The Inside Story of How Hungary Became Close to Putin

Two influential Hungarian businessmen boarded a plane bound for Moscow weeks before Hungary’s April 2010 parliamentary election. Both men belonged to the inner circle of Viktor Orbán, head of the Fidesz party, which was predicted to win comfortably at the polls. One of them was Lajos Simicska, a longtime friend of Orbán and his ally in making Fidesz the dominant political force in Hungary. The other person was Zsolt Nyerges, one of Simicska’s associates and an old friend of the Orbán family.

Upon their arrival in Moscow, the two businessmen headed to Lubyanka Square, one of the most notorious locations in the Russian capital. The large yellowish building towering over the square used to be the headquarters of the KGB, the feared Soviet secret police. Now it is the home of its successor, the FSB. Simicska and Nyerges had a meeting with a senior official of this organization.

The visit followed an important meeting that had taken place a few months earlier. In November 2009, Orbán, already a favorite of the upcoming elections, met Russian leader Vladimir Putin in Saint Petersburg. The purpose of that meeting was for the two politicians, who had never met before, to get to know each other. The goal of Simicska and Nyerges’ trip was to establish new business relations between the leaderships of the two countries.

Years later, Orbán and Simicska would turn against each other, but around the time of their respective visits, they seemed to be inseparable allies. While Orbán was fighting on the frontline of Hungarian politics, Simicska was working behind the scenes to provide solid financial support for Fidesz. They discussed the most important political and financial decisions, including the ones concerning Hungary’s relationship with Russia.

Simicska and Nyerges’ trip has never been reported in the press, but it was known in Fidesz circles, and some officials in the previous government have also been aware of it. Direkt36 has learned of the visit from three sources independent from each other. Simicska did not respond to our questions while Nyerges said that he never talks to the press. Orbán’s office did not answer the question of how much he knew about the two businessmen’s trip.

Orbán’s allies went to meet an FSB official because the Russian secret service is often involved in state-related businesses. Sources familiar with the meeting said that no concrete deals came out of it. One source described it as an “introductory visit.” Another said that the FSB official told Simicska and Nyerges that, if they need help in business, they “can rely on Russia.”

The 2010 meeting shows how Orbán and his inner circle made efforts to forge a close bond with Putin’s Russia even before they won the 2010 election by a landslide. Since then, this connection has attracted worldwide attention. Putin, who is considered a dangerous opponent by most Western leaders, has become a frequent visitor to Budapest. Hungary and Russia have also struck several major business deals. Most notably, Orbán’s government decided to contract Rosatom, the Russian state nuclear company, to expand Hungary’s Paks Nuclear Power Plant — a choice made without a public tender.

Orbán had been a staunch critic of Russia for most of his career, so exactly what led him to seek ties with Putin has been the subject of widespread speculation in recent years. Direkt36 spent months interviewing more than thirty sources with knowledge of Orbán’s moves. Because of the sensitivity of the issue, all of them asked for anonymity.

According to these sources, Orbán has been telling his own people that he’s building a closer relationship with Russia to strengthen Hungary’s standing internationally. He thinks that Hungary’s economy can profit from this connection, and he believes it also gives the country a better bargaining position vis-à-vis Western powers. Orbán, according to those who know him, enjoys maneuvering among powerful leaders. He finds Hungarian politics boring and is convinced of his own extraordinary political abilities (of which he even brags about in private).

Given that Hungary’s rapprochement with Russia is an ongoing process, it is difficult to predict where Orbán’s steps will take the country. The events of the past few years suggest, however, that Orbán views better relations with Russia as a remedy for almost all of his bigger woes, including his conflict with the Western world and his power struggles with Simicska and other influential figures in Hungary. “He thought that a proper relationship with Russia can be the answer to a set of economic and political problems he had,” said a source close to the Hungarian prime minister.

The following chapters will tell the story of how this answer was formulated.

