The EU’s awkward Hungary issue

by Elizabeth Shackelford

On April 3, Hungary’s anti-liberal, ultranationalist prime minister, Viktor Orban, won a fourth term. While the West remains fixated on the war next door in Ukraine, the threat of Hungary’s continued march away from liberal democracy is coming from inside the Western house. It remains an embarrassment for a bloc that touts itself as a model for human rights and the rule of law to have a member that respects neither.

Orban remains popular at home, but his election was not exactly free and fair. In classic authoritarian fashion, Orban has used his years in power and control over levers of the state to stack the cards dramatically in his favor. Public media is dominated by state-funded party propaganda, and private media is largely controlled by Orban’s allies. Opposition parties are prohibited from advertising on television, while the ruling party receives ample airtime through “public service” announcements.

Orban’s government reworked election law to boost his chances too, including severe gerrymandering and adjusting the formula for handing out seats in Parliament, allowing his Fidesz party to secure a supermajority twice before despite earning fewer than half the votes. The system he has designed entrenches minority rule with near total power.

The judiciary is the third lever that Orban has manipulated to serve his needs. In 2018, his party’s supermajority established a parallel court system under control of the executive to rule on “public administration” cases, thereby insulating the executive from accountability or governmental checks.

To the extent that Hungary remains a democracy, it is at best an illiberal one (a term even Orban himself uses to describe his state), and illiberal democracies remain a threat to a rules-based world order. After all, even Russian President Vladimir Putin feigns to win open elections. A liberal democracy, in contrast, requires a representative election combined with respect for individual rights and the rule of law.

What is so galling about Orban’s entrenched rule is that EU money helped solidify it. Since Hungary joined in 2004, it has received extensive EU financial assistance and more than $64 billion in structural and investment support. More than 80% of public investment in Hungary was funded by the EU, with much of that going to lucrative contracts to Orban’s family and friends. Hungary’s gross domestic product per capital grew by 57% in its first 13 years in the EU. Orban has been able to politically cash in on the benefits EU membership offers his people while bashing the institution at the same time.

Most recently, Orban has been a deviation from an otherwise unified EU position against Putin’s war. He has refused to allow weapons for Ukraine to cross Hungary’s territory, maintains a close economic relationship with Russia, and insists that Hungary remain neutral in the war. Orban has long been a close ally of Putin, so it is not surprising, but stands in stark contrast with every other member of the community.

Even before this, the EU was struggling with how to deal with Hungary’s democratic backsliding. When Hungary and other former Communist nations joined the European Union, liberal democracies were on top, and it was thought that history would move toward ever greater liberalization. The institution assumed that, once countries adopted a democratic system, democratic institutions would maintain it. It did not envision the kind of backsliding we’ve witnessed with Hungary, and to a lesser extent Poland, so it did not establish a mechanism for ousting a member for bad behavior.

The EU does have provisions for suspending certain rights of members for breaching the EU’s founding values of freedom, democracy, the rule of law and human rights. Such an act requires unanimity though, which the 27-member bloc is unlikely to secure as long as Poland also courts illiberal tendencies.

The EU has changed its rules to make certain funding conditional on democratic standards, and in February, Hungary and Poland lost a court challenge to overturn that. It took the EU about a decade to get there, but this rule change is a strong sign that there are finally limits to the institution’s tolerance of bad actors.

Europe waited too long and tolerated too much during the trajectory of Hungary’s rise in the EU. This was likely a result of a familiar narrative, one that three decades of the liberal world order has long championed: open markets, trade, and exposure to liberal values over time would simply catch on. The West told itself the same with China’s membership to the World Trade Organization two decades ago.

And yet, illiberalism today is growing, fueled and funded by the prosperity and innovation that the liberal world enables. What would Hungary’s trajectory have been had the EU conditioned its financial support on democratic behavior 15 years ago? Would Hungary’s leadership have been able then to blithely disregard it?

At this stage, if withholding funds fails to change Hungary’s behavior, the European Union must find a way to boot Hungary out. That might not lead to a more liberal Hungary, but it will keep the rule-following club in order and ensure that its funding isn’t complicit in the growth of an illiberal state.

Elizabeth Shackelford is a senior fellow on U.S. foreign policy with the Chicago Council on Global Affairs. She was previously a U.S. diplomat and is author of “The Dissent Channel: American Diplomacy in a Dishonest Age.”