Hungary to veto Bulgaria's Schengen entry unless it scraps gas transit tax

Hungary will veto Bulgaria's entry into Europe's passport-free Schengen Zone unless it scraps a transit tax on Russian gas, the Hungarian Foreign Ministry said on Saturday.

The veto threat follows Thursday's agreement among all 27 European Union members except Hungary to start accession talks with Ukraine despite its invasion by Russia, bypassing Prime Minister Viktor Orban's grievances by getting him to leave the room.

Orban's resistance in Brussels gained him some bonus points in Moscow, with whom his nationalist government has maintained regular contacts even during the war in Ukraine, and which still supplies landlocked Hungary with most of its gas.

Citing Foreign Minister Peter Szijjarto, the ministry said Hungary had made it clear to Bulgaria that it would veto its entry if the tax on Hungary's main gas import route remained in place.

"We have made it clear to the Bulgarians that if they keep this in place for long, if they jeopardise the safety of Hungary's energy supply for long, then we will veto their Schengen entry," Szijjarto said.

He said Hungary would lift its veto as soon as the transit tax is repealed.

While Western European countries have made big efforts to wean themselves off Russian gas, Hungary has been receiving 4.5 billion cubic metres of gas per year from Russia under a deal signed in 2021, mainly via Bulgaria and Serbia.

Szijjarto said Bulgaria's move, which he said went against European regulations, threatened the safety of supply not just in Hungary, but also Serbia and North Macedonia.

"While the tax aims to reduce Gazprom's profits, which, according to agreements concerning gas provision, should shoulder the cost, it could nevertheless result in transit disruptions and/or higher costs for the countries receiving gas through this route," economists at UniCredit said in a note.