'Playing with fire': Orbán's veto threat puts Brussels on edge

Diplomats and officials in Brussels are holding their breath as they wait to find out if Viktor Orbán’s increasingly critical rhetoric against EU sanctions will translate into a veto that could upend the bloc’s Russia policy, as soon as next week.

Since February 2022, the bloc has brought in sweeping bans on trade with Russia in energy, technology, finance, luxury goods, transport and broadcasting, among others. It’s also frozen €210 billion assets held by the Russian central bank within the bloc, which have been used to back a multi-billion-euro loan for Kyiv.

Those could all soon be put into question. The restrictions, designed to cripple Moscow’s ability to finance its full-scale invasion of Ukraine, need to be prolonged every six months by unanimity, and the next deadline is 31 January.

In recent days, Orbán and his deputies have ratcheted up their harsh words against the sanctions regime, arguing the inauguration of US President Donald Trump, who wants to negotiate with Russia’s Vladimir Putin, requires the bloc to rethink its longstanding stance.

“The question of extending the sanctions is now on the agenda, and I pulled the handbrake and asked European leaders to understand that this cannot be continued,” the Hungarian Prime Minister said in a radio interview on Friday morning.

One of his ministers, Gergely Gulyás, has openly questioned the six-monthly renewal. “So far, everyone has seen the extension of sanctions as automatic, but we do not think it is automatic now,” Gulyás said on Thursday.

Those comments have stoked fears that Hungary will use its veto to block the rollover, triggering the collapse of a sanctions regime painstakingly built across 15 packages, and depriving the EU of its most hard-hitting tool against the Kremlin.

“It’s clear that if Budapest were to block, we would have a great issue at hand,” said a senior diplomat, who spoke on condition of anonymity due to the sensitivity of the matter. “Budapest is playing with fire.”

The diplomat described the political situation as “mind-blowing” given the dire battleground conditions faced by Ukrainian forces, and predicted the EU would plunge into “uncharted territory” were sectoral sanctions to collapse overnight.

“The shenanigans we get from Budapest are seemingly endless,” the diplomat said.

A closed-door discussion among ambassadors on Friday only increased the uncertainty, as the Hungarian representative maintained ambiguity over his position, several diplomats said.

Instead, Hungary asked to change the agenda of Monday’s meeting of foreign affairs ministers, to allow the item on sanctions renewal, which is generally approved without any fuss, to be openly debated after a separate discussion on Ukraine support.

The Hungarian envoy also made a number of requests concerning energy policy, and in particular Ukraine’s recent decision to terminate the transit of Russian gas through Hungary, another diplomat said.

The decision, taken by President Volodymyr Zelenskyy to stop Moscow from earning “additional billions on our blood,” has met with a furious reaction from Hungary and Slovakia, two landlocked countries that still purchase Russian fossil fuels. Earlier this month, Slovak Prime Minister Robert Fico threatened to use his veto power in retaliation.

‘Transactional’ diplomacy

In his radio interview, Orbán made a direct link between sanctions renewal and the gas dispute, and asked the European Commission to intervene in his country’s favour.

The Commission has said it has “no interest” in extending the transit of Russian gas.

“What is closed now, has to be reopened again. This is not a matter for Ukraine, it is an issue for Europe, an issue for central Europe,” the prime minister said.

“If the Ukrainians want help, for example sanctioning the Russians, then let’s reopen the gas transit routes and allow the central European countries, including Hungary, to receive the gas we need through Ukraine.”

The connection between the two issues has left diplomats scratching their heads, trying to figure out how severe the latest threat actually is. Orbán has previously used his veto to extract concessions, but never to provoke such a disruptive effect on sanctions.

“The threats are taken seriously. But it’s not the first time,” a diplomat said, decrying Hungary’s “transactional” manner of making demands.

“The EU cannot enter into panic mode every time somebody says something in Budapest,” they added. “We have learned to make a clear distinction between what we hear in Budapest and what happens in Brussels.”

The suspense is likely to last, at least, until foreign affairs ministers meet on Monday and Hungary’s representative, Péter Szijjártó, announces his country’s position. Diplomats speculate that, despite the harsh talk, Szijjártó will back down if he can secure new EU assistance for Hungary’s energy needs.

This will pave the way for the renewal to be approved, if not on Monday, then at least before the end of the month.

“We expect a positive result from that discussion. [Sanctions] are a key part of our strategy,” said a high-ranking EU official. The issue of gas transit has “nothing to do with sanctions on Russia. Sanctions on Russia are because of the aggression.”

Asked if Brussels was already drafting a Plan B, the official said: “We don’t envisage any other possibility than that it will be approved in the coming days.”

One factor certain to influence the discussion are the latest comments made by Donald Trump, who took some observers by surprise with hawkish comments against Russia.

“If we don’t make a deal, and soon, I have no other choice but to put high levels of taxes, tariffs, and sanctions on anything being sold by Russia to the United States, and various other participating countries,” Trump said.

“We can do it the easy way, or the hard way – and the easy way is always better.”

The EU is already preparing a 16th package of sanctions against Russia, with the view to approving them before the third anniversary of the invasion, in late February.