Reconciling the Hungarian-Ukrainian Schism

The Belarus-Polish border crisis shows us that the situation on the Eastern frontier of Europe is escalating once again. To enhance resilience against Russian influence campaigns, Eastern and Central European countries should stick together. What seems evident in theory, however, is not always readily applied in practice. One of the most important cases of broken unity in Eastern Europe is the growing tension between Hungary and Ukraine, where heated debates over ethnic minority rights are now complemented by contradictory national interests in energy policy.

In 2017, the Ukrainian Parliament adopted the new Law on Education, reducing traditional rights of ethnic minorities to be educated in their native language. Two years later, the new State Language Law limited the use of minority languages in the spheres of public life—only private communications and religious events were exempted. Although Kyiv's new policies are directed at its Russian speaking population, all ethnic minorities have been heavily impacted, including Bulgarians, Hungarians, Poles, and Romanians. The kin-states of these minorities all protested against the new language regime. The strongest reaction came from Hungary, which has decided to block top-level political talks between NATO and Kyiv. Budapest has pledged to resume its full support for Ukraine's ambitions towards Western integration once minority rights are restored.

Hungary’s reaction was foreseeable. Just like other countries in Central and Eastern Europe, Hungary has a special bond to ethnic Hungarians living beyond its borders. As a result of the border changes after the two world wars, today 2 million ethnic Hungarians live in the neighboring countries, including some 150,000 ethnic Hungarians in Western Ukraine. The well-being of these communities has always been important for Hungary. This is not only the priority of the current government but also a constitutional obligation dating back to the country’s independence.

Moreover, in the Basic Treaty between Hungary and Ukraine, which entered into force in 1993, both parties declared that they would ensure the necessary opportunities for ethnic minorities to learn their native language and to study in their native language at all levels of the educational system. Ukraine breached this agreement when it introduced new language laws that infringed upon these established rights of ethnic minorities, including Hungarians.

A divergence of interests in the energy sector has only deepened the divide between Ukraine and Hungary. Ukraine’s extensive gas pipeline system, which has an annual transit capacity of 146 billion cubic meters (bcm), historically provided 40 percent of Europe’s gas import needs. By transiting hydrocarbons from Russia to Europe, Ukraine collects upwards of $3 billion a year in transit fees. The funds proved especially crucial for Ukraine after the economic deprivations caused by Russian transgressions in Crimea and Donbas.

The alternative routes offered by pipelines in the Black and Baltic Sea have severely diminished the amount Ukraine can collect in transit fees. An agreement signed in 2019 has ensured at least 40 bcm of Russian gas will flow annually through Ukraine's Druzhba pipeline until 2024, but European investments in these alternative routes continue to threaten Ukraine's fiscal security. Upon the completion of the new NordStream II project, the baltic route alone is projected to deliver a combined 110 bcm of Russian gas to Europe via Germany annually.

Russia’s willingness to use gas reliance for political leverage has underscored the importance of energy diversification in European countries like Hungary. Russia's refusal to transit gas through Ukraine in 2006 and 2009 elicited concerns that Russia may make similar unilateral decisions in the future, especially with hostilities in Eastern Ukraine still ongoing. Hungary’s current energy dependency on Russia, which supplies 80 percent of the country’s imported gas, places the country in a particularly precarious position.

While Hungary has attempted to diversify its energy sector by investing in nuclear reactors and Liquid natural gas (LNG), gas imports still cover the remaining 30 percent of the country’s energy needs. In September 2021, Hungary signed a contentious new gas deal that secures an annual 4.5 bcm of Russian gas imports over the next 15 years. By negotiating directly with Russian gas company Gazprom, Hungary has both enhanced its business relationship with its most important energy supplier and, by rerouting through Serbia and Austria, increased the reliability of transit by circumventing the hostilities in Ukraine.

The current geopolitical situation in Europe, largely orchestrated by Russia, places significant strain on the Ukrainian-Hungarian bilateral relationship. Both countries have attempted to enhance their national and economic security through controversial policy initiatives, including language laws in Ukraine and the new energy deal in Hungary. This schism between Hungary and Ukraine has strong relevance to the U.S., given Biden's foreign policy objectives.

The Biden administration’s commitment to addressing inequality makes the disagreements between Hungary and Ukraine especially relevant to the U.S. Although the language laws are directed towards stemming Russian influence in its Eastern territories, the U.S. should strive to find a solution that also provides legal protection for traditional minority rights. By emphasizing a proper balance between geopolitical priorities and minority protection, the U.S. can follow through on President Biden's declaration to renew the country’s focus on human rights issues.

The U.S. is also able to help stabilize the bilateral relationship through its investments in the Three Seas Initiative. The U.S. signaled its support for the regional initiative in February when Secretary of State Mike Pompeo made a pledge of $1 billion. By financing infrastructure and energy security projects in Central and Eastern Europe, the U.S. can help address fiscal insecurities that have resulted from recent changes in energy transportation routes.

A greater U.S. economic presence would compliment the already strong ties in normative structures and interstate commerce between Hungary and Ukraine. Trade turnover between the two countries grew 12 percent from 2017 to 2018, where it reached almost $3 billion. The benefits of maintaining stable bilateral relationships in Europe’s eastern front should continue to push both regional and international actors to find mutually acceptable solutions.

Michael van Ginkel is Hungary Foundation's Budapest Fellow at the Institute for Foreign Affairs and Trade and an Honorary Fellow at the University of Wisconsin's Center for Russia, East Europe, and Central Asia. Dr. Balázs Tárnok is Hungary Foundation’s Visiting Research Fellow at Kellogg Institute for International Studies, University of Notre Dame, and researcher at Europe Strategy Research Institute, Ludovika-University of Public Service, Budapest.