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Source: REUTERS/Johanna Geron
The relationship between Hungary and the European Union (EU) has been characterized by tension and conflict, particularly with the rise to power of Viktor Orbán’s nationalist, conservative right-wing populist party, Fidesz, in 2010. Since then, the Hungarian government has enacted numerous legislative acts that undermine democracy, human rights, and the freedoms of its citizens. Consequently, the actions of Fidesz and Prime Minister Viktor Orbán have become a significant test for Hungarian political institutions and civil society. The nature of the Hungarian government has been subject to various interpretations, such as a hybrid regime, non-democratic regime, or illiberal democracy. While specific definitions may not be necessary, it is traceable that Hungary’s democratic backsliding is a pressing issue for Hungarian citizens, whose rights are being undermined, and the EU as a whole.
The Hungarian government’s trajectory towards authoritarianism poses a grave threat to the EU and its very existence. As a unique, multi-level political entity comprising liberal democracies, the EU cannot overlook the fact that it harbours a complete hybrid regime among its members. This represents a fundamental challenge to the EU’s core values, as Article 2 of the Treaty on the European Union (TEU) outlines. Moreover, the Hungarian government introduced significant constitutional changes in 2011 that altered the powers of the Constitutional Court and the president, created uneven political opportunities among key players in Hungarian politics, favoured the ruling forces, and restricted the playing field for the opposition. The government is also known for implementing anti-LGBTQ laws and discriminating assylum-seekers by not compying with the EU migration and asylum policy. In practice, the Hungarian government has pursued policies that are at odds with the EU values, resulting in substantial damage to the EU’s international standing and its ability to act as a unified entity.
It is worth noting that Hungary’s democratic backsliding has far-reaching effects on the stability and internal cohesion of the EU. While far-right parties have gained popularity across the EU, particularly in countries like the Czech Republic, Poland, Slovakia, Italy, and Greece, Hungary stands out due to the significant deterioration of human rights and the normalization of authoritarian rule. The Hungarian approach may be an attractive model for other EU countries to follow, potentially leading to a shift from democratic governance to authoritarianism. Once a country deviates from democratic norms, it becomes increasingly challenging to revert to the right path. Hungary is currently the only EU member state rated as “Partly Free” by Freedom House, underscoring the extent of its democratic decline.
These developments concern the EU and its leaders, who are keen to normalize relations with Budapest. However, they face numerous obstacles in their efforts to hold Hungary accountable. Notably, the EU has never imposed sanctions on a member state, and setting a precedent with Hungary could fuel anti-EU sentiments. Although, the procedure under Article 7 TEU was triggered against Hungary, which might proceed to the stage where the member state could be deprived of its voting rights in the EU Council. One should remember that the EU has been prudent in interfering in its members’ internal affairs, making restoring democracy in Hungary particularly sensitive. If mishandled, it could lead to criticism of EU institutions for violating sovereignty by Hungary and potentially supported by other member states. Nonetheless, the EU is now determined not to allow the situation to spiral out of control, as prolonged inaction would have increasingly severe consequences.
Hungary’s democratic backsliding poses a significant danger and inflicts collateral damage on the EU’s external affairs, particularly its Common Foreign and Security Policy (CFSP). Hungary has been actively blocking or impeding various initiatives proposed by Brussels, especially those pertaining to the EU’s international relations. For instance, Hungary’s obstructionist stance has hindered the EU’s response to the Russian war against Ukraine and the implementation of sanctions against the aggressor. Moreover, the Hungarian situation has far-reaching implications for the EU’s Enlargement policy, further complicating relations with the Western Balkans and the EU’s Associated Trio. This raises an important question: Should aspiring member states still be required to meet the political, economic, and other obligations (Copenhagen criteria) to join the bloc, considering that Hungary can hardly be regarded as a free, liberal democracy that respects human rights and maintains independent institutions? As the guardian of the EU treaties, the European Commission is now expected to take action to address this issue. Failure to do so will not only worsen relations between the EU and Hungary but also harm connections between Brussels and other member states and the EU’s international partners.
The European Commission vs Hungary: Conditionality Regulation and Frozen Assets
Source: EP/Photo by Christian CREUTZ
In December 2020, the EU adopted a regulation establishing a general conditionality regime to protect the Union’s budget. This regulation, based on Article 2 of the Treaty on European Union (TEU), aims to safeguard the Union’s budget in case EU members breach the rule of law. The regulation was largely prompted by the COVID-19 pandemic, which exacerbated the existing rule of law crisis within the EU as states implemented extraordinary measures to combat the virus (e.g. to combat the coronavirus pandemic, the government of Hungary has implemented a “state of danger” as regulated by the Fundamental Law, which grants it exceptional competences). These measures created a risk of potential abuse by certain EU members, who could employ authoritarian practices under the guise of COVID-19 response. The regulation might be the first step to fighting the authoritarian wave in the EU.
