Hungary

   
 

Executive Summary

Orbán era producing
deep changes
Hungary has been governed by Prime Minister Viktor Orbán and his Fidesz party since 2010. In the parliamentary elections in April 2018, Fidesz succeeded in gaining the third two-thirds majority of seats in a row. This has given it leeway to continue what it has dubbed “systemic change.” Since 2018 at the latest, observers have been speaking of an “Orbán era” in Hungarian history, comparable in the breadth and depth of changes only to the Horthy and Kádár eras.
Checks and balances being undermined
Since Fidesz’s election victory in 2010, almost all checks and balances have been gradually destroyed. The 2018 elections were free, but blatantly unfair. The incumbent Fidesz government has benefited from its far-reaching control over the media. The combination of decreased registration requirements and generous public funding for candidates and party lists, introduced before the 2014 elections, led to the desired surge in candidacies which confounded voters and weakened the opposition. As in the case of the 2014 elections, the unequal treatment of Hungarians with dual citizenship in neighboring countries and Hungarian citizens working abroad gave Fidesz a considerable advantage. Moreover, the financial gap between Fidesz and the opposition was large, as Fidesz could count on lavish support by enterprises owned by the state or oligarchs close to Fidesz and benefited from the overlap between party and government campaigns and activities, as well as from the instrumentalization of the State Audit Office (ÁSZ) which launched investigations of Jobbik and other opposition parties.
Quality of democracy
declining further;
criminalization of
refugee aid
Since the 2018 elections, the quality of democracy has further declined. After Lajos Simicska, an enigmatic oligarch who had fallen out with Orbán in 2015, left the country following the 2018 elections and dispensed with his media empire, media concentration has advanced in favor of the Fidesz media empire, thereby further undermining media freedom and pluralism. The “Stop Soros” legislation and the 7th amendment of the constitution, both adopted in June 2018, have formalized the attack on political liberties. Both have contained a criminalization of activities connected to immigration or assisting refugees. Beyond this, a new principle of privacy protection has been introduced that is aimed at protecting politicians against criticism, whistleblowing and investigative journalism. Finally, assembly rights have been restricted as public protests and mass gatherings that could disturb the “privacy of people” (e.g., demonstrations close to the private houses of politicians) are not allowed.
New limits to judicial independence
The 7th amendment has also further limited the independence of the judiciary by narrowing the sources of interpretation available to justices. This involves making the reasoning of the proponents of a legal regulation a primary consideration in terms of interpretation. Moreover, it has paved the ground for the creation of a separate administrative court system that is intended to subject the state’s actions to judicial review but, in practice, will instead be subject to strong government control. Finally, the Orbán government has intensified its culture war since the 2018 elections and has removed the remaining leftist and liberal actors from their positions in cultural institutions.
Strong GDP growth paired with state capture
While the Hungarian economy recorded strong GDP growth in 2017 and 2018, economic policy has remained subject to power politics and state capture by the “(royal) court” (udvar) around Orbán. An increasing “re-nationalization” of the economy has gone hand in hand with a “re-feudalization” of public procurement. An openly aggressive, predatory politico-business elite has privatized the market economy and the state by grabbing huge fortunes. As a result, the new oligarchs are now richer than the richest Hungarians were in the Austro-Hungarian monarchy and in the Horthy era. In the run-up to the 2018 elections, Hungary’s fiscal policy turned pro-cyclical in 2017 and 2018.
Rise in deficits despite growth, buoyant taxes
Despite the strong economic growth and buoyant tax revenues, the general government fiscal deficit rose from 1.6% of GDP to almost 2.5% in 2018, one of the highest in the European Union. Since the 2018 elections, the government has sought to strengthen R&I, which had been neglected for a long time, by increasing spending and by initiating a reorganization of higher education and the public research sector. However, the hands-on-approach of László Palkovics, the head of the newly created Ministry of Innovation and Technology (ITM), is likely to weaken rather than strengthen research and innovation.
Policymaking centralized
in Orbán’s hands
The creation of the ITM has been part of a more comprehensive reshuffling of the Hungarian cabinet in the wake of the 2018 elections. Only three ministries have kept their previous function and minister. What has not changed, however, has been the strong centralization of policymaking in the hands of Orbán and his clique. This centralization has made quick and radical decisions possible but has also created bottlenecks. If the prime minister has not been available or ready or able to decide, issues have remained in the air without any decision being made. The fact that the Orbán government has largely ignored independent expertise and refrained from engaging in any substantial consultation has resulted in poor decisions being made and frequent policy changes.
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