Vladimir Putin’s announcement yesterday about the cancellation of the Southern Stream caught the Hungarian government by surprise. It looks as if Putin neglected to tell his loyal strategic ally that Russia was planning to scrap the project upon which the Orbán government built its foreign and energy policy.
It must have been a bitter pill to swallow, and I am fairly certain that it will not be the last. Because Russia is in trouble. Big trouble. The current economic situation reminds Csaba Káncz of privátbankár.hu of the late Soviet period when in 1985 Saudi Arabia dramatically raised the daily quota from three to eight million barrels and the price of oil dropped from thirty dollars to ten. The same commentator reminded his readers that three-quarters of Russian exports come from oil and that half of the Russian budget depends on oil revenues. The Russian situation today raises the specter of 1998, when the country defaulted on its domestic debt and declared a moratorium on payment to foreign creditors.
Indeed, Russian economic prospects are grim. Since the beginning of the year the ruble has lost 60% of its value. Inflation is at 9%. Official figures for economic growth are revised practically monthly, and it looks as if Russia is heading toward recession. Apparently Rosneft, the giant Russian oil company, had to sell 20% of its shares to keep the 2015 budget in balance, at least for a while. The Russian people are already feeling the pinch. Real wages may drop by 4%.
Even Válasz woke up and in a short article listed five signs that “Russia is in trouble.” The drastic devaluation of the ruble, oil prices, inflation, recession, and the flight of capital are the telling signs. Válasz points out that $120 billion in foreign capital has left Russia recently. Only Magyar Nemzet tried the old journalistic trick of publishing an article about a Bulgarian politician who thinks that “Russia’s decision … is only a tactical move.”
Otherwise, the Hungarian media uniformly interprets the cancellation of the Southern Stream as an indication that Viktor Orbán’s Eastern Opening has failed. Hungary’s foreign policy, if you can call it that, is in tatters. How could it happen that the Hungarian administration put its blind faith in Putin’s Russia when for months it has been quite obvious that the Russian economy is in trouble? In fact, it was in trouble even before the western sanctions were imposed. Not only foreign analysts found the Russian situation worrisome but Zoltán S. Biró, a Hungarian expert on Russian history and politics, talked about the possibility that the Southern Stream might not materialize. A former Hungarian ambassador to Moscow, who is also knowledgeable about Russian affairs, also warned that the project might be scrapped and even ventured to predict that Paks might turn out to be a pipe dream. But these are not the people Viktor Orbán listens to.
Already under Foreign Minister János Martonyi (2010-2014) a large number of old hands in the foreign ministry were fired because they were deemed to be too closely associated with the socialist-liberal governments. But prior to the move of Tibor Navracsics and Péter Szijjártó to the ministry there were still a few people left who could have given an honest appraisal of the Russian situation. I hear, however, that fear has spread throughout the administration and that the foreign ministry is no exception. People are afraid to give their honest assessment of a situation because they know that “bad news” is not welcome in the prime minister’s office. Moreover, it has been apparent from day one that Viktor Orbán is conducting his foreign policy through Péter Szijjártó, a diplomatic greenhorn. And the “experts” they listen to are the folks at Századvég whose ideas about the world are staggeringly deficient. This is, at least in part, how Viktor Orbán ended up in this mess.
Commentators point out what we always knew: it is not the West that is in decline but Russia that cannot keep up with the rest of developed world. As Index put it, “Suddenly we learned that Russia is not so strong after all.” The drop in the price of oil and the sanctions did the job. It turned out that Russia is just “a huge Venezuela.” Orbán bet on the wrong horse and he lost. This is “a loss of prestige for NER (Nemzeti Együttműködés Rendszere/System of National Cooperation), Orbán’s alleged new political system.”
On Klubrádió Ferenc Gyurcsány also talked about the failure of a foreign policy that relies on an ever-weakening Russia. The Eastern Opening has no future and Orbán should end “the age of adventures,” a reference to the tenth-century Hungarian military incursions into Western Europe that eventually came to a sorry end when Otto I, the Holy Roman Emperor, taught them a lesson near Augsburg in 955. Gyurcsány made another historical allusion when he talked about Hungary ending up being “the last servile retainer” (csatlós) of Russia, comparing today’s situation to 1945 when Hungary stuck with Hitler’s Germany to the bitter end.
What did the administration have to say? Not much. According to Péter Szijjártó, “Russia has the right to make such a decision and Hungary takes note of it.” This terse statement barely hides Hungarian annoyance and disappointment. He added that “the situation is entirely new. We have to look for new sources of energy.” His statement to MTI indicated that the Orbán government hasn’t done anything to look for alternative sources of energy. Everything was hanging on the completion of the Southern Stream by 2017. Today Szijjártó gave an interview to Magyar Nemzet in which he was asked about “the secure position of the Paks project.” His answer to the question was that, as far as he knows, Rosatom has never gone back on its commitments. A rather tricky answer because the real question is whether the Russian government is willing and able to lend ten billion euros to Hungary. If not, Rosatom is out of a job.
Magyar Nemzet tried to elicit a pro-Russian answer from Szijjártó by calling his attention to “the black and white” description of Russian-Ukrainian relations by the secretary-general of NATO, Anders Fogh Rasmussen. According to the pro-Russian and anti-American paper, he described Ukraine as a country that can expect “a wonderful European future” while Russia must be condemned. Well, Szijjartó did not fall into that trap. He again recalled Hungary’s bad experiences with the Soviet Union and promised that “Hungary will give all the necessary assistance to Ukraine to launch the necessary reforms.”
So, this is where we stand at the moment. This new development is clearly a blow to Viktor Orbán’s grandiose plans. The question is whether he learned his lesson or whether he will actually ratchet up his eastern policy, as many commentators predict.