A recent Bloomberg report indicated a rise in anti-European Union (EU) sentiment among the Hungarian public, with support for the EU among Hungarian citizens falling to 39 percent, according to the most recent Eurobarometer survey, down from 51 percent during the same time last year. This is a substantial decline, making Hungary one of the countries with the weakest support for the EU.
This decline coincided with what the Bloomberg report stated about the trial balloon floated by the Hungarian Minister of Finance during the coronavirus pandemic by proposing the idea of Huexit similar to the British exit (Brexit), where he stated that “Hungary’s membership in the EU may be viewed in a different light once the country becomes a net contributor to the bloc’s budget by the end of the decade.”
These changes at the popular and governmental levels in Hungary give rise to a number of questions, chief among them: Why now, when Hungary is one of the biggest beneficiaries of its membership in the EU? How important is this claim in the first place? What is the reason for this conduct and the growing hostility toward the EU and its institutions? And, what lies ahead?
Hungary’s Position in the EU
In 2004, Hungary joined the EU alongside the Visegrád Group, which includes the Czech Republic, Slovakia, and Poland. It is estimated to have a population of 10 million, compared to the Union’s population of 447.7 million. The country’s real GDP is estimated to be $326.186 billion in 2021, which is less than $0.5 trillion.
Hungary shares land borders with seven countries, including Ukraine, although its border with Ukraine is the shortest of the seven. Due to its location within the EU, it plays an important role, particularly in terms of its relations with the countries of the Western Balkans, not to mention Budapest’s important relations with Serbia, which play a pivotal role in the stability of the Western Balkans.
However, in recent years, Hungary’s rapprochement with Poland and their ongoing coordination have made them a troublesome duo for the EU.
In the past, this pair—Hungary and Poland—have made several attempts to obstruct the union’s plans in order to exert pressure and advance priorities for their internal policies that conflict with the obligations of their EU membership, including some legal obligations that the Court of Justice of the European Union (CJEU) is pursuing. The benefits of being an EU member in terms of politics and the economy are what motivate this commitment.
The most recent confrontation between the EU and the two countries took place in December 2022, and as a result, the European Commission (EC) has changed its approach to dealing with them, giving it authority it previously lacked in its dealings with them. That month, the EC approved a rule to uphold the rule of law, giving the EU the authority to prevent member states from receiving funding if the rule of law is found to be broken.
This law specifically targeted the two countries because Poland had passed legislation that allowed national courts to override the CJEU’s statutes, which was against the foundation of its membership. The Hungarian government, on the other hand, took a number of actions that violate EU law, pertaining to the government’s control over the media and the judiciary, which at the same time increased suspicions of corruption.
The two countries attempted to challenge the rule before the CJEU, which stipulates that the EU can withhold funding if violations of the rule of law threaten “proper financial management of the EU’s budget.” This decision allowed Brussels to begin cutting off funds to Budapest and Warsaw.
On 18 September, the EC proposed that if Hungary did not enact 17 anti-corruption reforms, the EU withhold about €7.5 billion of funding intended for Hungary. One of the proposed changes is the establishment of an Integrity Commission tasked with keeping tabs on how the Hungarian government spends the EU money it receives. Furthermore, until Budapest enacts the reforms, the EU may withhold an additional €5.8 billion from the COVID-19 recovery fund. Last December, at a time when Hungary is experiencing inflation of about 25 percent, which is among the highest in the EU, Brussels threatened to freeze the total amount of funds allotted to Hungary in the EU budget until 2027, or €22 billion.
Hungary’s Anti-Ukraine Stance
Unlike in many other European countries, the European and Hungarian sides’ disagreement did not end at the threshold of domestic politics. Instead, it went beyond the band of European solidarity for Ukraine. Since the Russian invasion of Ukraine more than a year ago, more than a million Ukrainian refugees have crossed the Hungarian border. Hungary opened its eastern borders to those fleeing the Russian invasion. However, only 35,000 individuals have requested temporary protected status (TPS) in Hungary, according to data from the UNHCR. This is significantly lower than the majority of other EU members as well as other countries west of Ukraine, like Poland and the Czech Republic.
Hungary forbade the transfer of weapons to Ukraine via its soil and refused to offer any military assistance to Kiev. Instead, it was one of the first nations to declare its approval to pay Russia in rubles, refused to sign on to any sanctions plans aimed at preventing the import of Russian gas or oil, and even threatened to halt European funding to Ukraine if it was not left out of the sanctions [imposed on countries importing Russian oil and gas].
There was more to come. Budapest criticized the Ukrainian and Western sides and held them accountable for the war’s continuation and the country’s dire economic situation as a result, despite not taking part in the conflict in any way. On the occasion of the first anniversary of the Russian-Ukrainian conflict, Prime Minister Viktor Orban declared that Russia had already succeeded in turning Ukraine into an unmanageable wreck. In a roundtable discussion with The American Conservative, Orban declared that Ukraine is now “the land of nobody”, adding that Vladimir Putin won’t lose the war and that time is on Russia’s side in the conflict.
