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A Humble Proposal to Sanction Some Hungarian Kleptocrats

Viktor Orban's corrupt authoritarian style seems to be spreading in Europe, with serious security risks.

Lukas Schulze/Getty Images

Barring unforeseen upset, on April 8 Prime Minister Viktor Orban will waltz his way to reelection, strengthening his two-thirds majority in Hungary and his role as the leading symbol of Europe’s growing illiberal threat. Orban has been at the center of a startling number of corruption allegations in his eight years in power, many now coming to a head as the vote nears. Two months ago, the European Anti-Fraud Office (OLAF) reported that Hungary’s procurement of $1 billion of EU funds for lighting projects suffered from legal “irregularities” and conflicts of interest—including 40 million Euros’ worth linked to projects of Orban’s son-in-law, warranting an investigation into “excessive budgetary fraud.”

Just last week, Hungarian daily the Magyar Nezmet claimed Orban and his cronies overcharged the EU for various procurement contracts, redistributed the funds through banks owned by Orban associates, and converted them into diamonds that could be laundered through lesser-regulated “hawala” banks offshore in the Arab world, known for sometimes laundering terrorist money. As those allegations were breaking, the journalism non-profit Direkt36 also reported Orban-linked intermediaries have been selling Schengan visas and Hungarian (i.e. EU) residency to anyone that can pay the price—opening up all of Europe to the buyer. The beneficiaries of this scheme reportedly include hundreds of un-vetted Russians and a close associate of Bashar al-Assad, one who happens to be on the U.S. sanctions list. Even now, days before the election, fresh charges continue to roil the Hungarian media. The sheer number might prevent Orban’s Fidesz party from keeping their 2/3 parliamentary majority, which allows them to change the constitution at will. But with the opposition unable to organize and unite, they’re unlikely to unseat Fidesz outright.

Thus far, the U.S. has done little to counter the growing security threat and troubling embrace of authoritarianism on Europe’s border. The EU, for its part, has not acted on Hungary’s multiple violations of basic values enshrined in the foundational EU treaties, only belatedly issuing a non-binding resolution calling for “dialogue” between Hungary the European Commission.

Unimpeded by strong Western action, right-wing authoritarianism in Eastern Europe is spreading. Polish aspiring autocrat Jaroslaw Kaczynski has now ticked off the boxes in establishing Hungarian-style rule: a constitutional court whose judges and decision-making are under control of the parliament and executive; a public media that lost all independent leadership in a 2016 purge, and was replaced by government mouthpieces; a cowed and defunded sector of citizen watchdog organizations; and a fear-mongering message citing foreign threats to “real Poles” to justify it all. While his version of the Hungarian model does not include an open embrace of Russian corruption, Kaczynski’s receptivity to, and even use of, disinformation, his invitation to far-right paramilitary groups to join the Territorial Defence Force, and his purge of experienced intelligence officers are plenty worrisome on their own, and provide an easy opening for Russian influence.

Romania, meanwhile, is following suit, with the President considering parliament’s proposal to change appointment processes for lead prosecutors, limit procedures for investigating corruption, and eliminate some corruption crimes from the penal code. Austria is remaking its public media through financial cuts and attacks on outlets that criticize the new nationalist government. And the Czech Republic has recently reelected the similarly euroskeptic, Russophilic, and anti-migrant president Milos Zeman. Orban-style policies are gaining ground across Europe, winning votes—and changing norms. 

So far, the EU has acted only against Poland. In response to the Law and Justice Party’s repeated restructuring and weakening of its judicial institutions, the EU initiated an accountability process known as the Rule of Law Mechanism. The process, laid out in Article 7 of the Treaty of the EU, states that a member that violates the basic values of the union—“democracy, equality, the rule of law, and respect for human rights”—may lose voting rights in the EU if members unanimously agree to the sanction. The negotiation process, however, has dragged. Since 2017, the European Commission has repeatedly set new deadlines by which Poland must institute changes, and Poland has repeatedly ignored them.

