From the beginning of the Russian invasion on Ukraine, Prime Minister Viktor Orbán and members of his government suddenly started stressing their devotion for their Western alliance and NATO. In the past 12 years, however, several Hungarian government decisions benefited Vladimir Putin’s Russia.
These were especially eye-catching when the government favored Putin and his circles even in situations when Russian aspirations obviously collided with the interest of Hungary’s NATO and EU-allies, or even Hungarian economic players, or the Hungarian state itself.
Since these conflicts mostly took place behind the curtains, they only became public afterwards, thanks to the investigative work of, amongst many, Direkt36. In this article we summarised how the Orbán government decided in many of these disputed matters prioritizing Russia’s interests.
Fidesz oligarchs visiting Putin’s intelligence service
Up until 2010, one could have the perception – based on his rhetoric in public – that Viktor Orbán and his Fidesz party represented a reliably pro-Western position in foreign policy, security, and energy issues. For instance, April Foley, the former U.S. Ambassador to Budapest put it this way in a diplomatic telegram, that was later published by WikiLeaks:
„Orbán may be no angel, but he is on the side of the angels on these issues.”
However, choosing sides was not that obvious anymore for Viktor Orbán when he was preparing to win the parliamentary elections in 2010. It was a clear sign when the Fidesz charman – who had previously been presumed as anti-Russian – met Putin in person in Russia at the end of 2009. What the public had no knowledge about, however, was that Fidesz oligarch Lajos Simicska and his close associate, businessman Zsolt Nyerges, later also flew to Moscow.
Simicska and his people were still controlling the economic hinterland of Fidesz as close allies of Orbán at that time, and they went to Russia to build relationships useful in the future governing. Their way led to the former KGB headquarters at Lubyanka Square, where they had a negotiation with a representative of the FSB (Federal Security Service), the successor to the KGB. (Previously, Vladimir Putin was director of the FSB, and he also served as a KGB security officer in his youth.)
Sources familiar with this meeting told Direkt36 that at this “introductory visit” the Russians expressed that if the Hungarian party needs assistance in business matters, they can be “counted on”. Information about the meeting only became public in 2018, when Direkt36 published a long article revealing the nature of Viktor Orbán and Vladimir Putin’s relationship (in the article, we also showed what disputed issued needed to be settled first to get this friendship started).
Russian nuclear deal instead of Western technologies
Orbán’s first truly spectacular move signalling both in Hungary and abroad that he would be committed to Russia in the long run was when he decided on the Paks nuclear power plant extension.
During the early 2010’s, U.S., French and South Korean companies were also interested in carrying out this project. By the end of 2013, however, Hungarian government officials negotiating on the matter received an order saying that there was no need for further discussions.
This was because, in a confidential meeting in August 2013, Viktor Orbán made an agreement with the head of Russian state nuclear company Rosatom awarding the contract of the new nuclear plant in Paks to the Russians without an open bidding. Details were settled by the Russian and Hungarian parties in secrecy in the upcoming months. The public was only notified when, in January 2014, Orbán and Putin declared that they signed a contract on the matter.
Although the European Union’s approval on the project had caused some delays, it did not get any faster afterwards either. The main reason for this was that the Russians struggled to make progress with planning the facility in accordance with the applying Hungarian standards. A visible sign of this was that the construction permit request was not ready in time. In this document, based on Russian plans, it must be justified that the power plant can be built and operated safely. At first, the Hungarian government expected that this paper could be filed with the Hungarian Atomic Energy Authority, which is responsible for the approval, in 2018. Eventually, it only happened much later in 2020.
Although the Russians were stranded in the planning, they still urged to start executing the project, and came up with many ideas they thought could be used to catch up with the delay. One suggestion was that some specific groundwork could be started before the construction permit is approved. This had a risk that if the foundations are laid before the project’s documentations are accepted, it is not certain that they would fit to the future power plant in all aspects.
