The party of populist Prime Minister Viktor Orban won a resounding victory in Hungary's parliamentary elections on Sunday, drawing cheers among fellow nationalists in Poland while renewing fears of creeping authoritarianism among other EU members.

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Orban won a third consecutive term in power after his populist campaign succeeded in securing his Fidesz party and its allies a two-thirds majority in parliament.

Orban, 54, regularly rails against the effects of globalisation and demonises migrants, portraying himself as a defender of Europe’s Christian values whilepraising authoritarian “illiberal democracies” in such places as Turkey and Russia.

Critics say Orban's government has chipped away at media and judicial independence and launched a crackdown on civil society groups, notably those linked to George Soros, a Hungarian-born billionaire philanthropist now based in the United States. Orban and his allies have even been accused of using anti-Semitic rhetoric in the attacks on Soros.

Hungary's largest opposition newspaper, Nepszabadsag, was shut down suddenly in 2016 and its owner, Mediaworks, sold to an Orban ally a few weeks later. Around 90 percent of the media is now directly or indirectly controlled by Orban's party, according to Marius Dragomir, director at the Centre for Media, Data and Society at the School of Public Policy at Central European University (CEU). The CEU, which was founded by Soros, has been a particular target of Orban’s ire.

As Orban has tightened his grip on civil society, Hungary's rankings on the World Bank’s Worldwide Governance Indicators have been in freefall for the past decade. Transparency International’s 2017 Corruption Perceptions Index ranked Hungary in 66th place, down from 46th in 2009 and lagging behind Romania and Rwanda. On the Cato Institute’s Human Freedom Index, Hungary plummeted from 28th in 2010 to 44th in 2015.

But events in Hungary have been part of a larger trend across former Soviet states.

According to Freedom House’s 2017 Nations in Transit report – which monitors democratic development in the former communist nations of Central and Eastern Europe, the Baltics and the Balkans – 18 of the 29 countries surveyed have seen declines in their overall democracy scores. It was the second-largest decline in the report’s history and almost as significant as the drop seen in the wake of the 2008 global financial crisis.

Moreover, the report found that, for the first time since 1995, there are now more of what it calls “Consolidated Authoritarian Regimes” than “Consolidated Democracies” in the region.

Hungary has the lowest ranking in Central Europe while Poland’s score in the survey last year reached its lowest point ever.

Not coincidentally, the right-wing governments in Budapest and Warsaw view each other as key allies in countering pressure from Brussels. In his victory speech, Orban specifically thanked Jaroslaw Kaczynski, a former prime minister and leader of Poland's ruling party, for his support.

Poland’s ruling Law and Justice Party has similarly moved to exert political control over state-funded radio and TV – much to the surprise of Polish journalists, with 164 of them either resigning or having been dismissed by July 2016.

The party has also introduced sweeping reforms of the judiciary, with new legislation granting the justice minister the right to appoint or dismiss the presidents of the courts and essentially submitting the formerly independent National Judiciary Council to the control of parliament. It introduced a retroactive review of final judgments while forcing nearly 40 percent of Supreme Court judges into early retirement.

The moves put Warsaw on a collision course with Brussels, which triggered the disciplinary Article 7 process for the first time ever last December.

“The European Commission is taking action to protect the rule of law in Europe,” the Commission announced at the time in a press release. “Judicial reforms in Poland mean that the country's judiciary is now under the political control of the ruling majority.”

The Article 7 process can ultimately result in suspending a country’s EU voting rights. However, doing so requires unanimous approval by EU members and Hungary has repeatedly affirmed that it would veto any such attempt.

Similar to international trends, #Hungary is now divided into a leftwing/progressive capital city and a populist right/conservative countryside. #Orban’s anti-migrant rhetoric is a huge “success” in villages, but not in Budapest. #HungaryElection2018 Tamas Boros (@BorosTamas_PS) April 8, 2018

Existential crisis

The EU is now facing two existential crises simultaneously: First, how to navigate the unprecedented departure of a cornerstone EU member such as Britain, and second, how to rein in members who depart from European democratic principles.

