Hungary First

By Olivier Bault for the Visegrad Post

Explaining the reasons why his country cannot accept an embargo on Russian oil, Hungarian Foreign Minister Péter Szijjártó said: “It is not a question of lack of political will, it is not a question of intention, it is not a question of duration, but quite simply a physical, geographical and infrastructural reality. At present it is physically impossible to run the Hungarian economy without Russian oil”, the Hungarian minister added. Prime Minister Viktor Orbán echoed this when he said in his weekly interview on Hungarian radio on Friday, 6 May, that the European Commission’s proposal to impose an embargo on Russian oil sounded like a nuclear bomb threat hanging over the Hungarian economy. Like Hungary, Czechia and Slovakia have criticized the idea of an embargo, even though the Czechs and Slovaks can hardly be suspected of sympathizing with the Russians, since they were the first to supply the Ukrainians with heavy weapons. It just so happens that these three countries are heavily dependent on Russian oil, which is delivered by pipeline. The day after the Hungarian Prime Minister’s statement, Bulgaria also threatened to veto the EU’s sixth sanctions package if it did not get a two-year exemption from the Russian oil import ban.

Hungary is very dependent on Russian oil and gas

Russia’s share in Hungarian oil imports is about 60–65%. Moreover, as Zsolt Hernádi, CEO of the MOL oil and gas company, pointed out in an interview published on 30 March, all MOL refineries in Hungary, Slovakia and Croatia were built according to a Russian design dating back to the 1960s and are designed to process crude oil from Russia. For technical reasons, these refineries cannot process more than 35% of oil other than Urals. In the case of gas, Russia’s share of Hungarian imports is 80 per cent, and the share of Russian gas in Hungary’s total energy mix is almost one-third, much higher than in Poland, where electricity generation is mainly based on coal and where imports from Russia accounted for just over one-fifth of the total energy mix before the invasion of Ukraine. Hence Hungary’s decision to give in to Putin’s demands and pay Gazprom in rubles, while countries like Poland and Bulgaria refused to do so and were eventually cut off from Russian gas. Landlocked Hungary also has more limited possibilities than Poland to quickly replace Russian oil and gas with imports from other parts of the world, although there is a pipeline connection carrying oil from the Croatian coast.

Even the Paks nuclear power plant in Hungary depends on Russian technology and fuel. In addition, since the beginning of the Fidesz governments, cheap energy for households has been an important part of the family support programme. Even if imports from Russia could be abandoned quickly, acceptance of the sixth EU sanctions package would – as Viktor Orbán pointed out in his interview with Radio Kossúth on 6 May – mean an end to the cuts in energy bills paid by Hungarian private consumers. At present, these bills are the lowest in the European Union and are about a third lower than in Poland. This applies to both electricity and gas bills, gas being the source of heating for 60% of Hungarian households. Last year also saw the launch of a pipeline carrying Russian gas from Turkey through Bulgaria and Serbia, bypassing Ukraine, and the signing of a 15-year gas supply contract with Gazprom. On 27 September, at the signing of the contract with Gazprom, which he attended, Minister Szijjártó stressed that this was not a question of political choices but of the need to ensure Hungary’s energy security and the absence of alternative solutions. On the one hand, this has weakened the security of Ukraine, which has ceased to be a transit country for Russian gas deliveries to the Balkans, Hungary and Austria, but on the other hand, it should be remembered that Hungary is now the second largest supplier of gas to Ukraine after Slovakia.

Is Hungary selfish or just reasonable?

The Hungarian government, however, does not hide the fact that its primary guiding principle is to place the interests of Hungary and Hungarians above all other considerations. In opposing the ban on oil imports from Russia, it also stresses that it has accepted all the other sanctions even though it feared that they would harm Hungary more than Russia itself. Despite relatively cheap energy, annual inflation in Hungary was already 8.6 per cent in March, when the producer price index (PPI) rose 4.5 per cent in just one month. An embargo on Russian oil – even if, contrary to Orbán’s warning, it does not have the effect of a nuclear bomb dropped on the Hungarian economy – can only stimulate the inflationary spiral that is increasingly out of control throughout Europe despite the slowdown in the economy.

Discussions about the European embargo on Russian oil alone caused oil prices to rise again in the first week of May. So far, Russia has been a great beneficiary of what is happening in the hydrocarbons market. In the first two months of the war with Ukraine, despite a drop in exports (by 30 per cent in April in the case of oil, compared to the level before the invasion), Russia almost doubled its revenues from gas, oil and coal sales. Norwegian consulting firm Rystad Energy estimates that despite significantly lower exports Russia will collect over $180 billion in energy tax revenues this year, a 45% year-on-year increase thanks to a 40% rise in oil prices. The Hungarians do therefore have a point, and especially so since it is the poorest countries, in particular those in Africa, that suffer the most from rising energy prices and the resulting additional increase in food prices.

European funds suspended while investments are badly needed to get rid of Russian oil

In a letter to the president of the European Commission, Viktor Orbán stressed that getting rid of Russian oil requires significant investments, “whereas the necessary EU funds are available to us only on paper”. From Hungary’s point of view, this is just one more problem: in the name of joint EU solidarity with Ukraine, it is asked to accept huge costs, while at the same time, as in the case of Poland, the European Commission continues to withhold the Next Generation EU recovery funds. Officially, this is because of some deficiencies in the fight against corruption in Hungary. Unofficially, it is for ideological reasons, because of the child protection law passed last year, which prohibits the indoctrination of minors with LGBT ideology. As if that were not enough, at the end of April, acting under pressure from the European Parliament, the Commission activated the new “rule of law” mechanism to suspend the payment of EU budget funds to Hungary. Already on 5 April, Ursula Von der Leyen had announced before the European Parliament that such a procedure was in preparation. That was exactly two days after Fidesz’s fourth consecutive victory in parliamentary elections.