To be able to go through with these modifications favored by the Russians, the Hungarian government eventually agreed to change a crucial regulation, which caused conflicts even inside the administration, and needed additional approval from the European Union.
The government however did not let the power plant get the construction permit before the Russians corrected their faulty documentation.
Hungarian company booted out to make space for Russians
The government prioritized Russian interests above Hungarians, when Ganz group, a Hungarian mechanical engineering firm, got close to a lucrative foreign contract. As a member of a consortium, Ganz won an Egyptian tender for the purchase of 1,300 railway carriages worth many hundreds of billions of forints. To be able to carry out the project, Ganz needed a loan from the state. State-owned Eximbank first took over the payment of this, but later cancelled and threw their support behind Transmashholding instead, which was the Russian competitor of Ganz.
As Ganz’s bid was made impossible, in September of 2018, the Egyptians entered into a contract with Transmashholding Hungary Ltd., the Hungarian subsidiary of the Russian firm. Later, pro-government figures started showing up around this company. One of the firsts steps of this progress was when Kristóf Szalay-Bobrovniczky, former Hungarian Ambassador to London and once a business partner of Árpád Habony, bought ownership in the tender-winner company.
The Hungarian state favored Transmashholding also when in spring 2021 they decided to withdraw and relaunch the 200 billion forints worth public procurement of suburban rail carriages. The government’s official explanation was that the bids of the two contenders, the Swiss Stadler and the French Alstom companies, were too pricey. By rebooting the procurement, Transmashholding also got a chance to enter the competition for the huge contract. Previously, the Russian company did not meet the requirements of the original procurement conditions.
In our country even Russian spies run free
Besides the Russian expansion of the Paks nuclear plant, the Orbán government has most frequently been criticised for turning a blind eye to Russian intelligence operations. In the 2010’s, majority of EU and NATO member states started seeing Russia as the greatest threat to their national security. They kept revealing Russian spies committing assassinations, murders, and explosions. Orbán’s government, however, approached the problem in a completely different way.
For instance, Direkt36 uncovered that although Russian spies – about ten of them between 2010 and 2016 – have been exposed in Hungary too, these spy affairs were always dealt with secrecy. While neighbouring countries made cases public many times when Russian intelligence operatives were caught, and Russian diplomats were expelled as sanctions, Hungary simply asked the exposed officials to return home.
This so called “silent expulsion” happened in the case of that GRU agent too who previously had been in contact with the Hungarian neo-Nazi group called Hungarian National Front (MNA). This organisation became widely known in 2016. Their leader, István Győrkös had gotten into a firefight with police officers arriving to search his home for weapons, and one officer died. Subsequently, Index.hu discovered that GRU intelligence officers working under diplomatic cover in the Russian embassy in Budapest provided military training to the Hungarian neo-Nazis, disguised as airsoft practice (military games played with tools resembling real weapons).
Since 2010, there was only a single case when Hungary officially banned a Russian diplomat. This happened in spring 2018, after the GRU tried to murder former Russian spy Sergey Skripal – who defected and, by that time, also lived in Great Britain – and his daughter with a nerve agent. As a response to the assassination attempt, NATO and EU member states, following up a British initiative, expelled Russian diplomats with GRU ties, and Hungary also joined the action.
But even on this rare occasion, Direkt36 found out that Budapest and Moscow secretly played on the same side, and commanded the mutual expulsion of their diplomats in a way that they could avoid harming Russian-Hungarian relations. For example, the Russian diplomat who was banned from Hungary had finished his mission anyway beforehand, and was already preparing to return home.
But the graciousness of the Hungarian counterintelligence towards Russian intelligence services was perhaps best shown in the handling of the Hungarian residency bond (golden visa) program. Direkt36, together with 444.hu and Russia’s Novaya Gazeta, found that people in Putin’s circles had also purchased Hungarian residency permits (combined with Schengen visas), and some of them were quite problematic with respect to Hungarian national security. Despite compulsory national security screenings, residency bonds were purchased by Russian foreign intelligence (SVR) head Sergey Naryshkin’s close family members, like, for example, his son.
