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Goulash State Corporatism Revisited

Once again Hungary sides with Russia to the detriment of European energy security by backing a politically divisive pipeline. I wouldn’t be so sure that Gazprom doesn’t have some deals brewing with Austria to keep this positive tension going – a sure fire way to defeat the Nabucco. Am I the only one who sees the irony of the fact that Russia’s leading presidential candidate is spending the week before the vote touring Southeastern Europe instead of campaigning back home? From the Financial Times:

Blow to US as Hungary backs Russian pipeline By Stefan Wagstyl in London, Kester Eddy in Budapest and,Neil MacDonald in Belgrade Hungary yesterday backed a planned Russian gas pipeline crossing south-east Europe, a move that risks angering Budapest’s western partners and could threaten the prospects of Nabucco, a rival pipeline supported by the US and the European Union. Ferenc Gyurcsany, the prime minister, announced the move during a visit to Budapest by Dmitry Medvedev, Russia’s first deputy prime minister and likely successor to the president, Vladimir Putin. The deal is expected to be signed in Moscow on Thursday.

The Hungarian decision puts Gazprom, the Russian gas monopoly, in a strong position to build its proposed $10bn-plus (£5bn, €6.7bn) Southstream pipeline, which would bring gas from Russia across the Black Sea and into the heart of the EU. Having secured the support this year of Bulgaria and Serbia, Gazprom has now obtained agreements for most of the route to Italy, the pipeline’s main destination. It is also in a position to build a link to Austria, central Europe’s gas hub, where the Russian group already enjoys close links. Gazprom has yet to decide whether to build a separate connection from Bulgaria across Greece and the Adriatic to southern Italy.Mr Gyurcsany and Mr Medvedev denied that Southstream was a threat to Nabucco, a rival western-backed route that would bring gas from central Asia to Europe via Turkey. Mr Gyurcsany said: “It’s in the interests of Hungary to have both pipelines crossing Hungarian territory.” The Hungarian section of the pipeline will be owned by a 50-50 joint venture between the government and Gazprom.Mr Medvedev said that for Russia the diversification of routes was important. Moscow is building Southstream and a Baltic Sea route called Nordstream to reduce its dependence on its current principal pipeline running through Ukraine.However, Nabucco’s backers are concerned that Southstream is gaining big commercial advantages by signing gas supply deals, leaving Nabucco in a weaker bargaining position. A US official said: “It’s important to remain focused on the clear Euro-Atlantic priority, which is Nabucco. It’s understandable that countries want to have as many pipelines crossing their territory as possible. But it’s a flawed approach because sequencing matters, and you want to put into place some diversification before deepening your dependence on a primary supplier.”The EU is in an awkward position, because while its collective gas policy is to encourage diversification of supply away from Russia, leading EU members, including Germany, France and Italy, have signed bilateral deals with Gazprom.* Mr Medvedev showed support for Serbia yesterday after what he called Kosovo’s “illegal” western-backed declaration of independence last week.”We proceed from the understanding that Serbia is a single state with its jurisdiction spanning its entire territory ,” he said.