Russia Bets on Nuclear Energy Diplomacy in Hungary

Executive Summary:

* Hungary’s Paks-2 nuclear power plant project is creating durable financial, technological, and institutional dependencies on Russia and proving to be a prime case of how Moscow uses nuclear energy as a foreign policy instrument.
* Russia exploits what it perceives as vulnerabilities in Hungary’s nuclear regulatory inconsistencies and lack of coherence in EU and U.S. sanctions exemptions.
* Hungary’s deepening integration into Russia’s nuclear ecosystem poses domestic economic, technological, and financial risks, as well as long-term geopolitical risks to the European Union and the North Atlantic Treaty Association (NATO), given Hungary’s membership and influence in both.
* While Paks-2 expands Russia’s energy footprint in Europe, it also exposes the Kremlin’s reliance on a narrow set of tools that may erode as political and economic realities shift.

On November 5,the Hungarian Atomic energy Authority issued an official license to Russia’s state-owned nuclear corporation,Rosatom,to begin construction of the country’s Paks‑2 nuclear power plant (NPP) project (Kommersant,November 5). Construction work is scheduled to start in February 2026. Hungary’s existing Paks NPP was connected to the grid in the 1980s and currently supplies nearly half of Hungary’s electricity. The two new reactors that make up the Paks-2 project are expected to roughly double the country’s nuclear generating capacity. On November 21, following the licensing announcement, the U.S. Department of the Treasury, through the Office of Foreign Assets control (OFAC), issued License No. 132, allowing Russian banks to participate in financing the Paks-2 project (Kommersant; U.S. Department of the Treasury,November 21).

Hungary is one of the most illustrative examples of how Russia uses nuclear energy as a diplomatic tool within the European Union. A green light for the Paks-2 project demonstrates the intersection of energy, financial, regulatory, and political dimensions, as well as Moscow’s ability to maintain influence even under sanctions and increasing pressure from the European Union and the United states.

As Soviet times, Moscow has viewed nuclear energy as more than just electricity-generation technology.The 2023 Concept of the Foreign Policy of the Russian Federation implicitly mentions nuclear energy as one of the tools of Russian foreign policy and a means to strengthen its international image (Russian Ministry of Foreign Affairs, march 31, 2023). Nuclear energy is now a central instrument of Russian foreign policy and a core pillar of the Kremlin’s broader “nuclear energy diplomacy” (diplomatiya v yadernoi energetike; дипломатия в ядерной энергетике), a specialized domain in which diplomatic and sector-specific institutions coordinate to leverage energy projects in pursuit of geopolitical objectives. Russian analysts have defined the concept as “a functional sphere of diplomatic activity aimed at advancing a state’s external energy policy through negotiations, formal agreements, and the involvement of state-owned enterprises and international organizations” (Cyberleninka, accessed December 5).

Moscow has achieved substantial progress between the early 2000s-when Russia’s energy diplomacy relied primarily on non-renewable energy resources-and the 2020s, when the nuclear

Russia’s Nuclear Diplomacy and the Paks-2 Project

The Kremlin has skillfully exploited divisions within the European Union, notably those involving Germany and France (Ru.reseauinternational.net,November 7). This exploitation centers around Rosatom’s involvement in the Paks-2 project.

In 2017, the European Commission initially approved hungary’s state financing scheme for Paks-2.Though, in 2025, the EU Court of Justice overturned this decision, finding that the commission hadn’t adequately assessed whether the state aid complied with EU competition and public procurement rules (Euro news, September 11). Hungary, along with the Russian ambassador, promptly asserted that the ruling wouldn’t halt the project, but would simply inform adjustments to the financing (NTV, September 11; Prime,November 24). This response establishes a potential precedent: Moscow can now argue for the “separate” and unsanctioned status of civilian nuclear energy in future engagements with other partners.

The Paks-2 project isn’t isolated. It’s part of a larger pattern of Rosatom’s ventures in countries like Türkiye, Bangladesh, India, and Egypt (see EDM, September 5). Collectively, these projects create a “nuclear network” of Russian interests (Radio Azattyk, October 16, 2024). This network differs significantly from many of Russia’s other nuclear projects.