US Secretary of State says Hungary's sanctions waiver applies for one year only

On Wednesday, US Secretary of State Marco Rubio held a press conference at Hamilton Airport in Canada following a meeting of G7 foreign ministers. He responded to journalists' questions, speaking in detail about Hungary's exemption from sanctions on Russian energy.

He was asked if the sanctions waiver issued for Hungary was for one year or indefinite, as there were conflicting reports about the terms limits.

Rubio said "it depends".

"[...] there’s a nuclear plant issue that’s already under construction and they need to complete and – because it involves a Russian company that did the design and build – we want them to be able to complete because we want them to be energy independent." 

In the case of the pipelines on oil and gas, it’s a one-year extension because it would be deeply traumatic to their economy to cut them off immediately.  It’s a very small piece of what Russia sells.  It’s almost all of what they buy, and it would be deeply destabilizing in Hungary for them to lose access to those energy resources,

he added.

Rubio thus made it clear that the United States had granted only a limited one-year exemption from sanctions on Russian oil and gas imports, while making a separate concession to allow the completion of the nuclear project related to the expansion of the Paks plant.

In light of the Hungarian government's announcement last week that US President Donald Trump had exempted Hungary from sanctions on Russian oil and gas purchases at the Washington meeting, Rubio's comments are particularly important.

However, following the announcement, several American and international news agencies, including Reuters, CNN and the BBC, reported that the White House had only informed the press of a one-year exemption, and that official authorisation for this would be issued by the Office of Foreign Assets Control (OFAC), a department of the US Treasury.

Based on diplomatic sources, Portfolio previously reported that the apparent contradiction could be explained by the fact that substantive exemption cannot be established by a political announcement, but rather by a licence issued by OFAC, for which the Hungarian side must officially apply. According to US practice, such licences are reviewed annually, meaning they are formally only valid for one year, even if the intention is to have them in place for a longer period.

However, according to Rubio's statement, the US is currently only willing to grant a one-year, temporary exemption from sanctions on the purchase of Russian oil and gas. The State Department's official statement released after the Trum-Orbán meeting did not include a single word about Hungary's exemption from the US sanctions on Russian companies.

They don't treat Russia with kid gloves

Rubio also responded to various questions about Russia. He said that

there’s not a lot left sanction from our part,

as the US has already "hit their major oil companies, which is what everybody’s been asking for". He admitted, however, that those still have to be implemented, and "it will take some time till you begin to feel it."

[...] I don’t know what more there is to do. I mean, we’re running out of things to sanction in that regard.

When asked about the Russian shadow fleet, he said "it is an enforcement mechanism, and obviously sanctions have to be enforced." The shadow fleet has come up because

there are things that the Europeans can do on shadow fleets since a lot of these are happening in areas much closer to them.

When asked whether the U.S. will get involved in the EU's plan to use the Russian frozen assets to support Ukraine?, Rubio replied that Secretary of the Treasury, Scott Bessent "is sort of dealing with that topic, so I wouldn’t want to get ahead of him on that."

He also said that Washington is aware of the debates taking place in Europe and the reservations of several member states on this issue. He added that the use of frozen Russian state assets has "unintended consequences", and that the US government is still forming an official position on this issue.

When asked about Russian military provocations in Eastern Europe, Rubio stated that the United States are "not in favour of them" and they "don't like them".

"But we have a strong commitment to NATO and to defend our partners if they ever come under attack. We think any – those provocations are coming from Russia. We think that they’re counterproductive and obviously create a high level of tension that could spark something broader, which would be bad news for them and bad news for everybody, really." 

Cover photo: Soeren Stache/Dpa picture alliance via Getty Images