Hungary: The Foil to EU-Wide Oil Embargo

The EU’s plan for Russia’s economic strangulation has hit a snag. Talks aimed at agreeing on a sixth batch of sanctions, which would phase out Russian crude oil imports, have stalled. While Slovakia and the Czech Republic have already been placated by special dispensations, Hungary is still unwilling to accede.

On Monday, Hungary’s Foreign Minister, Péter Szijjártó, told parliament of Hungary’s intention to secure peace in Ukraine, stressing it be done through diplomatic measures. He clarified that although his country endorsed the first five sanction packages, Hungary must consider the impact these sanctions will have on its energy needs. He asserted that any sanctions that put Hungarian energy supplies in jeopardy are unacceptable. The proposal now being considered does just that, making it “impossible for Hungary to purchase the oil crucial for its economy,” and raising “the price of petrol in Hungary to 700 forints (€1,84) per liter and that of diesel to 800 forints (€2,10),” Szijjártó added.

The May 4th proposal for fresh sanctions targeting Russian oil has been a source of worry for landlocked EU member states, such as Hungary. Their economies are bound to Russian energy, since the absence of sea ports prevents the direct importation of liquified natural gas. Consequently, ironing out a deal with the EU has been fraught with hurdles.  

Flanked by the Czech Republic, it was Hungary and Slovakia that last week took the lead in taking EU Commission President Ursula von der Leyen to task. The move won them concessions from the Commission, providing them more wiggle room so as to comply with the ban. Like Slovakia, Hungary obtained an exemption until the end of 2024, while the one for the Czech Republic expires mid-2024.

Last Sunday however, the Hungarian government held up a final deal being made. “There is no compromise among member states,” an EU diplomat said. “Hungary is still opposing [the package], and this is the problem.” Only the Friday before, Hungarian PM Viktor Orbán had told public service radio channel Kossuth Rádió that the plan to phase-out Russian oil would devastate his country’s economy, likening the fallout to the one after a “nuclear bomb” hit. 

Another EU diplomat said that the earlier compromise did not go far enough for Budapest, and that it pushes for a complete exemption from the oil ban. Orbán previously intimated that his country needed five years at a minimum. Bulgaria is also making known its displeasure, and is requesting a longer phase-out period.

In order to heal the rift, von der Leyen held an evening discussion with Orbán on Monday, noting afterwards that they “made progress but further work is needed.”

Meanwhile, the Commission considers providing funds to eastern states for the upgrade and extension of oil pipelines. It is hoped that these, once up and running, through the delivery of oil from other EU countries, would blunt their economic pain. 

By April 27th, the EU bloc had imported about €44 billion of fossil fuels from Russia since the start of the invasion on February 24th, according to a report by the Centre for Research on Energy and Clean Air. 

While the European Commission has its work cut out for it with a phase-out of Russian crude oil (ideally, within six months, followed by another of refined oil by the end of the year), expectations are that even more discord will come when Russian gas is in its sights.