Hungary’s Russian-built nuclear plant powered by politics in Brussels

Russia’s President Vladimir Putin and Hungary’s Prime Minister Viktor Orban | Yuri Kochetkov/AFP via Getty Images

The European Commission brokered a “global political solution” with Hungary over its controversial Russia-backed nuclear power station rather than escalate a fight amid already fraught relations with Budapest, according to internal documents obtained by an MEP and reviewed by POLITICO.

More than 200 pages of Commission memos, emails and meetings minutes from 2016 show that Commission officials expressed serious doubts about Hungary’s numerous attempts to justify awarding the contract to build the €12 billion Paks II nuclear project to the Kremlin-owned Rosatom without opening up the project for bids.

The documents show the Commission ultimately caved for political reasons when it dropped its infringement case in November 2016 over Hungary’s decision to skip a public tender two years prior. EU law requires competitive bidding for such projects.

The documents were obtained by Hungarian Green MEP Benedek Jávor through an access to documents request under EU transparency rules. It took nearly a year for the Commission to accede to most of his request, and the documents released have all been shared with POLITICO.

“You cannot cross a red light and promise the police that you will stop at the next light, so it’s OK” — Benedek Jávor, Hungarian Green MEP

“It was a political decision, and then they tried to construct a reason ex-post. This is backed by these documents,” said Jávor, who opposed the Paks project. He said it was “unique” for the Commission to approve a decision that went against so many of Brussels’ priorities.

Commission spokeswoman Lucia Caudet disagreed that the decision was crafted to match political needs, saying that considering new arguments during an infringement procedure like this one “is not exceptional.”

“Any conspiracy theories or allegations of undue interference are unfounded,” Caudet said Tuesday.

Yet what is clear from the documents is that Hungary’s first attempts in late 2015 and early 2016 to defend the Rosatom contract fell flat in Brussels.

If at first you don’t succeed

The Hungarian argument that finally gained traction — that Rosatom was the only nuclear technology provider that could meet Hungary’s technical needs — emerged as an apparent afterthought some two years after the project was conceived in 2014. It was only alluded to as providing “technical continuity,” in Hungary’s first letter responding to the Commission complaint in January 2016.

Even then, the argument about Rosatom’s technical exclusivity initially raised doubts in the Commission’s internal market and industry department, according to emails between staffers in the first few months of 2016.

“We stressed that the conditions to invoke this exception have been set very high by the [European Court of Justice] and that, up to now, we have not seen any sufficient justification for invoking the exception,” a February 15 email from a Commission official to colleagues in the internal market department, including a director, the deputy director-general and the director-general, reads, summarizing a February 12 meeting with Hungarian officials.

Protesters rally against the planned extension of the Paks nuclear power plant in central Budapest in February 2014 | Zsolt Szigetvary/EPA

Rosatom’s U.S.-based rival Westinghouse Electric, which discussed Paks II with the Hungarian government, boosted the case against the deal, arguing it was ready to submit a competing bid.

In the end, Budapest got Brussels’ green light for the Rosatom contract and Hungary stuck with a promise to solicit bids for subcontracts for Paks II. In a bonus for the EU, the deal ensured European companies could get in on the subcontracts.

“Our respective teams have worked closely and effectively together to substantiate the applicability of the technical exemption and have elaborated such a framework which enables us to find a mutually acceptable solution regarding the Paks II nuclear power plant development project,” János Lázár, who oversees the Hungarian prime minister’s office, said in a letter to Elżbieta Bieńkowska, the internal market commissioner, on August 4, 2016.

Westinghouse disputed the claim that Rosatom had exclusive technology and argued the Commission took Budapest at its word rather than asking for the company’s views.

“We had never received any questions about technical issues or concerns after two years of intense technical exchange,” Michael Kirst, Westinghouse’s ‎vice president of strategy and external relations, said Tuesday when asked about Westinghouse’s views on the Commission’s procurement decision. Kirst called the Commission’s eventual approval of the Rosatom deal an “artificially created rationale.”

“Cherry-picking items or arguments from the procedure can be misleading and inaccurate” — The Hungarian international communications office

Caudet said…

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