The bloc is losing its competitiveness due to soaring prices, according to the Hungarian PM

The EU’s refusal to buy Russian energy has been crippling the bloc’s economic growth, Hungarian Prime Minister Viktor Orban told a plenary session of the European Parliament on Wednesday.

Orban, whose country currently holds the EU’s six-month rotating presidency, was addressing the parliament in Strasbourg, France.

“EU productivity is growing at a slower pace than that of our competitors. Our share of world trade is declining,” he said.

He added that EU businesses were facing electricity prices that are two to three times higher than in the US. And when it comes to natural gas, “prices are four to five times higher.”

Half of European companies consider the cost of energy to be the main obstacle to investment, according to Orban. In energy-intensive industries that are vital for the bloc’s economy, production has fallen by between 10% and 15%, he claimed.

“Moving away from Russian energy has endangered the European Union’s GDP growth, while significant financial resources had to be redistributed to energy subsidies and the construction of infrastructure necessary for the import of LNG,” Orban said.

The Hungarian PM added that the EU should not be under the illusion that a green transition will solve the problem. He cited study results suggesting that “the share of fossil fuels will not change significantly until 2030.”

The EU declared the elimination of its reliance on Russian energy as one of its key priorities after hostilities in the Ukraine conflict broke out in February 2022. Sanctions imposed on Moscow and the sabotage of the Nord Stream pipeline in 2022 have led to a dramatic drop in Russia’s gas supplies to the EU. The bloc has turned to the US and the Middle East to replace them with costlier liquefied natural gas.

Russia reportedly accounted for over 16% of the value of natural gas imports into the bloc in the first quarter of this year, down from 40% in 2021. According to estimates by Russia’s Energy Ministry, American LNG is 30-40% more expensive than Russian pipeline gas.

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Prior to the Ukraine conflict, Washington had for years been pressuring the EU to cut its dependence on Russian energy.

In June, the EU banned some operations related to LNG of Russian origin, including reloading, ship-to-ship transfers, and ship-to-shore transfers with the purpose of re-exporting to third countries via the bloc. Russian seaborne gas imports into the EU remained permitted via LNG terminals that are linked to the interconnected natural gas network. However, the bloc has stopped short of imposing sanctions on the fuel beyond a ban on trans-shipments, which has yet to come into force.

Former European Central Bank president Mario Draghi said last month that the EU’s global economic competitiveness has been substantially eroded due to the loss of cheap energy from Russia.