MS Risk Blog

Deepening divisions between the EU and Hungary over proposed Russian oil embargo

A disagreement between the Government of Hungary and the parliament of the European Union over how to react to the increasing threat of Russian aggression and the imposition of economic sanctions, appears to be deepening existing divisions in the troubled relationship between Hungary and the EU.

Relations between the EU and Hungary have been strained since as far back as September 2018, when the European Commission triggered procedures under Article 7 of the EU Treaty in response to concerns that legislation and policies of Hungarian Prime Minister Viktor Orban’s ruling Fidesz right-wing populist and national-conservative party threatened a serious breach to respect for the rule of law within Hungary and common European Union values. Attempts by the Orban government to exert control over the country’s judiciary, and anti-LGBT laws put the EU at odds with Hungary, and in late 2021 a Hungarian government attempt to legislate curbs to immigration triggered a legal battle in the European Court of Justice (ECJ) over whether European Law could exert primacy over Hungary’s constitution. In April 2022, deputy head of the European Commission announce that the European Commission had sent Budapest a letter of formal notification of an EU ‘budget conditionality procedure’ which would withhold EU funding in an attempt to coerce the Orban government into compliance with EU rule of law concerns.

The conflict in Ukraine has exacerbated an existing energy crisis within Europe. At the start of 2022, liquid natural gas (LNG) prices in European markets were four times higher than the previous year. The European Union official statistics office, Eurostat, reported that the EU imported nearly 90% of its natural gas imports and in 2020 the Russian Federation was the EU’s primary LNG supplier, providing over 43% of all imports. With Russia’s invasion of Ukraine on 24 February 2022, the issue of Russian energy supplies to Europe became a key means both for the EU to exert pressure on Russia, with construction of the Nord Stream 2 gas pipeline between Russian and Germany being halted soon after the invasion, and for Russia to exert its own influence on the EU by threatening to restrict or cut off supply. In late March 2022, with Russian banks subject to international sanctions, the Kremlin began to demand that ‘unfriendly nations’ pay for their energy supplies in roubles, a demand which the EU discouraged members from complying with unless stipulated by existing contracts. In late April, the Kremlin followed through on its threats by announcing that gas supplies to Poland and Bulgaria would be cut off, increasing the motivation of eastern European nations to seek alternative sources of energy. The Hungarian government made clear that it would oppose any sanctions measures which would negatively affect the Hungarian economy or threaten the country’s energy security.

On 2 May, EU officials suggested that Hungary and Slovakia might be exempted from an embargo on Russian oil being considered as part of a sixth round of sanctions against Russia, later announcing that a proposed deadline for ending imports from Russia would be extended from 6 months to 2 years for certain eastern European nations, including Hungary. On 8 May, Hungarian Foreign Minister Peter Szijjarto reiterated that Hungary will withhold its vote of approval on the EU’s latest package of sanctions, which includes embargos on Russian oil imports, unless an outcome that protects Hungary’s energy security can be found. In mid-May, in his speech after having been sworn in for a fourth term as Hungary’s Prime Minister, Viktor Orban stated that Hungary would not block EU sanctions against Russia, providing that the measures did not pose a threat to Hungarian energy security. Blaming the EU for high energy prices within Europe, Orban said that “Every day Brussels abuses its power and tries to impose things on us that we do not want.” On Monday 30 May, an AU decision to impose sanctions on leader of the Russian Orthodox Church, Patriarch Kirill, over his outspoken support of Russia’s campaign in Ukraine, led Hungary to include Kirill’s removal from the sanctions list as a condition of the lifting of Budapest’s veto on an EU embargo on Russian oil imports.

On Tuesday 31 May, Viktor Orban hailed a Hungarian government victory as a result of a temporary exemption which had been granted to Hungary in an EU ban on two-thirds of Russian oil imports which had been announced the previous day. However, this extension is likely to only postpone a confrontation between the EU and Hungary over the issue. Hungary will need to increase its supplies from European neighbours in the intervening period to compensate for an eventual deficit in Russian supply. Any moves by the EU to provide funds to accommodate Hungary’s energy needs without Russian imports, which Foreign Minister Péter Szijjártó suggested could cost around €700 million, would likely be contingent on the Hungarian government curbing corruption and assuaging the EU’s ongoing concerns over the rule of law and democratic norms within the country. Ultimately, if a means cannot be found to bring Hungary on board with EU sanctions against Russia, the union will eventually be likely to move ahead with only 26 of its 27 members, severely damaging European Union’s ideal of unity.

