Hungary is in the EU, but its leader is cozying up to Putin’s Russia

BUDAPEST, Hungary — At a beer garden on the campus of Eotvos Lorand University during a lovely summer evening, a group of young graduates grows passionate when the conversation turns to Viktor Orban.

Locked in conflict with the European Union since he took office in 2010, the country's populist right-wing prime minister openly believes Hungary should no longer model itself on the liberal democracies of Western Europe.

It should emulate “illiberal” countries such as Singapore, China and Russia instead, he said late last month. Last week, he condemned EU sanctions against Moscow over its stoking of military conflict in Ukraine.

Such criticism has horrified educated, urban Hungarians like Marcsi, a young blond woman who, like her companions, asked that her surname not be published.

“Now we're mentioned in the same breath with Belarus and Russia,” she says. “If this government did nothing else, it’s ruined our reputation in the rest of the world.”

Orban has capitalized on his Fidesz Party's two-thirds majority in parliament to centralize control over democratic institutions since his first term began in 2010. But some believe his open declaration of war on liberal democracy presages a new level in what they say is a drive to embed cronyism in government and quash dissent.

“This is a programmatic declaration that the government would like to further weaken the system of checks and balances,” says Peter Kreko of the Budapest-based think tank Political Capital.

Orban came under fire during his first term for weakening the independence of the judiciary. Critics alleged he used punitive taxes and other questionable legal measures to target businesses owned by foreign companies and his political opponents.

He also faced international censure for amending the constitution to make it easier for his party to win a second two-thirds majority in April 2014.

He's since continued to move in the same direction.

In June, Orban enacted a tax on advertising revenue — not profit, as is more typical — that the EU criticized as an attack on the free press.

He also launched an investigation into foreign-funded nonprofit organizations. The probe’s targets say it’s designed to threaten their autonomy.

Viktor Szigetvari, a politician who campaigned for the opposition alliance in the recent election, is unequivocal about Orban's inspiration.

“It's Putinism at its best,” he says, referring to Russia’s authoritarian President Vladimir Putin.

The government denies the accusations, saying none of its measures is malicious.

Officials argue that the constitutional changes were needed to eliminate political gridlock. They say the advertising tax and similar measures are required for filling the country's depleted coffers and protect people from predatory pricing.

And they say the probe of nonprofits stems from allegations that funds were improperly diverted into campaign financing for a small Fidesz rival called “Politics Can Be Different.”

Zoltan Kovacs, Orban's international spokesman, denies there are grounds for comparisons between Orban and Putin, let alone Italian dictator Benito Mussolini.

“This is a political game,” he says. “It's very cheap and easy to use terms like these. We never crossed the democratic boundaries with any measure.”

But critics point to what they say is growing evidence to the contrary.

Veronika Mora, who heads the Okotars Foundation, responsible for distributing grants from Norway, says the government office that launched the original probe into NGOs has no jurisdiction over the administration of funds under a bipartisan agreement between Hungary and Norway.

A secondary embezzlement investigation launched by the Orban-controlled public prosecutor's office is little more than harassment, she says.

“If we lived in a country of law and order, we'd have no reason to fear because we've done nothing wrong,” she says.

The anti-corruption advocacy group Transparency International draws a direct line between the removal of checks on government power and an increase in crony capitalism.

Although the extent of corruption may not have grown — preceding governments were no angels, either — tailor-made laws have entrenched and legalized it, says Miklos Ligeti, Transparency’s head of legal affairs in Hungary.

“It's an exaggeration when it's perceived as a dictatorship,” he says of the state. “But the tendencies and trends are very worrying.”

Hungary raised no objections from the EU when it nationalized retail sales of tobacco following a model used in Austria.

A year later, however, franchise licenses were distributed to Fidesz Party loyalists.

In 2013, the government nationalized the country's largest cooperative savings bank only to reprivatize it again a year later through a single-bidder sale to a consortium of investors that included the man appointed to run the nationalization process in the first place.

The system uses punishments as well as rewards, says a Western businessman based in Hungary.

The tax on advertising revenue, for instance, was structured so that only a single media company was hit with a whopping 40 percent tax bill — a channel called RTL Klub owned by the German conglomerate Bertelsmann.

Similarly, a special retail tax on companies with revenues of more than $2.2 million bypassed Hungarian-owned CBA — a grocery chain that competes with companies like Britain’s Tesco — because its stores were run as individual franchises.

Sources of persecution can run the gamut from the taxman to the health inspector, according to the businessman, who spoke on condition of anonymity for fear of reprisal from officials.

“At one point, a client company had 65 different government investigations going on at one time,” he says.

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None of that may be evident to visitors in swish, stylish Budapest, where tequila bars, luxury boutiques and elegant cafes stand among majestic bridges and cathedrals.

But back at the campus beer garden, dismay pervades the jokes about state-owned TV broadcasts, a new degree program for shepherds, rules requiring college graduates to stay in Hungary and other echoes of the order that existed here before communism fell in 1990.

Most here expect Orban’s centralization to continue for the foreseeable future.

Fruzsina, a young woman in a pink, sleeveless blouse who works for a foreign firm, says that gives educated Hungarians a special responsibility: “We can't give up on the idea that we still live in a liberal state.”