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The EU’s war on Hungary

As news breaks of secret EU plans to cripple the Hungarian economy, who can still believe it respects national sovereignty?

Artillery Row

On Sunday the Financial Times broke the story that the EU had prepared secret contingency plans to sabotage the Hungarian economy. To be put into operation if Hungary continued to veto Brussels’s plans to make €50 bn available to Ukraine, the scheme was to find a way of very publicly freezing all EU monetary support to Budapest, with the aim of devaluing Hungary as an investment destination, pushing up the nation’s borrowing costs, and possibly starting a run on the already-weak forint. The ostensible reason was that Viktor Orbán’s government needed to be taught a lesson about the consequences of being uncooperative in Europe and too close for comfort to Russia. As usual in the EU, however, there is more to this than meets the eye.

For one thing, despite the FT’s references to a “a document drawn up by EU officials and seen by the Financial Times” (newspaper-speak for a leak), the smart money is on the story having been carefully planted by Berlaymont. It came out four days before a top-level meeting about EU aid to Ukraine. It went to the FT, a paper consistently supportive of the EU in its fights with maverick member States; and four EU diplomats contacted by the paper were immediately happy explicitly to welcome a struggle against what one of them referred to as Hungarian blackmail.

It’s no secret that the EU nomenklatura detests Orbán’s Fidesz administration with a vengeance

Secondly, it’s fairly clear that the real cause of this toughening in attitude is not so much regard for Ukraine as a determination to show who’s boss. Hungary, remember, has said that it is perfectly happy for the other 26 member States to club together as states to help Ukraine financially: something that, one suspects, could be done without too much difficulty and (since Hungary is one of the EU’s weaker economies anyway) without much loss of effect. This is about making sure the EU gets its way: indeed, one of the diplomats who talked to the FT effectively admitted as much when he said, “What kind of union do we have if we allow this kind of behaviour?”

Thirdly, this stance from Brussels is easy to understand. It’s no secret that the EU nomenklatura detests Orbán’s Fidesz administration with a vengeance. There are any number of reasons: they include not only Hungary’s perceived Russophilia, but its independent stance on most things European, its social policies (explicitly pro-marriage, pro-Christian and protective of cultural cohesion) that are seen by many western Europeans as regressive; its mistrust of organisations funded by foreign — sometimes intra-EU — money; and a less than transparent means of appointing its senior judiciary. An opportunity to destabilise that government would be very welcome to the EU machine.

Having said that, however, this episode tells us a number of things about the EU. None is very complimentary.

The first thing is that it lays bare Brussels’s rather casual attitude to democracy. The Hungarian government is one of the most solidly-based with its electors in the EU, having got 54 per cent of the entire vote in 2022 (and increased its support despite ill-concealed efforts by Brussels to persuade voters to think differently). Feelings about the Ukraine war, and support for Fidesz’s emphasis on the need to avoid being sucked into it at all costs, run high, especially in a country both close to Russia and dependent on Russian energy to keep the lights on. For a supranational organisation like the EU, which supposedly supports the principle of democratic accountability and subsidiarity, to call for a kind of economic punishment beating of Orban’s administration, and for doing what its people elected it to do does not look good.

The government in Budapest and the Hungarian people who elected it will not take kindly to an obvious attempt to strongarm them

The second point is that since under the EU treaties the issue of EU subventions to Ukraine is to be decided unanimously and not by a majority, it is very hard to see what possible justification there can be for punishing Hungary is doing what it has a perfect legal right to do: namely, declining to give its support. The EU has been keen enough to push its view of the rule of law on Hungary when it comes to matters like immigration and judicial independence, all of which turn on creative if controversial interpretations of vague EU law by a somewhat malleable Court of Justice. One would have thought that it would be equally keen on the rule of law on this issue, which is cut and dried in Hungary’s favour; but apparently not. Instead it is behaving rather like a club committee which, faced by a member who refuses to vote for a major investment that requires unanimity, promptly decides to deny that member use of the club facilities until he changes his mind.

Don’t shout this too loud, but assuming Brussels is indeed behind this veiled threat and is promoting it as a means of pressuring Hungary, it has the air of a fairly desperate measure. The top brass in Berlaymont are not stupid. They clearly realise that a plan to destabilise a member State which votes the wrong way by deliberately cracking its economy, attacking its currency and immiserating its citizens smacks not of a benevolent paternalist, but of a political bully. They must also know that both the government in Budapest and the Hungarian people who elected it will not take kindly to an obvious attempt to strongarm them.

It’s not even clear that their threats will work. The run on the pound on Black Wednesday in 1992 was arguably the best possible shot in the arm for the UK economy: an even more competitive forint, however immediately painful for those in Hungary, might in the long term increase Hungarian growth.

Brussels, one imagines, is hoping that something will come up, and that Budapest will blink first. They may possibly be right in this calculation. But I certainly wouldn’t bet on it.

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