EU sanctions Russia: New EU sanctions explained as well as Hungary and Slovakia Russian oil exemption

Europe and the US have also sought to punish Moscow with sanctions. European Commission President Ursula von der Leyen called on the 27-nation bloc on Wednesday to ban Russian oil imports, a crucial source of revenue.

The proposal needs unanimous approval from EU countries and is likely to be debated fiercely with Hungary and Slovakia relying heavily on Russian oil.

In the past both countries have already said they will not take part in any oil sanctions, and could be granted an exemption due to their reliance on the supply.

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According to an EU source however, Hungary and Slovakia will be able to continue buying Russian crude oil until the end of 2023 under existing contracts.

The European Union’s leader has called on the 27-nation bloc to ban oil imports from Russia in a sixth package of sanctions targeting Moscow for its war in Ukraine. (Patrick Pleul/dpa via AP)

What are the EU sanctions?

The sixth set of sanctions from the bloc are set to further target the Kremlin with the proposal banning oil imports from Russia.

The plan would see EU countries phasing out Russian oil in one year.

European Commission president Ursula von der Leyen also proposed that Sberbank, Russia’s largest bank, and two other major banks be disconnected from the Swift international banking payment system.

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If approved, the ban on oil imports will be the second package of EU sanctions targeting Russia’s lucrative energy industry over its war in Ukraine that President Vladimir Putin started on February 24.

In addition to sanctions on various entities and individuals – including Mr Putin himself and members of his family – the bloc previously approved an embargo on coal imports.

The EU has started discussions on a possible natural gas embargo, but consensus among member countries on targeting the fuel used to generate electricity and heat homes is more difficult to secure.

How reliant are Slovakia and Hungary on Russia gas?

The numbers vary but both nations are very heavily reliant on EU oil imports, with both nations being served by the Druzhba pipeline which brings Russian oil to Europe.

According to the International Energy Agency, Slovakia and Hungary are thought to have received 96% and 58% of their crude oil and oil products imports from Russia last year.

Slovak Economy Minister Richard Sulik said on Tuesday the country’s sole refiner, Slovnaft, cannot immediately switch from Russian crude to another kind of oil. Changing the technology would take several years, Sulik said.

“So, we will insist on the exemption, for sure,” Sulik told reporters.

Slovakia’s almost fully dependent on Russian oil it receives through the Soviet-era Druzhba pipeline. Hungary is also heavily reliant, though other major energy importers like Germany said it could cope if the EU banned Russian oil, with officials still noting “it is a heavy load to bear”.

Hungarian Foreign Minister Peter Szijjarto said the country will not vote for any sanctions “that will make the transport of natural gas or oil from Russia to Hungary impossible”.

“The point is simple, that Hungary’s energy supply cannot be endangered because no one can expect us to allow the price of the war [in Ukraine] to be paid by Hungarians,” Szijjarto said, speaking Tuesday in Kazakhstan. “It is currently physically impossible for Hungary and its economy to function without Russian oil.”

What happens if Hungary and Slovakia do not vote for the proposals?

Hungary and Slovakia would have to notify the Commission of any plans to make use of the exemption, and would need to set out the terms of any ongoing oil deals.

Members of the EU hope that such a compromise could be a way of getting both on board, with Hungary in the past being one of the major stumbling blocks for sanctions against Russia. However, it could also start a precedent for suspensions, with Czech Prime Minister Petr Fiala telling reporters his country also wanted a postponement, of two to three years.

According to a Commission document seen by Politico, "the competent authorities of Hungary and Slovakia may authorise the execution until 31 December 2023 of contracts" concluded before the new sanctions package enters into force, "or ancillary contracts necessary for the execution of such contracts."

If they did not vote for the proposals, a deal would need to be struck to ensure the EU could proceed with its plan to not buy Russian oil and gas.

Karol Galek, a deputy economy minister in charge of energy policy said that the EU proposals do not give Slovakia or Hungary enough to work without Russian oil.

He said: "This is unfortunately not enough. We are expecting at least three years.” but added that by the end of 2025, the switch away from Russian oil should be possible. He added: "This is the time when we will be able to make the pipeline stronger. And to change the technology."