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Hungary has won an unlikely ally.
Having played largely alone in its opposition to Russian sanctions, Budapest is now getting support from Athens in its skepticism of new measures against Russia, five EU diplomats told POLITICO.
The EU is currently discussing its 11th sanctions package against Russia following the start of Moscow’s full-scale invasion of Ukraine more than a year ago. While the previous 10 sanctions packages focused on measures to deplete Vladimir Putin’s war chest, Brussels now wants to prevent its sanctions from being circumvented. In an unprecedented step for the bloc, the current package could hit other countries by helping Moscow sidestep its trade embargo.
But Budapest and Athens have thrown a collective linchpin in the proceedings by linking their endorsement of the package to a separate thorny issue involving Ukraine. Kyiv compiled a list of private companies which he calls « war sponsors », which includes a number of European companies.
The odd couple want some of their companies struck off this list before they agree to the sanctions package. While these issues are usually unrelated, Hungary and Greece are using the sanctions package as political leverage to take their companies off Ukraine’s list.
This sparked tensions at a meeting of EU foreign ministers earlier this week, where German Foreign Minister Annalena Baerbock directly criticized Hungary, according to diplomats familiar with the exchange.
At a meeting of EU ambassadors on Wednesday, Greece was at the forefront of the discussion, four diplomats said. Athens rejected suggestions to circumvent the sanctions.
« Greece reiterated that if there is concrete evidence of a breach of sanctions, it should be brought to the attention of the Member States concerned, at a technical level, so that this is properly investigated and then the appropriate actions are taken, » he said. declared the EU. the diplomat said he is familiar with the dossier. « In the case of the Ukrainian name-and-shame list, Greek companies are accused of international war sponsors even if they are not violating restrictive measures against Russia. »
Another EU diplomat said that while they identify with the Greek position, “the question is how much it hurts [their economy]and Greece says it is very harmful. We have no problem with that position, but regardless we obviously want the next sanctions package. »
Josep Borrell, the EU’s top diplomat, has already promised to resolve differences on the Ukrainian list. Two of the diplomats said it was now up to him to work with the Ukrainians on a solution.
No deal in sight
Another EU diplomat said that as long as Hungary and Greece refuse to agree on anything before their companies are de-listed, ‘there is no pressure to really move on the other parties either’ .
Yet diplomats also say they look at Athens and Budapest differently. The level of frustration with Budapest is much higher, given that its pro-Russian and pro-Chinese line has often prevented the EU from reaching unanimity on statements about Moscow and Beijing. It is also blocking the approval of an eighth tranche of EU funds to repay military aid to Ukraine.
A new version of the package, sent to EU envoys on Wednesday and seen by POLITICO, does not include major changes. The third draft adapts some technical language related to the release of frozen assets and clarifies that Kazakh oil can still be sent via the Druzhba pipeline to Europe. It also adds more than 50 more Russian companies for which EU authorities cannot authorize transfers of dual-use goods and technology compared to an earlier version of the draft sanctions.
In both meetings this week, Germany and others were once again skeptical about naming and shaming other countries, as they fear it would damage diplomatic ties or prompt other countries suspected of sanctions-facilitating to rush into the arms of Russia or the China.
It is not yet clear when EU envoys will discuss the sanctions package again. Two of the diplomats said there is consensus on one thing: agreeing on the package in the end.
But with no clear deadline yet, it could be some time before diplomats make any substantial headway. French Foreign Minister Catherine Colonna She said On Monday the package is to be concluded by the next Foreign Affairs Council, but not before June 26 and falls just a few days before the meeting of European heads of state and government at the end of the month. However, some diplomats have balked at that suggestion, saying a deal must come sooner to avoid embarrassing the EU.