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Prime Minister Viktor Orbán suggests sanction package should not be placed on agenda of next summit of European Council

In his letter sent to the Hungarian news agency MTI by Bertalan Havasi, the Prime Minister’s press chief, he wrote the adoption of the proposed sanctions would immediately cause serious supply problems in Hungary and would undermine our crucial energy security interests.

A move in this direction would raise fuel prices by approximately 55 to 60 per cent during a period when energy prices are already at a forty-year record, Mr Orbán added, pointing out that neither Hungarian households, nor the Hungarian economy as a whole would be able to cope with a price shock of this magnitude.

He wrote Hungary continues to be highly reliant on Russian energy imports despite the fact that as a result of major investments implemented with a view to diversifying supply routes and sources, the percentage of Russian supplies fell from above 90 per cent in 2010 to around 64 per cent by 2021.

“Following from its geographical position, Hungary is unable to phase out Russian oil imports without the full conversion of its refinery capacity which simultaneously involves the implementation of major and speedy investments in our energy infrastructure and further requires a swift green changeover,” the letter reads in which the Prime Minister also drew attention to the fact that as the majority of these projects cannot be financed on a market basis, the introduction of the proposed sanctions would necessitate the regrouping of national funds towards redundant fossil fuel investments, while the EU funds allocated for this purpose are only available to us “on paper”.

Mr Orbán wrote while promising signals had been received from the Commission, suggesting that the REPowerEU plan introduced on 18 May could provide a satisfactory solution to our problems, according to our preliminary information, it failed to specifically and comprehensively address the concerns we had raised.

He highlighted that, according to their interpretation, one of the main objectives of the plan was – in theory – to swiftly reduce the EU’s dependence on Russian fossil energy sources. As regards the security of oil supply, the plan indeed covers the investment needs that are necessary for the modernisation of crude oil product refineries, the extension of existing infrastructure capacities and the management of the present bottlenecks. However, it does not fix a financial allocation for Member States with no sea outlets which are the most affected. Additionally, it fails to provide guidance with respect to the method and timetable for financing urgent investment needs related to the replacement of Russian oil, the Prime Minister explained.

In the letter, he also drew attention to the fact that REPowerEU likewise fails to take account of the different national needs related to the different energy supply structures of Member States.

“We are convinced that a clear distinction must be made between short-term investment needs related to the reduction of dependence on Russian energy and the more long-term needs of changing over to renewable energy sources,” he wrote, stressing that this is of fundamental importance for some Member States, including Hungary, as the two cannot be implemented at once without posing a serious threat to our energy security.

The Prime Minister added that because of this it was imperative to make EU funding available for investments in transitional technologies and infrastructure. According to their preliminary assessment, it is unclear to what extent and under what conditions REPowerEU would support these measures.

He pointed out that the fact that the Commission placed the Recovery and Resilience Facility at the centre of REPowerEU raised serious problems for Hungary as not all Member States were able to draw on RRF loans for the reduction of their energy dependence to the same extent.

Mr Orbán highlighted that – due to their history and geographical position – the measures proposed with a view to reducing dependence on Russian energy posed the greatest challenge for the Central and Eastern European Member States.

The application of the original RRF allocation rates – which were developed in the interest of supporting the Member States most affected by the impact of the COVID-19 pandemic on their economies – would, in actual fact, result in funds being taken away from the very Member States that would need them most, the Prime Minister wrote.

“So far in our sanctions adopted due to Russia’s aggression against Ukraine, our foremost value has lain in our unity. It was in this spirit that we supported the adoption of the previous five sanctions packages and cooperated with the Commission in order to find a solution to our problems related to the 6th sanctions package. We are committed to continuing talks with a pragmatic and result-oriented approach,” he laid down.

He stated that Hungary is, however, not in the position to accept the 6th sanctions package until a successful solution is found to every priority issue in talks. The solutions must precede the sanctions, he wrote.

In his letter, Mr Orbán took the view that given the weight of the issues that are still open at present, a comprehensive solution is not likely to be reached before the extraordinary meeting of the European Council on 30-31 May.

“I’m convinced that, in the absence of a consensus, discussing the sanctions package at the level of leaders would be counterproductive. It would only bring our internal division to the fore without giving us a chance to resolve our differences,” wrote the Prime Minister who therefore suggested that this issue should not be placed on the agenda of the next summit of the European Council.

“Preserving the unity of the European Union should continue to remain a priority for us,” Mr Orbán wrote in conclusion.