From pragmatism to bear hug: Hungary´s Russia policy on the eve of the Ukraine crisis

Since the beginning of the crisis in Ukraine last November, the increasingly Russia-oriented policy of Hungarian Prime Minister, Viktor Orbán, has attracted much more international attention than ever before. This policy line has often been called an “Eastern opening” by Hungarian government officials, and there is growing evidence that PM Orbán’s love affair with Russia has brought the country to an unprecedented dependency – something that is definitely not in the Hungary’s best interest. Is there still a way out?

Photo: CreativeCommons/ Robert W Gilcrease


Share on LinkedIn0Share on Google+0Tweet about this on Twitter10Share on Facebook0

Ex oriente… energy

Ever since the democratic transition in 1989, Hungary’s policy vis-à-vis Russia has been characterized by a dichotomy between the fundamental Euro-Atlantic orientation of the country, and the strong, lasting energy dependence on Russia. Thus all post-89 Hungarian governments strove for a pragmatic, business-oriented relationship with Russia, while also hoping to re-gain access to the lucrative Russian markets lost with the collapse of the Soviet Union.

In terms of energy dependence, besides being the dominant supplier of crude oil and natural gas, Russia has been a key player in supplying Hungary’s nuclear power plant in Paks. Concerning the former, the situation is often described as a triple dependency. First, Hungary is dependent on Russia as a supplier: as of 2013, approximately 80% of the country’s gas consumption was imported from Russia. Second, Budapest is strongly dependent on the Ukrainian gas transit. The gas crisis in January 2009 demonstrated very well, how vulnerable the whole Visegrad region really is, in the case that a lasting transit interruption would occur. Third, Hungary itself has no gas transit position except for a minor pipeline leading to Serbia, and so Budapest cannot rely on the indirect supply security provided by the transit position.

A key consequence of the strong gas dependency on Russia is that the Hungarian governments of the 2000s have been consistently striving for the diversification of supply and transit routes, as well as the acquisition of a transit position. This was the reason why Hungary supported both the Nabucco and the South Stream pipeline projects, as well as the Visegrad interconnectors and even the AGRI project with Azerbaijan.

However, before diversification efforts were ever realized, Hungary’s governments could not avoid pursuing a pragmatic, non-ideological foreign policy towards Russia. This has become particularly true in the 2000s, when Russia started to actively use energy prices and gas supplies as an integral part of its foreign policy inventory. The Hungarian pragmatism has indeed bore fruit: bilateral trade was steadily growing from 2002 until the breakout of the financial crisis.

Eastern opening – not much new under the sun

Content-wise the “Eastern opening” policy announced by the new Orbán-government in 2010, which aimed at intensifying trade and investment relations particularly with Russia but also with other Eastern countries, was not much of a novelty at all – every previous Hungarian government had attempted a non-politicized, trade-oriented foreign policy with Russia.

However, Orbán’s prioritization of Russia’s role in the “Eastern opening” is in strong contrast with his personal past – namely that since 1988 he had conducted strongly anti-Russian foreign policy and rhetoric. During the eight years spent in opposition between 2002 and 2010, he even accused the then-ruling Socialist-Liberal governments of committing treason because they were fostering closer ties with Russia. Hence, it is probably safe to assume that the personal past of the Prime Minister has resulted in a certain credibility deficit in Moscow, despite the sudden Russia-friendly line of the “Eastern opening”.

The new policy line also openly subordinates all political, ideological, value-related and even strategic considerations to foreign trade. In other words, raising money from the East has become an absolute priority – more than likely to counter-balance the economic and financial consequences of Orbán weakening EU relations. On the level of declarations the “Eastern opening” has been consistently pictured as a policy complementary to Hungary’s fundamental Euro-Atlantic orientation and thus only an economic alternative and not a political one. However, Orbán’s recently announced desire to build an “illiberal state” 1 contradicts this discourse and undoubtedly presents the “Eastern opening” as a political alternative. Of course, “economization of diplomacy” itself is not much of a novelty at all: many countries, ranging from Slovakia to Australia, conduct similar policies. However, Hungary went further, openly subordinating all other foreign policy considerations to trade interests.

The key importance of foreign trade was also indicated by Péter Szijjartó, a close, loyal ally of Orbán, who was assigned responsibility for the “Eastern opening” in the Prime Minister’s Office. Since Szijjártó replaced his predecessor in September 2014, the short-ruling Minister of Foreign Affairs, Tibor Navracsics (who followed the emblematic János Martonyi in June 2014), this prioritization has become even more visible. Szijjártó declared several times that attracting investments and foreign trade shall be the priority of Hungarian diplomacy, and he even changed the name of the MFA to Ministry of Foreign Affairs and Trade.

