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Thursday, 27 November 2014


Hungary retreats from Putin as Orban rediscovers Germany

Hungarian premier Viktor Orban is trying to keep his balance as the geopolitical ground shifts beneath him, and that means taking a step toward Germany and away from Russia.
Orban has made a point of cultivating ties with President Vladimir Putin, criticizing the sanctions imposed on Russia and negotiating a $14 billion loan from the Kremlin. This month the Hungarian leader sent different signals when he voiced support for Ukraine’s territorial integrity, called Germany his “compass” on foreign policy and visited NATO troops stationed in Lithuania

Germany, Europe’s biggest economy and Hungary’s no. 1 investor, is calling for ties with Russia to be “remapped” as the standoff over Ukraine is pressuring countries from Azerbaijan to Moldova to choose sides. While Orban says there’s no need for Hungary to do so, he is creating distance from Putin and celebrating ties with Germany as Chancellor Angela Merkel urges “patience and staying power” to overcome the crisis.
“Orban’s done a 180-degree turn on Ukraine,” Manuel Sarrazin, deputy chairman of the German-Hungarian group in the Berlin parliament, said by phone. “He realized with some prodding by Merkel that he’d seriously underestimated” the conflict and “he profoundly underestimated Merkel and the position Europe was taking behind her.”
That recognition moved Orban to invest time and effort to burnish Hungary’s image as a member of the European Union and the North Atlantic Treaty Organization, while keeping Putin, who as recently as last week called Hungary a “key partner,” at arm’s length.

‘At War’

The conflict in Ukraine, which borders Hungary, shows no sign of abating. Ukrainian Prime Minister Arseniy Yatsenyuk told parliament Nov. 27 the country is “at war,” while the United Nations last week cited a “total breakdown of law and order” in the east and linked Russian fighters to human rights violations there.
Russia denies taking part in the conflict, says it respects rebel demands for autonomy in Ukraine’s east, and accuses the U.S of instigating the crisis.
Orban’s charm offensive is focused on Germany, the driver of EU policies and Hungary’s most important economic partner. More than a quarter of all foreign direct investment in Hungary last year came from Germany, according to central bank data. Russia, the source of 80 percent of Hungary’s gas consumption, represents less than a 10th of a percent.

‘Danke Ungarn’

Increased output at local units of carmakers including Daimler AG and Volkswagen AG helped Hungary’s economy grow 3.9 percent in the second quarter, the most in almost eight years. German companies employ more than 300,000 people in Hungary and have invested more than 6 billion euros ($7.5 billion) in factories since 2010, Economy Minister Mihaly Varga said Nov. 21.
As a sign of Orban’s push, the Hungarian leader visited Germany twice in the past month and decorated German parliamentarians in Budapest. Hungarian state television will dedicate a day of programming to Germany on Nov. 30.
Hungary is also mounting an advertising drive in Germany based on the slogan “Danke Ungarn” or “Thank You Hungary.” It’s a reference to Hungary’s decision to let East German vacationers cross into Austria in 1989, precipitating the fall of the Berlin Wall. The campaign, sponsored by German investors in Hungary, is aimed at shoring up Hungary’s image after criticism over Orban’s unprecedented consolidation of power, as well as to remind Germans of Hungary’s place in Europe.

NATO Pledge

Last weekend, Orban visited troops serving in a NATO force in Lithuania and said Hungary doesn’t want to share a border with Russia after four decades as a Soviet satellite. He pledged to boost defense spending closer to the alliance’s target of 2 percent of gross domestic product, saying priorities have changed as the crisis in Ukraine makes the region “tense and jittery.”
“Our interest is for Ukraine to retain its sovereignty, for it to be strong,” Orban said, according to a video on his Facebook page. “We’re going to give all the help we can to do this.”
Rapprochement with Russia was part of Orban’s “eastern opening,” which followed his 2010 election victory and aims at reducing Hungary’s reliance on the ailing EU economy.
It has borne some fruit, the highlight being a $14 billion Russian loan in January to expand Hungary’s nuclear plant. Hungary’s parliament this month defied the EU by giving a green light to the proposed South Stream gas pipeline, which would carry Russian gas to Europe by circumventing Ukraine.

‘Communist Way’

Orban has sought to play down talk of a foreign policy reversal. He said on Nov. 20 that asking which side Hungary takes in the Ukraine conflict is the sign of a “communist way of thinking.” His rhetoric, though, has changed.
Over the Ukraine crisis, the Hungarian leader has also largely kept away from the chorus condemning Putin. As the pro-Russian insurgency in eastern Ukraine picked up, Orban in May demanded autonomy for Hungarians in western Ukraine. In August, he urged the scrapping of EU sanctions against Russia, saying the bloc was “shooting itself in the foot.”
Hungary in September cut gas supplies to Ukraine after Orban met with OAO Gazprom Chairman Alexei Miller. Officials in Budapest indicated this week that the country would be ready to restart shipments to its eastern neighbor next year.

East, West

“We’ve always been a country that went back and forth” between East and West, Gyorgy Jaksity, the head of Hungary’s largest brokerage Concorde Ertekpapir Zrt., told a conference Nov. 21. “The problem is, we always cozy up to the West when we should make friends in the East and the other way around.”
The Hungarian leader is now on the defensive, his record tainteded by comments about being an admirer of “illiberal states,” a category in which he included Russia. He is still trying to find way to balance his leanings with Hungary’s commitments to the EU and NATO.
“The question is not which side Hungary should take but what the Hungarian interest is,” Orban told ethnic Hungarian leaders last week. “Peace, energy security and opportunities for commerce. These are what we have to accomplish.” 

To contact the reporter on this story: Zoltan Simon in Budapest at
To contact the editors responsible for this story: Balazs Penz at 
Tony Halpin

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