Hungary is looking for a new source of funding for Paks-2

This morning one of the very first articles I read about Sergey Lavrov’s visit to Budapest, in Népszabadság, had the following headline: “Good Hungarian-Russian relations don’t depend on the extension of Paks.” The Russian foreign minister uttered these words at the joint press conference he and Hungarian Foreign Minister Péter Szijjártó gave after their meeting. My first thought was that something had gone very wrong with Viktor Orbán’s pet project, the extension of the Paks Nuclear Power Plant, to be built by Rosatom and financed by a state-owned Russian bank. The Paks project has been severely criticized by both the Hungarian opposition and the European Commission.

Sergey Lavrov, unlike his Hungarian counterpart, is an exceedingly skilled diplomat who chooses his words carefully. I therefore suspected that something is going on which the Hungarian government had decided not to divulge. This wouldn’t be the first time that we learn from Russian sources details of Russo-Hungarian relations that Budapest decided to keep secret. As the day went by, I became increasingly suspicious because other Russian sources, for example reports on Lavrov’s visit by TASS, the Russian news agency, emphasized the issue of Paks. Rosatom’s contract to build Paks-2, as the project is called, is obviously important to Russia. As Lavrov said, “we consider this project to be a strategic one [and] we are convinced that this project will contribute to strengthening Hungary’s energy security, creation of new jobs, and development of the Hungarian economy in general.” Szijjártó assured the Russians that “the Hungarian side is committed to the implementation of this project in compliance with the plan.”

It was pretty clear even before Lavrov’s arrival that conversations would focus mostly on trade and economic cooperation. In anticipation of his meeting with Lavrov, Szijjártó said that because of the economic sanctions against Russia, trade between the two countries has slowed, and therefore Hungary is seeking direct investment opportunities in Russia. In passing, he also mentioned seeking better relations between Russia and the European Union, which is in Hungary’s interest. According to Russian sources, one of Lavrov’s missions in Hungary was to get Hungarian support in lifting the EU’s economic sanctions against Russia.

Source: TASS / Photo: Alexander Schorbak

Source: TASS / Photo: Alexander Schorbak

Lavrov gave an exclusive interview to Magyar Nemzet in which he expressed his hope that “the Hungarian government, which in the past more than once declared its commitment to the [Paks] project, will be able to give satisfactory answers to Brussels’ questions.” Indeed, János Lázár will make a trip to Brussels in a couple of days to discuss the project once again. He is optimistic that the EU will reach an accommodation with Hungary. He announced that he is expecting “a significant step forward” as a result of his conversation with Margarete Vestager, European Commissioner for Competition, whose main objection is that Rosatom received the job to build Paks-2 without a competitive bidding process.

My suspicion of this morning was strengthened this afternoon when, after days of inexplicable silence on the part of the Hungarian media, Népszabadság reported that a few days ago János Lázár said in parliament, in answer to a question of Bernadett Szél (LMP) regarding the Paks project: “Hungary’s money market’s position has greatly improved lately and therefore Hungary is ready and able in the near future to replace the [Russian] loan with capital obtained on the open financial market. Therefore we might be able to finance the project under more favorable conditions.” How this critical announcement was missed by the Hungarian media is simply beyond me.

Since the Hungarian government argued at the time it signed the loan agreement with Russia that the country couldn’t possibly obtain such a large 30-year loan from private sources, Lázár’s announcement is baffling. Moreover, private banks are disinclined to lend money for nuclear power plants because their construction usually takes twice as long as anticipated and costs twice as much. Therefore, it is unlikely that Hungary would receive such a loan from non-Russian sources, especially for a project built by Rosatom.

What lies behind this change of plans? One possibility is that Vnesheconombank simply doesn’t have enough money to finance such a huge project. Last year the Russian government had to sink 19 billion euros into the bank, which was struggling after financing the Sochi Olympics. The other possibility is that the Hungarian government thinks that getting non-Russian funding would appease Brussels, which then would drop its objection to the project. Benedek Jávor (PM EP), who as a member of a Green party is deeply critical of the Paks project, has an explanation for why the EU rejects Russian funding, which unfortunately is not at all clear from the Népszabadság article. His theory is that the European Commission finds the interest rates stipulated in the Russian contract unacceptable (probably a form of state subsidy). If the project were to be funded by non-Russian private sources, this objection would be eliminated, but the project would cost a great deal more.

If the first version is correct, Russia is reneging on its promise to finance the construction of Paks-2, which was presumably the most advantageous part of the deal Hungary had with Russia. Now, if the project is still on but Hungary has to go to the private market in search of funding, Russia gets what it wants without having to make financial concessions. That is, Rosatom will build Paks-2 and the Russian state won’t have to provide favorable financing. The money for the project will flow from western investors into Rosatom’s coffers. This sounds to me like a win for Russia, a loss for Hungary.

