Viktor Orban’s Goulash Energy Policy Makes Hungary Putin’s Trojan Horse In Europe

On Wednesday, Hungary demanded that shipments of Russian oil be exempt from the European Union’s proposed sanctions. This statement comes amidst tense negotiations between Budapest and Brussels over the EU’s sixth round of penalties against Moscow. Budapest has proven the most skeptical of the plan, which requires the unanimous consent of member states. It is perhaps unsurprising given Hungary imports more than 60 percent of its oil from Russia.

Hungary claims its geography and heritage make abandoning Russian energy impossible— it is landlocked, energy supplies come mainly from the Soviet-era Druzhba pipeline, and most renewables are too expensive. These are almost believable excuses, so long as one ignores all of Hungary’s neighbors and its own energy policies.

Since returning to power in 2010, Prime Minister Viktor Orban has deliberately increased Hungary’s reliance on Russian imports as a political stratagem. Last year Hungary signed a new fifteen-year gas supply deal with Gazprom when other countries sought to reduce their dependence on Russia. Budapest puts a premium on low prices for utility bills for reasons of politics and economic competitiveness, and the Russian gas giant has been eager to offer price cuts.

Low energy prices have been a focus of Prime Minister Orban and crucial to his right-wing populist party Fidesz’s hold on power. This “energy welfare” proved effective for Hungary’s populist leader and his ally in the Kremlin. Low energy costs helped Orban hold onto power and gave Russia unparalleled leverage in Hungary— a Trojan horse inside the EU to advance its agenda.

With lower energy prices buttressing Orban’s power, Russian energy imports contributed to Hungary’s democratic backsliding. Orban butting heads with the EU for his sustained attacks on Hungary’s independent press and judiciary, women’s rights, and electoral irregularities make Moscow’s goal of weakening the EU real. These actions are possible because of his political stratagem. Although many Hungarians do not like the country’s direction, many fear the economic blowback from severing a relationship with Russia.

But what of Hungary’s neighbors which did not fall into this quandary? Poland made a conscious effort to diversify its energy sources and is one of the leading voices calling for sanctions. The country is fortunate to possess one of the largest coal-producing areas in the European Union – the Upper Silesian Coal Basin. Approximately seventy percent of Poland’s power is generated by coal, whereas oil, gas, and renewable energy make up the rest.

In addition to utilizing its ample coal resources, Poland diversified its energy supply with liquefied natural gas imports shipped to its terminal at Swinoujscie. The country finished the terminal in late 2015.

Warsaw has also begun an extensive nuclear power plant construction program, partnering with South Korea’s state-owned Korea Hydro Nuclear Power company to construct six APR1400 nuclear reactors. Two more companies, US-based Westinghouse and French-based Électricité de France SA, have also expressed interest in further reactor construction.

While Poland’s domestic coal resources and access to seaports help the country oppose Putin’s war machine more boldly, fellow landlocked Visegrád Four members, Slovakia and Czechia, still show courage by supporting Ukraine. This bravery demonstrates that Budapest’s reluctance to sever its relationship with Russia is not only because Hungary relies on the country’s energy imports. The governments in Bratislava and Prague — still heavily dependent on Russian oil and gas have taken bold steps to oppose Putin’s aggression, including Slovakia reversing its gas supplies to Ukraine. Both countries have sent heavy weapons to Kyiv and spoke frankly about a reliance on Russian hydrocarbons— despite asking for a longer timeframe to transition away from that dependence.

In contrast, Orban warned his supporters that a vote against him was a vote for war and that the country should be wary of getting between the ‘Ukrainian anvil and the Russian hammer’. Hungary has refused to send weapons to neighboring Ukraine and has avoided personal criticism of Russian President Vladimir Putin. Budapest has repeatedly shown little concern outside of keeping energy prices low to bolster Fidesz’s power. While Hungary did vote for an embargo on Russian coal, Orban himself said in a radio interview that step was permissible because it did not affect the country.

On Friday, a top European Commission official stated that the EU is “very much determined” to reach unanimity on banning Russian oil. However, a tremendous amount of damage has already been done. Orban’s energy strategy has been laid bare, Hungary’s democratic institutions have been damaged, and European unity against Russia has been demonstrably thwarted at critical junctures by Budapest.

When Orban won a controversial reelection in early April, he criticized Ukrainian President Volodymyr Zelenskyy in his acceptance speech and received congratulations from Russian President Vladimir Putin. To paraphrase the old Hungarian adage, Orban’s goulash energy policy aims to make Hungary the “happiest barrack” in the pro-Moscow camp rather than the free, democratic, and energy-conscious state its neighbors have strived to become in recent years.

With assistance from Marco Rodriguez