Hungary

Under the recent Orbán governments (2010 – 2024), Hungary shifted from a fully-fledged democracy to an electoral autocracy. Democratic institutions have been undermined by the ruling party, and state capture has turned them into instruments of the political will of those in power. The political system has been centralized by the enforcement of state control over the territorial bodies of self-government, intermediate institutions and the judicial system. Overall, the system of checks and balances is dysfunctional, leading to severe consequences for the quality of democracy, the rule of law and the openness of society.

The government’s control over the state media system ensures that political discourse, fueled by superficially religious-conservative but in reality nationalistic, homophobic and patriarchal narratives, induces othering within an artificially created us-and-them dichotomy. The cleavages between center and periphery and urban and rural areas are deepening. Increasingly, party competition in elections runs along the dividing line between highly educated, cosmopolitan, younger and mobile urban segments of society on one side and rural, less educated, older and nationalistic groups on the other. Prime Minister Viktor Orbán and his Fidesz party have mastered the exploitation of these differences in their communication strategies, and have adapted the electoral system to this rift through gerrymandering. Unsurprisingly, in the 2022 parliamentary elections, Fidesz won most constituencies outside Budapest, the opposition stronghold, and secured a two-thirds supermajority.

The overarching issue is corruption. Corruption in Hungary is endemic, and more so than in neighboring countries, is partly accepted by some strata of society. After its electoral defeat in 2002, Fidesz built an economic empire by acquiring media outlets and companies via oligarchs close to the party. Resources were secured via public tenders administered by Fidesz mayors, with hardly any non-Fidesz-affiliated companies winning such tenders in Fidesz-dominated cities. Participants were drawn into the system as if in a chain-letter or pyramid scheme, necessitating the circumvention of more and more control systems via the media, the judicial system, parliamentary control rights, state audits and so on. The system sustains itself, yet cannot be maintained without creating a substantial number of losers. Consequently, the current system is unreformable because any reform would threaten Fidesz’s power base, with severe repercussions for the actors involved.

Against this background, European funds are highly sought after. Nevertheless, beyond domestic considerations, there is a level playing field with Brussels-based actors. The European oversight system remains indispensable, and the EU has frozen some funds allocated to Hungary. This poses an existential threat to Fidesz, prompting Prim Minister Orbán to resort to drastic measures, such as political blackmail, to achieve his objectives. The EU serves as the last serious counterbalance to Orbán and Fidesz in Hungary, leading to the characterization of Hungary as an “externally constrained hybrid regime” (Bozóki and Hegedűs 2018).

Hungarian foreign policy is irredentist and unreliable, swinging between the West and East. Attempts to develop an “Eastern Opening Policy” toward Russia and China have shown some economic success, but cannot replace the benefits of the European Single Market and the billions provided through cohesion programs. Quite the contrary. Instead of opposing EU policies, Hungary should use all the benefits of European integration and go “all-in.”

Hungary faces several challenges induced by the presence of an illiberal regime that prioritizes ideology and survival over sustainability. While some statistics may appear promising, the labor market suffers from covert unemployment, labor shortages and a brain drain, which diminishes Hungary’s attractiveness for investments. The likelihood of falling behind is greater than that of catching up. The Hungarian government’s lack of emphasis on reforming crucial sectors with state-of-the-art measures hinders the country’s long-term competitiveness. Several sectors, particularly healthcare, education and the environment, show severe shortcomings. Governance models are often dysfunctional and almost always lack civil society involvement. The distance between the government and society is growing, regardless of what election results may suggest. Some progress is visible with regard to the sustainability of the Hungarian tax system, and the labor market has some robust features. However, without major policy changes and a different attitude, Hungary is bound to lose ground vis-à-vis its neighbors in the region.

Bozóki, A., and D. Hegedűs. 2018. “An Externally Constrained Hybrid Regime: Hungary in the European Union.” Democratization 25(7): 1173-1189.