“Budapest, which allows joint ventures in most sectors of the economy including banking, permits up to 100 percent foreign ownership, full repatriation of profits, simplified bureaucratic procedures, and relatively favorable tax rates including tax holidays in certain areas”. This is a quote from a 1989 CIA report praising the ultra-liberal economic and financial environment in Poland and Hungary following the collapse of the communist regimes.
But a Hungarian reader could be forgiven for mistaking it for a bill tabled by the recently elected government of Péter Magyar, which has been moving full steam ahead to put the country back in its place within the neoliberal, globalist order.
If you thought that the main issue in Hungary’s April elections was not the struggle between the right and the left, but whether Hungary would be able to preserve at least part of its sovereign foreign and economic policy, you would be right. Even its critics, however, have been surprised by the speed with which the new government — with the EU bureaucracy’s full backing — has moved to open up the Hungarian economy to foreign capital over the past few months, particularly in the energy sector, all while reducing the country’s foreign policy to a carbon copy of the Atlanticist playbook. To understand the current developments, one must remember that among the biggest sins of the previous — far from flawless — government were its opposition to the takeover of the Hungarian economy by Western capital and its stable relations with Russia. It is therefore not surprising that the new government has made two things its priority: opening the energy market to foreign capital and bringing Hungary’s Russia policy into line with Western orthodoxy.
It’s even less surprising when one considers that the three figures who now control Hungary’s economy, foreign affairs and public finances have all built their careers inside Western multinational corporations such as Shell, Erste and Cheniere; two of them have deep connections to American energy interests, while Anita Orbán, Hungary’s new foreign minister, is a committed Atlanticist with deep, institutionally embedded ties to the US national security establishment and neoconservative lobby. As I wrote back in June: “Given the profile of these three key figures, the trajectory of the Magyar government is not difficult to predict: energy diversification towards US LNG, financial opening towards Western institutions and corporate interests, and a foreign policy recalibrated towards Brussels and the Atlanticist establishment”. Alas, events so far have proven that prediction to be correct.
As for Hungary’s energy sector, one does not even need to read between the lines to understand what direction the country is headed in. Among the draft legislation proposed by the government for the fall, one is an “amendment... to establish an investment incentive program focused on the energy sector..., with the aim of increasing the share of foreign capital in the domestic energy sector”. This is in line with the recommendations and requests of Western international bodies — primarily the OECD and, of course, the European Commission. In its Economic Survey about Hungary, published in July, the OECD targeted the welfare measures taken by the previous government: tax breaks, early retirement for women, sectoral profit taxes, the protection of agricultural land, and — you guessed it — the energy price subsidies currently enjoyed by households. Unsurprisingly, all this corresponds to the EU Commission’s country-specific recommendations, which, among other things, lament the fact that “the high number of tax exemptions, tax incentives and sector-specific taxes make the tax system complex”, and even more astonishingly that the “use of sector-specific taxes disproportionately impacts larger, often foreign-owned firms” — which, one might argue, are precisely the companies that should be bearing the burden. The Commission also condemns Hungary’s “sizeable relevant fossil-fuel subsidies without a planned phase-out before 2030” and recommends “ensur[ing] that any measures taken to mitigate the impact of the hike in energy prices are temporary”. Furthermore, the Commission explicitly mentions the need to “accelerate the roll-out of renewable energy sources, in particular wind”.
These two documents form the ideological bedrock of the proposal the Commission issued in July, setting out the reforms and investments Hungary must implement to unlock the €10 billion in NextGenerationEU funds that Brussels has been withholding for years, officially on rule-of-law grounds. In practice, the proposal reads less like a reform programme than a shopping list, which goes so far as to specify the goods and services Budapest needs to spend money on. Nor is this confined to the NextGenerationEU funds: the prescriptions extend to national spending too. That a member state has no real say in how it spends funds notionally intended to boost its own growth and competitiveness tells you a lot about how the EU machinery works, all the more so given that a significant share of the money arrives as loans, not grants.
Furthermore, one cannot help but wonder how exactly many of the things that the Commission is demanding that Hungary buy, such as electric buses and digital notebooks, are supposed to boost the country’s economic growth. In any case, among the many useful items, the list contains multiple energy-related ones — in particular the purchase and installation of wind turbines and smart metres. Hungary is expected to install 6,200 MW of solar and wind capacity — but without resorting to any state or even EU funds for the plants themselves — and, based on these guidelines, the government has announced a plan to install 4,000 MW of wind capacity by 2030 — more than a tenfold increase on Hungary’s roughly 330 MW of installed wind capacity.
