Transitional or Hybrid Regime
DEMOCRACY-PERCENTAGE Democracy Percentage 44.64 100
DEMOCRACY-SCORE Democracy Score 3.68 7
Last Year's Democracy Percentage & Status
45 100 Transitional or Hybrid Regime
The ratings are based on a scale of 1 to 7, with 7 representing the highest level of democratic progress and 1 the lowest. The Democracy Score is an average of ratings for the categories tracked in a given year. The Democracy Percentage, introduced in 2020, is a translation of the Democracy Score to the 0-100 scale, where 0 equals least democratic and 100 equals most democratic. See the methodology.

header1 Score changes in 2022

  • Independent Media rating declined from 3.25 to 3.00 due to the surveillance of journalists with Pegasus spyware as well as the shrinking space for independent, critical media illustrated by the loss of Klubrádió’s frequency and a court decision infringing on a journalist’s freedom of speech.

As a result, Hungary’s Democracy Score declined from 3.71 to 3.68.

header2 Executive Summary

In 2021, the right-wing governing coalition of Fidesz and the Christian Democratic People’s Party (KDNP) further consolidated the control it had gained over formerly independent institutions in the past decade after winning two-thirds parliamentary majorities in three successive elections. This uninterrupted authoritarian streak cements Hungary’s place among hybrid regimes, in the “gray zone” between democracies and autocracies.

The state of danger, a special legal order introduced due to the COVID-19 pandemic that allowed the government to rule by decree, was in force throughout the entire year. The 15-day duration of government decrees stipulated in the Fundamental Law (Hungary’s constitution) was repeatedly extended—eventually until June 1, 2022—by a series of enabling acts that the governing parties adopted with their two-thirds majority in the National Assembly, Hungary’s parliament. Thus, the novel style of governance pioneered in 2020 and used to pursue a policy agenda unrelated to the COVID-19 pandemic became business as usual in 2021.

Access to public information, including epidemiological data, remained limited as state authorities repeatedly used the pandemic as an excuse to extend the deadline for replies to information requests. The right of public assembly remained constrained well into the year, which hampered citizens’ opportunities to express their dissent over contested developments. Due to the sweeping regulations in place, the first sizable protest held since November 2020, against the government’s plan to build Fudan University’s first European campus in Hungary from a Chinese loan and with Chinese companies, was registered in June as 16 separate gatherings.

With some of their revenues continuing to be diverted and a new cut in local business tax introduced for 2021, municipalities’ financial difficulties persisted into the second year of the pandemic. These were only partially resolved by compensation from the state budget since the distribution of these resources was influenced by the political leaning of local leadership.

The government’s ideological war against the LGBT+ community continued in 2021 with the adoption of a so-called anti-pedophile law, which gained a strong homophobic tone due to amendments that ban the portrayal and promotion of homosexuality and the display of content promoting homosexuality and sex reassignment to minors. Adding these to an anti-pedophile law conflates pedophilia and homosexuality and consequently demonizes sexual minorities. This provoked strong domestic and international criticism and resulted in the European Commission (EC) launching a case against Hungary for infringing on European Union (EU) law. To garner support for the government’s agenda, Prime Minister Viktor Orbán announced a “child protection” referendum, organized alongside the parliamentary elections on April 3, 2022.

In preparation for the upcoming elections, the governing parties further consolidated their institutional and financial stronghold through political appointments on the one hand, and by ensuring control over public funds on the other. Political appointments to the Curia, Hungary’s highest court, as well as an amendment making the chief prosecutor—a position currently held by a former member of the governing Fidesz party—removable only by a two-thirds majority in the parliament, further weaken the independence of the judiciary. Additionally, the early resignation of the head of the Media Council allowed a new president to be elected by the current parliament, thus guaranteeing lasting party control over the media sphere. In the ongoing organizational remodeling of higher education, the governing parties continued to ensure the transfer of state funds and control of formerly public universities to private asset-management foundations led by progovernment figures. The 35-year prolongation of casino concessions in Budapest serves the same purpose, while the appointment of a Fidesz loyalist as head of the newly established concessions regulatory authority will guarantee that future decisions benefit the current governing elite.

While many of the above developments follow directly from the political and policy course of the last or previous years, the Pegasus scandal that erupted in July was more disruptive. The investigative portal Direkt36 revealed, based on a leaked database, that about 300 Hungarian citizens were targeted by the Pegasus spyware of the Israeli NSO Group between 2018 and 2021. Among them were journalists, lawyers, politicians, businesspeople critical of the government, former state officials, and even President János Áder’s bodyguards. Forensic investigations conducted by nongovernmental organizations could not confirm who used the tool against the identified targets. After avoiding answers for months, in November, Fidesz vice-president and sitting member of parliament Lajos Kósa confirmed that the Hungarian state had indeed acquired and used the software. The case raised concerns about politically motivated surveillance against Hungarian citizens and the abuse of the NSO spyware, while the government declined to comment in detail.

