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.