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Germany accelerates decoupling from Russian oil

Good morning and welcome to Europe Express.

Germany moved on several fronts yesterday — most notably on sending heavy weaponry to Ukraine, after weeks of resisting Kyiv’s calls. But Berlin also indicated yesterday that it could very soon stomach an EU oil embargo on Russia, something that was out of the question just weeks ago. We’ll unpack the reasons for this change of heart and what it spells for the next sanctions package.

Meanwhile, on the other non-sanctions-hit fossil fuel, natural gas, Poland and Bulgaria’s national energy companies announced that Russia’s Gazprom will halt their gas supplies from today.

Moldova’s security situation meanwhile is worsening, with renewed explosions taking place yesterday in the pro-Russian breakaway region of Transnistria, which is home to more than 1,000 Russian troops. We’ll explore what the pro-European president had to say about the incidents and why fresh tensions in Ukraine’s small neighbour are a cause for concern.

In other news, we’ll bring you up to speed with another ruling by the EU’s top court, which dismissed a case brought forward by Poland that was challenging an EU obligation for online platforms to take down content in breach of copyright and other rules.

Speeding up

An EU-wide embargo on Russian oil is beginning to seem more realistic after Germany’s deputy chancellor said it would be “manageable” for his country, and predicted Berlin might be able to completely wean itself off Russian oil within days, writes Guy Chazan in Berlin.

Robert Habeck, the vice-chancellor who doubles as economy minister, just a month ago had said it would take till the end of the year for Germany to end its reliance on Russian oil. But he has now radically revised that timetable. 

“A problem that seemed very big a few weeks ago is now a lot smaller,” he said yesterday. “Germany has got much closer to independence from Russian oil.”

Whereas Germany obtained 35 per cent of its imported oil from Russia before the war in Ukraine began, it had reduced that to just 12 per cent over the past eight weeks, Habeck told journalists after meeting Polish climate and environment minister Anna Moskwa in Warsaw.

The sticking point has always been two refineries in eastern Germany, Leuna and Schwedt, which get most of their crude from Russia and which are both crucial to the regional economy. Schwedt supplies 90 per cent of the gasoline, jet fuel, diesel and heating oil consumed in Berlin and Brandenburg, according to its website. Leuna is a big fuel supplier for the states of Thuringia, Saxony and Saxony-Anhalt.

Habeck said Leuna had succeeded in switching to non-Russian suppliers. That left Schwedt, which accounts for Germany’s remaining 12 per cent dependency on Russian oil. The problem, Habeck said, is that Schwedt is managed by the Russian state oil company, Rosneft, and “their business model is to buy Russian oil”. It is also connected to the Druzhba oil pipeline that runs directly from Russia. 

But, the minister added, “we need alternatives, and developing an alternative will be the task of the next few days”. Officials have been looking into supplying the refinery by barge via the Polish port of Gdansk. Habeck also said there were plans to top up both Leuna and Schwedt with reserves from western Germany.

“The situation is such that an [oil] embargo has become manageable for Germany,” he said.

Trouble on the Dniester

Moldova’s determined efforts to remain a peaceful — if distressed — onlooker during the Russian invasion of neighbouring Ukraine were shaken yesterday, after a series of explosions in the country’s Moscow-backed separatist region, writes Henry Foy in Brussels.

Transnistria, a self-proclaimed republic fortified by Russian troops on Moldova’s eastern frontier, is separated from the rest of the country by the Dniester river.

It has long been seen by western capitals as a possible flashpoint in the war, despite Chisinau’s constitution-enshrined neutrality: a Russian military asset that could be used to stage attacks on western Ukraine, destabilise Moldova’s pro-EU government or drag the entire country into the wider conflict.

On Monday evening an unknown number of attackers used rocket-propelled grenades to attack Transnistria’s security headquarters, while yesterday morning two explosions wrecked two high-powered radio masts located in the separatist region.

Transnistrian authorities suggest Kyiv is to blame. Ukraine blames Moscow. Russia says it was probably the work of provocateurs or terrorists. Moldova’s president accused “pro-war forces” of endangering the country’s safety.

“We condemn any challenges and attempts to lure the Republic of Moldova into actions that could jeopardise peace in the country,” Maia Sandu told reporters after convening a meeting of the country’s security council, adding that it had decided to increase the security services’ alert level and step up the number of patrols along the Dniester.

Moldova is already reeling under non-military fallout from the war. The country has taken in the largest number of Ukrainian refugees per capita, a situation that government officials warn has imperilled its stability. Rising energy costs have been exacerbated by a surge in prices due to a collapse in goods imports from Ukraine.

But direct conflict would be a crisis on another scale for a country that is currently in the midst of applying for EU membership.

“It’s a complex and tense situation. We are vigilant,” Sandu said yesterday. “We need to be calm.”

Chart du jour: Inflation nation

Russia’s inflation has gone through the roof since it invaded Ukraine in February. But the upward trend has also been revised elsewhere, particularly in emerging economies, where inflation is expected to reach 8.7 per cent.

Big Tech’s filter foes

Poland has lost a bid to get rid of rules that force big tech platforms to check for pirated videos uploaded by users, writes Javier Espinoza in Brussels.

Big tech companies have been in the spotlight recently, with Brussels giving the green light to two pieces of landmark legislation aimed at curbing their powers. Yesterday, the European Court of Justice added to the mix when it backed an obligation imposed by Brussels to remove illegal content uploaded by users.

Poland had argued that the requirement for Big Tech to review the content prior to its publication online and make sure it does not breach copyright rules went against the right of freedom of expression. But the court dismissed the action, given that platforms such as YouTube and Facebook rely on automatic filters to comply with the requirement.

The ruling will come as a relief to EU officials involved in the recently agreed Digital Services Act, because the law protects the likes of YouTube from privacy-related lawsuits when they take down content.

What to watch today

  1. EU commission vice-president Vera Jourova holds a press conference on the protection of journalists against abusive litigation

  2. Kyiv mayor Vitali Klitschko holds a video press conference with Brussels-based journalists

Notable, Quotable

  • Breton warning: EU internal market commissioner Thierry Breton told the Financial Times that Elon Musk must follow rules on moderating illegal and harmful content online after Twitter accepted his $44bn takeover offer.

  • July rate decision: ECB chief Christine Lagarde indicated it was possible for the eurozone’s central bank to raise interest rates at the governing council’s meeting on July 21.

  • Seizing assets: Poland wants EU allies to agree new powers making it easier for sanctions-hit Russian assets to be seized, sold and the proceeds used for Ukraine’s postwar reconstruction. But EU lawyers and officials warn of formidable legal hurdles.

  • ‘Splinternet’ danger: The western sanctions regime against Russia for its war in Ukraine are increasing the risk that the internet could be split and siloed along a political divide.

  • Grounded planes: Aircraft leasing companies are seeking to persuade safety authorities to allow grounded planes returned from Russia without full maintenance records back into commercial service.

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