The country’s six main opposition parties prepared for the upcoming elections by organizing primaries to select their joint prime minister candidate and, for all 106 single-mandate districts, to select joint candidates to run against the governing parties’ candidate in the given districts. Their goal is to ensure that the opposition vote is less fragmented in the 2022 polls. The primaries drew the participation of around 850,000 voters in two rounds, which gave momentum to sizable civil mobilization ahead of the elections. Péter Márki-Zay, the independent mayor of Hódmezővásárhely, led the united opposition against Fidesz in the April elections.

The year brought significant developments in the European Union, as well. After years of conflict, frustration with Fidesz in the European People’s Party (EPP, Fidesz’s European party family) finally compelled the EPP political group in the European Parliament to decide by an overwhelming majority to amend its rules and procedures, allowing for the suspension of member parties that are already suspended from the party family. Fidesz’s membership was suspended in the party family in spring 2019. In response to the amendment, Fidesz left the EPP political group on March 3 and, two weeks later, left the EPP party family itself. Fidesz has been in negotiations with far-right parties from across the EU throughout 2021 about the formation of a new alliance. These negotiations, which did not yield results in 2021, also bear witness to Fidesz’s continued ideological shift toward the radical right since becoming a governing party.

In parallel, tension reached new heights between the Hungarian government and EU institutions. In March, the governments of Hungary and Poland challenged at the Court of Justice of the European Union (CJEU) the rule-of-law mechanism introduced into the EU’s new multiyear financial framework (2021–27). The mechanism would condition the disbursement of EU funds on respect for democratic values and standards in the member states and, as such, is staunchly opposed by the Fidesz-led government. While no final ruling was issued in 2021, the court’s Advocate General’s 2021 opinion found the rule-of-law mechanism to be legal under European law. Meanwhile, the EC’s rule-of-law report in July found no improvements in the fields of judicial independence, media pluralism, corruption, or regarding checks and balances in Hungary. Subsequently, Commissioner Didier Reynders announced that unless Hungary reforms the judiciary in line with EC recommendations and guarantees the investigation of corruption cases following European Anti-Fraud Office (OLAF) reports, its recovery plan—that is, the country’s application for COVID-19 economic recovery funds—would not be approved.

header3 At a Glance

In Hungary, national governance shows autocratic tendencies with increasing lack of respect for the rights of vulnerable groups. Elections are free but not fair, with changes to the electoral code also disadvantaging opposition parties. Local civil society organizations face recurring pressure from the government; and higher education autonomy, due to ongoing reforms, is under threat. Media pluralism is endangered as progovernment media outlets dominate the market and public media fail to fulfill their public-service function. Municipalities struggle with liquidity problems while their competences shrink due to government-led centralization in various areas. Reforms introduced in 2020 have already significantly undermine judicial independence while political appointments in 2021 strengthen the government’s grasp on the judicial branch. Corrupt practices are prevalent in public procurements favoring business circles close to the government, and nontransparent international investment deals pose risks of corruption.

