Viktor Orbán picks another fight with the West, this time over the Southern Stream

I know that everybody is intensely interested in the Hungarian government’s latest brainstorm, the introduction of an internet tax, but I would rather wait with an analysis of this latest scandal until it becomes clear what the fate of the proposal will be. So far the reaction to this new tax has been so vehement that the government most likely will have to retreat. When an article in the right-wing Válasz predicts that “if we had an election today Fidesz would lose big,” I think it’s time to order a quick turnabout. I would like to add just one observation on a related topic: the Hungarian budget must be in a sorry state if an additional tax must be levied on soap and detergent, allegedly because they are harmful to the environment. Let’s not contemplate the detrimental effect of curtailing the use of soap because this would take us too far afield.

So, instead of dealing with the effects of an internet tax, I will look at other recent governmental decisions that have been detrimental to Hungary’s relations with the United States and the European Union. What I have in mind is Viktor Orbán’s flirtation with Putin’s Russia, which is being watched with growing concern in Washington and Brussels. Already there have been a couple of moves indicating close cooperation with Russia that raised eyebrows in the democratic world: the building of a nuclear power plant by a Russian firm on Russian money, Hungary’s refusal to support the common European position on the Russian sanctions, a tête-à-tête between Gazprom and the Hungarian prime minister followed by the Hungarian decision to stop supplying gas to Ukraine, and the government’s decision to let Gazprom use Hungarian facilities to store gas in case Russia cuts off the flow of gas through Ukraine.

These moves worried and irritated the United States and the European Union, only compounding their concerns about all the transgressions of the rules of democracy committed by the Fidesz government against the Hungarian people. Years have gone by; at last western politicians are slowly, ever so slowly deciding that they have had enough. After Norway it was the United States that openly showed its dissatisfaction with the domestic and foreign policies of the Orbán government. Yet, as the last few days have demonstrated, Viktor Orbán is not changing tactics. On the contrary, as I wrote yesterday, he is strengthening ties with countries whose relations with the United States and the European Union are strained. Almost as if Viktor Orbán purposefully wanted to have an open break with Hungary’s western allies.

Yesterday one could still hope that Viktor Orbán would  come to his senses and would at least make some gestures, but as yesterday’s meeting between Péter Szijjártó and Victoria Nuland indicated, the new Hungarian foreign minister was sent to Washington without a Plan B. By today, however, most likely in his absence, the government came out with a new idea. What if the Hungarian office of taxation and customs (NAV) announces that in the last several years they have been diligently pursuing their investigation of those criminal elements who through tax fraud unfairly competed against the American company Bunge? Maybe it will work. Mihály Varga, minister of national economy, announced this morning that four of the culprits are already in jail. Very nice, but there is a fly in the ointment. Most likely the U.S. State Department remembers, as I do, that András Horváth, the whistleblower at NAV, months ago gave a detailed description of the ways in which these criminals operated. He asked NAV to investigate and disclose their findings, but the managers of the tax office first fired Horváth and a couple of days later announced that after an internal investigation found everything in perfect order. So I doubt that the Americans will fall for that bogus story.

Yesterday Portfólió asked “how to make the USA more angry with Hungary,” but they “did not have the faintest idea that the government has been holding the best answer to that and it beats every idea [the Portfólió] have ever had.” So, what is it? In order to understand the situation we have to go back to the controversy over Russia’s new pipeline already under construction–the Southern Stream–that would supply Russian gas to Bulgaria, Serbia, Hungary, Austria, Slovenia, Greece, and Italy. The United States and the European Union were never too happy about the project and now, in the middle of the Russian-Ukrainian crisis, they are especially leery of Putin’s plans. In fact, the European Commission asked the Bulgarians to stop the construction of the pipeline in their country. They obliged. The European Union also warned Serbia that they can forget about future membership in the European Union if they agree to support the project right now.

