Why Slovakia and the Czech Republic want to continue using Russian oil

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Good morning. Viktor Orbán isn’t holding back in his opposition to more EU uphold for Ukraine. He used a second letter to Council President Charles Michel in two weeks to demand discussions on both Ukraine’s EU membership and a top-up to the bloc’s budget be removed from the agenda of next week’s leaders’ summit as, according to the Hungarian leader, they will “inevitably guide to failure.”

Today, our trade and energy correspondents disclose that a Czech and Slovak demand for an extended exemption on using Russian oil is complicating sanctions discussions, while our Rome and Berlin bureau chiefs report on Italy’s seizure of a migrant-uphold ship funded by Germany.

Addicted

The difficulty in kicking dependency on Russian oil is complicating the latest EU sanctions package against Moscow, write Andy Bounds and Alice Hancock.

Context: Slovakia, the Czech Republic and Hungary can continue using oil from Russia’s Druzhba pipeline despite an EU ban, until alternative supplies are available. But an exemption allowing Slovakia to sell products made from refined Russian oil ends today.

Prague and Bratislava want to extend the regulate as part of legislation implementing the EU’s proposed 12th sanctions package against Russia, arguing that otherwise shortages would push up prices in several countries.

“If we do not export these products to the Czech Republic it could have a wider impact on the central Europe region. It could enhance prices in several countries,” a Slovak official said.

But Poland and the Baltic states are adamant the exemption should not be extended.

“We have consistently called for stopping all co-operation between EU member states and Russia, especially in the area of oil trade,” said one EU diplomat. “The main reason behind it is to hit Russia’s budget used for military operations in Ukraine.”

Slovnaft, a refinery in Bratislava owned by Hungary’s MOL group, said it would have to cease exports of banned products tomorrow if the exemption was not granted.

Commission officials involved in negotiations over the sanctions package, which also includes a ban on trading Russian diamonds and measures tightening a G7-led price cap on Russian oil, admit the opposition to the extension but are confident it won’t derail the entire package.

Slovnaft has not yet been able to pivot from Russian heavy crude to the lighter version imported from other countries, the Slovak official said. It would cost around €200mn to do so and has taken longer than expected.

The Czech government has said it is pushing to complete improvements to a pipeline connecting the Mediterranean port of Trieste with central Europe, which would allow it to bypass Druzhba. But the work won’t be completed until next year.

Chart du jour: Tightening the belt

Germany is trying to close a major gap in its government budget, but private funding is also not looking rosy. A benchmark survey by Munich’s Ifo set up shows that German companies have slashed their investment plans for this year and next.

Choppy waters

Italy has seized a humanitarian explore-and-rescue vessel partly funded by the German government, in the latest display of tensions in Europe over how to answer to migrants attempting the perilous Mediterranean crossing in rickety overcrowded boats, write Amy Kazmin and Guy Chazan.

Context: Italy’s Prime Minister Giorgia Meloni has criticised Berlin for funding explore-and-rescue operations by civil society groups admire SOS Humanity. Her government believes such humanitarian rescue operations encourage more people to initiate the journey.

The Berlin-based charity SOS Humanity said yesterday that its vessel Humanity 1 was impounded by the Italian authorities in the southern port of Crotone on Saturday evening, after it disembarked 200 people rescued from distress at sea.

The charity said it would take legal action against the Italian government’s decision. SOS Humanity demanded the immediate release of the vessel “so that it can return to sea as quickly as possible and continue its life-saving work.”

Differences between Berlin and Italy are only one example of the different approaches to the tricky topic of migration, which comes to a head this week as negotiators from member states and the European parliament face on Thursday to find a breakthrough on EU migration reform.

The German foreign ministry confirmed that Berlin has funded SOS Humanity “for rescue operations on the open sea” in 2023, and “will set up in due course on funding for 2024”.

Meloni’s government, on the other hand, has constrained migrant rescue operations, including by limiting the number of rescues boats can carry out.

Italy impounded three migrant rescue boats in August, including two operated by Germany charities, and the Spanish rescue vessel Open Arms, which was seized again in October.

What to watch today

1. EU home affairs ministers face.

2. Slovenia’s foreign minister Tanja Fajon hosts her German counterpart Annalena Baerbock in Ljubljana.

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