Online Commentary

April 13, 2022

Hungary’s Post-Election Balancing Act

On April 3, Viktor Orbán was re-elected for a fourth consecutive term, making him the longest-serving Hungarian prime minister of all time. But he is more vulnerable than meets the eye. Orbán and his ruling Fidesz party need to consolidate the economy and limit the costs of living and energy. Pre-election spending and energy price caps have left a hole in public finances, while pressure mounts to cut off Russian gas, which Hungary gets at a discount. A painful fiscal adjustment will be difficult without approval of the EU recovery fund. Something’s got to give.

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Picture: Hungary s Prime Minister Viktor Orban at a press conference
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Ahead of the Hungarian election, almost all public opinion polls forecasted that Orbán’s Fidesz would win an absolute majority. But there was no indication he would win by such a large constitutional supermajority of two-thirds. Orbán’s party is likely to have 135 seats in a parliament of 199. The opposition fared much worse than forecasted, losing not only in most individual districts, but also on the party list. The 23-page election observation report by the OSCE’s Office for Democratic Institutions and Human Rights condemned pro-government media bias in the campaign and noted pervasive overlap between the ruling party and the state.

While the opposition experienced a staggering defeat, even as a united front, one party, the liberal Momentum, did finally make it to the national parliament. Established in 2017, Momentum failed to pass the 5 percent parliamentary threshold in the 2018 elections but will now form a parliamentary group of 11 MPs from Budapest, in addition to their two existing MEPs. Their success indicates that the younger generation is forming new centrist parties. In the short-term this may lead to infighting among the moderate opposition parties – particularly among Momentum and the leftist Democratic Coalition (DK). But they currently pose no threat to Fidesz.  

The anti-Semitic, anti-vaccination, proudly anti-Western and pro-Russian Mi Hazánk party (Our Homeland), won six MPs in the election, which allows it to set up its own parliamentary group. It gained more attention in the public media than the united opposition bloc, which led to the opposition splitting and more former Jobbik voters supporting them. The presence of a militant far-right party could affect the proper functioning of the national parliament and the political discourse in Hungary.

Aside from the political landscape, it is the looming economic crisis that poses the biggest threat to Orbán. The budget deficit reached 45 percent of the annually planned amount in just the first two months of 2022, and inflation is approaching 10 percent. A slow post-Covid economic recovery due to Russia’s war in Ukraine and rising energy prices will give Hungary a hard time in the coming years. In his post-election press conference, Orbán said that he would like to keep energy price caps in place beyond their summer expiry date unless inflation rises significantly. He plans to impose special taxes on multinational companies to pay for it if necessary. He has also warned that he is ready to block EU sanctions on Russian oil and gas, even if Germany would cave in to the pressure, because cutting off Russian energy imports would kill Hungary’s economy.

Hungary’s Narrowing Menu of Options

International pressure gives Orbán even more reason to play nicely with the EU. While he is unlikely to turn away from his multi-vector and transactional approach, his room for maneuver with the EU is restricted. His mercantilist approach is undermined by some of his key non-EU allies, such as Turkey, being forced to take sides and pivoting towards a firmer transatlantic position.

Policy shifts in the EU are putting more pressure on Hungary to decrease its energy dependence on Russia – not only on gas imports but also the Russia-funded Paks-II nuclear power plant project. Hungary may well seek to increase its bargaining position with the EU by forming partnerships with Serbia and other Western Balkan countries. In doing so, it may seek to increase its regional influence there, capitalizing on the EU’s geopolitical weaknesses in the region. It may even look to expand bilateral deals with China.

But Hungary’s quest for more influence outside the EU will only result in Budapest being marginalized in Central Europe and in Brussels. In that case, only routine elements of the Visegrád cooperation would probably continue, including coordination before European Council meetings. Since the beginning of Russia’s war in Ukraine, Orbán has been criticized by his Visegrád allies over his ties to Putin’s Russia. They have pushed him to definitively choose his geopolitical orientation. Absent a clear stance from Hungary, the Czech and Slovak diplomacies are investing into alternative regional cooperation frameworks, within the EU but also specifically with Austria (the so-called Slavkov triangle). They have also strengthened their bilateral ties with Germany.

