Tag Archives: natural gas

Viktor Orbán on the world stage and at home

Every second Friday Viktor Orbán spends about twenty minutes with a servile reporter from Magyar Rádió who asks the great leader about his achievements and plans. But before I cover the latest pearls of wisdom coming from the prime minister I want to share some thoughts about an unexpected private meeting between Chancellor Angela Merkel and Viktor Orbán preceding the European Union Employment Summit held in Milan on October 8.

Critics and opponents of Viktor Orbán’s domestic and foreign policy initiatives were dismayed over news of the meeting. Just when the United States finally seems to be showing signs of greater resoluteness in its dealings with the Hungarian government, Angela Merkel rewards him with a private meeting. Hungarian opposition papers pointed to Merkel’s broad smile and assumed that the encounter had to be friendly. But this might not have been the case. Of course, we don’t know what transpired during the meeting, but there are a few signs that may indicate a less jolly encounter than Merkel’s smile would indicate.

The official government website republished the MTI summary of the encounter, based on information supplied to the news agency by the prime minister himself. What can we learn from that brief description? “First and foremost [they] talked about foreign affairs.” The second topic was energy policy. As far as foreign policy is concerned, I assume the topic was Hungary’s reluctance to support the common EU resolve concerning further sanctions against Russia if necessary. It is also possible that Merkel mentioned her disapproval of Viktor Orbán’s eastern orientation. When it comes to the country’s energy policy, I’m almost certain that Merkel brought up Hungary’s sudden decision to stop sending natural gas to Ukraine three days after the CEO of Gazprom paid a visit to Viktor Orbán.

How do I surmise that? A careful reading of this short report on the meeting makes that interpretation more than plausible. Let me quote the appropriate passage verbatim: “Hungary will be part of the common European efforts, but at the moment she must establish her own energy security. Thus, Hungary now is busy with feeding its own storage facilities.” After January 1, 2015, when the Slovak-Hungarian gas pipeline is functioning, “we will be able to send non-Russian gas to Ukraine, if our Ukrainian friends would like it.” I should call attention here to Orbán’s emphasis on the source of the gas intended for Ukraine. That strongly indicates that he agrees with the Russian position that selling Russian gas to countries outside the EU is illegal.

As for the possibility of a discussion between Merkel and Orbán on Hungarian-EU relations, my source is Viktor Orbán’s Friday morning interview. While until now we have heard only criticism from Orbán concerning the West, which is in decline and on the wrong track, during the interview Orbán praised German economic strategy. The German mentality of hard work and prudence is the basis of  successful economic policy. I might add here that praise of German economic strategy was somewhat ill-timed in the wake of dismal economic news from the country.

As far as future domestic policies are concerned, the Friday morning interview was singularly uninformative. There has been much talk lately about a new era coming, but Viktor Orbán refuses to provide any details. A careless remark by Mihály Varga a couple of weeks ago prompted speculation about the introduction of new austerity measures. Rumor has it that the government cannot hold to the 3% deficit, which may followed by the reintroduction of the excessive deficit procedure by the European Commission. And that would mean turning off the money spigots from Brussels. A government denial followed Varga’s remark, but people are not convinced that austerity measures are not in the offing. The budget that should already have been presented to parliament is still nowhere. According to Orbán, he and Varga will go through the numbers this afternoon.

There was only one topic on which Orbán was more expansive: his ideas about education. Specifically, producing skilled workers. He has big plans for something he calls “dual education,” which will produce a highly skilled workforce. After a student has been in school for eight years he would enter a course of study that would combine some academic study with hands-on work experience. It would be a kind of apprentice (inas) program. There is nothing new under the sun. Many of us still remember Nikita Khrushchev’s introduction of precisely the same type of education. We also remember that it was a huge flop and the experiment was abandoned. I guess Orbán thinks he can do a better job.

