Letter From Budapest

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Many observers perceive the Hungarian government of Prime Minister Viktor Orbán to be a Russian Trojan horse inside the EU and NATO. However, on May 5, Russian President Vladimir Putin openly threatened Hungary, saying it could seriously harm the country’s economic interests if Budapest pulled out of an agreement for the Russian energy company Rosatom to expand Hungary’s Paks nuclear power plant. This declaration indicates that Hungary’s relationship with Russia is much more complex than simply a bond between a serf and his lord.

Hungary is caught in an increasingly unsustainable balancing act between the West and Russia, giving Hungarian foreign policy ambition a score of 2 out of 5. In general, foreign policy has not been a priority for the government in Budapest, with the sole exception of foreign trade. Attracting investment and business opportunities is becoming a key task, while classical diplomacy is being seriously downgraded, in terms of both resources and personnel. Now, the time is coming for Hungary to show its true colors.

Orbán himself might well be a Putinist. He is clearly attracted by authoritarian regimes, as he himself has declared several times, often with surprising openness. According to the recently published memoirs of Eleni Tsakopoulos Kounalakis, a former U.S. ambassador to Hungary, Orbán once told her: “All this talk about democracy is bullshit.”

However, being a Putinist is not the same as being a loyal Putin ally. In fact, Orbán has never been that. Since the beginning of his political career in the late 1980s until 2010, the Hungarian prime minister was one of Russia’s harshest critics throughout Central Europe.

Moreover, since Orbán came to power for the second time in 2010, and despite occasional diplomatic flirting, there has not been a single case in which Budapest would have preferred to follow Russia’s foreign and security policy interests over those of the West. In spite of his harsh criticism of the EU sanctions against Russia, Orbán did not in the end veto any of the measures. Nor did he block or weaken the decisions made at NATO’s September 2014 summit in Wales.

In fact, the Hungarian government has been conducting a kind of multivectorial foreign policy based on maneuvering between the West and Russia. While Orbán is often critical of the EU, he is also well aware of the importance of EU funds in keeping the Hungarian economy afloat. Hence, he has never risked letting his occasional conflicts with Brussels endanger the continuous flow of EU money to Hungary. At the same time, the Orbán government has done its best to be a cooperative, reliable member of NATO to soften the criticism of Budapest coming from Washington.

As for Russia, the Orbán government has always perceived cooperation with Moscow as a project based purely on economic interests, not on any strategic commitment. Hungary’s energy dependency is crucial here: Russia is still a dominant source of Hungarian gas imports, and Hungary’s single Soviet-era nuclear power plant at Paks uses Russian fuel. By strengthening economic ties with Russia, Orbán intended to increase Budapest’s short-term political room for maneuver vis-à-vis Western partners, but without giving up Hungary’s profitable memberships in the EU and NATO.

#Orban has never been a loyal #Putin ally.

 

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The problem is that Moscow has different ideas about its bilateral relations. An imperial state with an imperial perspective of time, Russia focuses more on strategic interests in its ties with Hungary and is even ready to accept short-term losses to achieve its long-term goals. Budapest is important for Moscow not in and of itself but because of Hungary’s memberships in the EU and NATO: Hungary may serve as an entry point for Russia to influence decisionmaking in the two organizations and to weaken their coherence.

Russia, of course, is well aware of the foreign policy intentions of the Orbán government. Hence, by using all of its diplomatic, political, economic, and intelligence-related means, Russia has worked consistently to put Hungary in a situation in which it has to give up maneuvering and start serving Moscow’s interests. Providing support for Hungary’s openly anti-Western, far-right Jobbik party is one of Russia’s tools of influence, as Hungarian analyst Péter Krekó pointed out in a study published in March 2015.

However, the greatest success of this Russian strategy was the agreement to expand the Paks nuclear plant. In December 2013, Russia succeeded in making Hungary sign the contracts formalizing the deal, which financially and technologically ties Budapest to Moscow for decades to come.

In exchange for such a long-term, strategic commitment, the Orbán government received only benefits of a more tactical nature. Besides offering a short-term concession on the price of Hungary’s Russian gas imports, the Paks contracts prescribed that 40 percent of the construction costs would be outsourced to Hungarian subcontractors. Most probably, that will mean oligarchic groups close to the government.

It may therefore be assumed that Budapest’s decision to sign the deal was motivated by personal economic interests that overrode national ones. Another possibility is that the Hungarian foreign policy administration, which has been decimated by political cleansing, was simply unable to properly assess the risks such a commitment would pose.

Yet, the Paks power plant project has become the fork in the road for Orbán’s multivectorial foreign policy. On the one hand, Orbán made a strong commitment to Russia to build two new reactors, signed the contracts, and took the reward. On the other hand, the deal might well contradict EU regulations, as there was no request for tender and the state intends to offer a level of support that exceeds EU rules. It is therefore unlikely that Brussels would approve the proposed construction.

#Russia is becoming less patient with #Hungary.

 

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Hence, the moment is coming when Orbán will finally have to make an either-or choice—something he has long tried to avoid. He cannot risk a serious conflict with Brussels, but he has made too close a commitment to Moscow. Although Orbán is trying to gain some time from Moscow, Russia is becoming less and less patient, as indicated by Putin’s recent threat.

The Kremlin is therefore likely to keep up its strategy of trying to permanently link Hungary to its own camp, with the aim of weakening the EU and NATO from the inside. And if pressure needs to be used, Moscow is rarely reluctant to do so.

Before the crisis in Ukraine, Western partners might have perceived Orbán’s misguided multivectorial approach as tricky games of altogether minor significance. Now, however, Budapest’s overly close relationship to Moscow poses a strategic risk not only to Hungary’s national interests but also to the country’s EU and NATO partners. Hungary urgently needs to rebalance its foreign policy.

Botond Feledy is a foreign policy expert and founder of the Hungarian foreign policy news portal Kitekintő.

András Rácz is a senior research fellow at the Finnish Institute of International Affairs.