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Research Analyst Dániel Cséfalvay: Quo vadis, Hungary?

About the author: Dániel graduated from the Central European University with an MA in International Relations, focusing on conflicts and security. He has political risk experience from Oxford Analytica, Horizon Intelligence, and London Politica. His research focuses on Middle Eastern and Central-Eastern European politics.

Perhaps one of the most burning questions in the EU since the Russian invasion of Ukraine has been the ambiguous position of Hungary. Hungary’s Prime Minister Orbán has been nurturing close personal and business ties with Russian President Putin for the past decade which brings up many questions concerning the future direction of Hungarian foreign policy. The political oscillation of Orbán between the East and West reveals a country in search of its future direction. This, of course, is a political direction that is rather difficult to manoeuvre in the long term and it opens up significant questions for businesses wanting to understand the regional developments and the investment potential.

The side of peace

Much like with its EU membership, contrasted with a gradually greater economic opening eastwards and closer personal ties with autocrats, Hungary’s position regarding the Russian invasion has come into question. As Orbán’s governments challenged many of the normative ideas behind the EU’s core values, they started a rift that contributed to the Hungarian narrative of decoupling the EU’s economic opportunities from ideological values. This left Hungary in a rather scarcely occupied political space, periodically sharing it with Poland. However, since the beginning of the Russian invasion, the Hungarian government has stood alone within the EU and employed a past modus operandi turning eastward to find confirmation for its narrative.

The Hungarian government remains adamant that it desires peace more than its EU counterparts. One of the key reasons is the situation with the Hungarian minority in Transcarpathia over whose educational rights the government has led many fights with the Ukrainian government and their policies. Furthermore, Szijjártó has mentioned that as these ethnic Hungarians are Ukrainian citizens, they are also conscripted and fighting on the front lines, making Hungary the only country with direct victims in the war apart from the warring parties. Nonetheless, while continuously emphasising their desire for peace, neither Orbán nor Szíjjártó have been able to outline what that should actually look like.

Szíjjártó argues that Hungary did not veto any of the EU’s 10 sanctions packages, yet it is crucial to mention that Hungary (along with Slovakia and the Czech Republic) secured exceptions to the Russian oil import ban. Furthermore, Szijjártó also negotiated the exclusion of the nuclear sector from the sanctions. All three countries are landlocked, and the exemption is a necessary initial step to divert their sources of oil import. However, in Slovakia and the Czech Republic, this did not significantly influence the direction of their foreign policy as they remain committed to supporting Ukraine. Simultaneously, in Hungary the exceptions are presented as diplomatic victories, highlighting the economic and political exposure of Hungary to Russia. An analysis from Atlatszo relying on data from the OECD shows that in the private sphere, the economic activities between Russia and Hungary have been gradually lessening since 2010. However, the only sphere where these activities remain significant is that where the government has direct influence over imported products, such as oil or investments into the energy sector.

This, nonetheless, still does not mean that the Hungarian government could not distance itself from cooperation with Russia in light of the invasion of Ukraine and take a clearer stance supporting a common EU action like their long-term allies in Poland. With much of the Hungarian EU funds frozen, it overshadows the main benefits of their EU membership as seen by Orbán, who imagines Hungary as a “middle power” independent of the West and the East. In this respect, Orbán remains in an uncertain position, not fully committed to the EU and constantly negotiating its position, while manoeuvring the economic fallouts of opening towards the east, especially Russia, at a time of increasingly tightening sanctions from the EU.

A vague foreign policy

Promoting a narrative that does not necessitate a set direction of foreign policy allows one to play to all sides and prepare for any scenario. However, as seen with its V4 relations, the Hungarian government is getting gradually more isolated with its uncertain foreign policy. While the regional ties between the V4 countries have always been crucial in the development of these countries, it would be only a fraction of what Hungary could lose. Playing all sides, being on the side of peace with no concrete plan, and inviting investments from opposing fractions is hardly a viable long-term strategy especially considering the size of the Hungarian economy. A similar critique has been echoed by Zsolt Németh, a founding member of Fidesz and the Chairman of the Parliamentary Committee for Foreign Affairs. Németh outlined the dangers of having a vaguely defined strategy which makes it difficult for the allies of Hungary to build trust and lasting political and economic relationships.

To counter allegations of Hungary’s isolation and to prove that there is an actual “side of peace”, Szíjjártó reached eastward yet again. To highlight that there are countries with similar views like Hungary Szíjjártó met with Jeenbek Kulubaev, the Minister of Foreign Affairs of Kyrgyzstan and the State Councillor of China Wang Yi. Through these symbolic steps, Hungary is further isolated from the EU and its closest allies in the V4 region. Turning further towards the East will also question Hungary’s business potential in the future, as the majority of its trade is with other EU countries. Attracting foreign investments with the looming threat of being isolated or left marginalised between two economic blocs would be even more challenging. Hence, with decisive questions ahead in the coming months, it will be crucial to follow where the direction of the foreign policy will lean. As the Russian aggression in Ukraine continues and floating on “the side of peace” with no tangible steps is likely to be ineffective, Hungary’s steps towards the EU and crucially towards Ukraine will be under intense scrutiny.

What lies ahead?

The current developments highlight Hungary as a country that is oscillating between belonging to the EU (or more broadly to the West) and creating further economic ties in the East despite their implications. While Orbán and Szijjártó’s steps look like an opening towards the East searching for allies elsewhere, the economic and political impact of getting more isolated by the EU or its closest allies in the V4 would be massively damaging. Even though a sudden turnaround in foreign policy is unlikely, it will be crucial to follow Orbán’s steps as Hungary is pressured to resolve its inconsistencies.

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