Goulash: Russian surveillance, spies and oligarchs & Slovakia’s election
Greetings from sunny Budapest! An important election weekend is coming up in the Visegrád region with the second round of the Slovak presidential election on Saturday and Poland’s local and regional elections on Sunday. My bets: Slovakia is too close to call (but I still wouldn’t bet against government-backed candidate Peter Pellegrini) while Donald Tusk’s Civic Coalition will sweep Poland. But before we get to the weekend: In this newsletter, I’m sharing some fresh scoops concerning all of the V4 (and Austria), plus our latest international investigation into the Kremlin’s scary new AI-based surveillance operations.
Enjoy your latest Goulash, which you can also read online. Please share our newsletter on social media and with your friends and colleagues. They can use this link to subscribe themselves.
– Szabolcs Panyi, VSquare’s Central Europe investigative editor
Back in 2016, when the soon-to-be founders of VSquare gathered in Warsaw to discuss our cross-border initiative, we worked to come up with a name. Although we eventually settled for VSquare (standing for V4, the Visegrád Four countries), the runner-up name for our site—proposed by Investigace’s editor-in-chief Pavla Holcová—was goulash. But no brainstorming session is ever really wasted, and the name will be served as our new newsletter.
SPICY SCOOPS
There is always a lot of information that we hear and find interesting and newsworthy but don’t publish as part of our investigative reporting — and share instead in this newsletter. In this issue, we’ll tour the whole region with a focus on Russian and Chinese influence – plus the usual corruption in Hungary.
SLOVAKIA ELECTS A NEW PRESIDENT — AND MANY IN THE PREVIOUS ONE’S TEAM MAY LEAVE THE COUNTRY
The Slovak presidential election run-off between Peter Pellegrini and Ivan Korčok takes place on April 6, and my Slovak colleagues tell me it can truly go either way. Surprisingly, former foreign minister Korčok won the first run and may now have a chance to beat Pellegrini, the pro-Russian Fico government’s candidate. On the other hand, if Pellegrini can pick off the other candidates’ votes, that Korčok took round one may not matter much. Regardless of the outcome, nobody really expects the government’s crackdown on NGOs, the media and the anti-corruption institutions to stop, nor for the increasingly hostile and toxic nature of the county’s public discourse to improve – certainty not outgoing president Zuzana Čaputová’s team. According to multiple Slovak and Czech experts and officials in touch with the current Slovak presidential team, multiple Čaputová advisors – including those dealing with domestic and foreign affairs – are already looking for apartments and jobs in Prague, which is to say they are seriously considering leaving Slovakia for the Czech Republic. A Czech source in touch with them even said that “most of them” (in Čaputová’s team) are actually at least to some extent thinking about leaving their country, while a Slovak source added that, according to their knowledge, those who have already decided will do so regardless of the outcome of the presidential election. “Many of the advisors are looking for international jobs as well,” the source added. The situation since Fico returned to power looks increasingly similar to the 1990s, when thuggish Vladimír Mečiar’s rule forced many Slovak intellectuals to relocate to Prague. (In case you missed it, here’s my recent investigation into how Pellegrini secretly asked for Russian – and Hungarian – help in an attempt to win the 2020 parliamentary elections. Did he do the same this time? Hopefully we’ll find out soon.)
CZECHS NOW BRACING FOR SERIOUS PRO-RUSSIAN SHIFT IN BRATISLAVA
My seasoned subscribers may remember last autumn, when, in certain Goulash scoops, my Czech government and government-linked sources essentially shrugged off speculation that Robert Fico, previously known for his extremely pragmatic approach to foreign policy, would seriously shift Slovakia’s foreign policy eastwards. Well, I’ve just spent a week in Prague, met most of them again, and I can tell you: they sounded way less optimistic. “When (Slovak Foreign Minister) Juraj Blanár met with Sergey Lavrov in Turkey, they crossed a red line,” a Czech government official told me, adding that what is fully expected of Hungarian foreign minister Péter Szijjártó (who actually enjoys posing as Lavrov’s best buddy) was not expected of the Fico government. Moreover, according to a Czech diplomat dealing with security matters, some now fear that one of the outcomes of the Blanár–Lavrov meeting could be that the Slovak government accepts three or four additional Russian diplomats at the Russian embassy in Bratislava. The Czech Republic clearly sees this as a national security threat as they expect that Russia is essentially trying to replenish its decimated spy outposts in embassies around the region. (Also, if you’re interested in how Russian embassies are conducting signals intelligence operations too, I recommend this earlier article.)