May 25, 2016
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It is simply a crime against the Hungarian people what the Fidesz criminals, masquerading as their government, are doing, forcing down Paks 2 on their throat. The project is simply the largest corruption income for the Fidesz criminals, allowing them to remain in power even after they pull out from the EU within 4-5 years. Paks 2 would cost at least €35.0 billion, enough money to be steal from, for 30 years.
On another note, by the time Paks 2 would go into operation, (if it ever will) green energy will cost less than half what the energy produced by the two new Russian nuclear reactors.
Let’s not think, what will happen, if the project gets started and never gets finished. It can bankrupt Hungary.

Kudos Eva ! Great post. It is emblematic that the media did not get it right away. @Gyula Bognar Spot on. The whole Park project has been hushed from the beginning, classified thereafter by “the most transparent government” (in the fascist category). Why the secrecy? You’ve guessed right – the deal is not so great to boast with, and there are no real supporting studies (which makes the process illegal). The estimated costs reported were like HUF 3 600 billion; add 1 200 for upgrading the backbone grid to carry the energy produced of both old and new blocks for 6-8 years. Since all nuclear power plants in Europe had been completed with min. 100% budget overrun, in the case of Orbanian Hungary with its inefficiency and corruption (see swimming complex Margit Island) we can optimistically approx. HUF 10 000 billion. To put this in prospective: The Government Gross Debt, anointed as “enemy #1” by Orban in 2012, now already stands at HUF 25 000 billion. The Paks 2. project will add a whopping 40% to it, with very serious impact on credit ratings, CDS etc. To crown the financial disaster, if the state owned plant can’t produce profitably, which… Read more »

Totally agree – Orban Laszar bending over backwards to do anything for Russia, in return for materials but more importantly, investment – big media investment – in content aswell as funding … Fidesz came to power on the great EU hope which it now is treating as ‘the enemy’ , whilst still taking large grants and privalages – much the same as Putins politics ‘ the enemy is outside’ — Paks would sink Hungary as the Swiss mortgages have hung round many Hungarian necks for so long.

Steven D. Nelson

This post is a really good summary of recent developments. I would like to point out that last week’s Hungarian Politics podcast featured an in-depth interview with Benedek Jávor about the Paks 2 project. You can download or listen to that here:


That Lavrov’s a cutie, ain’t he?
‘So concerned about Hungary’s energy security, creation of jobs, and the development of the economy…’ Yeah.

Translation: “Russia will have these suckers by the gonads for the next 50 years!
Belarus will feel like a favoured child after they see the shackles we’ll put on these suckers!!”


“the economic sanctions against Russia, trade between the two countries has slowed, and therefore Hungary is seeking direct investment opportunities in Russia. ”

The slowing had one cause really and this is the decrease of energy prices.

The average import price of gas and oil from Russia (which probably makes up more than 90% of imports from Russia) significantly decreased, perhaps halved.

Hungarian exports decreased because of the sanctions and the recession in Russia.

Caprice Goldberg


Just a humble note that there is a small typo in the following sentence:
Lavrov gave an exclusive interview to Magyar Nemzet in which expressed his hope

the pronoun “he” is missing after the “which” .

I have been reading your blog since its very early days, far before it was in fashion, and sincerely appreciate your perseverance and tenacity. Hats off to you.

Paks 2 is sacrosanct. The prime minister made up his mind and he will not abandon the project. Out of the question. As long as Orban breathes Paks 2 will go on. There is no more important political issue for Orban than Paks 2, perhaps with the exception of the Museum-quarter-Castle Hill project. Luckily there is unlimited financial liquidity on the global markets and the interest rate does not matter for Orban. Petty financial issues like interest rates cannot be an obstacle. The political decision is what counts only. I have no doubt that the people at Paks /MVM will succeed in putting together the financing. The banks (from JPMorgan to Raiffeisen) are lining up to arrange such a mandate because they just can’t put their money into good enough projects. They are super-excited. A guarantee from an EU member state is more than enough for many banks so they will finance. (The financing probably cannot take place on a project-finance basis, I agree). Surrender to the EU or the opposition is not an option, I repeat, not an option and Jobbik too is wholeheartedly behind Paks 2, with the Socialists a bit wavering but they will be on board… Read more »

“As long as Orban breathes Paks 2 will go on.”

Then it can be helped, thanks Goodness! I was seriously worried that this madness just keeps on developing and gets real..!


(peanut brain?)

“The banks (from JPMorgan to Raiffeisen) are lining up … They are super-excited.)

Now, this must be really bad news for all ordinary Hungarians, though the fools still cheer their own rape. All mogyorósi ?


