Ukraine blacklist triggers fierce dispute and clash between Hungarian, German foreign ministers

German Foreign Minister Annalena Baerbock has accused Hungary's biggest commercial bank, OTP, of violating international law at Monday's summit of EU foreign ministers. Ukraine has placed OTP Bank on the list of "international sponsors of war," which is used as a tool to damage the reputation of companies and deter international partners. However, Kyiv appears to be rather selective about the companies that are included on the list, prompting many to cite double standards.

Berlin, 2023. május 11. Annalena Baerbock német külügyminiszter a francia, egyiptomi és jordániai hivatali partnerével a közel-keleti helyzetrõl tartott tanácskozást követõ sajtótájékoztatón Berlinben 2023. május 11-én. MTI/EPA/Filip Singer Fotó: Filip Singer

The German and Hungarian foreign ministers quarrelled over the case of the Hungarian OTP Bank at the meeting of EU foreign ministers in Brussels on Monday, the Brussels-based news portal Politico quoted four diplomats familiar with the exchange.

As the paper also notes, since the OTP Bank has been added to Kyiv’s list of „war sponsors”, Hungary’s government is refusing to approve further EU military aid for Ukraine until Kyiv removes the Hungarian bank from the list.

When Hungarian Minister of Foreign Affairs and Trade Peter Szijjarto reiterated the country's stance on the matter at a meeting of the Foreign Affairs Council, German Foreign Minister Annalena Baerbock called the Hungarian minister to account, and citing an unspecified report, accused the OTP of violating international law.

Mr Szijjarto rejected the accusations, echoing the bank itself, which has called the reports „incorrect” in a statement and argued that the OTP Bank’s management has expressed its support for Ukraine publicly. Moreover, the National Bank of Ukraine has recognised OTP Bank as a systemically important bank.

Not only Germany, but also Sweden and Estonia wanted to put pressure on Hungary, arguing that the EU must not delay further sanctions and more military aid for Ukraine. Some ministers have urged Hungary to decouple Kyiv’s blacklist from the issue of sanctions and military aid.

One diplomat argued that Hungary should not „latch onto” the Ukrainian list, as it has no legal bearing.

So far the European Union has spent a significant amount of 5.7 billion euros from the European Peace Facility (EPF) on financing a part of the weapons deliveries by EU countries, and intends to approve another 500 million euros package for the EPF. We made clear that we will oppose this as long as Ukraine places the OTP Bank on its list of international war sponsors. The accusations against OTP are false

Hungarian Foreign Minister Peter Szijjarto underlined.

EU High Representative for Foreign Affairs and Security Policy Josep Borell did not brush off Hungarian concerns. After the meeting, he vowed to examine the differences of opinion, and he is expected to visit Kyiv to discuss the matter, Politico reports.

„We have to do everything we can in order to [get] the next package of military support to Ukraine … approved,” Mr Borell said adding that

If one member state has a difficulty, let’s discuss about it, that’s what we are going to do.

Ukraine’s blacklist

Kyiv accuses more than two dozen companies from Europe, the US and Asia of doing significant business with Russia. The list targets “those companies that provide the public and private sector with goods and services of critical purpose, as well as contribute to the Russian budget.” The list is clearly aimed at damaging the reputation of such companies, leading them to cease doing business in Russia, Ukrainian news agency Ukrinform writes.

Although being listed does not entail any legal consequences, the listed entities will be included into the World-Check database, which is used worldwide to identify and manage financial, regulatory and reputational risks. The database is widely monitored by international investors and other companies. Therefore, the companies on the list are automatically displayed in the database in red colour. Thus, anyone who looks into cooperating with such a company sees that it is highly risky “both in terms of reputation and financially,” Ukrinform reports.

In addition, the list includes not only the OTP bank, but also several of its executives, including CEO Sandor Csanyi. On the black list are prominent companies such as the French cosmetics manufacturer Yves Rocher, the German Metro Group, the American mixed goods company Procter & Gamble and the Chinese electronics company Xiaomi.

Five Greek companies are also included. Besides Budapest, Athens also rejects that "its companies are labelled as supporters of the war against Ukraine", the German newspaper Frankfurter Allgemeine Zeitung (FAZ) pointed out. It is enough if company is active in Russia for Kiev to put it on the list, FAZ writes.

The FAZ also points out that several countries expressed their outrage over the Ukrainian government's actions at Monday's meeting of EU foreign ministers.

„I can understand the emotional reaction of our Ukrainian friends, but is not the right way to single out individual companies and not others. Ninety per cent of Western companies are still present in Russia, even if some have suspended their business activities”, FAZ quoted Austrian FM Alexander Schallenberg as saying.

Kiev is not so strict with everyone

Among others, the V4NA news agency reported earlier that in the Q1 of this year, Coca Cola maintained its leading position in the market in Russia. Despite this, the company was not blacklisted by the Ukrainians. Although in March 2022, the world’s largest producer of carbonated beverages decided to suspend production in Russia, the company’s products can be found on Russian supermarket shelves to this day.

Burger King, Pizza Hut and KFC have also remained in Russia, while many brands such as Levi's, Nestle and Reebok have simply rebranded themselves and continue to operate in Russia. However, British multinational Unilever, Italian food company Barilla and French sports retailer Decathlon, among others, remain in the country. Nevertheless, these companies have not been included either in Ukraine’s “sponsors of war” list.

Cover: German Foreign Minister Annalena Baerbock with her counterparts from France, Egypt and Jordan at a press conference following a meeting on the situation in the Middle East in Berlin, 11 May 2023 (Photo: MTI/EPA/Filip Singer)