I. THE PIVOT

It was June 2007, and April Foley, then the United States’ ambassador in Budapest, finally had the chance to send a positive message to Washington. In her previous cables to higher-ups at the U.S. State Department, she repeatedly complained about Ferenc Gyurcsány, then the prime minister of Hungary, whom she found “histrionic” and “not well prepared.” Her biggest concern with Gyurcsány, however, was that he was trying to build a closer relationship with Moscow and publicly backed some Russian energy projects.

Foley was much more impressed with then-opposition leader Orbán. She found him upbeat and energetic when they met on June 27. She especially liked what he told her. Orbán emphasized his commitment to transatlantic relations and said that the real threat now was the "survival and return of Russia and the far left." Foley was reassured by what she heard, and, in her cable — which was published by Wikileaks — she concluded that “Orbán may be no angel, but he is on the side of the angels on these issues.”

It took only a few years for American attitudes to change completely. Orbán’s relationship with Washington deteriorated as he built up extremely close contacts in Russia and took steps to weaken Hungary’s democratic institutions soon after his return to power in 2010. This change may appear abrupt, but in fact, Orbán’s drift away from the West started much earlier.

Orbán had a difficult relationship with the United States even during his first stint as Hungary’s prime minister (between 1998 and 2002). This was partly the result of a difference of opinion on the state of antisemitism in Hungary: the Americans considered it a serious problem but Orbán’s government disagreed. The relationship was further damaged when Hungary decided, to the surprise of many, to buy Swedish Gripen fighter jets instead of American F-16s. “This created tension with the Americans,” said a former top diplomat in the Orbán government. According to that source, Orbán still hoped that he would get an invitation to the White House during his visit to the U.S. in 2002, but “it did not materialize.”

Later, Orbán became more and more skeptical of the Western powers and, according to people close to him, began to view most Western leaders as weak and soft. Still, for years, he was firm in his criticism of Russia. During the 2008 Russo-Georgian war, Orbán was one of the Russians’ most vocal European critics. “What happened is something we have not seen since the end of the Cold War. In the past 20 years, this raw policy of force, shown now by Russia, was unknown,” he said in an interview at the time.

Sources in Fidesz say that Orbán’s approach changed soon after this. He thought that it did not make sense to be tough on the Russians if Western countries kept doing business with them anyway. He also thought that the 2008 financial crisis, which originated in the United States, would lead to a total geopolitical restructuring that would benefit the Eastern powers. György Matolcsy, his longtime economic advisor who currently serves as the governor of Hungary’s central bank, had significant influence on Orbán’s thinking. “By 2009, Matolcsy managed to convince Orbán that the emerging East will take the place of the West in world politics,” said a former senior economic official.

The source claimed that Orbán found what happened in Russia under Putin’s rule appealing. He was impressed by Putin’s social model, in which the business elite is dependent on the Russian leader, while only a few independent players remain.

When it became clear from the polls that Fidesz would easily win the 2010 elections, Orbán started building his foreign policy according to this new thinking. This much can be seen in two trips he made at the end of 2009. First, he went to see Putin in November; then, in December, he traveled to China, where he met Xi Jin-ping, a member of the ruling Communist Party leadership who is now president for life of the country.

““This created a package indicating that Orbán had opportunities beyond the traditional [Western] alliances,” said a source close to the prime minister. He added that it was remarkable for both the Chinese and the Russians to receive Orbán at the highest level even though formally he was still just an opposition leader. (The source said that another important factor in Orbán’s new foreign policy was that he established a good relationship with current Israeli Prime Minister Benjamin Netanyahu.)

The meeting with Putin generated a lot of speculation, partly because the details of it are still unknown. After his trip, Orbán said in a television interview that “one had the feeling that the Hungarian-Russian relations were under the control of some suspicious socialist figures.” He vowed to change this. Therefore, he claimed to have told Putin that he would like to “put the Hungarian-Russian relationship on new grounds.”

