Tag Archives: Benedek Jávor

The men behind Paks II: Günther Oettinger and Klaus Mangold

Today János Lázár triumphantly announced that all of the EU’s questions about the Russian- built and financed Paks II nuclear power plant have been satisfactorily resolved. Hungary is free to begin its mega-investment which, according to most experts, is an unnecessary undertaking which most likely will also be unprofitable.

Coincident with, and not totally disconnected from, this announcement is the political storm brewing in Brussels over the appointment of Günther Oettinger, commissioner for digital economy and society, to be the replacement for Kristalina Georgieva, who in the last two years was EU commissioner in charge of the European Union’s budget and who also served as one of the vice presidents of the commission.

Georgieva’s departure is considered to be a blow to the Juncker administration. She was enticed by the Bulgarian government to leave her job as vice president and corporate secretary of the World Bank. After two years in Brussels she is returning to Washington as the chief executive officer of the International Bank for Reconstruction and Development and the International Development Association. Most people interpret her move as a criticism of the Juncker Commission’s way of doing business. According to politico.eu, “Juncker’s Commission will undeniably be weaker without Georgieva. But what makes her departure worse is that Juncker is compounding the loss by promoting Günther Oettinger to take her place.”

Oettinger has been in Brussels for a long time. Between 2010 and 2014 he was commissioner for energy. When Germany nominated him again in 2014, Jean-Claude Juncker gave him a lesser post as commissioner for digital economy.

Oettinger is known to be a man who says and does outrageous things. Back in 2000 he broke into the banned “Deutschland, Deutschland über alles” at a celebration of his German nationalist fraternity. A few weeks ago at a business conference he described a delegation of Chinese officials as having “their hair brushed from left to right with black shoe polish.” When talking about Merkel’s liberal social policy, he joked about “compulsory gay marriage.” First, Oettinger insisted that he had nothing to apologize for but, I guess under pressure from his government, he admitted that the words he used “have created bad feelings and may even have hurt people.” He is described as curt and comes across as “unintellectual and unserious—more likely to obsess over cars or football than trade deals or European Union directives.”

It was Günther Oettinger who as commissioner in charge of energy matters gave the preliminary go-ahead to the Paks project in December 2013. The incoming Juncker Commission, on the other hand, decided on a reexamination of the whole project. Although Oettinger was no longer officially responsible for energy, according to all available information he worked hard in the background to promote Orbán’s pet project.

The second player in today’s story is Klaus Mangold, a wealthy German businessman and a former member of the board of automaker Daimler. Mangold, who is sometimes referred to as “Mr. Russia” in the German press, runs an industry lobby for stronger economic ties with Russia and so has been lobbying against Western sanctions on Russia.

According to some sources, Mangold has had a long-standing interest in the Paks II project. In fact, he may well have been the person who initiated it, acting as an intermediary between Putin and Orbán. 444.hu found proof of Mangold and Orbán meeting in December 2012, “reviewing German-Hungarian and Hungarian-Russian economic relations, particularly questions of energy and its financing,” which would indicate that the meeting might have included a discussion of enlarging Paks with Russian help. So, argues 444.hu, negotiations about Paks began as early as December 2012. Subsequent talks between Russia and Hungary were conducted in secret. It was only in January 2014 that the Paks contract was signed.

Günther Oettinger may no longer be the commissioner in charge of energy matters, but he hasn’t given up his role as a secret backer of the Paks II project. Nowadays, he attends conferences in Budapest on digital economic matters and uses them as opportunities to discuss matters concerning Paks with Viktor Orbán. One of these trips took place on May 19, just before János Lázár’s trip to Brussels and Russian Foreign Minister Sergey Lavrov’s visit to Budapest. This time Oettinger arrived on Klaus Mangold’s private jet. 444.hu learned that there was a dinner meeting attended by the two Germans and the Hungarian prime minister.

Klaus Mangold, Viktor Orbán, and Günther Oettinger

Klaus Mangold, Viktor Orbán, and Günther Oettinger in Budapest, May 19, 2016

That Oettinger flew to Budapest on Klaus Mangold’s private jet merited further investigation, but the reporters of 444.hu got nowhere with either the European Commission or Mangold’s office. A few days later Benedek Jávor, a member of the European Parliament (Group of the Greens/ European Free Alliance), wrote a post in which he expressed his disapproval of an EU commissioner lobbying for a project that is no longer in his portfolio. And there is another problem. Mangold is not a registered lobbyist, yet Oettinger met him despite EU guidelines forbidding meeting with unregistered lobbyists. Then, there is the question of the trip itself. Did Oettinger pay for it or was it a gift? According to EU rules, a commissioner cannot accept any gift over 150 euros.

So, Jávor began an investigation of his own. He wrote a letter to the European Commission:

According to an article published on 21 June 2016 in the Hungarian online magazine 444.hu, Commissioner Oettinger met with Hungarian Prime Minister Viktor Orbán and German consultancy manager Klaus Mangold on his trip to Budapest, on 19 May 2016. During this meeting, the nuclear project Paks II was allegedly discussed.

