Trojan Horses of Budapest

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As Hungary is announcing rediscovered friendly cooperation with Sweden and the US-led NATO alliance, it remains active toward the East. Hungary is now having a ménage à cinq with its security entanglements – with Sweden, USA/NATO, Russia, and China.

Despite being part of NATO and the EU, Hungary continues to foster strong economic relationships with Moscow, relying heavily on Russian oil and gas. The country has also been in conflict with the EU regarding its stance on the financial and military aid to Kyiv, and until the late February 2024 decision in parliament, it remained the last NATO member not to endorse Sweden’s bid to join the alliance, a move prompted by Russia’s actions in Ukraine.

Still Dependent on Russian Oil

Hungary persists in purchasing Russian oil and gas worth billions of dollars each year, even as the majority of Western countries have severed economic relationships with Russia following its invasion of Ukraine in February 2022. The Druzhba, known as the “Friendship” pipeline, carries thousands of metric tons of Russian oil through Ukraine each day, leading straight to the state-operated MOL refinery on the periphery of Budapest.

In the wake of the embargo, while Eastern European countries like Slovakia and the Czech Republic have made moves to diminish their reliance on Russian energy, Hungary has negotiated new advantageous agreements to augment its energy imports from Russia. Hungary has become the largest consumer of Russian energy within the EU, with purchases amounting to $343 million in oil and gas for just January of this year. Additionally, Hungary is in the process of constructing a new pipeline designed to transport Russian oil to Serbia. Furthermore, Russia is involved in developing the Paks II nuclear power facility in Hungary, situated on the Danube River’s banks, to the south of Budapest.

Pact with China

Earlier in February, China offered to support long-time strategic partner Hungary on public security issues. This proposal was made during a rare meeting of a senior Beijing official, Public Security Minister Wang Xiaohong with Prime Minister Viktor Orban. According to Minister Wang Xiaohong, China hopes to deepen law enforcement and security ties with Hungary as the two mark their 75th year of diplomatic relations.

The recent security agreement with Hungary signifies a strategic victory for China within the European Union amidst ongoing tensions regarding human rights issues, trade imbalances, and the situation in Ukraine. Wang’s visit to Budapest aimed to enhance bilateral relations, particularly in the fight against terrorism and cross-border crime, and to further the goals of the Belt and Road Initiative, which seeks to connect China to the rest of the world through trade and infrastructure.

During his visit, Wang met with Hungarian Interior Minister Sandor Pinter and signed accords to deepen law enforcement and security collaboration, as reported by China’s state-run Xinhua news agency, which did not disclose additional information.

Soaring Chinese Investments

Hungary’s inclination towards Beijing has caused a rift within the EU’s unified approach. Budapest has frequently taken a different stance from the EU on issues related to China, particularly regarding human rights criticisms, and has embraced Chinese investments, contrary to the broader EU directive for a coordinated approach towards China.

Furthermore, Hungary hosts the largest Huawei Technologies logistics and manufacturing hub in Europe, situated outside of China. This development has occurred despite warnings from the European Commission about the potential security threats posed by the telecom company. Since 2016, Huawei has collaborated with Yitu Technology, a Shanghai-based AI company, to develop smart city technologies aimed at enhancing public safety and law enforcement effectiveness through AI and surveillance initiatives.

According to the Spectator, the newly formed security pact with Hungary seems to be taking cues from a similar agreement in Serbia (which is outside the EU), characterized by the joint patrolling of Chinese police in zones frequented by Chinese firms or tourists. Hungary has the distinction of being the first EU member state to participate in China’s Belt and Road Initiative (BRI), a global project aimed at bolstering Chinese infrastructure investment abroad and expanding its geopolitical reach. Amidst this, Budapest has actively sought Chinese investment, despite the European Commission’s growing apprehensions, advising its members to minimize their dependencies on China.

Notably, Hungary houses Huawei’s largest operational hub outside of China. Additionally, CATL, a prominent Chinese battery manufacturer, is set to establish a $7.7 billion facility near Debrecen, Hungary’s second-largest city. Moreover, BYD, a Chinese electric vehicle manufacturer, has disclosed intentions to construct an assembly factory in Hungary. This comes at a time when the EU scrutinizes the substantial state aid provided by Beijing to its EV industry, suspecting the practice of selling their surplus production internationally at below-market prices.

Xi’s Trojan Horse

There have been protests in Hungary towards the ever-warming relations with China, the Spectator reported. Due to loud criticism against plans to build a campus of Shanghai’s Fudan University in Budapest for $1.8 billion. The project seems to be on hold.
Also, the mayor of Budapest renamed several local roads, creating ‘Uyghur Martyrs Street’, ‘Dalai Lama Street’ and ‘Free Hong Kong Street’. Opposition politicians have also criticized another Chinese project, a multi-billion railway linking Budapest and Belgrade, claiming that it is overpriced and riddled with cronyism in the awarding of contracts. Few of these controversies get wide coverage in the Hungarian media, which is tightly controlled by Orban.

China’s Xi Jinping is now wheeling his Trojan horse into Budapest, welcomed by a fellow authoritarian, The Spectator wrote. However, Europe as a whole is becoming more vigilant and resistant to the Chinese Communist Party’s outreach, and there’s a growing impatience with Viktor Orban’s governance strategies.

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