Infringement procedure against Hungary on account of the Paks nuclear power plant

Well, it’s official. The European Commission called on the Hungarian government to suspend all further projects in connection with the construction of the Paks II nuclear power plant because Budapest hasn’t followed EU rules governing open bidding procedures. Here is the official press release:

Commission opens infringement against HUNGARY for lack of compliance of the Paks nuclear power plant project with EU public procurement rules

The European Commission decided today to launch an infringement procedure against Hungary concerning the implementation of the Paks II nuclear power plant project. Following exchanges of information with the Hungarian authorities and a thorough assessment of the terms of the award, the Commission still has concerns regarding the compatibility of the project with EU public procurement rules. The Hungarian government has directly awarded the construction of two new reactors and the refurbishment of two additional reactors of the Paks II nuclear power plant without a transparent procedure. The Commission considers that the direct award of the Paks II nuclear power plant project does not comply with EU legislation on public procurement (Directives 2004/17/EC and 2004/18/EC). The Directives consolidate the basic principles of the Treaty on the Functioning of the European Union of transparency, non-discrimination, and equal treatment. These principles seek to ensure that all economic operators have fair chances to participate in a call for tender and to win a contract. The European Commission has decided to send a letter of formal notice to Hungary, which constitutes an official request for information and is the first step in an infringement procedure. The Hungarian authorities now have two months to respond to the arguments put forward by the Commission.

As expected, the Orbán government is defiant. János Lázár in his usual fashion expressed his total disgust with Brussels and promised to bring suit against the Commission if necessary. In his harangue against the EU he judiciously avoided talking about the actual case, the lack of an open tender, which is an EU requirement. Instead, he talked about the EU allegedly prohibiting Hungary from signing bilateral commercial agreements with so-called third countries or such country’s citizens. Hungary has “the right to sign agreements with China, the Arab countries, or for that matter with Russia.” But of course, this is not the issue here. After all, as we learned from José Manuel Barroso’s letter addressed to Viktor Orbán, which I published on Hungarian Spectrum today, the contract with Rosatom was considered to be legal as far as EU law was concerned. The way the contract was awarded, however, was another matter. Barroso in his letter made this eminently clear. Barroso did not, as Lázár now claims, “promise his support of the project in principle.” On the contrary, he called attention to the problem of “the rules on public procurement and state aid.” That was a signal of further probes into the legality of the deal.

Nuclear Power Plants in the European Union

Nuclear power plants in the European Union

Lázár is trying to divert the conversation from the real issue–defiance of EU laws that are on the books to ensure fair competition. Instead, he is trying to show that the controversy is the result of the outsize influence of western multinational corporations. After all, he said, Paks II is one of the largest projects underway in Europe. Large amounts of money can be made by being one of the contractors or suppliers. So, according to Lázár, the issue “is not political but commercial.” Well, indirectly it might be commercial, but what the EU is directly complaining about is an illegal process. The Hungarian government transgressed several European laws and directives that are supposed to ensure equal opportunities to all.

János Lázár was right on one point. He bitterly complained about the length of time it took to deliver the infringement procedure. After all, it was about two years ago that the Hungarian government began final negotiations on the Paks II project. Indeed, it is hard to imagine that it would take two years of solid work to come to the conclusion that Hungary was in the wrong when it signed a contract with Rosatom without open competitive bidding. Népszabadság noted that despite all his blustering, Lázár said nothing about Hungary’s total unwillingness to repeat the bidding process, this time with multiple applicants.

Attila Aszódi, the government commissioner in charge of the project, was asked by many media outlets to comment on the situation. Aszódi is described in his curriculum vitae as an “energy engineer” (energetikai mérnök). Before he was called to head this project he was a full professor at the Institute of Nuclear Technology at the Budapest Engineering University. So, I guess one cannot be terribly surprised that Aszódi is not well versed in legal matters. In his numerous interviews he painted a simplistic picture of the Hungarian position. In his opinion, since the European Union “raised no objections of principle to the agreement from the perspective of article 103,” it means that “the Paks II project itself must be legal.” A huge misunderstanding of the issue.

Meanwhile it turned out that the Hungarian government has spent a fair amount of money already on the project. Moreover, it has drawn on its loan agreement with the Russian government which, if the project comes to a halt, will have to be paid back immediately in one lump sum.

The most amusing news I read in the Hungarian media today was Rosatom’s reaction to the EU suspension of the Paks II project. The mammoth Russian firm announced that “Rosatom follows the dialogue [between EU and the Hungarian government] and fully shares the opinion of János Lázár concerning the legality of the project.” What a surprise.

