Hungary Will Veto EU Sanctions Against Russian Oil, Risks Further Isolation From the West

According to a senior official from Budapest, Hungary has expressed its intentions to veto the 6th European Union (EU) sanction package targeting Russian energy imports into the bloc.

The sanction package proposes to gradually end all imports of Russian oil and other petroleum products by EU member states by the end of 2022. This comes on top of a ban on Sberbank, Russia’s largest bank, along with two other financial institutions, from the SWIFT international payment system also included in the package.

“The Hungarian position has not changed regarding the oil and gas embargo: we do not support it,” Hungarian government spokesman Zoltan Kovacs wrote in a Facebook post. His post came as a response to an earlier report that Hungary has been convinced not to veto the sanction.

Chief of Staff for Hungarian Prime Minister Viktor Orban, Gergely Gulyas, has publicly denounced the oil embargo. Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto has said that his government would not agree to any EU sanctions that target oil as it will put Hungary’s energy security at risk.

“The Hungarian government has made itself very clear,” political scientist from the Budapest-based Political Capital Institute, Peter Kreko, said. “It’s not completely out of the question that the government may still modify or change its stance, but it is very clear about its veto position.”

Orban’s government has also agreed to pay in rubles for Russian gas payments, a big contradiction to the EU’s stance to not give in to Moscow’s demands.

Dependence On Russian Oil

Hungary, like several other countries in the 27-state bloc, is heavily dependent on Russian energy imports to fuel its economy. Orban has warned of catastrophic damages to his country’s economy when cut off from Russian oil.

“Since such decisions require unanimity, it makes no sense for the commission to propose sanctions affecting natural gas and crude oil that would restrict Hungarian procurements,” Hungarian Chief of Staff Gergely Gulyas told Hungarian news channel HirTV.

However, Hungary is by no means the most dependent EU nation on Russian energy. Russian oil imports provide Hungary with over half of its energy needs at 58%. Around 96% of Slovakia’s oil depends on Russia, while Finland and Lithuania get around 80% of their oil from Russia.

These countries, which are more reliant on Russia for oil, have not spoken against or threatened to veto the oil embargo. However, it is important to note that Slovakia intends to utilize an exemption clause written in the sanction package.

Provisions have been made for Hungary and Slovakia, which allow the countries to import Russian oil for a longer period than other EU members. The ban initially requires all imports of Russian oil to the EU to cease after six months gradually.

The draft allowed Slovakia and Hungary a longer period of time to ban Russian energy imports until the end of 2023 to convince countries not to veto the sanction package. The countries both use the same southern route through the Druzhba pipeline that pumps oil from Russia to Europe.

Given the commonality of Russian energy dependence and proposed provisions, there has to be another reason why Hungary refuses to agree with the ban. It may be possible that there may be more to the country’s threat to veto than meets the eye. Perhaps, Orban is trying to leverage his country’s ‘no’ in exchange for COVID funds meant for Hungary that were frozen by the European Commission. The Commission has withheld billions in recovery money over corruption concerns in the country. A case under the EU’s new rule of law mechanism has also been launched against Hungary, which suspends support payments to members that violate the bloc’s principles.

“Maybe all of this is playing a role in the decision not to go along with the sanctions,” Kreko said. “In any case, the relationship between Hungary and the EU institutions is thoroughly poisonous.”

Souring Relations

Hungary’s refusal to cooperate with the EU has further isolated the country from the rest of the bloc. Notably, Budapest is the only EU member that has not definitively condemned Russia’s unjustified aggression against Ukraine.

“Hungary’s foreign policy position in Europe has never been as bad as it is now,” said Kreko. “The Orban government has maneuvered itself into a dead end.”

Orban, who was recently re-elected for a 4th consecutive term, has come under fire for not directly criticizing Vladimir Putin and being a burden on EU foreign policy. Currently, his country has resentfully agreed to EU sanctions and has yet to allow arms shipments to Ukraine to pass through Hungarian territory.

His stance has caused all of Hungary’s former allies to distance themselves from the nation, most notably Poland. Warsaw is Budapest’s sole strategic ally in the EU. The two illiberal nations have signed a mutual protection pact and have backed each other from potential EU sanctions for the past years.

However, the past two months have seen the countries’ relationship turn sour over Orban’s balancing game between the West and the Kremlin. Last month, Poland’s Deputy Prime Minister, Jaroslaw Kaczynski, accused his Hungarian counterpart of being blind to the atrocities the Russians have done in Ukraine, adding that he should “see an eye doctor.”