But there’s more. Multiple Czech government officials and foreign policy experts with whom I spoke are now so pessimistic that they fear the Fico government may refuse any reinforcements to the 3000 soldiers strong NATO Multinational Battle Group in Slovakia (there are plans to raise its capacity by thousands). Moreover, if the country indeed goes down a pro-Russian path, my Czech sources don’t rule out the possibility of Fico deciding to kick the battle group out of Slovakia. “Two years ago, we already had to brand this battlegroup as a ‘Czech mission’ to make it acceptable to Slovak society. So there can be an issue” – one of my sources concluded.
AUSTRIA’S SPAR FENDING OFF ORBÁN PROXIES’ ASSET GRAB ATTEMPTS
Hungary’s deteriorating rule of law and corruption not only affect EU funds — they’re now also threatening private investments. Recently, in a candid interview, Hans Reisch, head of the Spar Austria retail chain, revealed that they are withdrawing assets from Hungary for fear of expropriation. He openly spoke about the Hungarian government’s harassment and extortion, even sharing that Hungarian Prime Minister Viktor Orbán asked Spar to let one of his relatives become the Hungarian subsidiary’s shareholder. Moreover, he alleged that the Orbán government uses an extra retail tax to force Spar to sell their Hungarian chain, consisting of more than 600 stores, to Orbán’s proxies. This phenomenon is not new. However, it’s rare that blackmailed foreign companies dare to go public with such Hungarian asset grab attempts. One of Orbán’s ministers even openly threatened Spar by saying: “The company will pay the price for what it has done in recent days.” Publicly, Orbán has long justified similar moves by stating that at least 50 percent of certain key sectors in the Hungarian economy should be under Hungarian ownership.
However, an Austrian source with knowledge of the attempt told me that more than a year ago, representatives of a Russian oligarch family living in Hungary were also approaching Spar with their Orbán-government backed bid – and got rejected. This family, the Rahimkulovs, is headed by Megdet Rahimkulov, a Kremlin-connected oligarch who was once Gazprom’s Hungarian representative. However, in recent years, the Rahimkulovs’ business connections were mostly cooperative in Orbán government circles. For example, they entered a real estate deal with the Prime Minister’s son-in-law, István Tiborcz, who sold two Austrian hotels to the Russians. Interestingly, according to my well-connected Hungarian business sources, Tiborcz was also the unnamed Orbán relative mentioned by Spar head Hans Reisch in connection with the takeover attempt. It seems the Rahimkulovs have also been closely coordinating with Viktor Orbán’s family since making their offer. (The Hungarian Prime Minister’s spokesperson, the Rahimkulov family and Spar Austria didn’t respond to my requests for comment. After the newsletter’s publication, Tiborcz’s BDPST Group company denied any involvement or plans of buying Spar.)
HUNGARY’S GOVERNMENT SECRETIVE ABOUT NEW CHINESE EV INVESTMENT
Some weeks ago, a well-connected China expert told me that Great Wall Motors, China’s eighth largest car manufacturer, is building a new EV factory near the southern Hungarian city of Pécs. The fact that a mysterious investor is buying up land and planning something big there was already known — but that was all that was known. However, last week, some Hungarian pro-government outlets published news pieces saying that Great Wall Motors is behind the investment. Then, a few hours later, all these articles were simultaneously taken down (original reporting here). A government-connected source explained to me that there was a glitch in the system, and the PR articles were for some reasons prematurely published before the official negotiations were finished — so an order came from the Prime Minister’s Cabinet Office, in charge of government propaganda, to delete the articles. This revealing episode not only shines a light on the sad state of media freedom in Hungary, but also shows how desperate the Orbán government is to try to avoid angering Chinese business partners. Hungary’s current strategy is quite simple: an all-in bet on new Chinese investments in the hope that said investments will somehow put the country’s flailing economy back on track. (For more on the latest in Hungarian-Chinese relations, you can listen to this new English language podcast I did with the Czech Association for International Affairs’ China (CHOICE) project.)
