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Russia Courts Hungary and Bulgaria on Pipelines

Loyal readers may recall a critical article we recently posted by the talented academic Janusz Bugajski, which argued that Russian energy imperialism uses a strategy of targeted disaggregation, especially focusing on new EU member states in critical geographic positions:

“The Kremlin not only manipulates divisions between older and newer members. It also aims to forestall any common policy among EU newcomers. Hungary and Bulgaria have become the primary targets among former Soviet satellites. The Kremlin is capitalizing on long-standing personal connections with Socialist officials in these countries to construct pipelines and distribution points that will pre-empt Europe’s energy diversification.”

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Bulgarian PM Sergei Stanishev and Vladimir Putin

As news developments are showing this week, it seems Bugajski hit the nail right on the head. Last week, Alexei Miller of Gazprom led a large delegation to Bulgaria and held numerous high level meetings, including some face time with Prime Minister Sergey Stanishev, to discuss major energy projects. Bulgaria has also recently signed an agreement with Greece and Russia to build the Burgas-Alexandrupolis Pipeline (BAP), which will end the Turkish stranglehold on the Bosporus Strait (one of the world’s major chokepoints), causing some critics to cry foul that Russia is undermining Turkey’s role as a transit country. The fall out in Hungary over the socialists’ agreement to support the extension of the Blue Stream pipeline is also beginning to heat up, and has put the government on the defensive. Viktor Orban, leader of the opposition party Fidesz, has dramatically compared Ferenc Gyurcsány’s administration’s warm relations with Russia with a submission to communism:

Those young people following us should not allow Hungary to become Gazprom’s most cheerful barracks after we freed ourselves from the fate of being the Soviet system’s most cheerful barracks,” Orban said in a speech to mark his party’s 19th anniversary. “The Fidesz generation is sending a message: we did not show the door … to the Russians, to the Soviet Union, to communism only for them to climb back in the window,” he continued. “Oil may come from the east, but freedom always comes from the west.”

nabucco2.jpg Gazprom’s “most cheerful barracks” in Hungary and Bulgaria may prevent alternative pipeline proposals (such as Nabucco or Baku-Samsun-Ceyhan) which would help Europe diversify off Russian oil and gas. Hungary’s Socialists aren’t taking this criticism lying down though, and in statements made to the FT and other media sources they argue that indeed Nabucco is still supported, and that, in fact, it is resolutely hypocritical to solely blame Hungary for the lack of a common EU energy policy toward Russia. After recent decisions made by Italy and Germany, I’m afraid that I thoroughly agree with the painful truth of that latter statement.

In interviews last week, senior government officials in Budapest expressed surprise that Hungary had been widely accused of undermining Europe’s energy security by signalling its interest in Blue Stream II, a Russian-backed pipeline that would bring Russian gas from Turkey to Hungary. In international press reports, unnamed officials from Brussels to Turkey have worried that Hungary’s backing of Blue Stream could kill the proposed Nabucco pipeline, which would also run from Turkey to Hungary, but would carry gas from the Caspian region and reduce Europe’s dependence on Russian energy supplies. Analysts and policymakers have become concerned about Europe’s dependence on Russian oil and gas because the Kremlin has demonstrated its willingness to use energy supplies and prices as pressure tools in relations with Russia’s neighbours. Kinga Goncz, Hungary’s foreign minister, repeated assurances that Hungary still backed Nabucco and was simply keeping all its options open. She played down the idea that Hungary was under fire from its European partners. However, other Hungarian officials said that behind the scenes, EU and US diplomats had expressed “concern” that Budapest might pull out of Nabucco. One senior official close to Ferenc Gyurcsany, the prime minister, said some EU countries were being hypocritical. “The question in not whether Hungary is supporting a common energy policy, because we do not have this policy. The policy does not exist and it is not because of Hungary,” he said. The same official said Germany, France, Italy, Romania and Bulgaria had all recently signed new long-term supply contracts with Gazprom, the Russian energy giant, but none had been accused of undermining Europe’s energy security.