New priorities required new personnel and since September 2014 the ministry has been literally purged – to be more exact, Szijjártó continued the purge that Navracsics started – resulting in the loss of important foreign policy and diplomatic expertise on the one hand, and an inflow of new, mostly young officials, appointed primarily on the basis of political loyalty on the other. A demonstrative example for the latter is that so far no less than eight members of the amateur futsal team, Kinizsi, for which Péter Szijjártó is a player, have been appointed to various positions inside or around the Ministry of Foreign Affairs and Trade. 2

Ukraine: a subordinated Hungarian neighborhood policy

Hungary has hardly ever had a well elaborated, detailed foreign policy vis-à-vis Ukraine. Instead, Budapest’s policy towards Ukraine has been a rather subordinated one, derived from numerous factors, but one that could be categorized into two, opposing dimensions: the “value-oriented” or “pro-European” interests; and the “realist” or “pro-Russian” ones.

In the “value-oriented, pro-European” category one may put the long-present commitment to democracy, human rights and fundamental freedoms, as well as the need to contribute to the EU’s neighborhood policy. While the general, stability-related interests as a neighboring country, the high risk of alienating Russia with too much involvement in Ukraine, and the traditional commitment to support the Hungarian communities living abroad (there are some 120-130.000 Hungarians living in Zakarpattya) can be placed in the “realist” category. Regarding minorities, Ukraine’s former president, Viktor Yanukovych, was a predictable partner because under his rule there was less danger that national minorities would be discriminated against. Of course, this relatively liberal approach was mostly extended to the Russian minority, but Hungarians also benefitted from it. All in all, the “pro-European” dimension has been in favor of a stronger, more active engagement in Ukraine, while the “pro-Russian” interests preferred a very pragmatic, low-level approach.

Until the crisis broke out in November 2013, these “pro-European” and “pro-Russian” dimensions of Hungary’s foreign policy towards Ukraine were more or less in balance. Even Russia’s increased importance in the framework of the “Eastern opening” did not really change this. Budapest was able to maintain highly practical and good relations with Kyiv (thanks to the highly skilled Hungarian diplomatic staff serving in Ukraine), and concentrated most of its aid and development activities to the Zakarpattya region. Meanwhile, Budapest supported the Eastern Partnership initiative of the EU, but when it came to Ukraine, was satisfied with the de facto leadership of the much more committed and better-resourced Poland. This low-level, passive Ukraine policy, which avoided direct conflicts and concentrated  meaningful activities on the Hungarian-populated periphery, did not irritate Russia either because the actions of Budapest remained under Moscow’s radar.

However, after the crisis began and particularly after the Russian annexation of the Crimea and the attack on Donbass, the balancing factors shaping Hungarian foreign policy have changed, not only regarding Ukraine, but also concerning the whole Russian dimension in the “Eastern opening.”

Since Russia’s aggression, almost all interests that defined Hungarian foreign policy towards Ukraine should have been pushing Budapest toward a more active engagement in the conflict. The need to maintain the stability of Ukraine started to belong to the pro-European group of interests, as only the West could prevent the further de-stabilization of Ukraine. Even minority-related interests should have pushed Hungary towards playing a more active role in Ukraine: since the war broke out, the real danger to the Hungarian minorities is not posed by Ukrainian hardcore nationalists (whose power and influence is largely overestimated), but the possibility of being taken to the frontlines and suffering combat losses, etc. In other words, even the need to protect the Hungarian communities in Zakarpattya should have motivated Budapest to get more actively engaged, support the EU sanctions against Russia and provide as much help to Kyiv as possible. The dependency on Russia is the only factor that was not changed by the crisis.

Despite the re-structuralization of its Ukraine-related interests, and the urgent need to get more actively engaged in Kyiv, Budapest is indeed not doing so. One may have the impression that Hungary sometimes even acts as Russia’s “Trojan horse”. For example, shortly after the annexation of the Crimea, Orbán made a controversial remark 3 where he demanded autonomy for Zakarpattya – a move that was perceived by many in Ukraine as an ill-timed direct threat. Thankfully Orbán never repeated this claim – it probably had more to do with the campaign for the May European Parliament elections in Hungary than it had to do with any real territorial ambitions towards Ukraine.

Shortly thereafter, during debates on the EU’s sanctions against Russia, the Hungarian Prime Minister criticized the EU’s tactics and labeled the sanctions as “a shot in our own leg”, 4 referring to the harm they had done to member state’s national economies, further weakening the far from rock-solid coherence of the EU’s Russia policy. Hungary was also a firm supporter of the South Stream gas pipeline project, and was ready to contradict the EU Commission in order to push forward the pipeline, which would have weakened the strategic transit positions of Ukraine, and then in late September, Hungary stopped the reverse gas flow to Ukraine, only two days after the visit of Gazprom CEO Aleksey Miller to Budapest.

Moscow does not believe in tears

The interesting element in this eagerly demonstrated Hungarian loyalty to Moscow is that it does not meet a similar response from Russia at all. On the contrary, Moscow has showed several times that it does not regard Hungary as any kind of a special partner, and that they in fact have the upper hand in bilateral relations.

