Orban-Putin talks compound disquiet over Hungary’s Russia ties

Orban-Putin talks compound disquiet over Hungary’s Russia ties

Leaders poised to discuss business deals as unease grows among Budapest’s western allies

Hungarian prime minister Viktor Orban will host Russian president Vladimir Putin for talks on Wednesday, adding to disquiet among Budapest’s western allies about its burgeoning ties with Moscow.

The two leaders will discuss business and long-term energy deals at the latest in a series of summits — the fifth since early 2016 — that have made Hungary one of Russia’s closest allies in the EU and highlighted a political affinity between two self-styled scourges of western liberalism.

“Orban is nobody’s fool and he has been playing the game very well,” said Tomas Valasek, director of the Carnegie Europe think-tank and a former Slovak ambassador to Nato. “For domestic political survival he needs a model not unlike that of Russia, so he can use the resources of the state to stay in power.”

Mr Orban rose to prominence 30 years ago when he gave a gutsy speech demanding the departure of Soviet forces from then-communist Hungary. But since regaining power in 2010, he has pursued closer ties with Moscow while clashing with Brussels.

While European diplomats say Hungary has not pursued an explicitly pro-Kremlin agenda in the EU or Nato, some of its policy positions and its growing economic ties with Russia have sparked concerns among those suspicious of Mr Putin’s intentions and influence.

Nato efforts to build closer relations with Ukraine have been hampered by Budapest, which since 2017 has blocked meetings between ministers from the alliance and their Ukrainian counterparts. Budapest says Kyiv is discriminating against its ethnic Hungarian minority, including through a law that stops them being taught in the Hungarian language.

Hungary was in effect “holding Nato’s relations with Ukraine hostage” at a very sensitive time to the possible advantage of Russia, said one European diplomat.

Mr Orban has also repeatedly criticised EU sanctions against Russia following its 2014 annexation of Crimea, although he has complied with them.

Last year, Hungary worked with the US authorities to catch two suspected arms dealers, but then declined to extradite them to the US, sending them instead to Moscow, where they were swiftly released.

Washington condemned the decision, saying it “raises questions about Hungary’s commitment to law enforcement co-operation”. Hungary also defended the transit of weapons through its territory from Russia to Serbia, which fellow Nato members had blocked.

Most recently, Mr Orban facilitated the relocation of the International Investment Bank from Moscow to Budapest, negotiating diplomatic immunity for its staff. The former Comecon institution styles itself as a central European development bank, but its tiny capitalisation and the perks it received has left western diplomats and observers scratching their heads.

The bank has been granted extraterritorial legal and tax-free status as well as the right to handle cash without using the international Swift system. Hungary has just raised its share in IIB by putting another €10m into the bank, making it the second-largest shareholder after Russia.

While some of its central European neighbours are trying to reduce their reliance on Russian energy, Hungary is moving in the opposite direction. Foreign minister Peter Szijjarto visited Russia twice in October for talks with Gazprom, the Kremlin-controlled gas exporter and Rosatom, the state-owned nuclear power monopoly. Hungary's imports from Gazprom in the first nine-and-a-half months of this year were 17 per cent higher than their imports for the whole of 2018.

“Hungary needs Russian energy, but this government is increasing energy dependence on Russia instead of decreasing it,” said Peter Kreko, of the Budapest-based Political Capital think-tank.

Gazprom is in negotiations with Bulgaria and Serbia to construct a pipeline that would carry gas from Turkey along the new TurkStream pipeline under the Black Sea to Europe, a move that would make Hungary a major transit country and could vastly increase the amount of Russian gas handled by Budapest.

Mr Orban and Mr Putin are likely to discuss plans for a Russia-built nuclear power plant at Paks, central Hungary. In 2014 Budapest gave Rosatom a contract to build the plant, in return for a €10bn credit line from the Russian state that is equivalent to about 7 per cent of Hungary’s gross domestic product. There was no tender and critics say the terms are unfavourable to Budapest, because the contracts for fuel supply, spare parts and repairs were all given to the Russians.

The project has been beset with delays and opponents argue that despite the money sunk into the project, it should be dropped because of the high cost of electricity the plant will produce.

During a recent trip to Moscow, Mr Szijjarto said Mr Putin’s visit was evidence that Hungary “can find a common voice in all countries with global political and economic developments . . . and that we can establish effective co-operation based on mutual respect”.

Mr Orban visited Saint Petersburg for his summer holidays twice in a row, meeting Mr Putin in 2018 but Andras Racz, who researches Hungary-Russia ties at the German Council on Foreign Relations said that though the ties were increasing, the mutual interest is not based on friendship.

“Hungary is first and foremost a Nato country. Any kind of friendly relations with a Nato country are unimaginable. It is an interest-based partnership with a lot of lack of trust on both sides . . . But for Russia, through Hungary it is possible to influence both EU and Nato, and this is what matters.”