A Volatile Unity: Hungary’s Leadership Amid Geopolitical Shifts and EU Challenges – Hungarian EU Presidency Watch

 

A review of the period between 28 October - 10 November  (Our previous reports on the Hungarian EU Presidency are available here.)

Key findings

• The EPC, alongside the EUCO summit, became the highlight of Hungary's Presidency. Viktor Orbán hosted the entire European political elite just 36 hours after Donald Trump's re-election, hoping it could re-establish Hungary as an honest broker and elevate his position.
• Although there were indications that not all Baltic or Nordic countries would come to Budapest, none of them chose to do so. The issues of Ukraine, Georgia, and Western Balkans EU accession were prioritized over protesting against Orbán. Additionally, European leaders seized the opportunity to discuss the shifting geopolitical landscape following Trump’s victory.
• The EU sees Trump’s victory as a turning point. The time has come for Europe to stand on its own two feet; especially, but not exclusively, in security policy.
• Still, Orbán did not set aside his Eurosceptic stance for these two days. He took the opportunity to raise concerns over "judicial activism," questioning whether EU law should be binding or if member states can rebel against it. Challenging this foundational principle could undermine the EU’s integrity.
• The Budapest Declaration on the New European Competitiveness Deal, intended to address economic challenges, fell short of grand ambitions. While some see it as a "paper tiger", and others as the "lowest common denominator," the Hungarian government’s focus was on finalizing the deal and ensuring Budapest's name was included.
• Among the Commissioner-designates who would not be serving as vice-presidents, only Olivér Várhelyi did not receive immediate approval and was required to answer additional written questions.
• The period under review saw little political advertising, further indicating that the Presidency is not a top domestic priority for the government.

 Contents

• 1. The political dimensions: Volatile Unity at the EPC and the informal EUCO Summit in Budapest 
  • 1.1 Key message: Hungary is not isolated, rather a messenger and a voice of common sense 
  • 1.2 The path to peace in Ukraine grows increasingly obscure 
  • 1.3 “Judicial activism” might threaten EU integration 
  • 1.4 Behind closed doors: the assumed greatest successes 
  • 1.5 The Hungarian opposition also rode the wave of the events 
• 2. The policy dimensions: Budapest Deal signed, penalty is mounting, Hungarian commission-designate not (yet) confirmed 
  • 2.1 Budapest Declaration on the New European Competitiveness Deal 
  • 2.2 European Commission struggles to collect Hungarian penalty debt 
  • 2.3 Hearings of Commissioner-designates in the home-stretch 
    • 2.3.1 Olivér Várhelyi, Hungarian candidate for the Health and Animal Welfare portfolio 
    • 2.3.2 Raffaele Fitto, Italian candidate for Commission Executive Vice-President responsible for cohesion and reforms 
    • 2.3.3 Kaja Kallas, Estonian candidate for High Representative/Vice-President for foreign affairs and security policy 
    • 2.3.4 Michael McGrath, Irish candidate for the Democracy, Justice and the Rule of Law portfolio 
  • 2.4 Council agrees on VAT in the digital age package
• 3. Paid political advertising on the Presidency and other EU issues on Meta and Google (28 October – 10 November) 
• 4. What to watch 

 

1. The political dimensions: Volatile Unity at the EPC and the informal EUCO Summit in Budapest

As Viktor Orbán intended, the European Political Community (EPC) has become the most prestigious event of Hungary's Presidency, along with the informal European Council (EUCO) summit. It was held in the symbolic setting of the Puskás Stadium, a venue where the Hungarian PM feels most at ease as host, also symbolizing Orbán’s “battle” rhetoric. The timing could not have been better either: Orbán hosted the entire European political elite for two days just 36 hours after Donald Trump was re-elected president in the United States, and the German government collapsed just on the day before the summit started.

1.1 Key message: Hungary is not isolated, rather a messenger and a voice of common sense

• The honest broker is back. Following two highly controversial actions by the Prime Minister – a July diplomatic tour he described as a "peace mission" and a swift visit to Georgia – the primary goal of the dual event was to re-establish the PM and Hungary as an honest broker and host capable of facilitating a forum for European leaders to collaborate. This video provides the clearest depiction of the government's self-perception in this role.
• No boycott. Although there were indications that not all Baltic or Nordic countries would come to Budapest (or that some of them might decide to come to the EPC but skip the informal EUCO Summit), none of them chose to do so. The issues of Ukraine, Georgia, and the EU accession of the Western Balkans proved to be more important than protesting against Orbán’s controversial actions. It also surely mattered that, for the first time since Trump’s victory, European leaders had an opportunity to discuss the evolving geopolitical situation. No one wanted to be left out of that.
• Trump's victory boosted Orbán's prestige. The atmosphere at the summits indicated that Trump’s re-election could give Orbán additional leverage within the EU. Orbán could present himself as a mediator with Trump or use his influence to disrupt EU decision-making.

