Magyar’s dilemma: getting EU defence funds for Hungary while steering them away from Orbán’s oligarchs
by https://euobserver.com/author/tomashrivnak/ · EUobserverHungary remains the only country in the EU whose plan for the cheap rearmament loans has not yet been approved by the European Commission
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By Tomáš Hrivňák,
Bratislava
,
This story is a part of the weekly newsletter about economy, defence, and tech in the eastern flank of Nato, How we cee it.
Hungary’s new prime minister, Péter Magyar, has managed to move his country closer to accessing the European funds that had been frozen over the rule-of-law abuses of Viktor Orbán’s regime.
More challenges, however, await with another crucial batch of resources Hungary has been missing out on: the EU’s SAFE programme (Security Action for Europe).
Hungary remains the only country in the EU whose plan for the cheap rearmament loans has not yet been approved by the European Commission. More than €16.2bn has been earmarked for the central and eastern European country.
Securing these loans is crucial for Hungary’s rearmament. The sum is so significant that it would cover a decade of modernising the armed forces — something the country could not otherwise afford in the financial state it finds itself in after 16 years of Orbán’s rule.
Hungary has been spending slightly above two percent of its GDP on defence in 2023 and 2024. But there are very serious concerns about whether the Hungarian economy, which has been underperforming for years, would be in a situation to increase defence spending to the 3.5 percent agreed upon by Nato.
If the SAFE loans don’t reach Hungary, it is even possible spending will fall back below two percent of GDP this year, Tamás Csiki Varga, defence policy analyst at SV/SD Consulting, explains.
The challenges for accessing the loans are many — and time to solve them is running out.
“The good news is that with the change of government, and with the negotiations and the general political deal reached by the new prime minister, Magyar, and Ursula von der Leyen, it seems that rule-of-law concerns in a general sense are at least addressed,” says Varga.
Channelling loans away from Orbán oligarchs
While politically, things are more or less set for approval, the technical side is more problematic. The new government has already signalled that the plan submitted by the Orbán government should be reviewed. Essentially, the new government is going to have to resubmit a revised plan for the SAFE programme.
This is because the Orbán government tailored the loan plan to benefit oligarchs close to Fidesz circles, Varga explains.
And it laid the groundwork for it.
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Hungary remains the only country in the EU whose plan for the cheap rearmament loans has not yet been approved by the European Commission
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Author Bio
Tomáš Hrivňák is an economy reporter for Denník N. He studied Media Analysis and Research at Masaryk University and previously worked as a photojournalist. His reporting and photography have earned multiple awards, including the Slovak Press Photo and a Journalism Award for written reportage.
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