As a small crowd of pensioners gathered outside the little village hall in Mártély, southern Hungary, all seemed calm. A horse and cart trotted past, long-bearded villagers settled into their wooden seats, and a cat mewed in the corner.

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But the atmosphere changed when János Lázár, one of Hungary’s most powerful politicians, strolled up the street and began to speak. “There are decisions that extend beyond party politics, and this is one of them,” Lázár said softly to the crowd. “This is something that will define the future of Hungary.”

Hungarians head to the polls on Sunday for a referendum on immigration that ministers have portrayed as a make-or-break moment for the Hungarian nation, and a watershed for Europe as a whole.

The question being asked is wordy and vague, its legal consequence unclear, and its primary context seems parochial. Literally translated, it asks if immigrants should be sent to Hungary without parliament’s approval. Essentially it’s about whether Hungary should be forced to accept just 1,294 refugees stuck in Greece and Italy as part of a responsibility-sharing system agreed by EU countries this time last year. However small the numbers involved, the ramifications of this poll on the eastern edge of the European Union could be enormous.

Within Hungary, critics argue that the referendum helps the government of Viktor Orbán to distract from its domestic failures. Outside, analysts say a strong turnout will give the prime minister, perhaps the most influential far-right leader in European electoral politics, added momentum in his battle for the soul of the continent.

A scuffle about 1,294 refugees is in fact a war over the role of the nation-state, and the nature of European democracy, argued Gerald Knaus, the director of thinktank European Stability Initiative. “It’s a performance that’s not about results – he’s not worried that any refugees will end up in Hungary,” said Knaus, a major player within refugee-related politics in Europe. “The refugee issue for Orbán is really just a means to an end – and that end is a cultural counter-revolution in Europe and an end to liberal Europe,” he said.

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Unlike populists such as Nigel Farage, Orbán does not want to leave the EU. But he does believe in devolving power from Brussels, in building fences to deter migrants, and in deconstructing the kind of liberal democracy represented by the likes of German chancellor Angela Merkel. He recently called for a “cultural counter-revolution” within Europe, has praised aspects of strongman leadership by Russia’s Vladimir Putin and Turkey’s Recep Tayyip Erdoğan, and hopes his referendum will lead to a series of similar plebiscites across the continent.

Csaba Tóth, co-founder of the Hungarian thinktank Republikon, said: “I think Orbán genuinely believes that Europe is changing, that what he calls the liberal model is failing, that the present EU elite – Jean-Claude Juncker, Merkel and the European commission – are wrong, that he’s right, that the majority of European people are behind him, and that he’s the forerunner of things to come. He believes that, in 10 years, we’ll see more Marine Le Pens in Europe than Junckers and Merkels, and that history will judge him [kindly].”

But first Orbán must secure a turn-out of more than 50% on Sunday. To do so, his government has unleashed what research by Transparency International suggests is the largest advertising campaign in Hungarian history. Even in the countryside, voters are never far from a poster that warns: “Don’t put Hungary’s future at risk!” Of the roughly 20,000 outdoor advertising spots in the country, nearly 6,000 have been taken over by the government’s campaign, TI’s legal director, Miklós Ligeti, said. That is five times as many as the next largest, mounted by a tobacco firm in the mid-1990s.

Big hitters such as Lázár have been dispatched to tiny villages to make the case for voting. Mártély was Lázár’s 20th. “First it will be 1,000, then it will be 10,000, 20,000, 30,000 – if they come, it will be irreversible,” he told the villagers. “Regardless of who you vote for, regardless of whether you like Viktor Orbán, this is about who will live in your village, and therefore you should vote no.”

“A yes vote will force a flood of people on us – people with a poisoned tooth in their pants!” yelled one of the long-bearded pensioners, a retired electrician, Tibor Antal. “What will we do if those guys come here? We’ll beat them up!”

Hungary’s rights campaigners say that the referendum campaign has turned an already dark public discourse into something far worse. “The mood is quite reminiscent of the 1930s,” said Márta Pardavi, co-chair of the Hungarian Helsinki Committee rights group. Pardavi fears that stigmatisation of refugees could soon accelerate the alienation of other marginal groups in Hungary. “Racism directed towards one group can easily be transferred towards other groups in society – and the seeds of this are being sown by the government through their taxpayer-funded campaign,” said Pardavi. “This is what distinguishes Hungary from other European countries with hate speech – here it’s the government that is funding it.”

Orbán’s critics are suspicious about the timing of the referendum. No one expects the government to lose. Most of the liberal opposition don’t dare to call for a yes vote, instead telling voters to stay at home or spoil their ballots.

