ECONOMY

Hungary and the EU edge towards a deal on money and the rule of law


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Welcome back. The EU is in intensive discussions with Hungary about releasing billions of euros for Budapest on condition that Viktor Orbán’s government abides by the bloc’s rule of law standards. It’s just my prediction, but I suspect some sort of deal will be struck, though the path to it will not be smooth. I’m at tony.barber@ft.com.

A few weeks ago, Orbán marked the 66th anniversary of the 1956 uprising against Soviet oppression by honouring the memory of Cardinal József Mindszenty, the Catholic prelate who epitomised the thirst for national freedom. Most Hungarians recognise that Mindszenty was an exceptionally brave man and justifiably regard 1956 as one of the defining episodes of Hungary’s 1,000 years of statehood.

Budapest residents in 1956 waving Hungarian flags as they demonstrated against the intervention of Soviet troops © AFP/Getty Images

More debatable is whether Hungarians concur with the lesson Orbán drew from the uprising. He said:

If you are a Hungarian, you need the courage of the lion, the cunning of the snake and the gentleness of the dove.

Is Orbán displaying these three qualities in equal measure in Hungary’s talks with the EU? A useful summary of the negotiations, leaning to the view that they will probably bear fruit, appears in this commentary for Politico by Mujtaba Rahman, head of Eurasia Group’s Europe practice.

Put simply, Hungary would like to unlock €14.9bn in grants and loans from the EU’s post-pandemic recovery plan, plus another €7.5bn in EU regional aid funds withheld over alleged rule of law violations, including corruption in awarding public contracts. To get the money, Orbán’s government will have to comply, or make a really good effort at appearing to comply, with EU demands on the rule of law.

EU officials are adamant that they won’t let Orbán pull the wool over their eyes. But some critics of his high-handed methods of rule are uneasy. In Germany, the parliamentary groups of the ruling coalition’s three parties — Social Democrats, Greens and Free Democrats — are putting pressure on the government not to approve money for Hungary if there are any doubts about Orbán’s sincerity in addressing the rule of law issue.

Meanwhile, anti-corruption groups in Budapest are worried that the Hungary’s “captured, illiberal state” will carry on more or less as usual if the EU isn’t careful. In August, the FT’s editorial board pointed out that, during Orbán’s 12 years in power, a warped business model has taken shape under which large sums of money flow to companies loyal to the premier’s Fidesz party, not to mention individuals who were childhood friends of Orbán.

There is much illuminating detail on these practices in a newly published book, “Tainted Democracy: Viktor Orbán and the Subversion of Hungary”, by Zsuzsanna Szelényi. Together with Orbán, she was a founding member of Fidesz in the late 1980s, but she broke with him after he switched from anti-communist liberalism to populist nationalism. Read her book — you may learn a lot.

A distinctive feature of Orbán’s relationship with the EU is that, despite all the benefits that come from Hungary’s membership, he spends much of his time attacking Brussels for domestic political purposes. For example, he has just launched a so-called “national consultation” on EU sanctions against Russia, with the clear aim of trying to show that Hungarians think these measures are needlessly damaging their economy.

Take a look at the slogan below, which appears in a government-sponsored billboard campaign. It translates as “the Brussels sanctions are ruining us”:

A woman passes by government billboards that say “Brussels sanctions are destroying us”, depicting EU sanctions as a bomb
Hungarian premier Viktor Orbán has long criticised the EU’s sanctions policy, here depicted as a bomb, and said it hurt the bloc more than Russia © Janos Kummer/Getty Images

Frictions are also evident in the Orbán government’s relations with Washington. Pro-government media have been calling for the resignation of two judges because they met with US ambassador David Pressman — who, like his EU colleagues, takes a keen interest in the independence, or shortage of it, of the Hungarian judiciary.

In a terse statement, the US embassy in Budapest said: “Interference in dialogue with US government officials does nothing to advance the US-Hungary bilateral relationship.”

Hungary’s scepticism about western sanctions on Russia is matched by its reluctance to be as supportive of Ukraine as its EU and Nato partners. The government is holding up the EU’s latest initiative to provide Ukraine with loans, to be raised on financial markets, to sustain the economy in the national war of self-defence against Russian aggression.

Perhaps this is a Hungarian attempt to exert leverage over the EU on the issue of aid funds and the rule of law? The thing is, Hungary under Orbán has other grudges against Ukraine, often alleging that the authorities in Kyiv practise discrimination against the ethnic Hungarian minority in Ukraine’s western Transcarpathia region.

Map showing ethnic Hungarian population in western Ukraine

For a thoughtful analysis of the status and political outlook of ethnic Hungarians in Ukraine, I recommend Krisztina Lajosi’s article for the European Centre for Minority Issues. It is worth keeping in mind that disputes over minorities in central and eastern Europe are a prime focus of Kremlin-inspired disinformation campaigns, as discussed in this report prepared by Political Capital, a research group in Budapest.

A final thought. Hungary and Turkey are the only Nato countries yet to ratify the applications of Finland and Sweden to join the alliance. Hungary says it has no objections and will complete the ratification when parliament has time to do it. Viktor, there’s no time like the present.

Meanwhile, Hungary’s talks with the EU go on. What do you think? Will Viktor Orbán improve the rule of law in Hungary enough to justify receiving EU funds? Vote here.

More on this topic

Hungarians differ in their evaluations of democracy under Orbán — Laura Clancy sifts the data for the Pew Research Center

Notable, quotable

“It wasn’t an evening that seemed to threaten our democracy” – David Gergen, a former adviser to US presidents of both parties, takes heart from the closely fought midterm elections, the first national contests between Democrats and Republicans since the 2021 assault on the Capitol

Tony’s picks of the week

  • Meta, the company that owns Facebook, Instagram and WhatsApp, has laid off more than 11,000 employees, or about 13 per cent of its workforce, as the social media giant battles falling revenues and rising competition, the FT’s Cristina Criddle in London and Hannah Murphy in San Francisco report

  • The EU needs to reassess its approach to enlargement and make sure Ukraine’s EU accession process doesn’t become bogged down like those of western Balkan countries, Alyona Getmanchuk writes for the Stockholm Centre for Eastern European Studies

Britain after Brexit — Keep up to date with the latest developments as the UK economy adjusts to life outside the EU. Sign up here

Working it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up here

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