Hungary stops supplying gas to Ukraine and makes its own gas deal with Russia

The news of the day is Hungary’s decision to stop the supply of gas to Ukraine despite its pledge to assist its beleaguered neighbor. Although the AFP news service assumes that the decision came after “threats from Moscow,” I have a different take on the matter. To make my case I have to go back a few weeks in time.

It is true that Russia was playing games with its gas supply to Poland and Romania, but Hungary was in no way affected by these Russian measures, most likely because of the cozy relationship that exists between Putin and Orbán. On the contrary, in the last few months large amounts of gas arrived in the country from Russia. Currently, the storage facilities are 60% full, and even larger amounts of natural gas will come from Russia in the next few months. Poland indeed had to temporarily stop its supply of gas to Ukraine on September 10, only to resume its operations two days later when Russia assured Poland that it would send an adequate supply of gas to the country in the future. Romania began receiving less than the usual amount of gas on September 15.

Instead of worrying about natural gas from Russia, on September 18 a very upbeat article appeared in Magyar Nemzet telling its readers that “we can be the gas center of Europe.” The article reported that two days earlier Miklós Seszták, minister of national development, conducted negotiations with Anatoly Yanovsky, Russian deputy minister for energy affairs, concerning the storage of 500 million cubic meters of Russian gas in Hungary “to facilitate the supply of Europe with gas in case of irregular transit shipments through Ukraine.” These plans are not new.  They were apparently first discussed in October 2012 when Aleksey Miller, CEO of Gazprom, had a meeting with Viktor Orbán in Budapest. However, the precondition for such a deal was the nationalization of the storage facilities. The Hungarian government subsequently purchased them from the German company, E.ON, at an incredibly high price. Although auditors warned the government about the pitfalls of the deal, Orbán insisted. It looked as if he did not care about the price. Now we know why.

Yanovsky had barely left Hungary when Aleksey Miller arrived in Budapest. The meeting of Miller and Orbán was kept secret from the Hungarian people, who read about it on Gazprom’s website. This is not the first time that we learn about important meetings and bilateral negotiations from the media of countries for whom close relations with Hungary, a member of the European Union, are important but who are not exactly friends of the West. The Hungarian government would rather not inform the world about its dealings with such countries as Iran, Belorussia, Azerbaijan, and Kazakhstan. According to Gazprom, “the talks were focused on the issues of reliable and uninterrupted gas supplies in the coming winter period. The parties paid special attention to the implementation of the South Stream project and noted that it was progressing on schedule.”

Source: Gazprom.com

This morning, three days after the Miller-Orbán meeting, Viktor Orbán announced that Hungary would indefinitely suspend supplying Ukraine with natural gas. According to Itar-Tass “the decision was made to meet the growing domestic demand for gas,” FGSZ, the Hungarian company operating the pipeline, said. Yet MTI reported today that even Serbia might be able to receive gas from the Hungarian storage facilities. So, surely, there is no shortage of gas in Hungary. The European Union is anything but happy about the suspension. Helen Kearns, a spokeswoman for the European Commission, in an answer to a reporter’s question on Hungary’s unilateral suspension of the gas supply to Ukraine, said that “the message from the Commission is very clear: we expect all member states to facilitate reverse flows as agreed by the European Council.” Naturally, Naftogaz, the Ukrainian gas company, also urged its “Hungarian partners to respect their contractual obligations” and said the Hungarian decision “goes against the core principles of the European Union single energy market.”

After delivering his usual Friday morning radio interview Viktor Orbán left for Berehove (Beregszász), in the area of Ukraine south of the Carpathian Mountains officially called Zakarpattia Oblast, to deliver a speech at the Hungarian-language college situated in the town where about half of the population is Hungarian speaking. Altogether there are three smaller territorial units within the oblast where there are significant Hungarian populations: in the uzhhorodskyi raion (33.4%), in vynohradiv raion (26.2%), and in the area around Berehove where they are actually in the majority (76.1%). Altogether there are about 120,00 Hungarians out of a total population of 1,254,614. The distribution of Hungarians in the oblast can be seen here.

Orbán indicated in his early morning interview today that Hungary will support Hungarians in the neighboring countries who demand autonomy. Although he did not specifically mention the Hungarian diaspora in Ukraine, he was obviously also talking about them. This was not the first reference to possible autonomy for Hungarians in this region of Ukraine. At the outbreak of the Russo-Ukrainian crisis Orbán already mentioned such a demand. He made it clear, again not for the first time, that his main concern in this very serious international crisis is the fate of the Hungarian minority. He promised his audience that Hungary will not do anything that would harm his Hungarian brethren, which I found interesting in light of the decision to cut the flow of gas from Hungary to Ukraine.

While Viktor Orbán was in Berehove, representatives of the European Union, Russia, and Ukraine got together to come up with an energy deal that would ensure the supply of Russian gas to EU members and Ukraine over the winter. In return, Ukraine would repay $3.1 billion of its debt to Russia.  The first installment, $2 billion, would be due by the end of October and the rest by the end of December. If Russia agrees to this deal, it would avert an immediate crisis, although it would not resolve the deeper dispute over what price Kiev should pay for past and future deliveries. The Ukrainian government earlier filed suit with the Stockholm Arbitration Court against Russia for making it overpay for gas since 2010. A decision may be reached by next year.