In one such spectacular case in April the Russian Ministry of Foreign Affairs accused Hungary of delivering tanks to Ukraine, and even presented some photographic evidence. 5 The pictures later turned out to be fakes, as well as the whole story, but it did indeed cause inconvenient moments for the Hungarian diplomacy. Another sign that Hungary lacked any kind of special position was that the Russian food import ban hit Hungary too, as it did all EU countries; in other words, loyalty did not seem to pay off. Moreover, Hungary’s engagement in the conflict with the EU Commission about the South Stream gas pipeline occurred a week before the project was cancelled, which means that Moscow probably did not inform Budapest in advance.

However, the most demonstrative example of Russia´s real attitude towards Budapest is the extension of the Paks Nuclear Power Plant. The first agreements for the 10 billion euros credit line that was necessary for the construction were signed with an unexpected hastiness by the Hungarian side in December 2013. Despite the earlier declarations by the government that there would be a tender announced, the Russian company, Rosatom, was instead simply chosen as a contractor. The lack of a proper tender contradicts EU competition regulations, which pose a serious risk to the overall feasibility of the project. Moreover, contracting Rosatom reportedly raised serious concerns in the United States as well. Since then, a Hungarian NGO has managed to prove in court 6 that almost no preliminary studies existed at all about the possible effects of the extension of the power plant. This leads one to question whether the decision has been properly prepared and its future consequences thoroughly assessed.

Interestingly enough, almost all known information about the Paks deal has actually been published by the Russian side.  While the Hungarian government has been striving to keep the details of the project under wraps, Rosatom published the first agreements on its own website, completely disregarding Budapest’s secrecy efforts. In response in early December 2014 the Hungarian Parliament passed a law classifying almost all details of the Paks project, despite the fact that it concerned a decades-long, strategic commitment of Hungary vis-à-vis Russia. Shortly thereafter, on the 9th of December the concrete construction agreements were signed with Rosatom – oddly enough, only two days after a long telephone conversation between President Putin and Prime Minister Orbán about the situation following the cancellation of the South Stream pipeline project.

A lord and his vassal

Though researching contemporary Hungary-Russia relations is not an easy task due to the increasing lack of reliable information, two conclusions may still be drawn. First, the government of Viktor Orbán has not managed to maintain the pragmatic, non-politicized relations with Russia its predecessors had. Strengthening economic ties with Russia induced high political costs for Budapest’s relationship with the EU and the US. In other words, Orbán did not manage to keep up the complementary nature of his “Eastern opening”. It has already become a zero-sum game: the dubious economic gains achieved in the East generate serious political losses in the West. The decimated Hungarian foreign policy administration seems to be increasingly unable to cope with the complicated geopolitical turmoil Budapest has maneuvered itself into.

The second conclusion is that the dependency of Hungary on Russia has become stronger than it ever has been before. Due to the failure of both great diversification projects (i.e. the Nabucco and the South Stream) Hungary’s dependence on Russian gas and Ukrainian transit is unlikely to significantly decrease in the near future. Moreover, the Paks nuclear deal is going to bind Budapest to Moscow for several decades to come, both in terms of technology and financing. In other words, the energy-related dependency is actually increasing due to the Paks Nuclear Power Plant project.

Not surprisingly, a stronger dependency comes with an increasingly limited freedom of movement in terms of foreign policy in regards to Russia. The reluctance of Hungary to actively support Ukraine is a telling symptom of this. Moreover, as it is clearly demonstrated by the Russian information and economic measures against Hungary, this relationship is not one between two equal partners, but rather one between a lord and his vassal. The main question, which not only Budapest, but also the EU and NATO need to think about in regards to Hungary, is whether there is still a way out of the Russian bear hug.

Notes:

  1.  „Egy munkaalapú állam korszaka következik” (The Era of a Labour-Based State is to Come), www.fidesz.hu, 26 July 2014. Official website of the Fidesz party.
  2.  For a detailed list of names and positions, see: “Tudja még valaki követni, hogy Szijjártó csapattársai közül ki mindenki van állami állásban?” (Is there anybody still able to follow, how many team-mates of Szijjártó are in state employment?) www.444.hu, 13 December 2014.
  3.  “Orbán Viktor beszéde a miniszterelnöki eskütételét követően” (The speech of Viktor Orbán following his oath as the new Prime Minister), Official website of the Hungarian Prime Minister, 10 May 2014.
  4. Orbán: Russian Sanctions „Shot in Our Own Leg””, Hungary Today, 18 August 2014,
  5.  „Hulladékvas áron eladott honvédségi harckocsik – útban az ukrajnai háború felé.” (Hungarian Defense Forces tanks sold on scrap metal price – on the way to the war in Ukraine) Hidfo.net, 12 August, 2014.
  6.  “Itt az újabb botrány – nem léteznek paksi hatástanulmányok” (Here is the new scandal – feasibility studies about Paks do not exist), Napi.hu, 23 June 2014.
András Rácz

András Rácz

is Senior Research Fellow of the Finnish Institute of International Affairs (FIIA) in Helsinki, and Member of the Board of the Centre for Euro-Atlantic Integration and Democracy (CEID) in Budapest.