After the election results were announced, Orbán acknowledged the current divide among Budapest and Warsaw on Russia. He acknowledged that “our goals in the European Union cannot be realized without Poland’s support.” Poland is used to working with Hungary on some EU policy issues and this will quietly continue because they will need each other to block further steps in the Article 7 procedure.

Orbán’s Unconventional Allies

Emboldened by his majority, Orbán is almost certain to adopt a more confrontational EU-policy, involving more veto threats, particularly on issues related to Common Foreign and Security Policy, which have become vital in the face of Russian aggression. In response, the European Commission and national governments will need to stand up to him and avoid giving Orbán any concessions on rule of law issues.

That said, the EU should still be skeptical about the narrative of an emboldened Orbán because it could become a self-fulfilling prophecy. He may have won big, but Orbán is more isolated now than at any time before. His Fidesz party was expelled from the influential European Peoples’ Party last year, and his stance on the war in Ukraine, while popular at home, has put him in a tricky position internationally.

But Orbán hasn’t given up hope on new allies in Western Europe like Marine Le Pen, who will face French President Emmanuel Macron in a run-off on 24 April, and whose party can win legislative elections in June. ­He will continue to organize a trans-European alliance with the French, Italian, and Spanish far right, and other nativist parties, for the European Parliament elections in two years. The return of Donald Trump – or election of another populist Republican candidate in 2024 – would also help his cause.

The European Commission’s Negotiation Strategy

In the second half of 2024, Hungary will also hold the rotating EU Council presidency after the European Parliament elections when the new Commission will be set up. But his options are narrow due to isolation in the EU because of his position on Russia and in the US because of a possible rapprochement with China.

European Commission President Ursula von der Leyen announced on 5 April the start of a new rule of law conditionality procedure, which could block Hungary from accessing EU funds due to breaches of the rule law. But the paradox here is that her hardball move on the rule of law could give the European Commission a better bargaining position towards Budapest and critics in the European Parliament on approving the country’s much-needed €7.2 billion recovery plan.

For Hungary to strike a bargain with the EU, it needs to improve anti-corruption measures and transparency. The European Commission could approve the plan — and unblock the first payment — but link future disbursements to more commitments. Those commitments could include signing up to a data-mining tool known as Arachne, which would help police the funds’ final beneficiaries – many of which are suspected Fidesz cronies. Orbán is unlikely to move on the substance of his policies, so this is about changing the structural conditions of his regime and his ability to use EU funds to grant patronage to friendly oligarchs.

Germany’s Appetite to Strike a Deal

Any deal will be the result of tough negotiations. To improve his chances, Orbán could reshuffle his new cabinet to include some less controversial figures. An important indicator of this will be the appointment of a new foreign minister, replacing his loyal lieutenant, the pro-Russian Péter Szijjártó. Appointment of the justice minister will also be an important sign, because this position coordinates the government’s work on some of the most relevant EU dossiers and leads talks on the recovery fund

Any compromise will need to secure qualified majority approval by EU member states. That could be tricky to achieve because national governments in the EU are taking an increasingly hardline stance on Hungary. Moreover, the European Council, which always tended to avoid divisions, is becoming firmer. For Germany, guiding the European Commission towards a bargain with Budapest will be particularly hard. In the past, Berlin has always taken a consensual line, and it is now under heavy pressure at home and abroad to stand firm.

Now is the time to put Viktor Orbán on the spot in national parliaments over his actions that breach the EU’s fundamental values. For now, Poland seems to be much closer to a deal with the EU – benefiting from more talks and hints that it is willing to dismantle the disciplinary chamber in its supreme court. It is also benefiting from European good-will over its support to Ukraine and its proactiveness in hosting refugees. But for Hungary, problems with rule of law and democracy are considered more profound, and there is no political will to give Orbán an easy ride, in Germany or in the EU.

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This online commentary was published on April 13, 2022.

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