EU navigates future challenges
James Willn is a Partner at Reed Smith
On 1st July 2024, Hungary assumed the rotating presidency of the European Union. Even before that date, questions had begun to emerge about how this leadership role might influence the EU’s sanctions policy, particularly concerning Russia.
Hungary’s often-contrarian stance within the EU, particularly its close ties to Moscow and previous opposition to several sanctions packages, has led to speculation that its presidency could mark a shift or at least a significant challenge to the EU’s traditionally unified approach. But with Hungary’s presidency now well-underway, has a shift in EU policy emerged?
Hungary’s unique position within the EU
Hungary, under Prime Minister Viktor Orbán, has consistently positioned itself as a maverick within the European Union. While the EU has taken a firm stance against Russia following the annexation of Crimea in 2014 and the full-scale invasion of Ukraine in 2022, Hungary has frequently expressed dissent.
Orbán’s government has criticised sanctions, arguing that they harm European economies more than they hurt Russia, and has sometimes delayed or watered down EU sanctions proposals, often favourably to Hungary itself. On the international stage, he has also endorsed calls for immediate peace talks, which contradicts the EU’s stated position that such talks cannot begin without backing from Ukraine.
This divergence in approaches to the conflict stems from Hungary’s strategic energy dependence on Russia, including reliance on Russian gas and nuclear energy projects. Moreover, Orbán has cultivated a political narrative of defending national sovereignty against what he sees as overreach by EU institutions. This approach has led to tensions with Brussels on various issues, including the rule of law and democratic standards.
Orbán’s decision to undertake self-proclaimed peace missions to Kyiv, Moscow, Beijing and Washington, less than a week after taking over the EU presidency has done little to mend relations with Brussels and the wider EU. Indeed, Orban’s trip to discuss the possibility of peace talks with President Putin was announced to have contravened EU law and treaties according to the EU’s legal service.
The EU sanctions policy: a brief overview
The European Union’s sanctions policy is a crucial tool of its foreign and security policy, aimed at promoting international peace and security, human rights, and the rule of law. Sanctions typically include asset freezes, travel bans, and economic restrictions, targeting individuals, entities, and sometimes entire sectors of a country’s economy.
Since Russia’s invasion of Ukraine, the EU has imposed several rounds of sanctions, aiming to cripple the Russian economy and pressure Moscow to cease its aggression.
EU sanctions are adopted through a unanimous vote by all member states, meaning that any member, including Hungary, can effectively veto (or heavily delay) new measures. This unanimity requirement has, at times, made it challenging to pass stringent sanctions quickly, especially when internal disagreements arise.
Since Russia’s invasion of Ukraine, the EU has imposed several rounds of sanctions, aiming to cripple the Russian economy and pressure Moscow to cease its aggression
Potential impacts of Hungary’s EU presidency
With Hungary at the helm of the EU Council, there are concerns that Budapest could leverage its position to influence the bloc’s sanctions policy. While the presidency primarily involves a coordinating role, setting agendas, and facilitating discussions (as opposed to setting policy and legislation) it also offers the opportunity to steer the focus of EU deliberations. This could mean prioritising issues where Hungary seeks broader consensus or downplaying those that it views unfavourably, such as new sanctions on Russia.
Moreover, Hungary could use its presidency to push for a re-evaluation of existing sanctions, arguing for their relaxation or removal under the guise of strategic or economic concerns. However, it’s important to note that any significant change in sanctions policy would still require the agreement of other member states, many of whom remain committed to maintaining pressure on Russia.
Nevertheless, Hungary’s presidency might slow down decision-making processes, introduce more debates over sanctions’ effectiveness, and complicate negotiations. This could result in delays or softer sanctions packages, especially if Hungary is successful in framing the sanctions debate in terms of economic self-interest or the need for dialogue with Russia.
However, it is important to note that the presidency does not set or define policy or legislation. Essentially, the presidency chairs the Council’s meetings. As the EU says itself:
“The role has been likened to someone hosting a dinner, making sure their guests all gather in harmony – able to express differences during the meal but leaving on good terms and with a common purpose…”
The broader implications for EU unity
Far from ensuring that all members leave the ‘dinner’ on good terms, Hungary’s approach to sanctions could test the EU’s unity, particularly if Budapest’s actions lead to significant friction with other member states.
The potential for such friction has been exacerbated by the fact that Hungary has assumed the presidency at a delicate time for the EU, which is grappling with multiple challenges, including the war in Ukraine, energy security, and internal divisions over migration and the rule of law.
A fragmented EU sanctions policy could weaken the bloc’s international standing and its ability to present a united front in foreign policy matters. This could embolden Russia and other adversaries, who might perceive divisions within the EU as an opportunity to exploit.
As a result, EU diplomats will no doubt be relieved that the 14th sanctions package was finalised before Budapest took over the reins. Indeed, it has been suggested that a particular effort was made to ensure that the package was passed before 1st July to ensure that it was in place before Hungary assumed the EU presidency.
The 14th package of sanctions was relatively comprehensive and whilst Hungary will now likely take little action in its six-month stint to push any further sanctions against Russia, there is also relatively little action Hungary can take to meaningfully rewrite sanctions policy.
It is also worth noting that things can be picked up again once Hungary stands down in January 2025, with Poland – which has recently been amongst the more stridently pro-sanctions members of the EU – taking over on 1st January.
Ultimately, Hungary’s control of the EU presidency will be closely watched by both internal and external observers, with a particular focus to be expected on how it influences the bloc’s sanctions policy. While Hungary alone cannot unilaterally change the EU’s course, its leadership could introduce new dynamics into the discussions on sanctions, potentially leading to delays, softer measures, or renewed debates over the direction of EU foreign policy.
There are also likely to be more significant challenges to come for the EU than one of its own members having a six-month stint as president. That said, the extent to which the Hungarian assumption of the EU presidency has been in, at least in legal and policy terms, something of a non-event will likely instil confidence in EU leadership that it can restrict the disruption that any recalcitrant or wayward members of the bloc can cause. How the EU navigates future challenges, including internal and external, will be crucial in determining its cohesion and effectiveness in the face of ongoing global crises going into 2025.
