And entering the war, the position of Germany was that we need to find the future solution to the situation in Europe, to the security, through negotiations with Russia. And that perhaps has not been aired publicly, but even I have heard it many times in private conversations with members of parliament, of the EU representatives, of German political elites. And now they have turned — the table has turned, and they have switched their position. And that, to me, signifies that their belief is now that diplomatic solution is not going to be effective and that the Russia is playing a different game, and it has to be stopped by force. So, in that sense, it’s much more significant than the pure economic implication of the ban. It’s a political change in Germany.

AMY GOODMAN: Tymofiy Mylovanov, can you talk about the pipelines that go through Ukraine and what this means for them, going to Europe, providing much of the oil to Europe? Many people don’t realize that those pipelines are continuing, Ukraine continuing to pay Russia — or, Russia continuing to pay Ukraine for allowing this to go through Ukraine.

TYMOFIY MYLOVANOV: Correct. There are two types of supplies which go through Ukraine, and through other countries, but there are major pipelines, an oil pipeline, and the Ukrainian, what is called, GTS. It’s a gas transportation system. There is a significant income — well, significant on the order of several billion dollars — coming on the rents or on the payments for this transportation, not so much in oil, but more so in gas. So, oil is less of an issue. But if you put it in a perspective, $2 billion or $3 billion is approximately 1% of the Ukrainian GDP, and we are suffering and losing, you know, 40, 50% of GDP now, according to different forecasts, including the World Bank report, from the war. So, you know, we will do what it takes. We are happy and ready to stop and enforce the embargo together with others. So, this 1% is insignificant and shouldn’t even be compared relative to the lives that are lost because of the war.

NERMEEN SHAIKH: Tim, could you explain — you said earlier that Germany has given up on the prospect of diplomacy with Russia. Why is that? And finally, May 9th, what do you expect to happen on Victory Day in Russia? What steps might Russia take then?

TYMOFIY MYLOVANOV: There are different cultural — or cultures — cultural codes. You know, the West is trying to build the future of prosperous and free economies and societies, whereas Russia has become, unfortunately for the world, in a sense, a collector of lands. So, you know, it’s hard to have a diplomatic solution if you’re a person, you know, very different objectives, and you are just not even understanding each other. You have different perspectives on what the value of the future is. And I think Germany has come to realize that Russia is just simply thinking differently about what diplomacy is. The diplomacy for Russia is about kind of creating a narrative which supports its forceful capture of lands. Unfortunately, Russia believes that the force is first and diplomacy is second, whereas the civilized world has learned that the force doesn’t work and diplomacy should go first.

May 9 is an important date for the Soviet Union history. It’s an official Victory Day. And by the way, I think Russia has kind of expropriated or exploited the Soviet Union legacy. Ukraine was a part of the Soviet Union, and many, many Ukrainians died in the World War II defending the Soviet Union and fighting Nazis. So, we are as entitled to the legacy of the Soviet Union as Russia is trying to claim. They are not the only party to the Soviet Union.

But I think they will try to claim or declare some kind of victory for its domestic audience, and that means that most likely they will do something really nasty in Mariupol and maybe the east of Ukraine. It’s unlikely they will be able to achieve any of their strategic objectives, such as encircling the Ukrainian troops or capturing a large area in the east of Ukraine, even though it looked like it was the plan. So I expect a lot of bombardments, a lot of missiles in the next week, and something very patriotically, quote-unquote, “symbolic” of the Soviet Union in Mariupol and elsewhere.

AMY GOODMAN: And, of course, the Russian foreign minister has denied that Putin will, as was predicted by some, declare war on Ukraine on Victory Day. But I have to ask you, Tymofiy Mylovanov, before you leave — we’re talking to you, like an economist, like we talk to economists around the world, but you are not just a typical armchair analyst right now. You’re the president of the Kyiv School of Economics. You’re in Kyiv. How is your family dealing with this? How are you? How are you affected?

TYMOFIY MYLOVANOV: Well, you know, yeah, you’re correct. So, we started a fundraising effort and raised tens of millions of dollars, actually $23 million, and we are supplying everything from medical kits to bulletproof vests. And, you know, sorry, but please support Ukraine and support us.

But, emotionally, you know, we cry. We have nightmares. We got used to the — we are used now to air sirens. You know, it’s like it’s a blur. Since February 24th, we are exhausted. And every time we read about a friend who died, or not a friend but just someone who was raped or tortured, and it’s coming daily, you know? You can’t shut it off. We are inside of this. You know, like, there are bombs around us, missiles landing. You know, every night I hear from someone — I even hear them sometimes. I haven’t been hit yet personally, and I’ve been very fortunate, but a lot of my friends have. Many died. Many of our alumni and students died, you know? Some have been tortured. So, you know, how do you — like, life goes on. We fight, we resist, we want to win, and we want to survive as the nation. So we work, we fight, we persevere. I think — we talk to you and thank you for having us. Thank you for giving us voice.

AMY GOODMAN: Well, Tymofiy Mylovanov, we want to thank you very much for being with us, president of the Kyiv School of Economics, associate professor at the University of Pittsburgh and former minister of economic development and trade and agriculture of Ukraine, speaking to us from western Ukraine.

Coming up, Yale professor Tim Snyder. He says Russia’s war in Ukraine is a colonial war. Stay with us. And, Tim, stay safe.

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