National Democratic Governance 1.00-7.00 pts0-7 pts
Considers the democratic character of the governmental system; and the independence, effectiveness, and accountability of the legislative and executive branches. 3.003 7.007
  • The state of danger, a special legal regime introduced by the Hungarian government in 2020 in response to the COVID-19 pandemic, continued throughout 2021. The state of danger was declared on November 4, 2020,1 and has been in force ever since. Furthermore, a law allowing government decrees issued during the state of danger to remain in force for 90 days was passed on November 10, 2020.2 This law would have expired on February 8, but since the parliament was not in session, the government adopted a decree that extended its expiration date by 15 days, until February 23. On February 22, the governing parties’ two-thirds parliamentary majority adopted a law that confirmed the content of this decree and extended the validity of the government decrees by an additional 90 days, until May 23.3 The parliament, extended this expiration date three more times during the year,4 and eventually until June 1, 2022.5 Though the law and later the extensions operated with a sunset clause, in practice the extensions initiated by the government faced no obstacles in the parliament, which thereby provided no check on the executive.
  • Government practices in 2021 followed the same patterns as the year before. The governing parties continued to syphon public funds from state coffers through the reform of higher education institutions and the establishment of asset-management foundations (see “Civil Society” and “Corruption”). Local governance was undermined through continued tax cuts, reallocations to the state budget, a tax break introduced by decree, and politically motivated distribution of compensations (see “Local Democratic Governance”). Access to public information was limited by decree using the state of danger and the pandemic as an excuse (see “Independent Media”). Controversial legislation, like that related to the planned Hungarian campus of the Shanghai-based Fudan University, passed without sufficient public consultation and with limited opportunities for expressions of dissent (see “Civil Society” and “Corruption”).
  • In July, the investigative portal Direkt36 revealed that about 300 Hungarian citizens, including journalists, lawyers, and even former state officials, were targeted with Pegasus spyware produced by the Israeli NSO Group. Forensic investigations could not confirm who used the spyware.6 The government initially neither denied nor confirmed that Hungary had purchased and used the software, and the ruling parties actively blocked attempts by opposition members of parliament (MPs) to look into the case during the summer. In September, minutes from a hearing featuring Interior Minister Sándor Pintér on the issue were classified until 2050.7 In November, however, Lajos Kósa, a Fidesz MP, confirmed that Hungary had used the spyware and stated that it was purchased by the Interior Ministry,8 although the state prosecution disputed his statement regarding the alleged purchase by the Interior Ministry.9
  • Through an amendment passed by the governing majority in November, the Hungarian Atomic Energy Authority (OAH) was removed from public control and thus gained independence from future governments.10 The amendment followed the sudden resignation of the OAH director in April and a dispute over the feasibility of the Paks-2 nuclear plant construction, which led in October to the OAH refusing to approve the project’s authorization request.11 The new director, Andrea Kádár, former state secretary in the Ministry of Innovation and Technology, was nominated by Prime Minister Viktor Orbán in September to lead OAH for a nine-year term beginning in 2022.12
  • The LGBT+ community remained the key target of the government’s ideological agenda. Pursuant to the ninth amendment to the Fundamental Law adopted in 2020 that introduced the protection of a child’s right to an identity corresponding to their sex at birth and to an upbringing that reflects values based on Hungary’s constitutional identity and Christian culture,13 in January, the Hungarian Consumer Protection Authority obliged the publisher of a children’s book promoting tolerance toward LGBT+ people to add a disclaimer that the book portrays behavior different from traditional gender roles.14 In June, the governing parties passed a so-called anti-pedophile law15 with homophobic amendments added at the last minute. The amendments ban the portrayal and promotion of homosexuality and the display of content promoting homosexuality and sex reassignment to minors. By being added to such a law, the amendments conflate pedophilia and homosexuality, thus demonizing sexual minorities.16 According to watchdogs, the occurrence of homophobic harassment and hate crimes increased after the adoption of the law.17 An implementation decree in August failed to clarify what “promotion” of homosexuality to minors means but ruled that such materials can no longer be displayed in shops, nor sold within 200 meters of schools and religious institutions.18 The Media Council’s content rating guidelines in September also left room for interpretation on what needs to be rated for audiences over the age of 18.19 The European Commission launched infringement procedures in the cases of stigmatization of the children’s book and the homophobic amendments in July,20 while the latter were also criticized by the Venice Commission.21 Amid increasing domestic and international criticism, PM Orbán called for a referendum on the newly introduced “child protection measures” (see “Electoral Process”).
  • Preparations began for the 2022 parliamentary elections. The six opposition parties (Democratic Coalition, Dialogue for Hungary, Hungarian Socialist Party, Jobbik, Momentum, and Politics Can Be Different) that agreed in 2020 to run jointly against the governing coalition of Fidesz-KDNP in order to minimize fragmentation of the opposition vote organized primary elections to select their common prime minister candidate as well as their joint candidates in the 106 single-mandate districts across the country (see “Electoral Process”).
