Is Hungary Ukraine’s Biggest Problem in the European Union?
Several weeks into Russia’s invasion of Ukraine, Hungarian Prime Minister Viktor Orbán singled out Ukrainian president Volodymyr Zelensky as an enemy of the Hungarian nation. In the current crisis, Orbán’s criticism of Ukraine and fierce opposition to further sanctions against Russia stand out during a rare moment of apparent E.U. unity in support of Ukraine. The Hungarian government’s overt admiration for Russian President Vladimir Putin, even after Russia’s annexation of Crimea in 2014, is unique in the European Union. In 2015, Orbán stated “I don’t want to live in a Europe that conducts a new Cold War against Russia and which makes the Europeans enemies of the Russians.” As an illiberal, populist E.U. member state, Hungary has long played on divisions between East and West, its leader courting Putin and campaigning against Brussels. Despite Orbán acting as the vocal poster boy for anti-liberal sentiments, the country’s economy is overwhelmingly dependent on the European Union and Hungary consistently complies with E.U. sanctions on Russia. In fact, the strongest resistance to further sanctions on Russia — including a European embargo on Russian energy — is not Hungary but Germany and other larger economies that hide behind Hungary’s inflammatory rhetoric. These divisions enable Hungary to continue weakening the European Union’s liberal agenda while enjoying the perks of membership, and there’s no reason to foresee this changing in the near future.
Hungary’s “Eastern Opening”
Upon taking office in 2010, Orbán introduced the “Eastern Opening” economic policy, intended to attract investment from non-Western markets. Observers emphasized the surprising overture towards Russia, but the main target of the policy was increased Chinese investment. During this period, many European countries were also courting China — a growing economy in a time of global recession — and China was seeking to expand its trade relations with Europe and its Belt and Road infrastructure initiative. Indeed after 2010 both the volume of trade between Hungary and China, and Chinese investment in Hungary, increased. A flagship of this new economic relationship is a 20-year €1.5 billion Chinese loan to construct a railway between Budapest and Belgrade. Recently Orbán and Serbian President Aleksandr Vucic took the inaugural journey, waving at non-existent passersby ahead of their respective elections. Though Chinese investment has risen throughout the region, China has invested more in Hungary than any other country in the European Union’s Central and Eastern European region.
The most controversial non-Western relationship that Orbán has cultivated is with Putin. Orbán ran on a platform of making utilities more affordable, and so securing cheap energy supplies was a major priority for his administration. When Hungary’s long-term gas contract with Gazprom expired in 2015, Putin personally went to Budapest to sign a new sweetheart gas deal that flew in the face of regional, European priorities to decrease energy dependence on Moscow. Orbán and Putin also signed a deal for Russia’s nuclear-energy giant Rosatom to finance and build a new nuclear power plant at Paks. Orbán also critiqued E.U. sanctions against Moscow in the wake of the annexation of Crimea, arguing that Europe “shot itself in the foot” by alienating Russia.
Cultivating close relations with China and Russia is key to Orbán’s mobilization strategy. As an illiberal populist, Orbán mobilizes his base with anti-Western and anti-European Union sentiment. Orbán is speaking to Hungarians who feel let down by the promise of European accession. While overall the quality of life in Hungary improved after it joined the European Union, the gap between Hungary and its Western neighbors on the Organization for Economic Cooperation and Development’s “Better Life” index and GDP per capita remain significant and, moreover, many rural voters have not enjoyed the same opportunities as the liberal elite in Budapest. For Orbán, China and Russia offer an alternative to the Western liberal democracy that he blames for stymieing Hungarian greatness. In an infamous 2014 speech, Orbán expressed his admiration for the illiberal model of governance:
Today, the stars of international analyses are Singapore, China, India, Turkey, Russia. And I believe that our political community rightly anticipated this challenge. And if we think back on what we did in the last four years, and what we are going to do in the following four years, then it really can be interpreted from this angle. We are searching for (and we are doing our best to find, ways of parting with Western European dogmas, making ourselves independent from them) the form of organizing a community, that is capable of making us competitive in this great world-race.
Despite the attention that Orbán pays to non-Western leaders and their highly visible diplomatic ties, there is no substitution for the European Union in Hungary’s economy: Neither Russia nor China is key to Hungarian economic interests. E.U. states are almost the sole investor in the Hungarian economy, with an 89 percent share of Hungarian foreign direct investment. Within the European Union, Germany is by far the biggest investor in Hungary and manufacturing for German firms makes up a significant portion of Hungarian industry. German auto manufacturing in Hungary accounts for 28.8 percent of all Hungarian exports. China is a minor investor in Hungary and Russia barely makes the list. Similarly, Hungary trades predominantly with E.U. members. A quarter of its trade imports and exports are with Germany alone. Russia and China are almost insignificant trade partners.