Sources close to Orbán say that the meeting’s purpose was for the two leaders to get to know each other personally. “Politics is often based on personal relationships,” said a source, adding that “both men ended the talk thinking that they can do business with each other.” The meeting also sent an “important message to the elite of Fidesz,” signaling that the Russians “see a future in a Hungary led by Orbán,” the source said.

But before Russian-Hungarian relations could be reset, a few sticking points had to be resolved.

II. COMMON ISSUES

The next meeting between Orbán and Putin took place almost exactly a year after their first discussion in Saint Petersburg. Orbán, by then the sitting prime minister, travelled to Moscow in November 2010. The visit did not start very smoothly.

First, a small problem arose at the Budapest airport. Orbán’s interpreter had become sick and needed to be quickly replaced. Ernő Keskeny, a member of Orbán's delegation, was responsible for the former Soviet countries in the Hungarian Foreign Ministry and spoke very good Russian, but, in the end, it was decided that he would not be the interpreter. A member of the staff at the Hungarian embassy in Moscow would be asked to join the delegation in the Russian capital and interpret during the negotiations.

The meeting took place on November 30 in the guest house of the Russian government. It began according to standard diplomatic protocol: the two prime ministers met in the waiting room, and, after taking photos for a few minutes, journalists were sent out. Orbán and Putin set off for a meeting, which included a business lunch. Here some surprises awaited the Hungarian prime minister and his delegation, according to a source familiar with the details of the visit. The Hungarians, numbering only a few people, faced more than a dozen Russians. The Russian delegation included basically everybody from the Russian government involved in matters related to Hungary as well as leaders of state-owned companies.

According to the source, it was obvious to the Hungarians that the presence of such a big Russian delegation was not an expression of respect but an attempt to exert pressure. What is more, the two-hour-long negotiation was complicated by Putin’s unusual negotiation tactics.

The Russian leader was known to break the rules of diplomatic protocol, and his performance in this meeting was no exception. During such meetings, only the leaders of the delegations are supposed to speak, but Putin often gave the floor to his people. On other occasions, he sometimes did it in a very rough manner. A participant of another Hungarian-Russian governmental meeting said that Putin had called on his ministers and pushed them around. "He told them to stand up and said things like, 'This is not what I asked, answer me properly,'" the source said. In a similar meeting, according to leaked information, the Hungarian delegation was shocked when Putin scolded a leader of a large oil company in front of everyone.

No information leaked about any such scenes from the November 2010 meeting. But Putin did take advantage of the fact that he had so many people present. During the conversation, he sometimes pointed to his people and let them talk about Russia’s position in detail. Meanwhile, Orbán was only able to rely on a limited number of people, and although his translator spoke good Russian, she was apparently intimidated by the unexpected and serious task at hand.

After the negotiation, spokespeople for the two prime ministers issued a brief statement; no joint press conference was held. In Hungary, the opposition tried to present the meeting as a failure due to its lack of an obvious outcome. Although it was true that the parties did not reach any important agreements, this was mainly due to the fact that they were still concentrating on solving their standing disputes.

These disputes, which dated back to the socialist government that preceded Orbán’s, were largely financial in nature. Although socialist former Prime Minister Ferenc Gyurcsány fostered an amicable personal relationship with Putin (who invited Gyurcsány to Moscow months after he had resigned in 2009), business relationships between their two countries had grown complicated during his tenure.

Of these, the three most significant involved major Hungarian companies with ties to Russia: Dunaferr, Malév and Mol.

Russian state development bank Vnesheconombank was a creditor of Dunaferr, an industrial concern, and Malév, an airline — both of which were struggling financially. The Russians were afraid that they would lose their money. They wanted the Hungarians to ameliorate the situation — most preferably in a way that the Hungarian state would reimburse their losses.