Klaus Mangold currently leads a German consultancy firm, and used to be Chairman of the ‘Eastern Committee of the German Economy’. He is an important mediator between German firms and the Russian political scene. According to the Hungarian newspaper Figyelő, Mangold had already been a mediator in the previous 2013 Paks case. It has been reported that Commissioner Oettinger arrived in Budapest on Mr. Mangold’s private plane.

This meeting took place only a few days before Hungarian Minister János Lázár, of the Prime Minister’s office, came to Brussels to discuss the Paks II project.

We therefore ask the Commission the following:

  1. By what means did Commissioner Oettinger travel to Budapest?
  2. What information does it have about the content of this meeting?
  3. Has it investigated the possible use of state subsidies for the Paks nuclear project (SA.38454 (2015/C)(ex 2015/N)) and/or the infringement procedure in which the Commission objects that no public procurement preceded the Rosatom mandate discussed at this meeting?

Oettinger took his sweet time answering (on November 3, 2016):

  1. Due to the lack of commercial flights to arrive in time for the meeting with Prime Minister Orban, the Commissioner responsible for Digital Economy and Society joined Mr Mangold’s private plane.
  2. The Commission had been invited to a conference in Budapest about digitisation of industry and automated driving which was opened by Prime Minister Orban. Prime Minister Orban and the Commission met in order to prepare the conference and to discuss the setting up of national initiatives for the digitisation of industry (as outlined in the communication by the Commission of 19 April 2016(1)).
  3. The Paks II nuclear project was not discussed.

Two days ago the story was finally out in the open. Eszter Zalan of euobserver.com wrote an article inquiring whether Oettinger broke any ethics rule by traveling on a private plane of a German businessman with strong Kremlin ties. The article points out that on May 18 there was a choice of four commercial flights from Brussels to Budapest, and therefore Oettinger is simply not telling the truth.

In a way Oettinger’s flight with Mr. Russia is of secondary importance. What is much more worrisome is the visit of Oettinger and Mangold to Budapest in order to advise Viktor Orbán on how to handle a commission probe into the Paks project. But, as often happens, the use of the jet makes bigger waves than the less tangible accusation of foul play on the part of a pro-Russian lobbyist and a pro-Russian prime minister.

Oettinger, like so many people in such situations, keeps giving contradictory statements. By now his story has changed somewhat. In his latest version the Hungarian government paid for his plane ride. “We did not explicitly ask HU [Hungary] about their payment—neither for plane nor for hotel they also offered,” he said. He claims that “governments often offer transport & accommodation for missions of Commissioners when they invited for meeting, conference,” he tweeted, adding “I was invited to a dinner with a Prime Minister to discuss EU digital policies. It is my job to explain & discuss.”

The European People’s Party’s reaction to the Oettinger story is what it always is when one of their own is being questioned about a wrongdoing. Manfred Webber, who is the leader of the EPP group, told journalists that he had “complete confidence” in Oettinger. He called him a “very experienced commissioner” and said there was “no doubt at all whether Günther Oettinger is doing a good job.” The Socialists and the Democrats are naturally less charitable. They called on Oettinger “to clarify his unfortunate actions and unethical behavior.”

444.hu not undeservedly feels proud that one of its investigative pieces was picked up by the international media. And it is still on Oettinger’s case. Its reporters discovered that the EU commissioner paid a visit to Budapest during the past weekend and that he was planning to return to the Hungarian capital today. The occasion for Oettinger’s visit this past weekend was apparently a party given by the Strabag Construction Company. According to 444.hu, this trip was not recorded on the commissioner’s calendar. The occasion for his latest trip is another conference on digital cars and, again, he has a planned meeting with Viktor Orbán. Isn’t it amazing how the busy Hungarian prime minister has so much time for and interest in digital cars? All in all, Günther Oettinger’s activities in Hungary are highly suspicious, and they should be seriously investigated. However, most likely nothing will happen. Apparently he has the strong support of Chancellor Angela Merkel.

November 17, 2016

András Schiffer: From KISZ to neo-communism?

Just as I suspected, in one short post I couldn’t cover the departure of András Schiffer, the founder and leader of LMP, from politics as well as opinions of him that have appeared since his announcement. Over the years I have written more than a dozen articles about LMP and András Schiffer and yet, after re-reading them, I must admit that I never managed to give a satisfactory portrait of this complex, controversial, divisive man. I guess one day someone will write a book on LMP and the abortive attempt to establish a true green party in Hungary. That book will undoubtedly praise Schiffer, the party’s founder, for being able in two short years to build a party that sent a fifteen-member delegation to the Hungarian parliament. No mean feat. But most of the book will probably be about the constant internal fights within the party and its founder’s unyielding and, in my opinion mistaken, ideology and political strategy.