  • The opposition’s primary campaign was met with a counter-campaign by Fidesz under the name “Stop Gyurcsány! Stop Karácsony!,” referring to former Prime Minister Ferenc Gyurcsány, head of the Democratic Coalition, and Budapest mayor Gergely Karácsony, head of Dialogue for Hungary, who ran as a prime minister candidate in the primaries.22 Additionally, in October, a Fidesz-affiliated group organized a so-called Peace March to mobilize government sympathizers ahead of the election.23 A series of welfare benefits were also announced, including a one-off 80,000 HUF pension premium for all pensioners and the reintroduction of a so-called 13th month pension, a partial lifting of income tax for people under 25, and a return of the 2021 income tax to citizens with children.24 The government also promised to increase the minimum wage by nearly 20 percent from January 2022.25
Electoral Process 1.00-7.00 pts0-7 pts
Examines national executive and legislative elections, the electoral framework, the functioning of multiparty systems, and popular participation in the political process. 4.254 7.007
  • With the state of danger in force throughout the year, no by-elections could be held in 2021. Local by-elections were postponed until after the expiration of the state of danger, which has been extended until June 1, 2022. No national by-elections became necessary in 2021.
  • Despite the need to adjust the electoral map due to population changes exceeding the legal margins in certain electoral districts, no amendment to the electoral code was adopted to this effect. In 2020, a politically neutral proposal for the amendment from the National Election Office (NVI) was submitted to the parliament but was not adopted.1 Since the electoral code cannot be amended during an election year, or in the preceding one, this shortcoming could only have been addressed in 2021 if the governing parties used their two-thirds parliamentary majority to lift this restriction. This did not happen. The delays in redrawing the districts raised questions about political motivations.
  • An amendment adopted in November, which changed the legal definition of “residence,”2 removed legal obstacles to “vote tourism” and could facilitate electoral fraud. Residence is now understood as a person’s contact address. The amendment allows for the registration of a person’s residence at a private property—even if the person does not live there—so long as the registration occurred with the owner’s knowledge and permission. Previously, registering a residence without residing at that location constituted forgery of public documents and was sanctioned under the Penal Code. The governing parties argued that the amendment sought to address an existing situation in which people’s registered residence no longer matches where they live; however, it also allows for the creation of fictitious addresses to gain voting rights in a given district without any repercussions.3 The latter phenomenon was observed and in a few cases even prosecuted in previous elections.4 Registering voters in districts other than where they live, or registering citizens who do not live in Hungary at all, are now open and legal avenues for distorting elections.
  • Political advertising is also problematic. Nongovernmental organizations (NGOs) reported to the State Audit Office (SAO) that on Facebook alone the advertising of a Fidesz candidate in a 2020 parliamentary by-election exceeded the 5 million HUF limit allowed for political advertisements. The SAO’s review, however, concluded that the costs of advertising via social media are not required to be reported under the current rules.5 Therefore, social media advertising is now an area where campaign expenses face no regulation.6 Excessive and uncontrolled spending was also visible during the opposition primaries, where the amount that Fidesz and progovernment channels spent on social media advertising as part of their negative, anti-opposition campaign—to the tune of 369 million HUF—far exceeded the combined spending of the opposition parties (252.7 million HUF) who actually organized the primaries.7
  • While political advertising on social media seemingly faces no constraints, distributing printed leaflets will become more challenging in the upcoming elections: the Hungarian Post, which had the most reliable and countrywide logistical network for the task, announced in July that it will no longer offer such services due to economic reasons.8 Among the biggest alternative service providers is a company with close ties to the governing circles, not likely to be favored by the opposition parties.9
  • To prepare for the 2022 parliamentary elections, primary elections were organized in fall 2021 by the united opposition parties with operational support from A Hang, a civil society organization (CSO), and 2,500 civil activists in the 106 single-mandate districts of Hungary, as well as for the joint prime minister candidate.10 All Hungarian citizens of voting age with a registered address in Hungary were eligible to participate. The primaries mobilized 850,000 voters in two rounds, both online and in-person.11 Cyberattacks by unknown perpetrators temporarily shut down the IT system during the primaries’ first round and continued into the second round, though without causing major disruptions.12 The race for the prime minister candidacy was won by Péter Márki-Zay, independent mayor of Hódmezővásárhely.13 Having selected candidates in the single-mandate districts, the parties announced their joint national list for another 93 parliamentary mandates shortly before the elections.
  • Faced with domestic and international criticism over the so-called anti-pedophile law, Prime Minister Orbán announced on July 21 his intention to organize a national “child protection” referendum14 with the aim of gathering public support for the already passed law. Though referendums may not be initiated during the state of danger, the government passed a decree the same day that lifted this ban at the national level, thus opening the way for the PM’s initiative.15 The five questions put forward concerning sex education for minors, availability of sexual content in the media, and information about and access to gender reassignment treatments for minors were all approved by the National Election Commission (NVB) the same month. The Curia, Hungary’s highest court, later reversed the NVB’s approval of the question on whether gender reassignment treatments should be made available to minors. The court argued, among other issues, that if the “yes” vote wins, the Fundamental Law (Hungary’s constitution) would need to be amended, which may not be the legal result of any referendum.16 The referendum was held together with the parliamentary elections on April 3, 2022.17
