Hungary approves 14th EU sanctions package in return for saving nuclear plant project

The Hungarian government has agreed to the 14th package of EU sanctions, which provides for restrictions on supplies of Russian liquefied natural gas (LNG), in exchange for assurances that no current or future measures will threaten the Paks II Nuclear Power Plants which Russian state-owned company Rosatom is building.

Source: Hungarian service of Radio Liberty

Details: The Hungarian government has stopped blocking EU sanctions on Russian LNG supplies, but in exchange for this, Paks II has received a horizontal exemption from sanctions. The nuclear project seems to be forever protected from all current and future potential sanctions.

The government has excluded Paks II from sanctions in previous packages, but this has always been done on a case-by-case basis. The change from this is that it has now been granted a full sanctions exemption.

This concession does not change the position of the Hungarian government, which is that it opposes all sanctions related to nuclear issues, including sanctions against Rosatom executives for their role in the Russian occupation and operation of the Zaporizhzhia Nuclear Power Plant, the largest in Europe and occupied since March 2022.

Previously, the Hungarian government had ruled out supporting any punitive measures affecting the Russian gas sector, citing security of supply. This is a significant step forward, even if the newly adopted measures do not affect the supply of Russian LNG to Europe, but only prohibit its re-export to third countries from European (mainly Belgian and French) ports.

In addition, investments in Russian LNG projects, especially in the North Sea, are prohibited.

Last year, the Russian state earned about €8 billion from LNG exports. The current embargo will affect only about a quarter of that amount. At the same time, due to European sanctions, Moscow may have to rethink its business model and deliver LNG via new routes (e.g., through the Arctic Ocean) to markets in Asia. This will require special icebreaker vessels.

Hungary had another serious reservation against the sanctions proposal, namely that the proposal would have obliged European parent companies present in Russia to ensure compliance with sanctions if they had subsidiaries in that country. Radio Liberty said this would have been a problem, in particular, for OTP Bank, which has significant interests in Russia. However, the proposal was so softened that interested European investors do not see it as a threat.

Background: 

• EU countries agreed on the 14th package of sanctions against Russia earlier on Thursday after more than a month of discussions.
• EU chief diplomat Josep Borrell said that this package of sanctions against Russia targets its defence industrial base, financial services, the energy sector, sanctions circumvention and war crimes, including those individuals involved in the deportation of Ukrainian children.
• As previously reported, Germany was hampering the sanctions package by expanding measures that would have forced EU companies to guarantee that their customers would not be able to sell sanctioned goods to Russia.

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