Orban Government on Winning Streak as Europe Is Checkmated

The Hungarian government is consistently warning that the renewed global trend toward bloc-based division is harmful. Hungary has made a conscious decision to stay out of this process, which is why the prime minister earlier announced a policy of economic neutrality.

Western and Eastern developments meet in Hungary (Source: BYD)

The world is moving rapidly toward renewed bloc formation—something Hungary would be wise to avoid. For this reason, Prime Minister Viktor Orban has repeatedly emphasized the importance of enforcing economic neutrality. He has defined its most important principle as Hungary’s sovereign right to decide for itself with whom it does business—directly, not through other power centers. The second principle is that Hungary should do business where it makes the most sense economically, allowing efficiency and competitiveness to take precedence over all other considerations. The third principle is to conduct negotiations based on Hungary’s own values, keeping ideological issues separate from economic ones.

Hungary as the meeting point of East and West
(Photo: Zoltan Vemi)

Economic Neutrality Delivers Clear Advantages

PM Orban has described the fourth principle of economic neutrality as the need to “look in all directions.” For a long time, it was widely believed that modernization lay exclusively in the West. Today, however, the world is undergoing a systemic transformation, and modernity is no longer a purely Western concept. He has defined economic neutrality as encompassing neutrality in financing, investment, markets, technology, and energy. Investment neutrality, for example, means Hungary does not discriminate among capital investments arriving in the country.

Foreign Minister Peter Szijjarto has also repeatedly stressed the importance of economic neutrality. In his view, the government’s responsibility is to ensure that Hungary’s economic competitiveness continues to improve even in today’s unfavorable European environment. He has likewise criticized the rapid resurgence of blocification —an approach from which Hungary once suffered severe losses.

Policies that promote bloc formation have produced poor results, as demonstrated by recent decisions in Brussels. As a consequence, the European Union has increasingly isolated itself from key players in the global economy.

A clear example is the recently concluded tariff agreement with the United States, which has proven highly unfavorable from Europe’s perspective. The tariffs imposed on China’s electric vehicle industry and the sanctions against Russia also fall into this category. These measures have dismantled Europe’s previous growth model, which was built on the combination of advanced Western technology and affordable Eastern energy. For Hungary, therefore, the only rational path is economic neutrality—allowing the country to remain a crucial meeting point between East and West.

Tangible Results, Especially in the Automotive Industry

The results of this strategy are most visible in the automotive sector. Hungary is one of only three countries in the world that host manufacturing plants for all three premium German car brands. As a result, the country has also become the number one destination for Chinese investment in Europe. Szijjártó noted that in 2023, 44 percent of all Chinese investment flowing into Europe was realized in Hungary.

It is also worth noting that while the main contractor for the expansion of the Paks Nuclear Power Plant is Russia’s Rosatom, German and French companies are also involved in the project—further evidence of the success of the Hungarian government’s strategy. In addition, to diversify Hungary’s nuclear fuel supply, the MVM Group signed a contract with Westinghouse Electric Company on November 7 last year. Under the agreement, the American partner will provide long-term, stable supplies of VVER nuclear fuel manufactured in Europe for the Paks plant.

Strategic Advantage Through Early Diversification

Recently, Mihály Varga emphasized that Hungary is pursuing mutually beneficial relationships with Asian countries, as the economies of the two continents are increasingly inseparable. According to the central bank governor, Hungary made the right decision at the right time with its “Opening to the East” policy, and the National Bank of Hungary remains committed to strengthening international ties. He also noted that Hungary recognized early on the fundamental transformations underway in the global economy, making the diversification of economic relations and the building of Eurasian partnerships essential.

Global economic centers of gravity have shifted, and while uncertainty has become a constant, countries should prepare for the possibility of a period of easing. 

It is unclear when this will arrive, but the signs are encouraging, as more political, economic, and financial power centers are recognizing the importance of building connections.

According to Varga, Hungary enjoys a significant advantage from having embarked on this path earlier than others and can rely on Eastern partners for economic development and financial stability. China is now one of Hungary’s most important trading partners, and in recent years, 40–45 percent of Chinese foreign direct investment entering Europe has flowed into Hungary.