Why doesn’t Hungary support EU sanctions against Russian oil? | Oil and Gas News

As the European Union tries to impose sanctions on Russian oil over the war in Ukraine, Hungary has become one of the biggest obstacles to the unanimous support needed from the bloc’s 27 member countries.

EU executive commission president Ursula von der Leyen proposed last week to phase out imports of Russian crude within six months and refined products by the end of the year to wean off the Europe from its reliance on Russian fossil fuels and cutting off a lucrative source of income that helps fund Russia’s war.

But Hungary’s nationalist government – one of the most pro-Moscow in the EU – insists it will not support any sanctions targeting Russian energy exports.

Hungary is heavily dependent on Russian oil and gas and says an EU oil boycott would be an “atomic bomb” for its economy and destroy its “stable energy supply”.

Von der Leyen made a surprise trip to the Hungarian capital on Monday for negotiations with Prime Minister Viktor Orban to try to salvage the proposal, but no deal has yet been reached.

Here’s what to know about the talks and what’s next:

What does Hungary say?

The Hungarian government has insisted it will block any proposed EU sanctions that include Russian energy, calling it a “red line” that runs counter to Hungarian interests. It gets 85% of its natural gas and more than 60% of its oil from Russia.

Orban, widely seen as one of Russian President Vladimir Putin’s closest European allies, has reluctantly backed previous EU sanctions against Moscow, including an embargo on Russian coal. But he argued that such moves hurt the bloc more than Russia.

Since coming to power in 2010, Orban has reinforced Hungary’s dependence on Russian energy and says its geography and energy infrastructure make it impossible to shut down Russian oil.

“We said coal sanctions would be acceptable because they don’t affect Hungary; but now we have really reached a red line, a double line, because the oil and gas embargo would ruin us,” Orban said in a radio interview on Friday.

The landlocked country has no seaport to receive global oil shipments and must rely on pipelines. Moreover, a flagship government program to reduce utility bills depends on the relatively low cost of Russian fossil fuels and is a major factor underlying Orban’s domestic political support.

Converting Hungarian oil refineries and pipelines to process oil from non-Russian sources would take five years and require massive investment, Orban said. It would push up energy prices further, leading to shutdowns and unemployment, he said.

Is there a chance of compromise?

Besides Hungary, Slovakia and the Czech Republic have been calling for years to phase out Russian oil. The European Commission has said it is ready to help countries that are particularly dependent on Russian oil.

“We recognize that Hungary and other landlocked countries that are highly energy dependent on Russian oil supplies are in a very special situation that requires us to find specific solutions,” commission spokesman Eric Mamer said on Tuesday.

Mamer said Hungary has “legitimate concerns” about oil supply and that a phase-out of Russian oil could include “differentiated timelines corresponding to the different situations of specific countries”.

“That’s definitely one of the variables, because obviously if you’re talking about investing in infrastructure upgrades, you need time,” Mamer said.

He did not specify which countries could be offered to delay the application of an oil embargo or for how long.

In a tweet on Monday after his meeting with Orban, von der Leyen said the discussion had been “helpful in clarifying issues related to sanctions and energy security” and that progress had been made but “further work is needed. “.

French President Emmanuel Macron spoke with Orban on Tuesday about the “guarantees” necessary for certain member states, such as Hungary, which “find themselves in a very particular situation with regard to the supply of pipelines from Russia”, according to Macron’s office.

What does Hungary have to gain?

Blocking the sanctions package could be used as leverage in a separate dispute between Budapest and the EU.

The bloc has withheld about $8 billion in coronavirus pandemic recovery funds from Hungary over what it sees as insufficient anti-corruption measures and has launched a process to suspend further support in the event of a violation of the principles of the EU rule of law.

Hungary has been accused of backsliding on democratic values ​​by exercising excessive control over the judiciary, stifling media freedom and denying the rights of LGBT people.

Orban’s government denies the allegations and argues that the EU sanctions are politically motivated.

But with Hungary’s economy reeling from high inflation and a major budget deficit, it will need that EU money for an economic recovery. As EU officials negotiate with Hungary to win its support for sanctions on Russian energy, the release of withheld funds could serve as a bargaining chip.

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