Turning Away from Europe, Hungary Seeks Russian Nuclear Power

Opposition lawmakers criticize the increasing reliance on Russian energy which they see as another move away from Europe.

Russian president Vladimir Putin welcomes Prime Minister Viktor Orbán of Hungary in Moscow, January 14
Russian president Vladimir Putin welcomes Prime Minister Viktor Orbán of Hungary in Moscow, January 14 (Presidential Press and Information Office)

Mere weeks after Russia threw Ukraine a $15 billion lifeline to help its former satellite state shore up its finances, the country negotiated a $13.7 billion loan to Hungary to help pay for the construction of a nuclear power plant.

The deal was signed earlier this month by Russian president Vladimir Putin and Hungarian prime minister Viktor Orbán and has been heavily criticized by opposition lawmakers since who see it as a step backward in their country’s integration with Europe.

Hungary already relies on its former Soviet master for most of its oil and natural gas imports. The new nuclear plant should cover about 40 percent of its electricity needs. Russia has pledged to cover up to 80 percent of its construction costs, equivalent to 11.5 percent of Hungary’s annual economic output, with a loan that is due to be repaid over a period of thirty years.

The agreement should allow the government to keep electricity prices down in the long term after Orbán forced energy companies to cut their rates last year — which propped up both consumer confidence and his government’s popularity even if business confidence faded.

According to the European Commission, Hungary’s business environment has “constantly deteriorated” since Orbán was most recently elected in 2010. Tax rates have shifted erratically, with energy and telecommunications companies as well as supermarkets facing sectoral surtaxes, and regulations are subject to sudden changes, hampering business’ ability to plan ahead.

Orbán has not taken the criticisms from Brussels well, where members of the European Parliament have also expressed concerns about his ruling nationalist party’s consolidation of political power. The nuclear deal, and the improvement in Hungarian-Russian relations it implies, comes at a time when Hungary is increasingly looking for allies in the east instead.

Earlier this month, Hungary announced that it would back Serbia’s bid for European Union membership — an Orthodox Christian majority nation that Russia considers to be under its tutelage.

On Tuesday, János Martonyi, the foreign minister, said Hungary would deepen bilateral relations with Kazakhstan, another former Soviet satellite state that is now in Russia’s customs union.

Hungary’s opposition Socialist Party says it will review the nuclear deal if they oust Orbán in elections in April. Polls put the prime minister’s party at 48 percent support, down from 53 percent in the last election but ahead of the Socialists and their allies who are at 37 percent combined.

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