1.2 The path to peace in Ukraine grows increasingly obscure

• No agreement on ceasefire. At the EPC press conference, first Orbán, and then Ukrainian President Volodymyr Zelenskyy spoke about their views on immediate ceasefire and peace. There was no agreement, and Zelenskyy sharply criticized Orbán and the position of the "armchair experts."
  • Orbán believes that there are still different opinions regarding ceasefire and negotiations in the Ukraine-Russia war, but with Trump's victory the "pro-peace camp" has increased significantly. He also stressed that the EU has decided to support Ukraine in its war without clarifying the definition of "victory". The most remarkable moment was when Euronews asked Orbán if he thinks Putin is rather part of the "pro-peace or pro-war camp", but he avoided the question by answering that "the Western community is the point right now, not Russia".
  • Zelenskyy sent a message to both the Hungarian PM and the EU, stating that without security guarantees, a quick ceasefire would lead to further aggression of Russia. He reminded that this had exactly happened after the Russian occupation of Crimea. Zelenskyy also addressed that "there are people here, who have been hugging Putin for 20 years and the situation is just getting worse".
• The EU sees Trump’s victory as a turning point. The time has come for Europe to stand on its own two feet, especially, but not exclusively, in security policy.
  • EC President Ursula von der Leyen expressed in Budapest her eagerness to work with Trump again. She said, “the future of Europe is in our hands, we have to act now.” Zelenskyy, along with most European leaders, also welcomed Trump’s victory.
  • Emmanuel Macron referred to Trump’s re-election as a "decisive" moment for Europe, stressing that the region must prioritize its own interests, just as the US would, particularly in defense and trade. The French president's words indicate that Trump’s comeback already strengthens French efforts to establish an independent EU military force.
  • Orbán expressed his concerns that Europe risks being left out of substantial negotiations if it does not act quickly, as Trump is certain to begin talks with Putin.
    • Reports already have suggested that Trump is likely to select Florida Senator Marco Rubio as his secretary of state. While Trump has not yet detailed his approach, it is expected to include proposals for Ukraine to either cede territory to Russia or agree to a ceasefire that freezes front-line positions, leaving Russia in control of about 20 percent of Ukrainian land. Recently, Rubio commented, “What we are funding here is a stalemate war, and it needs to be brought to a conclusion, or that country is going to be set back 100 years.”

1.3 “Judicial activism” might threaten EU integration

• Still, Orbán did not set aside his Eurosceptic stance for these two days. He also used the spotlight to raise the issue of "judicial activism," a point he repeated in several interviews. He argued that decisions made by governments are first blocked by European, and then by international rulings, causing these decisions to “burst.” This raises the question of whether all member states consider EU law binding on themselves, or if they can rebel against it if they disagree, as Orbán put it. It is a dangerous path to question one of the founding principles of the EU, which has so far been surrounded by consensus.

1.4 Behind closed doors: the assumed greatest successes

• The European Political Community was not created to make decisions, but rather to provide a platform for European leaders to meet regularly and discuss informally. The EUCO summit was also an informal one, so no concrete results were expected beyond the Budapest Declaration on the New European Competitiveness Deal. In this sense, the event certainly served its purpose, giving European leaders time and opportunity to hold bilateral or multilateral meetings. Although few details of these discussions have been made public, this is primarily a sign of their effectiveness.

1.5 The Hungarian opposition also rode the wave of the events

• Péter Magyar has managed to secure at least two important diplomatic meetings. The fact that he met not only with Austrian Chancellor Karl Nehammer but also with French President Emmanuel Macron indicates that he is now seen beyond Hungary's borders as a challenger to Orbán. He may have had other meetings that have not been made public. 

2. The policy dimensions: Budapest Deal signed, penalty is mounting, Hungarian commission-designate not (yet) confirmed

2.1 Budapest Declaration on the New European Competitiveness Deal

At the informal European Council meeting in Budapest, leaders have adopted the Budapest Declaration on the New European Competitiveness Deal. The declaration, initiated by the Hungarian Presidency, emphasizes the importance of improving the EU’s competitiveness, one of the main priorities of the Presidency.

