Hungary's ruling Fidesz party on Oct. 22 announced plans to introduce legislation that would allow any gas company that is not a certified transmission system operator to build a natural gas pipeline. According to the bill, the only requirement a company would need is approval from the Hungarian Energy Office, leaving international bodies with no jurisdiction over the issue. The bill does not mention any specific pipeline construction project, but the only such project currently under discussion is South Stream. The announcement came after Hungary announced the suspension of its deliveries of natural gas to Ukraine and amid renewed political frictions with the European Union and the United States.

South Stream is controversial for many reasons. First, it does not comply with the European Union's Third Energy Package regulations, which prohibits ownership of natural gas pipelines to companies in charge of natural gas extraction. Second, South Stream was designed to bypass Ukraine as a transit country for natural gas supplies from Russia to Central and Eastern Europe. The crisis in Ukraine has turned the South Stream controversy from a legal debate to a political issue. The EU Commission has been pressuring member states to freeze the construction of the pipeline, with only modest success. Bulgaria and Austria said that they would temporarily suspend the project but are still pushing diplomatically to continue. Hungary has taken a bolder approach, as Fidesz's bill suggests.

Orban's Policies Create Friction

Since Hungarian Prime Minister Viktor Orban took office in 2010, Hungary's relationship with the West has been tense. The European Union and the United States repeatedly criticized Fidesz's attempts to exert more control over the Hungarian economy by approving laws curtailing the independence of the central bank and the media. However, the relationship became particularly tense after the onset of the Ukrainian crisis because Budapest pursued an ambiguous foreign policy. On the one hand, Hungary joined the European Union and the United States in approving sanctions against Moscow. On the other hand, it sought to preserve its economic and political ties with the Kremlin.

Tensions have risen markedly in recent months. On Sept. 22, Orban met with Gazprom chief Alexei Miller in Budapest. Four days later, Hungary's energy operator, FGSZ, announced the suspension of natural gas supplies to Ukraine, hampering Kiev's quest for non-Russian energy suppliers (though Hungary said it would resume these shipments at the beginning of 2015). Hungarian authorities also irritated their neighbors by pushing for more autonomy for Hungarian minorities in Ukraine and Romania -- ethnic minorities are a sensitive issue in Central and Eastern Europe.

Hungary's moves are particularly worrisome to Poland, one of the most vocal supporters of sanctions against Russia. Poland and Hungary, along with the Czech Republic and Slovakia, are members of the Visegrad Group, a political and military alliance of Central European countries. The Ukrainian crisis worsened the pre-existing differences within the group; Hungary (and the Czech Republic and Slovakia to a lesser extent) does not share Poland's sense of urgency when it comes to Russia, pursuing more accommodative policies.

Hungary is also going through a rough period in its rapport with the United States. In late July, the Obama administration heavily criticized Orban's speech about building an "illiberal state" in Hungary. Tensions between Budapest and Washington were heightened in mid-October, when the U.S. government declared six unnamed Hungarian public officials suspected of corruption ineligible for visas. No names have been announced officially, but Hungarian media reported that the list includes high-ranking members of the Hungarian Tax Office and pro-government advisers and businessmen. Budapest's reaction was mild, criticizing the action but reassuring Washington that Hungary still considers the United States to be a key ally.

So far, Hungary's moves have not weakened Orban at home. Fidesz performed strongly in this year's general, EU-level and municipal elections. Moreover, Fidesz has been using its anti-EU and anti-liberal rhetoric to strengthen its popularity in Hungary. Budapest and pro-Fidesz media use recent actions by the United States and the European Union -- including an infringement procedure against Hungary because of legislation limiting foreigners' access to land -- to justify the expansion of the party's political and economic control of the country.

Not everything is quiet in Hungary, however, new plans to tax the use of the Internet and incidents of corruption involving public officials have harmed the government's popularity. Rivalries are increasing between Hungarian oligarchs as well as between the government and some of the businessmen that backed it -- most notably, Orban is in a fight against influential businessman and former Fidesz supporter Lajos Simicska. In the coming months, these rivalries could further weaken the Hungarian government.

Hungary as a Borderland State

While most of Fidesz's decisions are popular at home, they are also the result of the international situation. Hungary is at the center of a region in flux. To its west, Budapest sees a fragmented European Union with an uncertain future because of its internal economic, political and social conflicts. To its east, it sees a more active Russia that combines its energy resources with apparent military aggressiveness to pursue Moscow's foreign policy goals. Further afield, Budapest sees a U.S. government that may or may not protect Hungary in the event of foreign aggression. At home, Hungary has to deal with the conflict between center-left forces that push for more European integration and strong nationalist, right-wing, anti-Semitic groups that want the country to move away from the West and get closer to Russia.

Fidesz itself is not a homogenous force. Some members want Hungary to have better ties with the United States, while others defend a rapprochement with Russia. Criticizing the European Union is part of the party's strategy, but the Hungarian government is interested in maintaining good relations with the United States to secure political support and investment from U.S. companies. For example, on Oct. 22, Hungarian Minister for Foreign Trade and Foreign Affairs Peter Szijjarto met with managers of U.S. heavyweights such as General Motors and General Electric, both of which operate in Hungary.

Hungary is a borderland country, and as such it is forced to find a balance between all the foreign players that are involved in the region. This explains why Budapest supported anti-Russian sanctions and had a mild reaction to the U.S. visa ban on Hungarian citizens, but it also explains Budapest's recent overtures to Moscow and its intermittent clashes with Brussels. Hungary's conflicting interests will continue to force the country to maintain its ambivalent foreign policy.