CEE

Energy security in the V4: Assessment of possible cooperation to enhance security and development

Energy security has become one of the most important issues on the agenda of the European Union since the second gas crisis of 2009 when Russian gas flows to Europe were interrupted in the course of Moscow’s dispute with Ukraine over transit fees and higher gas prices. Even though energy security is of importance for the EU as a whole, with the Commission estimating that the import dependency of the Union will reach 73-79 per cent by 2020 and close to 90 per cent by 2030, especially the new twelve member states will be affected by any decision Russia makes about future (oil and) gas exports.1 In particular the Visegrád countries face a number of common challenges that make cooperation within the V4 setting not necessarily obligatory but highly recommendable.

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  1. Note that the security of supply with regards to oil is not covered in this paper due to the fact that oil is a globally traded good with relatively stable costs, regardless of its origin. This allows even the V4 countries to diversify their imports away from Russia to some degree. Nonetheless one should not assume that the situation is significantly better but interconnection is somewhat better and ensures a relatively stable supply of this commodity.

The country where growth stopped

The country which by many experts was once regarded as the economic powerhouse of Central Europe has stopped growing. Newly published data by the European Union’s statistical body, Eurostat, clearly show that in the last 7 years Hungary’s GDP (when compared to the EU per capita average) has almost started to stagnate. This means that with an average growth rate of 0.8 percent, Hungary is now among the worst performers both in its region and within the EU27.

Slightly before the accession, in the early 2000s, Western European financial experts were praising Hungary, labelling it is as the economic front-runner of Central Europe, for its huge efforts to comply with EU regulations and difficult economic tasks. One cannot stress this enough, but it is still unbelievable, even after a good 20 years, that former communist countries of Central and Eastern Europe – all of which were centrally commanded economies – have managed to make it to the European Union and NATO. However, political mismanagement, low productivity and the lack of privatisation potential (since their independence, most CEE countries privatised everything they had to raise money for developments) marks the beginning of the end for these smaller economies. It is now obvious that without a clear vision, a well structured financial plan, and a strong political will to get things moving, the former communist countries of CEE face a Greece-style collapse. Of course, there are some notable exceptions in the region, like Slovenia, the Czech Republic and Slovakia, all of which are steadily heading towards reaching the EU’s average GDP per capita. In the case of the two former ones, this means that they are behind the EU average by an estimated 10 – 20 percent, in the latter this average is about 25 percent, and in the case of Hungary, the former front-runner, well, 35 – 50 percent. It is true, however, that the Czech Republic (previously) and Slovenia (nowadays) are experiencing some financial difficulties as well and yes, it is also true that most countries in the region are not as stable as, let’s say, the Netherlands or Germany, but still, the prospects of these countries are relatively positive, especially when compared to neighbouring Hungary.

Tempting as it may seem, blaming solely local politicians and prime ministers, such as Péter Medggyesy, Ferenc Gyurcsány or the acting Viktor Orbán, for the problems of the country, is a bit hypocritical. Firstly, because only we the citizens elect politicians to their office. Secondly, because only we the citizens can change governments. Thirdly, because only we the citizens can protest or formulate ideas and opinions that can destabilise governments that are taking the country on a wrong track. And fourthly, because only we the citizens can create new parties and new civic movements that can replace the old and static political parties of the past. Nevertheless, despite that politicians should be and are accountable to their voters, even then they can screw up a lot of things; which they usually do. And precisely because of this, Hungary is now at a place where her politicians took it. Certainly, in this, MSZP’s (socialist party leading Hungary between 2002-2010) role is critical. I would even dare to say that its role and political leadership is the main factor why Hungary is now lagging behind its neighbours.  Since according to these fresh statistics from Eurostat economic growth stopped during MSZP reign, notwithstanding whether its politicians like it or not.. But irrespectively of these facts, centre-right FIDESZ is also responsible for the state’s financial health. Mostly because their policies rely only on blaming the socialists for the country’s problems, without formulating a credible alternative or idea to change the currently horrendous economic situation.

Of course, most Hungarians are now laughing at Greeks, believing that despite visible growth and positive financial developments, the Hungarian government is firmly leading the way and because of this a southern style collapse in the middle of Europe is highly unlikely; especially since „we had shaken off the chains of the IMF.” But sadly, in my view, the ones who think in this way are wrong: the worst is yet to come for Hungary if we do not get our act together soon.