Down is Up Again: Hungary is Blamed for Stalling EU Sanctions--While Austria Does the Same

Watch this shitshow explode as Brussels approves a 6th round of sanctions, replete with extraordinary amounts of gaslighting and virtue-signalling by France and Germany

You know that something very crazy is going on—if the good people over at nakedcapitalism lose their shit over certain things like this. Headlined ‘EU Continues to Try to Hurt Russia by Shooting Itself in the Foot’, Yves Smith conveniently summarised the main issues revolving around yesterday’s ‘breakthrough’ in Brussels:

It’s hard to make any sense of what EU leaders think they are accomplishing in their latest round of sanctions against Russia. Oh, and in case you lost count, this is the sixth package…

If you think the EU will really, truly, will have cut its imports of Russian oil by 90% in a few months, I have a bridge I’d like to sell you. And yet more sanctioning of individuals is a sign that the EU is hitting the bottom of the barrel.

This is a quite good piece on EUropean affairs by Ms. Smith (whose strengths, let’s face it, rest with explaining the American side of things), so it’s well worth your time.

Here’s what caught my eyes in particular: Ms. Smith linked to the Kremlin’s news item about a recent couple of calls Mr. Putin had with both Mr. Scholz and Mr. Macron. Please read them, but the money paragraph is this one (my emphases):

Vladimir Putin explained the real reasons for the unstable food supplies, saying that the disruptions were due to Western countries’ erroneous economic and financial policies, as well as their anti-Russia sanctions. He substantiated his statements with evidence and specific data. Russia, on the other hand, is ready to help find options for unhindered grain exports, including the export of Ukrainian grain from the Black Sea ports. Increasing the supplies of Russian fertilisers and agricultural produce will also help reduce tensions in the global food market, but that will definitely require the lifting of the relevant sanctions.

Classic Putin: calmly explaining something that’s obvious to my 8yo to grown men (ahem) pretending to run certain countries all the while backing this up with evidence and specific data. As an aside, I’d love to hear Mr. Putin deliver these things as some point, if only for my own edification, but I digress.

There’s a lot more in the brief item, but let’s not lose sight of the bigger picture. Here’s more from a by then slightly annoyed Ms. Smith:

How can the EU be so blind? Have they really convinced themselves that Russia is teetering on the verge of economic disaster despite evidence to the contrary, like the estimates of the GDP fall for 2022 being lowered slightly as export substitution is ahead of schedule, or the central bank again cutting interest rates? How about the fact that shops have plenty of food, food prices aren’t appreciating much, and ordinary Russians aren’t seeing signs of hardship (as in going without European goods and vacations do not make a crisis)? Yes, there may be some reductions in living standards in some sectors, but even to the extent that there are some costs, they are trivial compared to the 1990s…and here Russian overwhelmingly see their national survival at stake. Oh, and Putin just raised pensions by 10%. That arguably just represents an inflation catch-up but it’s a sign that the government has room to maintain social safety nets.

The Zombiefication of EU Policy

Keep in mind that ‘zombies’ are fictional, if undead corporeal revenants, and their main attraction appears to be a hunger for fresher human meat (as they themselves are putrefying), which is, I’d argue, a quite apt way of describing the EU.

Here’s how, for instance, Austrian state broadcaster ORF reported on this mess, and I’m sure you’re going to spot, right away, the ‘discovery’ that you cannot make an omelett without breaking the eggs first:

Hungary’s Exception Causes Imbalance

#Unity: with an emphasis on the ‘unity’ of the EU, Council President Charles Michel announced a breakthrough about a sanctions package that had been stuck for weeks. However, the embargo on Russian oil contained was softened especially for Hungary’s approval. It is now feared that Budapest could have an unfair market advantage. Russia, meanwhile, is faced with the question of where its oil will go in the future.

This is classic face-palm territory, ladies and gentlemen, and for your edification, I shall quote at length from this and a couple of other pieces before explaining as to how and why this all happened.

From that ORF piece still:

Hungary's Prime Minister Viktor Orban was ultimately able to prevail with his demands: before the special summit took place on Monday, he had demanded comprehensive guarantees to secure the oil supply before he could agree to an embargo…

On the day after…anger about the exemptions for Hungary rang through. ‘A great example of how the Council delays and waters down an ambitious policy agenda for the sake of unity. Some see this as a rather positive thing, others consider this the main issue with the EU’, Sophie Pornschlegel of the European Policy Centre (EPC) told ORF.