But if Khrushchev’s experiment was a bad idea in the 1960s, it is a terrible idea today. Who thinks that eight years of elementary education are enough to produce highly skilled workers who nowadays need higher math, computer skills, and–most likely in Hungary’s case–the command of a foreign language, just to mention a few requirements? The very word “inas” (apprentice) conjures up images of the little boy who was apprenticed to a master and who was terribly exploited by him. He lived with the master’s family and often did all sorts of things that had nothing to do with his future trade.  But in those days one didn’t need a lot of education to learn how to make shoes or to become a bricklayer. Today I would say that to become a skilled worker one should finish high school and have at least a two-year associate’s degree.

journeyman

Back to olden days

I agree that training a skilled workforce is needed, but Hungary is unlikely to be a country where industry dominates. The service sector will most likely remain the mainstay of the economy, as elsewhere in western countries. Moreover, it is not true, as Orbán claims, that “the road to successful life is through crafts” because statistics prove that university graduates’ compensation greatly exceeds the salaries of non-graduates. I fear, however, that he will introduce his ridiculous ideas on education very soon. He promises such legislation this year. I wonder what impact such a reorientation of education will have on the current educational system, which has already gone through a very hard time because of the nationalization and centralization of all public schools. One could also ask where they will find teachers by the thousands to instruct students to become skilled workers by the age of 16 or 18. What will happen to those teachers who today teach academic subjects? The whole thing sounds not only crazy but injurious to the country.

This year was spent mostly on campaigning for three different elections, and therefore the Orbán government had relatively little time to come up with ever new ideas and proposals that become law in record time. I fear this legislative respite is over, and the prime minister will have quite a few surprises for us in the coming months.

Hungary stops supplying gas to Ukraine and makes its own gas deal with Russia

The news of the day is Hungary’s decision to stop the supply of gas to Ukraine despite its pledge to assist its beleaguered neighbor. Although the AFP news service assumes that the decision came after “threats from Moscow,” I have a different take on the matter. To make my case I have to go back a few weeks in time.

It is true that Russia was playing games with its gas supply to Poland and Romania, but Hungary was in no way affected by these Russian measures, most likely because of the cozy relationship that exists between Putin and Orbán. On the contrary, in the last few months large amounts of gas arrived in the country from Russia. Currently, the storage facilities are 60% full, and even larger amounts of natural gas will come from Russia in the next few months. Poland indeed had to temporarily stop its supply of gas to Ukraine on September 10, only to resume its operations two days later when Russia assured Poland that it would send an adequate supply of gas to the country in the future. Romania began receiving less than the usual amount of gas on September 15.

Instead of worrying about natural gas from Russia, on September 18 a very upbeat article appeared in Magyar Nemzet telling its readers that “we can be the gas center of Europe.” The article reported that two days earlier Miklós Seszták, minister of national development, conducted negotiations with Anatoly Yanovsky, Russian deputy minister for energy affairs, concerning the storage of 500 million cubic meters of Russian gas in Hungary “to facilitate the supply of Europe with gas in case of irregular transit shipments through Ukraine.” These plans are not new.  They were apparently first discussed in October 2012 when Aleksey Miller, CEO of Gazprom, had a meeting with Viktor Orbán in Budapest. However, the precondition for such a deal was the nationalization of the storage facilities. The Hungarian government subsequently purchased them from the German company, E.ON, at an incredibly high price. Although auditors warned the government about the pitfalls of the deal, Orbán insisted. It looked as if he did not care about the price. Now we know why.

Yanovsky had barely left Hungary when Aleksey Miller arrived in Budapest. The meeting of Miller and Orbán was kept secret from the Hungarian people, who read about it on Gazprom’s website. This is not the first time that we learn about important meetings and bilateral negotiations from the media of countries for whom close relations with Hungary, a member of the European Union, are important but who are not exactly friends of the West. The Hungarian government would rather not inform the world about its dealings with such countries as Iran, Belorussia, Azerbaijan, and Kazakhstan. According to Gazprom, “the talks were focused on the issues of reliable and uninterrupted gas supplies in the coming winter period. The parties paid special attention to the implementation of the South Stream project and noted that it was progressing on schedule.”

Source: Gazprom.com

Source: Gazprom.com

This morning, three days after the Miller-Orbán meeting, Viktor Orbán announced that Hungary would indefinitely suspend supplying Ukraine with natural gas. According to Itar-Tass “the decision was made to meet the growing domestic demand for gas,” FGSZ, the Hungarian company operating the pipeline, said. Yet MTI reported today that even Serbia might be able to receive gas from the Hungarian storage facilities. So, surely, there is no shortage of gas in Hungary. The European Union is anything but happy about the suspension. Helen Kearns, a spokeswoman for the European Commission, in an answer to a reporter’s question on Hungary’s unilateral suspension of the gas supply to Ukraine, said that “the message from the Commission is very clear: we expect all member states to facilitate reverse flows as agreed by the European Council.” Naturally, Naftogaz, the Ukrainian gas company, also urged its “Hungarian partners to respect their contractual obligations” and said the Hungarian decision “goes against the core principles of the European Union single energy market.”

