Croatia and Hungary have had strained relations since the decade before last, and the main reason is the position of the oil company INA in the Hungarian MOL group, which is soon expected to take over the Russian-Serbian NIS.
The recent election victory of Peter Magar has brought obvious optimism to the Croatian media and political public. At the same time, there are also light assumptions being made about the return of INA to Croatia, from the auspices of the Hungarian group with which this once most important Croatian company is declining.
The departure of Prime Minister Viktor Orban from power in Budapest, however, will not in itself contribute to any progress less than the assumed colossal transfer, especially in light of the global energy-political crisis.
“The idea of bringing back INA is illusory, and the key problem with that company is governance anyway,” Božo Kovačević, a former Croatian diplomat and environmental protection minister at the turn of the century, told us. At the time, Kovačević was, among other things, on the government’s INA privatization council.
Hungarian refineries shut down Sisak refinery
But during the latter government's term, according to the findings of the trial of its president, Ivo Sanader, key management areas were handed over to MOL under criminal circumstances.
While Sanader was serving a prison sentence for accepting bribes, Hungary refused to extradite to Croatia his partner in the deal, Žolto Hernadi, who is still the CEO of MOL.
"From the Hungarian's statements so far, it can be inferred that there will be no changes in Hungarian policy regarding INA, and I assume Hernadi as well. The new prime minister stated that the problem is 'complex', so it is obvious that he is not inclined to change course," adds Kovačević.
"The issue of INA's business operations still remains. MOL's policy so far has been to ignore Croatian interests, which is why the refinery in Sisak was shut down. For reasons of market benefit to MOL and Hungarian refineries, that is. And if it weren't so, we wouldn't even look at which co-owner owns more shares," estimates Božo Kovačević.
Hungary holds 49 percent of the shares in INA, and Croatia around 45 percent, but the fate of the management rights was determined only by Sanader. In the meantime, several proposals could be heard with possible forms of buying out INA or taking over part of the business. But nothing was done.
A question more important than control over INA
Ana-Maria Boromisa from the Institute for Development and International Relations in Zagreb believes that Croatia does not have full sovereignty over its own gas production due to a combination of bad contracts from the past, lost arbitrations and Croatia's institutional weakness.
She also believes that the problems for Croatia's energy sovereignty will by no means end with Orban's departure from power. In the opinion of this scholar with a special focus on energy and climate, the issue of control over INA should be replaced by a more important one.
"Namely, how to ensure energy security, sustainable resource management and the state's ability to lead the energy transition in a period of deep market uncertainty? In other words, how to ensure that Croatia is no longer dependent on a company over which it has no real control," asks Boromisa.
Such a partial return of energy sovereignty would, in her view, involve less symbolism and ownership, and more systems and management capacities.
"The attempt to establish majority ownership and management of INA is extremely financially and legally demanding," she continues, "and therefore associated with great risks. It could easily turn into an emotional or revanchist issue, which can hardly be the basis for a responsible Croatian energy policy and stable Croatian relations with Hungary. But this does not mean giving up control over key energy functions."
Space for regaining energy sovereignty
These functions include the dynamics of gas exploitation, crisis supply of the domestic market, and the alignment of domestic production with imports, mainly of liquefied gas, as well as with storage and long-term investment priorities.
"In conditions of market uncertainty and still insufficiently developed renewable energy capacities, Croatia could use natural gas as a transitional fuel and - in the current circumstances - as a common security interest of Croatia and Hungary. Within this framework, it could also establish a kind of security package," Ana-Maria Boromisa pointed out to DW.
He adds that he is seeking a package that links liquefied gas, domestic gas and storage, and that offers supply flexibility, seasonal balancing and crisis protocols. In return, he is seeking a structured dialogue on gas in Croatia – the pace of extraction, security of supply and long-term investments, not necessarily ownership.
"There is a space here where Croatia can gradually restore real energy sovereignty, and MOL can accept changes without political defeat," Boromisa told us.
She concludes that political changes in Hungary may open doors, but they do not change the fundamental logic of the relationship: sovereignty is not gained and built on the expectation of goodwill, but on the interests, power, and willingness of the state to systematically implement them.
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