The clash operates on many levels. It’s about power and ideas and is driven by a strong personal enmity, one that even looks mildly Freudian given that Orbán, once an idealistic hero of the anti-Soviet student-resistance movement in Hungary, attended Oxford University on a scholarship with support from the Open Society Foundations.

But the story is not just about two men. It’s also about the soul of Hungary and the limitations of Europe. The fate of this one organization shows a disturbing possible future in which Europe’s budding authoritarians like Orbán set the rules, leaving the European Union struggling to respond.

The immediate issue is that Orbán has vowed to pass so-called “Stop Soros” laws, which would require any groups working with migrants to get security clearance from the Interior Ministry before operating in Hungary, and would also put a 25-percent tax on any groups with foreign contributions. In announcing its move to Berlin, OSF was acting preemptively; the laws haven’t yet passed but seem likely to, given Fidesz’s solid majority. The foundation said it would still continue to operate in Hungary, although it’s moving its administrative staff to Berlin. The fate of the Soros-funded Central European University, in Budapest, also remains unclear.

“Even though I’d known this was coming for a while, I’m still in a state of shock,” about what just happened in Hungary, said Heather Grabbe, the director of the Open Society European Policy Institute in Brussels, a Soros-funded outfit. She pointed out that Hungary, like all European Union member states, had signed on to many treaties requiring respect for the rule of the law, the independence of the judiciary, and the protection of minorities. She worried that the law would make it difficult for any international organizations to operate in Hungary and would send a message that they shouldn’t even try.

“I hope it will make people wake up and say, ‘Do we want this to happen in the EU?’ And that it gets a strong response, rather than, ‘This is ugly illiberalism in one country,’” Grabbe added. “This is a threat to the whole EU system.”

The European Union wasn’t designed with the powers to crack down on member states that backpedal on the rule of law. It was constructed from the destruction of the Second World War and enlarged to include some former Eastern bloc countries after the end of the Cold War—at a time when the conventional wisdom was that countries would keep growing more interconnected economically and more democratic politically. In recent years, Hungary and Poland have been testing that proposition, with ruling parties in each country compromising formerly independent government institutions and placing limits on civil society. The European Commission is now doing battle with Poland, threatening unprecedented sanctions and possible suspension of Poland’s voting rights within the Commission following the government’s reining in of the country’s judiciary.