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This article is part of the Hungarian presidency of the EU special report.
Hungary is Russia’s leading EU ally and goes to extraordinary lengths to snarl aid for Ukraine. But it’s also a big defense spender and an increasingly important production hub for the bloc’s armsmakers.
Those clashing faces will be on full display during the country’s upcoming EU Council presidency, where Budapest has said “the reinforcement of the European defence policy” will be a priority.
The big issue will be making progress on the European Defence Industrial Strategy (EDIS) and the European Defence Industry Programme (EDIP) — a bid to boost the bloc’s military-industrial complex, which Hungary backs. Also, there will be an effort to restart partial reimbursements for Ukrainian weapons under the European Peace Facility, blocked by Budapest.
“We need to move fast now when it comes to the implementation of EDIS and I hope they won’t derail that, also in the security interest of their citizens,” said Hannah Neumann, a German member of the European Parliament from the Greens.
But there is worry in other EU capitals about Hungary’s reliability.
Hungary knows that it won’t be able to “get through their agenda” on Ukraine and member countries “will be very skeptical of them,” said Gustav Gressel, a senior policy fellow at the European Council on Foreign Relations think tank.
Eyes on Budapest
Hungary is bracing for the coming scrutiny.
“We are aware of the fact that we will be watched very closely whether we cooperate sincerely with member states and institutions,” EU Minister János Bóka told POLITICO, adding that his country’s position on Russia was “pragmatic.”
“There is nothing to substantiate the statement that we are close to Moscow,” he said.
However, it’s not difficult to find a pro-Kremlin tilt in Budapest.
Foreign Minister Péter Szijjártó has broken ranks and regularly meets his Russian counterpart Sergey Lavrov, who was hit with EU sanctions.
Hungarian Prime Minister Viktor Orbán has railed against Western support for Ukraine, and Szijjártó warned last month of an “insane” idea of imposing compulsory conscription across Europe to bolster Ukraine’s diminishing manpower — something that isn’t true.
Orbán even made it a condition of backing outgoing Dutch PM Mark Rutte as the new NATO secretary-general as long as “no Hungarian personnel will take part in the activities of NATO in Ukraine and no Hungarian funds will be used to support them.”
But Hungary is also one of the EU’s most serious defense players.
Orbán has ramped up defense spending to 2.11 percent of GDP this year, above NATO’s 2 percent guideline. It could go higher. He said last month that if the war in Ukraine drags on into 2025 “then the 2023-2024 defense spending levels will not be sufficient and will have to be increased.”
Almost half of that money — 48 percent — goes to new equipment, most of it from European producers.
Hungary is buying 44 Leopard 2 A7+ tanks and 24 PzH 2000 self-propelled howitzers from Germany’s Krauss-Maffei Wegmann, as well as H145M and H225M multipurpose helicopters from Airbus. Earlier this year, it signed a deal to buy four Saab JAS Gripen fighter jets from Sweden. It also uses the Mistral short range air defense system manufactured by MBDA.
Buying European arms
“Hungary launched a modernization program of the army eight years ago” Hungarian Ambassador to the EU Bálint Ódor told POLITICO. And “85 percent of all the purchases come from European companies … with this we contributed to the strengthening of the European industrial base in the defense sector.”
Those big procurement budgets, plus cheap labor and favorable tax rules, are driving European defense companies to build factories in Hungary.
Germany’s Rheinmetall produces KF41 Lynx infantry fighting vehicles in Zalaegerszeg. Its vehicle systems division has a joint venture for wheeled vehicles, while its weapon and ammunition division is looking at expanding activities in Hungary.
Rheinmetall also has a deal with Hungary to develop next-generation Panther main battle tanks.
An Airbus factory produces components for modern combat helicopters.
Orbán “felt that buying German arms, and thereafter French arms, may help Hungary to buy political favors,” said András Rácz a senior research fellow at the German Council on Foreign Relations, a think tank.
But with Brussels blocking EU funds to Budapest over backsliding on the bloc’s rule of law and democratic standards, and the country under fire from its increasingly exasperated allies, it’s not clear that the diplomatic buffer is still working.
Still, the bloc’s black sheep is vowing to move forward on defense policies that have broad support among other member countries.
The Hungarian presidency will try to agree a general approach on the European Defence Industry Programme, EU Minister Bóka said. “We believe that this could strengthen the European defense industrial base, which is a prerequisite for a strong and autonomous European security and defense policy.”
