Hungary strengthens Russian ties despite EU sanctions push

According to Hungary's Minister of Foreign Affairs and Trade, Peter Szijjarto, large Hungarian companies should serve as models for smaller ones on doing business in Russia, specifically in sectors not subject to sanctions. Szijjarto, known for his pro-Russian stance, mentioned this in the spring of this year. He stressed that industry leaders in pharmaceuticals, food, medical, construction, energy, and agriculture are committed to remaining in the Russian market.

Szijjarto highlighted that in 2023, Hungarian exports to Russia surpassed a billion dollars. He added that the presence of giants like MOL should motivate others to engage more actively in Russia.

As Bloomberg reported, citing its sources, Viktor Orban also informed EU leaders that he would not agree to extend sanctions against Russia before Donald Trump is sworn in as President of the United States. It is speculated this could be a tactic to block further Western sanctions on Russia.

Despite the ongoing war in Ukraine, the Hungarian government is moving forward with the Paks II nuclear power plant construction, with Russian firm Rosatom as the main contractor. The Hungarian-Russian agreement, signed in 2014 by Prime Minister Viktor Orbán and President Vladimir Putin, includes a loan of approximately €8 billion to €9.5 billion ($8.3 billion to $9.9 billion) over thirty years to build two new nuclear reactors.

The expansion of the Hungarian nuclear power plant is Orban's administration's largest economic project and, as experts from the Center for Eastern Studies note, the flagship endeavor of Russian-Hungarian cooperation. Initially, the first reactor was slated for completion by 2032. However, the European Commission, after investigations, uncovered issues related to exclusive fuel supply arrangements, potential breaches of public procurement laws, and the provision of unlawful state aid. The reactor's commissioning may be delayed by up to a decade.

Dominik Hejj, an expert on Hungarian politics, mentioned in an interview with businessalert.pl this year that economic ties with Russia benefit Hungary as they "help maintain good political relations, especially vital during wartime."

The gas deal with Russia appears less promising for Hungary. Like Slovakia and Austria, which have benefited from cheap Russian gas, Central European countries will no longer receive resources from the east through the "Friendship" pipeline. This was confirmed by Vladimir Putin on December 19 during the Kremlin's annual press conference. The dictator stated that the transit agreement between Gazprom and the gas companies of these nations will lapse at the end of 2024 due to Ukraine's refusal to extend it.

– This contract will no longer exist, that much is clear. But that’s fine — we will survive, Gazprom will survive – Putin summarized briefly. This situation primarily stems from Ukraine's refusal to renew the agreement. Kyiv has halted gas transit to Hungary and Slovakia, which still rely significantly on Russian gas. On Thursday, December 19, Ukrainian President Volodymyr Zelensky confirmed that Ukraine would not prolong Russian gas transit. Hungarians can now only anticipate gas transmission from Russia via the southern route.

– This won't pose a problem for us, as Hungary can import gas through the Turkish Stream pipeline – stated Hungary's Foreign Minister Peter Szijarto in October. He noted that the Turkish Stream (a pipeline running from Russia under the Black Sea and through Turkey to Southern Europe) could soon become a viable alternative for gas transport for other Central European countries as well.

Hungary imports 4.5 billion cubic meters (about 160 billion cubic feet) of natural gas annually through a 15-year contract with Gazprom signed in September 2021. Russian gas constitutes 80 percent of Hungary's total imported gas resources.