Why are you repeating the same old idiocies re invincible O again and again?
Don’t care for reality?
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Jobbik invited diplomats for its political breakfast a few days ago.

Ten ambassadors and 40 other diplomats showed up to listen what party leader Vona had to say.

Vona said that most European countries but a few from Western Europe accepted his invitation.

Which countries had representatives at the meeting?

Russia, Iran, Turkey: yes
Germany: yes (!)

US: ???
Austria, France, UK: no.


“The Nobel prize [Kertesz] and the Oscar prize [Saul fia] are false idols.”

The nationalistic and pro-Fidesz Hungarian Arts Academy (MMA), which Fidesz elevated into the 2011 “fundamental law” that replaced the Constitution will get a record 10.5 billion forints from the budget in 2017.

After years of resistance, I can see that famous artists now joined the Big Money.

folk singer: Márta Sebestyén
opera singers: Éva Marton and Ilona Tokody
actors: György Cserhalmi, Ilona Béres , Péter Haumann, Péter Huszti
movie director: Géza Bereményi


They were anyway mostly loyal, pro-Fidesz people in private (and public) even if some of these were pretty privileged during Socialism too. I don’t see much surprise here. Fidesz handles the vain and poor artists like a real pro. The system worked with Aczel and it works now with the MMA.


Interestingly enough the Aczél-era produced less crap as art by far during his entire reign than this nauseating Orbanian kitsch-factory in the last couple of years.
I’m not kidding.
Nowadays — along with the backward ideology — most of the time comes professional inadequacy too, then, while mostly the ideology was wrong, generally the artworks held much higher quality than today.

But then again, just look at the image above and you’ll see the difference between the professional and the dilettantes. Counter-selection in its finest…

I am glad Eva made reference to the Magyar Nemzet interview with Sergey Lavrov because there is much more in it than just the discussions of the Paks project. Eva writes: “According to Russian sources, one of Lavrov’s missions in Hungary was to get Hungarian support in lifting the EU’s economic sanctions against Russia.” Actually the thrust of the Magyar Nemzet interview was to split the EU and NATO via Hungary. Lavrov in the interview, as is standard Russian practice, in diplomatic terms justifies the Russian invasion of Ukraine and annexation of part of that sovereign nation based on the EU/CIA instigated “coup d’etat in Ukraine.” Lavrov goes on to say (my translation) “when it comes to acquiring power in Kiev it was the armed nationalists irresponsible behavior that moved things to the edge of collapse, they plunged the country into civil war, in the West it is Russia that was found guilty, and against her unilateral sanctions were put in place. The truth is that it is a little bit overestimated that their Europeans autonomy in the world! However, the as the Ukrainian crisis has shown the European Union depends in a political and economic sense, on Washington.” Hopefully… Read more »
Indeed one of the reasons why Orban and Simicska had a fallout was that Orban very clearly told Simicska about his strategy to pivot to Putin and Russia both of which Orban had been admiring for quite some time. It was SImicska’s disagreement which made it clear to Orban – who does not tolerate any kind of dissent – that he was gonna to need new allies, new oligarchs as Simicska was not as reliable any more.. Orban is Putin’s bitch, but Putin also knows that sometime it’s a difficult balance with agents. If the agent is too successful then he/she might be caught and thus the overall influence through him/her could be gone. On the other hand if he/she isn’t as active as possible then a lot of opportunities are lost. Right now, for both Putin and Orban it’s best if Orban plays along with the EU but make no mistake Orban is with Putin and Russia. Orban wants to tie Hungary to Russia because he fears that the ‘liberal influence’ from the West will be disadvantageous to him in the long run. Moreover Orban seriously thinks that Russia could help him getting a part of Kárpátalja (as a… Read more »

Looking at that Tass photo of Sziijarto and Lavrov falls in line with the fact that ‘every picture tells a story’. The body language of the Magyar foreign minister seems to say ‘Kerem szepen gyere be nagysagos ur!’ Nothing like seeing the decades produce a different kind of ‘invite’ to a set of calculating and plotting Russian Machiavellis. And it’s all in the game once again with Sziijarto et al playing the part of malleable pawns in the Russian-Magyar-European chess game.

Javor makes a very strong case against Paks, lack of transparency, increased costs and how European law impinges on the negotiations. One thing not mentioned in the troubling variables on Paks would be the fact of Russian ‘unpredictability’ in its foreign policy actions which arguably should never be removed from the Paks analysis. Another variable noting the negotiations are ‘not reliable, not viable’.


Javor is proving to be one of the most important and successful politicians given his position (in opposition, of a minuscule party and working in the EU far away from Budapest).