President Trump, meanwhile, has appeared to tolerate or even encourage Eastern European authoritarianism. In his speech in Warsaw last July, he lauded the Polish government as it was perched to pass legislation crippling its own Supreme Court and Common Court system—two pieces of legislation were signed within days of his speech. He repeatedly emphasized the need to protect “our civilization”, and “our borders” from attackers, echoing the coded language Hungary and Poland use to support anti-immigrant, anti-democratic, nationalist policies. Just days after the address, the Polish government introduced new controversial laws attacking the independence of judges, and right-wing media released a list of enemies of “Western Civilization.”

In theory, the United States is well-positioned to check these states—not least because U.S. influence seems to matter to Orban, who recently expelled a single Russian diplomat to preserve appearances over the Skripal poisoning in the UK, and maintains a steady and well-funded lobbying presence in Washington to convince Congress that Hungary’s policies don’t contradict NATO values. U.S. travel bans of Hungarian officials in 2014 to rein in kleptocracy got their attention, and for a moment paused their anti-constitutional takedown. At a minimum, as a fellow NATO member, the U.S. could, at the July NATO Summit or November Parliamentary Assembly, verbally condemn Hungary’s Russian entanglements as a Skripal-like threat to international norms, while raising questions about Orban’s policies through a security lens.  

But the U.S. also has a more concrete and targeted option: the Global Magnitsky Act. Passed in 2016, the Act allows the U.S. administration to apply sanctions, such as visa bans and prohibitions on use of U.S.-affiliated banks, to an individual that has engaged in serious human rights abuses or acts of corruption. The standard was originally more stringent, but in December, in one of the few human rights-supportive moves he has taken in office, President Trump relaxed the requirements for such sanctions. The first round of designations issued in December 2017, named 15 individuals and 37 entities, including the son of the Russian Prosecutor General Yury Chaika, and the daughter of the late president of Uzbekistan Islam Karimov. 

The growing list of Orban’s kleptocratic and transnational corrupt schemes provide ample fodder for sanctions under Magnitsky, from the intermediaries that hand over visas to un-vetted Russians or Assad’s helpers to the lobbyists for Russian business interests in Budapest that helped secure sweet deals for Kremlin-linked companies at the expense of Hungarian taxpayers. In light of the corruption allegations flying this week involving the electoral, judicial, transportation, gas, nuclear, religious, real estate, and general business sectors, the U.S. government should have a menu of options to choose from.  

The narrowly tailored approach of Global Magnitsky sanctions also provides a way around the general problem of sanctioning a NATO ally and EU member, by targeting not the actions of the government as a whole, but rather individual corrupt or rights-violating acts. And in an environment where the U.S. president seems reluctant to push against Russia personally or directly, Magnitsky sanctions offer a less confrontational option: a way to target individuals that have opened the door to Russian corruption—such as those handing the contract to expand Hungary’s Paks nuclear plant to a Russian state company without a public bid—without direct state-to-state conflict. Pushing back against Russian interference while warning Orban off further illiberal ventures, initial designations might involve fringe members of Orban’s circle, adding closer associates to the list if the message is not heeded.

Yet the idea is perhaps most intriguing as a way of supporting the EU’s unprecedented and fragile self-policing efforts. The accountability provisions of the Rule of Law process the EU is trying to use on Poland require a unanimous agreement among EU states. This won’t be possible if Hungary holds fast to its promise to veto any action. However, if sanctions can be used to apply pressure to Hungary from just the right angle at the right time, the U.S. could weaken the Poland-Hungary euroskeptic alliance, and make EU action more likely to succeed. With just a bit of pressure, in coordination with European governments, building on Eastern European public frustration, the U.S. might set in motion a promising response to the anti-democracy wave in Europe.

As President Trump fends off criticism over cozying up to dictators, Hungarian sanctions offer a quick way to boost his credibility. For the U.S. they offer the opportunity to harmonize concerns regarding democratic backsliding in NATO and the E.U. with more hardline policies toward authoritarianism outside Europe. And as far-right parties gain troubling footholds further and further west, like Alternative für Deutschland in Germany, champions of liberalism have a powerful incentive to cooperate with one another. Curbing Hungarian kleptocrats may be one move everyone can agree on.