• The lowest common denominator. As we mentioned in our previous reports, it was particularly important for the Hungarian Presidency to show some results in the area of competitiveness. With the adoption of the deal, they have achieved this, even if the text is somewhat watered down.
  • Mario Draghi’s extensive report points towards federalization, while Orbán sees the solution more in strengthening the sovereignty of member states; however, in the approved, very short document the open questions are not solved. Therefore, the text represents the lowest common denominator and lacks specificity.
  • The text of the deal does not even answer the fundamental question of what sources the EU will use to finance the implementation.
  • The approved deal is far from a sovereigntist manifesto (even the term "connectivity" is only mentioned once), but from the government's perspective, the content is secondary. What matters most is that the deal is finalized, and Budapest is included in its name. This allows the government to present the deal as a success – and it does so.
• This is just a deal, not a law. According to Orbán, the effects of the deal will already be noticeable by the end of the first half of next year. However, even according to the adopted text, this will only be the stage of drafting proposals, and the legislative process is certain to be a lengthier one.
  • As the deal says: “Key objectives to be implemented by the Commission without delay include making concrete proposals on reducing reporting requirements by at least 25% in the first half of 2025 and including red-tape and competitiveness impact assessments in its proposals.”

 

2.2 European Commission struggles to collect Hungarian penalty debt

• On 4 November, the European Commission sent the Hungarian government a payment request for EUR 93 million plus interest, with a 15-day deadline. If the 15 days pass without payment, this amount will also share the fate of the EUR 200 million and the European Commission can withhold all payments due to Hungary. However, the Commission is in a difficult position, as not only is such a large amount not available in full, but even taking into account several smaller amounts, it is not possible to withhold such a large amount of money. This is because there is no payment request from Hungary that would correspond to this amount, or even a significant part of it.
  • Antecedent: The European Court of Justice ruled in June 2024 to impose a one-off penalty of EUR 200 million and a daily penalty payment of EUR 1 million because Hungary failed to comply with the court's ruling in December 2020. The EUR 93 million is the first three monthly penalties of one million per day. The original ruling was that Hungarian asylum rules should be brought in line with EU rules – this has not happened since. In the meantime, Hungary is set to lose EUR 1 billion in funding at the end of the year due to the still-open rule of law (conditionality) mechanism – the proportion of EU funding that has been frozen.

 

2.3 Hearings of Commissioner-designates in the home-stretch

All 26 Commissioners-designate have been heard in the European Parliament. Nineteen were confirmed, while the positions of six vice-presidents and Olivér Várhelyi remain under cross-party negotiations. Besides the Hungarian candidate, we summarize the hearings of Italy’s controversial Raffaele Fitto, Estonia’s High Representative Kaja Kallas with her significant foreign policy role, and Ireland’s Michael McGrath, who holds particular importance for Hungary due to his rule of law portfolio.

2.3.1 Olivér Várhelyi, Hungarian candidate for the Health and Animal Welfare portfolio

• Among the candidates who would not be serving as vice-presidents, only Olivér Várhelyi did not receive immediate approval and was required to answer additional written questions. ECR and far-right groups voted in favor of Várhelyi, however Greens, Renew and S&D wanted a second hearing, while EPP requested a second round of written question, which eventually was approved by the other groups too.
• Regardless of the outcome, it is clear that the Hungarian candidate is once again facing challenges, similar to what happened with the previous two Fidesz nominees: Tibor Navracsics had responsibilities removed from his portfolio in 2014, and László Trócsányi was deemed unfit in 2019.
• Although there were some professional objections, the main issue was not Várhelyi’s competence; he is widely regarded as a skilled professional with extensive knowledge of EU affairs, having spent the past twenty years in this field. However, he did not sufficiently distance himself from Orbán’s policies, particularly concerning Hungary’s vaccination practices (use of Russian and Chinese vaccines) and access to reproductive health for women, specifically regarding abortion, where he argued that this is a matter for member states – which is correct.
• Fidesz MEP Kinga Gál addressed her opinion regarding the rejection of Várhelyi by other MEPs. She thinks that left-wing groups and the EPP reached the agreement of opposing the candidate well before the actual hearing, just because Várhelyi was nominated by Orbán. She also condemns the double standard and hypocrisy of the EP.

2.3.2 Raffaele Fitto, Italian candidate for Commission Executive Vice-President responsible for cohesion and reforms

• During the hearing MEPs raised the issue of the rule of law and Fitto’s previous record on Article 7 votes: as an MEP he voted against the procedure. The designated commissioner declined to discuss his political views, arguing that those stances are irrelevant to the institutional role he is expected to assume in the European Commission.
• Fitto stated firmly that “respect for the rule of law is an essential and founding principle of the EU” and promised to “maintain an equal distance” from all 27 governments. However, he refrained from addressing a specific issue.
• Fitto emphasized his commitment to upholding the rule of law as a fundamental EU principle, noting that he had already contributed to the EU’s rule of law dialogue in his previous role as Minister of EU Affairs.

