Gazprom

Péter Szijjártó’s trip to Israel

I often wonder where Viktor Orbán manages to find the characters he surrounds himself with. A former auto repairman is apparently the brains behind the Fidesz propaganda machine. Another new star is a man who knows practically nothing about either economics or business practices but who expounds daily about the blessings of lower utility prices. A former pastry chef is the chief spokesman for the party. The auto repairman is practically invisible, but the others are very much in the limelight.

Stars come and go in the world of Fidesz. Orbán often has a sudden new favorite who catches his eye, and in no time this person finds himself in a very important position. The former favorite is unceremoniously dropped. The chief is, however, generous with those who fall from grace. An important position in some office or state company is normally awarded as a consolation prize.

It was perhaps the rise of Péter Szijjártó that was the most spectacular. At the age  of 20, straight out of high school, he became a member of the Győr City Council. A year later he established the local chapter of Fidelitas, the youth organization of the party. At the age of 23 he acquired a high position in the party hierarchy on the county level. During these years he also attended Corvinus University. Straight out of college he became the youngest member of the Hungarian Parliament in 2002.

After 2006 he was promoted to occupy the important position of Fidesz spokesman. He headed the “parrot commando,” as the Fidesz communication team was called by the party’s critics. He became Viktor Orbán’s voice since  Orbán himself rarely spoke or gave interviews in those days. Szijjártó also often acted on behalf of the party chairman. For example, he was entrusted with answering a letter from Gordon Bajnai to Viktor Orbán, inviting him to discuss the economic program he was planning to introduce after he agreed to serve as prime minister. It was a rude, impertinent response to Bajnai’s polite letter. I suggest you take a look at that exchange because it tells a lot about Szijjártó, Orbán, and Fidesz. The picture is not pretty.

Once Fidesz won the election, Szijjártó became a personal spokesman for Viktor Orbán. Szijjártó accompanied Orbán everywhere he went. You could see him in Brussels as well as in Moscow, sitting right next to the prime minister. Obviously, he proved to be indispensable as a kind of negotiating partner because in May 2012 at the age of 33 Szijjártó was basically entrusted with Hungary’s foreign policy and trade relations. Foreign Minister János Martonyi is a figurehead; Szijjártó, by contrast, seems to spend more time on airplanes than on the ground. He is in charge of Orbán’s pet project: the opening to the East.

It is hard to tell how successful he is at convincing Far Eastern, Central Asian, and Near Eastern countries to extend trade relations with Hungary. Lots of travel, lots of boasting, a great forecast but apparently the results are meager. His age (after all, he is by now in his mid-thirties) shouldn’t be an obstacle, but unfortunately he looks a great deal younger and doesn’t give the impression of a serious and knowledgeable man. He looks like a punk and I fear he is a punk.

szijjarto frizura

So, let’s see how Szijjártó operates on the ground. He just spent a couple of days in Israel where he gave an “exclusive” interview to The Jerusalem Post. It turns out that Szijjártó, in a meeting with Finance Minister Yair Lapid, “offered Israel access to Hungary’s 7 billion cubic meters of state-owned gas storage.” I assume he was talking about the storage the Hungarian government just bought way above market value from the German company E.on. And then came the usual boasting and exaggeration: “we could be a central European distribution hub for Israeli gas.” While at home the state-owned company just signed an agreement with Gazprom, Szijjártó in Israel complained about dependence on Russian gas which “means that we’re quite defenseless.”

While there, Szijjártó met with executives of Teva Pharmaceutical Industries Ltd., including the recently ousted CEO of the company Jeremy Levin who was awarded the Officer’s Cross of the Merit Award, one of the highest civilian awards in Hungary. Bad timing, I would say.

I am not sure why Szijjártó felt it necessary to inform the Israeli public and perhaps even the government that Hungary often goes against the policies of the European Union. For example, on the issue of nuclear energy. While the rest of Europe wants to lower or even exclude nuclear energy by 2020, Hungary is moving in an entirely different direction. Right now 43% of electricity comes from nuclear energy in Hungary, and the Orbán government wants it to be 60-70%. Thanks to Szijjártó’s “exclusive” interview, at last the Hungarian people and politicians could learn about Viktor Orbán’s plans, which he hadn’t bothered to share with anyone at home.

He also told the reporter that “while the EU pushed a platform of human rights and diversity, Hungary was forcefully embracing its Christian heritage.” I bet that made a real impression in Israel, especially when in Eastern Europe the largest Jewish community can be found in Hungary. It is not terribly difficult to come to the conclusion that if a nation forcefully defines itself as Christian, the non-Christians might not be considered part of that nation.