The Hungarian government is desperately trying to find an effective way to make the problem disappear. One point they emphasize over and over is that no nuclear plant anywhere inside the European Union was built after an open bidding process. So far I have not heard any reporter who could prove or disprove this assertion. It would certainly be a worthwhile undertaking to find out whether the statement is true or not. And if true, what makes the Hungarian case different.

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ambator
Member

Of course, Lazar’s assertion that nowhere in Europe was nuclear plant built with open bidding is a lie, based either on wickedness, or ignorance.
If only one case is enough to prove him wrong, then I offer the case of the Romanian reactors in Cernavoda that was built after a bidding race and won by the AECL, a Canadian company that started up the reactors in 1996.

ambator
Member

Adding to my own comment:

Yeah, could Lazar say, but that was before we were members of the Union. That is true, but since a second reactor was built on the same basis and the same place, by the same company, in 2007.

Reality Check
Guest

What about Finland? (EU Member 1995)

“Following the submission of tenders by three vendors, in October 2003, TVO announced that Framatome ANP’s 1600 MWe European Pressurized Water Reactor (EPR) was the preferred reactor on the basis of operating cost. Siemens was contracted to provide the turbines and generators. TVO signed a €3.2 billion turnkey contract with Areva and Siemens for an EPR unit in December 2003, with commercial operation expected in mid-2009. Meanwhile bids to TVO from its various owners for shares of the 1600 MWe expected net output totalled 2000 MWe.”

http://www.world-nuclear.org/info/Country-Profiles/Countries-A-F/Finland/

Do other EU members have to deal with restrictions on their nuclear programs or are Finland and Hungary singled out?

“Under duress, as a precondition for Slovak entry into the European Union (EU) in 2004, the Slovak government committed to closing the Bohunice V1 units 1 and 2 due to perceived safety deficiencies in that early model reactor. The original date specified for closing them down was 2000, though subsequently 2006 and 2008 were agreed in relation to EU accessing.”

http://www.world-nuclear.org/info/Country-Profiles/Countries-O-S/Slovakia/

bimbi
Guest

Open, transparent, competitive bidding process? C’mon, EU, you ought to know by now. That is not the Hungarian way. Secrecy in awarding contracts is so normal here that it has become a Hungaricum. How did Mr. Laborcz get to be the Luminary of lighting, Mr. Meszaros the Monarch of mangalicas, Mr. Rogan the Ruler of rent-to-buy and Mr. Simicska the Sovereign of engineering work anywhere? They all buy into the Hungaricum of lack of openness in bidding. Mr. Lazar (“What’s wrong with being rich?”) can bluster all he wants, but maybe the EU has got Viktor by the short and curlys now. High time.

Wei
Guest

I’m not a legal expert but if it’s a private project (let’s say EDF-owned Uk entity preparing for Hinkley Point in the UK), then there may be no need for a proper public procurement process at all. It’s not a public project then.

The Hungarian project however is absolutely a state-sponsored, financed, owned one.

zink
Guest

Plus there have been few relatively recent projects within the EU – most operating nuclear power plants predate the current EU public procurement directives.

benedikt
Guest

Just to make it crystal clear.

“The government doesn’t count with the eventuality that Paks 2 would have to be halted”. So said Bence Tuzson state secretary for communication (himself an attorney) at the Prime Minister’s office.

It’s the usual tweaking with the Commission. A bit of a show, but all will be settled. If not then Hungary will fiercely litigate. Meanwhile the project is on – of course.

http://nol.hu/gazdasag/tuzson-bence-a-kormany-nem-all-le-pakssal-1576001

Guest

@benedikt (November 20, 2015 at 5:05 am)

“It’s the usual tweaking with the Commission. A bit of a show, but all will be settled.”

Don’t be so sure about that. We have got a new Commission.

Bloom
Guest
Guest

@Bloom (November 20, 2015 at 7:21 am)

“Hungary will never surrender to the EU.”

To state it more precisely and evade the value loaded word “surrender”: Orban will never obey the rules that Hungary has committed itself to by joining the EU.

Well, we will see when he is facing the choice between obeying or loosing the money.

Bloom
Guest

@Jean P

You are right. Orban will never obey the rules that Hungary has committed itself to by joining the EU.

But why would Orban have to? Who obeys those rules anyway? The EU is a joke.

Orban is sleeping like a baby. He certainly doesn’t have to worry about the EU in connection with Paks.

