April 17, 2024

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Orban says Europe has 'shooted itself' with sanctions against Russia

Orban says Europe has ‘shooted itself’ with sanctions against Russia

BUDAPEST (Reuters) – Hungarian Prime Minister Viktor Orban said on Friday that the European Union had “shot itself in the air” by imposing ill-considered economic sanctions on Russia that, unless undone, threaten to destroy the European economy.

Gas supplies to Europe have tightened and fuel costs have risen since the Russian invasion of Ukraine in February and subsequent sanctions, leaving countries scrambling to refill storage and diversify supply channels. Russia describes its actions in Ukraine as a “special operation”.

An increase in gas and electricity prices forced the nationalist, Urban, on Wednesday to cut a long-term cap on utilities prices for high-use households, in a rollback of one of the 59-year-old prime minister’s signature economic policies.

“At first, I thought we only shot ourselves, but now it is clear that the European economy has shot itself in the lungs, gasping for air,” Orban, a longtime critic of the sanctions, told public radio. in an interview.

Orban said Ukraine needed help, but European leaders should reconsider their strategy, as sanctions have caused extensive damage to the European economy without weakening Russia or bringing the months-long war closer to any solution.

“Sanctions are not helping Ukraine, but they are hurting the European economy, and if they continue like this, they will kill the European economy,” Orban said. “What we see now is unbearable.”

“The moment of truth must come in Brussels, when leaders admit that they miscalculated, and that the policy of sanctions was based on false assumptions and must be changed.”

Orbán, who was re-elected in April, said that without restrictions Wednesday, which would lead to a jump in energy costs for households that consume energy above the national average, the cap utility rate regime would have to be scrapped entirely.

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Economists at Morgan Stanley said the restrictions could add 1.5 percentage points to inflation, already at a two-decade high, and exacerbated by the weak forint.

Ahead of the April vote, economists estimated the cost of utility-price caps at up to 1.5 trillion forints ($3.71 billion), which along with a raft of measures helped Orban’s election bid to widen the budget deficit.

Orbán faces his toughest challenge yet since taking power in a 2010 landslide, with inflation hitting a two-decade high, the forint slumping to record lows and EU funds in limbo amid a dispute over democratic standards.

Orbán’s other decision to speed up legislation to raise the tax rate for hundreds of thousands of small businesses this week as part of a broader campaign to curb a ballooning budget deficit has led to several protests in Budapest.

(dollar = 404.59 forints)

(Reporting by Gergili Zackas; Editing by Christopher Cushing)