  • On July 21, Budapest opposition mayor Gergely Karácsony also submitted five questions for national referendums18 out of which three were rejected by the NVB, which is dominated by progovernment delegates.19 These questions included one on Hungary’s accession to the European Public Prosecutor’s Office (EPPO); so far, Hungary has declined to join the EPPO, which investigates mismanagement of EU funds. A question on the development of the Fudan University campus in Budapest and another on extending unemployment aid were approved in December by the Curia, whereupon opposition parties began collecting the necessary voter signatures to officially initiate the referendum.
Civil Society 1.00-7.00 pts0-7 pts
Assesses the organizational capacity and financial sustainability of the civic sector; the legal and political environment in which it operates; the functioning of trade unions; interest group participation in the policy process; and the threat posed by antidemocratic extremist groups. 4.254 7.007
  • A ban on public assembly in Hungary remained in force until May 2021,1 with some exemptions for sporting events and religious services. Despite the ban, smaller demonstrations against the COVID-19 restrictions organized by virus skeptics took place but were typically broken up by police.2 Protests were officially allowed again from June on, but a 500-person limit regardless of location and mode of protest applied in case the organizers could not guarantee that participants were vaccinated, tested, or recovered.3 Such restrictions resulted in the first sizable protest in 2021, organized by the left-wing Szikra (Spark) Movement against the construction of a Hungarian campus for the Shanghai-based Fudan University, being registered as 16 separate demonstrations.4 Against the backdrop of the homophobic anti-pedophile law adopted in June (see “National Democratic Governance”), the Budapest Pride march nonetheless took place in July without problems and drew around 30,000 participants.5 November also saw an anti-vaccination demonstration in Budapest organized by the extreme-right Our Homeland Movement.6
  • Although the CJEU ruled in June 2020 that the so-called Lex NGO was in breach of European law,7 the withdrawal of the law took until May and was only carried out after a warning from the EC to comply.8 The law, adopted in 2017, required NGOs to register as “organizations funded from abroad” if they received financial support from non-Hungarian donors above a certain amount. While the Lex NGO was withdrawn, a new NGO law was passed according to which the State Audit Office (SAO) is required to audit NGOs with an annual budget of more than 20 million HUF every two years since they now are considered “civic organizations engaging in activities likely to influence public life.”9 The SAO, which previously dealt only with public funding, will now also oversee how NGOs spend private funds.10
  • In November, the CJEU ruled that the so-called Stop Soros law adopted in 2018 is in breach of EU norms.11 The law, whose primary target was the Hungarian Helsinki Committee, criminalized providing assistance to asylum seekers in making their claims, with penalties including imprisonment. The government had not withdrawn the legislation as of year’s end.
  • Negotiations between Norway and Hungary ongoing since 2016 over the allocation of the European Economic Area (EEA) and Norway Grants scheme ended without a resolution in July. The parties could not agree on how and by whom grants to CSOs—a mere 4 out of 77 billion HUF—should be administered. Donor countries insisted that the funds should be distributed by an independent consortium selected in an open tender, which the Hungarian government rejected. Consequently, Hungary lost out on the entirety of the funds.12 The conflict over the grants goes back to 2014 when the government demanded oversight of the grant distribution and put NGOs in the distributing consortium under investigation, thereby marking the start of the ongoing attacks on civil society.13
  • Half a year after the CJEU ruled the 2017 amendment to the Higher Education Act incompatible with EU law,14 the governing parties passed an amendment in May that withdrew these conflicting passages, which became known as Lex CEU.15 The contested amendment required foreign-accredited universities teaching in Hungary to have a campus in the country of accreditation, a requirement that singled out Central European University (CEU), founded by Hungarian-American billionaire George Soros. The withdrawal of the amendment comes after CEU had already been forced to move its academic programs abroad.
  • The reorganization of higher education that started in 2020 continued during the year. In February, the Budapest Court challenged the constitutionality of the new model through a case involving the University of Theatre and Film Arts,16 but the Constitutional Court found in June that the reforms are constitutional and do not undermine the university’s autonomy.17 In April, an additional 12 universities were placed under the control of asset-management foundations, thereby furthering the uncompensated syphoning of state assets into private hands (see “Corruption”) and consolidation of the governing parties’ control over higher education institutions.18 The already apparent practice of placing government-loyalists onto the supervisory boards of the foundations was confirmed when Prime Minister Orbán openly declared that members of the new boards should be appointed along ideological lines and have a “national” worldview.19
Independent Media 1.00-7.00 pts0-7 pts
Examines the current state of press freedom, including libel laws, harassment of journalists, and editorial independence; the operation of a financially viable and independent private press; and the functioning of the public media. 3.003 7.007
  • The Hungarian media landscape continues to be dominated by progovernment media outlets operating under the umbrella of the Central European Press and Media Foundation (KESMA); meanwhile, the public media fail to fulfill their public-service function,1 as the indirect and partisan reporting on the 2021 opposition primaries aptly illustrated.2
