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As Orban looks further East, a new wind blows from Beijing to Budapest

ChinaUngaria
©EPA-EFE/ANDREA VERDELLI  |   Chinese President Xi Jinping shakes hands with Hungarian Prime Minister Viktor Orbán before the bilateral meeting of the Second Belt and Road Forum at the Great Hall of the People on April 25, 2019 in Beijing

Hungary’s plans to become a hub for eastern superpowers were widely mocked after Viktor Orban’s government’s “Eastern Wind” policy had to be renamed “Eastern Opening” after a party official noted that an eastern wind blows things everywhere except to the east. That hilarity turned to anger, however, when it emerged that China plans to build its first ever European university on the banks of the Danube by way of a EUR 1.5bn construction project that will be funded by Hungarian taxpayers.

The agreement that “serves the expansion of Chinese companies to Europe”

On April 27, Hungary signed a strategic agreement to build the Fudan University campus, investigative website Direkt36 learned. According to the deal, Hungary will finance the project to the tune of around HUF 100bn (EUR 278.8 million) while China will extend a HUF 450bn (just over EUR 1.25 billion) loan to its eastern European partner. Overall the budget for the new campus of Fudan, which would open in 2024, is more than Hungary’s annual spend on higher education. Construction giant China State Construction Engineering Corporation - which has faced accusations of harbouring spies - will bid for the contract, as per the documents. 

The development elicited increasingly familiar accusations towards the Orban government: of clientelism, financial opacity, tying the nation’s long-term future to foreign dictatorships and allowing Hungary to serve as a “Trojan Horse” for hostile powers. 

Budapest Mayor Gergely Karacsony promised to block the project if the city’s residents oppose the plan to build a Fudan campus on the Ninth District site that had previously been earmarked for facilities for Hungarian students. Karacsony cited a poll of local residents that found some 80% are against the arrival of Fudan University. He also contrasted the deal with the Orban government’s treatment of Central European University (CEU), which relocated from Budapest to Vienna after hostile legislation rendered its operations in the Hungarian capital impossible. "Why should Hungary or Budapest host a Chinese university when it expelled CEU a few years ago, which created value for the public with private money,” he said. "Until the government provides full disclosure of all the details of the project, we have nothing to negotiate, which means that we will not give our consent to the construction of the Chinese university," he underlined.

Karacsony accused the Hungarian government of tossing Budapest’s plans aside with the deal and warned that he and other high-ranking city officials will initiate a referendum to block construction of the Fudan University. The strategic cooperation agreement "is about giving huge buildings to China (gratis). It serves the expansion of Chinese companies in Europe," he said. Budapest’s Deputy Mayor Erzsebet Gy. Németh meanwhile noted that the government can only declare its own territory a priority investment, adding that neither City Hall nor the Ninth District would provide any land for the Fudan campus. Budapest’s Ninth District Mayor Krisztina Baranyi also called for a referendum on Fudan. Minister of National Innovation and Technology Laszlo Palkovics, who is overseeing the development, has called for Fudan to be named a priority project. This would indeed streamline the process, but would not prevent a referendum on the plans. 

From Russia’s Trojan Horse to China’s Gateway to Europe

Fudan is not an isolated case in the nascent Sino-Hungarian friendship. After years of merely welcoming branches of China’s cultural arm, the Confucius Institute, and touting Hungary as China’s gateway to Europe, the Orban government is now inking significant and lucrative deals with the superpower. Early in 2020 Hungary took out a 20-year mega-loan from Beijing to finance improving rail links between Budapest and Belgrade, but this project has also been criticised at home and abroad over suspected corruption - a company owned by Orban’s strawman Lorinc Meszaros will cooperate with Chinese state-owned companies in the HUF 700 billion (EUR 1.95bn) rail link revamp - as well as the lack of transparency around the deal. 

As the Coronavirus pandemic started to bite in April 2020, Hungarian MPs voted to keep the Budapest-Belgrade railway project classified, including a profitability feasibility study, arguing that this was vital in order to secure an Export Import Bank of China loan. Moreover, in the last year, Hungary has purchased thousands of Chinese ventilators at above-market-price and was also the first EU country to use China's Sinopharm vaccine, a move that angered the European Union as it has not been approved by the European Medicines Agency. 

After a decade of reticence over criticising Hungary’s alleged role as Russia’s “Trojan Horse” in Europe, this time around EU member states are openly rejecting the Orban government’s murky deals with China, as well as its tendency to criticise and even veto joint European Union statements on human rights in China. “The EU will shortly issue a statement of support for pro-democracy activists in Hong Kong - with or without Hungary,” German Foreign Minister Heiko Maas said after an EU Foreign Affairs Council meeting on Monday, adding that Hungary’s position was “absolutely incomprehensible”. 

“This is not the first time that Hungary has broken away from unity when it comes to the issue of China,” Maas recalled. "If unanimity is not reached ... we will have to take a position which does not reflect unanimity," he said. “I think everybody can work out for themselves where the reasons are: because there are good relations between China and Hungary,” Maas said, adding that “It is important that especially toward China… the European Union speaks with one voice. Unfortunately, this has been prevented by Hungary.” 

