Hungary denies EU blocked Russian nuclear deal

Hungary denied on Thursday night (12 March) a Financial Times report that the EU has, in effect, blocked its €12 billion nuclear deal with Russia.

The FT said the EU strangled the project when the European Commission last week decided to back Euratom in its refusal to approve Hungary’s plan to import nuclear fuel exclusively from Russia.

All nuclear fuel supply contracts signed by EU member states must be approved by the European Atomic Energy Community.

Hungary appealed against the decision, but according to the FT, the commission last week rejected its case.

Hungary will now have to negotiate a new fuel contract or pursue legal action against the commission, the newspaper said.

Hungary’s prime minister Viktor Orban i concluded the deal in January 2014 in Moscow to have Russian state owned firm Rosatom build two 1,200 megawatt reactors at Hungary’s Paks facility, which provides 40 percent of the country’s electricity.

Besides building the reactors, Moscow is also to provide Hungary with a €10 billion loan to finance the project. Construction is set to start in 2018.

“This is a very favorable deal for Hungary,” Russian president Vladimir Putin i said during his recent visit to Budapest.

Moscow relations

The project has been seen as yet another example of Orban cozying up to Putin, raising concerns on EU solidarity in the face of the Ukraine conflict and the bloc’s Russia sanctions.

It also comes as the latest in a series of disagreements between Brussels and Budapest, on energy, civil liberties, and good governance, and has the potential to enflame relations.

"It’s not true that the EU has blocked Paks II construction," Andras Giro-Szasz, the spokesman for the prime minister's office, told the MTI newswire on Wednesday, adding that he has asked the FT to issue a correction.

Despite the denials, Hungary’s own EU commissioner, Tibor Navracsics i told the Index.hu news website that the decision was in fact taken by the college last week in a written format.

Navracsics noted that the commission asked Hungary if it agrees to make Euratom’s report public, but Budapest has not replied so far.

Monopoly?

The actual contracts of the Paks project have been classified by Hungary as a state secret, making it difficult to know what it says on fuel supplies.

If the Russian signatories made it a condition that only they can sell it, then the commission is in its rights to question the deal.

But if there is room for other companies to join in, this might offset EU concerns.

Hungarian media recently reported that the government is in talks with a US firm, Westinghouse, to supply fuel to the new reactors.

But other aspects of the deal have also raised eyebrows in Brussels.

The European Commission is looking into how Hungary awarded the contract to Rosatom in the first place (there was no public tender) and whether the financing arrangements constitute state aid.