I suspect that most people would agree with András Stumpf of the pro-government Mandiner.hu website that, without Schiffer, LMP’s chances of becoming a parliamentary party in 2018 are remote. The party leaders of LMP are naturally much more upbeat. Bernadett Szél, co-chairman of LMP, sounded neither heartbroken about Schiffer’s departure nor pessimistic about the future of the party. She took the news laconically. “I’m old enough to know that if someone wants to leave, one should let him go. Today I can’t worry about this. Instead, I want to make sure that the green party that has grown roots in the country has a future.” She is already organizing a tour of the countryside with a view to widening the territorial base of LMP. Szél in this interview gave the impression of being a liberated woman who can now do things her own way. As for the hard-and-fast rule of not allying LMP with any other political formation, it remains in place as far as I can see.

Photo: István Fekete

Bernadett Szél. Photo: István Fekete

Among those with LMP ties, the greatest admirer is Péter Róna, which makes sense given Róna’s economic precepts, which include anti-capitalist sentiments and ideas of the “népiesek,” a group of people who envisaged a Hungary whose economy would be a “third road” between capitalism and socialism. Róna simply cannot understand the Hungarian intellectual elite’s indifference, or in some cases hatred, toward Schiffer, whom he considers the best and most honest politician in Hungary today.

Endre Kukorelly, who for a few months was an LMP member of parliament in 2010, is a writer. Since I haven’t read a line of his, I can’t pass judgment on his literary talents. But, to me, his political views are muddled. He who quit parliament after a few months hails Schiffer’s decision because it is so much easier to do politics without the shackles of a party. He represents the unproductive view that political parties are evil and that civilians are the ones who will change the present system.

The opinions of most other former LMP members, however, are pretty uniformly negative.

Benedek Jávor, whose activities in the European Parliament I greatly admire, most likely hit the nail on the head when he observed that “the conflicts that led to a split in the party have not dissipated with our departure,” referring to PM members’ leaving LMP in January 2013.

Virág Kaufer, who left LMP in 2012, suggested that Schiffer “take some time off and take a good look at what he created and speak with those who are no longer his supporters.”

Perhaps Gábor Vágó, a former LMP insider, best summarized LMP’s problem. In his opinion, Schiffer’s departure “is not the end of the LMP story. The fate of the party was sealed when it abandoned its critical attitude toward [Orbán’s] system.”

At the end of this post you will find about a dozen links to my past articles on LMP and András Schiffer, from which a fuller picture of LMP’s role in Hungarian politics should emerge. But perhaps I should add a few details that might be helpful in explaining where Schiffer came from.

Schiffer’s first political act at the age of eighteen was adding his name to an open letter addressed to the Congress of KISZ (Magyar Kommunista Ifjúsági Szövetség). The letter was dated April 10, 1989. Less than two weeks later KISZ was dissolved. Gordon Bajnai, Ferenc Gyurcsány (KISZ secretary), and György Szilvássy (KISZ spokesman and later minister in Gyurcsány’s cabinet) also signed the letter. Schiffer talked about those days in 2014 in an interview with Szabolcs Panyi of Index. “In the spring of 1989, when it wasn’t quite clear which way things would develop, there was only one man in the whole nomenclature of the party-state who put his foot down, even risking his livelihood, and declared that the properties of KISZ and the party must be divided among alternative organizations. This man was Ferenc Gyurcsány. … Gyurcsány proclaimed what many of the opposition politicians didn’t dare: that because of the nature of the state socialist system what they [KISZ and the party] possess belongs to the people.”

Shortly after the dissolution of KISZ, Gyurcsány established a new youth organization called Új Nemzedék Mozgalom (Movement of the New Generation), of which Schiffer became a member. Gyurcsány soon gave up his political activities and became a businessman, but Schiffer remained active and was one of the founding members of a new political movement called Ifjú Szocialisták (Young Socialists). Shortly thereafter, Schiffer retired from politics (for the first time). After finishing law school, he worked for TASZ, the Hungarian equivalent of the American Civil Liberties Union, where he became interested in the green movement.

What changed Schiffer’s attitude toward Gyurcsány, whom he clearly admired back in 1989, were the 2006 disturbances in which he, as an associate of TASZ, took the side of those he considered to be the victims of “police terror.” What happened on the fiftieth anniversary of the 1956 Revolution is a hot potato about which people have widely different opinions. Rightly or wrongly, Schiffer accused Gyurcsány of criminal acts against innocent demonstrators. Hence, his hatred of the man.

His attitude toward Gyurcsány may have changed radically, but he didn’t shed his socialist political views. Árpád W. Tóta, who writes witty, sarcastic, sometime savage opinion pieces, said that LMP has never managed to present a coherent worldview and that “the only concrete position one can make out is a blood-curdling neo-communism. The kind that is becoming sawdust right now in South America.” Tóta portrays Schiffer as someone who wanted to be different simply for the sake of being different. The party was toggling between right and left until it started getting closer to the positions of Fidesz and Jobbik. In brief, in ideological terms Schiffer left the party in a real mess.