Hungary Versus Ukraine
Orbán was recently reelected in another landslide election. In his victory speech on April 4, Orbán celebrated his triumph over Hungary’s many enemies, claiming:
This victory will be remembered for the rest of our lives because so many people ganged up on us, including the left at home, the international left everywhere, the bureaucrats in Brussels, all the funds and organizations of the Soros empire, the foreign media, and in the end even the Ukrainian president.
Immediately after the election, he communicated privately with Putin on Telegram. Given Russia’s brazen aggression in Ukraine and the allegations of atrocities and widespread war crimes by Russian soldiers, Orbán’s actions have been widely criticized, even by his closet illiberal ally, Poland’s deputy prime minister and leader of the ruling Law and Justice party, Jarosław Kaczyński. But Orbán’s words are consistent with his behavior throughout his long tenure in office. The relationship between Hungary and Ukraine has been strained for years. As the champion of Hungarian minority rights outside Hungary, Orbán threatened to block Ukraine’s further integration with Europe over a 2017 Ukrainian law restricting the use of minority languages in Ukraine, including Hungarian. Some observers viewed Orbán’s focus on ethnic Hungarian rights as a pretext, suspecting that the real motivation was Orbán’s close relationship with Putin.
Orbán was also suspected of turning U.S. President Donald Trump against Ukraine during a 2019 meeting that Trump took against the wishes of his national security advisor John Bolton and Fiona Hill. During the meeting Orbán offered a negative assessment of Zelensky and called Ukraine “semi-fascist.” According to several sources, this meeting affirmed Trump’s hostility towards Ukrainians, whom he characterized as “terrible people” who “tried to take me down” during the 2016 election.
Moreover, Orbán has always goaded the European Union with strong anti-Western rhetoric, but has ultimately complied with European policies. The most notable example is Hungary’s consistent compliance with the E.U. sanctions regime against Russia both after the 2014 annexation of Crimea and the February invasion.
Gazprom Versus the European Union
Until now, Orbán was never forced to choose sides between the European Union and his non-Western allies. Although Orbán was heavily criticized for acting as an agent of Moscow within the European Union, Hungary was never the key actor shaping E.U. policy toward Russia. The most important voice on Russia policy has always been Germany. Both Hungary and Germany vetoed a 2015 E.U. energy security proposal to make gas contracts more transparent, which would have facilitated E.U. energy unity by increasing the bargaining power of the European Union as a bloc in negotiations with Russia’s Gazprom. For years, Germany has cultivated a far more extensive trade relationship with Russia than Hungary, and even in the current conflict, Germany is the most significant roadblock to an energy embargo against Russia. Recently, German Chancellor Olaf Scholz reiterated the German position that an embargo on Russian oil would trigger a recession in Germany and beyond.
Germany is not alone in its reluctance to implement a further sanctions regime against Russia, the effects of which will be keenly felt at home. Although Germany’s belief that economic interdependence would lead to energy security has been much criticized — especially by Poland and the Baltic states who had long warned of the dangers of energy dependence on Moscow — Austria also rejects sanctions against Russian oil and gas. Vienna is also highly dependent on Russian oil and gas, and in fact Austria’s OMV was the first Western firm to conclude an agreement to import Soviet natural gas in 1968. Austria’s pro-Moscow economic policies have flown under the radar for decades now, with the leadership in Vienna preferring to stay quiet while Brussels rebuked Hungary, and Eastern European states shamed Germany. France’s far right has notorious connections to Putin’s Russia, Italy deepened its energy dependence on Moscow under Silvio Berlusconi, and even Finland pursued a Russian-built nuclear power project after 2014. The harsh reality is that while Hungary is the only E.U. member to praise Putin and attack Zelensky, a number of prominent E.U. member states also have complicated energy and economic ties with Russia that make taking a hard line on sanctions a difficult political calculus.
Foreign policy toward Russia is not the only issue on which Hungary diverges from the liberal position. Most notably, Hungary vocally opposed E.U. refugee quota policy, eventually stymieing a joint migration policy altogether. Like on most issues of European foreign policy, Hungary was not alone in its resistance — it led a coalition of countries that refused to take refugees, like the Czech Republic, Slovakia, and Poland. Even more significantly, though Germany was leading the liberal effort to meet the challenge of the 2015 refugee crisis, most other countries in the European Union did not follow. Here too, anti-refugee mobilization is associated with Hungary, but Orbán was simply the loudest voice on the matter. These are not singular examples. Orbán consistently uses illiberal rhetoric to mobilize domestic support and court non-Western states. This rhetoric weakens the liberal agenda, sows divisions in the European Union, and lends support to other radical-right actors in Europe. Hungary gets away with this damaging behavior because it is acting in areas where European interests diverge.
