What to expect from Vladimir Putin’s visit to Budapest

Thursday, February 2, will be the first since the beginning of the year foreign visit of Russian President Vladimir Putin. A one-day visit he will go to Budapest, where he will meet with Prime Minister of Hungary Viktor Orban. Last time in Europe, the Russian President was in October, when he took part in the meeting of leaders “Norman Quartet” in Berlin.

The restoration of relations with the EU

At the talks, Putin and Orban will discuss the restoration of relations between the European Union and Russia, the situation in the middle East and Ukraine, told reporters on Wednesday, presidential aide Yuri Ushakov. “Hungarians in this context play a positive role,” — said Ushakov (quoted by “RIA Novosti”).

The leaders meet regularly: Orban three times in 2013 visited Russia, Putin came to Budapest in February 2015. At the meeting in Moscow a year ago, the Orban voted against the sanctions, claiming: “All are beginning to understand that Russia needs to cooperate”. At the same time Putin noted that to associate the sanctions regime with the implementation of the Minsk agreements on Ukraine is wrong, since their performance depends not only from Moscow, but from Kiev. However, each time you discuss the sanctions issue, the Hungarian side took a common European position, agreeing the extension of sanctions. The Minister of foreign Affairs of Hungary Peter Siarto in an interview to the newspaper “Kommersant” last week, explained that Budapest did not use the veto, because at the time of the decision of the Hungarian diplomats “was alone” and did not want his move to break European unity.

A year ago, according to Putin, the trade turnover between the two countries decreased by 40%, including from-for “anti-sanctions”. According to estimates Szijjártó, during the three years of confrontation between the West and Russia, Hungary has lost $6.5 billion in export revenue. In comparison, for the whole of 2014, Hungarian exports to Russia amounted to $8 billion.

The Hungarian leadership is exaggerating the importance of sanctions for the country’s economy, said a senior expert of the Budapest Institute of Political Capital, Peter Kreko: “orbán and Szijjártó often mention the dangers of sanctions to show their loyalty to the Kremlin.” In his opinion, Moscow and Budapest advantageous to demonstrate good relations: Hungary wants to show that she has friends among the superpowers Russia also creates a picture of disunity of the EU.

Mutual interest

Priority during the talks, Putin and Orban will be the issues of economy, energy and trade, announced the Minister Szijjártó. The diplomat reminded that Russia and Hungary in recent years, despite the sanctions regime, working on several investment projects: the construction of the slaughterhouse in the suburbs to the participation of “Rosatom” in the extension of the Hungarian NPP “Paks”.

Documents for the construction of the fifth and sixth power unit of Russia and Hungary signed in 2014. They must be equipped with reactors of the Russian VVER technology-1200V. The construction, scheduled to start in 2018, Russia will allocate a loan of up to €10 billion. However, the implementation of the delay initiated in 2016, the EU investigation. European authorities were investigating possible violations by the authorities of Hungary in the field of public procurement and state aid. The first investigation was closed, the second continues. Ushakov on Wednesday called the actions of the European Commission “nagging” impeding the implementation of the project.

Can be found the solution of “frozen”, according to Ushakov, the problem of indebtedness of the bankrupt in 2012 Hungarian airline Malev to Vnesheconombank, the amount of which the Russian side is estimated at €126.5 million

The parties will discuss and prospects of Hungary’s participation in two Russian energy projects — the “Turkish stream” and “Nord stream”. “It is not excluded that in the future the Hungarian partners will be able to connect to working out “Gazprom” new routes of energy supply,” — said Ushakov (quoted by “RIA Novosti”). According to Ushakov, discussed the question of building of branch “Northern stream” in Hungary.

The purpose of the parties, said Russian foreign Minister Sergei Lavrov at the beginning of the year to work on recovery “gaining momentum the positive momentum” trade. Last year the Russian-Hungarian trade turnover declined, although not as fast as Russia’s trade with the EU and with the rest of the world as a whole. For example, in January—November 2016 to January—November 2015 the trade turnover between Russia and Hungary in dollar terms fell by 11.6%, between Russia and the EU in General — by 17.2%. In General, the international trade of Russia has decreased over this period by 13%. By the end of 2015, Hungary as a trading partner Russia occupies 13-th place from the 28 EU countries (Slovakia and Sweden).

For Russia balance of trade with Hungary has always been positive, revenue from exports to Hungary about twice the cost of imports. In the structure of import of Hungary’s leading pharmaceuticals. According to the FCS of Russia, in 2015, the procurement of drugs in Hungary amounted to $397,8 million, or 23.2% of the total Hungarian imports to Russia. Almost all of Russia’s exports to Hungary ($2.44 bn or 81% of exports in 2015) accounted for the fuel and energy sector.