  • On February 9, the Budapest Court upheld the decision of the Media Council to not extend the license of Hungary’s last major independent and government-critical radio station, Klubrádió.3 Consequently, the radio station lost its frequency on February 14. It reapplied in an open tender, but the application was deemed invalid by the Media Council, which referred to economic reasons and alleged mistakes in the radio’s program plan.4 In June, the EC started an infringement procedure over doubts about the legitimacy of the Media Council’s reason to deny the license extension.5 Klubrádió continued its operation online.
  • In March, the Curia found journalist Árpád W. Tóta guilty of violating the dignity of members of the Hungarian nation with defamatory expressions in an article published in 2018 in which Tóta referred to Hungarian ancestors arriving in Europe as “smelly Hungarian migrants.”6 The judgment was criticized as a step toward limiting the freedom of speech.7
  • Access to information of public interest remained restricted under the state of danger in 2021. The deadline for state institutions to respond to requests for public information could be extended from the usual 15 to 45 days if fulfillment of the request would hamper defense against the pandemic, or an additional 45 days if the request concerned a significant amount of data.8 State institutions, including the National Public Health Center, however, repeatedly resorted to extensions regardless of whether the issue had anything to do with the pandemic.9 In April, the Constitutional Court concluded that state institutions could only make use of extensions if they substantiated that adhering to the 15-day deadline would endanger their ability to carry out their public responsibilities,10 but the default use of extensions continued nonetheless after the ruling.11
  • Several investigative journalists and businesspersons—like Zoltán Varga, CEO of the Central Media Group and owner of the news site, and Zoltán Páva, publisher of the government-critical site Ezalé—were covertly surveilled with Pegasus spyware between 2018 and 2021,12 raising concerns about the abuse of surveillance for political purposes (see “National Democratic Governance”). The Hungarian National Authority for Data Protection and Freedom of Information (NAIH) launched an investigation into the case in August, which had yet to conclude by year’s end.13
  • The head of the National Media and Communications Authority and president of the Media Council, Mónika Karas, resigned early from her positions effective October 31, 2021.14 Her tenure would have expired in September 2022, shortly after the parliamentary elections. With her resignation, the parliamentary majority was able to nominate the new president of the Media Council, András Koltay, for a nine-year term.15 The timing suggests that this move was politically and strategically motivated to ensure the new office holder’s loyalty to the current governing parties. Meanwhile, Karas was appointed vice-president of the SAO.16
  • Following the return of Radio Free Europe/Radio Liberty to Hungary in 2020, Deutsche Welle also announced in February the launch of its Hungarian-language program with the aim of improving media pluralism.17
Local Democratic Governance 1.00-7.00 pts0-7 pts
Considers the decentralization of power; the responsibilities, election, and capacity of local governmental bodies; and the transparency and accountability of local authorities. 4.254 7.007
  • Municipalities in Hungary continued to face financial losses due to revenue reallocations the government introduced in response to COVID-19.1 The state budget continued to withhold the vehicle tax from local authorities with plans to extend the practice into 2022.2 Municipalities suffered additional losses in 2021 as the government halved the local tax for small and medium-size businesses3 and banned the increase or introduction of any new local taxes during the year.4 Both measures will remain in place in 2022.5 Losses from the local business tax were estimated at 150 billion HUF, with Budapest set to lose some 18 percent of its revenues.6
  • The government announced a plan of financial compensation for losses in local business tax for municipalities with populations under 25,000.7 For larger towns, the government stated it would negotiate on an individual basis, which appeared politically driven and discriminated against cities led by opposition parties as well as against the capital Budapest.8 As of April, 13 cities with county rights (out of 23) led by governing parties or having a progovernment mayor received 97.5 percent of all government support, while the remaining 10 opposition-led cities received only 2.5 percent.9
  • Beyond the selective compensation, sanctioning of opposition-led municipalities continued with the creation of special economic zones under which real estate and the right of local business tax collection is transferred from the municipal to the county level. Establishment of the first such zone in Göd in 2020 was contested at the Constitutional Court but declared to be constitutional in February.10 Subsequently, despite local opposition, the government announced the creation of the Duna-mente—a Fejér county special economic zone including the town Rácalmás (with its Hankook factory) and the village Iváncsa (with its industrial park)—in the vicinity of the industrial city Dunaújváros.11 With this change, the opposition-led Dunaújváros will lose significant tax revenues it had received under an agreement with the two municipalities to use the city’s public infrastructure.12
  • In a move that may further reduce the competences of municipalities and thus incentivize creeping centralization, the governing parties passed a legislative amendment13 that allows local authorities to transfer, without compensation, the ownership of local water infrastructure to the state together with the responsibility for its operation.14 Water services have typically operated at a loss, so local authorities may be inclined to use this opportunity to reduce their financial burden, but this would lead to the loss of municipality assets. The legislation was therefore criticized by the National Association of Local Authorities (TÖOSZ).15