The case of Mol, Hungary’s oil company, was different. The Russian energy giant, Surgutneftegaz, bought 21.2 percent of Mol’s shares from Austrian’s OMV at the end of March 2009, during the chaotic period that followed Gyurcsány’s resignation. Mol feared a hostile takeover and, with the support of the Hungarian government, succeeded to prevent the Russian company from exercising its ownership rights. The Russians were offended by this, and they even threatened Mol Chairman and CEO Zsolt Hernádi, a US diplomatic cable published by Wikileaks revealed. Hernádi informed the Americans that Russian Deputy Prime Minister Igor Sechin had told him that "Mol is not only fighting with Surgutneftegaz, but with the Russian state, which has tools that companies do not have."

After Gyurcsány’s resignation, the government led by Gordon Bajnai (also backed by Gyurcsány’s party) started negotiations with the Russians about Malév and Mol. The negotiations were led by Finance Minister Péter Oszkó, who adopted a firm stance vis-à-vis his Russian counterparts. "Because of this, there was a half-year-long tension," a former high-ranking Hungarian government official said, adding that the Russians had tried to meet Bajnai, too. He rebuffed the Russians, partly because they only proposed to send Vnesheconombank’s deputy CEO to meet him.

The Hungarians sought to buy Surgutneftegaz’s stake in Mol. According to sources that held high-ranking positions in the Bajnai government, a tentative agreement had been reached by the spring of 2010. However, the government did not have enough money in its budget for the transaction, worth several billions of forints, so Bajnai could have only pushed the deal through with parliamentary approval. With general elections approaching, he thought he could only make such an important decision with full consensus, so he also involved Fidesz in the decision.

Orbán refused to cooperate. Mihály Varga, a trusted Fidesz lieutenant who would become Minister of National Economy, consulted with Oszkó several times about the agreement, and finally wrote in an SMS that Fidesz did not support the Mol transaction (the message, which Oszkó published a few years later, read, "Malév yes, Mol no. Bye: V.”)

Orbán’s government later re-opened negotiations with the Russians on a number of controversial issues, including the tabled Mol agreement. In the end, almost a year after Fidesz came to power, the Hungarian government bought Surgutneftegaz’s stake. This proved to be a transaction that helped Orbán, who was working on strengthening his domestic position, to kill two birds with one stone.

III. THE END OF THE ALLIANCE

Orbán had only been in power for around one year when he began to realize that he was not completely in charge of his own government. Some governmental and state positions were occupied by people who were loyal not to him but to his old friend and ally, Simicska.

Orbán and Simicska had known each other since high school, and for a long time, they were inseparable. In 2010, they reached their goal to make Fidesz the strongest political force in 2010, but soon after their partnership came under strain.

With Orbán installed as prime minister, Simicska was leading not just his business empire — which kept growing, thanks to state-financed construction contracts — but also influenced the Hungarian political process. Through surrogates, Simicska had a direct impact on domains such as the country's energy policy. This is why it seemed at the time that there were two heads of government in Hungary, a governmental source said. "It looked as though Orbán was the political prime minister and [that] there was also an operational prime minister, Simicska," the source explained, adding that Orbán had already decided in 2011 that he needed to end this situation. Orbán also knew, however, that he had to wait — because if he started an intra-party fight during his first term, he might risk losing re-election. Still, he prepared to marginalize Simicska. The development of stronger Russian-Hungarian relations played a major role in his preparations.

The first step in this process was the purchase of Surgutneftegaz’s Mol shares. Simicska fiercely opposed the deal and tried several times to dissuade Orbán from executing it. "Viktor said that he must have the influence in Mol," a source explained. Simicska argued that it was not worth spending so much money. This was not the only reason he objected to the deal, though: he knew that if the Hungarian government took a stake in Mol, his own position vis-à-vis Orbán would weaken.