southern stream

In Hungary construction has not yet begun, but the Orbán government seemed to be afraid that something similar would happen to them what happened to the Bulgarians. They decided to act. Changing the law by now has become a Fidesz pastime. Today Antal Rogán proposed an amendment to a 2008 law on natural gas that will allow any gas company to construct a pipeline. The original law, in harmony with laws of a similar nature in other countries, specified that the company in charge of the construction has to be a certified transmission system operator who must conform to international rules. Since pipelines are transnational projects, the countries involved must coordinate their individual projects. What the Hungarians hope is that as a result of this amendment Hungary will not be bound by any international constraint. Starting the project will depend only on the Hungarian Energy Office, which could give permission to any company it chooses to construct the pipeline. Portfólió suspects that both the European Union and the United States will be “furious” upon hearing this latest Hungarian ruse.

Clever Hungarian lawyers, who seem to specialize in circumventing the letter of the law, might think that this scheme is foolproof, but I suspect that EU lawyers will find the legislation full of holes. Hungarian papers suggest that the Orbán government is playing for time. But the case is settled, they argue; the pipeline will be built. Surely no one will force Hungary to destroy it.

Let’s contemplate another scenario. What if the European Union and the United States in joint action put such pressure on the Hungarian government that the plan must be abandoned? As it is, according to analysts, Budapest is already between a rock and a hard place. When political scientist Gábor Török, who has the annoying habit of sitting on the fence, says that “the Orbán government is in big trouble. It was before but now it is different. It will not fall, surely not now…. But if it does not recognize the fork in the road or if it chooses the wrong road, we will mark the events of today as a definite turning point.” And in an interview this afternoon Ferenc Gyurcsány twice repeated his belief that Hungary is at the verge of leaving the Union and, when it happens, it will not be Viktor Orbán’s choice.

I wouldn’t go that far, but I do predict that the screws will be tightened. Among those who will apply pressure will be Norway since the Hungarian government audit office just came out with its report claiming that Ökotárs, the organization in charge of distributing the Norwegian Civil Funds, has used the money inappropriately. A criminal investigation will be launched.

We know that Barack Obama said that the American government supports NGOs in countries where they are under fire. Today we learned that Veronika Móra, chairman of Ökotárs, was a member of a delegation that visited Washington in late September. During that trip the NGO leaders were received by President Obama in the White House. By contrast, Péter Szijjártó did not get any higher than one of the assistant undersecretaries of the State Department. If I were Viktor Orbán, I would take that as a warning.

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gdfxx
Guest

As I look at the map in this posting, I wonder: if Hungary builds the pipeline but Bulgaria and Serbia accepts the EU request and don’t build their segments, what is that pipeline in Hungary going to transport?

tappanch
Guest

@gdfxx

“what is that pipeline in Hungary going to transport?”

The gas from the Mako trough? 🙂

http://www.falconoilandgas.com/mako-hungary

tappanch
Guest

“In January 2013, Falcon agreed a three-well drilling exploration programme with NIS, owned 56 per cent by the Gazprom Group, to target the Algyö Play. NIS have made a cash payment of US$1.5 million to Falcon and agreed to drill three wells by July 2014.”

Past's Long Shadow
Guest
“I wouldn’t go that far, but I do predict that the screws will be tightened. Among those who will apply pressure will be Norway since the Hungarian government audit office just came out with its report claiming that Ökotárs, the organization in charge of distributing the Norwegian Civil Funds, has used the money inappropriately. A criminal investigation will be launched.” I think you got it wrong about Norway applying pressure. The press dealt with this issue and covered it well. Documents show that Okotars stole at least a 500 000 USD possibly a lot more from the money they were designated to administer. They did this mainly by falsifying expense reports submitted to Norway Switzerland and other places. Okotars claimed every single one of their employees used 50%-100% of total work time on Norway related work and they did the same for the Swiss fund. The fraud could not be detected when a single country is investigating (so the Norwegians could always claim that everything is order), but when the totals added up the fraud is evident. Let’s take the Okotars worker who worked the bare minimums at Okotars. Nobody worked less than this guy. This worker is working 50%… Read more »
An
Guest

@Past’s Long Shadow: Wow, you are very well informed.

