In Hungary, cheap Russian oil fuels right-wing culture wars

BUDAPEST — Hungarian Prime Minister Viktor Orban has fiercely opposed a proposed European embargo on Russian oil, saying it would devast...


BUDAPEST — Hungarian Prime Minister Viktor Orban has fiercely opposed a proposed European embargo on Russian oil, saying it would devastate his country’s economy. Other potential victims of such a ban would be things close to his heart: his populist campaign promises and financial sauce for culture warriors in Europe and the United States.

Both were fueled by Hungary’s profits on Russian crude. Bursting with cash from cheap supplies of Russian oil and gas, Hungarian energy conglomerate MOL – one of central Europe’s largest and most profitable companies – announced last month that it would pay dividends of $652 million to its shareholders.

More than $65 million of that will go to a privately run education foundation last year hosted Fox News host Tucker Carlson at a festival of right-wing pundits in Hungary. It has also provided stipends and scholarships to conservative Americans and Europeans seeking refuge from what they deplore as the spread of “cancellation culture” at home.

Some of them took part this week in the first Hungarian edition of the Conservative Political Action Conference, or CPAC, a gathering of the right wing of American politics. The event, at which Mr Orban delivered the keynote address, opened in Budapest on Thursday under the slogan “God, Fatherland, Family”.

Hungary has for years served as a beacon for foreign curators who admire Mr. Orban’s hostility to immigrants, LGBTQ rights, George Soros and liberals in general. The Russian invasion of Ukrainehowever, has put a strain on that role, sparking anger among some conservatives over Mr Orban’s rapprochement with the Kremlin.

He also threatened to strain Mr. Orban’s pact with voters, who gave his Fidesz party a landslide victory in last month’s election on the promise that, thanks to cheap energy from Russia, gas and utility prices would not skyrocket as has happened elsewhere in Europe.

A steady supply of Russian energy has become such a central part of Mr. Orban’s economic and political model that ending it “is a red line for him”, said Andras Biro-Nagy, founder and director of Policy Solutions, a Budapest research group. “Russian oil and gas are absolutely vital to his whole project.”

This addiction has alarmed even some of his foreign fans who have held paid positions at the Mathias Corvinus Collegium, known as MCC, the educational foundation that benefits from the Hungarian energy company’s business with Russia. The foundation has a 10% stake in MOL, which relies heavily on Russian oil deliveries to fuel its main refinery southwest of Budapest and another it owns in Slovakia.

“I am very unhappy with Hungary’s position vis-à-vis Russia in general, and in particular energy,” said Daniel Pipes, a conservative American scholar who received a “senior scholarship” paid by the foundation. “At the same time, I am very positive about the Hungarian position on immigration,” he said. “So I’m ambivalent. I don’t like Russian politics and I like immigration politics.

Poland is also unhappy, whose ruling Law and Justice party shares Mr Orban’s hostility to the liberals, but has been infuriated by his fierce resistance to European Union efforts to ban Russian oil, its refusal to allow arms destined for Ukraine to pass through Hungary. and its failure to convict Russian President Vladimir V. Putin.

Concerned that the Hungarian energy company was too indebted to Russia, the Polish Senate passed a resolution in March blocking a deal with the Polish state energy company that would have allowed MOL to acquire more than 400 Polish gas stations.

Bogdan Borusewicz, the opposition senator behind the initiative, said in an interview in Gdansk, the site of a major Polish refinery, that the war in ukraine made it dangerous to let a Hungarian company dependent on Russia enter the market in his country.

“You could debate this before the war,” he said, “but now it is impossible to have any illusions” about the loyalty of Mr. Orban, whom he described as “the ally the most most important of Putin in the EU”. For the MOL conglomerate, he said, “cooperation with Russia is a crucial part of its business and even its survival”.

The MOL declined interview requests but in public statements highlighted the difficulty and cost of switching to non-Russian oil. Its Danube refinery, south of Budapest, has invested heavily for eight years to accommodate crude from other countries, which is usually more expensive, but it still depends on Russia for 65% of its needs.