2.3.3 Kaja Kallas, Estonian candidate for High Representative/Vice-President for foreign affairs and security policy

• On Russia’s war against Ukraine, Kallas point of view is clear: Ukraine's victory as an EU priority, calling for as much military, financial, and humanitarian aid as needed. She warned that Russia, Iran, North Korea, and covertly China seek to reshape the rules-based world order. She urged the EU to counter this threat with its closest allies, “without losing an inch of who we are.”
• Regarding the incoming U.S. administration, Kallas intends to strengthen ties, stressing the importance of unity among allies. She noted the U.S. must not focus solely on China to the detriment of Ukraine and called for China to “feel a cost” for supporting Russia’s aggression.
• When asked about Hungary’s separate foreign policy, Kallas remained diplomatic, emphasizing that with 27 democracies in the EU, unity requires daily effort. “We need a common message that we interpret in different voices,” she said.

2.3.4 Michael McGrath, Irish candidate for the Democracy, Justice and the Rule of Law portfolio

• In line with the mission letter he received from Ursula von der Leyen McGrath said that he wanted to draw closer the link between the recommendations in the annual rule of law reports and the drawdown of financial funds. He also hinted that this was part of the next seven-year budget planning.
• Currently, the annual rule of law report is a state of play assessment, and there have been five such reports so far. The last two have included recommendations that have not gone beyond this category. Now, however, the candidate has made it clear that the European Commission may deny access to funds if the recommendations are not respected. The development is relevant from the Hungarian perspective.

2.4 Council agrees on VAT in the digital age package

• Two days before the Budapest summit, the European Council reached an agreement on a package of legislation on value added tax (VAT) in the digital age. The package consists of three proposals that set out to tackle VAT fraud, support businesses and promote digitalization. Though not part of the Budapest Deal, this package advances the issue of EU competitiveness. The new rules will:
  • make VAT reporting obligations for cross-border transactions fully digital by 2030;
  • require online platforms to pay VAT on short-term accommodation and passenger transport services in most cases where individual service providers do not charge VAT;
  • improve and expand online VAT one-stop-shops so that businesses do not have to go through costly registrations for VAT in every member state in which they do business.

 

3. Paid political advertising on the Presidency and other EU issues on Meta and Google (28 October – 10 November)

• The period under review was quiet in terms of political advertising, further indicating that, domestically, the Presidency is not a top priority for the government. Neither on Meta nor on Google were any campaigns launched in relation to the Presidency or the EU. The Fidesz-funded campaigns described in the preceding report were concluded by the end of October.
• A few pro-government politicians promoted the Presidency's events in a paid political advertisement, displaying the #HU24EU logo. However, the total amount spent on these was very insignificant, less than EUR 110.

Social media plays a very important role in government communication, and the bigger picture helps to understand all the above data. During the election campaign (between 1 January and 15 June 2024), the pro-Fidesz camp spent a total of 5.4 million euros on advertising on Meta and Google (while all 15 opposition parties and their associated media spent a quarter of this amount).

4. What to watch

• 15 November: ECOFIN
  • Union budget for 2025 The Council will meet to prepare the meeting of the second Conciliation Committee on the budget, with the aim of reaching an agreement with the European Parliament on the EU’s annual budget for 2025.
• 18 November: Foreign Affairs Council
  • EU Foreign Affairs Ministers will discuss the Russian aggression against Ukraine, after an informal exchange of views with the Minister of Foreign Affairs of Ukraine Andrii Sybiha, via videoconference.
• 19 November: General Affairs Council
  • As part of the Article 7(1) TEU procedure, the Council will take stock of developments regarding respect for the EU values in Hungary.
  • The topic was put on the agenda at the request of the member states – that is, not on Hungarian initiative. It will be a state of play, where the Presidency will be represented by János Bóka, and Hungary will be represented by the government's delegate.
• 21 November:Foreign Affairs Council
  • The Foreign Affairs Council, in its Trade configuration, will exchange views on the future of the EU’s trade policy with particular regard to ongoing and stalled negotiations. EU Ministers will also discuss the state of play of the trade relations with the US.

 

Please find our previous reports on the Hungarian EU Presidency

• Gearing up for the big show amid a "peace mission" 2.0 and new levels of anti-EU rhetoric – Hungarian EU Presidency Watch (14 – 27 October)
• In the shadow of the “Strasbourg Battle” – Hungarian EU Presidency Watch (30 September – 13 October)
• Prioritizing politics over policy? – Hungarian EU Presidency Watch (July – September)
• Trolling to weaken the EU while winking at Trump: the first week of Hungary's rotating EU presidency (July 2024)