Arms dealers helped to freedom by the Orbán government
While the Orbán government did a growing number of favors to Russia in mostly economic matters and also did not step up firmly against Russian espionage, the cooperation with NATO partners could have never been doubted in the field of law enforcement. The turning point was the Lyubishin affair.
Vladimir Lyubishin and his son of the same name had long been living in Hungary, from where the Russians were selling arms – for example, discarded weapons of the Hungarian Defence Forces. When representatives of a Mexican drug cartel showed up as potential customers, they did not turn them down either. Among many other things, they wanted to buy anti-aircraft missiles that they would shoot at the helicopters of the U.S. coast guards, and besides cash, they would have paid the for them in cocaine. But not long after the deal had been made, the Lyubishins were raided by Counter Terrorism Centre (TEK) special forces.
Direkt36 revealed the Lyubishin’s story in the autumn of 2018. In a secret international investigation under the codename ‘Perseus’ it was the U.S. Drug Enforcement Administration (DEA) that captured the two Russians in a sting operation. Subsequently, the Lyubishins were to stand trial in New York City. Throughout the whole investigation, the U.S. cooperated with Hungarian authorities, this is why they were stunned when the Orbán government suddenly denied a U.S. extradition request for Lyubishin and his son, and sent the two men to Russia instead.
Later we also found out that it was the Russian FSB that came to the help of the Lyubishins. Russia submitted their extradition request based on a fake, backdated FSB investigation against the two arms dealers that they have actually staged afterwards the arrest in Hungary. Although the Russian documents were full of errors, and even the Hungarian prosecutor was against accepting the Russian extradition request, Minister of Justice László Trócsányi decided to send the weapons smugglers home regardless. First it was Lyubishin Jr. who was set free; and a few months later his father was also released. The case put a strain on the Hungarian-U.S. relationship.
Bank suspected of espionage relocates to Budapest
Not long after the Lyubishin affair, the Orbán government found itself between colliding U.S. and Russian interests once more, and decided in favor of Moscow again.
Vladimir Putin brought one of the former Soviet Bloc’s institutions, the International Investment Bank (IIB) – also dubbed as the ‘Comecon bank’ – back to life in 2012. This step fit well into the part of the Russian foreign policy agenda that wanted to expand its international financial influence. Russia is the biggest stakeholder of IIB and the bank’s chairman is also Russian, which reveals that the whole bank is actually Russian-dominated to its core. Moreover, Russia’s second biggest financial institution, VTB Bank – whose leader has close ties to Putin – has been granted a supervisory position within IIB.
In their financial expansion, Russians found an eager partner in the Orbán government. Hungary joined the IIB in 2015, and soon became its second biggest stakeholder step by step. In the end of 2018, it also turned out that the bank was relocating its headquarters from Moscow to Budapest, and while doing it, they received many privileges from the Hungarian government. Although both the bank and the Hungarian government has been stressing that this is an international institution, in his joint press conference with Vladimir Putin, Viktor Orbán said he asked the Russian president so the bank could come to Budapest.
The bank quickly started its relocation in 2019, but the United States saw the institution as a threat from the very beginning. They were concerned that the bank – abusing the diplomatic immunities that IIB is entitled to have – would send more Russian spies to Hungary. IIB denied this suspicion from the start, while the media emphasized IIB chairman Nikolay Kosov’s family ties to the KGB. His father was a member of the KG task force sent to Hungary to crush the revolution of 1956, and later on he even became the KGB’s local head in Budapest.
IIB – labeled as “Russian spy bank” by the Hungarian opposition – became a symbolic example of the Orbán government’s pro-Kremlin agenda. It was well shown by the fact that, right after the Russians launched the invasion on Ukraine, the Hungarian opposition instantly requested the expulsion of IIB from Hungary. Later, on March 1, they held an anti-war protest in front of the bank’s headquarters.