Kehi presented some documents about the result of their investigations at Okotars to representatives of the press today. Index was there. They did not see anything convincing.

http://index.hu/belfold/2014/10/22/norveg_ugy_igy_nezett_ki_egy_koncepcios_per_a_tortenelemkonyvben/

petofi
Guest

@Past’s Long Shadow

Wow. This is advanced KGB work.

Hungarian police do not do such intricate detecting or they might have prosecuted the government on about 20 different fronts.

However, creating cases is another matter. I am thinking of the case against the MDF politico who began by accusing a firm of spying on her and ended up having to defend herself. That’s more like what Hungarian police and prosecutors are about…

db
Guest

@gdfxx: I also wonder about the point of building the Hungarian segment of South Stream if Bulgaria and Serbia continue to heed EU pressure. It’s hard not to speculate that Orbán and Putin must have a larger plan in mind. Perhaps Putin thinks that if Hungary defies the EU on this point then it will be easier to strongarm Serbia and Bulgaria into defecting. He may be planning on buying Serbian and Bulgarian co-operation by offering them low gas prices, which would be a hugely attractive deal for such impoverished countries. And/or Putin may think that he can count on Germany to soften the EU’s position. This is just guesswork of course.

Istvan
Guest

An thanks for the link it was obvious from the conclusions of the report of Ernst & Young that no crime had been committed, the auditor’s report revealed errors but concluded:
“The project is technically and economically operating as planned. The operator and its partners are working within the organization designated groups that are financially and administratively also able to perform the tasks assigned to them.”

What is criminal here is how the Fidesz controlled media put together bits and pieces of the audit to try to create the impression of criminality. Ernst and Young should be objecting to how their audit is being used by the Fidesz government as part of a show trial that would make Lavrentiy Pavlovich Beria Stalin’s head of state security and of the secret police apparatus (NKVD) proud.

Elek
Guest

It is time that ordinary Hungarians understand the loss of freedom, and act to recover their freedom.

The future truth tribunals will have a hard to deal with the huge number of cases of people who were involved with the illiberal regime.

Nwo
Guest

Two not related observations.
1. It is still striking that as Norway and now the U.S. Ramps up the pressure on Hungary, the EU remains rather impotent. Hungary is unlikely to get kicked out of the Union, but the Union may continue to push itself into irrelevance on the big issues facing Europe.
2. While the budget issues facing the Govt are enormous and there will be a big risk of losing EU funds in the future, is not this proposed internet tax more about trying to gain control of the industry by forcing the telecom and cable service providers out? That is what makes this idiotic idea truly scary.

tappanch
Guest

@Past’s Long Shadow

“support for criminals, embezzlers, document forgers becomes a lot more problematic and may prove difficult to explain”

Would you explain why only 1 Fidesz MPs (Angyan) defected from Fidesz, out of 200+, for moral reason since 2010?

If you support the Fidesz regime, would you please explain your rationale?

Guest
There is a lot ore going on here than Hungary. Serbia, is very strongly pro-Russian far more so than Hungary and probably doesn’t give a tinker’s damn about membership in the EU at this point. Turkey has been moving in the same direction and also is pissing off the US by attacking the Kurdish forces and providing ISIS with safe havens while they do the same. With the use of a tactical missile once again in Donetsk things in the Donbass are about to begin again except this time Russia will attack in force to defend the ceasefire once it is broken by Ukraine. The voentrag has been re-opened and troops in Russia brought back to ready positions for just this occasion. The Ukrainians have their backs up to the wall and I believe the US will push them to begin the war again rather than the imminent political collapse of Poroshenko’s government. Better to lose a war than have the citizenry rise up in revolt yet again and replace the pro-US government with a Nazi one in it’s place. The events in Ukraine will overshadow the current events in Hungary but this time it will likely also involve a… Read more »
tappanch
Guest

@Amerikai Szkeptikus

1.
Do you think the US and German economies are more “fragile” than the Russian?
This sounds outlandish to me.

2.
In case of a Republican takeover of the Presidency in two years,
Obama’s not-so-splendid isolationist politics will end,
and Orban will be squeezed much stronger.

