Euratom, the European Commission, and Paks

Last night an article appeared in The Financial Times, written by Andrew Byrne in Budapest and Christian Oliver in Brussels. The reporters had heard earlier that the European Atomic Energy Community or Euratom, which must approve all nuclear supply contracts signed by EU member states, had serious reservations about the contract signed by Russia and Hungary and would most likely withhold approval of the plant’s fuel supply. By yesterday they learned that Euratom had definitely “refused to approve Hungary’s plans to import nuclear fuel exclusively from Russia.” Hungary appealed the decision without success and, according to “three people close to the talks, the European Commission has now thrown its weight behind Euratom’s rejection of the contract.” In brief, that part of the contract that gave Rosatom the exclusive right to supply Paks2 with nuclear fuel for the next twenty years must be renegotiated. As a result, for the time being at least, the Paks project is stalled.

András Giró-Szász, one of the many government spokesmen, argued that the information obtained by The Financial Times was inaccurate. He especially objected to the sentence in the article that read: “The EU has blocked Hungary’s €12bn nuclear deal with Russia.” Nobody “blocked” anything. Initially the Hungarian government talked about demanding a retraction from the newspaper. By the next morning, however, Zoltán Kovács, another government spin doctor, gave up on the idea, especially since The Financial Times had no intention of changing a story that had been verified by three independent sources.

The Hungarian charge might have been based on an erroneous translation of the verb “to block.” Although one of the word’s meanings is “to stop,” it can also mean “to obstruct” or “to impede.” In the latter sense The Financial Times correctly described the situation that developed as a result of Euratom’s decision, sanctioned by the European Commission. As the FT text continued, “The result is to block the whole Paks II expansion. To revive it, Hungary would need to negotiate a new fuel contract or pursue legal action against the commission.” So, the deal is not dead but it must be renegotiated. I might add that in Hungarian “blokkolni” (to block) means only to stop.

Another reason for the confusion, in addition to semantics, is Hungarian secretiveness. 444.hu learned that the Hungarian government insisted on secrecy in its negotiations with Euratom. Therefore, neither the head of Euratom nor the European Commission can say anything about the details of the situation that developed in connection with the Russian contract.

euratom

Since the Hungarian government has already lost its battle with Euratom and the Commission, the matter of the nuclear fuel supply must be renegotiated with Rosatom. János Lázár, in an interview on Kossuth Rádió this morning, referred to extensive discussions with “the members of the Russian negotiating team.” There has been some talk about getting nuclear fuel from other suppliers. Westinghouse has been mentioned several times as a possible source, even by János Lázár himself. However, Benedek Jávor, Hungarian MEP of the Greens, got in touch with Westinghouse and the firm denied in writing that there have been any talks between them and the Hungarian government.

What can the Hungarian government do under the circumstances? It could abandon the whole project. The Russians might be quite happy with such a decision since the Russian economy is in serious trouble and the Russian state might not have the resources to lend such a large sum to Hungary even if the project would be beneficial to Rosatom.

The other possibility is to renegotiate the deal and to convince Russia to allow other suppliers to participate in selling nuclear fuel to Paks2. But that might not be too attractive to the Russian partners. The revenues Rosatom receives from selling fuel to nuclear power plants all over the world are an important contributor to the Russian economy, especially now that the price of natural gas and oil is falling. The Russian government might be willing to finance, through its loan to Hungary, a Russian company, but it doesn’t sound like good business from the Russian point of view to finance nuclear rods supplied by, let’s say, Westinghouse or Siemens. Or at least this is what Miklós Hegedűs, an economist specializing in energy matters, said in an interview on HírTV this morning. Finally, the Hungarians can fight the decision of Euratom and the European Commission. Such a move would delay the completion of the project, probably for years. I myself don’t think that Viktor Orbán would venture into such a losing battle.

What we must also keep in mind is that the question of the nuclear fuel supply is not the only one that the European Commission is interested in. Another concern is the Russian loan itself. Is it a form of “state aid,” which is forbidden by EU law? Will it give Paks2 an undue advantage that will distort the Hungarian energy market? If the European Commission decides that this the case, the whole project will have to be scrapped. Still another concern is that the Russians received the job of expanding the nuclear power plant without any competition whatsoever. If the Commission finds the lack of competition a stumbling block, the fate of the project will be sealed.

