USAID: The Machinery of Political Corruption 2: Hungary in Crosshairs

USAID provided funds for Central European pressure groups in four areas: capacity building, strengthening “independent media,” developing organizations focusing on rule of law and anti-corruption, and enhancing participation in electoral and political processes, states the report by the Sovereignty Protection Office on the distribution and use of USAID funds in Hungary. The document unveils a corruption network aimed at bringing down Hungary’s lawfully elected national government. This second part of Magyar Nemzet's article series examines how much money Hungarian pseudo-civil society pressure groups and so-called independent media outlets may have received.

Photo: Getty Images/Kevin Dietsch

The document names organizations involved in preparing attacks against Hungary's sovereignty:

• Bureau of Civilian Security, Democracy and Human Rights led by Uzra Zeya at the U.S. State Department;
• Bureau of Democracy, Human Rights, and Labor led by Erin M. Barclay;
• Bureau of European and Eurasian Affairs.

The latter office was headed by Karen Dornfried, who also served as senior advisor to former State Secretary Anthony Blinken, Before joining the Biden administration, Dornfried was president of the German Marshall Fund of the United States (GMF) between 2014 and 2021, one of the organizations involved in implementing  USAID's Central Europe Program (CEP)  – and this was her second stint with the organization. Previously, she worked on European affairs for President Barack Obama’s National Security Council and was a member of the National Intelligence Council.

 On behalf of USAID, its Bureau for Europe and Eurasia and its Bureau for Development, Democracy, and Innovation participated in preparing the CEP

The latter bureau was dissolved in 2023 as part of USAID’s frequent internal restructuring, making it harder to trace funding routes and oversee program implementation.

Focus on Hungary

According to a description provided by the CEP, USAID has provided financial and professional support to local organizations in Hungary, Bulgaria, the Czech Republic, Croatia, Poland, Romania, Slovakia, and Slovenia through its partner organizations. The funding was divided into four categories based on objectives:

Strengthening the capacities of political advocacy organizations, 

• strengthening "independent media,"
• enhancing rule-of-law and anti-corruption watchdog capabilities, and
• increasing participation in electoral and political processes.

For the planned five-year program—preparations for which, according to congressional documents, began in early 2021—USAID officially allocated $35 million. Of this, $10 million each was designated for the first and second categories, while $7.5 million each was allocated to the third and fourth categories.

The funds were not distributed equally: Hungary and Poland were identified as primary targets for intervention in all subprograms, with funding for the first and fourth categories almost exclusively targeting these two countries. The program's primary focus was clearly Hungary, as evidenced by the fact that on February 9, 2023—just two months after the official announcement of the program—USAID Administrator Samantha Power traveled to Budapest to discuss the details of U.S. involvement with the program’s Hungarian coordinators and key stakeholders, as summarized by the SOP. 

The budget of the Central Europe Program

The SOP attempted to untangle the budget of USAID’s Central Europe Program, but the publicly available sources contained so many contradictions that the final figures may only be confirmed through American documents.

One example among many: during a Senate hearing in 2023, Samantha Power stated that in 2021, the agency received $8 million from Congress, followed by an additional $7.5 million in 2022, with Congress planning to allocate a total of $20 million over five years for the program’s implementation. Meanwhile, USAID communicated to CEP coordinators that $35 million had been allocated for the project—almost twice the amount that Ms. Power had disclosed to Congress.

Regardless of how wasteful USAID’s financial management may have been or how many irregularities marked its operations, it can be assumed that in reality, more was spent on achieving its objectives over the program’s five-year duration than the publicly disclosed figures suggest. This assumption is reinforced by the fact that between 2022 and 2024, $9 million in USAID program funds were directed to Hungary alone—far more than what the program’s geographic and time-frame considerations would have justified.

The program's coordinators 

Before launching the Central Europe Program, USAID consulted with American government actors and the European Commission, as well as with U.S. embassies in the affected countries. However, it did not inform the target countries’ governments or state institutions about the program’s objectives or the methods employed by the coordinating companies and foundations, the SOP determined.

For the implementation of the program’s first category—capacity building for civil society organizations—USAID contracted The German Marshall Fund of the United States (GMF). The coordination of the second category ("media development") was assigned to Zinc Network Limited and the International Research & Exchanges Board (IREX). The third category ("enhancing rule-of-law watchdog capabilities") was overseen by Dexis Consulting Group and GMF, while the fourth category ("civic political engagement") was coordinated by the National Democratic Institute (NDI). Although the program's launch was accompanied by extensive hype and publicity, USAID made efforts to conceal which organizations had been contracted to coordinate the CEP. Moreover, program administrators were required to maintain the appearance that they were operating independently of the U.S. government and the agency.

That's why GMF launched its own Central European funding initiative - dubbed Engaging Central Europe (ECE) - in 2022, and that's also the reason why Zinc introduced funding calls - under the Central Europe Media Program (CEMP) name - from October 2022. That's also why NDI initiated its own regional project, the Central Europe Civic Engagement Project (CECEP), in November 2022; and GMF’s European branch, the Transatlantic Foundation (TF), became the coordinator of the Proteus grant program within the European Commission’s Citizens, Equality, Rights, and Values (CERV) initiative.

Each project identified its primary objective as "strengthening endangered Central European democracies and combating autocratic tendencies," mirroring the original goals of USAID’s program. Given the complexity of the funding model, it is noteworthy that the organizations coordinating USAID programs also received funding from other U.S. government sources, American private foundations, and, in some cases, even Brussels.

The next installment in our series will explore USAID’s network of advocacy groups in Hungary.

Cover photo: Illustration (Photo: Getty Images/Kevin Dietsch)