Will Hungary carry out its threat? The words of Gergely Gulyas, Prime Minister Viktor Orban’s special minister, are very clear. “We have made it clear that we will never support a proposal to extend European Union sanctions against Russia to the energy field,” he said on Sunday May 1 on HirTV.
Veto against embargo
Here are the European leaders warned, on the eve of an extraordinary Council of European energy ministers hastily organized to react to the shutdown on Wednesday April 27 of Russian gas deliveries to Poland and Bulgaria. The EU is in the process of finalizing a sixth package of sanctions against Moscow, including a “progressive embargo” on Russian oil. The European executive would like to put it to the vote of the 27 during the week.
→ ANALYSIS. Faced with Russia’s “gas blackmail”, the Europeans are speeding up discussions
Reluctance seems to have been lifted on the German side: Berlin has already reduced its dependence on black gold vis-à-vis Moscow from 35% to 12% of its imports. But nothing can be done at the community level without everyone’s agreement. “Given that such decisions require unanimity, it makes no sense for the European Commission to propose sanctions on natural gas and crude oil that would limit Hungarian purchases,” continued Gergely Gulyas.
Since the invasion of Ukraine on February 24, Budapest has passed five sets of sanctions against Moscow, as long as the latter were financial. But the unity of the 27 now threatens to crack. Viktor Orban, re-elected on April 3 for a fourth term and with a super-majority of two-thirds who entered Parliament on Monday May 2, was reappointed on the promise to preserve hydrocarbon supplies.
Hungary’s dependence is in the range of 75 to 100% of imports for both oil and gas, according to Eurostat, compared to an average of 30% for the 27. Slovakia, also closely linked to fossil fuels Russians, also fears devastating effects for its economy if the embargo on Russian oil falls too abruptly.
Towards delayed sanctions
Budapest signed last September a contract for 4.5 billion cubic meters of fuel per year for fifteen years with the Russian company Gazprom. But unlike Poland and Bulgaria, the Orban government has said it is ready to pay for this gas in rubles if necessary, which in reality amounts to circumventing the financial sanctions aimed at Russian banks. Arrangements have already been made in this direction: the Hungarian energy company MVM has opened a dedicated account with Gazprombank to make payments converted into Russian currency.
Traveling to Chile on Sunday May 1, the head of EU diplomacy Josep Borrell judged the new set of sanctions “absolutely essential”. “Hungary has so far always been at the rendezvous of sanctions, and we must avoid giving it a pretext to block on oil”, he pleaded. To save the European united front, the Commission intends to insist on the gradual nature of the oil embargo. Its full entry into force could only take place at the beginning of 2023. Regarding Hungary or Slovakia, the European executive could simply recommend an exemption. The cohesion of the European bloc would then be saved, at least in appearance.