In the conditions of the Russian full-scale invasion in Ukraine, the European Union remains vulnerable due to the efforts of Austria and Hungary to take an exclusive position.
Even before the war, Austria and Hungary built “special” relations with Russia, considering it their competitive advantage. Each case had its peculiarities.
In Austria’s case, the roots lead to the country’s neutral status, enshrined in the Constitution of the country under pressure from the Soviet Union after the occupying Red Army units left Austria in 1955. The country received tangible profit from this status in 1968 when a Soviet gas supply contract was signed, turning Austria into a powerful European hub. It would hardly be a great exaggeration to assume that 50 years later, Germany, having received Nord Streams agreements, was guided by the example of its lucky neighbour. By the way, the Austrian oil and gas concern OMV (Österreichische Mineralölverwaltung AG) was part of the international consortium behind Nord Stream 2.
The realisation that it is profitable to do business with the Russians somewhat dulled the ethical feelings of the Austrian elite, and many state leaders, after leaving their political offices, moved to high-paid posts in Russian companies with a light heart. So did Wolfgang Schüssel, Chancellor of Austria from 2000 to 2007, who first took a seat on the board of MTS mobile communications company and later moved to Lukoil. Christian Kern, Chancellor from 2016 to 2017, was sheltered by JSC Russian Railways. In addition, he became a contributor to the German-language site of the flagship of Russian propaganda RT/Russia Today. In 2007-2008, Chancellor Alfred Gusenbauer was one of the co-founders of the propagandist Dialogue of Civilisations “Research Institute” created by Putin’s friend and former president of the Russian Railways Vladimir Yakunin. Putin’s invitation to the wedding of Foreign Minister Karina Kneissl in 2018, where she danced with the Russian president, became a symbol of Austrian lack of fastidiousness. It is not surprising that she got a position at Rosneft and also started writing texts for RT/Russia Today after her resignation.
In April 2022, Chancellor Karl Nehammer became the only Western leader to visit Putin in Moscow after the start of the full-scale war. He said later that it was not a conversation between friends, but he believed that he could act in a way that would not even occur to another Western leader. But other leaders do not have such a gas dependence on Russia. Despite the promise to get rid of it, Austria still gets 60% of its blue fuel from there. Although compared to the pre-war 80%, this obviously shows a decline.
No less interesting is the story of Raiffeisen Bank which is still actively doing business in Russia and is a subsidiary bank of the Austrian banking group Raiffeisen Bank International. Raiffeisen Bank is on the list of systemically important Russian banks and ranks second in terms of assets in the RBI group and first in terms of profit. Raiffeisen Bank continues to operate in Russia with increased revenue in 2022 compared to 2021 (+$665 million or +46%). The Bank management promised to withdraw from the Russian market, but the RBI and its subsidiary banks continue to work there, explaining this by the fact that the Bank now needs special permission from the Kremlin, which it will not grant. According to Bank representatives, shutting down SWIFT is also not an option, since in this case, the Bank’s management will suffer – Moscow will either detain or even annihilate them. However, in this case, the question remains – why doesn’t Austria take its workers out of Russia…
Moreover, JSC Raiffeisen Bank Russian subsidiary not only officially recognises the so-called Donetsk and Luhansk “people’s republics” but also provides loans to the Russian occupiers in Ukraine on favourable terms. The National Agency on Corruption Prevention put the Austrian banking group Raiffeisen Bank International on the list of international sponsors of war for the continuation of the Bank’s work in Russia and the official recognition of the so-called “DPR” and “LPR”. In addition, the Bank plays along with Russian propaganda, calling the war a “special military operation.”
As reported, in 2022 Raiffeisen Bank paid 4.8 times more to the Russian budget than for the entire pre-war year – EUR 559 million (~$615 million). It should be noted that this is equal to the cost of about 95 Kalibr missiles which the terrorist state regularly launches at peaceful Ukrainian cities. The representatives of the Austrian Bank explain that they “can’t withdraw profits from Russia anyway,” so it’s not profitable for them to work in Russia but they can’t leave it either.
