Russian-built nuclear plant in Hungary faces EU lawsuits

The control room at the Paks nuclear power plant.
The control room at the Paks nuclear power plant.

Publish date: March 6, 2018

Luxembourg is joining Austria in suing the European Commission for allowing Hungary to expand its Paks nuclear power plant with Russian-built reactors, as part of a stand against nuclear energy.

Luxembourg is joining Austria in suing the European  Commission for allowing Hungary to expand its Paks nuclear power plant with Russian-built reactors, as part of a stand against nuclear energy.

Fiercely anti-nuclear Austria, which shares a border with Hungary, said  late last month that it would file a suit against the EU executive with Europe’s top court for allowing Budapest to proceed in building a $12 billion VVER-1200 reactor, the flagship export of Rosatom, Russia’s nuclear monopoly.

The environmental minsters of both countries said in statements to the press that they intended to push back against the notion of viewing nuclear power as a method for countries to honor commitments to the Paris climate accord.

Many in Hungary oppose the reactor as well. Opponents of the project Budapest have argued that the Paks extension is a Trojan Horse for Kremlin influence over the government of right-leaning Viktor Orban, and that the new reactor will forge a chain of debt to Moscow.

paks A 2014 protest at the Paks-2 nuclear power plant in Hungary. Credit: Courtesy of Ecodefense

European regulators granted the go-ahead to the reactor after a probe into whether the Russian build would have an unfair advantage over European Union energy producers. Orban’s government had signed to let Moscow finances and build the reactor in 2014, but the European Commission demanded the investigation, which concluded in August.

After the EU assented, Vladimir Putin flew to Budapest and proclaimed construction on the plant would begin this year.

Still, the green light for the reactor is an uneasy decision in a Europe wary of Moscow’s increasing role in its affairs, and Orban’s critics argue that the project is already importing shady political practices it wishes would stay in Russia.

For instance, Hungary’s parliament, which is dominated by members of Orban’s party, voted to keep the conditions of the nuclear deal secret for the next 30 years for what it said were reasons of national security. But Orban’s opponents have argued that this will make the construction project ripe for corruption .

Yet even if the project continues transparently, they argue that Hungary, which is dependent on nuclear power for 50 percent of its energy needs, is opening itself to bullying from Moscow– which has rarely been shy about shutting off natural gas supplies to European customers it finds quarrelsome.

The VVER-1200 reactor Hungary is getting is one of Rosatom’s build-own-operate deals, which puts Budapest in hock to Moscow for decades. Rosatom will also effectively operate the plant for 50 years, supplying it with all of its fuel and most of its technical know-how.

Budapest is on the hook for Rosatom’s loan even if the plant never sees a day of operation. The interest alone could be ruinous, but by how much is one of the items covered by the parliament’s secrecy clause around the deal. Other similar Rosatom has going with other countries, however, make it clear.

One such deal – an $11.4 billion, 30-year loan from Rosatom to Bangladesh – would net Moscow $8 billion in interest payments. A $25 billion deal Rosatom is pursuing with Egypt could, over the 35-year term of the loan, swell to $71 billion.

Getting on the wrong side of Moscow debt collectors could have disastrous effects.  In 2014, at the height of East-West tensions over Russia’s annexation of Crimea, Kremlin officials threatened to cut nuclear fuel supplies to Ukraine’s Soviet built reactors, raising the specter of Moscow forcing a calamitous nuclear accident.

Rosatom eventually walked the threat back, but the lurid message in Moscow’s head-fake at igniting a second Chernobyl was clear: Russian-built reactors are a useful form of post-Cold War nuclear blackmail.