Black Clouds over Paks II: Hungary without public aid

On 11 September, the EU Court of Justice (TEU) annulled the European Commission (EC) decision of March 2017 approving the granting by Hungary of State aid for the extension of the Paks atomic power plant, which Budapest is implementing jointly with Rosatom. The EC verdict inactive in February 2018 challenged Austria, but in November 2022 the EU court of first instance settled the case in favour of Hungary. It was otherwise assessed by the TEU – it stated that the Commission should have included in the judgement carried out in advance the assessment of the compatibility of the direct transfer of orders to 2 fresh reactors of the Russian company with public procurement law – even if the EC procedure initiated in 2015 was closed a year later without showing irregularities. The Hungarian EU Minister János Bóka stressed in the government briefing that the ruling of the TEU does not state that the investment is incompatible with these provisions, but that the EC has not included this issue in its decision and so does not see the legal reason why the task should be suspended. It besides ensured that Budapest intends to cooperate with the Commission to show that all procedures have been carried out in accordance with Union law.

The Court ruling in Luxembourg obliges the EC to reconsider Hungary's approval to finance the expansion of the Paks II power plant, which means that the task will be delayed further and may even contribute to its final failure. After Russia's invasion of Ukraine in 2022, there were many doubts as to whether it could be completed under fresh global conditions, and the resumption of the EC's approval of public aid makes another barrier in this regard.

Comment

• The decision of the TEU is another of the many obstacles to the implementation of the Rosatom task which distances the possible of its completion. As a consequence of various legal and political obstacles and related modifications, it is delayed by about a decade, taking into account the first dates set in the 2014 Hungarian-Russian Intergovernmental Agreement. In June of this year, any advancement was made – the US abolished sanctions on Rosatom Gazprombank's financially operated activity, and German Siemens Energy confirmed its commitment to the task (see IP/10/73). Hungarian-Russian atomic task Paks: a fresh breach in Western sanctions). The construction inactive in the first phase (the foundation work started in the fall of 2023) was now due to decision on to the next phase – concrete was planned for the end of the year to be poured under the first of 2 fresh blocks. The request for a reassessment by the EC means that this step will be delayed by at least a fewer months (the first resolution was issued after nearly 2 years).
• The fresh EC decision will be dealt with in diametrically different global circumstances. Following Russia's full-scale invasion of Ukraine, the EU is seeking a complete departure from Moscow's energy dependency.Come on.Nuclear energy has not yet been subject to sanctions, the Commission's plan presented in May includes a ban on Russian atomic fuel imports since 2028. The force to decision rapidly distant from Russian supplies in this area has late besides been exerted by the US. The affirmative decision of 2017 was made at a time erstwhile Hungary was not isolated in the Union present and was preceded by intensive measures, including those involving lobbyists from the West Germany (see IP/10/73). Russia closer to building a atomic power plant in Hungary), which in the current situation Budapest cannot number on. While EU state aid regulations have not changed, both the TEU's decision to include in the decision the choice of the contractor and another policy conditions makes the EC's re-approval seem little likely than then.
• The Hungarian Government is trying to reduce the importance of the TEU judgement due to its deep engagement in the task with Russia and the forthcoming parliamentary elections. Until now, the authorities in Budapest have demonstrated their determination to grow the post-Soviet facility – they did not retreat from it even after Russia's full-scale invasion of Ukraine in 2022 (Finland, then the only EU country to implement a akin task with Rosatom). Another hold could service the opposition in campaigning before the spring elections to point out ruling ineffectiveness. However, if Fidesz's main opposition force – the Tisza organization – had become harshly critical of him for his energy cooperation with the Kremlin, further hold in work could have been convenient for Viktor Orbán's group – it would have partially solved the image problem.