Links to Hungarian Spectrum articles on LMP and András Schiffer:

http://hungarianspectrum.org/2010/03/26/lmp-or-can-politics-can-be-something-else/

http://hungarianspectrum.org/2010/03/27/two-interviews-with-andras-schiffer-chairman-of-lmp/

http://hungarianspectrum.org/2010/07/07/viktor-orban-had-a-meeting-with-the-lmp-parliamentary-delegation/

http://hungarianspectrum.org/2011/05/02/babes-in-arms-lmps-encounter-with-viktor-orban/

http://hungarianspectrum.org/2011/07/12/the-new-electoral-law-lmps-wake-up-call/

http://hungarianspectrum.org/2011/11/14/a-few-words-about-the-hungarian-green-party-the-lmp/

http://hungarianspectrum.org/2012/01/14/the-rise-and-fall-of-lmps-andras-schiffer/

http://hungarianspectrum.org/2012/07/26/the-future-of-lmp-an-interview-with-benedek-javor/

http://hungarianspectrum.org/2012/10/21/hungarian-opposition-groups-lmp-4k-and-milla/

http://hungarianspectrum.org/2012/11/17/with-or-without-gordon-bajnai-lmps-dilemma/

http://hungarianspectrum.org/2012/11/18/lmps-andras-schiffer-won-but-did-he/

http://hungarianspectrum.org/2013/01/26/where-is-andras-schiffer-leading-lmp-straight-into-the-arms-of-fidesz/

http://hungarianspectrum.org/2013/01/27/lmps-rebels-left-the-party-who-will-be-the-winner-of-this-game/

http://hungarianspectrum.org/2014/04/23/budapest-municipal-election-mszp-lmp-deal/

June 1, 2016

Guide book to embezzlement of European Union subsidies. Part I

Today and tomorrow I will look at three recent corruption cases in Hungary, all of which involve money received from the European Union.

Two Hungarian politicians are currently spending a lot of energy uncovering corruption cases. One, Benedek Jávor (PM-Együtt), is a member of the European Parliament who sits with the Greens. The other is Ákos Hadházy, a veterinarian from Szekszárd who began his political career as a Fidesz member of the city council. Once the corruption of the Fidesz members of the council became apparent, he resigned his post and quit the party as well. He is now a member of LMP.

Both men are doing a splendid job. Jávor is in an infinitely better position than Hadházy because he receives information from the EU and its anti-corruption arm, OLAF. Jávor has made a real impact, especially concerning the Paks II nuclear power plant and its most likely illegal financing. Hadházy, on the other hand, is at the mercy of the Hungarian authorities or the police who simply ignore his inquiries and/or criminal complaints. Although he has been working tirelessly on dozens of cases, he is unable to show any results. Hadházy is now hoping that if he and his fellow LMP politicians regularly make corruption cases public, they will be more difficult to ignore. Thus, every Thursday he will reveal one case. He claims that he has enough cases to keep “Corruption Info” going for at least a year.

Today I’ll focus on Hadházy’s first case, presented at the launch of “Corruption Info.” I will devote tomorrow’s post to Benedek Jávor’s successful efforts in Brussels.

Ákos Hadházy arrived at the press conference with a recording of a conversation between Rezső Ács, the mayor of Szekszárd, and Péter Máté, a Fidesz member of the city council. The conversation took place in 2012. It was about the decision of the city council to entrust a particular job to a company that charged considerably more than its competitors. Here is a portion of the conversation:

-Eighty-five percent support!

-Yes, yes, but this is a good offer. The price is high, but it can be done in such a way that the person who does it will finance the whole thing and therefore it will not cost us anything.

-Is it overpriced?

-Yes. This is how the tendering procedure works today in Hungary. He comes and tells me that he will do everything. He will win the tender, but he will bring everything. And if not, then he will go to the city next door. Because he has a quota which he can divide. This is how it is behind closed doors.

I’m sure that we all need an explanation of this cryptic description of the process. First of all, the ministry responsible for the tender has a certain number of businesses that have a chance of receiving these EU jobs. Each of them is allotted a quota, so if Szekszárd doesn’t grab the opportunity, the owner of the company will go to the next town. And if Szekszárd makes the mistake of awarding the tender to someone else, they most likely will either get no funding or they will have to put down 15% before the work begins. But one of the privileged companies will promise “to do everything”:  the application as well as the work itself. Only large, well-off companies are able to participate in this game because they have enough capital to wait for payment until the very end of the project, when the money from Brussels arrives. In the case of the project discussed on the tape, the company who did the project charged 115 million forints as opposed to 60 million, which would have been the price without the ruse devised by the Hungarian ministry officials and their corrupt business associates. By the end, with overruns, the cost turned out to be 130 million, paid in full by the European Union.