But why is the EU establishment so invested in the Hungarian energy mix? And why press for wind in a country with rather moderate winds? According to the Global Wind Atlas, the windiest tenth of Hungary averages 6.42 m/s at 100 metres, a modest resource by European standards — and below the 6.5-7 m/s that was long considered the threshold for commercially viable onshore wind, though that bar that has since been lowered by turbines built specifically for thin winds. Wind is also an inherently intermittent and unpredictable source: output depends on conditions no operator controls, and can fall to near zero across an entire country for days at a time.
Hungary has long drawn criticism from Brussels over its “dependence” on Russian energy, and relentlessly so since February 2022, on the grounds that the Orbán government did too little to diversify. That government’s own account was that Russian supply was cheap, reliable and a pillar of Hungarian growth. Whether it really was as advantageous as claimed by the previous government is hard to verify, since the long-term contract with Moscow is classified. That said, diversifying is an important goal, of course, but for a landlocked country like Hungary, this is not as straightforward as it seems. This was recently confirmed even by the new economy minister, István Kapitány; when asked in an interview how much the country’s reliance on Russian energy has decreased since the Magyar government took over, he replied: “Right now, Russia is obviously still the source from which the vast majority of gas and oil comes, and this is economically efficient”.
In any case, in 2025, diversification did increase in terms of import sources. Most natural gas continues to arrive from Russia via the TurkStream pipeline, through Serbia, but its share has decreased from 75.65% to 62.48%, whereas the volume of natural gas arriving from Austria has increased significantly, accounting for 22.21% of Hungarian imports in 2025. An important development is the recent increase in renewables, a field where the previous government performed surprisingly well: according to a Deutsche Welle report, 25% of Hungary’s electricity production now comes from solar energy — surpassing gas to become Hungary’s second-largest electricity source after nuclear power, and making the country the world leader in solar energy adoption when measured by the percentage of domestic electricity it gets from solar power, according to the energy think tank Ember. This will likely surprise many readers, given that Orbán was regularly accused of being a “climate sceptic”.
Nuclear energy, meanwhile, accounts for around 18% of total energy use, and over 40% of the grid mix, all of it from a single plant at Paks. The plant has been in the headlines recently: this summer’s historic draught disrupted the reactor’s cooling system and a complete shutdown was only narrowly avoided. Yet the government took action surprisingly late: Romania blew up a rock to divert water to its Cernavodă nuclear reactor in early August, while the Hungarian government took action only ten days later; moreover, the weir built to slow the current turned out to deepen the riverbed further, and the prime minister’s claim that Austria had lodged a complaint over its construction was later denied by Vienna. Some commentators consider all this a tactic to justify the delay in the construction of the second reactor (Paks II), to be built by the Russian company Rosatom. It is not entirely clear what the Magyar government wants to do with the second reactor, as they recently announced that they’ll review the project (even though the construction has started months ago). One thing is certain: the project has been constantly torpedoed by the EU; most recently, the European Court of Justice (ECJ) annulled the Commission’s approval of state aid for the project.
It is clear that there is still plenty of work to be done in the area of diversification, but the question arises whether installing wind turbines in a country which has only a few regions with considerable wind is the way to go about it — and, more importantly, whether it should be Brussels that decides. As for the new government, it seems more than willing to comply. So far, it has posted a first public tender for 702 megavolt-amperes of new wind power capacity, equivalent to around 700 MW. This is problematic for numerous reasons. For starters, there is no domestic wind turbine production in Hungary, so Hungarian companies can only bid for the construction (and expansion) of wind turbines — if at all. The turbines themselves will likely have to be purchased from Western European or Chinese companies, the latter looking increasingly unlikely in light of the recent investigation led by the Commission into the Chinese wind giant Goldwind’s state subsidies.
The tender has drawn criticism from developers and analysts on two fronts. Developers must pay host municipalities up to €50,000 per megawatt before generating a single kilowatt-hour, hand over further payments on every unit produced, and accept that state-designated “energy communities”, so far basically non-existent in Hungary, may buy up to a quarter of the project — all on top of Hungary’s existing windfall tax. One prospective bidder told the trade press that the numbers do not add up. But even though the terms of the tender may deter some investors, they do not deter all of them equally. An auction that rewards whoever pays the most upfront, years before a single turbine is connected, while no longer crediting the wind measurements and site studies on which smaller developers can compete, is one tilted towards large, well-capitalised players — and in Hungary’s wind sector, few of those are Hungarian.
Worse, the sites appear to have been chosen for spare grid capacity rather than wind: the largest single allocation, at Ócsa, sits in a densely populated area next to a nature reserve. This is particularly concerning because modern wind turbines are around 190 meters high, which including the blade height amounts to approximately 260-270 metres. Public opposition to wind turbines, which are seen as spoiling the landscape, is already growing stronger, so it would be reassuring to know that their installation will at least serve some minimal purpose.
