Hungary’s failed foreign policy and what we can learn from it

The 2022 election prolongated Hungary’s Prime Minister Viktor Orbán’s rule, after a disappointing result for the united opposition parties. With a combination of financial ‘handouts’ when elections are around the corner, an increasingly muzzled media landscape, and outright blackmail, Orbán has managed to get re-elected numerous times despite not enjoying the majority support of the population. During the campaign, the Russian invasion became a priority issue for the Fidesz party, trying to remain ‘neutral’ and profiting from both European and Russian partnerships.[1]

Judged by the principles of small states theory, did Hungary’s foreign policy with regards to the war in Ukraine enlarge its margins of maneuver in the EU, or did it accomplish the exact opposite? To answer this question, we need to discuss first whether smalls states theory is even applicable to Hungary, and what it implies. Hungary’s relationship with the EU is contextualized afterwards, in order to finally analyze Hungary’s latest foreign policy decisions.

I put forward the idea that Hungary has lost diplomatic leverage, and that Hungary’s decisions confirm the importance of alliances as perhaps the single most powerful way for small states to influence the structure of the political system they partake in.

For the Netherlands this is a lesson as well. The Netherlands was diplomatically isolated a few times the last decade, most notably during the COVID-19 debt sharing negotiations. Hungary’s situation again confirms that solitary action may lead only to diplomatic friction.

Small State Theory

Is Hungary a small state? A definition requires precision. Although the concept of small state cannot be defined unequivocally, the international system is undoubtedly made up of small states; in short, they exist in reality. Unfortunately, a rigid, quantifiable definition does not do justice to the complex concept of state size. What scholars agree on is that the small state must be able to function in the international state system. Most small states are somewhere on a spectrum between a high degree of sovereignty and independence in international relations on the one hand, and little autonomy and independence on the other. I follow the academically consensus by defining the small state fundamentally as “a recognised political unit with significant decision-making authority.[2]

A true consensus regarding the criteria for state size does not exist. We distinguish two different interpretations of what ‘small’ means; first, small in size, capacity, quantity, and second, small in significance, relevance and influence in relation to other states.[3]

Following the first interpretation, Hungary qualifies as a small state, ranking consistently around the average of the EU. Hungary has almost ten million inhabitants, and about 93,000 square kilometers of territory. By comparison, the biggest players in the EU (Germany, France and Italy) have more than 60 million inhabitants. However, the EU also has nine countries with less than five million inhabitants. Economically, again, Hungary’s statistics are unremarkable. The differences within the EU are large. Whereas Germany generated a GDP of 3.57 trillion 2021, Estonia compares with €30.6 billion. 17 EU states, including Greece and Portugal, have a higher GDP than Hungary.[4]

In addition, the Hungarian army does not play a significant role in the EU either. Quantitatively, Hungary is not among the EU micro-states, but statistically in size it is far from the ‘big’ states of the EU.

These factors are all part of a material assessment of the state. The disadvantage of this method is that the boundary between small states and non-small states is very arbitrary. In addition, a state’s statistics may vary greatly depending on dimension (economic, military, demographic, etc.), and thus the statistics also have an arbitrary relative weight.[5]

More importantly, small states are ‘ineffectual international actors’, both vis-à-vis major powers and state systems. The small state by itself cannot meaningfully and permanently change the state system around it, and is irrelevant to the organization of the system (structurally irrelevant).[6] The EU is a phenomenon in itself: veto rights allow the smallest member states to halt the Union’s ‘development process’. Apart from this, the rule of systemic ineffectuality applies. Being a small state carries risks. They risk getting into asymmetric power relationships. Diplomatic power is limited, and internal stability can be highly influenced by external circumstances.[7]

Ideally, small states increase their agency. This can be done by being cautious and flexible. Baldacchino and Wivel conclude that ‘small states may actively use their status as small (and therefore non-threatening) as a starting point for influence-seeking in ways that are characterised by caution, flexibility, consensus-seeking and coalition-building (…)’.[8]

