The US Department of the Treasury has announced the issuance of a general licence allowing Hungary to carry out financial transactions with Russian banks as part of the construction of the Paks II Nuclear Power Plant.

Source: Reuters

Details: The US Treasury noted that the new general licence provides an exemption from the current US sanctions against Russia, introduced in response to its war against Ukraine. The licence applies to financial transactions necessary for the implementation of the Paks II Nuclear Power Plant project in Hungary and covers key Russian financial institutions involved in the project.

In particular, the licence includes transactions involving Gazprombank, VTB Bank and the Central Bank of the Russian Federation. These institutions provide financing and support for the project, which has been conducted by the Russian nuclear energy company Rosatom since 2014 under an intergovernmental agreement between Budapest and Moscow.

The US decision comes amid intensified negotiations between Washington and Budapest in the fields of energy and security. Hungarian Prime Minister Viktor Orbán signed a strategic agreement on nuclear partnership with US President Donald Trump during a meeting in Washington in November. Under the agreement, Hungary will purchase American nuclear fuel and technologies for storing spent materials, while remaining dependent on Russia for the construction of the reactors themselves.

The Paks II project envisages the construction of two generation 3+ WWER-1200 reactors to replace the older units approaching the end of their service life.

Financing for the project also largely depends on Russia. Moscow agreed in 2014 to provide Budapest with a state loan of €10 billion, covering around 80% of the construction costs. This has repeatedly been criticised within the EU and among certain Western partners, who point to the risks of increasing a NATO member state's dependence on the Kremlin.

Despite Russia's full-scale invasion of Ukraine and the EU's numerous sanctions packages, Orbán has consistently defended the inviolability of nuclear cooperation with Russia. Budapest regularly threatens to block sanctions that could affect Rosatom or the Russian nuclear sector more broadly, citing national interests.

Support Ukrainska Pravda on Patreon !