Hungary’s Prime Minister prompted gasps on November 22, when he was photographed wearing a football scarf showing the contours of “Greater Hungary”, that is, the pre-World War 1 entity that contained swathes of the territory now belonging to its neighbors, including, crucially, Ukraine.
“Football is not politics,” Orbán later claimed; a dubious statement from a politician who has expertly used his and his country’s obsession with the game to gain popularity and justify grand construction projects. But “Scarfgate”, as the episode was immediately branded, was the least consequential of Orbán’s recent foreign policy steps.
A couple of days earlier, Orbán refused to support an EU initiative to raise €18bn ($18.7bn) of funds on capital markets for Ukraine. He then told his Polish counterpart, Mateusz Morawiecki, that the Hungarian parliament would ratify the NATO accession of Finland and Sweden only at its spring session, in 2023, and not before the end of this year. At the same time, his government has been blocking an EU decision on a global minimum tax, an initiative spearheaded by the US administration. Domestically, loyalist media have accused the US of illegally financing the Hungarian opposition, with ad hominem attacks on David Pressman, the US ambassador, and a clumsy report issued by the National Information Center, an authority supervised by an Orbán loyalist, essentially calling the National Endowment for Democracy a CIA front.
Foreign policy brinkmanship is not a novel feature of Orbán’s governance style: Hungarian diplomats have been blocking common EU and NATO positions on issues ranging from China to Ukraine for years; Orbán has said he opposed EU sanctions on Russia and aid to Ukraine since April; his claims of “American interference” are at least as old as Joe Biden’s presidency. What is new is the apparent willingness and intensity with which the Hungarian Prime Minister is locking horns with everyone at once.
To understand the urgency, look for the money — in all of its forms. Annual food inflation in Hungary was over 45% in October, higher than anywhere else in the EU. Bread was more than 82% more expensive than a year ago, and inflation is still accelerating. The government was forced to partially lift one of its flagship policies, a utility price cap, and may have to suspend a fuel price cap in January. While the government blames this on EU sanctions against Russia, the mess is mostly of Orbán ’s own making. Energy prices, for instance, have to do more with the pricing mechanism in Hungary’s supply contract with Gazprom than energy sanctions, from which Hungary enjoys a carveout. At the same time, the government is facing the most resilient grassroots protest movement of recent years, driven by pupils and teachers angered by an education system short-changed for several years by the Fidesz governing party.
But this is only part of the squeeze. Until this month, it seemed that Orbán would be able to kick-start growth and pad his treasury with EU development funds, which would soon be unblocked under a deal agreed with the European Commission. Then, on November 23, the Commission unexpectedly recommended withholding 65% of funds under three development headings, due to persistent rule of law problems. Together, the funds are worth €7.5bn, or one-third of Hungary’s allocations over the current seven-year fiscal planning period. A further €5.8bn from the EU’s pandemic recovery fund has also been withheld. The only sweetener was the adoption of Hungary’s recovery plan, meaning that the money might be available next year.
To access it, however, Orbán ’s government has to fulfill 27 “milestones”, among them 17 European Commission demands regarding anti-corruption legislation, including a new “integrity authority”, which experts — and, it appears, the Commission — found unsatisfactory in the form chosen by the government. A further 10 conditions would provide guarantees that the use of EU funds is properly audited and that the judiciary is able to independently verify this.
The Commission’s decision clearly came as an unpleasant surprise to Orbán. While Hungary can draw other EU funds, further delays mean greater pressure on its overstretched budget that has to pre-finance development projects, and, very likely, delays on the ground as well. If the EU Council adopts the Commission’s recommendation, it is unlikely that Hungary will see any of the blocked funds before summer 2023 at the earliest. Hence the barrage of threats, vetoes, and general noisemaking to remind Hungary’s partners that Orbán can also cause problems, if so minded.
Orbán may feel that his combative style, which has paid dividends in the past, will work once again. But there are warning signs this time. His hardline opposition to the Ukraine aid package seems to have earned him the scorn of budget commissioner Johannes Hahn, who called it “pure political blackmail.” This in turn may very well have contributed to the Commission’s sudden switch to hardball tactics, along with the strong support of the popularly elected European Parliament, which Orbán’s government wants to do away with.
Recall that only a year ago, Orbán’s government was again reportedly poised to unblock EU recovery funds, when it decided to launch a campaign against LGBT people. This prompted the Commission to refer Hungary to the EU’s Court of Justice and raised further concerns about the rule of law. Indeed, it seems that Orbán is not reading the room: brinkmanship may work during peacetime, but in situations like the current one, the role of long-term, trust- and value-based relationships that the EU is founded upon, becomes stronger.
This leaves Orbán with unpleasant options. He can try to continue leveraging his veto in the European Council, but this risks alienating Poland, a close ally, as well as prompting other EU members to call his bluff and figure out a way to circumvent Hungary.
He can also try to strike a compromise, which however may not be enough to unblock the funds in the Council, and risks confusing his domestic messaging. The fact that Hungary’s head of state, Katalin Novak, traveled to Kyiv together with Poland’s prime minister shortly after the Commission’s announcement, points in this direction. Novak’s social media pages, however, were soon teeming with comments from angry and confused Fidesz supporters who have consumed pro-Russian messaging from the loyalist media.
Thirdly, his government can simply implement everything that the Commission asked. By doing this, however, he would likely risk weakening his domestic coalition, which heavily relies on public contracts enriching the right people. It would also risk his no-compromise, strongman approach to the EU and others.
One of the talents that has best served Orbán during his long career as a politician has been the ability to recognize where his position was strong, and where he could expect resistance. It enabled him to maximize his leverage through a combination of networking and sheer audacity, while ensuring he didn’t fight hopeless battles.
The current face-off is far from over, but make no mistake; Hungary’s Prime Minister is in a very difficult place and it’s hard to see how he can escape.
András Tóth-Czifra is a Nonresident Fellow at the Center for European Policy Analysis (CEPA.) He is a political analyst from Hungary, based in New York City.