- 22 Jan 2014 8:00 AM
The Hungarian government is striking the best deal of the past forty years, government sources have told this daily, before the news on Hungarian Premier Viktor Orbán and Russian President Vladimir Putin signing the document was released.
When these sources were reminded that only a few years ago Orbán declared in public that “we won’t be the happiest shack of Gazprom” and that “in Europe the number of Putin’s poodles has grown” and that Orbán used to speak up for diversifying Hungary’s energy resources, said sources answered that the deal will not make Hungary dependent. Hungary will not become dependent on the United States, France or any other great power, they said. They added: “We are dependent on the Russians anyway as far as the Paks nuclear power plant is concerned.” In Viktor Orbán’s opinion the deal will even reduce Hungary’s dependence on others.
The pro-government “professional” argument goes like this: even when the nuclear power plant reaches peak operation some time in the future, it will only produce 60 percent of Hungary’s daily power consumption and the remaining 40 percent needs to be generated from other, green sources.
This chapter of the Paks saga started in early 2013 in Moscow, when Hungarian–Russian ties were consolidated during a meeting of Orbán and Putin. János Lázár, minister of state for the Prime Minister's Office, confirmed that during an off-the-record briefing on Tuesday, January 14. The rapprochement of the two leaders was a turnabout at the time because during the premiership of Ferenc Gyurcsány [2002–2010] their relations were chilly.
The speed of events picked up speed in summer 2013 when the Fidesz [party] decided to have a realistic chance of winning the parliamentary elections in 2014. Orbán reasoned: economic growth depends on competitiveness and there is no competitiveness without inexpensive electricity.
The sources of this daily suggest that in spring 2013 Orbán put out feelers to several directions. He held “consolidation talks” with the RWE [German electric utilities company] and Deutsche Telekom and then concluded: in the next twenty years the most important question in Europe will be who can supply the German industry with inexpensive sources of energy.
Hence it follows that the deal with Russia was not motivated to reduce utility costs in Hungary because low power prices are crucial for industry in the first place. The real motivation was to grant preferential treatment to the enormous German manufacturing sector. At about that time the Russians indicated their readiness to come forward with a reasonable offer to extend the plant’s lifetime and build two new units.
In August 2013 Orbán met Rosatom [State Atomic Energy Corporation of Russia] President Sergey Kiriyenko in Budapest. A deal began to materialize with the proviso that the Paks deal “wouldn’t be tied to anything else. The future of gas supplies won’t even be mentioned.”
During the Orbán–Putin meeting in 2013 Russia proposed to operate the Paks nuclear power plant (in the same way as in Turkey) but Hungary insisted on keeping the plant in Hungarian hands.
Russia will grant a credit, whose upper limit is HUF 3000 billion, and Hungary won Hungarian local content at 40 percent.
Lázár was commissioned to head a top-secret government working committee in August 2013. “As from September 1, talks were held at a high intensity, now weekly, now daily, between the Rosatom and the Hungarian government. On the Hungarian side the key figures were Mihály Varga, minister of national economy, Gábor Orbán, state secretary in that same ministry, Péter Szijjártó, external economy and foreign affairs state secretary, and Lázár’s small operative team. The MVM [state-owned electricity wholesaler], the Ministry of National Development, and the management of the Paks nuclear power plant contributed technical input but the political decisions were made at top level.”
János Lázár said on Tuesday, January 14, that the Hungarian government gave official information to Brussels and obtained preliminary approval to the Russian–Hungarian interstate accord. Thus the project has the full approval of Brussels, Lázár declared.
Lázár added the Hungarian–Russian interstate agreement was sealed without inviting competitive bids. Instrumental in brokering the deal was the Rothschild Group, which has specialized in global financial consultancy.
Following advice from the Rothschild Group the Hungarian government hired a German law firm, Hengeler Mueller which has specialized in multi-national transactions. The German firm has managed to pave the way of the project in Brussels so that the entire arrangement should be compatible with European Union law.
Throughout the process, “a highly influential German industrialist” mediated between Orbán and Putin – a member of the Hungarian government has told this daily. That source has added: the Hungarian prime minister can re-position himself in the international political arena along the “dimension” of nuclear energy.
Translated by Budapest Telegraph