At the moment, the appropriate cabinets of the European Commission are investigating whether an in-depth investigation of these aspects of the Russian-Hungarian agreement is warranted. Their decision will undoubtedly be influenced by political considerations. How much does the EU worry about Russian influence within the European Union and the role Hungary might play in Vladimir Putin’s power game? If they consider Russia a serious threat to European security, the Commission might be less understanding and forgiving than it has been in the past five years. Until now Viktor Orbán has been lucky, but it is possible that the Brussels bureaucrats will scrutinize Hungary’s blatant disregard of EU laws and its common democratic values more closely now, given Russia’s perceived threat to Europe.

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buddy
Guest

“the Hungarian government insisted on secrecy in its negotiations with Euratom”

I think you meant to write “Rosatom” here, no?

Gerald
Guest

Growing scandals.
Iran bought nuclear technology and hardware from North Korea, Russia, Ukraine.
The Russian nuclear power in Hungary is another deal to provoke and weaken the West.
The White House is not stopping these deals.
It is a virtual an ally of Iran.
A minority of the American voters has been totally fooled.
Wake up calls do not matter to them.

Webber
Guest

Gerald – Regardless of what Fox News suggests, the United States does not and can not control the entire world. Independent countries can make deals with one another without the approval or even knowledge of the White House. Presidents, including the current one, understand this. It’s a rather basic part of national sovereignty.
I agree with you on this: a minority of the American voters has been totally fooled into thinking the White House should and can control everything.

Gerald
Guest

But an Iranian leader maffia can terrorize the whole world?

We all have to condemn the crooks and the incompetent Obamas of the world.

googly
Guest

Obama is incompetent because he didn’t stop Iran from buying nuclear material from Russia and North Korea? What was he supposed to do, start wars with nuclear powers to stop them from selling the material to Iran? I detect an anti-Obama bias here, especially since his predecessors actually sold spare military parts to Iran, in secret and against the law.

By the way, Iran is not terrorising the whole world, just Israel, the US, Syria, Iraq, Yemen, and a few other countries in the region. Obviously it isn’t terrorising Russia, otherwise the Russian government wouldn’t have sold it nuclear material (if that really happened, I can’t say one way or the other).

RZ
Guest
” In brief, that part of the contract that gave Rosatom the exclusive right to supply Paks2 with nuclear fuel for the next twenty years must be renegotiated. As a result, for the time being at least, the Paks project is stalled.” False information. The contract to build Paks was already voted on and entered into law long ago. The supply contract is a completely separate contract which was signed last December. There is no “exclusive right” to supply anything. This separate contract is simply a twenty year supply deal for fuel in which the Russian side gave a huge discount because of the larger volume (20 years). What is really at play here is that instead of the cheap, hugely discounted Rosatom fuel, the EU wants to get Hungary to use at least in part expensive Westinghouse fuel. This was most likely a simple corruption case organized by Westinghouse or another company who wants this business. .”Finally, the Hungarians can fight the decision of Euratom and the European Commission. Such a move would delay the completion of the project, probably for years. I myself don’t think that Viktor Orbán would venture into such a losing battle.” Once again completely… Read more »
Lutra lutra
Guest

I have no idea where you get your information but even Russia Today wrote that the planned design would only work safely with Russian-made fuel rods. Not being an expert I have no idea if Siemens, Westinghouse or Walmart own-label rods use different fittings (like mobile phone chargers, until recently) but it’s clear that alternative sourcing was never part of the plan.
What we also don’t know (because of the confidentiality lock-down) is whether the Russians are using cross-subsidy in their contract deals to lock out competitors – loading the costs into the construction phase while offering fuel at break-even rates, for example.
I think we can agree that the implications of this are not fully known, but I’m convinced that the Fidesz “bish, bash, bosh” approach to modifying contentious legislation isn’t going to work with something as complex as Paks II

Doc
Guest

Westinghouse supplied rods to a Ukrainian plant (same Russian design as in Hungary) and it didn’t go well due to technical issues, I think same with a Czech plant. The projects were thus suspended and still use Russia fuel. Essentially only the Russians can supply their own plants. It’s actually pretty logical from their point of view. It’s a bit like Canon or Minolta saying they only keep their warranty effective if you continue to buy ink and paper from them (on which they make the money and not on the copy machines themselves) because other paper or ink “do not fit properly” in their machines. Only in the Russian plant other rods don’t really fit. Why would the Russians let their competitors into their own territory? They can solve this via arranging the necessary technical specificntions which Westinghouse or Japanese cannot comply with. It’s pretty easy, in Russian plant Russian rods will be supplied. They can play tenders and competitions or whatnot, but the fuel will eventually be Russian.