Ecuador’s Security Crisis

On 9 May, a prison riot caused by clashes between rival gangs in the city of Santo Domingo left 43 inmates dead. According to Interior Minister Patricio Carrillo, 108 prisoners remain at large and 112 have been recaptured. Prison riots are a common occurrence in the country. In 2021, there were multiple incidences of prison rioting, resulting in 316 inmate deaths. The Santo Domingo incident is just the latest indication of Ecuador’s worsening security situation.

Violence in prisons is not Ecuador’s only security problem. Murder rates are climbing not just in the prison system but on the country’s streets as well. On 29 April, President Guillermo Lasso declared a 60-day state of emergency in 3 of Ecuador’s 24 provinces. Measures imposed include a curfew and the deployment of thousands of members of the Ecuadorian security forces to affected areas of Guayas, Manabí and Esmeraldas, with the stated purpose to “enforce peace and order.” President Lasso tweeted that “the streets will feel the weight” of their presence. It is the second time in just over 6 months that a state of emergency has been declared, with one brought into effect 18 October 2021, and extended into November.

The precise causes of the re-emergence of violence in the country are difficult to determine, after Ecuador had been seeing successes in reduction of crime previous to 2021. Since the legalization of gangs in the 2007, the country’s murder rate had decreased significantly. The Ecuadorian state and most media outlets argue that gangs are to blame, and suggest that Ecuador’s geographic location makes it vulnerable to gang violence, since the country sits between two large cocaine producers – Colombia and Peru. Location also goes some way to explaining the reason that certain cities and provinces see more violence than others. The city of Guayaquil has been badly affected. It is included in the areas currently covered by the state of emergency and on 14 February, it was reported that two bodies were found hanging from a pedestrian bridge in Durán, next to Guayaquil. As the largest port in the country, it offers a route of passage for drugs into Europe and North America. Ecuadorian police claim that killings such as those in Durán are linked to an ongoing rivalry between the Águilas, a faction of the sizeable Choneros gang, and the Chone Killers. It has also been reported that Mexican cartels such as the Sinaloa Cartel and the Jalisco New Generation Cartel are contributing to the problem. It is suggested that these Mexican cartels have formed alliances with Ecuadorian gangs in an attempt to control the flow of drugs through Ecuador and its port cities.

Some are less convinced by the dominant narrative that blames Ecuadorian and Mexican gangs. Analysts have proposed alternative explanations. They suggest that economic hardship, including informal labour, is a principal cause. This hardship has been worsened by the COVID-19 pandemic. According to Ecuadorian government statistics, poverty had risen to 32.2% by 2021 compared with 25% in 2019. Analysts also argue that for years state institutions have been weakened under previous presidents, which makes combatting crime more difficult. Daniel Ponton, a security analyst and university professor, details how this has happened. Former president Rafael Correa’s government created a new intelligence service that analysts and political rivals accuse of spying on the opposition. Then, in 2018, Lenin Moreno (Correa’s successor) closed that intelligence service and created a new entity. Ponton explains that these changes produced a lack of state cohesion, and when there are too many changes, intelligence work cannot be properly coordinated.

There is little reason to expect improvement in Ecuador’s security crisis, whether the root cause is either economic hardship or gang activity. The country’s security forces appear ill-equipped to manage the gang violence issues, and Lasso’s strategy of attracting foreign investment to improve the country’s economy appears unlikely to work, since stability would be required to make Ecuador attractive as an investment destination.

2022 General elections in the Philippines: the return of the Marcos family

On 9 May general elections were held in the Philippines. In these elections more than 67 million Filipinos chose a president, vice president, 12 senators, 300 lower house legislators, and about 18,000 officials across 7,600 islands. As polling stations closed and the vote count started, data showed a huge early lead for the candidate Ferdinand Marcos Jr. (commonly referred to as Bongbong Marcos (BBM)), son of the late dictator. The second most voted candidate, a Human Rights lawyer of the Liberal party and the current vice-president, Leni Robredo, has fallen behind in the number of votes. This is considered a make-or-break moment for the country: it will be the end of the era of Rodrigo Duterte, the controversial outgoing president who, in addition to his bloody war on drugs, has been a scourge of dissidents, indigenous peoples and the country’s Muslim population. The election of BBM only raises questions about the future of democracy in the country. There are three main factors that explain the return of the Marcoses to power in the Philippines.

