EU not ready to help Hungary and Slovakia with Russian oil imports – Politico
30 July 2024 11:43
Hungary and Slovakia are asking for help from Brussels to maintain access to Russian oil, but this request is causing irritation among EU diplomats, as almost all EU countries have already refused to buy Russian raw materials. This is stated in a Politico article, according to "Komersant Ukrainian"
The talks come amid Ukrainian sanctions blocking the transit of oil sold by Russia’s largest private oil company, LUKOIL, which could deprive the two countries of a third of their oil imports. Hungary and Slovakia have asked the European Commission to intervene, arguing that the sanctions violate the 2014 EU-Ukraine trade agreement.
However, this request has put the EU in a difficult position. Officials know they have to follow the rules, and have already made several statements that they are checking the facts and exploring options. But behind the scenes and in discussions among EU diplomats, there is considerable irritation that the issue is even on Brussels’ agenda.
“Most EU countries have found ways to wean themselves off Russian oil. It’s not our problem that Hungary and Slovakia have used sanctions exemptions to continue importing,”
– the diplomats are indignant.
European officials are particularly outraged by the fact that Hungary has even increased its imports of Russian oil, which is a unique case among the bloc countries.
Ukraine, for its part, argues that its sanctions are aimed at limiting a key source of revenue for Russia’s war effort. In addition, Mykhailo Podolyak, an adviser to the Ukrainian president, said that the move had nothing to do with blackmail.
Growing discontent in the EU with Budapest is intensifying as countries grow increasingly weary of Hungarian Prime Minister Viktor Orban over his friendly relations with Russia and his constant attempts to stall sanctions. Slovakia is also beginning to irritate the EU as populist Prime Minister Robert Fico reorients Bratislava to a more pro-Russian stance and ends state military aid to Ukraine.
Payback for dependence
After Moscow’s full-scale invasion of Ukraine in 2022, the EU imposed an embargo on Russian oil imports, a key source of revenue for the Kremlin’s war effort. However, this embargo had an exception for shipments via pipelines, including those to Hungary, Slovakia and the Czech Republic via the Druzhba pipeline. This was done to give these countries time to find alternative supplies, with the understanding that they would do so quickly.
Germany and Poland, which also imported oil through Druzhba, stopped buying Russian oil last year. The Czech Republic plans to end its imports from Moscow by 2025, and Slovakia has already begun upgrading its main refinery to handle more non-Russian oil.
But Hungary has chosen a different path, instead increasing its pipeline oil imports by 50 per cent from 2021. Budapest has also signed new deals with Russian gas giant Gazprom.
Threats and alliances
Feeling opposed by the bloc, Hungary and Slovakia have resorted to threats and are quietly looking for other options. Last week, Hungarian Foreign Minister Péter Szijjártó said Hungary would continue to block EU military aid to Ukraine until sanctions are lifted, adding that the country provides 42 percent of Kyiv’s electricity imports.
Slovak President Peter Pellegrini said that Ukraine should “restore order as soon as possible”, otherwise Slovakia will be forced to take reciprocal measures. On Monday, Slovak Prime Minister Robert Fico threatened to cut exports of diesel fuel to Ukraine, which accounts for a tenth of the country’s consumption, if sanctions are not lifted. Leading Slovak officials have previously hinted that they may cut off electricity supplies.
However, these threats seem more like a way to influence the negotiations than genuine threats, said Krzysztof Debiec, a senior researcher at the Warsaw-based Centre for Eastern Studies. This is partly because both countries continue to profit from energy exports to Kyiv, and they would face serious pressure from the EU if electricity supplies to war-torn Ukraine were cut off.
Meanwhile, Slovakia and Hungary may face higher energy prices and fuel shortages in the coming weeks. Their refineries also face “significant credit risk”, according to Fitch.
Alternative solutions
Despite these threats, both countries have other options for securing supplies. For example, they could increase imports of non-Russian oil from Croatia through the Adria pipeline. The Croatian Ministry of Energy did not comment on this issue.
Last Friday, Slovak Prime Minister Robert Fico proposed an unspecified “technical solution” to resume blocked supplies after meeting with Ukrainian Prime Minister Denys Shmyhal. Hungarian leader Viktor Orban’s aide, Gergely Gulyás, also noted that the country is studying a “legal loophole” that allows oil to be transferred through a third party without being subject to sanctions.
This could mean increased imports through Druzhba from Kazakhstan or other Russian companies such as Gazprom or Rosneft, which are not subject to sanctions.
Hungary and Slovakia have been very hypocritical in their position, said Martin Vladimirov, director of energy research at the Centre for Democracy Studies.
“They actually received direct economic profit from their proximity to the Ukrainian market, reselling cheap Russian energy resources for huge premiums, while at the same time maintaining arms supplies and being Russia’s Trojan horses in Europe,”
– said the expert.
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