Hungary’s Populist Paradox

Viktor Orban, the godfather of the global nationalist right and Hungary’s prime minister for 16 years, lost big in last weekend’s elections. In the end, it was corruption and a sickly economy that brought him down.

His loss was also a loss for other right-wing populists who had looked to Orbanism as a model for how to turn election wins into entrenched political control. Today I write about that model and how it engenders the kind of economic decline that ultimately cost Orban the election.

Orban and the populist paradox

He has inspired MAGA culture warriors in America and nationalist populists in Europe. But after 16 years in power, Viktor Orban conceded defeat. The main reason was the abysmal state of the Hungarian economy.

Once the darling of foreign investors after the Cold War, Hungary is now one of the poorest countries in the European Union. Economic growth last year was just 0.4 percent. Unemployment is at a 10-year high.

It’s not a coincidence that Hungary is the most corrupt country in the E.U., according to Transparency International. (It shares that ranking with Bulgaria.) That corruption, which voters voiced their disgust with last weekend, has hollowed out the country’s economy.

It’s also no coincidence that all of this happened on Orban’s watch.

During his time in power, he became the global guru of “illiberal democracy,” a system of extensive political control over Hungary’s institutions, including the judiciary and the media.

That system came at a steep economic price: Government contracts went to companies based on political loyalty, not skills or economic efficiency. Corruption and cronyism, in other words, were integral parts of Orbanism.

Long a model for like-minded movements, Orban’s Hungary is also a case study of what results from an unrestrained executive and the systematic dismantling of the rule of law.

In these models, “politics are more important than the economy,” said Ivan Krastev, a political scientist who has written extensively about populist regimes. “The aim is to control everything. And as a result, the economy pays the price.”

A ‘golden age’ falls short

After Orban’s last election victory in 2022, he promised a “golden age” for Hungary’s economy.

It didn’t turn out that way. The statistic that most caught my eye was the incredible decline in Hungarian productivity growth since Orban took power. In the decade leading up to his first election, it averaged 2 percent. In his first decade in power, it dropped to 1 percent. Since 2020, it has averaged only 0.2 percent, E.U. statistics show.

How did this happen?

There’s a well-established pattern that some have called the “populist paradox.” Some populist leaders win on promises to drain the swamp and fight corruption. Then, once in power, they chip away at the institutions that help guard against corruption, while using it to entrench their rule.

This played out in Hungary. Orban stacked courts and once-independent government agencies with loyalists. He took control of media outlets. In 2014, he baptized this construct “an illiberal state.”

Eventually, this “illiberal state” took its toll on the economy.

I spoke to Krisztian Orban (no relation), an economist who has closely followed the impact of Orbanism. He told me that Orban’s model extended deep into the private sector.

It meant preventing the rise of powerful independent economic actors — multinationals were favored over local companies. And it meant empowering loyalists — companies that pledged fealty to Orban were blatantly favored in public tenders, including companies run by the prime minister’s family, he said.

Istvan Tiborcz, the prime minister’s son-in-law, has become one of Hungary’s wealthiest businessmen, thanks to a vast private equity and real estate empire built on state-backed financing.

After 16 years of Orbanism, the share of G.D.P. controlled by Orban allies has ballooned to a fifth of the entire economy, Krisztian Orban estimates.

“These companies aren’t cost efficient, they aren’t providing good services, they’re not good at what they do — they’re only good at getting along with Viktor Orban,” he said.

Lessons for Orban’s fans

Orban also used taxpayers’ money to reward voter groups that supported him. He subsidized energy prices and repeatedly handed out pension increases. He ensured that the bulk of development funds from the E.U. went to political supporters, too.

Voters knew it. Then, when the E.U. started freezing funds to Hungary in 2022, citing systemic problems with procurement and corruption, they felt it.

That explains why Peter Magyar, who promises a clean break with the corruption of the Orban era, beat Orban so resoundingly in Sunday’s election.

What does this mean for nationalist populists elsewhere?

Orban inspired many, not least Trump. The Hungarian leader’s governing model was a direct influence on Project 2025, a blueprint for radically restructuring the U.S. government, put together by the conservative Heritage Foundation. Trump has followed through on many of its ideas, including taking direct control of independent government agencies.

The U.S. has a much bigger economy, which may limit what one administration can do, Krisztian Orban said. But the populist paradox has also made itself felt in Brazil, under Jair Bolsonaro, and in the Philippines, under Rodrigo Duterte. Will America be any different?

More on Hungary’s election: Peter Magyar, once a loyal Orban ally, changed sides and defeated his former boss. But does he represent real change?

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