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07/12/2016

Putin and Orbán contemplate stronger energy ties

Central Europe

Putin and Orbán contemplate stronger energy ties

Vladimir Putin and Victor Orbán [The Kremlin]

Russian President Vladimir Putin agreed to continue supplying gas to Hungary on Tuesday (17 February) during a visit to Budapest, cementing the EU member state’s growing ties to the Kremlin, as the rest of Europe distances itself from Moscow over its Ukraine policy.

The fact Putin was in Hungary at all underlined the relationship. The Russian President has not been on a bilateral visit to a European Union country since June last year, just before a Malaysian airliner was shot down over a part of Ukraine held by Moscow-backed rebels.

After several hours of talks, Putin and Hungarian Prime Minister Viktor Orbán said they had reached an agreement to extend a gas supply contract that expires this year. They said there were some technical issues to fix before it could be signed.

Orbán said a big stumbling block, a clause in the expiring contract which means Hungary has to pay for gas it contracted to buy but did not use, had been resolved. He said Hungary can use the remaining gas under the contract in the coming years, and pay at the time when it draws on the gas. But he did not disclose the price it would have to pay.

Gazprom is open to raising the amount of gas stored in Hungary, Putin said.

The Hungarian prime minister also criticised those in Europe who want to isolate Russia – a stance that sets him apart many of his fellow EU leaders.

“We are convinced that locking Russia out of Europe is not rational,” Orbán said. “Whoever thinks that Europe can be competitive, that the European economy can be competitive without economic cooperation with Russia, whoever thinks that energy security can exist in Europe without the energy that comes from Russia, is chasing ghosts.”

‘Turkish Stream’ to reach Hungary?

Both Orbán and Putin said they would back a successor to the South Stream project, a gas pipeline that was to have pumped Russian gas under the Black Sea to southern Europe, but which Moscow has abandoned in the face of objections from Brussels.

One option raised by both leaders was to expand ‘Turkish Stream’, a proposed Russian pipeline into Turkey, to include spurs that would take the gas through Greece and the Balkans to Hungary.

“If they [the European Commission] don’t hinder us, then in essence we could realise part of the former South Stream project via Turkey,” Putin said.

One of the aims of the ‘Turkish Stream’ project is to bypass Ukraine, and another, to punish Bulgaria, which Russia blames for having obstructed the construction of South Stream.

>> Read: Russia says it will shift gas transit from Ukraine to Turkey

Orbán’s closeness to Russia has come at a political cost. Many Western diplomats say they are alarmed by what they see as Orbán’s drift into the Kremlin’s orbit.

>> Read: Orbán: We’ll choose our own path with Russia

>> Read: Orbán wants warmer EU-Russia ties to boost business

At home, ties to Russia are highly charged because Hungary was, for four decades after World War Two, effectively under Soviet occupation. A 1956 uprising against rule from Moscow was brutally suppressed using Red Army tanks.

One of Orbán’s most important allies, business mogul Lajos Simicska, fell out with him this month, in part over his policy towards Russia, a source with knowledge of the matter told Reuters.

In Budapest late on Monday, an estimated 1,000 people protested against Putin’s visit.

“We don’t agree with the fact that Viktor Orbán receives Putin while the leaders of democratic Europe do not receive him,” said 57-year-old protester Gabor Faradi. He held a banner which read, “We won’t be a Russian colony.”

Background

Victor Orbán, whose conservative Fidesz party in April won a new four-year term, has been accused by some parts of the EU of seeking to amass too much power and rejecting democratic checks and balances.

Orbán has made it clear that Hungary would act according to what was in its national interest, even if that meant annoying its allies in the European Union and the United States over the country’s relations with Russia.

Last year, Orbán agreed with Putin on a loan of about €10 billion to build two additional reactors in the country’s only nuclear central in the central city of Paks.

Many Hungarians have expressed anger at the government's decision to expand the nuclear power plant without consulting the people.

>> Read: Russian nuclear plant divides Hungarians ahead of election

More and more often Hungarians demonstrate to remind Orbán of the country’s obligations as a member of EU and NATO.

>> Read: Hungarians rally to remind Orbán of Western allegiance