Sanctions Imposed on Budapest: Why Did US Treat an Allied Hungary as an Enemy?

The sanctions imposed by The United States a few days ago on Hungary are an unprecedented decision. Never before have Americans punished any member country of the EU, which is their biggest ally.

Washington is claiming that the decision to forbid entry to the U.S. to six Hungarian citizens is due to attempted bribery. But in fact, there is more to the sanctions than just corruption. It is a “yellow card” for Viktor Orbán, aimed to forewarn him not to develop his authoritarian model of state any further.

According to the Hungarian press, Washington’s black list includes the head of the Hungarian revenue agency, one of the founders of the ruling Fidesz party, some lower-rank officials, and one of Orbán’s most important counselors. They have all been promising tax immunities to American companies (including one of the bigger players in a grocery market) in exchange for enormous bribes. The money is alleged to go to the foundation connected with Fidesz.

This is a totally new aspect in the history of Hungarian corruption. Never before have the ruling elites so openly demanded bribes from powerful international corporations. Nevertheless, for the last few years a new practice has grown of financing various funds, associations and companies belonging to Fidesz, or to the people connected with Fidesz. Thanks to billions of dollars in government contracts, a class of oligarchs has appeared who now returns favors by financing election campaigns, or by supporting Fidesz in the media they own.

The corruption has grown on a systemic scale in Orbán’s country, and the government tries to quiet those who try to reveal it. For example, the Budapest division of Transparency International (TI)*, which describes the pathologies of the Hungarian state, has learned of problems. Government officials send numerous, detailed reports to its office, and even demand the names of volunteers that are involved in anti-corruption projects. TI is one of the organizations described by Fidesz and Orbán as “foreign agents.” Such words and methods used toward the nongovernmental organization totally resemble the rhetoric used in Putin’s Russia. Russia is another country where anyone not obedient to the government gets in trouble and acquires the stigma of “a foreign agent.”

“The illliberal state,” whose creation was announced by Orbán a few months ago, is just a mask that hides the authoritarian model of power. The Hungarian prime minister keeps saying Hungary has become a Western colony, and he will release it from this jackboot. And he does. For example, he takes away the banks from the “bloodthirsty” foreign capitalists and quickly hands them over to the Hungarian oligarchs, who are in fact equally “bloodthirsty,” but obedient to the authorities.

It is for them and their profits that special laws are passed in the parliament. That enables them to earn even more profit. This happened, for example, in the case of the market chain belonging to one of the oligarchs that recently gained significant tax immunities. But the law has also been changed to punish the media that are too critical of the government. Because of the new revenue taxes (not profit), many of those media outlets will probably face the danger of closure.

The Americans — unlike the Europeans — have probably put aside any delusions about the aim of Orbán’s state model. The clear signal about that came at the end of October from Barack Obama. At an event for the Clinton Global Initiative, he said, “From Hungary to Egypt, endless regulations and overt intimidation increasingly target civil society.”

Bill Clinton was plainer. “The Hungarian prime minister said he likes authoritarian capitalism. But he’s just saying, ‘I don’t want to ever have to leave power.’ Usually those guys just want to stay forever and make money,” said the former president.

And consider one more remark, from Andre Goodfriend, the U.S. Chargé d’Affaires in Budapest, right after the announcement of the American sanctions on Hungary: “At a certain point, the situation, if it continues this way, will deteriorate to the extent where it is impossible to work together as an ally.”

The Americans know where Orbán’s ruling will lead to and are reacting. Europe acts as usual, and keeps silent.

*Editor’s note: Transparency International is a non-government organization that monitors and publicizes corporate and political corruption in international development.