Ákos Hadházy at his first "Corruption Info"

Ákos Hadházy at his first “Corruption Info”

According to Hadházy, what’s going on are criminal acts of a mafia-like network that reaches and is perhaps even orchestrated by the ministries. He mentioned the prime minister’s office and the ministry of human resources as the main sources of this criminal activity. Apparently, 12 trillion forints worth of tenders subsidized by the European Union are offered by these two ministries.

The reaction of the prime minister’s office was typical. The real culprit is Ákos Hadházy, who sat through this discussion and kept the recording secret instead of going to the police immediately after the discussion took place. Thus, Hadházy is an accessory to a criminal act. According to the spokesman of the prime minister’s office, LMP, instead of holding weekly press conferences, should go to the police immediately and report all suspicious cases they know about.

The prime minister’s office underestimated András Schiffer, co-chair of LMP, who although not my favorite is a very good lawyer. Naturally LMP made sure that everything was professionally prepared. First of all, as soon as the project was finished and paid for, Hadházy filed a criminal complaint concerning the case. That was two months ago. Since then he received a letter from the police saying that they could not find any reason to investigate the Szekszárd case because they found nothing that would indicate abuse of office or misappropriation. However, the police sent the case over to the National Office of Taxation and Customs (NAV). The case bounced back from NAV, which stated that the case has nothing to do with budgetary fraud. It is a case for the police.

Rezső Ács, the Szekszárd mayor, went further. He blamed the socialist-liberal administration for the city council’s decision to offer the job to a company in 2012, two years after Viktor Orbán’s Fidesz won the election.

Tomorrow I will relate stories of criminal activities committed by the Hungarian government in its direct dealings with the European Union.

To be continued

January 29, 2016

The European Union has had enough: No money for a 110 billion project already underway

Not only does Quaestor’s collapse and the government’s involvement in this scandal weigh heavily on the third Orbán government. Viktor Orbán just heard officially that the European Union is refusing to finance a 30 km section of a new Hungarian superhighway, the M4, that would be 230 km long and would lead all the way to the Romanian border just north of Oradea/Nagyvárad. This is a first. And this time there is no possibility of any further negotiations. The project must either be abandoned or be built from purely Hungarian sources. Trying to resubmit the same project based on another, lower bid seems pretty hopeless since the European Union considers the whole project a “luxury item.”

I would be hard pressed to recall all the dates that were mentioned in the press about the imminent beginning of work on the project. It was in 2003 that civil engineers and experts on transportation came up with a 15- and a 30-year plan which included two much-needed superhighways, M8 and M4, that would transverse the country from the Austrian border to Romania. The point was to avoid Budapest, which has for far too long been the epicenter of the Hungarian transportation system. By 2005 it looked as if both M8 and M4 would be built.

In December 2012 Index reported that work on the planned 30 km section of M4 between Abony and Fegyvernek would begin in 2013. At that time people familiar with the price structure of Hungarian highways predicted that it would cost “tens of billions of forints,” but by the end of 2014, when all the bids were in, the cost was 110 billion or almost 4 billion per kilometer. That is four times the price of similar road construction in Western Europe where wages are considerably higher. Such a blatantly overpriced project was too much for the European Union. Moreover, they suspected price fixing. But what is really devastating for the Hungarian government is that the EU didn’t just stop this particular section of M4 but refused to finance the entire 230 km of M4 during the 2014-20 budget period.

An unfulfilled dream: "M4's construction began at Abony / szolnoknaplo.hu

An unfulfilled dream: “M4’s construction began at Abony” / szolnoknaplo.hu

The European Union’s decision about the Abony-Fegyvernek section of M4 couldn’t have come as a surprise to the government. Although by January 2014 all necessary permits were obtained and therefore work could begin, the green light from Brussels wasn’t forthcoming. In December 444.hu learned that in general there are problems with the Hungarian projects waiting for approval in Brussels. “Among other reasons, the European Commission did not pay because the officials consider the prices submitted too high.”

Benedek Jávor (PM MEP) turned to OLAF (European Anti-Fraud Office) to initiate an investigation into the M4 highway project. He wanted to know whether there were any signs of corruption, specifically any possibility of kickbacks to parties by the five firms involved in the construction of the project. Colas USA and the Austrian Swietelsky were to build 13.4 km for 46.76 billion forints. Lajos Simicska’s Közgép together with another Hungarian company, Híd, was entrusted with a short 2.4 km section, but it had three bridges, including a new 756 meter-long bridge across the Tisza River. For this work they signed a contract for 32.5 billion. For the rest Strabag International was to receive 31.5 billion.

The Hungarian government was so eager to launch the project that in January they began construction, which means that about 30% of the project has already started. It is not at all clear what the government will do in light of the EU decision. After all, it is not the fault of the companies involved that the Hungarians decided to begin construction without the final okay of Brussels. If, however, price fixing can be proven, Nándor Csepreghy, assistant undersecretary in charge of communication on matters related to the European Union, said, the construction companies will be responsible to the Hungarian taxpayers for the loss of 110 billion forints.

