As the European Union seeks to impose sanctions on Russian oil over the war in Ukraine, Hungary has proved one of the biggest obstacles to unanimous support from the bloc’s 27 member states.
EU Executive Commission President Ursula von der Leyen last week proposed phasing out imports of Russian crude oil and refined products by the end of the year in a bid to rid Europe of its dependence on Russian fossil fuels and cut off a lucrative source of oil income that helps fund Russia’s war.
But Hungary’s nationalist government – one of the most pro-Moscow in the EU – insists it will not back sanctions targeting Russian energy exports.
Hungary is heavily dependent on Russian oil and gas and says the EU oil boycott would be a “nuclear bomb” for its economy and destroy its “stable energy supply”.
Von der Leyen made a surprise trip to the Hungarian capital on Monday to negotiate with Prime Minister Viktor Orban to try to salvage the proposal, but no deal has yet been reached.
Here’s what you should know about the talks and what’s next:
What does Hungary say?
The Hungarian government has insisted it will block any proposed EU sanctions involving Russian energy, calling them a “red line” that runs counter to Hungary’s interests. It gets 85 percent of its natural gas and more than 60 percent of its oil from Russia.
Orban, widely regarded as one of Russian President Vladimir Putin’s closest EU allies, has reluctantly backed previous EU sanctions against Moscow, including an embargo on Russian coal. But he has argued that such moves hurt the bloc more than Russia.
Since coming to power in 2010, Orban has deepened Hungary’s dependence on Russian energy, saying its geography and energy infrastructure make a Russian oil shutdown impossible.
“We said that coal sanctions would be okay because they don’t affect Hungary; but now we really have reached a red line, a double line, because the oil and gas embargo would ruin us,” Orban said in a radio interview on Friday.
The landlocked country has no seaport to receive global oil shipments and relies on pipelines. Also, a flagship government program to cut electricity bills depends on the relatively low cost of Russian fossil fuels and is a key factor underlying Orban’s domestic support.
Converting Hungary’s oil refineries and pipelines to processing oil from non-Russian sources would take five years and require massive investments, Orban said. That would push up high energy prices further, leading to shutdowns and unemployment, he said.
Is there a chance for compromise?
In addition to Hungary, Slovakia and the Czech Republic have been demanding the exit from Russian oil for years. The European Commission has agreed to help countries particularly dependent on Russian oil.
“We recognize that Hungary and other countries that are landlocked and have significant energy dependency on Russian oil supplies are in a very specific situation that requires us to find specific solutions,” Commission spokesman Eric Mamer said on Tuesday.
Mamer said Hungary has “legitimate concerns” about oil supplies and that an exit from Russian oil “could involve differentiated timelines to suit the different situations of certain countries”.
“That’s definitely one of the variables, because obviously when you’re talking about investing in upgrading infrastructure, you need time,” Mamer said.
He did not specify which countries could potentially be offered delayed implementation of an oil embargo, or for how long.
In a tweet Monday after her meeting with Orban, von der Leyen said the discussion “has been helpful in clarifying issues related to sanctions and energy security” and that progress has been made, but “further work is needed”.
French President Emmanuel Macron spoke to Orban on Tuesday about “guarantees” needed for some member states, like Hungary, which “are in a very specific situation regarding pipeline supplies from Russia,” according to Macron’s office.
What does Hungary have to gain?
The blocking of the sanctions package could be used as leverage in a separate conflict between Budapest and the EU.
The block has Hungary around 8 billion.
Hungary has been accused of falling away from democratic values by exercising excessive control over the judiciary, stifling media freedom and denying the rights of LGBT people.
Orbán’s government rejects the allegations and argues that the EU fines are politically motivated.
But with the Hungarian economy reeling amid high inflation and a large budget deficit, it will need that EU money for an economic recovery. As EU officials negotiate with Hungary to win its support for sanctions on Russian energy, the release of withheld funds could be used as a bargaining chip.