Orban's meeting with Barroso aimed to find a compromise between Budapest's latest reforms and the commission's opposition. The commission has ruled that many of the unorthodox policies Orban has implemented in Hungary violate EU rules. The more heavily contested reforms include policies that reduce the independence of Hungary's judiciary and central bank and diminish media freedom in the country.
The Nabucco pipeline would stretch from Austria to Turkey. It has been heavily promoted by the commission, which wants to create a route for Central Asian natural gas to reach Southern Europe as an alternative to Russian supply routes. Russia countered the Nabucco threat by proposing the South Stream pipeline, which would provide natural gas to roughly the same markets as Nabucco while remaining under the control of Russian state-owned energy company Gazprom.
Nabucco was created as a joint venture between six major energy companies: MOL, Germany's RWE, Austria's OMV, Bulgaria's Bulgargaz, Romania's Transgaz and Turkey's Boru Hatlari ile Petrol Tasima. But the project has lost the support of a third of its members as well as Bulgaria and Hungary, two of the pipeline's three crucial Central European partners. In addition, Austria has postponed any decision on Nabucco until at least 2013, forcing the project to fall further behind South Stream. While a significantly smaller project may remain feasible, Hungary and Bulgaria have found Russia willing to offer more concrete economic benefits for the countries' support of the Gazprom project. Meanwhile, the European Union is still struggling to find funds, incentives and suppliers for Nabucco.
The timing of MOL's withdrawal is more noteworthy than Orban's announcement itself. Hungary's top near-term priority is to secure an IMF-EU bailout, which would provide a critical influx of funds to boost Hungary's credibility to markets and help stabilize its finances. But the bailout essentially hinges on the commission's approval of Hungary's controversial legislation regarding judicial, media and central bank independence. Orban's announcement therefore could be an attempt to gain negotiating leverage with Barroso. The prime minister's goal is not necessarily to bolster support for either pipeline project but instead to highlight the growing influence and appeal of Russian money for cash-strapped nations on Europe's periphery.
This veiled threat would normally resonate with the commission, the charter goal of which is to further EU integration. However, the commission is currently engaged in a delicate EU stabilization process and has received unprecedented enforcement powers from member states through the recent "six pack" of reforms and fiscal compact treaty. It is now overtly contesting the Hungarian reforms in order to show other EU members that it can wield real power.
The disconnect between the external pressures felt by Hungary and the Continental focus of the commission reflects a broader trend at the heart of the European Union. The financial crisis has led core EU members to increasingly look inward in order to maintain the stability of the union, leaving EU members on the eastern periphery exposed to Russian influence. Moscow is proposing alternative sources of stability and income for the Europe's economically weaker countries — the kind of help the European Union is increasingly unable to provide.
Orban intended to use his Nabucco speech to encourage the commission to look eastward and see incentives to keep Hungary solvent. However, with many core EU nations beginning to question the efficacy of German-led austerity measures, the commission's efforts are instead primarily devoted to preventing Continental rifts. Focused inward, Brussels is unlikely to adjust its stance significantly in response to Hungary's moves.
