Can the EU Bring Hungary to Heel?

The Briefing: The European Union prepares to withhold funds from Hungary.

A major step towards enforcement of EU values
- The EU has a new way of denying funds to member states that don't meet its rule of law or anti-corruption standards
- The European Court of Justice upheld the legality of the mechanism after it was challenged by Hungary and Poland
- It is preparing to use this mechanism against Hungary for the first time
Hungary's political status
- EU funds constitute about 2.5% of Hungary's GDP, one of the highest proportions in the union
- Major measurements of democratic quality no longer rate Hungary as a full democracy
- Prime Minister Viktor Orbán and his Fidesz party just won a fourth term in power amid criticism of the highly biased media environment and electoral system
- Hungarian courts are also widely considered to be under the thumb of Orbán and his allies
Hungary's response to the EU
- Officials are saying they believe that some kind of compromise solution can be reached, although EU officials seem to disagree
- But Hungarian officials have also accused Brussels of overriding Hungary's sovereignty and domestic democratic processes
- This is in line with a long-running critique of the EU as suffering from a lack of democracy or a "democratic deficit"

The Big Question: Would Hungary leave over this?

This new mechanism has the potential to be a pretty big deal. As we’ve written before, the EU has long wrestled with the question of just how deeply it should integrate. Opponents of deeper integration complain that it would threaten the capacity of member states to exercise their sovereignty. Commonly cited examples are the 2015 migrant crisis and certain regulations decided in Brussels that must be followed at the national level. These complaints played a significant role in the outcome of the United Kingdom’s referendum to remain or leave in the EU. Supporters, meanwhile, have argued that the bloc has generated enormous benefits to the European continent with respect to economic growth, democratization, and regional peace, and that bad actors like Hungary threaten everyone’s well-being.

How political actors view the EU’s new mechanism for withholding funds depends a lot on their prior views of the Union. For those skeptical of further integration and fearful of the erosion of sovereignty, it looks pretty bad. For those who embrace deeper political integration, this is a much-needed stick in what was previously a land of carrots.

Hungary quite obviously falls into the former camp. Despite being one of the largest beneficiaries of the EU as an integrated economic bloc, its politics are probably the most divergent from other member states’. If those other states begin a process of further institutionalization of shared norms around democracy, anti-corruption, and the rule of law, membership for the conservative quasi-democracy in Budapest could be under genuine threat.

Of course, there’s a very simple solution to Hungary’s problem: leave. Despite endless handwringing about Brussels bureaucrats, Viktor Orbán and his ruling Fidesz party are perfectly entitled to initiate a process of withdrawal from the EU. With a legislative supermajority in the country’s parliament, there’s practically nothing stopping them.

So why hasn’t the country left yet, and how likely is it to make a “Hungarexit” in the future?

The Theory: Let’s break it all down.

Markus Gastinger, a political scientist at the University of Salzburg, has developed what he calls the “EU Exit Index,” a series of questions and corresponding survey, economic, and institutional data that generate the predicted likelihood of an EU member leaving.

He looks at three dimensions of a member state’s propensity to leave the EU: social, economic, and political. Each of those dimensions is broken down into a few sub-sections. The social dimension includes the extent to which a country’s citizens identify themselves as “European,” their views on freedom of movement within the EU, and the size of the gap between their trust in their national government as opposed to EU leaders. The economic dimension considers whether or not a member state has adopted the Euro as currency, how much trade it conducts with other member states, the status of its own economy, and the extent to which it benefits from EU subsidies. Finally, the political dimension considers the presence or absence of institutional veto points preventing a member state’s exit, the number of eurosceptics in its parliament, and whether it’s influential in political and policy decisions made at the EU level.

From these points, along with survey data on citizen attitudes, economic data, and institutional data (to measure the political dimension), Gastinger is able to rank the likelihood of exit from the EU for the social, economic, and political dimensions, along with a combination of those rankings for an overall likelihood.

The Takeaway: Not going anywhere.

Hungary scores right in the middle of the pack, according to Gastinger. In his view, that suggests there’s very little that could incite the country to leave, especially because his rankings indicate that no country—aside from the UK, which is included for the sake of measuring against—has any particular propensity to exit.

As anyone might predict, Hungary’s “political” ranking is significantly higher than its overall ranking, an obvious product of the eurosceptic Fidesz party’s near-absolute control of the levers of power. There are few veto points in Hungary’s institutions and—at least based on a superficial analysis of Fidesz’ rhetoric—a high degree of euroscepticism among its politicians.

Curiously, though, Hungary’s score along the social dimension is low (ie. indicating less exit propensity) in large part because Hungarian citizens view the EU with middling favorability rather than widespread disdain. This is the case despite the citizenry’s repeated returning of Fidesz to power. Of course, Gastinger notes that his analysis is blind to whether or not those views are held out of true belief or as instrumental to something else.

Given the score along the economic dimension, the latter is plausible. As a major beneficiary—and one of the net “takers”—of EU funds, as well as a country deeply embedded in the European single market, an exit from the EU would likely wreck the Hungarian economy. If Hungarian citizens understand the extent to which the EU benefits them economically, that might explain their favorable views, although it’s important to be cautious about drawing that kind of conclusion.

There’s significantly less reason to be cautious about suggesting that openly eurosceptic Fidesz politicians in Hungary actually rely on the EU to maintain their economy chugging and in turn, their popularity. There’s plenty of evidence to suggest that they know where their bread is buttered, and that they’re perfectly happy to take EU funds with one hand while giving the Union the finger with the other.

With all that said, how Hungary—both its people and its politicians—reacts to an EU that’s actually started to show its teeth is a story worth paying attention to. While the above discussion indicates that Hungary is unlikely to leave, it’s certainly plausible that tensions between it and other member states worsen, hampering the possibility of future integration. Or, perhaps, Hungary will respond to Brussels’ prodding and re-open parts of its political system. Regardless, the current drama seems to be of a part with an EU entering a new chapter, with all of the promises and perils therein.