Leaving aside Ms. Pornschlegel—who is a ‘senior policy analyst’ at the EPC, a self-identifying ‘think tanker’ (whatever that might mean), and, to no-one’s surprise, funded by a plethora of German-based foundations, including in particular the Mercator and Heinrich Böll-Stiftung (the party foundation of the Greens—and her ideologically and financially-biased ‘insights’, here’s a revelatory statement by people who matter a tad more:

German Economy Minister Robert Habeck [Greens], for example, accused Orban of playing a ‘ruthless’ [ruchlos] game for his country’s interests. Meanwhile, calls were heard from the EU Parliament to abolish the principle of unanimity: ‘The people are simply fed up of being led around by Viktor Orban and others’, said EPP leader Manfred Weber…

Orban’s exemption, which allows Hungary to continue to purchase Russian oil arriving via pipelines, could have an impact on the entire market. Specifically, the deal reached now involves stopping the import of Russian oil by sea, but not the supply via pipelines. According to Michel, the embargo affects 75% of imports.

So, we have Germany huffing and puffing about smaller country’s interests, which should be subordinated to the interests of bigger players, such as Germany. In this, Mr. Habeck was seconded by veteran political hack Manfred Weber who called for the most significant alteration to the EU treaties imaginable: so far, the EU requires ‘unanimity’, i.e., one member-state = one vote in ‘common affairs’.

While this has, predictably, led to political troubles before, the Russian sanctions are, shall we say it, existential for most EU members, hence there’s so much more at stake than first meets the eye.

The above quotes are from the ORF piece, here’s Ms. Smith’s (spot-on) comment, with added emphases:

This sixth package gets the EU its much-sought-after embargo of Russian oil, although it’s only a partial embargo, thanks to prime minister Viktor Orban acting like a bad Hungarian populist rather than a good European. Orban threatened to veto a full-bore embargo since all of Hungary’s oil comes via the Druzhba pipeline. By contrast, most of the EU’s oil comes by tanker, which as we’ve pointed out and Alexander Mercouris has confirmed, allows for Russian oil to still come to Europe via out and out laundering through cut-outs and mixing with non-Russian source product, albeit at a higher cost. So landlocked countries on a Russian pipeline can’t cheat while the others can

In other words: Hungary’s Orban has apparently told the wimps in Brussels a bit about reality, hence Mr. Habeck and Ms. Pornschlegel’s huffing and puffing becomes understandable to everyone: the latter wished to continue with their BS-peddling and virtue-signalling, but Mr. Orban told them, apparently in no uncertain terms, that he prefers Hungarians to remain warm, have enough food, and good relations with the main supplier of hydrocarbon energy.

Bottom lines: prices for everything will increase further, but not as much in Hungary due to the foresight and backbone of Mr. Orban. According to Austrian media, inflation rose by 8% in May (yoy), and that increase will be sustained for the foreseeable future.

Food, Oil, and Gas Matters, Austrian Style

Here’s what Ms. Smith omitted in her otherwise good piece: while mentioning Mr. Putin’s calls, which included another telephone conversation with Austrian Chancellor. While the Kremlin’s readout reads (almost) identical to the one cited above, there was one more sentence at the end of the item that gives away the game:

Vladimir Putin reaffirmed Russia’s commitment to its contractual obligations with regard to natural gas supplies to Austria.

Much to the chagrin of certain well-connected Anglo-Americaphiles, such as Wolfgang Münchau, Mr. Orban and Mr. Nehammer aren’t the only ones who can clearly see the writing on the wall. Here’s a money part from Münchau’s ‘analysis in The Spectator, which appeared on 30 May:

By the autumn, just before the start of the winter, the Europeans’ priority will be to secure gas from Vladimir Putin. The Russian read-out of the telephone conversion with Karl Nehammer, the Austrian Chancellor, says that Putin has reaffirmed Russia’s contractual obligations with regard to gas supplies. When Mario Draghi called, Putin even went further: he guaranteed fail-safe natural gas supplies to Italy at contractual prices. Putin deals with EU leaders one at a time. Not much there has changed…

The German government is prioritising its commercial relations with Russia—as it always has done—while pretending to stand with Ukraine as part of the EU and Nato's consensus. It’s the old east-west double-game that Germany has been playing since the days of Willy Brandt.

