Central Europe is strategically important to Russia because of its geographic location on the eastern edges of the European Union and NATO. Central European countries, including Hungary, Slovakia and the Czech Republic, are situated in the borderlands, where historic powers such as the Habsburg and Ottoman empires have historically competed for control.
These Central European countries have different geographical imperatives than their neighbors in the Russian periphery and are more open to the possibility of boosting ties with Russia. In contrast, Poland's close geographic proximity to Russia, history of being invaded and location on the North European Plain make it wont to turn to the West and hesitant to forge political or commercial ties with Russia. Romania — which is located on the Black Sea and borders Moldova, a former Soviet country with a Russia-backed separatist region — is a borderland country that has historically balanced between Russia and the West. But now, because of its geopolitical challenges and its fear of Russian influence, it has veered toward the West, developing strong defense and political ties with Western institutions. Countries in other parts of Central Europe, however, are geographically further from Russia and from areas of strategic interest to the Russian military, such as the Black Sea. Because they face a lower direct security threat from Russia, they are better able to balance between Russia and the West.
Prior to the escalation of the crisis in Ukraine, Russia took full advantage of the financial crisis in the European Union to increase its commercial presence in Central Europe, thus increasing its levers in the region. In 2012, Russia's Sberbank expanded into Central Europe by gaining control of Volksbank International's subsidiaries and auxiliary holdings. As a result, in 2013 Sberbank had a 1.9 percent market share in the Czech Republic and a 2.9 percent market share in Slovakia. Russia has also promoted strategic deals in the nuclear sector, including an agreement between Russia's Rosatom and Hungary to expand Paks nuclear power plant. Rosatom's subsidiary, TVEL, also continues providing nuclear fuel to all three countries.
Russia's efforts to increase its influence in the region also extend to the intelligence sphere. Russia is thought to have used its intelligence capabilities for years to boost its position in the region. In October 2014, the Czech Republic's Security Information Service reported that the number of intelligence officers working undercover at Russia's diplomatic mission in 2013 was "extremely high." Meanwhile, Russia supported far-right groups in Central Europe, as it has done in other countries. In May 2014, Hungarian prosecutors asked the European Parliament to lift the immunity of Bela Kovacs, a member of the European Parliament representing the far-right Jobbik party who is suspected of working for Russia. There are also unconfirmed reports that foreign intelligence activity in Hungary has increased.
The crisis in Ukraine led Russia to boost its efforts to expand its influence in the region. As some nearby countries, such as Romania and Poland, push for a greater NATO presence along the alliance's eastern edge, Moscow aims to ensure that countries like Hungary, Slovakia and the Czech Republic do not support Polish and Romanian initiatives or allow a significantly larger NATO presence within their borders. Moreover, the Kremlin has worked to use its existing influence in the region to encourage Central European EU members to oppose further sanctions on Russia. When it comes to Slovakia and Hungary, the Kremlin is pressuring the two countries, though to varying degrees, to limit natural gas reverse flows to Ukraine. Russia understands that the Central European countries are secondary players in the European Union and are not strong enough to block sanctions on their own, but the Kremlin hopes these countries, and others such as Greece and Cyprus, will help delay or soften future measures once the current sanctions begin expiring in March.
Moving Beyond Strategy
Russia's constraints, however, are growing. Russia's financial crisis has partly contributed to the Kremlin's decision to suspend work on the planned South Stream project, which served as a significant lever for Russia in the Central European countries that were expecting investment and jobs as a result of the pipeline's construction. Though there are plans to extend the newly proposed Turkish Stream pipeline into Central Europe, funding for the project may be limited.
Russia's financial troubles are also affecting its banking sector. Standard & Poor's has estimated that Russian banks may need $41 billion this year to cover bad loans. In late February, reports emerged that Sberbank may sell its subsidiaries in both Slovakia and Hungary. The Russian ruble lost 40 percent of its value in 2014 alone, and a continuously weak ruble will likely have a negative effect on Russian imports from Central Europe. As a result, the Russian government is focusing on domestic spending. While some funding will be allocated to furthering Russia's chief geopolitical goals, especially in Ukraine, spending in other areas may be limited.
Russia has long sought to boost its influence in Central Europe, and the crisis in Ukraine has provided further impetus for the Kremlin to pay attention to the region. In the past, high-level visits from the Kremlin to Central European countries were rare. Putin's visit to Hungary and Lavrov's planned visit to Slovakia demonstrate that the Kremlin is adding Central Europe to its list of priorities. Reports of increased intelligence activities signal that understanding and influencing developments in the region are a part of Russia's strategy. Nevertheless, in a region where countries are constantly balancing between the West and Russia, new constraints stemming from Russia's financial crisis and geopolitical challenges will limit the Kremlin's ability to fulfill its ambitions in Central Europe.