Ep.120: Hungary’s Deepening Dependency on Russian Oil

Three years ago, as part of efforts to weaken Putin's war chest, the EU banned imports of Russian crude oil. But those countries with a high dependency on Russia were allowed to continue importing, the idea being they needed more time to adapt. Poland, Germany and the Czech Republic have since stopped. But not Slovakia, and not Hungary. Both still take deliveries of Russian crude through the Soviet-era Druzhba or "Brotherhood" pipeline. In this episode, Attila Steiner, the Hungarian State Secretary for Energy, acknowledges that his country is increasing, not decreasing, dependency on Russian crude, and that Hungary is expanding links with the Druzhba network. That's not how EU sanctions are supposed to work. It's also fundamentally at odds with the REPowerEU plan to stop all Russian oil imports by the end of 2027. The behavior of Hungary, which is facilitating Russian oil exports amid Putin's continued assault on Ukraine, shows contempt for Brussels and Kyiv. Moreover an alternative to Russian oil already exists in the form of the Adria pipeline that can deliver oil from suppliers like Kazakhstan via Croatia. But Steiner using the Adria is neither advantageous for Hungary nor for its giant energy conglomerate MOL. And, in any case, it looks like the pressure is off Hungary to quit Russian crude, at least for now. Steiner credits a recent diplomatic campaign by Prime Minister Viktor Orbán, first with Donald Trump, who is no longer calling on Hungary to change suppliers, and second, with former German Chancellor Angela Merkel, who effectively gave her blessing to continuing Russian crude imports. But that's unlikely to be the end of the story. There's domestic politics to consider too. Hungary imposes a tax on the profits that are partly generated from importing the relatively low-priced Russian crude. Yet prices at the petrol pump remain above the EU average, and that contributes to an already delicate political situation for Orbán's ruling Fidesz party, which is trailing in the polls ahead of elections next year. It's also a delicate situation for Steiner himself. He seems set to go head-to-head with Péter Magyar, the main opposition figure in Hungary who opposes Russian imports, in a forthcoming contest for a parliamentary seat in Budapest. That, Steiner says, will be "an interesting fight".

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