Although the Hungarian government now echoes the EU and says that the construction costs are too high, back in 2013 when Benedek Jávor first began his investigation of the case neither Mrs. László Németh, then minister of national development, nor János Lázár found anything wrong with the winning bids. In fact, both insisted that they “were not irrationally high.” But now, suddenly they’re talking about price fixing. It is hard to escape the conclusion that Benedek Jávor’s suspicions about possible kickbacks to individuals and perhaps also to Fidesz’s coffers are well founded.

As far as I know, up to this point it was only Simicska’s Közgép that reacted to Csepreghy’s threat of passing the lost EU money on to the companies involved. Közgép published a statement in which they explained that it was Közgép that offered the lowest price in a proper bidding process and that their job was not simple road building but the construction of three bridges. The new Tisza bridge will require 8,500 tons of steel. In addition, two smaller bridges, on either side of the Tisza, must be built over wetlands. Közgép called attention to the fact that the January issue of the Official Gazette announced that the government would finance from domestic sources a road that “connects M5 with M4.”

Indeed, János Lázár only recently reiterated the “government’s long-standing desire to have at least a four-lane highway between M5 and Szolnok.” Apparently, it is for political reasons that the Orbán government wants to make this road a priority. It was in Szolnok last September that Viktor Orbán announced his ambitious plan for building four-lane highways that would connect each county seat to the larger superhighway system of the country. Moreover, he planned this expansion of the roads not from EU money but from domestic resources. Such a road would “bring spectacular economic development to the city,” said Ildikó Bene, a Fidesz member of parliament. Budapest could be reached from Szolnok in less than an hour, she promised.

As for the charge of cartel activities and price fixing, I’m not sure that this is the real reason for the extraordinarily high prices asked for the job. Colas-Swietelsky bid 3.49 billion/km and Strabag 2 billion/km. Közgép is a different story because their work consists mostly of building bridges. I’m almost sure, however, that officials demanded kickbacks. A conversation between Nándor Csepreghy and Egon Rónay of ATV on Friday morning supports this supposition. When Csepreghy went on and on about the cartel activities of the firms involved, Rónay asked him why Hungary had to wait for the European Union to suggest that price fixing might be behind the high prices. Why didn’t they investigate these suspiciously high prices themselves? Csepreghy refused to answer. He tried every which way to bypass the question until Rónay said, “Well, you just refuse to answer my question.” Probably a wise decision.

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.

An unexpected turn of events: Tibor Navracsics has to be satisfied with the post of education, culture, and youth

Today around noon Jean-Claude Juncker, future president of the European Commission, made his final decision on his “cabinet” or, in EU speak, the “college.” EurActiv published an excellent and telling infographic that depicts the structure of the cabinet as well as the relative importance of the commissioner-designates. Juncker will have seven deputies, the most important of whom is Frans Timmermans of the Netherlands who will be “first vice-president.” He will be in charge of “better regulation, inter-institutional relations, rule of law and charter of fundamental rights.” The other six come from Italy, Bulgaria, Estonia, Slovenia, Latvia, and Finland. So, as you can see, the new member states are well represented. One must also keep in mind that the future president of the European Council will be the Polish Donald Tusk.

In the infographic the seven vice-presidents are followed by the rest, not in alphabetical order but by what seems to me a ranking of the importance of the posts. Hungary’s nominee, Tibor Navracsics, who to everybody’s surprise got the post of commissioner of education, culture, youth & citizenship, is in the penultimate place, just before Cyprus’s Christos Stylianides (humanitarian aid & crisis management).  Most papers published in Brussels dealing with European affairs describe the post as lightweight. According to Euobserver, “the least weighty dossiers have gone to Belgium’s Marianne Thyssen (employment) and Hungary’s Tibor Navracsics (citizenship). ” The paper added that “the latter may face difficulties in the EP, which has to hear all commissioners, because he belongs to the increasingly authoritarian government of Viktor Orban.” The Hungarian-language Bruxinfo also pointed out that “the portfolio does not belong to the most heavyweight ones” but notes that Navracsics’s staff is huge, the second largest within the commission. As for his possible difficulties in the European Parliament, Benedek Jávor, the Együtt-PM EP member, reported on his Facebook page that, according to rumors in Brussels, Navracsics might be drilled hard at his hearing and there is a possibility that he will not be confirmed.

Navracsics himself was also surprised, and most likely disappointed, with the post because he was hoping for a job that has something to do with foreign affairs. But he put on a good face. Naturally, for Fidesz the position was elevated to one of the utmost importance. As a Fidesz official statement said, the future of Europe depends on Navracsics’s work in the next five years. Indeed, education is very important and it is true that many European countries could do a great deal better in that department. The problem is that education is the domain of the member states, and therefore Navracsics will not be able to make a substantial difference in educational policies across the EU.