Until then, it was him who directed the business world close to Fidesz, but with this move, Orbán would gain direct access to an important economic position. "Lajos was protesting with a terrible force against the purchase of Surgut-shares. He knew that it would not be his, but the prime minister’s,” a source familiar with the case explained.

What is more, the purchase of the Mol shares did not only help Orbán to push Simicska to the background, but also served the purpose to create a counterbalance against one of Hungary's richest and thus very influential people, Sándor Csányi. While being the head of the country's largest bank, OTP, Csányi also has a strong influence on Mol, which has grown into regional multinational company. Since 2000, Csányi has been a member of the board of directors of the company, and since 2001, he has also served as its vicepresident. Mol’s chairman and CEO Zsolt Hernádi, is considered Csányi’s long-standing and loyal ally.

As the result of the purchase of Surgutneftegaz’s shares, the Hungarian state became one of the biggest shareholders of Mol, holding 25% of all shares. This was "hanging as the sword of Damocles" over Csányi, a source close to Orbán said. Although the management of the oil company was practically cemented by a 2007 legal act known as Lex Mol, which stipulates that the management of Mol and other similar Hungarian companies can only be changed with the support of a very large majority of votes. However, it would not have been a problem for Fidesz – which won two-thirds majority at the 2010 elections – to modify this law. According to a government source, they even prepared drafts for this option.

In addition to the purchase of Mol shares, there was another Russia-related deal, which allowed Orbán to further marginalise Simicska. The deal, in which a gas company called MET played the leading role, was one of the most controversial state-related deals in the last 8 years.

Several Hungarian news articles have previously described the details of the deal. Gas-trading company MET was originally founded by Mol in 2007, and later has grown into international group. New shareholders appeared in the company, including Russians and people linked to the Hungarian economic and political elite. Through a series of decisions, Hungarian state authorities have made it possible for MET to have a lucrative business opportunity as of 2011. To put it simply, the Hungarian state increased the amount of gas that could be imported from the West – which was then cheaper on the world market - and gave MET the permission to re-sell it with a significant profit. The owners of the company made tens of billions of forints on the deal in a few years, according to a study of Corruption Research Center Budapest.

At that time, the biggest shareholder of MET group was Mol, holding 40 percent. Other shareholders were, for example, a businessman named György Nagy, a business associate of Sándor Csányi, and István Garancsi, who has a good personal relationship with Viktor Orbán.

The MET deal saw Orbán and Simicska’s relationship deteriorate. "Lajos was especially offended by the fact that the Csányi-Hernádi duo triumphed in this business," said a source close to Simicska, adding that the businessman considered Csányi and Hernádi “the most dangerous [threat] to the power center he had built with Orbán." Simicska was afraid that Csányi would use his own power for political purposes, possibly against Orbán.

The MET deal was also a major milestone in Russian-Hungarian relations. Although the Russian state did not officially appear in it, former government officials and energy industry experts insist Moscow was involved. In March 2009, an offshore company with links to Russia took a stake in MET, and later a Russian national also became a shareholder. Neither of the Russian parties have proven ties to the Russian state, but sources familiar with the oil and gas market said that it is practically impossible that they transacted without the Kremlin’s consent.

According to one of the sources, the most striking sign was that the Russians turned a blind eye to the business although it hurt Russian interests. Hungary and Russia had signed a long-term natural gas purchase agreement, which obliged Hungary to purchase a certain amount of gas from Russia every year. According to the contract, at that time the Hungarian party was represented by the German company E.ON, which got into a conflict with Russia’s state-owned Gazprom, and for years it did not buy the amount of gas stipulated in the contract. This was the situation when MET brought even more gas into the country through other channels, without the Russians objecting. " Gazprom could have said that this is not okay, the long-term contract needs to be respected," a source familiar with the energy market said. He added that absence of objection was a “too big, too important decision," which must have been taken at the highest level in Russia.

