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Russian oil ban plans are like 'dropping an atomic bomb on Hungary's economy', says Viktor Orban

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By Jorge Liboreiro  & Efi Koutsokosta, Shona Murray, Sandor Zsiros
PM Viktor Orbán has compared the proposal for a EU-wide ban on Russian oil to an economic "atomic bomb."
PM Viktor Orbán has compared the proposal for a EU-wide ban on Russian oil to an economic "atomic bomb."   -   Copyright  Andrew Medichini/Copyright 2022 The Associated Press. All rights reserved

Brussels'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 European 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, diplomatic sources with knowledge of the situation told Euronews.

The Czech Republic could also benefit from a similarly protracted exemption, until June 2024, while waiting to be connected to the Transalpine Pipeline, which today links Italy, Austria and Germany.

"We are ready to support this decision under the condition that the Czech Republic will be able to delay its implementation until the capacity of oil pipelines leading into the Czech Republic is increased," the country's prime minister, Petr Fiala, said on Wednesday, speaking at a press conference.

The 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.

"Russian or any kind of oil can only come to Hungary by pipeline. One end of the pipeline is in Russia and the other one is in Hungary," PM Viktor Orbán told Radio Kossuth on Friday morning.

"We cannot accept a proposal that ignores this circumstance. This proposal in its current form is like an atomic bomb dropped on the Hungarian economy. "

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.

Reacting to Orbán's comments, a Commission spokesperson said the executive "fully understands" that certain member states are in "very specific situation" due to their geography and energy dependency.

"We need to find a solution that caters to the objectives that we're trying to reach, which is maximising the impact on the financing of the Kremlin's war machine while minimising the impact [for the EU]," the spokesperson said on Friday afternoon.

Earlier his week, 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 will 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 that of 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.