East Europe Leaders Decry EU ‘Hypocrisy’ in Russia Rift

Czech, Hungarian and Slovak leaders are resisting more economic pain inflicted by possible wider economic sanctions on Russia, pointing to “hypocrisy” in the bloc’s west during the crisis in Ukraine.

Western European countries cutting deals with Russian companies even as they threaten Russia with more sanctions is “hypocritical,” Slovak Prime Minister Robert Fico said at a conference today in Bratislava, the nation’s capital. His Czech and Hungarian counterparts, Bohuslav Sobotka and Viktor Orban, said they don’t want to lose out on business opportunities. Polish Premier Donald Tusk struck a different tone, saying the EU must show unity and assume its costs.

“We are talking about solidarity here and France is selling warships to Russia,” Fico said at the Globsec security conference. “We are talking about how to help Ukraine with its energy security and the very same day we were taking fundamental decisions at the European Council,” while Russian gas exporter OAO Gazprom (GAZP) “signed a contract on South Stream,” a pipeline, “with German, French and Italian companies.”

The EU’s eastern members, who escaped Moscow’s sphere of influence 25 years ago after decades as Soviet satellites, want their richer western partners to share the cost of tighter sanctions. Dependent on Russian energy, they also want guarantees for their supplies. Their demands exacerbate already existing divisions, with Germany, France, Italy and Spain defying NATO calls to raise defense spending.

French Deal

In a sign of Russia’s ability to use its economic clout to drive a wedge between its adversaries, France’s government said this week it will deliver Mistral helicopter carrier warships to Russia as planned, rejecting requests from its European and U.S. allies to cancel the sale.

“If we drop the hypocrisy, we could build a common position on energy and defense policy,” Tusk said. He also urged a greater presence of North Atlantic Treaty Organization troops across the region

The EU, the U.S. and Ukraine accuse Russia of fomenting the unrest in Ukraine’s easternmost regions, which the government in Moscow rejects. Tens of people have been killed and more than 100 kidnapped since separatist unrest flared up after Russia’s annexation of Crimea in March. U.S. and EU leaders have said they’ll expand sanctions if Ukraine’s May 25 presidential election is disrupted.

Escalating Sanctions

Industrywide sanctions aren’t totally off the table: EU foreign ministers, meeting in Brussels, pledged to accelerate preparations for broad economic penalties should Russia disrupt the Ukrainian presidential election due May 25.

Meanwhile, the EU this week for the first time used penalties against companies, including natural gas producer Chernomorneftegaz, that were expropriated after Russia annexed Crimea. It also added 13 people to a list of individuals facing asset freezes and travel bans, including Vyacheslav Volodin, first deputy chief of the Russian presidential staff, and Vladimir Shamanov, commander of Russia’s airborne troops.

The EU needs to assume the costs of a proposed energy union to reduce its dependence on Russia, Tusk said. Last month, he proposed a single body charged with purchasing gas as a means of breaking Russia’s “stranglehold” over the region’s energy market.

“When I listen to discussions about the energy union, that it’s difficult or even impossible, that the costs are too high, the only honest answer, which stems from our historical experience, is that solidarity doesn’t come cheap,” Tusk said.

‘Eastern Opening’

Orban, Hungary’s prime minister who first captured the spotlight in 1989 when as a student leader he called for the departure of Soviet troops, said the conflict with Russia was torpedoing regional strategies to boost trade ties that collapsed after the fall of the Iron Curtain.

Hungary’s “eastern opening” was a cornerstone of Orban’s foreign policy until the Ukraine crisis. The Czech Republic and Slovakia also relied on the Russian market to balance western European demand weakened by the euro crisis.

“Why should central Europe lose out on the chances for economic cooperation when the economic cooperation” with Russia “is uneven in Europe?” Orban said. “Currently Germany is the one profiting the most” from its economic ties to Russia.

Putin’s Leverage

Europe’s divergence underscores Russian President Vladimir Putin’s leverage against EU leaders who lack the will and the means to face down his efforts to rebuild influence in the buffer area between Russia and NATO member states.

Eastern Europeans are prepared to back a united EU approach if the costs are shared in a fair way, the leaders said. Slovakia and Hungary are already providing gas to help Ukraine meet some of its energy needs as Russia threatens to shut down shipments.

“We are prepared to show solidarity, be united players even if it costs Slovakia something,” Slovakia’s Fico said. “But I want to see this solidarity everywhere in Europe, so that it’s not only member states bordering Ukraine that will show it.”

To contact the reporters on this story: Zoltan Simon in Bratislava, Slovakia at zsimon@bloomberg.net; Radoslav Tomek in Bratislava, Slovakia at rtomek@bloomberg.net; Peter Laca in Bratislava, Slovakia at placa@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; James M. Gomez at jagomez@bloomberg.net Andrew Langley

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