Newsletter: Magyar sets stall amid hope for renewed EU-Hungary ties in Brussels
Good morning from Brussels, where there is palpable sense of expectation after Sunday’s Hungarian election which saw the dethroning of long-time leader Viktor Orbán. European Commission President Ursula von...
Good morning from Brussels, where there is palpable sense of expectation after Sunday’s Hungarian election which saw the dethroning of long-time leader Viktor Orbán.
European Commission President Ursula von der Leyen called on Monday for "swift" progress in restoring the fraught ties between Brussels and Budapest following opposition leader Péter Magyar's stunning win on Sunday, adding that contacts will begin immediately but that the reset would need to wait until Magyar formally takes office, expected in mid-May.
My colleagues Jorge Liboreiro and Sándor Zsiros break down which EU funds Magyar could seek to unlock as he aims to turn a new page in the relationship with Brussels – including €17 billion in frozen cohesion and Covid recovery funds, and €16 billion in defence loans yet to be approved by the EU executive.
Magyar set out his stall yesterday in a wide-ranging three-hour press conference in Budapest, his first since Sunday’s ballot, in which he outlined his priorities including tapping into EU funds, mulling joining the Eurozone and sustaining a tough line on migration.
My colleague Sándor Zsiros reports that Magyar also gave the most revealing insights to date on his vision for renewed ties with Ukraine, after a fraught relationship under Viktor Orbán.
He stressed that Ukraine cannot be compelled to accept a peace deal that requires it to cede territory. "No other country has the right to say that you should give up this or that territory. Anyone who says such a thing is a traitor himself," Magyar said.
Crucially, Magyar hinted he could lift Hungary’s veto on the EU's stalled €90 billion loan to Ukraine, raising prospects that the cash can be released to Kyiv in the coming weeks. But Magyar supports the opt-out negotiated by the Orbán government which exempts Hungary from any direct financial payments into the loan, citing Hungary's bad budgetary situation.
He also said Ukraine's EU accession "in the next ten years" would not be realistic, and opposed any fast-track of the country's EU membership, a view that is in line with that of other EU leaders.
My colleague Marta Pacheco writes that, while recognising the need to diversify Hungary’s energy supply, Maguar refrained from committing to weaning off Russian oil and gas completely, backtracking on a pledge he made during the electoral campaign. He said that his Central European country “will look for the cheapest oil” and “cannot change geography” when it comes to its energy supply, hinting at the possible removal of sanctions against Russia when the war in Ukraine ends.
He also said that the disruption of Russian crude via the Druzhba pipeline – an issue much leveraged by the Orbán campaign – was a threat to Hungarian supply, raising questions over whether the political dispute with Kyiv over the controversial pipeline will persist, despite Ukraine saying it will be repaired this spring.
Marta takes a closer look at whether Magyar could break Hungary’s reliance on Russian oil, and at how higher investment costs could be a deterrent for the new Hungarian leadership, challenging the EU’s energy transition and independence goals.
In other news this morning, Ukrainian President Volodymyr Zelenskyy has said he is gearing up for talks with European counterparts on creating a joint European air defence system, saying discussions could start as early as this week.
"I am confident: either Ukraine becomes an integral part of Europe’s security system, or some in Europe risk becoming part of the 'Russian world,'" Zelenskyy said. Countries on Europe's eastern flank are already adopting Ukrainian solutions to bolster their defences, while Gulf countries are now also increasingly adopting Ukrainian technology to fend off Iranian drone attacks.
Trump says the US military has begun its blockade of Iranian ports to ramp up pressure on Tehran
US President Donald Trump said his country’s military have begun blockading Iranian ports in an effort to force Tehran to open the strategic Strait of Hormuz and accept Washington’s terms to end the war that has been raging since 28 February.
At least two tankers approaching the Strait late on Monday turned around, according to a post on X by vessel tracker MarineTraffic, who announced the development shortly after the US Navy began its blockade.
The UK Maritime Trade Operations agency said the blockade restricted “the entirety of the Iranian coastline, including ports and energy infrastructure.” Its notice to mariners said transit through the strait to or from non-Iranian places was not reported to be impeded though ships “may encounter military presence.”
“We can’t let a country blackmail or extort the world because that’s what they’re doing,” Trump said of Iran at the White House, where he announced the blockade had started.
He suggested the US remains willing to engage with Iran. “I can tell you that we’ve been called by the other side,” Trump said, adding that "they want to work a deal.”
Discussions between Washington and Iran about a second round of in-person negotiations are underway, according to two US officials and a person familiar with the matter. A diplomat from one of the mediating countries – Pakistan, Turkey and Egypt – said Tehran and the US have agreed to more talks.
Malek Fouda has the full story.
Risk of ‘serious’ economic shock if Iran war drags on, EBRD chief says
The President of the European Bank for Reconstruction and Development (EBRD), Odile Renaud-Basso, has warned that while the current scenario in the Middle East risks dampening growth prospects and pushing up inflation, the economic repercussions of a drawn-out war will be “wider and more significant.”
The EBRD estimates that a scenario in which oil prices continue at around $100 (€85) per barrel could dent growth by 0.4% and increase inflation by around 1.5% in the economies in which the bank operates.
“This doesn't mean recession, but if the situation worsens, then the impact will be wider and more significant,” Renaud-Basso explained.
She added that Europe faces a challenge because its governments face a “much more limited” fiscal space, preventing them from introducing measures that could “counterweigh increases in energy prices” in the same way as they did during the Covid-19 pandemic or the 2022 energy crisis.
Last week, the EBRD announced plans to channel €5 billion in investments to countries in the Middle East hit by the economic repercussions of the conflict, with a focus on Iraq, Jordan, Lebanon, the West Bank and Gaza.
“When you have private sector banks withdrawing or reducing their exposure (...) we are stepping in, in a way, as a counter-cyclical bank, which is there to continue to support investment,” Renaud-Basso said.
Watch the full interview on today’s episode of Europe Today.
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That’s it for today. Jorge Liboreiro, Sandor Zsiros, Marta Pacheco, Malek Fouda and Sasha Vakulina contributed to this newsletter. Remember to sign up to receive Europe Today in your inbox every weekday morning at 08.30.
