Hungary's Orban Isn't Another Putin

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(Bloomberg View) -- Given Hungarian Prime Minister Viktor Orban's reputation -- he's been called a dictator and an autocrat, albeit a "soft" one -- as a Russian in Budapest, I couldn't avoid wondering whether his rule was anything like Vladimir Putin's in Russia. So I asked some people who'd know -- both Orban loyalists and members of civil society groups that have come under attack from the government and its media.

As a result, I think that Orban's style of running his country resembles Putin's in a number of important ways. But the differences, at least so far, outweigh the similarities -- they're on key issues that determine whether a country is a democracy or a dictatorship. It's important to make a clear distinction between a government that legitimately pursues illiberal and often noxious policies and one that is fundamentally illegitimate, repressive and a danger to its citizens, whether they realize it or not.

Orban and Putin share an obsession with sovereignty -- the kind that critics would call unlimited personal power. Their goal is not to allow any external force to undermine their power to make decisions on their nations' behalf, be that wealthier Western countries, multinational corporations or non-governmental organizations. Orban, however, has been far more sophisticated than Putin in reaching for that goal. That sophistication isn't "softness" -- rather, it's a sharper sense of what's sufficient. 

The Elections Are Real

When I asked Gergely Gulyas, head of ruling party Fidesz's parliamentary faction, whether his party's high-turnout landslide on April 8 reminded him of President Vladimir Putin's March 18 victory, he bristled: "It reminds me more of the Bavarian election. Given our legal framework, that would be a better example." (In Bavaria, of course, the center-right Christian Social Union, which has strong ties with Fidesz, leads in the polls ahead of the October state election with similar numbers to those garnered by Orban's party this month). "I've read articles comparing Orban and Trump with Putin and Erdogan, but it's part of some journalistic reality," he continued. "If you live here, it's a normal pluralistic democracy that complies with European rules."

European rules, of course, allow some dispersion, and Hungary isn't quite Bavaria. Observers from the Organization for Security and Cooperation in Europe noted "a ubiquitous overlap between the ruling coalition’s campaign messages and the government’s anti-migration, anti-Brussels, anti-UN, and anti-Soros information campaigns, evident, in particular, in outdoor advertising" and "unexpected distributions of public money" during the campaign. Neither is standard practice in established democracies. At the same time, the observers noted "a high degree of contestation." Compare that with the OSCE's language on Putin's March re-enthronement:

Restrictions on the fundamental freedoms of assembly, association and expression, as well as on candidate registration, have limited the space for political engagement and resulted in a lack of genuine competition.

Though there have been some calls for a recount in Hungary because of possible voting irregularities, no one has suggested the massive falsification detected by independent observers of the Russian election -- up to 10 million fake votes for Putin, almost 18 percent of his total. And the high turnout in Hungary wasn't caused, as in Russia, by local officials' pressure on public employees. There is one similarity: The opposition parties in both countries have failed to present a united front, which makes them easier to defeat.

"If they weren't complete morons, the opposition could have beaten Orban," investment fund manager Viktor Zsiday told me. "It's not as if he'd get Chechens to kill politicians near the parliament." That, of course, is a reference to the murder of former Russian deputy prime minister Boris Nemtsov near the Kremlin in 2015.

The Pressure on Critics Is Softer

On Thursday, the pro-Orban weekly Figyelo published the names of more than 200 alleged "mercenaries" for his arch-enemy, financier George Soros, including staffers at Hungary's Helsinki Committee, the local branch of Transparency International and the Soros-funded Central European University. It resembled the lists of "traitors" and "Russophobes" that started cropping up on pro-Putin propaganda websites and social networks after the Crimea invasion. I showed up on some of those, and felt threatened.

"We're facing increasing psychological pressure," Gabor Gyulai, head of the refugee program at the Helsinki Committee, told me. 

But Gyulai, along with Transparency International's Jozsef Peter Martin and the Corruption Research Center's Istvan Janoth Toth, told me they didn't consider themselves in physical danger. Their organizations are all, to some extent, recipients of Soros funding -- the equivalent of taking money from Fethullah Gulen in Recep Tayyip Erdogan's Turkey or from the U.S. government in Putin's Russia. In those countries, such a connection would lead to harassment by police and pro-government thugs and to a very real threat of imprisonment. Not in Hungary: They get beat up in the press, but there's no threat of violence against them or their families.

"The biggest difference with Russia is that there's a much greater degree of individual freedom in Hungary," Martin told me.

