Hungary could invoke national security to dodge EU plan to cut off Russian energy - expert

On Tuesday, EU Energy Commissioner Dan Jørgensen announced a comprehensive two-stage plan to end dependence on Russian energy (gas, oil and nuclear), under which purchasing natural gas would be prohibited from 2028 even under long-term gas contracts with Moscow.

Jørgensen insisted that the European Commission, the EU’s executive, would help countries divest — and argued that internal estimates showed the bloc overall wouldn’t see higher prices. 

“We do not neglect the fact that for some countries, this will be a harder transition than for others,” he said. The Commission, Jørgensen added, will help “using the different tools that we have, so that no countries are hit too hard from this” — though he was vague on specifics.

Brussels argued that the proposals will be legally robust. According to one EU official,

the ban would allow firms to declareforce majeure— breaking their contracts — due to an unforeseeable event (like sanctions).

For example, the Commission may impose a significant tariff on gas that could not have been foreseen when the long-term contracts were concluded, and thus an unforeseen event could be used as a pretext for withdrawing from the contracts, and thus the companies could not be held liable afterwards.

An official, who was granted anonymity to speak freely, said:

Believe me we know very well what we want [and] how we can do this in a safe manner that is legally solid, that avoids litigation risk, that avoids economic risk for the market participants and suppliers.

The official added: “It's a trade policy, and like any other trade policy where we choose our partners [...] if we have a problem with one partner, we react to it.”

Hungary, Slovakia, Czechia, Bulgaria — they're going to produce a very nice plan where they'll put some milestones and targets,

said Martin Vladimirov, director of energy and geoeconomics at the Center for the Study of Democracy.

But ultimately their politicians will insist it is too risky for their security of supply and ignore the plan, just as they have done with other plans on the phaseout of coal or on renewables.

In the meantime, he added, "Russia is gaining billions."

It is worth noting that if the Commission were to impose high tariffs on Russian gas and oil, Hungary would have to pay them into the common EU budget, because as an EU member we are also subject to the common trade policy framework, so it is questionable whether the reference to national security risks would really override the plan to make it financially impossible to import Russian energy sources.

Hungary's Prime Minister Viktor Orbán said at a public forum late on Tuesday that the EU plan is dangerous for Hungary, but it would be legally feasible, because the Commission's trade measures, taken under its own authority, would only need to be approved by a qualified majority of member states to avoid a Hungarian and Slovak veto. He also stated that "we have to get our act together here", which could have meant that the Hungarian government would explore similar legal options and room for manoeuvre.

It is worth noting that Jørgensen said yesterday that

their analysis is that the Russian divestment plan will not lead to significant price increases or security of supply risks,

but that there may be specific aspects of the cut-off process that they need to take into account and therefore outlined a gradual and closely coordinated process.

Cover photo: Portfolio