Hungary is often portrayed as a problematic example of European integration due to frequent clashes between Viktor Orbán’s government and EU institutions. Not yet Andras Biro-Nagi and Gergö Medve-Balint To illustrate, the two decades since the country joined the EU have seen relatively high levels of compliance with EU policies and strong public support for membership.
Hungary’s twenty years of membership in the European Union can be divided into two distinct periods. The learning phase of membership, the first 6-7 years, is characterized by compliance with EU requirements, the linkage of Hungarian public policy institutions with the EU, and continued integration into the European market.
During this period, socialist-liberal governments adopted a pro-European stance and did not question the EU’s competence on public policy. The 2008 global financial crisis hit Hungary particularly hard, with public deficits soaring and external credit drying up. Without EU membership and the standby agreement with the EU and the IMF, the crisis would have deepened and economic recovery would have taken longer.
The European Union served as Hungary’s seatbelt during the global financial crisis, but this marked a turning point in Hungary’s relationship with the EU. In 2010, Viktor Orbán and his right-wing Fidesz party won a landslide election victory. Orbán’s government developed a Eurosceptic rhetoric, questioned the EU’s authority in several policy areas and began to publicly criticize the EU.
Increasingly hostile political rhetoric is obscuring the remarkable continuity of public policy. Data on infringement proceedings show that Hungary generally fulfills its membership obligations and is inconsistent with other Member States in this respect.
However, the infringement case decided by the Court of Justice of the European Union shows that there are areas where Hungarian law is inconsistent with the EU’s obligations. This includes the implementation of EU asylum policies and Hungarian tax and environmental laws. Thus, over the past decade, Hungary’s membership of the European Union has been characterized by a dichotomy between increasingly Eurosceptic political rhetoric and general compliance with European law.
Mixed economic results
Economically, Hungary is deeply integrated into the European market. Almost 80% of the country’s total exports come from the European Union, which accounts for almost 70% of all domestic imports.
EU member states have strengthened Hungary’s dependent market economic model, which now rests on three pillars of external financing. Initially, foreign capital was the dominant source, followed by EU funds, and from the 2010s, remittances from Hungarians working in Western Europe also became an important source. Together, these three sources of external financing add up to an average of 10% of annual GDP.
The Orbán government has leveraged EU state aid rules to increase state support for foreign companies in the manufacturing sector, strengthening Hungary’s functional specialization in the low-value complex manufacturing sector. However, China is gradually losing its competitive advantage based on cheap and skilled labor, pointing to the limits of dependent development, the risk of a middle-income trap, and a significant slowdown in the economic catch-up process.
Overall, successive Hungarian governments have failed to modernize the economy over the past two decades, with no significant shift towards higher value-added activities. Rather than moving towards the centre, the Hungarian economy remained on the semi-periphery of Europe.
EU funding and migration
Since 2004, the EU has provided Hungary with approximately 56 billion euros per year through its EU cohesion policy, equivalent to an average of 3.5% of GDP. Most of these funds have benefited state-owned enterprises, which have primarily invested in infrastructure. EU funds have contributed significantly to the modernization and expansion of the country’s physical infrastructure, but private sector beneficiaries of EU funds have been unable to upgrade their production profiles.
Likewise, the level of internal territorial disparities is broadly consistent with what it was 20 years ago. Given the considerable EU cohesion policy resources devoted to reducing the development gap, this result is not an outstanding achievement. Overall, the effectiveness of EU financial support remained low as funds failed to achieve their stated objectives.
The 2010s also saw a shift in the migration patterns of the Hungarian labor force. During the first years after accession, Hungarians were not particularly mobile compared to other eastern member states, but from 2011 onwards labor migration abroad increased significantly.
This is partly due to the economic difficulties caused by the global financial crisis. Although the proportion of people experiencing severe material deprivation has decreased since 2015, the living standards of Hungarian households are among the lowest in the EU. Opportunities for social mobility have also not improved significantly, despite their disadvantaged starting position at entry. This reflects the policy priorities and performance of the Hungarian government, as well as the limited effectiveness of the European Social Funds over the past two decades.
Public attitudes towards the EU
Hungarian society has an overall positive view of the European Union. A key pillar of the high level of support for EU membership (still above 70%) is the EU’s strong economic legitimacy. The majority believe that EU membership is still valuable, and Hungarians see the role of EU funds in economic development as one of the most important benefits of EU membership.
But our study of Hungarian attitudes shows that the EU’s economic legitimacy is slowly being eroded. One reason is that while there is undoubtedly a call for Euroscepticism in Hungarian society, arguments criticizing the EU for economic reasons have gained momentum in recent years, blaming the EU for Hungary’s economic difficulties. The Orbán government’s ability to shape the public narrative has had an empirically demonstrable impact on what Hungarians perceive as the shortcomings of EU membership.
An in-depth analysis of Hungarian society’s attitudes towards the EU suggests that high levels of support for EU membership are not in themselves an adequate indicator of the complexity of Hungary’s attitudes towards the EU. Deepening European integration is not widely accepted in Hungarian society, as there is a strong desire to maintain national sovereignty. Majorities of government and opposition voters agree that Hungary belongs to the European Union, but they have very different understandings of what kind of EU they want.
Perceptions of Hungary as a member state are closely linked to how well citizens know the EU. The more information you have, the more likely you are to support Hungary’s EU membership. Therefore, the information and stories that Hungarian society receives from its political elite about the European Union, and whether the pool of citizens informed about EU issues grows over time, are critical to long-term public support for Hungary’s EU membership.
Hungary’s impact on the EU
Ironically, Hungary’s undermining of the EU’s democratic values and its growing rule of law dispute with the European Commission have contributed significantly to the development of the EU’s sanctions capabilities. Previously, the EU was powerless when member states violated democratic principles and the rule of law. However, because Hungary and Poland have questioned these principles, the EU has adopted a rule-of-law conditions mechanism that gives it real sanctions powers in the form of suspension of EU funds.
While the deepening conflict between Hungary and the European Union (EU) has led to reactions at the European level pointing to the development of a more cohesive political community, Orbán’s ambitions to transform the EU within itself, reversing this trend and organizing the EU into a more loose framework. and push for intergovernmental cooperation. But without strong allies, these efforts are unlikely to succeed.
future prospects
Hungary’s conflicted relationship with the EU is likely to continue at least until the 2026 Hungarian general elections. This conflict is rooted in the decline of democracy in Hungary. This reflects wider political and economic divisions within the EU, which challenge its legitimacy and capacity for internal integration. However, a more dramatic scenario is unlikely because Hungary is deeply involved in and dependent on European markets, and its sources of external financing are closely linked to EU member states.
This article is part of a series hosted by Eli Gateva. Rethinking Europe’s East-West divide – 20 years after the Big Bang expansion.
Note: This article gives the views of the author and not the position of EUROPP (European Politics and Policy) or the London School of Economics. Main image source: Lalaroro /Shutterstock.com