First of all, electoral analysts have referred to the concept of authoritarian nostalgia. Marcos’ father ruled the country for two decades (1965-1986), including nine years under a brutal period of martial law, a period that saw disappearances, detentions, killings and torture of people, as well as massive corruption (Marco’s family has been estimated to have stolen up to US$10 billion from public coffers). The Marcos family fled to Hawaii after the 1986 revolution, but since then their human rights’ abuses and kleptocracy have been whitewashed up to today. Some analysts have pointed out that this historical revisionism has been easier in the Philippines because there was no transitional justice during the democratic transition in the late 1980s.

Marcos Jr has presented his campaign in terms of unity and highlighting the promise of reviving a former greatness. The Marcos’ years in power are seen as a golden era when there was social stability, peace, order, a thriving economy and development of infrastructures. The idea of a golden age is especially influential nowadays due to the impact of the pandemic on the poorest. Marcos’ electoral campaign, with the slogan “together we shall rise again” has ironically been seen as a one of the most divisive and polarising political campaigns in the country’s history.  The voters’ decision is however not a unexpected turnaround: it is the verification of the triumph of the anti-political discourse initiated six years ago by Duterte, who has governed with a national-populist message with which he has silenced any criticism of the country’s situation.

Another element that feeds authoritarian nostalgia is the influence of individuals over political parties. For voters in the Philippines, political parties tend to be secondary to personalities, with loyalties shifting easily. This means that the charisma, agenda or reputation of a certain candidate carry an enormous weight. The popularity of Marcos Jr. has also been fuelled by different campaigns on social media. Filipinos spent an average of 10 hours a day on the internet, 4 hours of those consuming social media. This makes the spread of disinformation an effective tool for controlling the public discourse.

The second factor that explains the victory of BBM in the Philippines is thus his successful campaign to control the political discourse on social media. Although the battle to control the popular narrative was fierce, it is the campaign in favor of Ferdinand “Bongbong” Marcos the one that had the most power of public reach and manipulation, according to the experts. Apart from spreading on social media the story of an idyllic Philippines in his father’s time, he has taken advantage of hoaxes that thousands of citizens have believed, such as the one that his family hides a great treasure of gold ingots that they will distribute among the population if he is elected president. On the other hand, the second most popular candidate, Leni Robredo, has been slandered with hoaxes such as an alleged sexual video of her daughter or the insistent message that she is allied with the communist insurgents. To compensate disinformation on social media, Robredo’s supporters launched an unprecedented door-to-door effort that is unusual in such a large scale.

Finally, the spread of disinformation on the internet has also been largely absorbed by the younger generations, including first-time voters. Analysts consider that, even if Marcos Jr. has high levels of popularity among all age groups, young voters have been key in his electoral triumph. Young people do not remember the millions of dollars looted from the public coffers during the term of the Marcos’ dictatorship, as well as the cases of torture and executions. Apart from the age gap that prevents young people from having directly experienced the years of the dictatorship, the educational system has not been able to properly discuss the dictatorship era. Historical revisionism has affected the morals and the political conscience of young people. This gap in public knowledge, especially among younger generations, has been exploited by Marcos Jr’s campaign.

The three factors that explain the return of the Marcos family to power in the Philippines (authoritarian nostalgia, disinformation, and the role of the younger generations) have given rise to concern about the future of democracy in the country. The Philippines, one of the oldest democracies in Asia, has seen with Duterte a turn towards China that could continue with the next president Marcos Jr. The president-elect has asked that he be judged for his actions and not for his family past. Regardless of his words, his actions will definitely be closely monitored by the international community.

Ethnic tension Flare-ups in North Kosovo Destabilising Regional Peace

Kosovo police patrols have been coming under attack in the north of the country, near its border with Serbia. Specifically in the north, ethnic tensions continue to simmer almost two decades since the war between ethnic Albanians and ethnic Serbs ended.  It is still not known the reasons for the attacks, but ethnic tensions are the most likely motivation.

The northern region of Kosovo is renowned for smuggling activities. With high police presence it could be that smugglers decided to attack police in order to threaten the police away from the area. Kosovo police have been closing roads i that are used by smugglers to illicitly transport people and goods across from Kosovo to Serbia and through into Europe. But given the extent to which the police have been targeted, and general ethnic tension in the region, the attacks hold heavier sentiment than commercial gain.