Marcel Dé (@MarcelD10)
Guest

gdfxx: As I look at the map in this posting, I wonder: if Hungary builds the pipeline but Bulgaria and Serbia accepts the EU request and don’t build their segments, what is that pipeline in Hungary going to transport?

Pálinka and sertészsír. Can be used for heating. Instead of soap, too.

Webber
Guest

@Amerikai szkeptikus> “The events in Ukraine will overshadow the current events in Hungary” Yes, and no. The events in Ukraine and Syria are far more important than what is happening in Hungary, true. But those in the State Dept. tasked with watching Hungary will not be less vigilant because of what is going on elsewhere. I think it’s time for Hungary to leave NATO – or be informed that it will be kicked out if it keeps on with its pro-Russian policies. I hope the Hungarian government is no longer getting sensitive information from NATO. I think plenty of senators on both sides of the aisle would back Hungary’s exclusion. I’m sure my representatives would. Put up, or get out.

trouble
Guest

KGB and their Hungarian pals are getting very active here.

I think it would be time to delete some of their comments, because they are spreading plain lies, in other cases just sowing seeds of doubts and so on, but they are starting to occupy too much space here and gaining too much influence.

Freedom of speech does not mean everybody has the right to publish at the forum of their choosing but that they too may set up a competing forum — this is a right with which both Hungarian and Russian ‘organs’ lived amply.

Berci
Guest
Orban is escalating for three reasons. One is an anchoring tactics in anticipation for a potential future compromise. The results will be much better in that compromise if he properly upped the ante beforehand. This tactics worked splendidly with the EU many times, one can play this game many times with the EU, especially now that the burocrats are so shuffeled that the new ones have no experience in dealing with Hungary. It worked for other dictators too. The second is a simple domestic political reason. He needs the support of his followers and I mean the hard core followers here who anyway ensured his continued reelection. They need to be fired up and they need a coherent narrative of “Western jihad on poor righteous Hungary”. Just yesterday Fidesz’ media for crime reporting and disiniformation in the crime/politics field pestisracok.hu was accusing cink.hu (part of the American gawker.com empire) of being nothing less than a cia outfit. It’s getting crazier by the day. I agree that Orban is deliberately preparing for internal strife as someone called the attention to it yesterday among others with the increase of the salaries by 20-30% (when cost cutting is the order of the day… Read more »
Webber
Guest

@Eva S. Balogh – Given the revelations of the past few weeks, I suspect the Russians realized some time ago that Hungarian f.p. is for sale, and that they’ve been very willing to pay, whatever the price.

Guest

Anyone interested in my point of view of US foreign policy disasters may wish to read what I consider a very reputable source. Flame away as this is not going to make many of you very happy. But, before you start calling me a KGB troll, which I am not, think carefully about US foreign policy and how many countries have actually benefited from American help (not just the rich but the people) in the past 30 years. The US will make noise about Orban but only because he is clearly supporting an avowed enemy of the US and Hungary cannot respond in any meaningful way back against the US other than to serve as an irritant to US foreign policy. By the way, that is one definition of a bully. Anyway, it is well worth reading if you have an open mind. http://cluborlov.blogspot.hu/2014/10/how-to-start-war-and-lose-empire.html

bob
Guest
@Istvan The Ernst and Young report was published years ago, so saying that it proves “that no crime had been committed,” is spectacularly ignorant. Unless they see into the future, a report written in 2011 could not guess what crimes Okotars will commit in 2011-2014. Btw is forging documents a crime in your opinion or is that OK too? Another logical fallacy you seem to believe is that because an investigation did not notice a crime, it must prove that no crime was committed? Maybe Okotars was quite good in forging documents, backdating, producing missing documents as if they were created years ago even when Ernst and Young “investigated” them. And you can use that term loosely because Ernst and Young never took any documents everything they saw, was freely given to them. Hence they only ever saw what Okotars allowed them to. Ernst and Young only investigated the Norway fund documents. The Okotars fraud could never be proven by looking at just those documents only. The fraud becomes plainly evident when all the documents are investigated together, which Ernst and Young never did. Imagine a lawfirm that has 20 clients. This lawfirm says we are working 100% for client… Read more »
ripi-ripi-tyom
Guest

Oh my, Club Orlov. It’s great.