A Hungarian governmental source familiar with the story also said that it was obvious that the Kremlin had a role in the MET deal. The transaction was a sign that Russians were ready to do business not only with Hungarian Socialist Party business circles — who had good relations with Russia, rooted in the era when Hungary was under Soviet influence — but also with those connected to Fidesz. "This was the time when the Russians opened those channels that had previously been blocked or directed somewhere else," he explained.

This shift was largely completed by 2012, and the road opened to some major decisions.

IV. THE NUCLEAR GESTURE

The world’s leading atomic energy companies set their sights on Hungary in the early 2010s after the Hungarian government announced an expansion of the country’s lone nuclear power plant, near a town in central Hungary called Paks. Representatives from America’s Westinghouse, France’s Areva, and firms from Japan and South Korea often visited Budapest to negotiate with Hungarian government officials. In the fall of 2013, though, the officials in charge of discussions with these companies were informed by their superiors that further negotiations made no sense.

These officials were not aware at the time that — as reported earlier by Direkt36 — Orbán held a confidential meeting with the head of Rosatom in August 2013 in which it was decided that the Hungarian government would award the Paks expansion project to the Russians without a public tender.

The Hungarian and Russian parties negotiated the details in the following months in secrecy, excluding even many high-level Hungarian officials, whose competencies were affected in the process. For example, a group of experts tasked with drawing up the financials of the project conducted a few rounds of talks with their Russian counterparts before being frozen out of negotiations. “Afterwards, the issue had become political,” a source with knowledge about the process said, adding that the final agreement did not reflect the experts’ proposals. (According to several analysts, the loan conditions of the Paks deal are unfavorable for Hungary. Even the Hungarian government appeared to acknowledge this by trying to restructure the original loan.)

The deal’s announcement, made by Orbán and Putin in Moscow January 2014, also surprised many in the Hungarian government. According to a source, Hungary’s Ministry of Foreign Affairs rushed to understand what happened after-the-fact. Hungarian officials responsible for getting the European Union to greenlight the project only learned about the decision from the news.

That Hungary would choose Russia for the Paks expansion project was, however, a likely scenario from the outset, according to a former senior government official. The existing power plant at Paks was built with Russian technology, which Hungarian engineers were familiar with. In addition, the Russian offer also included a loan backed by the Russian state, which at the time looked more attractive than a loan from commercial banks.

World politics also played a key role in the decision. Even though Orbán and Putin did not meet in person for more than 2 years after November 2010, this this period saw bilateral relations solidify. Ernő Keskeny, who served as ambassador to Moscow during the first Orbán government (between 1998 and 2002) and then became in charge of the Central Asian region in the foreign ministry after 2010, played a key role in this. He frequently traveled to Moscow and, as he once told a colleague in the ministry, „he was very busy because he had to rebuild the relationship with the Russians. (We approached Keskeny with several questions but he declined to answer them.)

In addition to launching the MET energy business, negotiations about another important issue were also finished around that time. At the end of 2012, Orban announced that the government would purchase the Hungarian gas branch of E.ON. This included the contract regulating the long-term gas supplies between Hungary and Russia.

After that, the Hungarian government could negotiate about the gas supplies directly with the Russians. This step was important also for the Russians due to the conflicts between E.ON and Gazprom. According to a former senior government official in charge of energy issues, the Russians were happy that they “could force out an enemy” from the market.

In addition to all this, progress was also achieved in negotiations which started in 2010 about other problematic issues between the two states. In these negotiations, the Russians made it clear that they were primarily interested in two projects: the upcoming investments in Budapest’s metro system and the expansion of the Paks nuclear power plant.

Eventually, links between the two governments had become so close that awarding the Paks expansion project to the Russians was basically a done deal. “This was a political gesture towards the Russians,” a source close to Orbán said, who added that Orbán’s conflicts with Western powers also influenced the intensification of his relationship with the Russians. The Hungarian prime minister was heavily criticized in the West for his measures affecting the democratic institutions, media and economy. According to the source, “this pulled us with great strength to the Eastern side.” (This did not only mean Putin: in 2013, Orbán met with the Turkish leader Recep Tayyip Erdogan twice.)

