Conflict Alerts # 514, 18 May 2022
In the news
On 16 May, Hungary's prime minister, Viktor Orban, on the EU proposal for an oil embargo on Russia. He said: "Every day Brussels abuses its power and tries to impose things on us that we do not want." Earlier, he mentioned that the decision would affect Hungary as its economy depends on Russian energy imports of more than 50 per cent. On 06 May, he rejected the EU's proposal saying the sanctions on the energy will have an effect equal to "nuclear bomb," on Hungary.
On 16 May, Lithuania's and Ireland's foreign ministers accused Hungary of its decision to veto the EU's oil embargo on Russia. Ireland's foreign minister, Simon Coveney said: "This is about a deterrent to the continuation of war. The sooner the EU can finalize that sixth sanctions package the better."
On 09 May, European Commission President Ursula von der Leyen met Orban to discuss Hungary's objection to the EU's oil ban. Post the discussion, she said: "This evening's discussion with PM Viktor Orban was helpful to clarify issues related to sanctions and energy security."
Issues at large
First, the equation between the EU and Hungary. The relations between Hungary and European Union have never been static. Especially under Orban, there have been domestic, regional, and international issues that have maintained the crack in Hungary-EU relations. At the domestic level, the government's misuse of the EU funds, democratic backsliding, manipulation of media, undermining courts, and provisions against LGBT have been the reason behind the rift. Looking at the regional level, the neighbouring countries Poland, Czech Republic, and Slovakia, tagging along with Hungary in misuse of the EU funds and democratic backsliding, had also challenged the EU's operations. At the international, Hungary's disagreement with the EU's sanctions on China during the crackdown on Hong Kong also created a similar situation where the EU could not step forward to support Hong Kong because of Hungary. Orban, keeping the economic relations with China on the front, denied supporting the EU. The same is repeated with Hungary's dependency on Russia's gas and oil.
Second, Hungary's dependency on Russia. The relations between Hungary and Russia go back to 2010. When Orban was re-elected, Russia, more than the economic ties had more focused on involving Hungary through politics, energy, and its elites. Keeping Hungary being a member of NATO and the EU, Russia has always concentrated on keeping the loop going on with Hungary to block the EU's foreign policy decisions and sanctions against Russia.
Third, the bargain. EU's trump card to bring Hungary under its control have always been through funding adjustment. One, though, promised to send cash and improve infrastructure from the richest EU countries. Two, by cutting down on EU funds keeping the rule of law and democratic backsliding reasons. This situation is reversing back in favour of Orban, as the EU wants his vote to pass the oil embargo. Hungary is currently demanding a five-year exception to phase out Russian oil import and a EUR 750 billion in exchange for a vote against Russia and indirectly to make EU funds flow back into Orban's cronies accounts which was restricted after the recent elections.
First, Hungary's bloc to EU's sanctions will impact the EU's proposal to the oil embargo, but this will also sideline Hungary from Europe. There has been a shift in relations with the regional neighbours of Hungary post the Ukraine war. Poland, Slovakia, Bulgaria and the Czech Republic have turned in favour of the EU; the perception has changed positively with the intake of refugees and support to Ukraine. Hence Hungary's rejection of the oil ban might lead the EU countries to opt for the ban individually, which leads to Hungary's isolation for its stance favouring Russia.
Second, Russia has succeeded in breaking European unity. However, it will face the hardship of economic sanctions from the EU countries and a big challenge in diverting its gas and oil supplies from the European market.
Third, there is also another possibility that without a united EU ban on phasing out the Russian energy exports might lead to a more significant split amongst the EU member states in taking an individual stance against Russia, considering the loss to their economies. This will turn in favour of Russia to play its big power politics over the small economy states of the EU.