Navracsics and his fight with Vice-President Vivien Reding was not forgotten

Navracsics and his fight with Vice-President Vivien Reding was not forgotten

Juncker initiated a major structural change, whereby the vice-presidents will be the overseers of the rest of the commissioners. In his letter to Tibor Navracsics he described the new system this way:

I will entrust a number of well defined priority projects to the Vice-Presidents and ask them to steer and coordinate work across the Commission in the key areas of the Political Guidelines.  This will allow for a better focus and a much stronger cooperation amongst Members of the College, with several Commissioners working closely together as a team, led by the Vice-Presidents, in compositions that may change according to need and as new projects develop over time.

In Navracsics’s case this will entail close cooperation with  the Finnish Jyrki Katainen, vice-president for jobs, growth, investment and competitiveness; with Latvia’s Valdis Dombrovskis, vice-president for euro and social dialogue; and with Estonia’s Andrus Ansip, vice-president for digital single market. Keep in mind that under Navracsics’s short tenure as foreign minister Hungary closed its embassy in Tallinn. Juncker emphasized in the letter than the vice-presidents have his total trust and their decisions on certain projects are final. They speak in his name. The success of the Juncker Commission will largely depend on these “über-commissioners,” as Eurobserver called them.

Navracsics gave a press conference for Hungarian journalists where he admitted that “it is possible that education in comparison to the portfolio of internal market is considered to be less weighty but every job is worth as much as we manage to make of it,” which is certainly true. The commissioner for internal market, industry, entrepreneurship & SMEs is the Polish Elźbieta Bieńkowska, and the fact that Navracsics mentioned this particular post I think says something about the frustration of the Hungarians. There are all those others in the region who did much better.

According to the new government spokesman, Éva Kurucz, Navracsics’s post is about the future and his nomination to the post is an “outstanding success.” Fidesz’s EP delegation agrees. The youth of Europe is of the utmost importance and Navracsics has twenty years of academic experience behind him. Of course, there is nothing surprising about Fidesz and the government extolling the importance of Navracsics’s new job, but the enthusiasm of LMP’s András Schiffer is hard to understand. Perhaps he would like to get a few more brownie points from Viktor Orbán and a few more invitations to Fidesz and government functions. According to him, the education portfolio is strategically more important than any of the others that had been mentioned in the last few weeks, which is patently not true.

The opposition parties’ opinion of the post was predictable. Jobbik blamed the Orbán government for not lobbying harder for a more important post. MSZP’s József Tóbiás blamed the Orbán government and Viktor Orbán himself for getting this lowly portfolio. According to him, the fault lies not with the Hungarian people but with Viktor Orbán and his regime. “It is a slap in the face for Orbán but it is we Hungarians who feel the pain.” DK’s spokesman, Zsolt Gréczy, called this particular portfolio the weakest of the twenty-eight. After all, the EU has no common educational or cultural program. He added that DK will not support Navracsics’s candidacy. That means that DK’s two delegates in EP’s socialist delegation will vote against him. MSZP, as far as I know, hasn’t decided yet.  Benedek Jávor, the sole representative of Együtt-PM, rightly pointed out that it will be difficult for Navracsics “to promote cultural diversity while at home his government dictates what real culture is, how youth should be educated, and wants to make self-organization of the citizenry impossible.” All very true.

Final approval of the Juncker Commission will take place in October at the plenary session of the European Parliament in Strasbourg. I agree with some of the commentators: there might still be surprises concerning Navracsics’s appointment. If I were Viktor Orbán I would hold my tongue for a couple of more months. Otherwise, “the slap in the face” might be even harder and more painful than it is now.

An unusual debate on the new Hungarian nuclear plant: János Lázár and Benedek Jávor

The news from Russsia and Ukraine  is frightening. The major question now is whether Russia will be satisfied with the annexation of the Crimea or whether the Russian army will march in and occupy further territories at the “request” of the Russian-speaking inhabitants of Ukraine’s eastern provinces. I wonder what the Hungarian public will think if Russia manages to cut Ukraine in half and the Russian bear ends up quite a few kilometers closer to the Hungarian border. In addition, there are threatening Russian talks about Ukraine and its supply of natural gas, which naturally would affect the Hungarian energy supply. All this is happening in the wake of Viktor Orbán’s top-secret negotiations with Vladimir Putin about the expansion of Hungary’s only nuclear power plant in Paks, which will increase Hungary’s energy dependence on Russia.

Viktor Orbán was in a great hurry to close this deal, most likely because he wanted ensure that it was voted on while he has a guaranteed two-thirds parliamentary majority. But then came Vladimir Putin’s gambit, which casts the Paks deal in a different light. As it is, the majority of the population doesn’t want to build another power plant and a whopping 75% of them are against the Russians building it. The couple of months spent by the Orbán government trying to influence public opinion in favor of Putin’s Russia didn’t manage to erase the negative feelings Hungarians have when they think of the country’s almost fifty-year occupation by the Russians. With the events in Ukraine these fears have received a new impetus, which makes Viktor Orbán’s situation concerning Paks even more difficult. According to some observers whose opinions I trust, “Paks is dead in the water.” But for the time being the government is sticking to its guns and Viktor Orbán is acting as if nothing has changed. They even agreed to a debate on the expansion of Hungary’s nuclear capacity built by Rosatom on money lent to Hungary from the Russian state. It is about this debate that I would like to say a few words.