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Very few migrants now reach Hungary, after the country’s controversial new border fence blocked their path. Some suspect that the referendum is a means of distracting the electorate from more pressing issues, and of outflanking Hungary’s largest opposition party, the far-right Jobbik.

“Immigration ceased to be an issue within the country earlier this year, and so Orbán’s popularity started to drop,” said András Bíró-Nagy, a research fellow at the Hungarian Academy of Sciences. “That’s when they basically invented this referendum. That’s how he can keep up his popularity.”

Opposition politicians say the referendum is illegitimate according to electoral law – that it’s beyond the purview of the Hungarian parliament. “The question is unconstitutional,” argued Viktor Szigetvári, leader of Együtt, a liberal opposition party. “And it’s a sign of our illiberal democracy that such a formally illegal question can be put on the ballot paper.”

For people like Szigetvári, this is just the latest erosion of due process under Orbán.

Orbán’s opponents claim that his Fidesz party has removed checks and balances since taking power in 2010 – taking control of the constitutional court, installing a partisan electoral commission, and tinkering with constituency boundaries to ensure a larger majority.

Zoltán Kovács, the government’s lead spokesman, called the allegations “simply false”, and “a common but stupid criticism”. Kovács said the referendum was legitimate because it had been verified by the constitutional court, that the court was legitimate because its members were elected by parliament, and that no gerrymandering had taken place to create parliamentary constituencies.

“The Hungarian voters’ will has been administered clearly and, at the end of the day, it’s about the number of votes,” said Kovács. “The opposition has to accept that.”

But independent watchdogs allege that Orbán’s alarmist advertising campaign has diverted unnecessarily large amounts of state funds towards advertising moguls and media barons who tend to be friendly to his government.

Referendum advertising has largely appeared in outlets like 888.hu, Magyar Idők, Magyar Hírlap, Lokal, Ripost, TV2, EchoTV – newspapers, websites and channels owned by businessmen considered to be Orbán loyalists. A lamp-post ad firm owned by another Orban associate, István Garancsi, has also profited from the campaign – as has an advertising agency owned by the neighbour of a government minister, Csaba Csetényi. Lázár, regarded as Orbán’s gatekeeper, said there was nothing untoward about engaging party loyalists. “They don’t need the money – they’ve got enough money. This issue is much bigger.”

Kovács said: “These are political allegations. All spending comes through a public procurement process, everything goes through rules that are valid, and everything is completely transparent.”

Transparency International is unconvinced. “Our concern is about the very questionable transactions that surround this campaign,” said Miklós Ligeti, TI’s legal director. “It’s a government campaign, not a party campaign, and the government is putting lots of funds into crony companies for their advertising.”

On the high street in Mártély, few seemed to care. Welcoming people from the Middle East was simply a bad idea, said József Borsos, the mayor. “In our past we had a lot of experience with the Ottoman empire,” he said. “They lived here for 150 years. And no Hungarian who knows history will want that again.”

A sign stuck to the bus stop reveals that the village is funded by the EU. But Hungarians don’t owe Europe anything, Borsos said – they’d done enough just by joining. “We’ve allowed the free flow of capital,” Borsos noted. “Factories and multinational companies can come here and profit, while we’ve given up on some successful industries.”

Ferencné Lugosi, a 76-year-old former chef, was convinced refugees would put Hungary’s security at risk. Yes, 200,000 Hungarians sought refuge from communism in 1956, she admitted, but today’s refugees are very different. “They want Hungarians to be their servants,” Lugosi argued. “They think that it’s the duty of Christians to serve them.”

Additional reporting by Benjamin Novák

A CRUCIAL QUESTION

Hungarians go to the polls on Sunday to vote on whether parliament should allow the EU to set a quota for refugee resettlement in the country. The referendum was conceived and championed by the prime minister, Viktor Orbán.

Voters will be asked the question “Are you are in favour of the EU being allowed to make the settlement of non-Hungarians obligatory in Hungary even if the parliament does not agree?” The country received the second largest number of asylum applicants in Europe last year, behind Germany. Hungary received 174,000 asylum applications (13% of Europe’s asylum seekers) – but very few actually stayed. In August Orbán announced that the country was planning to build a second fence to prevent refugees from crossing the border. It will stand next to its current 500km razor wire fence that runs alongside its border with Croatia and Serbia. Last year some 400,000 migrants crossed Hungary – fewer than 18,000 have done so in 2016.

Until mid-June, only 2,280 people had been relocated across Europe from Greece and Italy, according to EU data. None were relocated to Hungary.