EU allies alarmed at Hungary's Kremlin drift

Hungary's Prime Minister Viktor Orban is pictured before signing a Partnership Agreement between the European Union (EU) and Hungary at the Hungarian parliament in Budapest September 11, 2014. REUTERS/Bernadett Szabo

By Gergely Szakacs and Stephen Brown BUDAPEST/BERLIN (Reuters) - Several European governments believe Hungarian Prime Minister Viktor Orban is flouting EU values by drifting into the Kremlin's orbit but are unsure how to respond. At a time when most EU states are isolating Moscow and turning their thoughts to stiffer sanctions as Ukraine's ceasefire crumbles, Orban has alarmed many of his peers by establishing closer ties with Russia. Orban, 51, has said the EU "shot itself in the foot" by imposing sanctions on Russia; he signed a deal with Moscow to build a nuclear power plant; he stopped shipping gas to Ukraine and he wants to accelerate work on the Russian-backed South Stream pipeline that Brussels opposes. "We do not want the sanctions imposed on Russia by the EU to be undermined," Gunther Krichbaum, Christian Democrat President of the European Affairs Committee of the German lower house of parliament, told Reuters. "This ambivalence is not without risks," he said. "The Russians are trying to break the unity of EU members, especially in countries more dependent on Russian energy exports." While criticism is mounting, EU diplomats who spoke to Reuters said there was no consensus on how to respond in a way that would persuade Orban - a leader who has repeatedly scorned EU norms - to alter course. "I think Orban cares little about his image," among EU peers, one diplomat said. "He will press on with this policy until Europe finally responds in earnest." Several European diplomats, speaking on condition of anonymity, knocked Orban's conduct. They include officials from neighboring states who generally do not speak out against him. "The war is unfolding almost next door. The Ukrainians are trying to come up with something with their last strength ... and meanwhile, the Hungarians are arranging a friendly soccer match with the Russians," one EU diplomat said. Orban will attend a soccer match in Budapest on Tuesday between Russia and Hungary. Government spokesman Zoltan Kovacs said the event had nothing to do with politics. Orban is also on Washington's radar. Last month it blacklisted six people with ties to the Hungarian government from entering the United States, accusing them of involvement in corruption. The Budapest government published on Thursday a document which it said it had received from the U.S. Embassy outlining a series of concerns raised in the last year. The embassy was not immediately available to verify the document. Orban dismissed it. "We have indeed received a paper, which is ... a collection of the allegations that we could hear from opposition parties in the past four years," he told public radio. "This is a flimsy piece of paper. If it had not been written in English, I would think it had been written by an opposition party." Under Article 7 of the EU Treaty, the bloc can apply penalties on a member state if there is a serious breach of EU values. That mechanism has never been used. There are other levers of influence. Hungary depends heavily on the billions of euros it receives in EU development funds and the European Commission can under certain circumstances suspend payments. But one diplomat said any measure to tame Budapest could actually bolster Orban's image with his eurosceptic supporters as someone who stands up to Brussels. "It is the same strategy that Britain is using," the diplomat said. (Additional reporting by Jan Strupczewski in BRUSSELS. Editing by Christian Lowe/Mike Peacock)

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