Hungary's government hopes to be a "pillar" in a new and profitable relationship between Europe and the Kremlin, but Russian president Vladimir Putin will face a mixed reception when he visits Budapest on Thursday.
Hungarian prime minister Viktor Orban opposes sanctions on Russia, shares the Kremlin's desire for the geopolitical shake-up promised by new US president Donald Trump, and will seek to strengthen business ties with Moscow this week.
Many people in Hungary accuse Orban of mimicking aspects of Putin's autocratic rule, however, and plan noisy protests during what will be a rare visit by the Russian leader to the European Union.
"Sanctions are not effective and are clearly harmful," says Hungarian government spokesman Zoltan Kovacs, of measures imposed by the EU and US after Russia annexed Crimea and fomented conflict in eastern Ukraine in 2014.
“If there will be a positive shift in the dialogue between Moscow and Washington, European partners will perhaps be easier to convince to follow suit,” he added, complaining that sanctions had cost Hungary €6.07 billion in lost export revenue.
“Hungary seeks to be one of the pillars of the re-establishment of European-Russian relations,” Kovacs says.
Orban and Putin have maintained friendly ties despite Russia’s continued aggression against Ukraine, Hungary’s neighbour, where a Moscow-fuelled separatist war has killed about 10,000 people, including at least five during fierce fighting last weekend.
Despite Hungary being one of the main beneficiaries of EU funding, Orban accuses the bloc of over-extending its powers and “meddling” in his government’s affairs, while critics see shades of Putin in his drive to dominate the country.
Orban’s allies
Since taking power in 2010, Orban has re-written Hungary’s constitution, put allies in charge of previously independent state agencies, weakened the law courts and tightened the government’s grip on the media. Anti-corruption watchdogs say graft is growing as businessmen loyal to Orban and his Fidesz party flourish.
"Orban is like a copy of Putin," says Peter Juhasz, vice president of Hungarian opposition party Egyutt (Together), which plans to demonstrate in Budapest on Thursday and wants Hungarians to whistle or blow their horns in protest wherever they see the convoy carrying the two leaders.
“Using new laws or economic means, Orban’s people have taken over independent media and now they are trying the same with civil society – this is what we have to stop,” he says.
Orban accuses NGOs backed by liberal Hungarian-born financier and philanthropist George Soros of trying to undermine him, and a senior Fidesz member has said they should be "swept out" of Hungary; Putin banned Soros' Open Society Foundation from Russia on national security grounds in 2015.
"Corruption in Hungary was also high before 2010 [when Orban took power] but it was more about the dysfunction of the system . . . Insider or crony state capitalism has emerged in Hungary over the last six years," says Jozsef Peter Martin, executive director of Transparency International in Budapest, which is partly funded by Soros's foundation.
“The state has an extremely big role, state institutions are very biased towards the government and there are no checks and balances any more except for some judges and courts. The prosecution service, for example, is totally under government control,” he added.
“In a normal democracy, these institutions control the government – here in Hungary, they serve as an instrument of the government.”
Martin says Hungarian business is now dominated by “oligarchs” loyal to Orban, who have “much more power and ability to absorb EU funds and gain public procurement, and can get very rich”.
The most striking example is Lorinc Meszaros, Orban’s childhood friend and a former gas fitter who in recent years has become the mayor of their hometown, Felcsut, and Hungary’s 28th richest individual according to Forbes magazine.
Controversial deal
Orban's government signed its most intriguing and controversial deal with Russia, when it granted a €12 billion contract to Kremlin-controlled nuclear agency Rosatom to build two new reactors at Paks, Hungary's only atomic power station.
Russia will provide €10 billion in funding according to a contract that was awarded without a public tender and has been classified as secret for 30 years; the EU is reviewing whether the 2014 deal breaches its rules on state aid.
“We think the Hungarian people should be aware of what the country has agreed to,” says Martin, while acknowledging that security issues may demand a degree of secrecy.
“Our main concern is that this is totally non-transparent. We basically know nothing about this deal, which is worrying in geopolitical terms and from a corruption point of view.”
Russia will not only expand the Paks plant but help operate it and provide fuel, and Hungary’s government hopes to discuss a long-term gas deal during Putin’s visit – while insisting that it is not undermining EU efforts to cut the bloc’s dependency on Russian energy.
“Instead of criticism, we instead owe Russia a debt of gratitude for being prepared to extend co-operation. The country’s co-operation with Russia on the expansion of Paks is the agreement and deal of the century,” says government spokesman Kovacs.
The symbolism of Putin’s trip to Budapest may be stronger than its substance, however – the Russian president visiting a friendly European leader to discuss hopes for a new world order during the turbulent early days of Trump’s presidency.
“If the EU fails to engage in a pragmatic dialogue with Moscow,” Kovacs warns, “it stands to lose a great deal”.