After delivering his usual Friday morning radio interview Viktor Orbán left for Berehove (Beregszász), in the area of Ukraine south of the Carpathian Mountains officially called Zakarpattia Oblast, to deliver a speech at the Hungarian-language college situated in the town where about half of the population is Hungarian speaking. Altogether there are three smaller territorial units within the oblast where there are significant Hungarian populations: in the uzhhorodskyi raion (33.4%), in vynohradiv raion (26.2%), and in the area around Berehove where they are actually in the majority (76.1%). Altogether there are about 120,00 Hungarians out of a total population of 1,254,614. The distribution of Hungarians in the oblast can be seen here.

Orbán indicated in his early morning interview today that Hungary will support Hungarians in the neighboring countries who demand autonomy. Although he did not specifically mention the Hungarian diaspora in Ukraine, he was obviously also talking about them. This was not the first reference to possible autonomy for Hungarians in this region of Ukraine. At the outbreak of the Russo-Ukrainian crisis Orbán already mentioned such a demand. He made it clear, again not for the first time, that his main concern in this very serious international crisis is the fate of the Hungarian minority. He promised his audience that Hungary will not do anything that would harm his Hungarian brethren, which I found interesting in light of the decision to cut the flow of gas from Hungary to Ukraine.

While Viktor Orbán was in Berehove, representatives of the European Union, Russia, and Ukraine got together to come up with an energy deal that would ensure the supply of Russian gas to EU members and Ukraine over the winter. In return, Ukraine would repay $3.1 billion of its debt to Russia.  The first installment, $2 billion, would be due by the end of October and the rest by the end of December. If Russia agrees to this deal, it would avert an immediate crisis, although it would not resolve the deeper dispute over what price Kiev should pay for past and future deliveries. The Ukrainian government earlier filed suit with the Stockholm Arbitration Court against Russia for making it overpay for gas since 2010. A decision may be reached by next year.

On the one hand, Ukraine seems to be happy that, after so many unsuccessful attempts, there is hope of an agreement but, on the other hand, it is unhappy that the price of Russian gas “is dependent on the decisions of the Russian government.” According to Kyiv Post, “Ukraine will under no circumstances recall its suit from the Stockholm Arbitration Court.”

If this deal goes through, as it seems that it will, perhaps it was unnecessary for Hungary to unilaterally and abruptly stop the flow of gas to Ukraine. By this decision Orbán further emphasized his pro-Russian sympathies and undoubtedly further alienated himself from Western governments.

Scandal surrounding the purchase of E.ON gas company

The left-of-center Hungarian media is full of stories about details of  the purchase of the German-owned E.ON gas and electricity company by MVM (Magyar Villamos Művek), a state-owned utility company.

Let’s go back a few years to recall the background of this deal. Rumors of the purchase of the company were already circulating in the summer of 2011 because Viktor Orbán made it clear that he found state ownership of utilities of strategic importance to the country. Not everybody shared the Hungarian prime minister’s view. For example, the Financial Times Deutschland at the time called the idea “madness,” arguing that the price of energy cannot be lowered by nationalizing the utility companies.

It is also important to understand the history of E.ON in Hungary. Originally E.ON bought the company from MOL, the Hungarian oil and gas company, when during the initial tenure of Viktor Orbán (1998-2002) the government set the price of gas so low that MOL suffered considerable losses. For ten years E.ON managed to make the Hungarian business profitable, but in 2010 it suffered a blow when the second Orbán government once again froze the price of gas. As a result, E.ON lost money. The Germans decided to bail and sell the company to the Hungarian state. The deal was closed in March 2013. At the time experts found the purchase price too high.

Because of the controversy over the purchase price, atlatszo.hu  (Transparency), an NGO that receives some funds from the Norwegian Grants, decided to ask for documentation about the deal. Although by law the Magyar Nemzeti Vagyonkezelő/Hungarian National Asset Management, the state organization that handles state properties, was obliged to release the documents, they refused. At that point atlatszo.hu went to court and won. The state appealed but atlatszo.hu won again. That did not deter MNV. They decided to go all the way to the Supreme Court (Kúria). But no luck. After a year and a half of legal wrangling the Hungarian state was forced to release the documents. Atlatszo.hu promptly made them public on its website.

On the basis of the documents now released, it looks as if MVM purchased a company that was practically bankrupt. The purchase price of 251 billion forints was considered too high when critics were unaware of the actual financial health of E.ON. As it turned out, the assessors estimated the value of E.ON to be -355 billion forints. Yes, you read it right: minus. So, with the 251 billion paid by the government, the loss to the country is 616 billion forints.

