Hungary 'holding EU hostage' by blocking Russian oil sanctions

Diplomats try to unblock stalemate over proposed embargo linked to war in Ukraine

Hungary's Duna refinery continues to receive oil through the Druzhba pipeline from Russia. AFP

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Hungary was accused on Monday of holding its European neighbours hostage by opposing a ban on oil imports from Russia, as diplomats sought to unblock a political stalemate over the proposed embargo.

Germany said no breakthrough was expected at a meeting of the European Union’s 27 foreign ministers on Monday, almost two weeks since the bloc’s leaders proposed an embargo as part of a sixth sanctions package.

Although the EU has offered sceptical countries a grace period to phase out Russian oil they cannot immediately do without, Hungary has not backed down on its threat to veto the package altogether.

The impasse has stalled Europe’s progress in weakening a Russian energy sector which continues to collect money from EU countries and, as supporters of an embargo see it, provide funding for the invasion of Ukraine.

Lithuanian minister Gabrielius Landsbergis made an impassioned plea to diplomats to unite behind tougher measures against Russia, telling colleagues: “We will be remembered by the decisions we made."

“The whole union is being held hostage by one member state who cannot help us find a consensus,” said Mr Landsbergis, who said he would give this message directly to his Hungarian colleagues.

Some diplomats struck a more conciliatory tone and warned against airing frustrations in public. “We should be aware that Russia is watching us,” said Austrian representative Alexander Schallenberg.

Others spoke of finding a way through the stalemate after the European Commission offered some countries as long as two and a half years to free their power grids from reliance on Russia. An oil ban would cut off the Druzhba pipeline that runs through Poland, Germany, the Czech Republic, Slovakia and Hungary

Also under discussion are ways to find alternative energy supplies for countries most reliant on Russia, which recently underlined its hold on Europe’s power grid by blocking gas imports to Poland and Bulgaria.

None of this has persuaded landlocked Hungary, which wants five years to revamp its energy system and for pipeline oil to be exempted from the ban altogether, leaving only maritime shipments covered by the embargo.

Hungary derives about 65 per cent of its oil from Russia, as well as 85 per cent of its gas. It allowed a ban on Russian coal to pass last month, but opposes oil and gas sanctions and has not provided military aid to Ukraine.

Prime Minister Viktor Orban, regarded as the Kremlin’s closest ally among the EU’s 27 leaders, has compared the impact of an oil embargo to an atomic bomb being dropped on Hungary’s economy. Lobbying by European Commission chief Ursula von der Leyen and French President Emmanuel Macron has not succeeded in changing his mind.

Foreign Minister Peter Szijjarto told public radio that prices would rise by more than 50 per cent and that Brussels had yet to put forward a proposal to compensate Hungary for this.

Hungary is not alone in fearing the economic consequences at a time when fuel prices are already high. However, other cautious countries such as the Czech Republic and Slovakia have been less outspoken in their public statements.

EU sanctions need unanimity to pass and talks between the 27 ambassadors in Brussels have yet to find a consensus. Countries can receive exemptions if other member states are willing to go along with them.

Ukraine, which wants the EU to move into the trickier territory of banning Russian gas, has said there should be no exemptions to an embargo.

Aside from phasing out oil imports, the proposed sixth package would penalise high-ranking Russian military officers, silence pro-Kremlin propaganda channels, and cut off more banks from payments system Swift.

“There are clearly still a few questions that need to be answered,” said German minister Annalena Baerbock, who said any sanctions needed to be designed so that they could be kept in place for years if necessary.

“We won’t get a final answer here today, but we will come to a common conclusion in the next few days, I’m very confident of that.”

Such predictions have proved optimistic in the past but Josep Borrell, the EU’s top foreign policy official, said he was striving to “deblock the situation” and find a common position.

“In Europe, we are incredibly good at showing ourselves to be disunited,” Mr Schallenberg said. “In this situation, we need to keep appearing united.”