Oil from Russia. When will Orban agree to an embargo? Brutal fight for money with the EU

Ursula von der Leyen, the head of the European Commission, a week ago presented a draft of a new sanction package with an embargo on refining products from the end of this year with an additional transition period until the end of 2023 for Slovakia and. However, Budapest, despite tearing out the extension of the transition period for both countries until the end of 2024 (and additionally until mid-2024 for the Czech Republic), continues to block approval. On Wednesday (May 11, 2022), another meeting of the ambassadors of 27 EU countries ended in nothing. Moreover, the teleconference of the prime ministers of Hungary, Slovakia, the Czech Republic and Croatia with President Emmanuel Macron (yesterday he called Orban) and von der Leyen, which the Commission president announced after her visit to Viktor Orban on Monday, was postponed again.

– We would like to know the reasons for this blockade. We hear that it is about technical expectations for oil supplies. But when we ask what exactly the expectations are, we do not get any answers – said Andrzej Sadoś, Poland’s ambassador to the EU after today’s meeting. Prime Minister Orban last week compared the embargo to an atomic bomb launched on the Hungarian economy, for which Dmitry Medvedev, deputy head of the Security Council of Russia (and the former prime minister and president), repaid Hungary with a laudatory social media post about a “reasonable leader” opposing the “sterilized” of the European herd “towards the abyss behind the American shepherd leading them to the slaughter. However, in Brussels there is still a conviction that such praise is premature, because Orban will eventually agree to the embargo and now he is just haggling over the price.

– Fairs for money are normal in the EU. However, in the context of Ukraine, the specificity of Hungary is the lack of pressure on the public opinion – also shaped by state propaganda – to give way relatively quickly. For the entire EU, the sanctions debate is mainly a question of how to help Ukraine. Meanwhile, Orban treats it as an ordinary “trade negotiation” with Brussels, argues one of our EU interlocutors.

Hungary is bargaining with the European Union. Long list of requests

Leaks on the Brussels side indicate that the Hungarians, during von der Leyen’s visit to Budapest, did not try to directly link the sanctions to the unfreezing of the Hungarian KPO or to the recently initiated “money for the rule of law” procedure. On the other hand, it concerns investments in an oil pipeline from Croatia to Hungary (the modernization of several dozen kilometers of this pipe), which is to replace supplies by the Russian “Druzhba”, and the technological conversion of Hungarian refining equipment to non-Russian oil. Hungarians are to value it at as much as EUR 500-700 million. Moreover, they are demanding for themselves an even greater extension of the embargo transition period.

Brussels is ready to pay, inter alia, as part of the RePowerEU program (departure from Russian energy resources), the details of which will be presented in a week’s time, but not as much as the Hungarians are requesting. In addition, the postulates of a longer and longer postponement of the embargo for Hungary causes concern among other EU countries, because it poses a risk of considerable distortions of competition on the EU common market. The Hungarian concern MOL could use cheaper Russian oil for a long time, when, for example, Polish refineries would only have access to more expensive oil from outside Russia.

Can the European Union impose an embargo on Russian oil without Hungary?

which now heads the EU Council, would like to agree on sanctions by the end of this week at the latest, but the probability is increasing that it will not end with negotiations until next Monday, May 16, at the regular meeting of the EU’s 27 foreign ministers.

Although approval of the sanctions requires the unanimity of all EU countries, with the relentless opposition of Budapest, the rest of the EU would be able to introduce an oil embargo without Hungary. However, no one is striving for such a precedent for the time being, because it would strongly infringe the unity of the EU also in the context of subsequent sanctions. But Orban also knows that he does not have absolute blocking power in the Union, and that if he could pursue any sanctions on oil without Budapest, he would face a very costly – politically, but with time also financially – isolation in the Union.

So far, Greece, supported by Cyprus and Malta, has managed to remove the ban on the transport of Russian oil on ships owned by EU companies from the draft sanctions. This case has been postponed until the joint arrangements of the G7 group so that such EU restrictions on tankers would not be removed immediately by, for example, British companies from outside the EU. On the other hand, the plan to prohibit insurance against Russian oil shipments persisted – severe, as EU companies dominate this insurance sector.

Sanctions against Russia. On the “blacklist”, Patriarch Cyril and Alina Kabaeva

Despite the resistance of e.g. on the part of Hungary, Patriarch Cyril was not removed from the draft new “blacklist” (entry ban and property freeze in the EU), to be approved together with the oil embargo. The justification in the draft sanction indicates that Cyril during one of his sermons “presented Russian military activities as a war against evil and equated it with the spiritual cleansing of Ukraine, and continues to proclaim that the territory of Donbas and other areas of Ukraine belongs to Holy Russia and therefore should be cleansed. the enemies of Western decadent values. “

Moreover, Alina Kabaeva, Putin’s life companion and the mother of their three children, were added to the planned “black list”. The Russians have speculated for years about the former gymnast’s ties to the host of the Kremlin, but – as the Wall Street Journal recently wrote – US authorities considering sanctions against Kabaeva also have such data.