Hungary is going through its worst economic crisis in a long time, and politically Orban has driven it into isolation. Will the EU solve the “Orban problem” by 2023?
The prime minister of Hungary Viktor Orban it has already overcome many crises that threatened its authority, in domestic and foreign policy, in the economy and society. But now he faces the biggest challenge so far of his 13 years in power. 2023 could therefore become a decisive and fateful year for the politician whose name is associated with the rise of unfreedom in Europe. Hungary is currently experiencing its worst economic crisis since the country came close to bankruptcy during the 2008-2009 global financial crisis.
Mountain financial problems
The national currency, the forint, has lost much of its value in recent months and high inflation exceeding 20% plunges more and more people in the country into existential difficulties. The price cap on food and petrol has helped little so far and has led to shortages of goods for the first time since the end of existing socialism. In this difficult socio-economic situation, the EU cut off a large part of Hungary’s billions in funding due to deficiencies in the rule of law. More cuts will follow until all payments from Brussels are completely removed. Moreover, the Orbán government is more isolated than ever in Europe in foreign policy, due to its continued pro-Russian stance. It is the only EU country to reject sanctions against Russia, has banned arms supplies to Ukraine through its territory and voted with great reluctance for billions in EU aid to Kyiv. With this stance, Orbán cemented his position as a “necessary evil” within the EU.
“Actually, the Orbán government has never been in as difficult a situation as it is now,” political scientist Peter Kreko of the left-wing Political Capital Institute in Budapest told DW. “You can also see this in the polls, according to which discontent is growing, or in the protests of teachers and educators that have been going on for months”. However, Kreko expresses the caveat that “Orbán and his government are still very successful in shifting the blame for any crisis to external actors, for example the EU or stock market billionaire George Soros. Orbán and his party Fidesz have a very solid electoral base and have also established the most centralized political system in the EU. All this means that the chances of the Hungarian government surviving this critical situation are good.”
“Balkan Bazaar”
Conservative economist László Czobo, who once belonged to an informal circle of Orbán advisers and teaches at the Central European University (Budapest/Vienna), sees Hungary’s current crisis primarily as a “crisis of the Orbán model”. “Behind this model is a policy of cheap money, loose monetary policy and generous spending. This can no longer be sustained,” Tsombo tells DW. “Overall, the government’s situation is difficult, but not catastrophic. Hungary is facing a recession, but it is not on the brink, as it was 15 years ago during the fiscal crisis.” Much will depend for Hungary in the coming months on whether or not the EU provides money to stimulate the country’s economy. After Poland, the country is the EU’s second largest recipient of net contributions. In recent years, they have accounted for an average of 3% to 4% of Hungary’s GDP, roughly the same as the country’s annual economic growth. In mid-December 2022, after months of consultations, the European Commission initially stopped the disbursement of 6.3 billion euros to Hungary. The reason was deficiencies in the rule of law and accusations of corruption.
End of last December, Brussels even threatened to freeze the total amount foreseen for Hungary in the budget until 2027, a total of 22 billion euros. In this way the EU could lead Hungary into a very serious economic crisis. Of course, almost no one in Hungary believes that it will reach this point. “In the past, the EU always used big words towards Hungary, but did not put them into practice,” points out economist László Czobo. “Therefore, I think that part of the EU funding will continue to flow. Because if it no longer pays anything, it will also lose its influence in Hungary, and that is not in the interest of Brussels. Therefore, the process of negotiations will now look a bit like a Balkan bargain and in the end there will be a compromise”.
“Doing too little too late”
Political scientist Peter Kreko however warns against delusions on Orbán’s willingness to compromise with the rule of law. “We can’t expect a lion to become a vegetarian overnight,” says Kreko. “It is not in Orbán’s interest to simply abolish the nepotism and corruption that characterizes his government. Because that would mean that his close associates or members of his family could even go to prison. It is also not characteristic of illiberal systems the openings, especially in economically difficult situations. If anything, they close themselves even more.” Both experts hypothesize that Orbán will try to “maneuver” through the crisis, politically and financially. Economist Tsombo sees a sign of this fact in the “Motolci case”. In early December, the head of Hungary’s Central Bank, George Motolci, a longtime confidant of Orbán, had criticized Hungary’s economic policy in an unusually outspoken manner and had implicitly called for austerity measures. The Motolci criticism had sparked a debate in Hungary about how stable Orban’s rule is.
Tsobo believes that the Hungarian Prime Minister is keeping control of the situation. “Orbán has two people for every job,” he says. One is more of a realist, like Motolci, and the other is an optimist. When he is left with no other choice, he resorts to drastic pragmatic measures, while at the same time resorting to the usual bigotry.” ally Poland over Orbán’s positions on Russia’s war against Ukraine. In December, the Hungarian prime minister went so far as to blame the US for the war. At the same time, he sent President Katalin Novak on a visit to Kyiv, and pro-government media news outlets, which until then spread the most extreme pro-Russian propaganda, now speak more often of “Russian aggression.” Kreko doubts that Orbán can successfully overcome the crisis with this kind of policy, end his isolation in foreign policy and resolve the conflict with the EU.”Can you summarize how Mr Orban at the moment simply as follows,” says the political scientist. “Doing too little too late.”
DW – Keno Fersek/ Irini Anastasopoulou
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With a wealth of experience honed over 4+ years in journalism, I bring a seasoned voice to the world of news. Currently, I work as a freelance writer and editor, always seeking new opportunities to tell compelling stories in the field of world news.