LwiiH
Guest

Since this deal is secret we don’t really know anything do we. What I take from this report is that a reporter got lucky in that someone leaked information to him that should be in the public domain anyways. That this government has decided once again on an opaque, antidemoctratic step of hiding this information makes the whole deal smell. I thin Eva is bringing generous when she attributes the spin to a mistranslation. These guys knew very well what was said and they were just up to their brutish intimidation tactics which has rarely worked when being used against the western press.

This whole deal walks like a rat, squeaks like a rat and smells like a rat….

spectator
Guest

You may want to check your facts again!

Having no relevance of the fuel used in the end product at design state is just about so much true than in case of a car design. You have to know, what fuel your car going to use, do you? The same here.
The unit has to be designed minutely to the exact parameters of the fuel cell to have the optimal and safe working conditions of the reactor.
The ro have to have the designed level of purity, for example, – it isn’t the case to add a twist more lemon to your Margaritas, you see!

However, for your efforts here you qualified to receive an Orbán figurine, made of indestructible “ever-glow” material, with “PAKS II FOREVER” engraved inscription.
It’s a great thing, because the second price would be only the “glow in the dark” version, with “PAKS II FOREVER IN DEBT” inscription only.
The third price winners may glow all by themselves, and they have to wait for their price awhile longer.

Member

@RZ

Finland is contracting Rosatom for fuel suply.

False information. NNS Ltd is involved in that matter.

Doc
Guest

The Finnish case is entirely different. There was a real tender and without Russian state loans the project seems profitable and legitimate. Russia won in an open tender with the best offer.

In Hungary there was no open tender whatsoever (the deal was just awarded to Moscow), the business viability is highly questionable (but anyway kept secret by the Hungarian government) and it is done via indebting Hungary to Russia (which considers NATO and EU as enemies). Not good. And not good for the EU.

Member

Hungary will lock its energy with Russia, a trading and political partner with questionable ethics, and if and when the more informed, brighter, more ethical, and less corrupt Hungarian government changes its mind, it will be too late. When those mini-Chernobils will be built for billions there will be no way to operate them without getting the supply from Russia.
The Hungarian government, with reliable and trustworthy Orban (do not listen what I say) at its helm did not even do a coin toss, simply went with Russia for a reason Orban and his inner circle only understand and know. If the above is not a concern for the likes of RZ and other Hungarians, Hungary have even a bigger problem then we ever imagined!
Let’s put it this way if your life would depend on to sign some contract with Russia, England, China, Canada, North Korea or the USA, who would you believe they would (could) keep its word for the long run? (You can pick two!)

tappanch
Guest

2015 version of “Gloomy Sunday” protesting the forced closing of the stores on Sunday.

“Szomorú vasárnap nem mész a plázába,
templomba terelne lázárok lázálma:
szenvedjél te is, ha más érted szenvedett,
közben meg emlegesd sűrűn a szenteket.
Szent István óta lett ez a nap vásárnap.
Ma zárnap. – Tünete agybéli válságnak.
Szomorú vasárnap!

Szomorú vasárnap, napja a haragnak:
harapnak reád fent fogai Harrachnak.
Jaj, mit is tett veled kőbányák Orbánja?
Jön-e már új idő, bűnét mi-kor bánja?
Ezen a napon is jól megy a csalárdnak.
Nem fél, hogy becsukják: tagja a családnak…
Szomorú vasárnap!”

Guest

@tappanch Please include the suicide statistics from now on.

tappanch
Guest
Webber
Guest

It’s a great t.v. series. Disturbingly, I’ve now met two Hungarians who are convinced that it is an accurate record of American politics with names and certain details changed to protect the producers from politicians’ and gangsters’ wrath.

petofi
Guest

I don’t know why everyone is moaning so. The norms of a society are its character; and as the saying goes, “CHARACTER IS DESTINY”.

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