'Progress' and 'small step forward' made in Brussels-Budapest talks on Russian oil embargo

"This evening’s discussion with PM Viktor Orban was helpful to clarify issues related to sanctions and energy security. We made progress, but further work is needed. I will convene a VC with regional players to strengthen regional cooperation on oil infrastructure," tweeted Ursula von der Leyen late on Monday.

This evening’s discussion with PM Viktor Orban was helpful to clarify issues related to sanctions and energy security.We made progress, but further work is needed. I will convene a VC with regional players to strengthen regional cooperation on oil infrastructure.

— Ursula (von) May 9, 2022

Some progress, a small step forward, was achieved on the new package of sanctions against Russia at Monday's meeting with the President of the European Commission in Budapest,

Minister of Foreign Affairs and Trade Péter Szijjártó told state-run newswire MTI in the evening. He added:

there is a lot more to be discussed before Hungary can change its position.

It is clear from the remarks of von der Leyen and Szijjártó that the positions are very far apart, although the Commission's President appears to be slightly more upbeat about the prospects of an agreement.

Economic nuclear bomb

Szijjártó reiterated for the umpteenth time that Hungary's energy supply is currently "on a secure footing", but the current sanctions package (the sixth) would destroy Hungary's energy security, as it would be impossible to obtain the oil needed to run the Hungarian economy.

He said the EC President was informed in detail about the impact and the problems that the sanctions package would cause for Hungary, and asked for the sanctions package to be reconsidered.

Szijjártó reiterated that as long as the European Commission does not offer solutions to these problems, Hungary cannot support the sanctions package, as in its current form - without any proposed solutions - it is tantamount to "dropping a nuclear bomb on the Hungarian economy".

EU considers more funds for eastern states to reach deal

The European Commission is considering offering landlocked eastern European Union states more money to upgrade oil infrastructure in a bid to convince them to agree to an embargo on Russian oil, an EU source told Reuters on Monday.

The measures are part of a wider package of new sanctions against Russia for its invasion of Ukraine, but the adoption of the legal text still needs an agreement on the size of the investment, the source said, adding another sticking point was Cyprus's concerns about a proposed ban on the sale of real estate to Russians.

A new version, currently being drafted, is likely to drop a ban on EU tankers carrying Russian oil, after pressure from Greece, Cyprus and Malta, the source said, declining to be named because of the sensitivity of the matter.

EU companies would, however, be prevented from offering insurance and other financial services for the transport of Russian oil worldwide, the source added, noting that on this point the original proposal would remain unchanged.

Whereas most EU states will have to fully implement a Russian oil embargo by the end of the year, Hungary - the most vocal critics of the new sanctions package - has already obtained an exemption until the end of 2024, as has Slovakia, and the Czech Republic would have until mid-2024. 

EU officials say the concerns of these landlocked countries are legitimate and are now considering spending more than initially planned to upgrade and extend pipelines that would deliver oil from other EU countries.

The source declined to comment on the size of the investment, but noted it was not to be calculated in billions of euros, rather far less.

The EU is withholding EUR 7.2 billion in EU post-COVID recovery funds to Hungary over concerns about the rule of law, and diplomats have said that Budapest may be trying to link the oil embargo talks with disbursement of the blocked funds.

Dismissing this, the source said additional funding would be provided for pipeline investment and there was still a debate about whether such money could also be used to upgrade oil refineries in eastern European countries, many of which can currently only process Russian oil.

Cover photo: Prime Minister Viktor Orbán receives Ursula von der Leyen, President of the European Commission, at the Carmelite Monastery for talks over dinner on 9 May 2022. Behind them is Gergely Gulyás, Minister of the Prime Minister's Office (right).MTI/the Prime Minister's Press Office/Vivien Cher Benko