Hungary and Greece are not happy with the list of private companies Ukraine calls “war sponsors,” which includes a number of European ones | Olivier Hoslet/AFP via Getty Images
New sanctions against Russia stuck in limbo over Greek-Hungarian protest
Odd couple is holding back deal on new sanctions against Russia.
BY BARBARA MOENS, JACOPO BARIGAZZI AND LEONIE KIJEWSKI
MAY 26, 2023 6:08 PM CET
Hungary has won an unlikely ally.
After largely playing solo in its opposition against Russian sanctions, Budapest is now getting support from Athens in its skepticism over the freshest measures against Russia, five EU diplomats told POLITICO.
The EU is currently discussing its 11th sanctions package against Russia after the start of Moscow’s full-scale invasion of Ukraine more than a year ago. Whereas the 10 previous sanctions packages focused on measures to empty Vladimir Putin’s war chest, Brussels now wants to avoid its sanctions being circumvented. In an unprecedented step for the bloc, the current package could target other countries helping Moscow dodge its trade embargo.
But Budapest and Athens have thrown a collective spanner in the works by linking their approval for the package to a separate thorny issue involving Ukraine. Kyiv has compiled a list of private companies it calls “war sponsors,” which includes a number of European companies.
The odd couple wants some of their companies struck off this list before they will agree to the sanctions package. While these issues normally aren’t linked, Hungary and Greece are using the sanctions package as political leverage to get 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 Wednesday, Greece was very much at the forefront of the discussion, four of the diplomats said. Athens pushed back against suggestions of sanction circumvention.
“Greece reiterated that, should there be concrete evidence of violation of sanctions, these should be brought to the attention of the member states concerned, at the technical level, so that this be adequately investigated and then due action will be taken,” an EU diplomat familiar with the dossier said. “In the case of the Ukrainian name-and-shame list, the Greek companies are accused as International War Sponsors even though they are not violating the restrictive measures against Russia.”
Another EU diplomat said that while they empathized with the Greek position, “the question is how much does it damage [their economy], and Greece says it’s very damaging. We don’t have a problem with that position — but independently of that we of course want the next sanctions package.”
Josep Borrell, the EU’s top diplomat, has already vowed to work through the differences on the Ukrainian list. Two of the diplomats said it is 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 off the list, “there is no pressure to really move on the other parts either.”
Yet diplomats also say they look at Athens and Budapest differently. The level of frustration with Budapest is much higher, given its pro-Russia and pro-China line has often prevented the EU from reaching unanimity on statements on Moscow and Beijing. It is also blocking the approval of an eighth tranche of EU money to reimburse military aid to Ukraine.
The Bolashak oil plant on the offshore oil field near Atyrau, Kazakhstan | Pool photo by Leon Neal/AFP via Getty Images
A new version of the package, sent to EU envoys Wednesday and seen by POLITICO, does not include major changes. The third draft adapts some technical language regarding the release of frozen assets and clarifies that Kazakh oil can still be sent through the Druzhba pipeline to Europe. It also adds more than 50 additional Russian companies for which EU authorities cannot authorize transfers of dual-use goods and technology to compared to a previous version of the sanctions draft.
At both meetings this week, Germany and others were again skeptical about naming and shaming other countries, as they are afraid it would hurt diplomatic relations or drive other countries suspected of facilitating sanctions busting into the arms of Russia or China.
It’s not clear yet when EU envoys will discuss the sanctions package again. Two of the diplomats said that there is consensus about one thing: to agree on the package in the end.
But with no clear deadline yet, it could be a while before the diplomats make substantive progress. French Foreign Minister Catherine Colonna said Monday that the package has to be wrapped up by the next Foreign Affairs Council — but that is not until 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 of the diplomats pushed back against that suggestion, saying a deal has to come sooner to avoid embarrassing the EU.