Reporting a sharp increase in profits, the Hungarian company warned in its annual financial report this spring that it was exposed to Russia through a minority stake in a junior Russian oil company, BaiTex, and through “the physical flow of crude oil through the transportation system”. in Russia and Ukraine. This flow, he noted, had not “until now” been restricted.

Since then, the executive arm of the European Union has sought to cut it off completely.

To do that, said Tamas Pletser, oil and gas analyst at Este Bank in Budapest, would be a big blow. MOL, he said, has so far benefited from a growing price differential between European Brent and cheaper Russian crude.

“They’re making another $10 million a day on this current situation, which is based on Russian procurement and Russia invading Ukraine,” Pletser said.

Several million dollars have been paid to the Mathias Corvinus Collegium and two other theoretically independent foundations, which together own 30.49% of the energy company and are its main shareholders. The shares were owned by the state, but Mr. Orban two years ago gifted themalong with other valuable assets, to the foundations under what he described as educational reform effort but which critics have called legalized theft. The president of the MCC is Balazs Orban, who is also the political director of the Prime Minister (but not a relative).

Zoltan Szalai, CEO of the foundation, acknowledged in an interview: “This year, MOL has been very good to us. The dividend money MCC received this year from MOL is more than double its annual budget.

Mr. Szalai said his foundation should be able to weather a drop in profits for energy companies if Mr. Orban lost his fight to keep Russian crude flowing. “We think long term, and MOL is a very good and serious company,” Mr. Szalai said.

When it comes to banning Russian oil, “it’s not true that Hungary has no choice,” said Piotr Wozniak, Poland’s economy minister in a previous Law and Justice government. and longtime director of energy. “It won’t be cheap or easy, but it’s not impossible.”

But, he added, “the question is whether Hungary wants to make that choice.”

Making that choice particularly difficult is Mr Orban’s successful promise last month to control energy prices through government-imposed price caps.

Shortly before the invasion of Ukraine, Mr Orban traveled to Moscow to meet Mr Putin, obtain assurances that Hungary could rely on Russian natural gas supplies.

Moscow last month abruptly cut deliveries to Poland and Bulgaria but still supplies Hungary. Any suspension, either by Russia or as a result of Western sanctions, would force Hungary to source more expensive supplies from the market.

In his CPAC keynote on Thursday, Orban mentioned the war in Ukraine, calling Russia an aggressor, but mostly focused on advising conservatives on how to succeed politically. “The first point,” he said, “is that we have to play by our own rules.”

Mr. Carlson, the Fox News host who sided with Russia in its war against Ukraine, sent a short video message of support to the conference.

Most speakers avoided the question of Ukraine, although one, Gavin Wax, a conservative New York commentator, complained about the tens of billions of dollars spent supporting Ukraine and of the “relentless media propaganda for World War III” with Russia.

The main organizer of the event is the Center for Fundamental Rights, a government-funded Hungarian organization that says it is fighting to repel the “relentless attack” on “Judeo-Christian culture, patriotism, sovereignty, family , the created nature of male and female and our commitment to life.

The center first said it was working on the CPAC event in Budapest with the Mathias Corvinus Collegium. The foundation, however, denied helping to organize CPAC, although it said it supported its goals.

Mr. Szalai, the chief executive of the MCC, denied that his foundation had pushed for a political agenda, saying in an interview that its mission was to promote “classic common sense”.

“To say that we are far-right is not fair,” he added.

Critics of Mr Orban say the MCC has established itself as what Mr Biro-Nagy of Policy Solutions calls “one of the crown jewels of Orban’s mission to create a conservative cultural hegemony”.

Among the foreign culture warriors listed by the Mathias Corvinus Collegium as “guest instructors” this year was Rod Dreher, an American writer who has praised Hungary’s tough stance against Muslim immigrants.

Mr Dreher said he was “not the least bit bothered” that MCC was profiting from Russian oil. He said his own salary came from another entity funded by the Hungarian government.

“I deplore the invasion of Russia and hope that Ukraine prevails, but I do not share this horror of Russia and the ties to Russia that the ruling class in the United States and Western Europe share “, did he declare.

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