Friday, 19 August, 2022

EU struggles to clear Hungary’s block on Russian oil ban

BRUSSELS: EU ambassadors made a final push to persuade Hungary to accept a watered-down oil embargo against Russia before a summit on Monday, as European unity over the war in Ukraine showed cracks.

Envoys from the 27 member states were meeting in an attempt to finalise a sixth package of sanctions against Moscow, but remain deadlocked over a proposed embargo on Russian oil, reports AFP.

The meeting was held just hours before the start of a two-day EU summit, where leaders hope to discuss ways to help Ukraine and how to beef-up European defence spending in the face of Russian aggression.

A senior EU diplomat said that any failure to clinch a sanctions deal would be the "elephant in the room", given that Ukrainian President Volodymyr Zelensky was also expected to address the leaders by video link.

The latest wave of sanctions was put on the table on May 4, but has been refused by Hungarian President Viktor Orban, an ally of Russian President Vladimir Putin before the war, who argues that an oil embargo would be an "atomic bomb" against his country's economy.

Landlocked Hungary imports 65 percent of its oil consumption from Russia through the Druzhba pipeline and, along with Slovakia and the Czech Republic, have asked for an exception from the import ban.

Diplomats said a two-year delay to the embargo has been granted to the countries concerned, but that Budapest wants at least four years and nearly 800 million euros in European funding to adapt its refineries.

An EU official told AFP the latest compromise solution would exclude the Druzhba pipeline from the embargo "for the time being" and only impose sanctions on oil shipped to the EU by tanker vessel.

Hungary's intransigence comes on the back of Orban's resounding recent re-election to a fourth term and some experts are sceptical about the official claims of alarm over a Russian oil ban. 

"Although costly, potentially leading to some shortages, and not solvable from one day to another, it's a challenge that can be managed," Zoltan Torok, an economist at Raiffeisen Bank in Budapest, told AFP.

Also complicating the stand-off is Hungary's share of the EU's 800 billion euro recovery fund, which Brussels has yet to approve due to disagreements over Budapest's respect for the rule of law and human rights.

Still hoping to find a solution, EU officials are trying to insist the problem is technical and not about political differences between Orban and his EU partners.

But a senior EU diplomat warned that tempers were being tested over suspicions that negotiators were going too far in their efforts to placate Orban.

The question of how we answer Russia is always "emotional" for certain member states and will be "one of the most sensitive issues" at the summit, the diplomat added.