Hungary “doubtful” over fate of Budapest-Belgrade rail link

By bne IntelliNews October 13, 2016

The fate of the Chinese-funded Belgrade-Budapest high-speed rail project is “doubtful” due to concerns on the part of the European Commission, a senior Hungarian official said on October 13.

China signed separate deals with Hungary and Serbia last November on the construction and modernisation of the rail link between the capitals of the two countries. The European Union, however, has reportedly initiated infringement proceedings against Hungary due to suspicion that the deal stuck on the project does not comply with competition rules.

In the agreement, a consortium of Hungarian National Railways (MAV Zrt), China Railway International Corporation Ltd. and China Railway International Group was directly named as the main contractor, a role estimated to be worth HUF550bn (€1.8bn), Magyar Nemzet reports. The European Commission reportedly initiated a probe in May.

"Negotiations are under way (…) the positions of the Chinese and European Union counterparts, however, are very far from each other,” Janos Lazar, head of the Hungarian Prime Minister’s Office said on October 13 according He added that “the Chinese show far less flexibility than the Russians did concerning the Paks extension project”.

The European Commission have long questioned the fiscal wisdom and the legality of the €12.5bn deal between Hungary and Russia to expand Hungary’s only nuclear power plant. However, in recent weeks local press has repeatedly suggested the EU is set to approve the Paks project imminently.

Budapest has been reported to have a “secret deal” with Germany. that would offer support from Berlin for both the Paks deal and the rail project. In return, Hungary would tone down its confrontational stance towards Brussels' migrant quotas now that Budapest’s referendum on the issue is over. The suggestion from Hungary that the link to Belgrade is in trouble appears to counter those unsubstantiated claims.

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