Before the rise of Szijjártó to his current position of roving ambassador, Orbán tried to impress China and Russia without much success. The emissary then was Tamás Fellegi, Viktor Orbán’s senior adviser in law school. At least Fellegi looked like a serious negotiator with academic credentials and business experience in the United States and in Hungary. But he failed miserably and was packed away in Washington to head a Hungarian government lobbying group. Then came the “wonder boy.”  I wonder how long he will last.

Russia and the European Union on a collision course over the South Stream pipeline

It was a week ago that the European commission told Russia that the “South Stream” pipeline, already under construction, and the contracts between Gazprom and six members of the European Union, including Hungary, violate European Union law. Klaus-Dieter Borchardt, director for energy markets at the European Commission, told the European Parliament on December 4 that the “intergovernmental agreements are not in compliance with EU laws.” The EU countries that signed agreements with Gazprom were told that “they have to ask for re-negotiations with Russia, to bring the intergovernmental agreements in line with EU laws.” The countries in question are Bulgaria, Hungary, Greece, Slovenia, Croatia, and Austria, as well as Serbia, which is a member of the Energy Community, an EU-backed international agreement covering former communist countries in Eastern Europe.

Deli Aramlat

The European Commission identified three major problems with the South Stream. First, Gazprom is in violation of the so-called ownership “unbundling” rules, according to which a company cannot be both a producer and a supplier of gas. It cannot own production facilities and transmission networks. Clearly, Gazprom does. Second, according to EU law, non-discriminatory access of third parties to the pipeline must be ensured. In other words, Gazprom cannot have the exclusive right to supply gas through the pipeline. Finally, the Commission found problems with the tariff structure.

If these treaties must be renegotiated, there will be a delay of not months but, according to Borchardt, at least two years. Bulgaria has already protested. Bulgarian foreign minister Kristian Vigenin, who used to be a member of the European Parliament, made it clear that his country is not happy with Brussels’ decision. “It is not a nice move to slow the construction, because the parties to the track area are already in readiness to kick off.” He emphasized that “this is a very important project” for Bulgaria and expressed his hope that the European Union will not “stop the South Stream project.” Bulgaria already began construction of the South Stream at the end of October.

Brussels, however, seems to mean business. Borchardt said “in all openness and frankness that the South Stream pipeline will not operate on the territory of the EU if it is not in compliance with our energy law.” The Russians seem to be as resolute as the European officials are. A representative of Gazprom who was present at Borchardt’s announcement stressed that “nothing can prevent the construction of South Stream.” Russia’s position is similar to that of Viktor Orbán: EU law cannot prevail in EU-Russian relations, which are governed only by international law.

The Hungarian media covered the news coming out of Brussels, but the Hungarian government offered no response to the rather harsh verdict of the European Commission on the bilateral treaties that had been negotiated with Russia. Although here and there one could read about visits of Gazprom officials, nothing was known about the actual state of the negotiations and their particulars. Only yesterday Világgazdaság, a normally well informed paper dealing with economics and finance, reported that perhaps in the next week or so Orbán and Vladimir Putin will talk about the EU objections. Apparently Mrs. László Németh, the minister in charge of national development, was charged with preparing the prime minister’s visit to Moscow. I’m not sure, however, whether this meeting will actually take place. Because, as we just found out today, an agreement has already been signed.

As usual, details of Hungary’s negotiations with foreign powers came from the other side. The Hungarian public learned today that Aleksei Miller, president of Gazprom, paid a visit to Budapest yesterday and signed an agreement concerning the construction of the South Stream pipeline. Journalists immediately bombarded the head of Orbán’s press department for details. They were told that the prime minister and the head of Gazprom didn’t sign any agreement. He added that negotiations between Mrs. László Németh and Gazprom will proceed according to plans.

So we had two versions of the story. Someone was not telling the truth. At least this was the conclusion journalists of opposition papers came to. Stop, an online site, asked its readers whom they believed, the Hungarian government or the head of Gazprom. A relatively new online paper whose political views seem to me to be close to the Demokratikus Koalíció talked about the “selective memory” of the officials of the Orbán government.

It turned out that the spokesman for Viktor Orbán didn’t lie outright. It is true that Orbán himself didn’t sign anything. But something was signed all right: an agreement between Gazprom and MVM (Magyar Villamos Művek/Hungarian Electricity Ltd.), a state-owned company. As I understand it, MVM and Gazprom established a joint company called Déli Áramlat Zrt (South Stream Corporation), each with a 50% ownership. It is a large, expensive project that might pose serious financial risks to MVM, especially if the EU stands fast.

Experts figure that the Hungarian part of the project will cost around 300 billion forints, for which MVM will be responsible. Today’s Népszabadság points out, however, that MVM will be able to borrow such a large amount of money only if the project has the European Union’s blessing and financiers feel safe lending so much money to the Hungarian company.

I have the feeling that this is just the beginning of an extended imbroglio. Viktor Orbán is ready for his next battle with the EU, Hungary’s enemy.