The United States Department of the Treasury has issued General License 132 authorising financial transactions required for the completion of the Paks II nuclear project in Hungary, led by Russian state-owned enterprise Rosatom. This authorisation, granted despite existing sanctions on the Russian energy sector, aims to ensure the project’s financial continuity while redirecting part of the supply chain towards the United States.
A targeted exception with legal implications
The licence, issued under Executive Order 14024, explicitly permits transactions that would otherwise be prohibited, provided they are strictly related to Paks II. This includes financing operations, banking services and guarantees, even with sanctioned Russian entities such as Gazprombank, VTB and the Central Bank of Russia. The measure is not a general lifting of sanctions but a unilateral and revocable exemption with no legal impact on the broader sanctions framework.
General License 132 corrects a previous exclusion that barred any US actor from engaging with the project, even indirectly. Financial institutions involved must segregate Paks II-related flows, apply enhanced beneficiary due diligence and include contractual clauses detailing the use of proceeds to avoid exposure to secondary sanctions.
A tripartite arrangement with political undertones
In exchange for this regulatory opening, Hungary commits to purchasing nuclear fuel and storage technologies from US suppliers. This configuration enables the United States to integrate into the project without challenging Rosatom’s role as lead contractor, preserving existing bilateral agreements while introducing an American technical foothold.
On the Hungarian side, the project remains under the supervision of the government and project company MVM Paks II Zrt. Following the annulment of state aid approval by the European Commission, financing has shifted towards Russian loans and bilateral alternatives. This dynamic strengthens Budapest’s negotiation leverage within the European Union on energy matters.
A hybrid model under regulatory strain
The Paks II project now combines Russian VVER reactor technology with critical American components. This hybridisation complicates certification and safety procedures due to the interface between Russian and Western standards. It also introduces multiple legal frameworks, making technical and contractual governance more sensitive to any incident.
The US suppliers, not publicly confirmed at this stage, could include firms such as Westinghouse or Holtec. However, these contracts remain contingent on the continued validity of the OFAC licence, whose unilateral nature gives Washington direct leverage over the project’s progress.
A geopolitical precedent with broad implications
This decision weakens the case for sweeping sanctions against Rosatom by showing that a Rosatom-led project can be made acceptable with the addition of American components. At the EU level, it creates ambiguity regarding the coherence of the bloc’s energy policy, highlighting the divide between pro-nuclear and anti-Russian member states.
For Hungary, the arrangement consolidates a dual-anchored bilateral position between Moscow and Washington, at the cost of simultaneous dependence on two geopolitical rivals. For Rosatom, the licence provides implicit recognition of its operational legitimacy within the European Union, even under a sanctions regime.
