Hungarian Prime Minister Viktor Orbán was granted a near-total exemption from the European Union’s embargo on Russian oil. Although the premier hails it as a great victory achieved in Brussels, the exemption may only deepen the rift between the bloc and Hungary.
EU leaders agreed this week to grant Hungary a near-total exemption from a newly accepted embargo on Russian oil. The decision comes after nearly one month of haggling between Brussels and Budapest as Hungarian Prime Minister Viktor Orbán refused to accept the planned ban, citing his country’s critical reliance on Russian crude.
The sixth package
On May 4, European Commission President Ursula von der Leyen proposed a total ban on European imports of oil from Russia -- one element of a comprehensive sixth round of sanctions. The rest of the sixth package of sanctions proposed by the EU is also critical—removing Russia's largest bank, Sberbank, from the SWIFT international money transfer network and an expansion of the list of Russians whose travel and financial accounts will be frozen.
The EU proposed a gradual embargo on Russian oil imports, recognizing that certain EU members’ reliance on these imports made it impossible to wean themselves off Russian oil with immediate effect.
Orbán was a vocal critic of the plan from the start, saying that such a move would be equivalent to dropping an A bomb on Hungary’s economy. He later went on to demand hefty financial compensation to the tune of billions of euros in exchange for Hungary voting in favor of the embargo. Von der Leyen traveled to Budapest to negotiate with Orbán but their talks failed to lead to an agreement.
EU heads of state and government claimed victory late Monday night when they adopted the sixth package of sanctions designed to punish Moscow for invading Ukraine and to thwart Russian President Vladimir Putin’s war efforts.
Prime Minister Orbán announced the decision in a Facebook post saying, “An agreement was reached. Hungary is exempt from the oil embargo! Hungarian families can sleep in peace tonight.”
European Council President Charles Michel and other senior officials said the embargo would halt 90% of Russian oil exports to EU countries by the end of the year, depriving the Kremlin of crucial revenues to finance the war. The package includes other penalties, including a severing of Sberbank from the SWIFT international payment system. The new sanctions also target Russian military officials responsible for atrocities in Bucha and other towns that were occupied by Russian forces.
“We want to put a stop to the Russian war machine, and stop financing for Russian military capacity,” Michel said at a joint news conference with Commission President Ursula von der Leyen. The President expressed her satisfaction that the leaders were able to agree in principle on the sixth sanctions package. The Council should be able to finalize the legal language of the sanctions that would ban almost 90% of all Russian oil imports by the end of the year, she added. She noted that the new sanctions would also prohibit insurance and reinsurance of Russian ships by EU companies and would suspend broadcasting in the EU of three Russian-controlled media outlets that were being used to spread Kremlin propaganda.
Under the agreement, Hungary will be allowed to continue receiving Russian crude oil through the Druzhba pipeline without any limit.
Hungary remains on the agenda
Michel, von der Leyen and some national leaders said that the European Council would revisit “as soon as possible” Hungary’s case. Dutch Prime Minister Mark Rutte even said that heads of state and government would take up the matter again at their next summit, toward the end of June.
Officials said they would work to improve infrastructure that would allow Hungary to receive more oil through an alternative pipeline from Croatia, at which point Budapest's exception could be phased out.
Hungary was not the only country to voice objections, though it was the most forceful in its demands. Slovakia and Bulgaria also requested concessions. The Czech Republic was granted an 18-month exception from a ban on the resale of oil products. "We're ready to get rid of our dependence on Russia's energy sources … but we're not able to do it in a short term," Czech Prime Minister Petr Fiala said.
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