The conditionality mechanism introduced by this regulation allows for the imposition of restrictive measures on a member state in the event of a breach of the rule of law and a threat to the EU’s financial stability, including the withholding of funding. On April 27th, 2022, shortly after the Hungarian elections, the European Commission formally informed Budapest that it was activating the conditionality mechanism against Hungary. This serves as a significant signal to Budapest, as estimations suggest that Hungary stands to lose approximately 7.5 billion euros, a catastrophic outcome for the country. Furthermore, the EU has decided to freeze the allocation of around 5.8 billion euros from the Recovery and Resilience Facility, an initiative designed to support Member States in their post-pandemic recovery. This means that Hungary could lose funding equivalent to 8.5% of its GDP if it fails to implement necessary reforms and improve the rule of law situation.
This development is highly unfavourable for Hungary, as it is currently grappling with the urgent need to stabilize its economy and combat inflation, which stood at over 25% in March 2023. However, there are widespread concerns that the conditionality mechanism is imperfect, and scepticism prevails regarding its ability to induce meaningful behavioural changes in Hungary. To address the EU Commission’s concerns regarding the problematic rule of law situation, Budapest has committed to implementing 17 remedial measures in the hopes of negotiating and resolving the dispute. These measures include strengthening anti-corruption efforts, ensuring transparent use of EU funds, and enhancing overall transparency.
Nonetheless, analysts still worry that even if Hungary adopts the proposed steps, it will not effectively strengthen democracy and the rule of law due to deeply entrenched illiberal practices and concerns about the judicial system’s independence. The key issue lies in Hungary’s ability to faithfully implement the 17 remedial measures in a legally binding manner. Consequently, if Hungary successfully unblocks EU funds without significantly improving democracy, accountability, and the rule of law, it would set a major precedent and demonstrate that illiberal regimes are welcome to reinforce authoritarian rule by making superficial changes to access EU disbursements.
However, applying the conditionality mechanism has its cons, as it might invite strong criticism of the EU institutions in case of failure. Such criticism would highlight their inability to effectively address illiberalism within the EU borders. Additionally, triggering the conditionality mechanism solely against Hungary raises questions about how other member states that occasionally violate EU treaties and experience democratic backsliding are treated. This concern extends beyond the EU’s Eastern flank, encompassing other countries of the Union. In fact, by using the conditionality mechanism exclusively for Hungary, the EU and its institutions risk facing further criticism for their perceived “double standards” and the ambiguous nature of their decisions. This could further undermine the EU internally and provide Hungary with leverage to build a coalition of dissatisfied countries within the EU, weakening the Union and imposing additional constraints on its ability to act as a leading international actor.
Hungarian Foreign Policy, Sanctions and Russian Invasion: Continuing Act of Balancing
It is worth noting that Hungarian foreign policy has remained the same since Orbán’s government came to power, and the full-scale Russian invasion did not bring any significant changes. Budapest’s approach to international relations revolves around positioning itself between major powers and pursuing a path of balance. This allows the state and Prime Minister Orbán to safeguard vital national interests. The Hungarian balancing act is evident in its foreign policy behaviour, characterized by escalating anti-Western rhetoric and criticism towards the EU while simultaneously deepening ties with authoritarian regimes. Another major authoritarian partner besides Russia is China, which wields considerable influence in Hungary through projects financed by Beijing, such as the Belt and Road Initiative (the Budapest-Belgrade railway, for instance).
The EU responded firmly to the onset of a full-scale Russian invasion by imposing restrictive measures against Moscow. In February 2023, the EU introduced its 10th package of sanctions against Russia. Throughout the EU’s response, Hungary’s position has been viewed as one of the main obstacles to unified action. Budapest did not outright block sanctions but often resorted to blackmail, threats of veto, and attempts to limit or delay the scope of anti-Russian measures. There could be various explanations for this behaviour, ranging from pressuring Brussels to unfreeze assets for Hungary, consolidating the government’s power by portraying the EU as responsible for the country’s poor well-being and economic performance, or simply due to Hungary’s high dependence on Russian fossil fuels. Consequently, Budapest is particularly concerned about any EU sanctions targeting Russian oil and gas. It has actively negotiated new deals with Moscow, despite other EU countries attempting to reduce their reliance on Russia.