Personal affronts also played a role in the deterioration of relations with Western powers. Senior Hungarian government officials — and Orbán himself — often felt being treated as inferior by their Western counterparts. According to one of these officials, beyond officially recognizing the Hungarian sovereignty, “they [Western officials] did not treat us as equal partners.” On the other hand, he continued, the Russians “always were respectful towards us.”

However, there were conflicts with the Russians, too. They did not like that Moscow Square in Budapest was renamed, and this was brought up several times by Russian Deputy Prime Minister Viktor Zubkov, a lead negotiator. “It took a while for them to understand that this was a domestic political issue and a message to our electoral base,” a source participating in the discussions said. (The square was renamed after a conservative Hungarian historical figure, admired in Fidesz’s circles.) The source added that they explained to the Russians that Roosevelt Square in Budapest had also been renamed

At the same time, it was also clear to many Hungarian government officials that the Russians may have been respectful at the negotiation tables but were also collecting information about domestic issues, from time to time even by using dubious methods.

Around the time of his resignation, Ferenc Gyurcsány told his colleagues a story which, in his opinion, showed how well informed the Russians were about Hungarian government officials. He concluded this from a discussion he had with Putin in March 2009, just 11 days before his resignation.

At the end of a joint governmental meeting in Moscow, Putin told Gyurcsány that Russia always honors its friends, and if Gyurcsány’s path ever takes him, a different direction, he could still count on Russian friendship. Gyurcsány considered this weird, not only because of the hidden job offer, but also because he thought that Putin obviously knew about his intention to resign, despite that at the time he had shared it only with his wife and a few of his closest aides.

Other government officials claimed the Russians tried to involve them in dodgy business deals. For instance, a senior member of Bajnai’s government said that several people with Russian secret service links contacted him with various business proposals. Once, he was about to have lunch with someone when, just before reaching the restaurant, he received a phone call from the Hungarian secret service warning him that his meeting partner had ties to the Russian secret services. The same source was later contacted by several such people. They were generally “Hungarians who studied in Moscow and had good Russian relations.”

“The Russians were looking for a catch on everyone, and chances of blackmails through common business,” the source said, recalling that once a Russia-connected person came to him with an offer to buy a British chemical company. “They said they would bring a lot of money, I just had to be the front man as the owner. Or if I didn’t want to do that, I could involve a friend for that purpose,” the source remembered. The Russians were so well informed that they told the source about a romantic affair between two former Hungarian government politicians half a year before the relationship became public in February 2010.

These manoeuvers did not stop under the Orbán government. Extended Russian activity was also reported by a former Hungarian secret service agent, Ferenc Katrein, in his interview given to the Hungarian news site Index.hu last year. Index also revealed that one of the Russian secret services kept contacts with a Hungarian far-right organization. According to sources with contacts to U.S. government officials, the activities of the Russian secret services in Hungary were also noticed by the U.S. One source said that the U.S. is also concerned by Hungary’s close relations with the Russians, and now ”their image about Hungary is that there is in principle an ally country which is romantically involved with someone else.”

Orbán did not respond to questions about whether he is aware of these concerns. But, according to sources close to him, he clearly enjoys maneuvering among big powers.

V. THE MASTER AND THE SERVANTS

Last summer, European embassies in Budapest were surprised by news of a high-profile event in the Hungarian capital.

Hungarian daily Magyar Nemzet reported in June that Vladimir Putin was scheduled to visit Budapest in August, which was unusual for several reasons. He had been on an official visit in the Hungarian capital only half a year before and his repeated visit was strange, even though it was officially justified with his participation at the judo world championship held in Budapest (Putin is the honorary president of the International Judo Federation). What made his visit even more remarkable was that according to official statements he was invited by Orbán, however Hungarian officials privately told several diplomats and other contacts that the idea of the visit actually came from Putin.