Viktor Orbán was bent on purchasing E.ON regardless of price. In fact, even before negotiations began he repeatedly announced his absolute determination to acquire the company. Not the smartest move. There was not much haggling over price either. The Germans asked 260 billion forints and, it seems, Orbán was happy to pay.

Prime Minister Viktor Orbán and Chairman-CEO of E.ON

Prime Minister Viktor Orbán and Chairman-CEO of E.ON

In fact, he was so eager that he wasn’t bothered by the fact that the Hungarians were unable to examine the financial health of the company thoroughly. The German side announced that certain documents would be released only after the deal was complete.

The negotiators from MNV were aware of the riskiness of the transaction and were afraid to go ahead with the deal without appealing to a higher authority. They wanted to submit their findings to the Ministry of National Development for approval. Mrs. László Németh, then minister of MND, did not feel comfortable with the deal either, so in the end it was Viktor Orbán who personally assured MNV of state guarantees for any losses incurred as a result of the transaction.

Apparently the greatest risk for the health of the company is the “take-or-pay contract” that has existed for many years between Gazprom and the E.ON companies. That means that the company either takes the product from the supplier or pays the supplier a penalty. After 2008, in the wake of the global financial crisis, Hungary’s gas needs decreased considerably. And yet the company was obliged to buy gas regardless of need. Some references in the documentation indicate that after the close of the deal the new owners might be able to negotiate with Gazprom concerning the take-or-pay arrangement. Orbán’s cozy relationship with Putin should help in this regard.

Critics also point to legal irregularities. For instance, owners of E.ON shares were not notified thirty days before the deal was signed. There is also the possibility that Brussels will consider the state subsidies to MVM illegal. (Apparently, the socialists already asked the European Union to investigate the case.)

The new division of MVM cannot stand on its own financially. Not only does it need state subsidies to cover its costs, but two of the gas storage facilities bought from E.ON already had to be closed.

Együtt-PM and DK are bringing charges of mismanagement and abuse of fiduciary duties in connection with the purchase of the E.ON gas business by MVM. MSZP was more modest. The party only asked Miklós Seszták, the new minister of national development, to investigate the case. If I were the representative of MSZP I wouldn’t wait breathlessly for this investigation. The ministry already made its position clear tonight. Hungary cannot be at the mercy of foreign interests in the energy sector, and therefore the purchase of E.ON was necessary for the “defense of the decrease of utility prices.” Getting back the gas company is also of inestimable value from the point of view of national security because of the gas facilities where Hungary can store 70% of its yearly gas consumption.

As for the purchase itself. “Several independent assessments showed the economic justifiability of the purchase in the long run.  The state ownership guarantees the secure gas supply of Hungary and it serves as a solid foundation for future economic growth,” reads the statement of the ministry released to MTI. I must say that this is a pretty weak response to the very serious charge of financial irresponsibility with taxpayer money.

In the right-wing media the silence is deafening. The only article I found was in MNO (Magyar Nemzet Online). It was posted at 17:33 and is a bare outline of how the documents were acquired by atlatszo.hu and what the documents show. It seems that, since the Ministry of National Development hadn’t yet responded to the revelations, the paper’s editors didn’t know what the right position was on this particular issue. I guess they will eventually find their voices.

As for the Fidesz-friendly prosecutors, they were quick to charge socialist and liberal politicians with an abuse of fiduciary duty for selling state properties at prices they considered too low. But it is unlikely they will ever charge Fidesz politicians with the same abuse for buying state properties at prices that are too high.

Hungary’s new friend: Turkmenistan’s dictator

The Hungarian media is full of stories about the visit of the bloody dictator of Turkmenistan, Gurbanguly Berdymuhamedov, to Budapest. The trip has been in the making for a long time. It was Hungary that initiated talks between the two countries when in November 2011 President Pál Schmitt was dispatched to Asgabat, the capital of Turkmenistan. In January of this year Péter Szijjártó announced that the two countries had signed an agreement on economic cooperation. It was at that time that it was revealed that the Turkmen dictator himself will visit Hungary sometime in June.

As for the economic ties, Szijjártó claimed that there are hopeful signs that the relatively low level of trade between the two countries will grow substantially in the near future. He revealed that there are already Hungarian “success stories” in the food processing industry and in agriculture. A Hungarian firm is involved with the construction of a large brewery. He also indicated that Turkmenistan intends to modernize its oil and gas sector and would welcome Hungarian participation.

