Budapest will oppose the sixth package of sanctions against Russia in its current form because of its impact on Hungary in terms of energy, Hungarian Foreign Minister Péter Szijjártó said on Facebook on Wednesday 4 May, reacting to the European Commission’s proposal for a progressive EU embargo on Russian oil (see EUROPE 12945/1).
According to Mr Szijjártó, the embargo as proposed by the European Commission “would destroy Hungary’s energy security”, despite the fact that the sanctions package presented by the EU institution includes an exemption for Hungary and Slovakia. Both countries are heavily dependent on the Druzhba pipeline for their oil imports due to the lack of connections with the rest of the EU.
“It is not a question of political will or time. It is simply a physical, geographical and infrastructural reality”, Mr Szijjártó said.
“No one can expect us to make the Hungarian people pay the price for the conflict in Ukraine”, he added.
While the adoption of the new sanctions requires the unanimous agreement of the Member States, the Minister clarified that the Hungarian approval is conditional on the addition of an exception to the embargo for oil transported by pipelines.
Hungarian government spokesperson Zoltan Kovacs pointed out that 65% of the oil used by Hungary comes from Russia.
“We do not see any plans or guarantees on how a transition could be managed on the basis of the current proposals and how Hungary’s energy security would be guaranteed”, he further stated in an email response to the Reuters news agency.
Towards a longer derogation for some countries?
In addition to Hungary, other Member States may oppose the European Commission’s proposed embargo.
Slovakian Economy Minister Richard Sulík has called for a three-year transition period to gradually implement the embargo, according to Reuters.
“The Czech Republic will have to apply for a waiver before pipeline capacity from other countries is increased and oil imports to the Czech Republic are secured from other sources”, Czech Prime Minister Petr Fiala reacted via Twitter.
Germany’s Minister of Economics and Energy, Robert Habeck, warned that an embargo on Russian oil could lead to disruptions in Germany’s oil supplies and price increases.
An effective measure?
When asked by EUROPE about the risks of oil shortages for some Member States, Thomas Pellerin-Carlin, Director of the Jacques Delors Energy Centre, said that these risks are almost non-existent, except for some Slovak and Hungarian regions, “given their dependence on the Droujba pipeline“.
In his view, the introduction of an EU embargo on Russian oil is a good decision that should have been taken much earlier in order to “deprive Putin of the material means to wage his war in Ukraine”.
However, he regrets the progressive nature of the embargo planned by the European Commission: “The longer we drag our feet, the more time we give Putin to lessen the impact of this embargo by finding other customers”, he said.
This is also the view of the Bruegel think-tank, which argues that a punitive tariff on all energy imports from Russia would be a better option than a progressive embargo on certain fuels.
The organisation fears that a gradual embargo will also lead to higher oil prices in Europe and worldwide during the transition phase, in anticipation of the reduction in Russian deliveries, thus pushing up the revenues generated by these deliveries.
For Mr Pellerin-Carlin, the optimal option for the Europeans would have been an ‘escrow account’ that would allow the EU to continue buying fossil fuels from Russia, but by transferring the money to a “frozen account”. This money would then only be released after a certain period of time, for example on the condition of a ceasefire in Ukraine.
He added: “The big thing that is missing from all of this is energy efficiency, for example by reducing the speed on motorways, which would reduce our oil consumption”.
The European Commission, for its part, defended its proposal as “a good balance”. “It’s about maximising pressure on Russia in a way that minimises the impact on us, our partners and the global market”, said the institution’s chief spokesperson, Eric Mamer. (Original version in French by Damien Genicot, with Camille-Cerise Gessant and Solenn Paulic)