Hungary’s Hardline Shift
After Poland, Hungary is the second-highest recipient of EU funding. In recent years, these funds have contributed an average of 3-4 percent of the nation’s gross national product (GNP), which roughly reflects the country’s annual economic growth. The country has received more than €100 billion in aid since joining the EU, ranking among the countries with the highest aid per capita. The distribution of this aid between 2010 and 2021 is depicted in the graph below.
Figure 1: Distribution of EU aid to Hungary, 2010-2021
Source: Statista (2023)
Note: 1 euro equals HUF 371.9
This was also preceded by the EU lending Hungary a low-interest loan in response to the crisis the nation experienced in 2008. Hungary received €14.2 billion, including €8.7 billion from the International Monetary Fund and €5.5 billion from the EU, in addition to the substantial contribution of the EU and its member states to Hungary’s economic growth. 78 percent of Hungary’s exports are traded within the EU (Germany 28 percent, Romania, Slovakia, Austria, and Italy all 5 percent), while 3 percent of exports go to the United States and 3 percent to the United Kingdom. In terms of imports, 71 percent come from EU member states (Germany 24 percent, Austria 6 percent, Poland and the Netherlands 5 percent), while from outside the EU, 9 percent come from China and 4 percent come from the Republic of Korea, not to mention the significant role played by German firms in enhancing the Hungarian economy.
In 2010, Hungary’s economy was in dire need of improvement and it owed money to the IMF. However, the entry of German industry, particularly the auto industry, provided, for instance, 500,000 Hungarian jobs by 2018. German automobile manufacturing in Hungary accounts for 28.8 percent of all Hungary’s exports and makes up a significant portion of the country’s manufacturing sector.
These economic advantages were the driving force behind Hungary’s decision to join the EU, and years after joining, the country remained one of the staunchest proponents of EU membership, with 84 percent of referendum voters choosing to join EU in 2003. Since then, support for the EU has fluctuated according to the country’s economic conditions and crises. In 2004, 46 percent of Hungarians had a favorable opinion of the EU, compared to 24 percent in 2012. In 2020, positive perceptions rose to 49 percent. In 2004, 14 percent of people had a negative opinion of the EU. This sentiment peaked in 2012, when approximately one-third of the population held it, and then declined to 12 percent by 2020. Hungary was thus one of the most anti-EU nations in 2012 and one of the most pro-EU nations by 2020.
This fluctuation in Hungarian support for the EU has been attributed to a number of factors, most notably:
1. Economic Conditions: After the financial crisis the nation experienced in 2008, which led to the demise of the liberal government supporting EU ideology and the entry of the Fidesz party led by the current prime minister, Viktor Orban, this economic support has fallen to its lowest levels. However, once the Hungarian economy was bolstered and began expanding again, support levels increased once more. This is in line with the current downturn because of the economic conditions the country is experiencing, which the media and the government solely blame on the ongoing conflict between Russia and Ukraine and the West’s continued support for Ukraine, which contributes to the war’s perpetuation.
2- Ideological Disparities: The country’s history diverges significantly from the principles upon which the EU was established. West European nations, who have a distinct history from those in the east of the continent, were the ones who spearheaded the creation of the EU. Hungary, for instance, has a long and ingrained history of upholding Christian values and seeing them as a cornerstone of governance, in addition to its past as a former communist country; so, unlike many other countries that suffered under the rule of the Soviet Union, did not have anti-Sovietism ingrained in its system. These two factors have contributed to the recurrence of the country’s conflict with the EU as a result of its liberal policies and laws, such as those pertaining to LGBT communities, and its strictness toward Syrian refugees and refusal to accept them on the basis of their diverse religious identities. Perhaps these two factors help to explain why, in contrast to most EU member states in the west, Hungarians approach EU membership pragmatically, taking advantage of the benefits it offers rather than supporting a shared set of moral principles.
Looking East: Hungary’s Convergence with China and Russia
The current prime minister’s government has taken an eastern direction since he took office in 2010, and this has contributed to the growth of shifting public opinion in Hungary towards the EU. When Russia invaded Georgia in 2008, then-opposition leader Viktor Orban was the first to vehemently denounce Russia’s aggression, emphasizing that “military aggression is military aggression.” In the years that followed, the economy of the country was hit hard by a series of unexpected events. In order to diversify investments in the economy and ensure its growth, Orban and his administration came up with the concept of “looking east”. Voters in the country, who did not benefit as much as the liberal elite in Budapest from EU membership, gave this policy a boost. The luster of this trend was further enhanced by the fact that it supports the identity discourse by rejecting Western ideologies that Orban and his supporters see as hostile to traditional Christian values.
