Spain has blocked Hungary's takeover of the Madrid-based train manufacturer on the grounds that the Russian-friendly government of Viktor Orbán should not buy technology that could be useful to Ukraine.
The Financial Times reports this with reference to sources.
A senior Spanish government official said that Madrid vetoed the €619 million Talgo deal partly because the company could help rebuild Ukraine by helping it strengthen its rail links with the EU.
"One of Ukraine's biggest interests is rail," the official told the FT.
He stressed that Talgo could help Ukraine overcome one big obstacle: the fact that the country's railway tracks are of different widths.
Spain has classified documents explaining its decision, which it made for reasons of "public safety and order." Madrid has not commented on whether its concerns are related to Orbán and his relations with Russia.
Spanish Prime Minister Pedro Sánchez criticised Orbán as a "pro-Putin" leader of the "international far right" and said that the Hungarian prime minister "wants to bring Ukraine to its knees".
Hungarian Ganz-Mávag consortium submits bid for Talgo
The Ganz-Mávag consortium, which submitted a bid for Talgo in March, is backed by the Hungarian state's investment arm and train manufacturer Magyar-Vagon, which Spain claims is controlled by Hungarian oil company MOL.
A Spanish official said Talgo has advanced automatic track change technology that allows trains to move seamlessly between Ukraine's railways and narrower gauges in neighbouring European countries.
Railway gauges in Ukraine and Europe
The width of railway tracks in Ukraine is 1520 mm, in line with Soviet standards, but the standard for European rails is 1435 mm.
At the same time, the variable gauge technology was developed in Spain, as the country uses different gauges, which is unusual for Europe: the most common is the 1668 mm Iberian gauge, but in the north there is a narrow 1000 mm gauge, while Spanish high-speed trains run on standard European gauges.
According to Talgo, its variable gauge system "allows the train to adapt the track gauge while travelling at approximately 15 km/h and without having to stop".
Due to the wider gauge in Ukraine, most passengers on trains to and from Warsaw have to wait several hours for the train axles to be adjusted manually. Such delays also affect wagons carrying Ukraine's grain exports and other goods, the weight of which exacerbates the problem of dimensional incompatibility.
Ganz-Mávag said there were "no justifiable reasons" for Spain's veto, promising to take legal action against the government.