EU state issues €6.5bn ultimatum to Ukraine

Hungary is moving to punish Kiev for its blockade of oil deliveries from Russia

Budapest will block funds the European Union has earmarked for Ukraine until Kiev resumes the transit of Russian crude oil to Hungary and Slovakia, Hungarian Foreign Minister Peter Szijjarto has said.

Ukraine stopped the flow of oil through the Druzhba pipeline last week, citing its sanctions against Russian energy giant Lukoil, thus depriving the two EU members of an estimated 30-40% of their needs.

“As long as this issue is not resolved by Ukraine, everyone should forget about the payment of the €6.5 billion of the European Peace Facility compensation for arms transfers,” Szijjarto announced on Tuesday.

“Ukraine’s decision to not allow Lukoil to transit oil supplies through Ukraine poses a fundamental threat to the security of energy supplies to Hungary and Slovakia,” Szijjarto said, describing Kiev’s move as “unacceptable and incomprehensible,” as well as incompatible with its aspirations to join the EU. 

Szijjarto also reminded the EU foreign policy chief Josep Borrell that Hungary – along with Slovakia and Poland – came to Ukraine’s aid in early July, sending enough electricity to stabilize Kiev’s energy system. Hungary supplied 42% of Ukraine’s electricity in June, Szijjarto noted.

According to unconfirmed reports from Ukrainian local media, Ukraine stopped receiving electricity from Slovakia and Romania as of midnight on Tuesday. 

Kiev has had to resort to imports after Russian air and missile strikes disabled most of its domestic generation capabilities. Moscow has described the strikes as reprisal for Ukrainian attacks on Russian civilian infrastructure.

Poland has already protested Hungary’s move, saying that it would deprive Warsaw of €2 billion it needs to modernize its armed forces. “This is a huge disappointment for me,” Polish Foreign Minister Radoslaw Sikorski has said.

Kiev’s official explanation for embargoing oil deliveries was that Lukoil revenue could be used to support the Russian military. One Ukrainian lawmaker, however, suggested to Politico that the blockade has a secondary purpose, to pressure Hungary into changing its policy on arming Kiev. 

Hungarian Prime Minister Viktor Orban has long refused to send Ukraine any weapons, train any Ukrainian troops, or allow the use of Hungarian territory for EU or NATO arms shipments, insisting that Kiev should sue for peace with Moscow as soon as possible.