Alliances make all the difference for small states.[9] With political will and ambition, taking initiative, flexible and informal diplomacy, building coalitions, competent leadership and good-governance as soft-power tools, a state can increase its agency.[10] This method is not characteristic of Hungary. It had to rely in particular on its alliances: the bilateral relationship with Poland and the Central European Visegrád Group.[11]

Hungary’s resistance, enhanced by alliances

Hungary joined NATO in 1999, and only five years later took part in the EU’s last large expansion. Although opposition and government changed places regularly during the 1990’s and the start of the new millennium, Hungary was consistent in its multilateralist approach. The election of Orbán’s national-conservative Fidesz party in 2010, a result of decreasing confidence in politics, was the start of tensions.

Throughout the 2010’s Hungary found itself on a tightrope, and had to maintain a precarious balance between adhering to European values and partaking in European solidarity on the one hand, and increasingly conservative policies and authoritarian practices in domestic media, politics and the judiciary system on the other hand. The circumstances were tough. The European Union was plagued by the economic crisis since 2008, the refugee crisis since the Arab Spring in 2011, and threatening geopolitics developments in Turkey, China and Russia.

The optimism surrounding the expansion wave in 2004 subsided. The economic differences between East and West were notable. Subsidies for members in South- and Eastern Europe led to domestic unrest in North-Western member countries, and fears of a so-called ‘Transfer Union’. As populism threatened France, Germany, Italy, the Netherlands and Scandinavian countries (among others) from within, Hungary and Poland formed a conservative resistance within the Union’s framework. Tensions arose surrounding European solidarity amidst the refugee crisis, and the domestic policy decisions in Poland and Hungary, which became further and further removed from the Union’s values concerning freedom and democracy.

At this point in time, Hungary was in quite a comfortable spot. Together with Poland, it possessed 73 of the 703 seats in the European Parliament, almost as many as France (79). Of these seats, Poland commanded 52, which shows just how essential this alliance was for Hungary’s diplomatic margins of maneuver. Besides, Hungary was part of the Central European Visegrád Group, or Visegrád 4, which included the Czech Republic, Slovakia and Poland. The EU was not only toothless when it came to reprimanding domestic Hungarian policy, Hungary was also able to create a comfortable diplomatic space.

Relationship with Russia

Since the start of the war, and especially the last few months, Hungary has found itself in a difficult position. Although the government has voted in favor of all eight sanctions packages that target Russian society, Hungarian media bash the sanctions and blame it for the rising utility prices. With an inflation of 20% in September, and the closure of cultural and sports institutions due to energy costs, the economic worries are grounded. The BBC notices Hungary’s tendency to compromise behind the scenes, desperate for European subsidies, but lash out against European policy in domestic media.[12] Criticism on rising energy prices is hardly unique to Hungary, but its ambiguity concerning Ukraine is.

In the meantime, Hungary continues doing business with Russia. A deal from 2014 to expand Hungary’s Paks nuclear plant with predominantly Russian financing has not been revised as a consequence of Russia’s invasion. The motivation, as explained by Foreign Minister Peter Szijjarto, is to ‘ensure Hungary’s energy security in the long term and protect Hungarians from wild swings in energy prices.’[13]

While economic motives behind the partnership, surely in times of economic regression, have their merits, Hungary is far from the only country in Europe struggling with energy prices. Lithuania, for example, still took the decision to free itself from Russian energy imports by May 2022. Its energy is now mainly supplied by the United States, Sweden, Poland and Latvia.[14] What matters now is whether Hungary is able to avoid economic collapse without Russian investment. The answer could be, regretfully, an injection of EU-funds. It is precisely these funds, combined with Hungary’s stance on Ukraine, which put it in a tricky position.