Paks 2 is a total disaster from any (financial, political and environmental) angles and Javor has been fighting diligently and hard against this monster (let’s add just as any opposition politician should).

The determining issue however is that he cares, while the Socialists and DK people don’t really care. They may have doubts but they don’t really care so they are unable to really oppose this craziness. This lack of care, the lack of passion, lack of vision make it very hard to be effective in general.


Matolcsy is writing his PhD !

His advisor is his subordinate in the National Bank …

Mr Lentner’s thoughts about his student:

{Matolcsy] should be honored with a publicly displayed sculpture.

He was dolchstussed by the Constitutional Court.

The ammunition in his brain moves the Hungarian GDP.

[Sure, the creatively altered statistical data]

He is the alpha and the omega of the 2018 election.


It’s communist times rhetoric circa late 50s early 60s.

And I love this: “A Magyar Művészeti Akadémiát Orbán Viktor iránymutatása nyomán tették meg a művészeti élet korlátlan urává.”

Following the guidelines set by OV, the Hungarian Academy of Arts was made absolute overlord of the art world.

But it’s fascism my friends, of the classical type + huge corruption.


Re: MMA as overlord of the arts

Brings us back to those happy Kadarian ‘daze’. We know it always had the very ‘subtle’ touch in everything in it took part in. Janos’ style predicated that. None of that earlier heavy-handness and tumult to disturb the Magyar psyche.

Once again and taking a line from Will what we are looking at is subtle censorship with an environment where art is

‘….. made tongue-tied by authority’…Sonnet 66

Like in that other era, not only does the censorship operate from without but notably from within. Thing is it’s making sure you create the ‘right’ art for the right time and self- censoring oneself towards it. And absolutely no ‘diagonals’. Art is to be done only on the ‘straight and narrow’. By now artists probably have the ‘gist’ of it all already floating around in their minds namely creation on the ‘oblique’ is a harbinger of danger.


London Calling!

At it’s most stark Hungary is by-passing European and American sanctions against Russia.

Hungary is constantly trying to weaken international resolve against the war criminal Putin.

Colleen Bell 17 May 2016 at the CEU:

“That consistency and legitimacy is the basis of our position toward Ukraine as well. We consider Ukraine’s sovereignty to be supreme, and Russia’s annexation of Crimea to be illegal. Period.”

Orban, in encouraging Putin and his forays into Syria, is a war criminal by association.

A vicarious war criminal is still a war criminal.

Orban is a war criminal. Period.

That the EU overlooks its values and responsibilities – and leaves the US to make all the running shames us all.

That the EU overlooks its values in making concessions to Erdoğan and Turkey shames us all.

I shall be voting ‘remain’ in the EU ballot – on condition that Hungary leaves. I will invalidate my vote by adding this protestation.

Brexit will be a close thing.


Re: ‘That the EU overlooks its values and responsibilities – and leaves the US to make all the running shames us all.

That the EU overlooks its values in making concessions to Erdoğan and Turkey shames us all’

That is why we should watch carefully with bated breath how the EU maneuvers in Paks especially in its adherence to its laws. We can bet Putin and Lavrov will eagerly eye the execution or lack of execution of possible concessions or reformulation of positions in negotiations. Perhaps we will see how truly wedded the EU is to its principles in the light of negotiating with the lot of very very shrewd antagonists with one in the EU and one out of it. Indubitably they’d steal the eyes out the EU’s head if they aren’t looking. And the Magyars I’m sure just wouldn’t mind.


OT.. Brexit
Blast from the past …perhaps an earnest plea..;-)..


Meanwhile at the Serbian/Hungarian border refugees are waiting in an abominable situation – the old Fidesz tactic.
Make it so horrible for the people that they start looking for another way …


OT: Who on earth is Orban paying off to spin this arrant nonsense about Hungary’s economy??

“Poland’s markets losing lustre as Hungary’s star shines”

“Hungary… a star performer.”

“Hungary’s stocks have soared 70 percent and its local bonds have surged in the last two years.”

“The Hungarian government and central bank were hailed as geniuses”

“Hungary[‘s] rating upgrade last Friday made it the first emerging economy to make the leap to investment grade in two years.”

Even just as a local pairwise comparison relative to junk grade, it is hilarious hype.


Couldn’t reach this jockey, mailed Reuters to lift their game.

After all, gov bond performance in a liquidity flush world is one thing, real economy quite another, i.e. see investment rate and growth.


Marc Jones journalist at Reuters:

“Having started my Reuters life on the sports desk I now tackle the big players in the central banking world”

Says it all for me.


Satellite to Sycophant

Hungarians never seem to tire of giving the world lessons on how to keep systematically making the worst possible choices.

Pity only the minorité décente et douée that could have earned Hungary a prouder place in human history.

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