Trade between the two countries is indeed very small: until 2010 it amounted to only 10-15 million dollars a year, but by last year it had reached 110 million dollars. Just to give you an idea of the relative size of this trade relationship, Turkmenistan is not among the top 50 trading partners of Hungary.

Szijjártó also mentioned the possible construction of a gas pipeline, which is currently under discussion between the European Commission and Turkmenistan. Clearly, Hungary’s interest lies primarily in Turkmenistan’s gas reserves, which are the fourth largest in the world.

The opposition loudly protests this cozy relationship between Asgabat and Budapest, pointing out that Turkmenistan is second only to North Korea in having the darkest dictatorship and that the only significant difference is that North Korea is very poor while Turkmenistan is flush with cash from the sale of natural gas to Russia and China. One can read more about the situation in Turkmenistan in the U.S. Human Rights Report of 2013.

Pro-government commentators point out that, after all, Ferenc Gyurcsány also visited Turkmenistan in the summer of 2008. Indeed, he did and apparently had a six-hour talk with Berdimuhamedov. He went there to show the United States that, despite rumors that he was against the Nabucco pipeline, the pet project of the EU and the United States, he was serious about finding a way of getting gas from outside of Russia. Apparently he came back convinced that the Nabucco project would not materialize. He turned out to be right.

The Trans-Caspian project was first conceived in the late 1990s.  Talks between the European Union and two of the five countries surrounding the Caspian Sea, Azerbaijan and Turkmenistan, officially began on September 7, 2011, but there was not much follow-through. In the wake of the protests in Kiev and the ensuing Russian-Ukrainian conflict, however, the Trans-Caspian pipeline gained new urgency. In December 2013 it was announced that negotiations between Turkmenistan and the European Union would begin in early 2014. The Russian response was swift. Sergei Lavrov, Russian foreign minister, indicated that “external interference in the Caspian region will strain the situation in the region and can have a negative impact on the five-party negotiations,” that is, among Turkmenistan, Azerbaijan, Kazakhstan, Iran, and, naturally, Russia.

In earlier Hungarian reports on Szijjártó’s trade negotiations, no mention was made of Turkmen natural gas, but on June 14 Trend, an Azeri site, said that “Hungary is interested in receiving Turkmen gas under transnational projects.” The next piece of information, from MTI, stated that Baymyrat Hojamuhammedov, deputy prime minister for oil and gas, told the newly appointed minister in charge of national economic development Miklós Seszták that Turkmenistan in the next two decades plans to more than triple its production of natural gas and wants to lay pipelines toward Europe, Pakistan, and India.

While Hojamuhammedov was visiting Miklós Seszták, Turkmen Foreign Minister Raşit Meredow was talking with Péter Szijjártó. Note that, flouting diplomatic protocol, the Turkmen foreign minister met only with Péter Szijjártó and not his Hungarian counterpart, Tibor Navracsics.

As for Gurbanguly Berdymukhamedov, he first met President János Áder in the Sándor Palace. Áder talked about the modernization of Turkmenistan and possible Hungarian participation in the Turkmen economy. It was no more than generalities. Berdymukhamedov’s announcement was, on the other hand, more interesting. He pointed out that “in a political sense the two countries’ points of view resemble each other in many ways. Both find stability and security important.” Turkmenistan is “grateful to Hungary for representing her in the United Nations.” He added that “the foreign ministers of the two countries continue their consultations concerning foreign policy.” He hopes that “Hungarian experts” will help Turkmenistan in its economic and social programs. Finally, he invited János Áder to Asgabat. It looks as if the two got along splendidly. The Hungarian media watched every move of the two men and even noted that their handshake lasted eight seconds!

Source: AFP. Photo Igor Sasin

Source: AFP/ Photo by Igor Sasin

Berdymukhamedov’s official program included a meeting with House Speaker László Kövér. Nothing has been said so far about a possible meeting between Berdymukhamedov and Prime Minister Viktor Orbán, although it is hard to imagine that such a meeting would not take place.

Let me add a funny note. Hungary was just admitted to the Parliamentary Assembly of Turkic Speaking Countries, joining Azerbaijan, Kazakhstan, Kirghistan, and Turkey. The request came from former deputy-speaker of the parliament Sándor Lezsák, who started his career in MDF but who now can be placed somewhere between Fidesz and Jobbik. He is among those who refuse to accept the Finno-Ugric origin of the Hungarian language and overemphasize the importance of  Turkic loan-words in the vocabulary. Anyone who’s interested in Turanism, which is closely linked to the idea of Hungarian being a Turkic language, can read a fairly good summary of the movement here or, in Hungarian, here.