Alongside the questionable push to expand wind power capacity, the energy minister’s old contacts appear to be serving the country well — or at least serving someone well. István Kapitány spent his career at Shell, rising to global executive vice president; that same company has now signed a major deal with MOL, Hungary’s largest energy company, for the purchase of Shell’s BG Cyprus unit. The latter has a 35% non-operated interest in a Cyprus Offshore block, home to the Aphrodite gas field in the eastern Mediterranean. Shell — whose profits have doubled from last year to $9.84 billion in the second quarter of 2026 — justified the transaction by saying that it is “focus[ing] on opportunities that strengthen their integrated LNG value chain”. What they appear to be saying is that they sold the field to MOL because it was no longer considered a worthy investment. MOL has framed the purchase in glowing terms, despite the fact that the field will not produce any gas until 2031, and even then, the energy will not be imported to Hungary. It therefore will not, in any meaningful way contribute to the diversification of the country’s energy portfolio. Shell is essentially selling a stake in a long-dated, pre-development asset rather than a producing one — useful for Shell’s balance sheet now, but representing questionable value for Hungary.
Meanwhile, last month, Kapitány announced — on social media, now a routine channel for government communication — that while the previous government had secured the country’s gas supply, it had not locked in the price beyond January 2027. Naturally, he blamed the previous cabinet for all of this, even though he himself could have made hedging deals during the nearly five months that had passed since the April elections. Instead, he warned that businesses and households would have to bear the burden of rising energy prices; these are expected to skyrocket in the coming months. Many believe that the minister is laying the groundwork for the gradual phasing out of one of Orbán’s most significant measures: the cut to household utility bills. This seems like a realistic assumption, given that the Commission, echoed by the OECD, is calling not only for energy price reform but also for the simplification of the Hungarian tax system. In plain language, this means the elimination of the sectoral taxes imposed on companies, which Orbán used to finance the utility bill cut for households.
For the time being, therefore, the new Hungarian government has not refuted either the expectations coming from the EU or the fears of critical commentators: it wants to free the Hungarian legal system as soon as possible from any regulations that would even minimally restrict the activities of international companies in the Hungarian economy. Even those measures that appear to have no connection to foreign interests reinforce this goal. One example is the establishment of the newly created National Office for Asset Recovery and Protection, whose stated purpose is to uncover and investigate corruption committed in recent years. Most critics have rightly emphasised that this body seems to have been created with the specific aim of going after the former ruling party, but they are missing an equally important point. This authority will also likely contribute to eliminating, as effectively as possible, those Hungarian companies and businessmen that rose to prominence during the Orbán years — the so-called “oligarchs” — so that they will not be able to participate in any future public procurement tenders.
The first signs of this are already visible; for example, in a tender related to the installation of smart metres, OPUS TITÁSZ, belonging to Lőrinc Mészáros — whose companies won the most public procurement contracts under the previous government — was retroactively excluded for transparency reasons. It remains to be seen who will take on the work that was to be done by Mészáros’s company, but it is not hard to imagine that Western European companies will eventually get a bigger slice in the country’s public tenders. One may reasonably object that a country’s business sector should not be dominated by a handful of well-connected domestic firms. But will ordinary Hungarian taxpayers really be better off if the alternative is foreign companies gaining a bigger foothold in the economy — and taking their profits out of the country? After all, when the CIA singled out “full repatriation of profits” as one of the merits of Hungary’s new economic order in 1989, it was hardly the welfare of Hungarians it had in mind.
More broadly, however, any attempt to separate the government’s economic and political aims neatly is bound to fail. They are, after all, mutually reinforcing facets of a single project: bringing Hungary firmly back under Western control. Seen in this light, the government’s authoritarian turn — a constitutional overhaul effectively barring Orbán and much of Fidesz’s senior leadership from standing again, the shutdown of the public broadcaster’s news output, the closure of Fidesz-aligned institutions such as MCC and the Danube Institute — is not simply about crushing a rival party. It is about removing any organised resistance to the new government’s neoliberal shock therapy, and locking in the new EU- and NATO-dictated agenda for years to come.
Over the fall, it will become clear exactly what the government’s proposed bill — which aims to increase the share of foreign capital in the Hungarian energy market — entails. One thing is certain: in the few months since the election, the new government has wasted no time in implementing the Commission’s requirements. If they continue at this pace, the complete colonisation of the Hungarian economy will not take long.
Thanks for reading. Putting out high-quality journalism requires constant research, most of which goes unpaid, so if you appreciate my writing please consider upgrading to a paid subscription if you haven’t already. Aside from a fuzzy feeling inside of you, you’ll get access to exclusive articles and commentary.
Thomas Fazi
Website: thomasfazi.net
Twitter: @battleforeurope
Latest book: The Covid Consensus: The Global Assault on Democracy and the Poor—A Critique from the Left (co-authored with Toby Green)
The eu leadership has no priority whatsoever other than The War On Russia.
What does anyone propose to do about it?