  • Municipal assets came under further pressure by an amendment to the housing law in June that would allow tenants of municipally owned rental housing to purchase their rentals at 15 to 30 percent of the market price. The initial proposal, targeting all such housing, was met with criticism from opposition politicians as well as mayors of the governing parties as it concerned public assets worth many billion HUF.16 The final adopted amendment17 restricted the focus to apartments in world heritage sites, several of which were rented by governing party figures in the Castle district of Budapest.18 Due to constitutional concerns, however, President János Áder sent the amendment to the Constitutional Court, which indeed found several points of the law unconstitutional, including the potential for generating significant financial losses to municipalities should they sell real estate under market value.19 Pursuant the review of the amendment, the parliament adopted the law with the stipulation that those renting housing for less than 25 years as of December 2020 would need to pay market price. The law entered into force in November.20
Judicial Framework and Independence 1.00-7.00 pts0-7 pts
Assesses constitutional and human rights protections, judicial independence, the status of ethnic minority rights, guarantees of equality before the law, treatment of suspects and prisoners, and compliance with judicial decisions. 4.254 7.007
  • After the eventful year of 2020, when major reforms to the Curia (Hungary’s highest court) were rolled out based on a 2019 omnibus legislation, the year 2021 brought less spectacular changes but saw the government continue to weaken the independence of the judiciary by consolidating political control over the branch.1
  • After receiving the title of judge, a development facilitated by amendments in the 2019 omnibus law, Zsolt András Varga, a justice named to the Constitutional Court in 2014, was appointed to a nine-year term as Curia president and took office on January 2. He received the nomination despite objections from the National Judicial Council, the country’s top professional forum of judges,2 and the restrictive attitude toward judicial independence he had expressed in his prior scholarly work and public commentary.3
  • The practice of political appointments at the Curia continued under Varga’s tenure. Based on his proposal, András Patyi was nominated for six years to fill the second-highest position in the judicial system as Varga’s deputy on administrative cases. Patyi was the first rector of the National University of Public Service, established by the Orbán government in 2012, and president of the National Election Committee from 2013, filling both positions until 2018.4 Further nominations to the Curia—like that of Barnabás Hajas, former state secretary of the Ministry of Justice, as a judge in June—illustrate political maneuvering on lower levels, as well. Like Varga, Hajas’s lack of experience as an ordinary judge constituted no obstacle.5
  • The Committee of Ministers of the Council of Europe raised concerns about the continued lack of safeguards against the arbitrary removal of judges and the resultant chilling effect on the freedom of expression of judges.6 The concerns remain unaddressed due to Hungary not executing the judgment of the European Court of Human Rights (ECtHR) in the Baka v. Hungary case issued in 2016. In this ruling, the ECtHR concluded that the removal of chief justice András Baka from his position in 2011 must have discouraged other judges from expressing their professional opinion publicly.7 The non-execution of the ECtHR ruling is not unique for Hungary, which is among the worst performers among the signatories to the European Convention on Human Rights.8
  • The above developments regarding the Curia as well as lasting shortcomings in the National Judicial Office, the judiciary’s self-governing body, were also raised as concerns over judicial independence in the EC’s rule-of-law report on Hungary published in July.9 The same month, Commissioner Didier Reynders said that unless Hungary reforms the judiciary in line with recommendations from the European Semester and guarantees that corruption cases following reports of the European Anti-Fraud Office (OLAF) are investigated, the EC would not approve the country’s economic recovery plan (related to the pandemic). 10 Furthermore, as the first informal step toward triggering the newly introduced rule-of-law mechanism, which could suspend EU funding to Hungary if rule-of-law concerns relating to budget matters remain unaddressed, the EC sent a letter to Hungary in November asking for information about rule-of-law-related matters.11 The government challenged the rule-of-law mechanism at the CJEU in March together with Poland.12 While a ruling was not reached in 2021, in December, the CJEU’s Advocate-General found the mechanism legal under EU law.13
  • Conflict developed between the European Commission and the Hungarian government over the latter’s noncompliance with the CJEU’s ruling last December, which found that the use of transit zones at the Serbian-Hungarian border and the lack of effective access to asylum procedures in Hungary are contrary to EU law. While the transit zones were closed, Hungary continues to refuse access to asylum procedures, therefore the EC sought financial sanctions against Hungary.14 Moreover, in January, the EU border service Frontex announced that it would pull out of Hungary, the first time it has suspended operations in an EU member state.15 However, the Hungarian government claims that implementation of the ruling would be in conflict with the Fundamental Law and brought the case before the Constitutional Court.16 In its decision on December 10, the court announced it would not review the CJEU’s decision and would also not examine whether EU law has primacy, thus the government did not get the court’s backing to avoid implementing the CJEU ruling.17
  • The Ombudsperson continued to remain silent on human rights issues concerning vulnerable groups, refusing to examine restrictions on the right of assembly imposed during the state of danger18 and refraining from any engagement with the Pegasus spyware case.19
  • A legal amendment20 adopted in November made the removal of the country’s chief prosecutor conditional upon a two-thirds instead of simple majority vote in the parliament. The current prosecutor, Péter Polt, was a member of Fidesz and is filling the position for the third time. His current tenure lasts until 2028.21
Corruption 1.00-7.00 pts0-7 pts
