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Hungary holds up EU plan to ban Russian oil

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The European Union's hopes of quickly imposing a ban on Russian oil imports could be dashed after Hungary demanded costly guarantees for its own fuel supplies, diplomats say.

“I am sure we will have an agreement, we need this agreement and we will have it,” EU foreign policy chief Josep Borrell told reporters in Germany on Friday as G7 ministers met.
But he added that if EU diplomats cannot overcome resistance between certain member states, then foreign ministers meeting in Brussels on Monday will need to
Hungary holds up EU plan to ban Russian oil

The European Union’s hopes of quickly imposing a ban on Russian oil imports could be dashed after Hungary demanded costly guarantees for its own fuel supplies, diplomats say.

“I am sure we will have an agreement, we need this agreement and we will have it,” EU foreign policy chief Josep Borrell told reporters in Germany on Friday as G7 ministers met.

But he added that if EU diplomats cannot overcome resistance between certain member states, then foreign ministers meeting in Brussels on Monday will need to “provide political momentum.”

The European Union has already imposed five rounds of sanctions against the Russian economy and people from President Vladimir Putin‘s inner circle in response to the invasion of Ukraine.

A sixth round would add a few names to the sanctions list and affect some Russian media outlets, but more importantly would ban imports of Russian crude oil.

EU chief Ursula von der Leyen’s European Commission has drawn up a proposed text for such a package, but it needs the unanimous approval of all 27 EU member states.

Hungary is resisting, and several of its neighbors, who also rely heavily on Russian crude for their oil refineries, are reluctant to sign on.

– ‘We can’t accept it’ – Brussels is desperate to avoid the appearance of division in the face of Putin’s attack and Ukraine‘s plight, and officials are scrambling behind the scenes to find a compromise.

But, as Hungarian Foreign Minister Peter Szijjarto told the Spanish newspaper El País this week, Budapest told von der Leyen that they have “a problem” with his proposals.

“We can’t accept it unless she offers us a solution,” he said.

Hungary‘s Prime Minister Viktor Orban, often the outsider in Brussels’ decision-making, has informed von der Leyen and French President Emmanuel Macron, who holds the EU presidency, of his concerns.

Hungary is landlocked and, like neighboring Slovakia, relies almost 100 percent on Russian oil from a single pipeline to supply its refinery, which is calibrated to process only Russian crude.

Budapest has demanded exemption from the embargo for at least four years and wants 800 million euros ($830 million) in EU funds to refurbish the refinery and increase the capacity of a pipeline to Croatia.

A European diplomat told AFP that Slovakia, the Czech Republic, Bulgaria and even Croatia are queuing up behind Hungary‘s more outspoken opposition with similar demands.

The embargo, as planned by Brussels, would see most member states halt imports of Russian crude by the end of the year and refined fuels by the end of next.

Hungary, the Czech Republic and Slovakia have been offered a two-year suspension of the embargo, but Hungary has dismissed it as insufficient.

After the sanctions package was announced with great fanfare on May 4, 10 days of backroom negotiations have produced no progress and tensions are mounting.

Diplomats in Brussels dismissed reports that the oil embargo could be dropped from the plan to allow much smaller measures to take effect, arguing that this would be seen as weakness.

“If this package is adopted without an oil embargo, I think President Putin can celebrate,” Ukraine‘s Foreign Minister Dmytro Kuleba warned.

Kuleba, who will join his EU colleagues on Monday, said “it will be the first case where the unity of the European Union is broken due to the position of one country: Hungary.”

Hungary has proposed exempting pipeline deliveries from the export ban. Of the 2.8 million barrels of Russian crude that arrive each day in the EU, only 0.7 million arrive by pipeline.

– No trust – But this idea has been coldly received in Brussels. “That would undermine the unity and solidarity of the 27 to share the burden of the embargo,” said one diplomat.

“Orban wants guarantees on European funding and on energy security so that he can say to the Hungarian people: ‘Look, you don’t have to worry,'” he said.

Hungary‘s right-wing populist government has capped fuel prices since last year, but the war in Ukraine has already pushed up global energy prices even before the embargo.

“The problem is that he has no confidence in the European system and its institutions,” the official said of Orban, explaining why Hungary is opposed to ending the use of single-country vetoes in many EU decisions.

If next week’s negotiations fail to make a breakthrough, and Monday’s foreign ministers’ meeting will not be a forum for decision-making, the issue could haunt the EU summit in late May.

But if European powers at least agree to the €500m package of arms shipments to Ukraine that Borrell is also proposing, that could reduce tension between kyiv and Budapest.

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