Revelations the Hungarian government is considering taking a huge, opaque and disadvantageous Chinese loan to pay for the construction of Fudan University’s new Budapest campus shows the depths that Orban’s Fidesz is willing to kowtow to Beijing.

When Hungary’s top diplomat openly criticised the EU for sanctioning some of the world’s worst human rights abusers, it understandably raised eyebrows around Europe. After all, earlier that day, on March 22, every member state, including Hungary, agreed to trigger the so-called “EU Magnitsky Act” to punish Chinese officials complicit in crimes against the Uyghur minority.

Despite voting in favour of these sanctions, however, Hungarian Foreign Minister Peter Szijjarto later denounced these measures as “pointless, self-aggrandising and harmful”, much to China’s delight. While the EU has been facing down China’s “wolf diplomacy” in recent weeks – in turn, incurring retaliatory counter-sanctions targeting elected EU officials, scholars and human rights activists – Hungary appears to be advocating for deeper cooperation, if not outright appeasement.

Just days after this diplomatic tit-for-tat between the EU and China, the Hungarian government played host to a senior visitor from Beijing: China’s defence minister. Wei Fenghe used his visit as an opportunity to condemn the EU sanctions while praising Hungary’s conciliatory approach, claiming that China “has always regarded Hungary as a good brother”.

It was rather strange that no official readout was given by the Hungarian side on the content of Wei’s meetings with officials in Budapest. However, Chinese media reports suggested a worrying theory: Beijing might try to retaliate for Western involvement in the South China Sea conflict by meddling in the military and security affairs of Europe. This was far from the first time that members of the transatlantic alliance were left wondering about the true geopolitical alignment of Hungary.

The most obvious manifestation of China’s giant footprint in Hungary is the planned new Budapest campus of Shanghai-based Fudan University, to be opened in 2024. My recent report, citing internal government documents, revealed that this 1.5-billion-euro project will have the usual Belt and Road-like conditions. It will be financed by a 1.3-billion-euro loan from China Development Bank taken out by the Hungarian state, and the construction will use labour and building materials shipped in from China. The price tag for the campus will be higher than what the government spends each year on running all of the country’s state-run universities.

Prime Minister Viktor Orban’s so-called ‘Eastern Opening’ policy, set out in 2010, was originally intended to make Hungary a gateway to China and Russia in the hope of investment, loans and new markets. However, it not only opened up the gates to eastern capital, but is now drawing accusations that Hungary is acting as a Trojan horse for Chinese and Russian influence.

Germany does it in silence; Hungary not so much
For many years now, Prime Minister Orban has been taking advantage of what is increasingly being seen as an institutional flaw coded into the EU’s decision-making system.

As important EU actions require unanimity, leaders of every member state have the solemn right to use their veto power if they feel their national interests are being threatened. Orban’s government has been utilising Hungary’s veto power to water down, prolong, block or even kill measures or statements detrimental not to Hungary, but to authoritarian countries with which it enjoys close economic ties, such as Russia, Turkey, Belarus (here’s my summary of almost all previous cases) and, most crucially, to the People’s Republic of China.

Both Orban and his foreign minister could not have been more outspoken about what drives them. They believe that all the economic opportunities that these eastern powers can offer far outweigh any moral reservations over human rights abuses.

However, Hungary’s opportunistic pro-Kremlin and pro-Beijing tendencies are strongly limited by the country’s allegiance to EU and NATO institutional structures. It has always been a delicate balancing act for Orban: at times, a veto has seemed worth risking Western allies’ trust; in other instances, all Orban could offer to Beijing were lip service and friendly gestures.

I have spent months investigating both the incentives and the unintended consequences of Orban’s ‘Eastern Opening’ policy. My article, “Chinese Spy Games in Orbán’s Hungary”, was published by the Hungarian non-profit investigative outfit Direkt36 just a week before EU-China relations tanked. During an on-background conversation with a former senior official of the Orban government, this is how the big picture was summed up: “If there is a concrete, serious request, we are allied with NATO and the United States… but if there is no unity or common position, if something is a grey area, we do what the Germans do.”

Chancellor Angela Merkel’s well-documented reluctance to confront China has came in handy for Orban, especially given that Hungarian-Chinese foreign trade is dominated by German-owned companies – one of Hungary’s main export products to China are Audi engines, and German car manufacturers have an intimate relationship with Hungarian decision makers. However, as the former senior official put it, the difference is that “while the Germans do business in silence, Hungarians roar praise for China in political statements.”

