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The Budapest-Moscow special relationship

epa05166352 Russian President Vladimir Putin (R) and Hungarian Prime Minister Viktor Orban (L) attend a joint news conference following their talks at the Novo-Ogaryovo residence outside Moscow, Russia, 17 February 2016. Viktor Orban is on a working visit to Moscow.  EPA/MAXIM SHIPENKOV / POOL
Russian President Vladimir Putin (R) and Hungarian Prime Minister Viktor Orban (L) attend a joint news conference following their talks at the Novo-Ogaryovo residence outside Moscow, Russia, 17 February 2016.

With the exception of oil and gas, nuclear energy, defense procurement, pharmaceuticals, construction, vehicles and railways, Budapest is firm on EU sanctions 

“We all are interested in normalizing relationship between Russia and Europe,” said Viktor Orban from Moscow on Wednesday, February 17.

all for sanctions except…

President Putin in turn announced that gas-supply contracts with Hungary were extended until 2019. Apparently, the partially state-owned Hungarian oil and gas company also secured a exploration rights in Western Siberian and the Volga-Ural regions. Based on Germany’s Nord Stream II precedent, Budapest argues, these agreements should be acceptable.

Meanwhile, it was announced that Russia’s Rosatom remains committed to developing Hungary’s €12,5bn Paks II nuclear plant, 80% of which will be funded by a Russian loan. Rosatom was granted the contracts for Paks II in 2014, sweetening the deal with a €10bn loan from Russia’s development bank. The Hungarian opposition finds the cost exorbitant.

Hungary’s Prime Minister was visiting President Putin to cultivate a relationship that both leaders call “constructive,” “amiable,” and productive. In fact, Orbán extended his “gratitude” because Russia remained committed to the Paks II investment, despite EU trade sanctions.

Meanwhile, he made clear that Hungarian pharmaceuticals and vehicle makers would continue to exploit opportunities in Russia, while criticizing EU policy for “not cooperating with everyone that could boost its economy.” It is also known that Hungary is moving towards the procurement of 30 helicopters from Russia at an estimated cost of €450 million (HUF 142 billion).

President Putin returned the favor saying that Hungarian construction companies were welcome to bid for infrastructure development projects related to the 2018 soccer World Cup in Russia.

Prime Minister Orbán did not break ranks and recently voted for the renewal of EU’s sanctions against Russia, but has since 2014 made clear he believes that Europe “shot itself in the foot” because sanctions hurt Europe’s exports more than Russia. Meanwhile, Budapest is apparently securing all kinds of exemptions from Russia’s “black list.”

The two leaders also took turns at bashing the European Commission’s asylum policy.

Meanwhile in Brussels

The Paks II project is stumbling against a European Commission probe that questions whether the contract awarded to Rosatom complies with EU competition and state aid rules. When the decision for the probe was taken in November, EU Competition Commissioner Margrethe Vestager said that “Given the size and importance of the Paks project, the Commission has to carefully assess whether Hungary’s investment is indeed on market terms or whether it involves state aid. This requires a complex analysis. I think it is important that stakeholders can also submit their views.”

Budapest would suggest beginning this analysis with Nord Stream II and possibly end it there. via neurope.eu

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