The Media Has Some Signs of Life

Figyelo, formerly a respected business publication, is one of several Hungarian media outlets that have been acquired by Orban loyalists since he came to power in 2010. Since 2016, it has been owned by the government's official historian, Maria Schmidt. Most regional newspapers in the country have in recent years passed into the hands of Fidesz-friendly owners. Like in Russia, these media, "watched over" by government loyalists, are part of a shameless propaganda machine with a Kremlin-like disregard for the facts. 

There's only one TV channel available to all Hungarians that is not a government mouthpiece (RTL Klub, owned by Germany's Bertelsmann); Andy Vajna, Orban's film industry commissioner, purchased TV2 station, the nation's second biggest, in 2015. An Orban ally turned nemesis, Lajos Simicska, announced after Orban's re-election that he was shutting down his newspaper and radio station, which he had used to accuse Orban and his family of corruption. Simicska's Hir TV, an all-news channel, will keep broadcasting.

Even that degree of pluralism, however, would be patently impossible in Russia. One of the first things Putin did after coming to power was strangle NTV, the only widely available television broadcaster that didn't feel obligated to toe the Kremlin line. Now, he enjoys full control over all traditional media with a broad nationwide reach, confining opposition and independent media to a few online outlets. It's debatable, however, whether moving toward such total control makes any political sense once a relatively high share of voice has been achieved. The temptation remains for at least one non-political reason: Orban's economic model rewards his allies through channeling government funds to them, which in media take the form of government-bought advertising.

The Courts Limit Corruption

Perhaps the strongest similarity between Orban's Hungary and Putin's Russia lies in the ways in which both are corrupt. "The best investment that can be made in Hungary is in a good relationship with the government," Martin told me.

When I asked Gyorgy Laszlo, chief economist of the Orban government's key think tank, Szazadveg, why the government's effort to increase Hungarian ownership in key industries such as energy and banking largely transferred assets to politically connected individuals, he countered with a smile, "Where is it different?" In Russia, it certainly isn't. In the 1990s, I heard similarly glib answers from the ideologists of that era's privatization campaign; they'd say that the first generation of national capitalists might be robber barons, but their children would form an enlightened post-Communist elite. But the Hungarian model of corruption is closer to modern Russia's rather than the one that sprang from the fall of communism. 

"It's not an oligarchy-captured government, it's the reverse capture of business by government," Toth from the Corruption Research Center told me.

Toth and a colleague recently studied government procurement tenders in Hungary between 2010 and 2016 and found that tenders with the participation of four people close to Orban -- Lorinc Meszaros, Istvan Garancsi, Simicska (who later fell out with the prime minister) and Orban's son-in-law Istvan Tiborcz -- were on average less competitive and resulted in higher government payouts than if the four didn't take part in the bidding. That's exactly the kind of pattern that emerged in Russia, where government procurement helped turn a few Putin friends into billionaires. Another typically Russian form of corruption is white elephant projects, mainly funded in Hungary with government-distributed EU cash. Toth's favorite example is the construction of 11 observation towers for tourists in a remote village; in Russia, of course, the white elephants are proportionally bigger.

Even on this, though, there are important differences between Russia and Hungary. Toth estimates that 15 to 24 percent of government procurement is corrupt. In Russia in the first half of 2017, the Finance Ministry found that 42.5 percent of the total amount of government-owned companies' procurement contracts was distributed without a competitive procedure at all -- a clear indication that these are corrupt deals. According to Martin, the overall share of corrupt and cronyist business in the Hungarian economy is between 5 and 10 percent; in Russia, according to a 2015 estimate by Justice Minister Alexander Konovalov, corruption causes an annual loss of 10 to 20 percent of official economic output.

Russia, in other words, is far more deeply corrupt than Hungary. One reason for this is that, as all the NGO experts I've talked to in Budapest have told me, Hungarian courts are still independent and not afraid to rub the government the wrong way. Another is that low-level corruption visible to citizens is virtually non-existent compared to post-Soviet countries. Finally, politics are still competitive, and that places a natural limit on how bold stealing can be.

Of course, moving toward Putin-style government methods and economic mechanisms is a slippery slope, and many Orban opponents expect Hungary to continue its slide. Martin, however, says he doesn't believe Hungary will end up as a dictatorship: Orban's balancing act between Putinism and European rules is deliberate and finely tuned. 

The reason I agree with Martin's assessment is that Orban has survived two genuine elections after returning to power in 2010. There's no overwhelming need for him to go full Putin -- he's doing well enough as it is. He's also more experienced than any current European leader save Germany's Angela Merkel; surely he realizes that if he goes overboard, the opposition will eventually unite and, with the support of liberals in the EU, mount a more convincing bid against him. His skill lies in staving off that threat while grabbing as much power as he can; he uses a scalpel where Putin has long wielded an axe.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.

For more columns from Bloomberg View, visit http://www.bloomberg.com/view.

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