The border police came under attack with automatic weapons, AK-47s, and a hand grenade showing the potential lethality of the assault. However, other attacks featured people throwing stones at the police cars and road equipment used to damage and stop police cars as they drive by. All of which attest to the ambition of harming Kosovo authority in the area.

Between 15 April and 26 April there were five attacks on border police in the region. No police officer was injured in the attacks, but they resonate the feeling of the local populace. The attacks have come just weeks after Kosovo refused to construct polling stations for the Serbian elections at the start of April, a move that led to condemnation from Serbian officials, as well as EU and UN officials, because of its destabilising potential. Kosovo’s reasons to prevent ethnic Serbs in Kosovo from voting is that it would undermine Kosovo sovereignty, especially given that Serbia does not recognise Kosovo’s independence.

Kosovo Prime Minister Albin Kurti has claimed that the attacks originated on the Serbian side of the border with the aim of destabilising the Kosovo. He called the attacks an act of terror that were aimed at intimidating the police and people of Kosovo. Serbia suggested that the attacks were in fact a Kosovan attempt at destabilising things in the region. Both lobbying the UN to accuse the other.

The region has experienced repeated flare-ups since Kosovan independence in 2008 and it looks to continue. With Europe’s tensions at an all-time high, these flare-ups have put even more pressure on the European community to ensure tranquillity between Serbia and its neighbours. It is a hard job, though, as Serbia is surrounded by mostly pro-western governments who, not only condemn the attacks on Ukraine by Serbian-ally Russia but are looking to secure European and American support should Russia show aggression towards the Balkans.

Although Serbia and Russia are allies, it would be unlikely that Serbia would be aggressive against its neighbours while Russia is occupied in war in Ukraine. Serbian support for Russia is still high, but Serbia realises that while Russia is occupied it must find a powerful friend elsewhere with whom it can do business. This friend has come in the form of China who has been sending military equipment, notably surface-to-air missile systems to Serbia, these systems have shown their applicability in modern conflict given their extensive use (different systems) by Ukraine against the superior numbers of the Russian air force. China has also been investing in the Balkans, not only in Serbia.

Although these police attacks have shown how unstable the position is between Kosovo and Serbia, it is unlikely that a flare-up like this should warrant further action from either side. Both Serbia and Kosovo have been accusing the other of destabilising tactics and rhetoric to the United Nations, but as peace is the main goal, the UN is solely trying to reduce these tensions. The UN is also looking at changing its role in Kosovo as the UN Mission in Kosovo has accomplished its goals. So, we could see increased security measures being used by the UN to maintain peace in the region. However, Serbia is looking to balance its relationships between Europe and Russia and China and so any aggression towards Kosovo or its neighbours would ultimately ruin any prospect of joining the EU, something Aleksandar Vučić has said is one of Serbia’s goals.

Security Alert – Houndé, Burkina Faso

Unconfirmed reporting indicates that protests erupted between miners and gold mine workers at Canadian group Endeavor Mining’s Houndé Gold Operation. Tensions have been on the rise in the area since the morning of Tuesday 17 May.  Local reports claim that artisanal gold miners are apparently blaming mine officials for having monopolized their sites. According to local reporting, which remains unverified, on 16 May officials moved in to clear artisanal gold miners from the site around the mine, a move that resulted in them storming the mine and setting fire to its facilities. While these reports remain unverified, compelling video is now circulating suggesting that some sort of a breach of the mine may have occurred. The tensions have impacted a number of services in the city of Houndé, including the mayor’s office, schools and places of commerce which as of 17 May are closed. Smoke has also been seen rising from the mine, with reports indicating that several staff vehicles were set on fire by artisanal gold miners in the area. Security officials at the mine were apparently unable to stop the large crowd from entering the mining site.

The Houndé Gold Mine is located in southwestern Burkina Faso, in Houndé, in the province of Tuy in the Hauts-Bassins region. It is situated about 100 km east-northeast of Bobo-Dioulasso along the Route Nationale N1 to Ouagadougou.

This situation in Houndé is developing and MS Risk is closely monitoring the situation on the ground and we will confirm or deny the situation once the information is clarified. Companies with convoy moves on main routes west of Ouagadougou are advised to verify the status of their drivers and should assess routes to ensure that they remain accessible for the rest of the day. Likewise companies should be aware of the possibility of similar tensions rising at other industrial mining sites around the country.