Exactly a year since Vladimir Putin’s visit to Budapest, the Hungarian PM has arrived in Moscow seeking to reinforce nuclear and gas bonds with Russia. With Russian-Hungarian 2015 deals in the spotlight, both sides are hoping to give them a big boost.
Viktor Orban’s visit to Moscow on February 17 falls on the anniversary of the Russian President’s trip to Hungary, adding symbolic value to the meeting. Coming amid a cooling relationship with Europe, it is highly anticipated to push along Russian-Hungarian ties.
According to Ambassador of Hungary to Russia Janos Balla, bilateral economic and trade ties have decreased by almost 50 percent.
“In the past, Russia was the second largest trade partner for us, now it is 13-14. The problem is that the market is lost," Balla told RIA Novosti.
Announcing Orban’s visit, the Kremlin laconically said that on the agenda of the tete-a-tete are the prospects of enhancing cooperation in several key sectors, including trade, technology, energy and culture.
The meeting is, in essence, a continuation of bilateral achievements reached last year.
In 2015, during Putin’s visit, Russia and Hungary inked a number of deals, including agreements on expanding Hungary’s Soviet-built nuclear plant and natural gas transit.
The so-called Paks-2 is an important project for both countries. Initially sealed at the end of 2014, the 12.5 billion euro contract, partly aided by Moscow’s €10 billion ($11.4 billion) loan, would add two new 1,200 megawatt (MW) reactors to the Hungary’s only acting nuclear power plant.
Located on the River Danube, some 100 kilometers away from the capital, four Paks reactors are currently producing up to 50 percent of country’s electricity. However, as things stand, Hungary may lose the bulk of its power within the next 20 years, as the remaining reactors would run out between 2032 and 2037.
Yet, despite the necessity, Paks-2 is one of Orban’s controversial Russia-related projects. It has been challenged in Brussels, with the European Commission launching an in-depth investigation over its suspected non-compliance with EU rules.
“The Commission's role is to ensure that when public funds are used to support companies, this is done in line with EU state aid rules, which aim to preserve competition in the Single Market,” it said in November 2015.
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The second highly essential point of the bilateral cooperation is natural gas supplies and storage.
About 85 percent of Hungary’s gas flows from Russia. Last year, Putin and Orban signed a new gas deal that replaced a 20-year contract that had expired in December 2015.
Under the agreement, Budapest is paying only for the gas it actually consumes, as opposed to the volume it contracts, making it a lucrative offer for the low-demand client.
Although Hungary went along with EU sanctions against Russia, it has been criticizing the decision to isolate Moscow.
“I have made it clear [to Mr. Putin] that Hungary needs Russia,” Mr. Orban told reporters last year.
He then criticized former Polish PM and President of the European Council Donald Tusk for spearheading a European anti-Russia crusade.
“We think that without cooperation with the Russians we cannot achieve our goals,” the Hungarian prime minister said, referring mainly to energy security, jeopardized by the EU sanctions.
In 2014, Orban said Europe “shot itself in the foot” as the sanctions policy pursued by the West “causes more harm to us than to Russia.”