A diplomatic headlock

Naturally, the European Parliament has declared itself critical of Hungary on multiple occasions. A recent motion passed in September by a considerable majority of the Parliament has declared Hungary an ‘electoral autocracy’. These words will unlikely be followed by action.[15]

However, recently the European Commission throws more weight in the ring. While throughout the years the European Union has barely succeeded in reprimanding Hungary, among other reasons thanks to Poland’s veto, now the withholding of funds gives the Union power. That decision does not allow for a veto. The amount of money on the line exceeds 20 billion euros.[16] 

Therefore domestically, Orbán has no choice but to blame the West for the economic troubles. In reality, Hungary has signed the sanction packages, but does not receive its funds. It can only target the West for so long until discontent becomes unmanageable and targets the government. At the same time, Orbán has spent twelve years mobilizing support from Hungary’s conservative voters. If Orbán complies with the European Commission’s list of demands in order to receive at least 7.5 billion in funding, he loses his grip on the electorate. The trench has been dug too deep to make a U-turn. He may resort to minimal compliance to receive the desired funds, while still bashing the Union in the media. The EU may not undergo Hungarian resistance as vulnerably as before, a precarious compromise may nevertheless by reached.

This might prolong Hungary’s economic survival. Its dependency of EU-funds, though, is clearer than ever. Additionally, it has never been as diplomatically isolated. Due to its foreign policy with regards to Ukraine, Hungary has hurt its alliances. Apart from further alienating the West, fellow Central- and Eastern European countries, that might have been emphatic to Hungary’s criticisms of Brussels and calls for national sovereignty, are disgruntled by its pro-Russian rhetoric. Even though the Polish Prime Minister Mateusz Morawiecki has recently shown a willingness to revitalize the Polish-Hungarian axis, the alliance has been hurt. To make matters worse, already in April 2022, Poland had declared the Viségrad Group dormant.[17] A change in policies in the Czech Republic and Slovakia have further isolated Hungary in the Union.[18]

This does not have to be the end for the Polish-Hungarian alliance. The Parliament’s motion previously mentioned that declared Hungary an ‘electoral autocracy’ had also been opposed by PiS (Poland’s leading party) MEPs, which underscores the common interests still relevant to both countries.[19] It is up to Orbán, however, to reconsider his approach.

Conclusion and Policy Suggestion

Orbán has, when push comes to shove, not acted according to the principles that small states theory prescribes for increasing influence and diplomatic leverage. Orbán might have been able to torment the Union for a decade, after recent policy Hungary is in a tight spot, isolated and more than ever dependent on the EU. If the country can realign with Poland, it would have a chance, as Poland is in the same dire position when it comes to European funds. [20] The ‘Hungary-First Policy’ would have to be dropped to revive its old alliances, a political risk for Orbán.

Still, the EU finally holds economic power over Hungary. It has no reason to give in easily. The more than 20 billion in funds, which may still be directed towards Hungary, do not serve the interest of the EU. A strong Europe is vital for its geopolitical independence on the world stage, in the face of American ambiguity and Russian aggression. However, funds have not changed Hungary’s behavior. Despite billions of funds, an anti-Western sentiment still echoes throughout media and politics. The Russian invasion of Ukraine has not been outright supported, but it is highly reluctant in complying with sanctions, while continuing to cooperate with Russia in its nuclear site expansion.

The situation Hungary is in now was in the making for well over a decade. Its alliances might not have prevented the withholding of EU-funds, but Hungary would in any case have been able to mount a more powerful form of resistance. Recent developments have thus shown us that first, the EU managed to get Hungary, albeit reluctantly, included in sanction policy. It is a legal and efficient way to force compliance onto a lonely obstacle. Hungary is no longer in a comfortable position. Furthermore, Hungary has miscalculated its ability to profit from both camps in the conflict. Small states have to play smarter to win. The case of Hungary underscores the need for small states to maintain their alliances, especially when their policy has no consensus in the state system in which they operate. Hungary to this day still has not reignited relations with Poland, even though Poland has shown itself to be open to reconciliation. One can draw a parallel to the situation The Netherlands were facing when they lost Germany’s alliance in the European debt-sharing negotiations. Since 2008, The Netherlands could count on Germany’s support while facing economic conflicts with Europe’s South. The Netherlands immediately found itself in a diplomatic tight spot when Germany changed its stance. There is still time to change policies. It does not merit to follow Hungary’s road.