The question remains open; why doesn’t the European regulator create favourable conditions for Raiffeisen to leave, so as not to stay.
A separate point is the role of Vienna as the European capital of espionage. Due to the neutral status of Austria, numerous international organisations are located here: IAEA, OPEC, OSCE, and UN bodies. This gave Russia formal grounds to deploy a powerful espionage network in the centre of Europe under the guise of official representatives and employees. But this did not become a reason for greater vigilance of the Austrian security service BVT (Bundesamt für Verfassungsschutz und Terrorismusbekämpfung). On the contrary, the threat of its employees working in Russian interests increased. This happened in the case of a top BVT officer Egisto Ott. Moreover, suspicions about his work for the Russians arose in the CIA long before his arrest, but Austrian colleagues did not heed the warning. This led to the fact that Western national security agencies stopped sharing their information with Austria, fearing leaks to Russia. In 2021, BVT had to be dissolved and created practically from scratch.
As Oleksandr Shcherba, who worked as the Ambassador of Ukraine in Vienna for six years, says, Austria seeks to use all the possibilities of a safe stay in the West team without investing in its security, and it is for this purpose that it uses its neutral status. It is very beneficial: being under the NATO umbrella, while not being a NATO member. But neutrality ceases to be an argument when Europe is in a threatening state due to Russia’s aggressive actions. In the end, both Finland and Sweden were also neutral but were forced to change their status under the pressure of circumstances. At the same time, unlike Hungary, it is important for Austria to remain part of the European mainstream, Shcherba is sure, and this is the factor that will further erode the old pro-Russian foundation developed in previous years.
The situation is different in Hungary. Right-wing populist Viktor Orbán, who has ruled the country since 1998 with a break in 2002-2010, created a system of relations with Brussels and the outside world in general based precisely on speculation about Hungary’s difference from other Europeans.
Much is said, and rightly so, about the inner closeness of the two autocrats, Putin and Orbán. The head of the Fidesz party is neither a Democrat nor a liberal. He has radical conservative views and is a rather cynical player in political practice. In this, undoubtedly, the Hungarian prime minister resembles the Russian president to a great extent. And yes, Orbán needs Putin; he needs Putin’s Russia, but precisely because they create space for bargaining within the framework of domestic European relations and enable the populist to appear in the eyes of a part of the population as a defender of the interests of “ordinary Hungarians” who do not pay attention to the European bureaucracy or the White House.
Typing the phrase “Hungary refuses…” into Google, you will find links to an insane amount of news telling what it refused: “…to discuss financing security assistance to Ukraine in EU,” “…to participate in Ukrainian military training in Europe,” “… demand to remove sanctions from three Russian oligarchs,” “…to supply arms to Ukraine,” “…to discuss embargo on Russian oil imports,” “… sanctions against Gazprom,” “…to arrest Putin in its territory,” and so on. Minister of Foreign Affairs of Hungary Péter Szijjártó visited Moscow several times during the war. The last time was this April.
In May, a draft resolution was even submitted to the European Parliament, stating that Hungary, due to numerous violations of EU legislation, is not suitable for the role of the Chair of the Council of the European Union which it is supposed to assume by rotation in the summer of 2024. MEPs ask themselves how Hungary “will be able to honorably fulfill this task, given its non-compliance with EU laws and violation of the values enshrined in Article 2 of the Treaty on EU, as well as the principles of sincere cooperation.” Article 2 of the Treaty refers to “the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities.” The main parties of the European Parliament became the initiators of the draft resolution regarding Hungary, drawing attention to the systemic problem. In Europe, they understand that the Hungarian disease has gone too far but they cannot do anything.
The Russian-Ukrainian war united the countries of the European Union like never before while exacerbating at the same time unresolved issues that threaten the integrity of the European community. In the conditions of the full-scale war near EU borders, this strike does not look like just a metaphor. Putin has been playing for disorder in Europe. And this is not Putin with whom they maintained polite relations. Now he is the outright enemy capable of anything.