by Zoltan Dujisin

06-04-07

Western powers are concerned that Hungary's relations with Russia, and especially the Russian state-owned energy giant Gazprom, are becoming too warm at a time when Europe seeks to reduce dependence from Russian natural gas.
Following a meeting with Russian President Vladimir Putin, socialist Prime Minister Ferenc Gyurcsany was accused by the Western press and the domestic opposition of making a side deal with Russia to support its Blue Stream gas pipeline, thus sabotaging European efforts to achieve energy independence.

The Blue Stream pipeline, initiated by Moscow and with already functioning sections, would transport Russian natural gas onto Europe through Turkey, and could turn Hungary into a regional distribution centre. Serbia, a traditional ally of Russia, is competing with Budapest for the function, but Hungary's advantage lies in its geological conditions, which allow for storing large quantities of natural gas.
Gazprom and MOL, the Hungarian energy giant, are already planning the building of a large natural gas storage facility in Hungary, and a feasibility study should be completed by July.

The pipeline is seen by Western analysts as competing with Nabucco, the EU's strategic pipeline project that would bring gas to Europe from the Middle East through Bulgaria, Romania and Hungary. With it, the EU hopes to diversify its energy sources.
Nabucco, a EUR 5 bn project whose construction has not begun, could also transport Russian gas among others, whereas the Blue Stream would only provide clients with Russian energy.

Gyurcsany dismissed the accusations of side dealing and refuses to unconditionally support either project as of yet, saying both are feasible. This position has allegedly caused discomfort in Washington and Brussels, who are not happy about Hungary pursuing an independent foreign policy with countries outside the EU.
The Prime Minister reminded critics the Nabucco project has been in the planning phase for 10 years and that European countries have not yet agreed on a common European energy policy, expressing greater trust in the Blue Stream pipeline.
"What am I to tell the Hungarian voters if I keep waiting for a plan that only exists on paper for long years and miss the opportunity right in front of us?" Gyurcsany asked. "Apartments cannot be heated with dreams," he added.

Gyurcsany also pointed to the fact that most large EU countries have signed long-term agreements ensuring Russian natural gas deliveries. Europe, currently Russia's major natural gas client, is nonetheless apprehensive over its increasing dependency on Russian energy, even though analysts point out both sides are co-dependent, and Nabucco would rely mostly on Iran, a country whose future international standing is uncertain.
Russia has been accused of using Gazprom to exert leverage on its neighbours, and Western analysts fear Moscow could employ energy as an effective foreign policy tool, resulting in international confrontations and possible gas shortages as was the case with Ukraine in January 2006.

The same analysts note Gazprom is putting too much effort in expanding to foreign markets and too little in developing its gas production. The right-wing opposition party Fidesz has also brought up the topic, prompting a swift reaction on the Russian side. Fidesz chairman Viktor Orban criticised Gyurcsany's cabinet for siding with Russia and betraying EU interests.
At a recent conference, Orban compared Gazprom to the Soviet Union, and spoke of differences between Russian and European mentality to hint at the alleged lack of independence of Russian market players, and at Russian state support for monopolies at home and abroad.

Russian ambassador to Hungary Igor Savolskiy, who was witnessing Orban's speech, took the floor and gave a sharp reply, reminding the audience the world is dealing with a new Russia that is open to the world and to negotiations. The ambassador told Orban that "party politics has no place in the Hungarian-Russian relations that havebeen developing promisingly," and added that "Russian suppliers would rather withdraw if they sense uncertainty in a market."
"Are we understood?" concluded Savolskiy.

Hungarian and Russian government officials have made several statements expressing satisfaction with bilateral economic relations in the recent past. Hungary still has a EUR 3.1 bn trade deficit with Russia, but recently the trade balance has changed in Hungary's favour, with exports of Hungarian products, especially agricultural ones, quadrupling, whereas Russian exports have increased by 27 %.
Moscow is also satisfied with finding a rational partner in a region where, due to last century's Soviet domination, anti-Russian emotions thrive and Russian capital is feared. An important signal on the Hungarian side was the sale of its national airline Malev to a Russian company.

Gyurcsany claims to be defending Hungarian national interests by diversifying Hungarian exports and securing the country's energy supplies in the long term. Healso called for a comprehensive European-Russian agreement on energy.
Hungary could, however, find other ways to diversify its sources, Claude Mandil, director- in-chief of the International Energy Agency said. Mandil said Hungary should reduce its highly wasteful household and industrial energy consumption, and recommended more use of nuclear, hydroelectric and renewable energy sources.

This view is supported by Igor Breitner, a senior researcher at the Antall Jozsef Foundation.
"We have to consider changing to alternative and green resources, we consider it better to join the European way than to be absolutely dependent on Russian oil and gas: this could be very dangerous."
"A change could even come in a matter of a few years, the EU would absolutely support any attempts at lowering our dependence," Breitner told.
 

Source: IPS