Hungary's new government, led by Prime Minister Péter Magyar, has initiated a series of policy adjustments aimed at unlocking over €24 billion in blocked European Union funds. These actions, framed as reversing "democratic backsliding" and restoring relations with the EU, primarily serve to align the Hungarian state with the broader interests of capital accumulation within the European bloc, ensuring continued capital flow and market integration.
The State's Role in Securing Capital
The previous Hungarian administration under Viktor Orbán saw €7.6 billion in EU development funds blocked due to disputes over EU law, including anti-LGBTQ+ legislation. An additional €10.4 billion in grants and cheap loans from the EU’s post-pandemic recovery fund were never disbursed, citing concerns about the rule of law and financial probity. Budapest's access to €16.2 billion in cheap loans for defense projects under the EU’s Security Action for Europe programme also remains at stake. The new government's immediate priority, as stated by Prime Minister Magyar, is to “bring home” these frozen EU billions.
Magyar, sworn in on Saturday, leads what is described as an “experienced technocratic team.” He declared that Hungarians had given his party a mandate to launch “a new chapter” and “change the system.” Foreign minister designate Anita Orbán affirmed, “Hungary’s place is in Europe; naturally, firmly and without question.” These statements signal a strategic shift to meet the conditions imposed by the EU, which acts as a supranational enforcer of capitalist norms and market stability.
Conditions for Capital Flow
The European Commission has set specific criteria for the release of funds. Hungary is expected to produce a new plan demonstrating how it will meet recovery fund goals of becoming “greener and more digital.” Furthermore, the government must complete 27 “super milestones” to tackle corruption and ensure the independence of the judiciary by August 31 to receive funds by year-end. Justice minister Márta Görög pledged to revise Hungary’s anti-LGBTQ+ law after the European court of justice ruled it discriminatory. Finance minister András Kármán outlined an economic transformation plan aimed at meeting the criteria for adopting the euro by 2030, further integrating Hungary into the EU's economic framework.
Economist László Andor, formerly Hungary’s EU commissioner, stated that the new government would have to “move mountains” to meet the August 31 deadline. Andor highlighted that Hungary’s economy has stagnated over the last four years and that the government deficit is spiraling. He emphasized that gaining the frozen funds is “absolutely vital” to avoid at least a temporary recession and start a new cycle of public investment. Andor added that it is “very important that the new government avoids starting with an experience of a recession, which would obviously be to the detriment of its reputation and competence.” This framing prioritizes the stability and image of the ruling class over the material conditions of the working population.
Liberal Inadequacy and Political Landscape
The new government's actions, while presented as reforms, represent a managerial adjustment to secure capital inflows rather than a fundamental challenge to the existing economic order. The dropping of Hungary's long-standing veto over sanctions against violent Israeli settlers further aligns the state with Western foreign policy objectives, which often serve broader capital interests.
The current political landscape in Hungary reflects a consolidation of power around this technocratic management. For the first time since 1990, left-of-center and liberal parties are absent from the Hungarian parliament, having chosen not to run in order to ensure Orbán’s defeat. Richárd Barabás, co-leader of Párbeszéd-Greens, congratulated Prime Minister Magyar, stating, “Hungary really needs the EU funds to come back.” This sentiment underscores the liberal inadequacy in challenging the structural dependence on EU capital, even as Barabás criticized Orbán’s “authoritarianism” and “infringement of human rights.” The focus remains on securing funds within the existing system, rather than pursuing independent economic development or challenging the mechanisms of surplus extraction.