Regarding anti-Russian sanctions, Hungarian officials have adopted a line of criticism that aligns with Kremlin propaganda. Budapest’s position suggests that the sanctions against Moscow have proven ineffective and failed to stop the Kremlin’s war against Ukraine. Moreover, Hungary and other EU member states are portrayed as suffering more from the imposed sanctions than the Russian economy itself. This stance explains Hungary’s reluctance to agree on further restrictive measures. Additionally, Hungary has outlined its red lines, opposing sanctions against the Russian nuclear energy industry. This concerns Russia’s state nuclear company, Rosatom, involved in Hungary, particularly in providing built-in water-water energetic reactors for the Hungarian Paks nuclear power plant. Hungary aims to preserve its ties with Russia to secure additional economic benefits and balance Western influence, aligning with Orbán’s belief that the neoliberal system has failed and the old, US-led liberal order is obsolete. Hungary sees the rise of two powerful authoritarian rivals, Russia and China, as catalysts to overthrow American dominance permanently.
Interestingly, public opinion polls in Hungary indicate that 97% of respondents are against restrictive measures against Russia. However, doubts arise about the credibility of these polls. Labelling the sanctions as “Brussels’ sanctions” fails to reflect the reality that many member states support pressuring Russia through sanctions. The relations between Brussels and Budapest are becoming increasingly strained, not only due to sanctions. For instance, Hungary, citing preserving peace, security, and the safety of the Hungarian community in Ukraine’s Transcarpathia region, refused to allow weapons transit to Ukraine via its territory.
Furthermore, due to the Hungarian veto, there were difficulties in the EU reaching an agreement on allocating funds from the European Peace Facility to finance Ukraine’s military aid, worth around €500 million. It is crucial to remember that the EU can only be strong when it speaks with one voice and remains united. The developments mentioned above highlight that Hungary and Viktor Orbán’s government prioritize their interests over those of the entire bloc.
The government’s actions are clearly aligned with Orbán’s proclaimed “Hungary first” principle, a typical promise made by populist governments to their voters. However, this approach seriously damages the EU’s reputation, credibility, and status in the eyes of its international partners. Alongside Hungary’s democratic decline, Hungarian foreign policy prioritizes national interests above all else and is a significant factor contributing to the escalating tensions between Brussels and Budapest. The EU, whether willingly or not, strives to establish itself as a defence and security actor, but Budapest’s actions present additional challenges. Unsurprisingly, many in Brussels are dissatisfied, as it is unacceptable for a single state to impose such constraints on the collective positions of the other 26 EU members regarding various foreign policy decisions.
The EU Decision-Making: Reform Long Overdue?
We have paid a price for the unanimity principle in EU foreign policy by weakening and delaying our actions.
High Representative of the Union for Foreign Affairs and Security Policy/Vice-President
of the European Commission Josep Borrell
Discussions regarding more effective and flexible EU foreign and security policy-making are not new. Recent vetoes and Hungary’s efforts to block EU actions and the full-scale invasion of Ukraine have reignited debates on the need to transition from unanimity rule to Qualified Majority Voting (QMV) in the European Council. Led by Germany, the “Group of Friends,” consisting of 9 member states, has pushed for changes to the EU treaties to enhance decision-making capabilities, which is crucial during times of crisis. Shifting to QMV would undoubtedly strengthen the EU by preventing a single state, like Hungary, from blocking Brussels’ decisions. To initiate discussions on treaty change, at least 14 out of 27 member states must be in favour, constituting a simple majority. However, achieving a binding agreement would require ratification from all 27 EU member states. Delays may occur if member states decide to hold national referendums. Despite the promising prospects of this reform, resistance from smaller EU states is expected, as they might lose their influence on the EU’s foreign policy, because fear bigger states may exploit the reform to make decisions without their consent.
The situation with Hungary has already reached an alarming point, and the EU has been passive and silent in response. The EU faces a paradoxical situation. If it implements the reform, it can enhance its ability to make prompt and resolute decisions. However, this may come at the expense of unity among EU members as Brussels must persuade smaller states first. On the other hand, if the EU delays the reform, countries like Hungary may continue to obstruct united and decisive foreign policy decisions. As a result of the recent elections, Viktor Orbán’s party has secured another term, potentially leading Budapest further down the path of democratic decline and authoritarianism while prioritizing Hungary’s interests over those of the other 26 EU members. This is a deeply concerning situation, particularly given the ongoing major war in Europe since World War II and escalating great power competition. The EU’s ability to respond to these challenges fully is compromised. Thus, engaging in proper and honest dialogue between Hungary and the EU is crucial to overcome the disunity within the bloc and prevent further negative consequences. Addressing the obstacles to EU foreign and security policy decision-making, the rise of authoritarianism, and the deterioration of the rule of law in member states is essential for envisioning a strong EU—the Union which can project considerable power in international affairs only when it speaks with one voice.
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