Brussels hopes to be able to overcome Hungary’s veto on the Russian oil embargo in the coming days and thereby approve the sixth package of sanctions against Moscow for invading Ukraine. According to municipal sources, the European Commission is negotiating with Viktor Orbán’s government over a municipal investment program that would help reduce Hungary’s dependence on Russian hydrocarbons. The plan is accompanied by a transitional period for ending imports of Russian oil to some EU partners, which is to be used to build new transport infrastructure. The same sources trust that the likely deal between Brussels and Budapest will allow sanctions to be passed this week or next week at the latest.
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The EU foreign ministers, who meet in Brussels this Monday under the presidency of the High Representative for the Common Foreign and Security Policy, Josep Borrell, will deal with the Hungarian veto, albeit without any possibility of overcoming it, as for diplomatic reasons sources. But Brussels is confident that Orbán’s support for the sanctions will be met in the short term thanks to a pledge of multimillion-dollar European investments in that country’s energy security.
Community sources are hoping the deal will come after approval this Wednesday of an update to the community plan (dubbed REPowerEU) to rapidly reduce reliance on hydrocarbons. The draft document, to which EL PAÍS had access, proposes partially redirecting many items from the Community budget, including Cohesion Funds and those of the Common Agricultural Policy, to renewable energy projects, energy efficiency and distribution infrastructure.
The MidCat pipeline
Brussels is also proposing to use part of the considerable revenue generated by states thanks to the CO2 emissions market auctions. And the Commission is committed, among other measures, to adopting before the end of the year a rule that “will speed up the design and reimbursement of energy efficiency and renewable projects through the usual cohesion policy reimbursement mechanisms,” the draft plan says.
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The aim is to ensure the energy security of the 27 EU Member States. But Orbán won’t settle for the vague promises of interconnection that Spain has been hearing for the last two decades, calling for very specific investment plans and a clear timeline for compliance so that everything doesn’t remain up in the air. In the case of Spain, the EU committed in 2002 to an electricity connection equivalent to 10% of the capacity installed in 2005. The target has been moved and is currently not reaching 3%.
The Spanish government in particular insists that the new REPower-EU plan includes the connection requirements of the Iberian Peninsula with Spain. The government’s third vice-president, Teresa Ribera, has written to the Commission demanding more investment. Spanish sources regret that the latest draft Commission document does not yet include the Spanish demands and there is no reference to the MidCat gas pipeline, the connection project with France through the Catalan Pyrenees which was abandoned in 2019 and is now being restored.
The Commission estimates that adjustments to oil transportation infrastructure to allay concerns from Hungary and other countries in a similarly dependent situation will not be extensive. Some involve building new pipelines from the west and south of the EU, others expanding or increasing the capacity of existing pipelines.
Investments in the gas sector are much more advanced, and plants with a capacity of 20,000 million cubic meters per year will come on stream between this year and next, according to the commission document. In the electricity sector, Brussels is investing an additional 29,000 million to adapt the grid to new needs.
According to municipal sources, the haggling with Orbán revolves around both the municipal investment to finance the pipeline network and the specific deadlines for its execution. And these sources hope the deal will overturn Hungary’s veto and maintain the unanimity that has prevailed since the first round of sanctions in late February and was under threat as they tackled the tricky terrain of energy supplies.
Commission President Ursula von der Leyen proposed earlier this month to suspend imports of Russian crude oil for six months and refined products for eight months. However, this new round of sanctions, which already affects a core area of trade relations between the EU and Russia, failed due to fears by several countries, most notably Hungary, of jeopardizing their energy security.
The group led by Orbán includes Slovakia, the Czech Republic and Bulgaria, countries that have raised fewer objections to von der Leyen’s proposal but face a similar risk situation to Hungary: high dependence on Russian oil, little or no alternative links and no seaports through which crude oil could be imported by ship.
Diplomatic sources acknowledge that this is a real problem and that once the issue with Hungary is resolved, the rest of the countries can benefit from the deal and the desired unanimity will be reached to approve the sanctions. Negotiations with Budapest included a blitz visit by Von der Leyen to the Hungarian capital to meet with Orbán and a phone call by French President Emmanuel Macron to the Hungarian prime minister.
In addition to the oil embargo, the sixth round of penalties against Moscow includes sanctioning high-ranking soldiers or those blamed for the massacres in Bucha on the outskirts of Kyiv; a ban on three major Russian banks, including the largest of them, Sberbank, from using the SWIFT financial communications system; and the suspension of broadcasting licenses for three major Russian TV channels accused of being tools in the service of Kremlin-spreading propaganda and disinformation.
Diplomatic sources assure that the 27 countries have already agreed on all these sanctions and only the last hurdle of the oil embargo has to be cleared. Von der Leyen warned when the proposal was presented: “It won’t be easy, some member states are heavily dependent on Russian oil, but we simply have to do it.”
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