Brexit must be handled firmly enough that it discourages any other members from following Britain’s lead while not jeopardising future cooperation with London on trade, security and other matters. Disciplining members that are sliding into authoritarianism must also be handled adroitly so as not to alienate these member states and drive them further toward anti-Brussels nationalism.

The EU has recently ramped up measures against some of its errant members. In December it filed suit against Poland, Hungary and the Czech Republic for refusing to accept asylum-seekers in accordance with agreed EU quotas.

Unsurprisingly, Brussels' main source of influence may be economic. Hungary is slated to receive €21.9 billion in EU structural investment between 2014 and 2020, plus another €3.45 billion for rural development.

And yet the “political appetite” for leveraging this option may be weak.

“The main practical weapon could be to suspend payments under the European Structural and Investment Funds, from which both Hungary and Poland are significant net beneficiaries, unless they conform to agreed norms and commitments,” wrote Iain Begg, a professor at the European Institute of the London School of Economics and an associate fellow at Chatham House, in an email.

“Such political conditionality is currently under discussion in anticipation of negotiations on the next round of the EU's multi-annual financial framework. However, the political appetite for this is limited and it is regarded by many as of doubtful legitimacy.”

Political pressure could also be leveraged by EU blocs like the Christian conservative European People's Party.

“Another channel could be through political groups, especially for Hungary given that Orban's Fidesz party belongs to the largest group in the European Parliament, the European People's Party,” Begg said. But he added that, so far, the “delicate parliamentary arithmetic” has made the EPP “reluctant to be too vocal”.

While the EU has a great deal of leverage over applicant countries while it dangles the carrot of EU membership, it loses much of this clout once they become full members. And yet the EU must be able to enforce its standards and norms if it hopes to remain relevant.

“In Hungary and Poland, the problem is not just about damage to the rule of law, but also about open defiance of legally binding decisions,” wrote Heather Grabbe, director of the Open Society European Policy Institute, andvisiting scholar Stefan Lehne in an analysis for Carnegie Europe.

“The risk of contagion is high: if you see your neighbor getting away with not obeying the law, your motivation diminishes to comply yourself.”

Moreover, they said, the EU risks losing moral and political authority if it tolerates infractions to democratic norms among its members. “Across its neighborhood and in the Balkans, the EU promotes improving the functioning and independence of the judiciary and reducing corruption through better rule of law. It is much harder to convince politicians in Europe’s East and South to stop influencing the courts if the union’s own members are doing the same thing.”

EN NW GRAB GULLIVER FROM 14H30 Q1

Speaking at an anti-corruption conference in December, Carl Dolan, the director of Transparency International’s EU office, said certain member states are defying the EU while the European Commission shows signs of helplessness.

“There is a crisis of rule of law forming in the European Union,” Dolan said. He added that it was time for the EU to defend its core principles, including through the use of financial penalties.

“If the EU doesn’t do anything, a new generation of autocrats will take control, which will lead to increased corruption risks,” Dolan said.

Zselyke Csaky, a senior researcher for Freedom House’s Nations in Transit report, said that while a more robust EU response might be “politically costly” in the short term, inaction is no longer an option.

“The EU has several options still on the table, including finally taking Article 7 to a vote against Poland, launching it against Hungary, and making fundamental rights a more integral part of the process when it comes to the disbursement of EU funds,” Csaky said. “We know that these are all complex and politically costly decisions, but Hungary’s example shows that the longer EU members postpone action the more it will hurt them.”

"While seven years ago one could argue that Hungary was an isolated case with little impact on other members, that’s no longer true," she added. "What is more, in Poland’s case the damage could be far more direct – a common market cannot function well if there are areas where the rules don’t apply."

Responding to Orban's victory on Monday, Luxembourg's Foreign Minister Jean Asselborn issued a warning in an interview with German daily Die Welt. "Today it is Hungary and Poland, tomorrow others in Eastern and Central Europe – even a major founding member country of the EU could develop a taste for undermining values and scaremongering."

In light of Hungary's vote, he said, "it is up to Germany and France, along with all member states that aren't counting on indifference, to weigh in unambiguously on the basis of the European treaties to neutralise this tumour of values".

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