These issues are always political and Orban and Janos Lazar know how win in political games with divided, bored-out-of-their-minds latte-sipping bureaucrats, who don’t even know where Hungary is let alone care about a Hungarian nuclear plant.

Guest

@Bloom (November 20, 2015 at 11:20 am)

” Who obeys those rules anyway? The EU is a joke.”

Not a single member country obeys all the rules. Not even Germany. However, most countries do their best, because they realise that the EU presents the only hope for a peaceful and prosperous Europe without nationalistic strife. Such ideas are alien to Orban. He is actively working on demolishing the EU. The present situation in Europe is a joke compared to what will happen if Orban and those he tempt will prevail in their destructive fury.

Xinji
Guest

Exactly. But Orban is a Russian agent and the Russians are the best when it comes to sabotage. They are pretty good at selecting their assets. If they think Orban is capable of demolishing the EU from within then believe me he is.

It is an unquestioned goal of the present Russian military-security elite (and thus this wouldn’t change even if Putin suddenly left politics which he won’t do of course) that the EU and the NATO must be destroyed. Nothing less is acceptable.

Orban is only one of Russia’s agents in this game.

Never underestimate the Russian security establishment. They are real pros and with long term vision.

Margot
Guest

Hungarian Spectrum was mentioned again in the morning news of ATV. They were talking about the disappeared Barosso letter and told that it was available on Hungarian Spectrum!

Istvan
Guest
While the Hungarian opposition is cheering on the EU for its order for the Paks project to stop, Orban is emerging victorious on his position on border controls within the EU. France is proposing numerous changes to current EU regulations see http://gu.com/p/4eb63/sbl the evolution here in a direction that Orban has advocated for is more than obvious. Mr Hollande speaking before the French Parliament also called for ‘coordinated and systematic checks’ on people passing between EU countries in what would amount to the suspension of free movement rules. The EU in relationship to Hungary can be viewed either as the glass half empty or half full at any one moment. The opposition can say to Fidesz in relationship to Paks we told you so and Fidesz can also tell the opposition in relationship to the refugee/border control issue we told you so. Probably the most disturbing evidence of the psychological dependency of the Hungarian opposition to Orban on the various machinations of the EU and its dominate nation states are the innumerable appeals being made by the opposition to various EU bodies and commissions over basically the illiberal evolution of Hungary. Only Hungarians can stop this evolution, neither the EU… Read more »
exTor
Guest

videos

I am currently downloading an interview of Éva Balogh recently made by Robert Field. The interview exists on Budapest Beacon’s Vimeo videosite.

That videosite has 86 uploaded videos from which to choose. Some videos have separate Hungarian versions. As with most Vimeo videos, the quality is high-def [HD] and the vids are large-size: 720 or 1080 pixels [height].

Give the Budapest Beacon webpage a looksee. You will find many videos that have been referenced in Hungarian Spectrum articles.

MAGYARKOZÓ

exTor
Guest

videos

Apology to Richard Field for the elementary mistake of misnaming him Robert. At least I didn’t add an ess to Field, which I almost did the first time I used his name.

I’ve repeated the link to the Budapest Beacon videos. Dont know why the link didn’t materialize here. It gave every indication that it would. For the record, I had used https://, which is unusual for a regular URL. Usually only high-security links [eg: for financial transactions] add the ‘s’ to http://. I already checked; this link will connect to the ‘advertised’ link.

With respect to English subtitling, where would it be needed? There is plenty of English-language videos for most people. BTW, Richard Field looks so different in the videos compared to some photos I’ve seen of him.

MAGYARKOZÓ

Guest

If the EU is finally acknowledging and taking steps to deal with Fidesz/Orbán corruption as regards the Paks scandal, can we also count on it to investigate procurement process for the ubiquitous and endless roadworks throughout Budapest and Hungary?

Everywhere and every day, suddenly a new bit of road is being feverishly dug up. And while many roads remain almost undrivable, without transparency about the contracts we do not know if all of it is necessary, or most of it a sham and the profits from the contracts and no doubt overpriced materials, going into the greedy and capacious pockets of Orbán and Co., Private [very] Limited Company?

Member
petofi
Guest

@Some1

shul & congregation helps mosque

I’m not surprised but neither am I proud. It would’ve been better left unreported. Charity should never be advertised. I hasten to add that the reverse has never been seen in the past…nor will it in the future.

I’m put in mind Bibbi’s take on what would happen in the Middle East if both the Palestinians and jews would lay down their arms–to whit, ‘if the palestinians disarmed, there would be peace; if the jews disarmed, they’d be pushed into the sea’.