I also thought that you would appreciate a picture of Berdymukhamedov on horseback. He even participates in horse races. In one of them, he was thrown off his horse but, never fear, just as a good dictator should, he won the race anyway.

An analysis of Russian-Hungarian relations in perspective

I’m sticking with Russian-Hungarian relations, although today I won’t write about the Hungarian opposition’s reactions to the Putin-Orbán meeting as promised. The reason for this change of plans is that I read an in-depth interview with Zoltán Sz. Bíró on the relationship between the two countries over the last ten years or so. I would like to share it with those of you who are not in a position to read it in the original.

Although I’m quite familiar with Russian history and Soviet politics, I haven’t been following what’s going on in Russia. I know as much as one can learn from the media. A couple of years ago, however, Tamás Mészáros hosted a show on ATV that dealt with foreign affairs. Every time the discussion touched on Russia Zoltán Sz. Bíró, a research fellow in the Historical Institute of the Research Center attached to the Hungarian Academy’s Section of the Humanities, was among the participants. He always impressed me with his learning and his analytical skill.

His track record continues. I learned more from the interview that appeared in today’s Népszava on the state of Russian-Hungarian affairs than from all the other articles I read on Viktor Orbán’s visit to Moscow. The main thrust of Bíró’s analysis is that, despite Vladimir Putin’s warm welcome, there is a great deal of dissatisfaction with the Orbán government’s Russia policy. Putin’s Russia doesn’t hide its true feelings toward Viktor Orbán, which in this case translated into a short audience, no scheduled press conference, and no lunch or dinner after the official appointment. In November 2010 when Viktor Orbán first visited Russia as prime minister these niceties were planned, but in the end they were dispensed with. By contrast, each time Péter Medgyessy or Ferenc Gyurcsány paid a visit to Moscow there was always a press conference and a dinner meeting.

the Kremlin

The Kremlin

Russia has reason to be dissatisfied with trade relations and mutual investments between the two countries. In the last three years the rate of investment has slowed. To quote from Putin’s welcoming speech: “The level of investment until recently was well balanced between the two countries. However, for the last three years it hasn’t grown or has grown very slowly.”

Before December 2002, when Medgyessy visited Moscow, Hungarian exports to Russia were less than half a million U.S. dollars while imports were around 2.2 billion dollars. By 2008 both exports and imports peaked: Hungarian imports reached 10 billion and exports 4 billion dollars. That is, while Hungarian imports grew fourfold, exports expanded by a factor of eight. Not even in the old Soviet days was the volume of trade between Russia and Hungary that great.

This spectacular growth was due in part to the change of government in Poland when under the Kaczynski brothers’ rule Russian-Polish relations soured. In addition, in 2007 Russia finally decided to build the Southern Stream that would supply Hungary with natural gas. Negotiations over the pipeline necessitated frequent contact between the two countries.

Viktor Orbán is in a difficult position when it comes to friendly relations with Russia because of the heavy political baggage he carries from his days in opposition. In those days he made irresponsible comments about Russia. A responsible politician should think ahead: what will happen if he wins the election? How hard is it going to be to mend fences? The Russian leaders are pragmatic, but in 2005 there was a spectacular change in the official Russian stance on its role in World War II. In order to give emotional content to the regime, Putin’s government stands ready to do battle with any country that tries to minimize or question Russia’s sacrifice. The Orbán government’s frequent anti-Soviet rhetoric certainly doesn’t endear it to the Russians.

Earlier I wrote about Viktor Orbán’s resolve to purchase E.On’s Hungarian subsidiary from the German company. At the moment the Hungarian media is full of extended debates about whether the 800 million euros the Hungarian government is paying is too much. According to some, it is not worth more than 400 million. I can’t take sides because I have no idea of the value of E.On. But presumably E.On could purchase Russian gas at a cheaper rate than a Hungarian state-owned company could. Russia’s largest natural gas customer in Europe is Germany at 35-36 billion cubic meters a year. Hungary in the last three or four years decreased its natural gas purchases to about 6 billion cubic meters. This difference in purchasing power most likely influences the price of Russian natural gas. That’s why “the Hungarian government’s anti-E.On policies are incomprehensible.”

