Hungary’s ratification of Finland’s Nato membership on Monday is the latest sign of prime minister Viktor Orban slowly turning away from Russia as the economic benefits of their relationship fades.
Tamas Menczer, the junior foreign minister, told parliament that including Finland in the transatlantic defence pact made military sense. “World war three has never been as close as now,” he said, reiterating that Hungary would do everything to avoid armed conflict and achieve peace talks.
Finland’s push to join the military alliance and expand Nato’s border with Russia was held up for 10 months by Turkey, mainly owing to Ankara’s concerns over Sweden, which had applied at the same time as its Nordic neighbour.
But Orban also held off on approving the two countries’ bids as he sought to leverage his vote in an attempt to unblock EU funds frozen over corruption allegations. When Ankara agreed to approve Finland’s bid, Budapest followed suit.
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Fidesz, Hungary’s ruling party, however, continues to withhold approval of Sweden’s attempt despite US national security adviser Jake Sullivan urging Budapest to ratify both bids “without delay”.
“The heavier they press for a decision, the more thoroughly we must contemplate it each time,” said Mate Kocsis, the Fidesz parliamentary group leader.
[ Turkey drops opposition to Finland’s bid to join NatoOpens in new window ]
Hungary is heavily reliant on Russian gas and maintains financial ties to Russian institutions. Still, several government moves indicate Orban has begun a gradual shift that could eventually lead to Russia being replaced in its economy.
Signs the Orban government is softening its Russian stance include talks with France about switching more of its nuclear power production away from Russia and membership in the contact group on Ukraine aimed at co-ordinating arms shipments among Nato allies, even though it has not sent any weapons to Kyiv, said Peter Kreko, director of the Budapest think-tank Political Capital.
“There is an intent to correct course,” Kreko said, adding that Orban’s anti-western, pro-Russian politics “will take time to unwind”.
According to people familiar with the premier’s thinking, the change has been prompted in part by a worsening economic outlook. Some of Hungary’s largest companies are considering exiting their Russia business.
OTP Bank, Hungary’s largest lender, for instance, said it was waiting for the right moment to “make a strategic decision about” its Russian subsidiary, which “for the moment cannot be sold”.
“We don’t make a lot of money in Russia,” OTP deputy chief executive Laszlo Bencsik said. “We narrowed our activity there significantly, to very simple products.”
[ Finland impatient to leave Sweden behind on path to Nato membershipOpens in new window ]
Despite record profits, energy group MOL has begun to diversify away from cheap Russian crude. MOL executive Zsolt Hernadi said the company faced “unprecedented challenges” from the Ukraine war and was planning to spend hundreds of millions of dollars to access oil shipped through the Mediterranean and upgrade its refineries to process non-Russian crude.
As recently as las month, a defiant Orban was insisting Hungary would “maintain our economic relations with Russia”, but three weeks later he told a business forum in Budapest that he might recalibrate the relationship with Moscow.
“Hungary will have to think long and hard about diplomatic and economic relations it can create and maintain with Russia in the next 10-15 years,” he said. “We are obviously interested in preserving connections as much as possible... But nobody knows whether and how long we can do that.”
The prime minister is hoping to use Sweden’s Nato push as a way to resolve a decade-long dispute with EU partners over his self-styled “illiberal democracy”, which included an erosion of civil liberties and the extension of his influence over the media, the courts, education and the arts. Orban’s alleged systematic abuse of EU funding schemes led Brussels to suspend more than €30 billion worth of funding.
“Orban is clearly blackmailing the West, even as he receives very serious warnings,” said Daniel Hegedus of the German Marshall Fund, a think-tank. He said there was a “an obvious connection” between the Nato vote and the EU funds.
That tactic has alienated allies such as Poland, which has been exasperated by Hungary’s multiple attempts to delay the adoption of sanctions against Russia.
“There is no return to business as usual with the Russians,” Poland’s prime minister Mateusz Morawiecki wrote in an article published in Hungary on the first anniversary of the Ukraine invasion. “One cannot normalise relations with a criminal regime.”
The Hungarian ploy has surprised Finland and Sweden, which were focused on Turkish opposition. “I don’t think we have a problem with Hungary,” said one Nordic official. “It’s just Orban being opportunist and seeing if he can get anything out of it.” – Copyright The Financial Times Limited 2023