Let me add that I know of no displaced group in history that has persisted on staying on the borders of their homeland for 67 years. Were it not for the billions being sent to the Palestinians (of which their leaders skim 25%) then the people would’ve dispersed a long time ago.

exTor
Guest
Interesting development. I think that it was petofi who said that many Fidesz supporters now feel compelled to write in support of Paks 2. That mention by petofi occurred before we were spated yesterday and today. So, we have a bunch of newbies mostly with regular names [eg: Huszár Géza, Erzsi Csabai, Pusztai Zoltán] who have written defending both Orbán and Paks 2. It is unusual for Hungarian Spectrum correspondents to use their names. These newbies with regular-sounding names, which are likely false, try to add gravitas to their words by attaching their opinions to links that portray them as John Q Publics [János Q Közösségiek]. I find it odd that all these newbies just now have materialized around this one issue [Paks 2]. The subscriber count has not noticeably increased, which makes me believe these newby names are mostly (if not all) fake and that multiple names are using single email addresses. Hungarian Spectrum is an antiOrbán site, yet these Orbánistas have not said anything earlier about their dream angel. If they have, I’ve missed it. Inquiring minds want to know, are these people true believers, meaning that they are voicing their opinions of their own volition for no… Read more »
webber
Guest

Paks is a priority for both the Hungarian and Russian governments.

I somehow don’t believe the Russian government is stupid enough to have its troll army work “for” Paks in this manner. That government has some basic understanding of international affairs, and knows that such comments mean nothing. EU bodies won’t be swayed one way or another by readers comments. Russian trolls are out there to sway public opinion. This is one issue in which public opinion doesn’t matter.

The Hungarian government, however, is about as incompetent as it is possible to be in foreign affairs.

Moreover, some of those who love Orban worship his power, and believe that he and his clever lads can and will do anything they set their minds to. These people like to tell others that the Geniuses of the Carpathian Basin will do whatever they like. For some reason such people think saying Orban and Lazar will just do whatever they want is in some way clever. When they say it, they often intersperse their comments with “you don’t understand” (like it’s so hard to understand!).

Subba
Guest
Also, the issue is that Jobbik is totally behind Paks too. In fact most of the political elite is behind it. There’s just no better way to titillate the fantasy of politicians then to raise the prospect of a giant project. Fantasy and hope are great motivators. What’s really strange to me is why it’s such a top priority for both Orban and Putin? Do they feel that as we go along the business case of renewables and energy storage gets more obvious and thus concurrently that of the utter uselessness of Paks 2? Why is Orban so passionate about Paks 2? It’s difficult to see any benign reason, especially as almost all funds to renewables and energy savings were cut off. As someone wrote here the other day, Orban actually confessed to Simicska (I also heard it from a source who is close to one of the two) in 2014 that he, Orban was reorienting Hungary, executing a pivot to Russia. Why would he do that? Is he totally insane or so hopelessly corrupt? In any case, I’m sure Orban and Putin will not give Paks 2 up and both will pull all the strings in order to keep… Read more »
petofi
Guest

@Subba

“I don’t get it.”

It takes only a minor reorientation to understand it all.
Orban is a Putin agent. Putin is using Hungary–by prying it out of the EU–to weaken, and hopefully break, the union. Paks is payoff city for the corrupt Fidesznik weasels who attend the parliament, and clap on cue like seals at waterworld. Everyone of the Fidesznik lemmings knows who plays the melody, and who the harmony. But for them they care not as long as the money keeps rolling in. The low level of morality in the culture in general works to grease the whole structure.

Istvan
Guest

PM Viktor Orban was on Kossuth radio and spoke about the EU and Paks basically saying what many posters have predicted – “megyünk tovább előre” we’ll go ahead. There is a good summary in the Beacon of his interview in English see http://budapestbeacon.com/public-policy/orban-cheap-energy-equals-paks-immigration-equals-terrorism/29451 I would also like to thank Benjamin Novak for getting this summary up so quickly, because when I was listening to Orban I thought I heard him say something to the effect – all the migrants need to be sent back to Greece because that was their point of entry to the EU.

I assumed he didn’t say that and I misunderstood him, but the Beacon confirmed that I did not hear wrong! Now that is real statesmanship, send 900,000 or so refugees to bankrupt Greece. Really unbelievable, Orban will say anything that pops up into his brain.

Member

@Istvan “Orban will say anything that pops up into his brain.” What brain?

Miklos
Guest

The USA and the EU will never accept that the job of Paks was given to Russia, and not To Siemens or Bechtel.

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