A Gateway that raises security concerns

The campus construction plan has similarly caused ructions with Hungary’s NATO partner the US. "The possible opening of Fudan University's first campus in Europe is a cause of concern, as Beijing has a proven track record of using its higher education institutions to gain influence and stifle intellectual freedom," the US Embassy in Budapest  told independent weekly Magyar Hang.

However the Orban government remains bullish. In March Hungarian Foreign Minister Peter Szijjarto denounced sanctions on China in response to human rights abuses in the Xinjiang region, as "pointless, self-aggrandising, and harmful”. Hungary’s confidence may come from its close relations with a superpower: Chinese Defence Minister Wei Fenghe visited Budapest soon after Szijjarto’s diatribe, and praised the country, saying China "has always regarded Hungary as a good brother”. According to state news reports of a phone conversation between President Xi Jinping and Orban, Xi told the Hungarian premier on April 29 that “China highly appreciates Hungary for its firm adherence to a friendly policy towards China, as well as its significant contributions to advancing cooperation between China and Central and Eastern European countries (CEEC), and safeguarding the overall China-Europe relations. China is willing to conduct close strategic communication with Hungary, consolidate political mutual trust, and take the Hungary-Serbia railway and other major projects as a guide to deepen practical cooperation in various fields.”

For his part, Orban said “Hungary attaches great importance to its relations with China”, and expressed happiness that “bilateral trade has registered positive growth despite of the pandemic. Hungary is ready to work with China to actively advance the construction of the Hungary-Serbia Railway, and will continue to play a positive role in promoting cooperation between CEEC and China,” according to Orban.

As Hungary hosts Huawei's largest manufacturing base outside of China and around 2,500 employees including R+D workers, the EU also sees its member state as uniquely vulnerable to security concerns from the Chinese telco. In another development that will raise eyebrows in Brussels, next year will see the opening of the EUR 61mn East-West Gate intermodal railway terminal on the edge of the EU, near the Hungarian-Ukrainian border, in Fenyeslitke, one of the strategic points in the economic corridor of China’s Belt and Road Initiative. Touted as the western gateway to the New Silk Road, it will offer Asian countries faster freight routes to Germany, Austria, Italy, Switzerland, Slovenia and Croatia. Although the state of the art, 5G-powered facility is being financed from private sources, the Hungarian Government provided EUR 8.2mn via a job creation subsidy.

Out with the (liberal) old, in with the (communist) new

The harshest condemnation of Hungary’s eastward turn came from CEU. The irony that the Hungarian government had been finalising the Fudan deal just as CEU’s own saga was coming to an end was not lost on the liberal university. CEU noted in a statement that “a new bill has been submitted to the Hungarian parliament amending the National Higher Education Act. This follows a ruling by the European Court of Justice (ECJ) last October that ‘lex CEU’ violated European law. […] Under the new draft legislation, it remains a political decision—certain to be taken at the highest level—whether to allow foreign universities to operate. The [Orban] government has already made it perfectly clear how it proposes to use its powers. It threw out an institution that abides by international standards of academic freedom and has invited instead a university which obeys the ultimate authority of the Chinese Communist Party.”

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  • Hungary’s plans to become a hub for eastern superpowers were widely mocked after Viktor Orban’s government’s “Eastern Wind” policy had to be renamed “Eastern Opening” after a party official noted that an eastern wind blows things everywhere except to the east. That hilarity turned to anger, however, when it emerged that China plans to build its first ever European university on the banks of the Danube by way of a EUR 1.5bn construction project that will be funded by Hungarian taxpayers.
  • Overall the budget for the new campus of Fudan, which would open in 2024, is more than Hungary’s annual spend on higher education. Construction giant China State Construction Engineering Corporation - which has faced accusations of harbouring spies - will bid for the contract, as per the documents. The development elicited increasingly familiar accusations towards the Orban government: of clientelism, financial opacity, tying the nation’s long-term future to foreign dictatorships and allowing Hungary to serve as a “Trojan Horse” for hostile powers.
  • Fudan is not an isolated case in the nascent Sino-Hungarian friendship. After years of merely welcoming branches of China’s cultural arm, the Confucius Institute, and touting Hungary as China’s gateway to Europe, the Orban government is now inking significant and lucrative deals with the superpower.
  • The harshest condemnation of Hungary’s eastward turn came from CEU. The irony that the Hungarian government had been finalising the Fudan deal just as CEU’s own saga was coming to an end was not lost on the liberal university. CEU noted in a statement that “a new bill has been submitted to the Hungarian parliament amending the National Higher Education Act. This follows a ruling by the European Court of Justice (ECJ) last October that ‘lex CEU’ violated European law. […] Under the new draft legislation, it remains a political decision—certain to be taken at the highest level—whether to allow foreign universities to operate. The [Orban] government has already made it perfectly clear how it proposes to use its powers. It threw out an institution that abides by international standards of academic freedom and has invited instead a university which obeys the ultimate authority of the Chinese Communist Party.”
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