According to Sz. Bíró, a half-hour meeting on the highest level simply cannot replace the day-to day work necessary to develop a good relationship between countries. János Martonyi’s absence was glaring. Péter Szijjártó was there, but in Sz. Bíró’s opinion the young upstart lacks a thorough knowledge of the areas he is supposed to deal with. Here is one example. Szijjártó announced that Russian-Hungarian economic relations are especially promising because the Russian economy last year grew by 3%. But this is not a great accomplishment for Russia. On the contrary, “it is a serious set-back.” After all, in 2010 and 2011 the Russian economy grew by more than 4% while during the prior decade the Russian GDP grew by 7-8% every year.

Sz. Biró is not at all sure whether Hungary should enlarge the Paks Nuclear Power Plant, not just because of its enormous cost (2-4 trillion Hungarian forints) but because the country might not need a larger facility in the first place. Second, this enormous investment would have to be financed by new loans. Sz. Bíró also fears that “if a political group is able to get even a small portion of this money it will be able to eliminate the possibility of open and democratic political competition.”  In brief, Hungary will be stuck with a Fidesz government for a very long time to come.

I think that I more or less managed to summarize Zoltán Sz. Bíró’s opinions on the current status of Hungarian-Russian relations. Let me finish with something that I hope Viktor Orbán said in jest Friday morning during his weekly interview on MR1 (Kossuth Rádió) when asked about his trip to Moscow. He described his trip thus: “Hungarian history is a great teacher. That’s why the first success is that we not only went to Moscow but we also came home. We should start here!” What on earth did he want to say? If it was a joke, it was a very bad one. Not exactly how to make friends and influence people!

Otherwise, Orbán said nothing specific about his accomplishments in Moscow. When asked about Russian participation in the building of additional facilities at the Paks Nuclear Power Plant, he acted as if he didn’t hear the question. Instead, he went on and on about Russia’s contribution to the fields of music and literature. According to him, “We can’t even imagine European music and literature without Russia.”  He quickly added that Hungary is a “kultúrnemzet” which also contributed greatly to European culture. “We can therefore speak of Russia with appreciation.” Why? Otherwise we couldn’t?

A quick look at Facebook reveals that jokes about Viktor Orbán’s appreciation of music and literature number  in the hundreds. We know from Gábor Fodor’s description of Viktor Orbán in his college days that “Viktor moved in the world of culture like an elephant in a porcelain shop,” meaning he didn’t feel at home there. He was interested in football and politics almost exclusively. It is highly unlikely that in his spare time the Hungarian prime minister reads Dostoevsky or Tolstoy. But I guess if you don’t want to acknowledge Russia’s importance in today’s world, it is always safe to praise its cultural heritage. A nationalistic prime minister also has to point out, however, that Hungary is no less cultured and that its contribution is just that great as that of other nations.

Viktor Orbán in Moscow: “Putin’s new little kitten”?

Earlier I mentioned that after his return from Brussels Viktor Orbán was flying to Moscow. Ahead of yesterday’s meeting no one knew exactly what the negotiations would be about. The Hungarian press mentioned possible several topics: the further development of the Paks Nuclear Power Plant; the building of the Southern Stream that will go through Hungary; the sale of Russian natural gas; transportation, especially the country’s rail system; and bilateral trade. I suspect that all of these items have been under discussion between the two countries for the past few months. Obviously no detailed discussion of these topics took place during the fifteen-minute audience Vladimir Putin granted the Hungarian prime minister.

The Hungarian media poked fun at the brevity of the visit and complained that Viktor Orbán’s visit didn’t make banner headlines in the Russian press. Yes, the meeting was short, but presumably all the groundwork had been laid for it.  Orbán had only to show his face to endorse the negotiations of his underlings. Moreover, one must keep in mind that for Hungary Russia is a much more important partner than vice versa. In trade relations the Hungarian share of Russian imports is only 2%. On the other hand, Hungary because of its dependence on natural gas and oil is heavily dependent on Russian goodwill.

Hungarian foreign policy experts pointed out that the Russians are pragmatic negotiating partners who will not be bothered by Viktor Orbán’s earlier attitude toward Russia. Because, in case anyone has forgotten, Viktor Orbán’s relations with Russia were outright antagonistic during his first four years in office. And, while in opposition, he fiercely attacked both Péter Medgyessy and especially Ferenc Gyurcsány for trying to mend fences with Russia. He was especially critical of Gyurcsány’s efforts to make a deal with Russia on the Southern Stream. He managed to blacken Ferenc Gyurcsány’s name in Washington where the Bush administration was certain that Gyurcsány was not only interested in obtaining natural gas but that somehow he was ideologically attracted to the semi-dictatorial Vladimir Putin. The same Vladimir Putin to whom western newspapermen compare Viktor Orbán nowadays.

