The Position of Fidesz - Hungarian Civic Union on the Agreement between the Hungarian and Russian Governments concerning South Stream Pipeline

Created: 7th March, 2008 13:20	print	send

Fidesz - Hungarian Civic Union considers the recent agreement between the Hungarian and Russian Governments regarding the Hungarian part of the South Stream pipeline as illegal and unacceptable.

Both the Hungarian National Assembly and the public were excluded from the series of steps taken by the socialist government in reaching the Russian - Hungarian agreement of a joint venture in order to construct the Hungarian part of the pipeline. Until the announcement of the political decision on 25 February 2008 the whole process was top-secret.

According to the Hungarian Constitution the National Assembly and the Government have the right to conclude international agreements. The conclusion belongs to Parliament in case of important agreements. It is the Act L of 2005 on the conclusion of international agreements that stipulates that an agreement is deemed to be important if it governs matters that belong to the competence of the National Assembly.

This Agreement contains provisions on exemptions to value added tax and customs duties, as well as expropriation, issues that are governed by law in Hungary and therefore belong to the competence of the National Assembly.

The question of VAT exemption is governed by the Act on VAT, which is in full compliance with the EU directive on value added tax in force. The Hungarian Act and the EU directive define all possible exemptions of VAT. There is no possibility for an international agreement to provide for such additional exemptions of VAT as are contained in this Agreement. The Agreement is therefore not in conformity with the relevant Hungarian and EU legislation.

The Agreement is not clear about the responsibilities of the Government, the Ministry of Economy and the joint venture to be set up by the Hungarian Development Bank (MFB) and Gazprom. It is not clear on what basis, under what legal procedure SepCo Ltd. was selected to do the feasibility study and preparatory works for the project.

We do not know how much the project will cost and weather it will be profitable. We do not know therefore how much it will cost to taxpayers and what its effects will be on gas price.

For all these reasons Fidesz called for an extraordinary parliamentary session to discuss the agreement to build the South Stream gas pipeline crossing Hungary before the final decision was agreed upon in Moscow on 28 February. The Hungarian National Assembly, as well as the Hungarian public have the right to know all details of the agreement - the project's possible effects on the EU's common energy policy and the Nabucco pipeline - since it sets Hungary's course for decades to come, not only in terms of energy policy, but with respect to foreign and security policy as well.

It is the interest of European citizens that negotiations regarding energy supplies be based on transparency and the principle of reciprocity. Transparent conditions must prevail both on the level of the EU as well as on the level of all Member States. Bearing in mind that Europe is increasingly dependent on external energy sources, we cannot evade an open dialogue concerning the role of energy. Especially since economic dependency may lead to political dependency as well.


Budapest, 6 March 2008