The European Union Versus Hungary
The European Union has other reasons to want to isolate Hungary: For years the Orbán regime has been degrading Hungarian rule of law and democracy. Upon taking office, the Orbán-controlled parliament wrote a new Hungarian constitution without any input from the opposition or civil society. The new constitution re-imagined Hungary as a conservative, Christian nation at the expense of liberal democratic values. To accompany the legal revolution, the Orbán regime embarked on a full-scale attack on the judicial system, and in particular the constitutional court. Reforms included retroactively reducing the retirement age for judges in an effort to change the composition of the court, significantly limiting the right to bring suits to the court, and changing court procedures to limit the power of the institution. This process significantly weakened the court, so that it could no longer serve as a check on government power.
As part of the concentration of political power and the elimination of checks and balances, the Orbán government transformed the Hungarian media landscape. Foreign-owned outlets that did not kowtow to the government were taxed out, and owners of domestic outlets were replaced by Orbán’s cronies. This has led to effective government control over print and broadcast media in Hungary. One implication of this is the inability of the opposition to frame the political debate. This was evident in the recent election, where the main opposition candidate received little media time. In addition, the media presented only the government’s narrative of the war on Ukraine: that Orbán was a cautious leader trying to prevent Hungary from being dragged by Zelensky into a costly war. Orbán’s longstanding alliance with Putin did not take center stage. The judiciary and media were only two of the many liberal victims of the Orbán regime. Freedom House no longer considers Hungary a democracy.
In response to the degradation of democracy and the rule of law, the European Union used the European court system to prosecute the Hungarian state. These attempts have mostly been ineffective. In some cases, the Hungarian government rescinded particularly egregious policies, but only after the damage was done. In 2018 the European Commission opened an Article 7 procedure against Hungary, which may be triggered when a country breaches the European Union’s fundamental values including democracy and the rule of law. Article 7 requires four-fifths of member states to find the state guilty of violations to move to the next step, where a consensus vote is required to deny voting rights and impose sanctions. This is a very high bar, especially since Poland, an illiberal ally of Hungary, is also accused of violating E.U. law and, since 2017, also faces an Article 7 procedure. Recently there have been increased efforts to sanction violations of E.U. law by tying the disbursement of COVID-19 relief funds to upholding rule of law practices. Prior to the invasion of Ukraine, the European Union managed to withhold the disbursement of these funds to Hungary on these grounds.
The invasion of Ukraine has shifted alignments within the European Union: Poland, previously a poster child for illiberal behavior alongside Hungary, is now a crucial member of the anti-Russian alliance. Hungary, on the other hand, is being ostracized by its closest allies for its ties with Russia, and both Poland and the Czech Republic cancelled their participation in a scheduled meeting of the Visegrad countries (a cultural and political alliance they are part of along with Hungary and Slovakia). While this isolation of Hungary could help to unify the European Union on sanctions, it may not be enough. Poland and Hungary are now on opposite sides of the Russia debate, but they still share very important interests vis-à-vis the European Union. Sanctioning Hungary will leave Poland vulnerable to sanctions for similar violations, and Poland is thus unlikely to support any E.U. efforts that require a unanimous vote.
Russia’s war on Ukraine has united the European Union and NATO as they have not been in decades. In this context, Hungary is a bad actor and stands out as the only E.U. member state openly unaligned with the Western cause. Putin’s actions have rendered Russia so toxic that even Orbán has toned down his pro-Kremlin rhetoric over the past few weeks, expressing his preferences in less inflammatory terms. But there are other divisions within the European Union that hinder unified action in favor of Ukraine. Hungary’s influence is limited compared to that of larger states like Germany. Moreover, as long as the European Union remains divided on both key foreign policies and on common values, Hungary can get away with playing both sides.
Hadas Aron, Ph.D., is a faculty fellow at the Center for European and Mediterranean Studies at New York University. Previously, she was a fellow in the political science department at Tel Aviv University, the Saltzman Institute of War and Peace Studies at Columbia University, and a visiting fellow at Central European University. Her research focuses on populism, nationalism, and international security, and European politics. Her work has appeared in Party Politics, Nations and Nationalism, Newsweek, Duck of Minerva, and The London School of Economics United States Politics Blog. Her work has been featured in the New York Times and Vox.
Emily Holland, Ph.D., is an assistant professor in the Russia Maritime Studies Institute at the Center for Naval Warfare Studies, U.S. Naval War College. Dr. Holland studies the geopolitics of energy, Russian and European foreign policy, U.S.-Russian relations, and populist movements in East-Central Europe and Russia. Her book project Poisoned by Gas elucidates the relationship between foreign policy, domestic politics, and the natural gas trade in Europe and the post-Soviet space. The views expressed here are hers alone and do not express those of the Naval War College, the U.S. Navy, or the Department of Defense.
Image: CC BY 2.0, Flickr user European People’s Party