For Hungary’s rapprochement with China, more than half of Chinese FDI to countries in Central and Eastern Europe came to Hungary in the years following 2012. In 2020, China became Hungary’s largest foreign investor for the first time. According to the Chinese Ministry of Commerce, Hungary and China exchanged more than $11 billion worth of goods in 2021. The Budapest-Belgrade railway, which was financed by a Chinese loan and is arguably the most significant Belt and Road project in Europe, was one of the notable Chinese projects in Hungary. China’s Contemporary Amperex Technology Limited (CATL) announced in August 2022 that it would invest €7.3 billion (three times the previous largest investment in Hungary) to build a new car battery factory in Hungary. Given that it is anticipated to be the company’s largest factory in Europe, Hungary will benefit strategically from having this facility. For China, Hungary serves as a platform for forging economic ties with Europe, particularly with nations in Central and Eastern Europe. The Chinese side also sees investment, particularly in Hungary, as a vehicle for advancing Chinese interests in Europe and expressing Chinese viewpoints in European institutions. Hungary’s capacity to thwart unanimous decisions in dire situations is a key factor in China’s growing relationship with that country. For instance, in 2021, the Hungarian government prevented the EU from issuing a statement criticizing China for the Hong Kong security law.
When it comes to relations with Russia, its influence is primarily felt in the energy industry because the Hungarian government views supplying energy at reasonable prices as one of its top priorities. After the Russian-Ukrainian conflict, Budapest has increased its reliance on Russia, in addition to its refusal to impose sanctions on Russia’s energy sector, as previously mentioned. In order to address concerns about the country’s energy supply during the winter, Hungary’s government asked the Russian gas giant Gazprom to start supplying it with more gas in August. More than 80 percent of the oil and 25 percent of the electricity Hungary needs are supplied by Gazprom.
After Russia’s invasion of Crimea in 2014, Hungary signed an agreement to construct the TurkStream pipeline, which was inaugurated in 2021, in order to lessen Russia’s reliance on Ukraine as a transit hub. Additionally, Hungary and Russia agreed to a joint agreement in 2014 that Rosatom would construct two new reactors at the Pax nuclear power plant at an estimated cost of €12 billion. Cooperation between Russia and Hungary extended to the banking sector. In April 2021, the Hungarian Ministry of Foreign Affairs announced that Hungary would join the Moscow-based Eurasian Development Bank as the first EU member state.
In its annual State of the Nation address, which coincided with the first anniversary of the Russian-Ukrainian war, the government elucidated its vision for relations with Russia. The Hungarian Prime Minister delivered the address, in which he stated, “We are maintaining our economic relations with Russia; and indeed we are advising the whole Western world to do the same.” and that “The Hungarian government does not consider it realistic to assume that Russia is a threat to the security of Hungary or of Europe.”
How Hungary-Russia Rapprochement Affected Hungary-US Relations
Hungary’s convergent strategy with Russia and China had a negative impact on its relationships with the United States, particularly with the administration of current President Joe Biden, whom Orban harbors animosity toward (given the latter’s strong support for former President Donald Trump).
On 14 April, the US government imposed sanctions on the management of the Russian-Hungarian International Investment Bank (IIB), as well as Imre Laszloczk, the IIB’s vice president and a Hungarian national. Hungary owns approximately 25 percent of IIB shares, while Russia holds the majority of the remainder. The majority of the IIB’s leadership are people connected to the Russian intelligence agency, the FSB, thus earning the organization the nickname “spy bank”. Nikolay Kosov, the president of the IIB, is descended from a line of Soviet intelligence officers. Hungary reacted angrily to the US decision, but it was ultimately forced to withdraw its employees.
It went further than that. The same month, it was revealed that a group of members of Congress from both parties had drafted US sanctions intended to target prominent Hungarian political figures associated with the Orbán administration. Former officials and government supporters, who primarily are members of the ruling Fidesz party, will face penalties under the bill. The legislation, according to officials familiar with the draft, has been in the works since last year and is anticipated to be introduced to Congress as soon as next month (June 2023), given that it is likely to receive widespread support.
In summary, despite rising tensions between Hungary, the US, and the EU, motivated by the Hungarian prime minister’s hopes for the election of his close ally, former US President Donald Trump, Russia’s ability to win the war, and the West’s growing disinterest in and withdrawal from support for Ukraine, which could demonstrate the wisdom of his policies and allow him to avoid any repercussions for the actions of his administration, this does not negate the Hungarian Prime Minister’s ability to back down when his choices start to backfire. This is demonstrated by the fact that he approved all sanction packages, withdrew his nation’s workers from the IIB bank, and permitted Finland to join NATO despite his earlier objection.
Hence, the Hungarian government’s instigation of this unrest and controversy, including its covert call to leave the EU and the polarization of Hungarian public opinion against the EU, can be viewed as a strategy by the Hungarian government to maximize its gains from all parties, whether they be the EU, China, or Russia, as well as the contribution that strategy made to direct some of the Hungarian people’s frustration with their economic situation away from the government and onto external parties until the government can deal with the crisis head-on, as it did from 2010 to 2012.