“We were joking among ourselves that Putin invited himself,” said a staffer at a European country’s embassy in Budapest. Others saw it in a darker light. “This was a message to Orbán that Putin could come to his country any time,” another diplomat said.

For Western countries, the visit was proof that the Hungarian prime minister had grown too close to Putin and that the situation was out of his control. However, Orbán has kept telling his inner circle that he was following a sophisticated strategy aimed to elevate the country. He also made it clear that he was much more interested in dealing with international affairs than with Hungarian domestic politics, which he finds boring.

“He’s fucking bored with it. And he’s been like that for a long time,” said a source close to Orbán. In private conversations, the prime minister has even said that he considers Hungarian politics of low importance since he is the only master and everyone else is just a servant. Once, he stated that nobody is capable of long-term strategic thinking in Hungarian politics except him; therefore, he said, he did not expect to be defeated by anyone in the near future. According to someone present at one of these discussions, Orbán also made it clear that “it is the power games with Putin, Angela Merkel and the U.S. president that he considers interesting.”

Orbán is convinced that he has the necessary abilities and knowledge to do well in this international environment. “He thinks that if he had been born outside Hungary, he could have become a world leader,” said a source who spoke with Orbán in the past few years on multiple occasions.

Several people in the prime minister’s milieu say that Orbán’s confidence has visibly increased lately. In the past, he took care to distance himself and his family from any corruption allegations. This has changed. Recently, the EU’s anti-fraud office found serious irregularities in projects connected to Istvan Tiborcz, his son-in-law, and, as Direkt36 articles revealed, companies owned by his father and brothers have been secret beneficiaries of several state-financed investments. “I wonder what happened to his sense of danger,” said a source who has known Orbán for years.

Others found it unusual for Orbán to boast about his influence over business interests held by people close to the government. “He did not used to speak this way before. Now it’s as if he wants to prove how much power he has,” said a person close to the prime minister. “Of course, it matters who surrounds him, and to what extent they keep him on the ground. If you’re the prime minister for eight years and everybody around you keeps kissing your ass, then it’s a little difficult,” the source continued.

“Orbán has a very strong charisma, which is hard to escape from,” said a person who had worked with the prime minister. The source added that Orbán is aware of this quality and uses it masterfully. He knows when to praise and when to scold. Even senior government officials are “yearning for his caress like children,” and ministers consider even just talking to him a reward, the source said.

In the strongly hierarchical system Orbán has constructed, very few people question his decisions. According to information leaked from his inner circle, he is a very mistrustful person (one source used the word “paranoid”) who confides in few people about what he is doing and why. “Not even Orbán’s closest people know what he wants. They only hope he knows what he is doing,” a source said.

However, many in Fidesz are convinced that Orbán is playing a sophisticated political game. According to a source close to the government, Orbán’s strategy is to have every big international actor invest in Hungary — because “if they have investments, they also have something to lose.” Therefore, Orbán is trying to build closer relations with the Chinese and the Turks in addition to the Russians. His ultimate goal is to loosen Hungary’s economic dependence on Germany, the source explained.

Others believe Orbán is using his Russian contacts to command greater influence in the West. “Viktor realised that this was a good bargaining position against the EU,” a person close to Orbán said. According to another source, the prime minister appreciates Hungary’s increasing importance and that “it is impossible to make decisions in European issues without him.”

The Hungarian government argues that the only aim of its rapprochement with Russia is to achieve economic advantages for Hungary. “When we talk to Hungarian government officials, they always say this is just about business,” a diplomat of an Eastern European country said. If the Hungarians are serious, he continued, then they totally misunderstand the situation, because the Russians operate according to the logic of empire. The diplomat added, “This is never only about business for the Russians. There is always politics behind.”

Noah Buyon contributed edits to this article.