Hungary Election: Opposition Sweeps Hungary Election

BUDAPEST: Peter Magyar’s center-right Tisza party won a resounding victory in Sunday’s Hungarian election, giving it a broad mandate that will allow it to implement reforms, strengthen the rule of law, and possibly access billions of euros in assistance from the European Union.

The anticipated two-thirds supermajority for the incoming administration, according to economists and political analysts, was the most favorable scenario for the EU and the market and, prior to Sunday, one of the least likely, and would probably lead to a significant increase in Hungarian assets on Monday.

The markets appear inclined to give Budapest’s new leaders the benefit of the doubt for the time being, but there are still a number of uncertainties, and cautious diplomats and analysts warn the new government must fulfill its pledges before reaping the full rewards.

According to Mujtaba Rahman, managing director of Eurasia Group, “the outcome is a game-changer and will allow Magyar to govern with a free hand.” Above all, he will be able to end Orban’s dictatorship and implement all of the changes that the EU has called for.

“This implies that at least 6.4 billion euros ($7.46 billion) from the resilience and recovery facility should flow swiftly, strengthening the real economy and solidifying Tisza’s victory.”

Given that Orban, a euroskeptic, has clashed with Brussels throughout his 16-year leadership over topics ranging from immigration to his proximity to Russia, the election was long expected to be the most market-sensitive in Europe this year.

Despite falling behind in opinion polls, Orban maintained his confidence throughout the election campaign, claiming that his objective was to defend Hungary’s traditional Christian values and national identity within the EU while denying any wrongdoing.

However, the markets had been indicating for weeks that investors anticipated a shift. Companies connected to Orban saw a steep decline in their share values, and measures of market volatility suggested that significant currency fluctuations were possible following the election.

Speaking to ecstatic fans who chanted “Europe, Europe” following Orban’s defeat, Magyar promised to mend connections damaged by years of turmoil and make Hungary a powerful partner of the EU and NATO.

“We will restore the system of checks and balances with the two-thirds majority allowing us to amend the constitution,” Magyar declared.

“We will ensure our nation’s democratic operation by joining the European Public Prosecutor’s Office. We will never again permit anyone to abandon or imprison free Hungary.

Unlocking EU funds frozen as democratic norms weakened under Orban was a key component of Magyar’s strategy to revitalize Hungary’s economy, which has been stuck in near-stagnation for the past three years.

Ian Bremmer of GZERO Media stated, “A constitutional majority is a different story entirely.”

“That would grant Magyar the authority to amend the constitution, expel Fidesz supporters from institutions they have taken over, obtain full access to EU funding, and even adopt the euro—a key campaign promise.”

Magyar demanded the resignation of Hungary’s chief prosecutor, head of the highest court, head of the media authority, and other officials on Sunday, claiming that Orban loyalists had taken control of the nation’s public institutions during the previous sixteen years.

As his party works to meet EU requirements, including as more judicial independence and public procurement, in order to access the cash, Magyar has promised a broad anti-corruption campaign.

However, some EU diplomats and credit rating organizations like S&P Global and Fitch Ratings are doubtful that any funds remaining under Hungary’s pandemic recovery financing would be disbursed.

Comparisons with Poland’s 2023 election, when Prime Minister Donald Tusk’s pro-EU cabinet obtained a prompt disbursement of EU financing on promises to reverse the actions of his nationalist predecessor, may be mistaken, according to analysts and diplomats.

“There is no willingness to give out the money only on a promise like the EU did to Tusk in Poland, who was not able to deliver on most promises,” an EU diplomat stated.

“Tisza would need to demonstrate that it can deliver. But if something is legally impossible, and that can be demonstrated, then the EU could figure out a way.”

The flow of EU cash, according to Capital Economics analysts, may help stabilize Hungary’s public debt, which is the biggest in the EU outside of the euro zone, and reduce the country’s budget deficit to 3.5% to 4% of national GDP by the end of the decade.

Liam Peach wrote in a note, “Overall, the election result marks a major turning point for Hungary’s economy.”

“The speed at which Tisza rebuilds relations with the EU, secures EU fund disbursements, and signals a credible medium-term fiscal anchor will now determine how long any positive market reaction lasts.”