You can see the frustration dripping from Mr. Münchau’s writing, but we should ask ourselves: why should a country, such as Hungary or Austria, sacrifice the well-being of its inhabitants to the interests of, say, Germany—which is, in no small part, beholden to US interests?

Also, why would media people and think tankers like Ms. Pornschlegel pile on Hungary—while conveniently omitting that Italy and Austria are doing the same?

Speaking of same-ness, the question, ‘when will Covid be over?’ appears to have a clear answer, according to Der Standard whose Nora Laufer yesterday reported glowingly on the most recent ‘Fridays for the Future’ protest. Headlined ‘The Fossil Insanity Must Stop’, the subtitle reads:

On Tuesday [31 May], Chancellor Nehammer Affirmed Again His Veto to a EU-wide Gas Embargo

Assisted by Ilyess El Kortbi, ‘a young climate activist from Kharkiv’, the Vienna-based protests called for Nehammer to ‘stop the flow of this dictatorial energy’.

While this is too stupid to warrant further commentary, it’s important to note that the piece also quotes one Daniel Huppmann who called it ‘a question of time before no more Russian gas will be delivered’. The analyst from the International Institute for Applied Systems Analysis (see here), a think-tank based just outside of Vienna, idiotically called for a EU-wide gas boycott because ‘it is doable and morally right’.

By contrast, here’s what Wolfgang Mahrer, chairman of the Austrian Chamber of Commerce, had to say about this (my emphases):

Calling an embargo on [Russian] gas an ‘economic Armageddon’, Mahrer cautioned that a ‘supply crunch’ [Versorgungsengpass] would morph into a ‘supply crater’ [Versorgungskrater]. ‘This is not feasible, it causes collateral damage that no one wants to imagine’, he emphasises several times. This must also be said—the message is probably also directed at climate activists from Fridays for the Future. The oil embargo alone will cause price hikes at gas stations somewhere between 20 and 30 cents per litre, he calculates, adding that more honesty is needed in naming the effects of a gas and oil freeze on consumer prices.

While this is bad enough, here’s why the above-cited whining of ‘solidarity’ by the likes of Mr. Habeck and Ms. Pornschlegel is so disingenuous and outright dangerous (my emphases):

In the event of a gas supply crunch, Austria cannot count on help from Germany or Italy, says Mahrer. In an emergency, these countries would have a hard time dealing with their own supplies. This is why Austria now needs a master plan, he tells the federal government—and especially the Green [Infrastructure] Minister Leonore Gewessler. All the previous plans for climate neutrality, which were conceived before the Russian invasion of Ukraine, were ‘no longer relevant’; the paper they were written on could be used for heating when there was no more gas: it is actually ‘five minutes past twelve’ in terms of energy policy, Mahrer insists.

As far as prioritising the gas supply is concerned, if gas does indeed stop coming from Russia, Mahrer says it is not so easy to say that private households come before the economy: many companies also heat households with their process waste heat.

Bottom Lines for Now

While I’m not a huge fan of Austria’s Chamber of Commerce, its chairman has many things right—even though Mr. Mahrer once served in government and didn’t manage to get anything done back then.

The main problem is the virtue-signalling Greens and their ilk are prioritising ‘morality’ and ‘values’ (read: ideology) over reality, hence the predicament.

Contrary to Mr. Münchau’s please for ‘morally right’ policies that would benefit…who, by the way?, it would appear that Mr. Nehammer and the ÖVP are on the right side of this one.

This is also why Die Presse recently explained Austria’s state-owned fossil fuel provider OMV acceding to Russian demands for payments in Roubles: much like neighbouring Hungary, Austria’s former Chancellor Sebastian Kurz had negotiated long-term delivery (until at least 2040) of hydrocarbon energy for a fixed price.

Picture credit: that above-linked piece in Die Presse.

As push comes to shove, I suspect that people like Mr. Scholz and Mr. Macron—as well as their respective establishments are green with anger at their own lack of foresight. Now, they are projecting their anger onto small countries like Hungary and Austria, if only to gaslight their own citizens.

I suspect that, if majorities of French and Germans understood the foresight of people like Viktor Orban and Sebastian Kurz, there’d be quite a different mood on the streets of France and Germany.

This, of course, is impossible as long as French and German legacy media continues to deliberately mislead the population, all the while leading politicians remain beholden to the malign Transatlantic interests.

Fool the people once, shame on them. Fool them again (and again), the shame falls onto the likes of Mr. Macron and Mr. Scholz.