As we know, there was no debate whatsoever on Paks prior to the signing of the agreement although there is a great deal of interest in the issue. So a student organization of law students at ELTE called Joghallgatók Önképző Szervezete (JÖSZ) organized a post-signing debate. The law students active in the association invited János Lázár, representing the government, and Benedek Jávor of Együtt2014/PM, who is a staunchly anti-nuclear Green, to have an open debate. How did the students manage to convince such an important man as Lázár to participate? Gáspár Orbán, the prime minister’s son, is one of the leaders of JÖSZ. He was among the students who were busily arranging the podium just before the actual debate.

atomvita

The interest was great. The large lecture hall was completely filled half an hour before the debate began. What was strange, and it says a lot about Hungarians’ attitude toward transparency, is that the debate was closed to the media as the result of a last-minute decision by the dean. Of course, reporters from several Internet news sites in addition to a journalist from Népszabadság managed to sneak in with fake IDs. Moreover, the whole debate, lasting longer than an hour, was recorded and is available online. But for those who don’t speak Hungarian here is a brief description of what transpired.

While Fidesz leaders might look very confident and can overwhelm their audience when delivering speeches, when they are supposed to engage in real debates they run out of steam. This is what happened to János Lázár.

Let’s start with the structure of the debate. There were three distinct parts. In the first part the topic was the circumstances of the agreement; in the second, questions concerning Russian-Hungarian relations were addressed to the participants; finally, in the third, the economic aspects of building a new power plant were discussed.

The debate began with Lázár, whose position was that nuclear capacity must be expanded because the old power plant will not be able to function beyond a certain date. This is true, but that date is far in the future. It would be quite enough to start to build the two new reactors in 2020. While he claimed that there will be no added capacity he did announce that in the government’s estimate in the next few years the need for electricity will grow by 1,000 megawatts. So, is there or isn’t there a need to produce more electricity? To give you an idea of the simplistic view Lázár and his friends entertain concerning this issue, for him the choice is “either a power plant or no Hungarian electricity.” No other options are available.

Jávor insisted that Paks II, the two new reactors, are additions to the present capacity. In addition, he listed the following objections: (1) the majority of Hungarians reject building the new reactors especially if it is done by the Russians; (2) the details of the agreement are not transparent; (3) the new investment will increase the price of electricity and will not add to the growth of the Hungarian GDP; (4) there will be too much energy when all four reactors are operational; (5) the building of Paks is too much of a geopolitical commitment to Russia; (6) the reactors will create fewer than the 10,000 jobs the government is talking about; (7) there are environmental concerns; (8) with interest the debt will be more than the government’s figure of 4.6 billion dollars. Jávor compared the deal to an especially deadly version of Russian roulette in which only one chamber in the revolver’s cylinder is not loaded.

When the moderator asked Lázár whether the government acted in such a way as to ensure the “democratic minimum,” he completely lost his cool. He interrupted the moderator and brought up a procedural question in order to avoid answering the question. He reduced the argument to: “either a power plant or no electricity.” From here on he talked about the fallacy of his opponent’s arguments but couldn’t come up with any arguments of his own. When he exceeded the allotted time he ignored the moderator and kept going. When the moderator inquired from him about the government’s refusal to make the details of the negotiations public, he told him and Jávor that they “should turn to the Russians with their requests.”

When it came to the price of electricity produced by Paks II, Lázár kept saying “atomic energy produces the cheapest electricity prices.” Yes, answered Jávor, the electricity Paks currently produces is inexpensive because the original initial investment has already been paid down. But the energy produced by Paks II will have to reflect the price of the new investment, which will be very costly. Lázár called this argument nonsense.

They moved on to national security issues. Jávor maintained that Hungarian dependence on Russian energy will increase after building Paks II while Lázár argued the opposite. In his opinion there is nothing to worry about because “the Russians have been here for sixty years and they are here today because they were the ones who built Paks.” So, nothing will really change. For Lázár nuclear energy means “independence.” Having only natural gas imposes energy dependence. To the question of why the Hungarian government asked for a Russian loan and why they didn’t turn, for example, to the IMF, Lázár’s answer was simple: “No one else would give a loan to Hungary except Russia.”

The debate naturally led nowhere. But there is also a good possibility that the grandiose Orbán plan for a Russian-built nuclear plant in an EU country will also lead nowhere. The Czech minister of defense already made it clear that Rosatom will never be in the running to build the Czech nuclear reactor. I can’t believe that the European Union could possibly let Putin’s Russia get close to an atomic power plant in Hungary.