It should also be remembered that one of the reasons for the crushing defeat of the joint opposition lists in those elections was the difference in approach to the war in Ukraine: while the opposition demanded that Hungary become more involved in the sanctions and agree to supply weapons, Viktor Orbán presented himself at the head of the Fidesz coalition with the Christian Democratic Party KDNP as a guarantor of peace who would refrain from any action that could drag Hungary into a foreign war. The 53% of votes cast for the Fidesz-KDNP coalition candidates on 3 April undoubtedly give the Hungarian government democratic legitimacy to pursue its policy of condemning Russia’s actions in Ukraine without committing itself too much to the latter’s side, as do the United States, the UK, and Poland, three countries where citizens have not had the opportunity to express themselves at the ballot box on this issue.

The burden of history

The Hungarian authorities justify their refusal to supply arms from Hungarian territory first of all on historical grounds: Hungary has already been dragged by the great powers into two world wars against its will and, having already paid a high price, it has no intention of being dragged into a third. Again, what counts here is the idea of putting the interests of the Hungarian people before those of others, which may be perceived as selfish or simply reasonable, but in any case is partly related to Hungary’s specific historical experience. The trauma of the 1920 Treaty of Trianon, under which Hungary lost its historic lands, and one-third of ethnic Hungarians suddenly found themselves in the position of national minorities in neighbouring countries, is still very much alive among Hungarians. One of these groups is the Hungarian minority in the Transcarpathian region of Ukraine (called Subcarpathia by the Hungarians). According to the 2001 Ukrainian census, it consisted of 156,000 people. Some of them fled to Hungary after the outbreak of war with Russia on 24 February. Of the 570,000 refugees from Ukraine who crossed into Hungary between the last week of February and the first week of May, about 20,000 were granted refugee status, and most of these refugees are in fact Ukrainian Hungarians. It is estimated that the vast majority of the remaining Ukrainian refugees have gone further west or to countries such as Poland or Czechia. Some of the members of the Hungarian minority in Transcarpathia who found refuge in Hungary were young men fleeing conscription: they did not want to risk their lives defending a country with which they did not identify and which, moreover, had deprived them of many rights after 2014, especially under Ukrainian language laws.

During a visit to Hungary at the beginning of April, I myself met the head of a Hungarian organization in Ukraine who wishes to remain anonymous for fear of the consequences for himself and his family back home. He said that he had fled to Hungary after being visited by SBU men who threatened that if he did not report to the army, not only he but also his elderly parents would be put in prison. In his eyes, the actions of the Ukrainian SBU are no different from those of the former KGB in the Soviet era, when the Hungarian minority actually enjoyed more rights than today. In conversations with Hungarians from Ukraine and Hungary, the issue of the Hungarian minority’s oppression – in their eyes – by successive governments after Euromaidan often comes up, not to mention the illegal activities of Ukrainian nationalist groups or, as has also happened, Russian provocateurs. The law on education passed by the Ukrainian parliament and signed by President Poroshenko in 2017 made Ukrainian the only language of instruction in schools, and the possibility of national minorities having their own schools was removed. This law was the main reason why, starting in 2018, Hungary systematically blocked ministerial-level meetings between NATO and Ukraine.

Protecting the Hungarian minority in Ukraine

This is why, on the one hand, the Hungarians justify their refusal to allow the delivery of weapons from Hungarian territory by the fear of Russian air strikes in a region where a Hungarian minority lives, and on the other hand, although they insist that they do not wish ill on the Ukrainians who are defending themselves against the Russians and that they are ready to support them with all kinds of humanitarian aid (which they are doing), they do not feel morally obliged to put themselves at risk by defending Ukraine. Especially since there is a fairly widespread opinion in Hungary that by restricting minority rights after 2014 the Ukrainians have acted to their own detriment in favour of Russia, alienating not only the Hungarian minority in the west, but also the Russian-speaking population in the east. The Russian–Ukrainian war “is not our war, and that is why we do not want to participate in it and we will not participate in it”, the Hungarian foreign minister said after a meeting with his NATO partners in late March. At about the same time, Polish Deputy Prime Minister and PiS leader Jaroslaw Kaczyński said in an interview, when asked if “this is also our war”: “Yes, this is a typical proxy war; basically, it is a war declared on the West” and therefore “the stakes of this war also include Poland”.

The impact on relations with Poland and within the V4

Polish criticism can be heard in Hungary, more so than the Poles hear Hungarian criticism about the reckless actions of Mateusz Morawiecki’s government, characterized by excessive confidence in the United States. During discussions with Polish journalists that I witnessed in early April in Hungary, the subject of Polish–Hungarian relations was often on the lips of Hungarians. The prevailing belief in Hungary, however, is that the age-old brotherhood of the two peoples has very strong roots and that, since it survived the Second World War, when the two nations found themselves on opposite sides, it will also survive the current deep differences of opinion on what to do about the Russian invasion of Ukraine. Interestingly, after Polish Foreign Minister Zbigniew Rau’s visit to Czechia on 5 May and his joint press conference with his Czech counterpart Jan Lipavský, the Hungarian media focused on a statement by the Pole that went unnoticed in Poland, namely that the V4 is “the work of four neighbouring countries” and has existed for more than 30 years, “with better and worse moments in its history”. “We have never claimed to have the same position on all issues”, the Polish minister was quoted by Hungarian media as saying, and “we will cooperate on those issues where consensus can be reached, which is a good tradition within the V4”.

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