This doesn’t change the fact that the regime in Beijing still considers Hungary part of a hostile alliance, yet it also sees it a weak link: a country where Chinese spies can safely operate. This, ultimately, has made Hungary the European collision zone between China and the US.

Chinese spies flock to Budapest
Back in 2010, shortly after Orban came to power, things looked very different. Hungary, like the other Visegrad Four countries, was still considered a reliable US ally, so much so that FBI agents decided it would be the perfect location to trap and arrest Chinese spies who had been trying to steal radiation-hardened microchips for ballistic missiles.

However, this secret operation incurred a level of Chinese wrath that has made Viktor Orban much more cautious since. As Hungary itself has been unable to produce much cutting-edge technology worth stealing, in the ensuing years cyber-espionage was never really a concern.

Nor was China’s so-called “citizen intelligence” or “people’s intelligence” – the regime’s well-known tradition of using regular Chinese citizens, such as students, teachers or businessmen, for intelligence gathering. Budapest was already home to the region’s largest Chinese community when the Orban government, without proper background checks, handed out 16,000 golden visas (residency bonds with Schengen zone visas) to Chinese applicants. Behind closed doors, Hungary’s counterintelligence community has constantly warned decision-makers of the threats posed by such back-door entry points.

According to the former chairman of Hungary’s national security committee, the growing number of Chinese citizens and companies in Hungary helped Chinese intelligence catch up with Russia and its spies have been the second-most active in the country since 2016-17. Hungary’s counterintelligence agents even had to intervene after finding out that a Chinese spy was visiting a Hungarian MP in parliament, the politician involved in the case told me.

However, China’s main priority in Beijing-friendly Hungary is not targeting locals but facing off against the US. In January 2018, for example, a well-connected US international relations expert visiting Budapest was followed everywhere by Chinese surveillants. His case was reported to the FBI.

Meanwhile, ignoring warnings from its own security apparatus, Hungary’s government seemed completely unfazed when news broke that a Chinese army-linked company, Zhenhua Data, was gathering information on Hungary’s elite, including one of Orban’s own children.

According to a US State Department list, Hungary has also become the only EU member state ruling out even the possibility that Chinese vendors such as Huawei might pose risks if allowed to participate in the rollout of domestic 5G mobile networks. While the US and a handful of allies accuse Huawei of cooperating with China’s intelligence services, Hungary has developed a close relationship with the company. The country is home to Huawei’s largest manufacturing base outside of China, as well as its new regional R&D centre.

Selling out its people and country
On March 22, the same day the EU imposed sanctions on Chinese officials over Hungarian objections, another symbolic event in Western-Chinese relations played out. That event, and the case it stems from, shows that Hungary is not only willing to sacrifice common EU policy to favour China, but also the interests of the Hungarian state.

In Beijing, diplomats from 26 countries gathered outside a courthouse in a show of solidarity with Michael Kovrig. The Canadian ex-diplomat is widely seen as a victim of China’s hostage diplomacy – his arrest in December 2018 retaliation for the detainment of Huawei CFO Meng Wanzhou in Canada. Hungary did not join Canada, the US and most EU states in this diplomatic action, despite Kovrig being of Hungarian ancestry and holding Hungarian citizenship.

As each country is obliged to protect its own citizens, Kovrig’s case could have posed complications for the Orban government’s pro-China and pro-Huawei policies. Instead, it quickly decided to abandon Kovrig, becoming the only EU member state to remain completely silent in public about the man’s unlawful imprisonment. As cruel and calculating as this move might seem to many, the case of Kovrig is the perfect indication of how determined Orban is to remain friends with China.

Moreover, hosting Fudan University’s campus in Budapest will have serious national security implications. Orban’s government plans to award the lucrative construction project to China State Construction Engineering Corporation (CSCEC) – a company blacklisted by the US for its ties to the People’s Liberation Army. CSCEC has been suspected of espionage and corruption in many places it has operated in over recent years, from Ethiopia, to Pakistan, to Australia.

Fudan University itself also has close ties to China’s security apparatus. Not only is it known to cooperate with Chinese intelligence, but the university even opened a spy school in 2011.

As a Hungarian university professor explained to me: with the American Central European University booted out and the Chinese Fudan University invited in, it’s hard not to identify a major geopolitical shift taking place in the country.

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