LONDON, February 23. /TASS/. Hungary’s decision to sign nuclear power contracts with Russia is facing "a growing threat" from EU regulators amid fears that Budapest could resist attempts to ramp up sanctions against Moscow, the Financial Times has reported.

Brussels could introduce "a veto or prohibitive fine," the report says.

Although Moscow is subjected to the Western pressure over Ukraine, Hungary considers the contacts worth 12 billion euros as a "centrepiece of strategy to forge deeper political and economic ties with Russia," the report says.

In December, Budapest awarded contracts to a subsidiary of Russian atomic energy company Rosatom to design, build and maintain two 1,200 megawatt reactors in the town of Paks, 75 miles south of Budapest.

"But the decision to conceal some details of the contracts on grounds of national security provoked suspicion" in Brussels, the newspaper wrote. While the European Commission raised no objections to an intergovernmental agreement signed by the two countries just over a year ago, "the award of contracts for the Paks plant has thrown up thorny antitrust concerns."

"Two EU agencies are now examining the agreements. Euratom, the nuclear watchdog, is withholding approval for the plant’s fuel supply on technical and financial grounds, though talks are ongoing," an official said. All nuclear fuel supply deals by EU member states must be approved by the Euratom agency.

Competition investigators from the European Commission "are also looking at state subsidies and the legality of contracts awarded to Rosatom and its affiliates without a tender," the report says.

Meanwhile, the antitrust inquiry "is still at an early stage," giving Hungary an opportunity to reach an agreement with Brussels before a possible full formal investigation.

"For EU diplomats, [Hungarian Prime Minister Viktor] Orban’s decision not to hold a competitive tender underlined fears that his close links with Moscow could lead Hungary to resist attempts to ramp up sanctions against Russia," it says.

Last week, Orban said the energy policy was a sovereign matter. "We will have a major problem·.·.·.·I expect an escalating conflict," he said.

A Hungarian government spokesman said the commission sought to interfere in national energy policy "by stealth" and warned that attempts by Brussels to build a single internal energy market threatened EU member states’ sovereignty.