For the uninitiated, It’s a fringe prepper site (ie. Mr. Orlov, an American but born in Russia, is preaching an imminent global collapse) and even other preppers found the more recent ideas of Orlov strangely and uncritically pro-Russian. (I wonder why).

According to Orlov’s own admission he resides on his sailing boat and sails around the caribbean, purportedly because he fears that the US will in any minute degrade into world war Z.

If nothing else this reference reveals that you are a FSB/GRU troll.

HiBoM
Guest

@bob, you clearly have seen and read the report. Has it even been published yet? How come you saw it before the Norwegians or Ökotars?

arkos kovac
Guest

HiBOM:

Bob is lying.

Pure and simple.

He may or may not know what’s in this “report”, but he is here to prepare the minds, to anchor our expectations, the cause dischord.

He is taxpayer-paid (this thought alone makes me wanna puke) member of the security establishment serving the boss of bosses. His superiors don’t let just anybody to play on this site, he is probably a star pupil.

defo
Guest

some spooks are complaining via andras dezso. He received some info from them, now he’s relaying their concerns.

http://index.hu/belfold/2014/10/23/a_kitiltasi_botranyt_a_titkosszolgalatok_is_megsinylik/

HiBoM
Guest

Ordinarily, I get very irritated when regulars here start accusing those with different opinions of being “paid trolls”. It shows how few people believe in pluralism. But in the case of Bob and “Past Long Shadow”, it really does look like someone in the governments communication department has been sent along to stir things up, perhaps because this is an English blog and the Norwegians would naturally check English blogs to find out about Hungary.

bob
Guest
HiBoM: The description of Okotars fraud, document forging and others is widely reported in the press. The involvement of the Norwegians in the forgery is also reported on in the press. Do you know how to use google? Let me copy you a passage here that was published in the news media on October 22, (also known as yesterday). “BEÉPÍTETT KÖVETSÉGI EMBER A lap szerint a norvég nagykövetséggel is rendszeres volt az ökotársasok kommunikációja. Előfordult például, hogy a Demnet vezetője a nagykövetség egyik munkatársával egyeztetett bizonyos dokumentum visszadátumozásáról. Egy nyári levelezés tanúsága szerint azt írta: „Itt az ellenőrzés miatt nagyon kellene már ez. A dátum legyen az első BB (bírálóbizottság) ülés (2013. 05. 09.) előtti egy nappal.” Polgár Tamás, a nagykövetség munkatársa válaszában még visszakérdez, hogy „Mikori legyen a dátum?”, ahogyan érdeklődik arról is, hogy „A biztonság kedvéért legyen-e egy 2013-as is?” This passage describes an employee of the Norwegian embassy asking communicating with a Demnet employee (a partner of Okotars) about how to properly forge a document. And asking whether to create another forged document for “safety” (“biztonság kedvéért legyen-e egy 2013-as is”?) In other words how to create fake documents to “prove” to the investigators that everything was… Read more »
Ruiz
Guest

by the way do we know where Ildiko Vida was heading from Schwechat when she was caught by RTL Klub? Checking her off-shore companies,accounts? I would bet Singapore, rumor has it that it’s the location of choice for many fideszniks, but perhaps somewhere else.

Member

bob

October 23, 2014 at 5:43 am

Interesting comment and “explanation”. What are your sources? Do you know personally any of the ladies working at Ökotars? I do. Yes, they can do mistakes but never premeditated criminal acts as you suggests.

Member

Not even TEK is able to find all bugs. Got some OV conversation files.

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