Russian oil ban plans like ‘dropping atomic bomb on Hungary’s economy’

Brussel’s proposal for a gradual EU-wide ban on Russian oil imports is sowing division, with Hungarian Prime Minister Viktor Orbán comparing the embargo to an economic “atomic bomb”. 

The main point of contention is the ambitious timeline envisioned by the Commission: a phase-out of all Russian crude in six months and all refined oil products by the end of the year.

During consultations, Hungary, Slovakia and the Czech Republic have emerged as the most sceptical countries.

The trio are all highly dependent on Russian oil, which they get directly from the Druzhba pipeline, and are concerned the EU ban will imperil their energy supplies and wreak economic havoc.

The latest compromise indicates Hungary and Slovakia might have until the end of 2024 to complete the phase-out, two years later than what Brussels has suggested, while the Czech Republic could also benefit from a similarly protracted exemption, diplomatic sources with knowledge of the situation told Euronews.

The European Commission had already prepared for a scenario where the EU-wide ban would have to accommodate national interests in order to gain the necessary unanimity for approval.

The embargo on Russian oil is considered the most radical and consequential step taken by the bloc in response to Russia’s invasion of Ukraine. The measure became almost inevitable after the Kremlin continued its costly military campaign propped by the billions spent by Europeans on fossil fuels.

The EU is Russia’s top oil client, buying around 3.5 million barrels of crude and refined products on a daily basis, which last year amounted to more than €70 billion. 

The ban is now shaping to be the litmus test of the bloc’s political unity.

“This proposal is equivalent to an atomic bomb dropped on the Hungarian economy in this form,” Orbán told Radio Kossuth on Friday morning. “We cannot accept a proposal that ignores this.”

Orbán said his country would need four to five years to revamp its energy system and become independent from Russian oil. He noted that, while other EU states can bring additional crude barrels through their ports, Hungary, a landlocked country, lacks that alternative path.

The Prime Minister added his government will be “happy to negotiate” to reach a compromise that takes into account Hungary’s interests and demands.

Meanwhile, Slovakia’s Economy Minister Richard Sulik told a German broadcaster his country needed until the end of 2025 to implement the full embargo.

If the dispensations are eventually agreed upon, this would mark the first time since the war in Ukraine broke out that a set of EU sanctions is not uniformly implemented. However, the economic weight of the three exempted countries is limited compared to the main buyers of Russian oil: Germany and the Netherlands.

Another point of contention is a proposed clause that would prohibit EU-based shipping companies from transporting Russian oil to non-EU countries. The Commission included this provision to further cripple Moscow’s ability to sell the profitable fossil fuel around the world.

But Greece, whose tankers enjoy a dominant position shipping Russian oil, together with Cyprus and Malta have raised concerns about the potential economic damage for their local industries.

The three countries might be given an additional three months to implement the measure, Euronews understands.

Negotiations among EU ambassadors began on Wednesday and will continue all through Friday, possibly extending into the weekend.