Hungary Holding Up EU’s Russian Oil Embargo

Source: The Wall Street Journal

European Commission President Ursula von der Leyen failed to reach agreement with Hungary on Monday to secure the country’s backing for an oil embargo on Russia, setting back hopes of a quick deal on Brussels’ energy sanctions proposals.

Slovakia, the Czech Republic, Bulgaria and Croatia are also making their acceptance of an oil embargo conditional on assistance from Brussels.

EU officials and diplomats say they remain confident a deal to phase in a ban on Russian oil will eventually come together but hopes of wrapping it up quickly are receding.

The Commission, with the backing of other member states, is prepared to offer Hungary more time to stop importing Russian oil, and guarantees and assistance to ensure Hungary can find energy alternatives.

After Monday’s discussions, Hungary’s foreign minister said his government can’t support the EU’s oil embargo, the centerpiece of the bloc’s latest sanctions package against Russia, “as long as it does not provide a solution for Hungary’s concerns,” according to a government spokesman.

An EU official who participated in Monday’s discussions said Mr. Orban and his team neither explicitly promised to join the sanctions push if Hungary’s conditions were met nor ruled it out. The official said the talks opened a path forward through Hungary’s concerns but said the timeline for agreeing on the sixth sanctions package remained unclear.

Hungary receives around two-thirds of its oil from Russia, mainly through the Druzhba pipeline. Hungarian officials have raised concerns about refitting refineries, storage and the infrastructure needed to switch away from Russian crude oil, EU officials say.

Last Tuesday, the European Commission circulated a sixth sanctions package against Russia over its Ukraine invasion. The package proposed that EU member states stop importing Russian crude oil in six months and stop importing refined oil products by year-end. The sanctions need the backing of all 27 member states.

The commission offered Hungary and Slovakia 20 months to stop importing Russian oil. Those countries say that extension isn’t enough time. In a revised proposal Friday, the commission said it could give the two countries until the end of 2024.

The commission is also offering the Czech Republic two years to wean itself off Russian oil. Bulgaria and Croatia are also both seeking EU assistance or more time.

Complicating the talks with Hungary are years of tension between Mr. Orban, who recently won re-election, and EU authorities. Mr. Orban has maintained close ties with Moscow and has refused to allow the supply of western arms to go to Ukraine through his country, leading to friction with President Volodymyr Zelensky’s government.

The longtime Hungarian leader pitched his re-election campaign around a message that he would keep Hungary out of the war between Russia and Ukraine and protect Hungarians from bearing the costs of the war.

The EU is withholding billions of euros in coronavirus-recovery money over its concerns about the rule of law in Hungary. The commission last month started a separate procedure that could result in future EU budget funds for Hungary being frozen as well.

Mr. Orban’s government said those moves are politically motivated and designed to force the country to fall in line with the EU on social issues such as immigration and gay rights.

Source: The Guardian

Orbán said last week that “in its present form” the proposal was “tantamount to dropping a nuclear bomb on the Hungarian economy”. The Hungarian foreign minister, Péter Szijjártó, repeated the phrase before Monday’s talks with Von der Leyen, according to Orbán’s international spokesperson, Zoltán Kovács.

Hungary says it needs five years and hundreds of billions of forints to convert its Százhalombatta refinery near Budapest, which can only take Russian oil. Hungarian officials say they could get oil from Croatia, but this would require their southern neighbour to boost its capacity.

Source: Bloomberg

The EU’s proposal seeks to ban crude oil over the next six months and refined fuels by early January. The EU had offered Hungary and Slovakia until the end of 2024 to comply with the sanctions and the Czech Republic until June of the same year since they are heavily reliant on Russian crude.

The exemption failed to convince Hungary, which continued to block the plan on Sunday over the oil ban as well as how to fund the transition away from Russian energy, the people said.