If Budapest gets EU money directly will Orbán tax it at 100% or 120%?

Since October 2019 there has been a new thorn under Orbán’s autocratic fingernails. Many major cities and Budapest have elected non-Orbánist mayors and local councils. Now they are pushing to gain access to EU resources without the permission of Orbán, who would never give it.

But even if they manage, Orbán will get his revenge.

The autonomy of local authorities has gradually diminished under Orbán, starting with his new basic law that replaced the constitution in 2011. The only reason he hasn’t done away with it completely is that he didn’t need to.

Orbánist mayors have been glued to their seats in all cities but one – telling their voters that only they can get money for their towns from Orbán and helped by the electoral system that legally boosts Orbánists before they even start voter intimidation and other dodgy practices.

But in October 2019, just when Orbán thought his rule was un-undoable and elections a mere formality, the municipal elections delivered a blow to him. Ever since then we are living through Orbán’s crackdown on opposition cities and Budapest, which is mitigated only by Orbán’s need to appear civilized for now, until he blackmails another 7-years’ worth of EU money out of other European leaders.

But Budapest and non-Orbánist cities have joined in the fight for EU resources. They want to access the EU rescue fund, for instance, directly, because Orbán would sure as hell not give them any.

And the reason is that a modern autocracy has economic roots. Long before guns are necessary, people can be made to shut up by economic means. Jobs lost, contracts not won, regulations driving you out of business are the tools of autocrats and their cronies to blackmail a country into oppression. Meanwhile, their own pockets are filled with breathtaking amounts of public money, both from Hungarian taxpayers and the EU. And they use it to buy up absolutely everything in the country. Orbán doesn’t mind if the best and brightest leave the country for good, he doesn’t want the good of the country, he just wants all there is to be his.

The logic of the autocracy is this: everyone must be financially dependent on Orbán. They must either eat from his hand or not eat at all.

When the EU agreed to let Orbán to rule over the spending of EU funds in the country, they cemented him in power. Every since then it was all his money, used to pay his loyalist, let them buy up the whole country – while starving the non-loyalists. Orbán got so thorough in his effort to not let any outside resource to reach non-loyalists, he put out a tax on activities financed from abroad. See where I’m going with this?

The situation only got worse under covid. Covid measures all happened to disadvantage disloyal Budapest while bailout money flew to cronies and loyalist mayors unstoppably.

And when George Soros, the Budapest-born philanthropist gifted some money to Budapest to take off the edge of the covid-induced economic damage, Orbán was so incensed that a spectacular revenge siege started immediately.

Revenues that once belonged to the city or districts have been redirected to the government, one by one. Every covid press conference was filled with announcements of what else they took away from Budapest and what extra taxes they demand from the city. When a city official complained that all they have left is parking revenues, