For years, the European Union has struggled to slip the Russian stranglehold on its supplies of natural gas. Now, just as it is beginning to do so, plans to upgrade a Russian-built power plant are raising concerns that the Continent is about to fall into Moscow’s nuclear embrace.

When Russian President Vladimir Putin visits Hungary Thursday, among the topics of discussion will be the Paks II nuclear power project, a controversial agreement between Budapest and Russia’s state-run nuclear company Rosatom that is under review by the European Commission.

If Brussels gives the green light as expected, its approval will further open the European market to Russian nuclear technology and services, potentially increasing the Continent’s reliance on the Kremlin’s goodwill for its energy supplies. The Commission’s ruling, on whether to allow Hungary’s state aid for Paks II, is expected imminently. It would come at a time when renewed fighting in Ukraine and the ascension of U.S. President Donald Trump have given new urgency to the debate over Western sanctions imposed on Russia in the wake of its 2014 annexation of Crimea.

For much of the last decade, Brussels has struggled to reduce its dependency on Moscow. After a dispute between Russia and Ukraine led to cuts in Europe’s gas in 2006 and 2009, the EU has sought to diversify supplies and link national markets to make them more resilient to unexpected shortfalls.

Rosatom’s expansion has been made possible, in large part, by strong backing from the Kremlin and loans from state banks.

Critics of the Hungarian project warn that Rosatom’s start-to-finish deals — often funded by subsidized Russian state loans — could once again lock in dependence on Moscow.

Rosatom would build and operate the €12-billion Paks II project for about 50 years. It will be the only supplier of fuel for at least the first decade. Up to 80 percent of the project will be funded with a Russian loan.

Nuclear agreements like Paks II will strengthen the Kremlin’s influence in Europe “as has been traditionally seen via Russian oil and gas deals,” said Ian Armstrong, a senior analyst at the news and analysis firm Global Risk Insights.

Whereas Russia’s gas exports are restricted by the need for pipelines or, to a lesser extent, liquefied natural gas import terminals, nuclear energy services can be deployed wherever there is demand. But with big capital costs and the need for highly skilled workers, nuclear energy customers can be equally dependent on their suppliers for expertise.

“In instances where Moscow provides significant financial assistance as part of the deal, like in Hungary, [the deals] also serve as a direct purchasing of influence and political favors from EU member states,” Armstrong added. Hungarian Prime Minister Viktor Orbán has been a vocal critic of EU sanctions on Russia, an issue he is expected to discuss with Putin during the visit.

Together with the construction of a power plant in Finland, Paks II is the “ticket to the European nuclear market,” said Petr Topychkanov, a fellow in the Carnegie Moscow Center’s nonproliferation program. “The success there will help Rosatom to overcome the anti-nuclear lobby in Europe, and to have an upper hand over nuclear competitors in this region.”

Analysts and industry insiders worry that at least one other EU member — the Czech Republic — is waiting to see if it can follow Hungary’s lead and secure the Commission’s approval for skipping a competitive tender and award a nuclear energy contract straight to Rosatom, even though it has already started to prepare for one.

That said, the interest rate for the Russian loan is not that attractive for Prague, Václav Bartuška, special envoy for energy security at the Czech foreign affairs ministry, told POLITICO on Tuesday. “For a country like the Czech Republic it’s easy to find financing on much better terms than can be offered by Rosatom.”

A permanent outpost

Rosatom’s expansion into the international nuclear market started when former Russian Prime Minister Sergey Kirienko became chief executive in 2005. Twelve years later, the company has secured some $110 billion in foreign orders to supply new reactors, enriched uranium and other services in 49 countries over the next 10 years, according to the company’s website.

In an illustration of the company’s close ties to the Kremlin, Kirienko left Rosatom in October to become first deputy head of Russia’s presidential administration. He was replaced by Russia’s first deputy minister of economic development, Alexey Likhachov.

In addition to the Hungarian and Finnish projects, Rosatom plans to build reactors in Turkey, India, China, Belarus, Bangladesh and Egypt. It also sees potential for projects in Brazil, the United Arab Emirates, Saudi Arabia, Algeria and Nigeria, among other countries, Andrey Rozhdestvin, regional vice president of the Rusatom International Network, which supports the Russian company’s subsidiaries overseas, told POLITICO.

“Unlike all other companies, Rosatom is the only nuclear corporation in the world which operates in all segments of the value chain — from uranium mining to construction, operation and decommissioning of nuclear power plants,” he said. “We combine the functions of an operator and technology supplier at the same time.”

Rosatom’s reactor technology is also unique because its newest model, updated to meet safety standards following Japan’s Fukushima meltdown, has been tried and tested in Russia. Competing models have yet to generate any energy. French company Areva is installing its untried European pressurized water reactor in France, Finland and the U.K., but has already run into significant budget and safety concerns. Its Hinkley Point C project in the U.K. is expected to cost roughly €6.5 million per megawatt — compared to €5 million for Paks II.

The importance Moscow places on Rosatom’s success can be seen in the government’s willingness to finance projects even as it is under pressure from Western sanctions and dismal oil and gas prices.

Rosatom’s ability to offer all-encompassing deals — to build, operate and sometimes even own the power stations it installs — will provide Moscow with a long-standing presence in places like Turkey, said Armstrong.

“It’s not like a military base,” he said. “But it’s a permanent outpost in that country, and there could be cases where, for security reasons, there might be Russian security officers as well as scientists and engineers.”

Political value

Rosatom’s international expansion has been made possible, in large part, by strong backing from the Kremlin and loans from state banks. The importance Moscow places on Rosatom’s success can be seen in the government’s willingness to finance projects even as it is under pressure from Western sanctions and dismal oil and gas prices.

“It’s possible only because the Kremlin believes in the political value of long-term peaceful nuclear cooperation with other countries, and the government is ready to pay for this expansion,” said Carnegie’s Topychkanov. “Even in a tough time, the Russian government is ready to meet the financial obligations according to nuclear deals.”

In Europe, Rosatom has so far largely focused on modernizing and extending the lifetime of existing reactors, as it’s doing with France’s EDF in Bulgaria, and research and development, also in partnership with French nuclear companies.

The project in Finland broke ground a year ago, providing Rosatom its first step into Europe’s market for new reactors, although the majority ownership will rest in Finnish hands.

A deal Rosatom reached with the Swedish energy utility Vattenfall in December for long-term nuclear fuel supply also opened a new avenue for the company. “It is an important victory for us, providing the basis for development in a new segment of the European nuclear market,” Rozhdestvin said. “In the long-term perspective, we are also considering an opportunity for building new nuclear capacities in Europe.”

Kalina Oroschakoff contributed reporting.