So, let’s look at the long process that eventually led to Viktor Orbán’s conversion. In January of 2007 he announced that “we don’t want to be the happiest barracks of Gazprom.” In November of the same year he called the Gyurcsány government’s policies in connection with Russian-Hungarian relations incomprehensible. How can Hungary be “a bridge between the West and Russia”? Hungary’s place is squarely in the West. This is the same man who now finds his country’s destiny in the East.

During the Russian-Georgian conflict he sided with Georgia. In October 2008 he claimed that “in Hungary today one-sided and unbalanced pro-Russian policies are being pursued.” In 2009 he considered a potential Russian threat to Europe a serious matter. Even after he won the elections, in November 2010, he said that any kind of partnership with Russia was dangerous. He complained that more and more EU countries were initiating economic cooperation with Russia and that this would lead to a dangerous economic and political penetration of Russia into the West.  He declared that “even NATO  doesn’t consider Moscow an opponent anymore but a partner” and expressed his fear that “the western world will eventually forge a historic alliance that will be dangerous for Central Europe.”

This fear of Russia led Viktor Orbán to come up with the idea of a cordon sanitaire or an axis as he called it. The former socialist countries should band together from the Baltic to the Adriatic to make sure that Russian political and economic ambitions are checked. One “political analyst” went so far as to write in Heti Válasz (December 2009) that he believed that Russia would be genuinely fearful if Viktor Orbán were to become prime minister of Hungary. The mouse that roared!

After his election Orbán visited Poland where he most likely tried to convince Donald Tusk to join this axis. Orbán failed in this attempt, however, and from there on the government made little mention of this grand alliance forged by the Hungarian prime minister. But as the speech he gave in November 2010 indicates, he didn’t abandon his anti-Russian sentiments and his fear of Moscow.

Although his meeting with Putin was very short, Orbán arrived in Moscow with a large delegation. He was accompanied by György Matolcsy, minister of national economy; Mrs. László Németh, the mystery minister of national development; Mihály Varga who at last is free from his duties as chief negotiator with the IMF; Péter Szijjártó who lately behaves as if he were the foreign minister (as he is except in name); and Csaba Baji, the CEO of the Magyar Villamos Művek Zrt. (Hungarian Electric Power Co.) On the Russian side, besides Putin, the Russian minister of agriculture and the CEOs of Gazprom, Rosatom, and Vnesheconombank were present.  Vnesheconombank is commonly called the Russian Development Bank. The institution is used by the Russian government to support and develop the Russian economy.

Vladimir Putin and Viktor OrbánMTI / Photo  Szilárd Koszticsák

Vladimir Putin and Viktor Orbán, January 31, 2013
MTI / Photo Szilárd Koszticsák

Putin turned out to be a gracious host, at least on the protocol level.  He was “very glad that [Viktor Orbán]  finally took advantage of this invitation to come to Moscow.” He announced that he considered Hungary a priority partner in Central Europe, especially on economic matters, “because, after all, after Germany, Russia is the most important trading partner of Hungary.” Putin noted that an avenue in Budapest was named after Lev Nikolaevich Tolstoy. He naturally neglected to mention that Moszkva tér in Buda lost its name at almost the same time. He ended his speech with “We have been waiting for you in Moscow. … Welcome back!”

Orbán was equally expansive. He talked about Hungarian admiration for Russian culture and praised Russian achievements profusely. He made sure that Putin understands that he is aware of Russia’s economic and political importance:  “We believe that Russia is a great power. It has not only a great past, but also a great future. So it is obvious that  Hungary has a keen interest in maintaining a fruitful and close cooperation with Russia.” He also welcomed Russian investment in Hungary.

Putin added a little dig. Or at least I interpret it this way. Picking up on Orbán’s reference to Russian culture, Putin in his brief answer noted the multinational nature of the Russian Federation. Among the components of this ethnic mix are the Finno-Ugric people to whom the Hungarians related. He indicated that there will also be Russian-Hungarian cooperation in that field. So, forget about Kazakhstan!

Véleményvezér, one of the leading Hungarian-language blogs, entitled its post “Viktor Orbán, Putin’s new little kitten.” As for the Hungarian opposition’s response, I will deal with that topic tomorrow.