Like many of you, we’ve been paying close attention to Russia’s actions in Crimea and the Ukraine. But it’s important to broaden that attention and ask: What is the Kremlin’s intention in the entire region, including in Hungary?
A not-so-subtle clue can be found in The New York Times’s excellent article, “Kiev Struggles to Break Russia’s Grip on Gas Flow.” We encourage you to read it and to pay special attention to way Russia exerts its influence through the energy influence its cultivated via Gazprom, the world’s largest gas company which is, incidentally, controlled by the Russian state. Gazprom not only supplies a large percentage of gas to the Ukraine —and Russia exploits its political grip on the Ukraine by skyrocketing the prices (in April, Gazprom raised the price of gas to Ukraine by 80%) and threatens to shut off power if the Ukraine does not/cannot pay its bill —but it also provides the European Union with approximately 1/3 of its gas imports. No wonder countries like Germany, “Gazprom’s biggest customer” according to the NYTimes, are reluctant to implement meaningful sanctions on Russia. It’s hard to bite the hand that feeds.
So, how does this relate to Hungary?
On February 6, 2014, the Hungarian parliament voted to approve a $14 billion nuclear loan-agreement deal with Russia. According to The Jamestown Foundation, “Under the agreement, Rosatom,” Russia’s state nuclear holding company, “shall build two nuclear power blocs in Hungary, financed by Russian state credit.” The expansion will take place at and more than double the capacity of Paks, Hungary’s only nuclear power plant, which currently provides Hungary with about 40% of its electrical needs.
This deal has enormous consequences, and we encourage you to read the following articles to provide in-depth background information and analysis:
- To get a summary of this deal and how it was rushed through Hungarian parliament, read: Rosatom Lands Nuclear Energy Project in Hungary by Western Default by Vladamir Socor from The Jamestown Foundation, February 6, 2014
- To understand the disastrous economic implications for Hungary and rumors about why Orbán originally turned to Russia for a loan, read: A brief summary of the Russian-Hungarian agreement on the Paks nuclear power plant on Hungarian Spectrum, March 13, 2014
- To read an analysis of Orbán’s flip-flop on Rosatom, possible reasons why he is now cuddling up to Russia, and the Kremlin’s intentions in the region, read: Power out(r)age: Hungary & Energy by E.L on The Economist, February 10, 2014
In short, we believe this deal is a worrying sign of Hungary aligning itself with, and increasing its dependence on, Russia; of Russian extending (and surely exerting) its influence on the region; and of future economic self-ruination for Hungary.