Following a week of unsuccessful negotiation and dialogue with the Hungarian gov't, the EU has given up on trying to get a deal agreed on an embargo on Russian oil at today's Coreper II meeting of Permanent Representatives (member state ambassadors to the EU).
- There is a slim prospect that a deal could be reached at Monday's meeting of member state foreign ministers in Brussels, but at present Budapest is digging its heels in.
- Yesterday evening, Bloomberg reported that the EU is mulling whether to go ahead with the rest of the sanctions package without the oil embargo in order to ratchet up pressure on the Kremlin.
- The loss of the oil embargo could have several impactful outcomes on the bloc.
- It could galvanise other EU member states to significantly ramp-up pressure on Budapest, which remains subject to a rule of law mechanism triggered by the European Commission. The EU could seek to progress with economic punishments on Hungary, such as the withholding of structural funding or COVID relief in order to convince the Orban gov't to change tack.
- Alternatively, given that Hungary is the most vocal of a number of member states wary of cutting off Russian oil (Slovakia for one has raised concerns), it could result in a more fractured and less united EU front in the face of Russia's actions in Ukraine.