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[1] Kim Lane Scheppele, ‘How Viktor Orbán Wins’, Journal of Democracy 33, no. 3 (July 2022): 45–61, https://doi.org/10.1353/jod.2022.0039.

[2] Butler, Petra, and Caroline Morris, eds. Small States in a Legal World. The World of Small States, V. 1. (Cham, Switzerland: Springer, 2017), https://doi.org/10.1007/978-3-319-39366-7, 24.

[3] Butler, Morris, Small States, 25.

[4] D. Clark, ‘GDP of European Countries in 2021’, n.d., https://www.statista.com/statistics/685925/gdp-of-european-countries/.

[5] Baldacchino, Godfrey, and Anders Wivel, eds. Handbook on the Politics of Small States, (Cheltenham, UK: Edward Elgar Publishing, 2020), https://doi-org.proxy.library.uu.nl/10.4337/9781788112932, 5.

[6] Butler, Morris, Small States, 27.

[7] Baldacchino, Wivel, Handbook, 7.

[8] Ibidem, 11.

[9] Ibidem, 32.

[10] Butler, Petra, and Caroline Morris, eds. Small States in a Legal World. The World of Small States, V. 1. (Cham, Switzerland: Springer, 2017), https://doi.org/10.1007/978-3-319-39366-7, 43, 60.

[11] Baldur Thorhallsson, ‘Small States in the UNSC and the EU: Structural Weaknesses and Ability to Influence’, in Small States in a Legal World, ed. Petra Butler and Caroline Morris (Cham: Springer International Publishing, 2017), 35–64, https://doi.org/10.1007/978-3-319-39366-7_3.

[12] Nick Thorpe, ‘US Reminds Pro-Putin Hungary It’s a Western Ally’, BCC, 20 October 2022, https://www.bbc.com/news/world-europe-63317158.

[13] Alys Davies, ‘Russia to Build Two Nuclear Reactors in Hungary’, BBC, 27 August 2022, https://www.bbc.com/news/world-europe-62695938.

[14] Giedre Peseckyte, ‘Lithuania Now Fully Independent of Russian Energy’, EURACTIV, 24 May 2022.

[15] ‘European Parliament Brands Hungary as ‘No Longer a Democracy’European Parliament Brands Hungary as “No Longer a Democracy”’, Politico, 15 November 2022, https://www.politico.eu/article/viktor-orban-rule-of-law-european-parliament-brands-hungary-as-no-longer-a-democracy/.

[16] Bremmer, ‘The E.U. Is Finally Standing Up to Viktor Orbán’, Time, 26 November 2022, https://time.com/6216585/e-u-is-finally-standing-up-to-viktor-orban/.

[17] Jennifer Ranklin, ‘How Soulmates Hungary and Poland Fell out over Ukraine War’, The Guardian, 18 October 2022, https://www.theguardian.com/world/2022/oct/18/how-soulmates-hungary-and-poland-fell-out-over-ukraine-war.

[18] Barbara Bene, ‘Relations Between Hungary and Poland Could Be Reinvigorated’, Hungary Today, 5 September 2022, https://hungarytoday.hu/relations-between-hungary-and-poland-could-be-reinvigorated/.

[19] Jennifer Ranklin, ‘How Soulmates Hungary and Poland Fell out over Ukraine War’, The Guardian, 18 October 2022, https://www.theguardian.com/world/2022/oct/18/how-soulmates-hungary-and-poland-fell-out-over-ukraine-war.

[20] Alexandra Krzysztoszek, ‘Morawiecki: Poland to Revive Relations with Hungary’, EURACTIV, 5 September 2022, https://www.euractiv.com/section/politics/short_news/morawiecki-poland-to-revive-relations-with-hungary/.