Hungary seals gas deal as it calls for Russian rapprochement

By bne IntelliNews February 18, 2015

Kester Eddy in Budapest -

Russia's isolation from Europe is unreasonable and cannot help bring about peace, while any hope of Europe being competitive without Russian energy is an illusion, said Hungarian prime minister Viktor Orban at a joint press conference with Russian President Vladimir Putin.
During the Russian president's controversial visit to Hungary on February 17, Orban won a gas deal and in return he backed up his guest on his geopolitical challenges. The Hungarian PM declared the cease-fire agreement in Minsk "a good basis" for further negotiations towards a peaceful settlement in Ukraine, noting that Hungary has "200,000 arguments" for a peaceful solution - a reference to the ethnic Magyar population living in its eastern neighbour.
"We're convinced that the isolation of Russia from Europe is not rational. The security of this region cannot be maintained without Russia ... so we're striving for better cooperation," Orban said.
Putin, however, while expressing support for a negotiated peace, firmly blamed Kiev for the continuing fighting. "The Ukrainian government has, for the third time, decided to resume military conflict," he said. "This will have no end unless the decisions makers in Kiev decide there is no military solution."
The visit by the Russian president, his first to an EU member state since meetings in Austria last summer, has been widely criticised both within Hungary and abroad as giving succour to Russia. It comes as the European Union extended sanctions against Moscow because of its support for separatist militants in Ukraine.
But Orban dismissed any threat to European unity caused by the visit, saying there was "no need to fear". Stressing that "long and successful negotiations" with the Russian leader had "secured gas supplies for Hungary's households and industry", he said the new deal will enable Hungary to escape the "take or pay" clause about which so many Gazprom customers complain.
The pair had reached a "political agreement" on a new contract - Hungary's priority going into the talks - Orban continued. Only "technical details" remained to be solved, he said, adding that this should be achieved by the end of the year, when the current deal ends.
In view of the collapse of the South Stream project, Hungary is eager to explore other options to access Russian gas from Turkey, Orban said, saying he has held negotiations with Serbia, Macedonia and Greece on the issue.
"It would be good for Hungary to have the investments to transport Turkish gas through Greece, Macedonia and Serbia. Whether this will come to fruition is a future question but Mr President made me hopeful on this," he said.
Putin, noting that his visit coincided with the 70th anniversary of the liberation of Budapest from Nazi rule at the cost of "more than 200,000 Red Army soldiers", said negotiations were "very constructive and businesslike" and said Russia was ready for more cooperation, including possible further use of gas storage facilities in Hungary.
Regarding the planned extension of Hungary's Paks nuclear plant, Putin said Russian credit, at some 80% of the total cost of €12bn, was "very favourable" for Hungary. Russia will also work to assist Mol, the Hungarian energy group, in its energy projects in Siberia, he said.

Five bi-lateral agreements - on regional cooperation in higher education, health care, nuclear energy training and the the opening of a Hungarian consulate in Kazan - were signed at the beginning of the press conference.

In contrast to Orban's upbeat assessment of the visit, commentators and opposition leaders in Hungary were critical of the visit, many saying it only helped Putin to show off at home and sow disunity in Europe.

“It was 40 minutes drag on nothing, it was awful. We can forget these five agreements, they're not important. You don't need a meeting of this level to sign those. For sure, there are reasons for this visit, but that's not what it's about,” Laszlo Keri, a political scientist, told ATV television.

Gyorgy Drucker, an energy consultant, even played down the value of the supposed gas contract agreement

“We already had the option to take over the natural gas until at least 2020, so after all nobody really needs a new agreement urgently,” he told bne IntelliNews.

Edit Inotai, Senior Fellow at CEID, a think tank, was more positive: “The two got along rather well, there was no sign of friction, as with [German chancellor] Merkel in the recent visit.”

“Typically [or Orban], this was the pragmatic, business-oriented approach, lacking any criticism on Russia's violations on international law,” she told bne IntelliNews, adding: “On the other hand, it will not help improve the Polish-Hungarian relationship - Orban is visiting the new Polish prime minister this week.”

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