EU expects to renew Russia sanctions after Hungarian hold up

By Julia Payne and Lili Bayer (OTC:)

BRUSSELS (Reuters) - European Union foreign policy chief Kaja Kallas said she expected the bloc to renew its sanctions on Russia on Monday after Hungary signalled it would stop holding up the move in return for assurances about energy security.

Officials from other EU countries had warned that a failure to roll over wide-ranging sanctions on Moscow, imposed over its war in Ukraine, would have major consequences such as the unfreezing of Russian assets in Europe used to help Kyiv.

"I expect a decision to roll over the sanctions we have," Kallas told reporters as she arrived for a meeting of EU foreign ministers, just a few days before the Jan. 31 renewal deadline.

The sanctions up for renewal include all sector-based bans on trade as well as the measures that immobilised Russia's central bank assets. Legally, EU countries must unanimously vote to renew these restrictions every six months.

Hungarian Prime Minister Viktor Orban had first called for consultations with the Trump administration before a renewal decision. But U.S. President Donald Trump has so far indicated that he wants to exert pressure on Russia to enter peace talks.

Budapest then cited its complaints about Ukraine ending a deal that brought Russian gas to Hungary.

But Hungary - which maintains closer economic and political ties with Russia than other EU members - indicated on Monday it was ready to give the green light at the ministers' meeting.

Hungarian Foreign Minister Peter Szijjarto said on Facebook (NASDAQ:) that Budapest's vote would depend on "whether the European Commission will give guarantees that it will take steps every time the energy security of EU member states is threatened from outside the European Union".

At a meeting of EU ambassadors on Monday morning, the Commission presented a statement declaring it was "ready to continue discussions with Ukraine on the supply to Europe through the gas pipeline system in Ukraine".

The statement, seen by Reuters, also said the Commission - the EU's executive body - was ready to involve Hungary and Slovakia in the process.

"The Commission will approach Ukraine to request assurances regarding the maintenance of oil pipeline transfers to the EU," the statement also said.