On the one hand, Ukraine seems to be happy that, after so many unsuccessful attempts, there is hope of an agreement but, on the other hand, it is unhappy that the price of Russian gas “is dependent on the decisions of the Russian government.” According to Kyiv Post, “Ukraine will under no circumstances recall its suit from the Stockholm Arbitration Court.”

If this deal goes through, as it seems that it will, perhaps it was unnecessary for Hungary to unilaterally and abruptly stop the flow of gas to Ukraine. By this decision Orbán further emphasized his pro-Russian sympathies and undoubtedly further alienated himself from Western governments.

The Ukrainian crisis: Hungary between Russia and the West

There are occasions when it becomes blatantly obvious how little the Hungarian people are told about their government’s activities. I’m not talking about state secrets but about everyday events. I find it outrageous, for instance, that I had to learn from a Polish Internet site that Donald Tusk, the Polish prime minister, had a talk with Viktor Orbán in Budapest before flying to Brussels. There was not a peep about this meeting in Hungarian papers, presumably not because Hungarian journalists are a lazy lot but because the prime minister’s office failed to inform the Hungarian news agency of the meeting. The less people know the better.

There is official silence in Budapest on the Ukrainian protest, perhaps soon civil war, with the exception of a short statement issued by the Hungarian foreign ministry at 5:12 p.m. today. I assume there had to be some kind of communication between the prime minister and his foreign minister. If we compare the Hungarian statement to the words of Donald Tusk we can be fairly certain that the two men didn’t see eye to eye on the issue.

According to Tusk, “the moral judgment here is black-and-white, there are no gray areas.” Moreover, “the responsibility for the violence in Kiev rests with the government, not the opposition.” And what did the Hungarian communiqué say? “The responsibility of the Ukrainian government is decisive, but the parliamentary opposition forces must keep their distance from extremist groups.” While according to Tusk “the crisis in Ukraine could determine the course of the whole region” and  requires the European Union to prepare for commitments lasting “not for hours, days or weeks, but for many years,” the Hungarian foreign ministry simply stated that “Hungary finds the European Union’s active participation in the interest of a lasting solution to the country’s political and economic crisis important.”

One can only guess why Tusk had to stop in Budapest on his way to Brussels, but whatever transpired in that meeting it didn’t result in Hungary’s forceful condemnation of the Ukrainian government and its active participation in the process contemplated by the United States and the European Union. Tusk specifically mentioned Poland’s interest in Ukraine because of its common border and historical ties. Both are also true about Hungary’s relations with Ukraine.

It seems to me that Viktor Orbán got himself into a rather uncomfortable situation with his hurried agreement with Russia on the Paks nuclear plant. Pro-government papers, like Heti Válasz, show that journalists in government service feel obliged to defend Vladimir Putin and his policies. One spectacular sign of “loyalty” was an article that appeared in the paper about a week ago in which the author expressed his disgust with the American campaign for the rights of gays and lesbians that prompted a partial boycott of the Sochi Olympics. If the Hungarian right feels that it has to come to the rescue of Putin in this case, one can imagine its position when it comes to such a momentous event as the near-civil war situation in a Ukraine torn between East and West.

While Tusk welcomes Ukrainian refugees and Polish hospitals are taking care of the wounded, nothing was said about any Hungarian willingness to take in refugees if necessary. In fact, I detected a certain fear that such an onslaught might reach the country. There is some worry about the Hungarian minority of about 200,000 in the Zakarpattia Oblast, especially around Beregovo/Beregszász. The Hungarian Inforadio announced tonight that according to a Ukrainian Internet paper “the change of regime has been achieved peacefully in Zakarpattia Oblast.” This may simply be sloppy reporting, but we know that regional capitals all over western Ukraine are engulfed in violence and that in some places the opposition took over the administration. Ukraine is falling apart at the seams. All this is far too close for comfort as far as Hungary is concerned. Yet Viktor Orbán is sitting on the fence.

Source: Wikipedia

Meanwhile Donald Tusk has taken the initiative with spectacular success. He flew to Brussels to facilitate a quick decision on the Ukrainian crisis and assembled a delegation of French, German, and Polish foreign ministers to visit Ukraine tomorrow. They will assess the situation before a meeting in Brussels to decide whether to impose EU sanctions on Ukraine. While French Foreign Minister Laurent Fabius was giving a press conference, U.S. Secretary John Kerry was standing by his side. He stressed President Viktor Yanukovich’s “opportunity to make a choice.”

At the same time German foreign minister Frank-Walter Steinmeier had a telephone conversation with Russian foreign minister Sergei Lavrov who urged EU politicians “to use their close and everyday contacts with the opposition to urge it to cooperate with the Ukrainian authorities, to comply with agreements reached and to decisively distance itself from radical forces unleashing bloody riots, in fact, embarking on the route to a coup.”

It seems that Hungary is trying to strike a “balance” between the western position and that of Russia. It will be difficult.

Meanwhile in Hungary a liberal blogger compared the two Viktors and found many similarities. Neither is a democrat, both are corrupt, and both built a mafia state with the help of their oligarchs. And yet Ukrainians are fighting in the streets while in Hungary Orbán still has a large and enthusiastic following. In his post he tries to find answers to the question so many people ask: how is it that the Hungarian people have not revolted yet? Are they less freedom loving than the Ukrainians? Are they longer suffering? Can they be more easily fooled? Our blogger is convinced that one day Hungarian patience will run out. He gives Viktor Orbán a piece of advice: “Keep your eyes on Ukraine!”