Looks at public perceptions of corruption, the business interests of top policymakers, laws on financial disclosure and conflict of interest, and the efficacy of anticorruption initiatives. 2.753 7.007
  • According to the April 2021 report by the Group of States Against Corruption (GRECO), Hungary remained noncompliant with the majority of GRECO’s recommendations, implementing only 5 of 18 in full and 4 in part concerning corruption risks in the judiciary and the parliament.1 Compared to the previous (2019) report, one more recommendation was partly implemented in 2020 concerning MPs’ conflicts of interest.2
  • The latest annual OLAF report recommended the repayment of 2.2 percent of all EU structural and agricultural funds spent in Hungary between 2016 and 2020 due to evidence of misuse, which remains the highest rate among EU member states. OLAF conducted eight investigations in Hungary in 2020 and closed four with recommendations, which is an increase compared to 2019.3
  • Transparency International’s 2021 Corruption Perceptions Index ranked Hungary in 73rd place among 180 countries surveyed, four places lower than the previous year. With this rating, Hungary is next to last in the EU, with only Bulgaria receiving a worse ranking.4 The group’s Global Corruption Barometer found that 69 percent of Hungarians consider governmental corruption a serious problem in Hungary, and 54 percent believe that the government is not driven by the public good but by private interests.5
  • After the nontransparent purchase of ventilators in 2020, the procurement of Russian Sputnik V and especially Chinese Sinopharm vaccines raised legal and financial concerns in 2021. The contracts revealed legal vulnerabilities in the Russian case,6 while use of the Hungarian company Danubia Pharma as intermediary in the Chinese case cost Hungary €149 million, half of which may have been pocketed by the intermediary.7 Danubia Pharma’s ownership structure is murky, and it has ties to individuals involved in last year’s ventilator procurement.8
  • Lack of transparency in international investments also continued in 2021. In April, government plans were revealed to contract a Chinese state-owned company to construct Europe’s first Chinese university campus, that of the Shanghai-based Fudan University, using a €1.25 billion loan from the China Development Bank.9 The project undercuts the planned development of a “Student City” conceived to provide affordable housing for students in Budapest as the Chinese campus would be built in the same area.10 The campus would be operated through the Fudan Hungary University asset-management foundation, which allows the government to endow it with state assets, such as the land originally allocated for the Student City project, without compensation.11 The foundation was registered in August12 and endowed with about 14 billion HUF in both public funds and real estate.13
  • In October, a court ruled on independent MP Bernadett Szél’s initiative that the classification of the Chinese-Hungarian loan agreement regarding the 750 billion HUF ($2 billion USD) modernization of the Budapest-Belgrade railway (passed in 2020)14 was unjustifiable, and in the absence of credible grounds for the classification, it must be made public.15 Additionally, the court ruled in November that project contracts over 5 million HUF signed by the Chinese-Hungarian Railway Nonprofit Ltd. (responsible for implementing the investment project) must also be made public.16 No contracts were published by year’s end.
  • The case of a six-kilometer railway investment project in Budapest won by a company belonging to Lőrinc Mészáros, Prime Minister Orbán’s longtime friend, illustrates the continued corruption risk in public procurements posed by business circles close to the government. The project, which experts estimate should cost from 30 to 50 billion HUF, may become Hungary’s most overpriced infrastructure development to date, as the company won the open tender with a 338 billion HUF offer.17
  • Beyond the syphoning of state assets to newly formed asset-management foundations operating universities (led by progovernment figures),18 the governing parties also used concessions to ensure their business circles’ long-term control over financial assets even in the event of a change of government. Current casino concessions generating a yearly 10 billion HUF profit, held by government-allied businesspeople, were prolonged until 2056 without tender.19 Further 35-year concessions were put up for tender in the construction and operation of highways and public roads,20 and the operation of public waste management.21 From October 2021, a newly established regulatory authority (SZTFH)22 is now responsible for the operation of a Concession Council and oversees certain state monopolies, like gambling and the tobacco trade.23 With the nomination of Marcell Bíró, former state secretary of the prime minister’s cabinet, the government has ensured that oversight will remain friendly to the current governing elite for the next nine years.24 According to an amendment submitted in October and passed in November, the president of SZTFH would be nominated in the future by the president of Hungary upon the proposal of the prime minister, and could only be dismissed by the president.25
  • In the highest-reaching corruption case investigated during the Orbán governments, Pál Völner, state secretary of the Ministry of Justice and ministerial commissioner responsible for the Hungarian Court Bailiff’s Chamber, resigned in December over allegations of regularly accepting bribes amounting to €226,000 in exchange for fulfilling certain requests of the head of the Bailiff’s Chamber, György Schadl, and in doing so, abusing his office.26 Schadl was arrested and is being held in custody as the investigation ensues,27 while Völner’s immunity was lifted upon the request of the chief prosecutor.28 Investigations were ongoing as of the end of 2021.

Author: Zsuzsanna Végh is a researcher and PhD candidate at the Chair of Comparative Politics of the European University Viadrina and an associate researcher at the European Council on Foreign Relations. She was a ReThink.CEE fellow of the German Marshall Fund of the United States in 2019–20. She holds MA degrees in international relations and European studies from the Central European University and in international studies from the Eötvös Loránd University.

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