MEANWHILE IN POLAND: TOUGH ON RUSSIA, SOFT ON CHINA
Given all the current tension between Orbán’s Hungary and Donald Tusk’s Polish government, one would think that the two countries would be on opposite ends of the spectrum when it comes to foreign policy. However, geopolitics is a tricky business, and Visegrád region politics has always been extremely diverse. The issue with Poland being “too soft” on China came up in multiple conversations I’ve had recently with Polish and Czech foreign policy experts, partly in relation to the possibility of Donald Trump’s return to the White House and the problem that may pose to the Tusk government. “Currently, the Polish government’s thinking is that China-related topics are too polarizing. Their priority is to bring Germany and other countries on board with their more assertive Russia policy, and Tusk can’t afford to open the China basket,” a Czech security expert told me. However, Poland’s current power balance is also complicating things. For example, as my source pointed out, Polish President Andrzej Duda and his close confidant and former advisor, current Polish Ambassador to China Jakub Kumoch, are essentially “killing every pro-Taiwan initiative” and are softer on China than Tusk’s government. But this could change with the snap of a finger: “If Trump wins, Poland instantly becomes anti-Chinese in the hope that this would secure US support against Russia,” a Czech foreign policy expert predicted, explaining that the Poles would try to appeal to Trump’s, and Republicans’, hawkish attitudes towards China in every possible way. While Tusk’s reactions to Trump’s comments on NATO and Russia used to be quite harsh and so far it didn’t look like he would try to score any points with the former president, in his latest interview with European newspapers, Tusk already hit a different tone. He stressed that “even if Trump were to win, Europe will still have to be more active in taking care of transatlantic ties, as they are the only responsible way to defend itself against Russia and other autocracies”.
Got a nice scoop to include in our Goulash newsletter? Can’t wait to hear it! Send it to me at [email protected]
NEW ON VSQUARE
KREMLIN LEAKS: HOW PUTIN’S REGIME IS BUILDING AI SURVEILLANCE OPERATIONS
In many European countries, locals actually demand more public surveillance cameras. They feel more secure when they think they are being watched by authorities, even though, in reality, in places like Hungary, nobody actually watches most of the CCTV camera footage, which is erased shortly after being recorded). In Russia, however, Putin’s regime is putting up surveillance cameras everywhere – not to protect people from petty street crime, but to protect themselves, a regime committing murder and genocide, from the people. This latest investigation in our “Kremlin Leaks” series, based on documents originating from the Russian presidential administration, reveals how Russian AI technology, like facial recognition tools, is used for surveillance and to arrest, for example, opposition protesters or mourners at Alexey Navalny’s funeral. Moreover, the company in the middle of this project, NtechLab, even has a foothold in the European Union. Read this scary story here and think twice before demanding more surveillance cameras.
If you like our scoops and stories, here are some more articles from our partners!
MORE TO READ FROM OUR PARTNERS
DANUBE WARMING UP. Atlatszo.hu’s amazing, data-based visualization explains how climate change and industrialization are resulting in the Danube’s warming temperatures and increasingly frequent and extreme low-water periods – and the price we (and nature) have to pay for it. (Story in English and Hungarian.)
MCC’S SECRET LUXURY SPENDINGS REVEALED. Mathias Corvinus Collegium is the Orbán government behemoth that serves as a talent recruitment institution, a think tank, and the core organization of the Hungarian government’s foreign influence operations aimed at infiltrating Western right-wing circles. However, as Direkt36’s investigation reveals, MCC’s lavish spendings on events and catering are also a part of the story. (Text in Hungarian.)
FORMER EMPLOYEE TESTIMONIES REVEAL UNFAIR PRACTICES TOWARDS UKRAINIAN WORKERS. The “War and Labour” pan-European investigative project focuses on the exploitation of Ukrainian refugees in various European countries, and investigace.cz’s article reveals that Czech temporary employment agencies are immersed in illegal practices such as tax evasion and labor rights violations. (Text in Czech.)
POLITICAL PARTIES BACKING PRESIDENTIAL CANDIDATES WERE THE ONES MOSTLY ATTACKING THE MEDIA. The Investigative Center of Ján Kuciak (ICJK.sk) journalism safety project found that, during the country’s presidential election campaign, it was mostly the political parties rather than the presidential candidates themselves who attacked journalists and smeared the media. (Text in Slovak.)
This was VSquare’s 18th Goulash newsletter. I hope you gobbled it up. Come back soon for another serving.
Still hungry? Check the previous newsletter issues here!
SZABOLCS PANYI & THE VSQUARE TEAM
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VSquare’s Budapest-based lead investigative editor in charge of Central European investigations, Szabolcs Panyi is also a Hungarian investigative journalist at Direkt36. He covers national security, foreign policy, and Russian and Chinese influence. He was a European Press Prize finalist in 2018 and 2021.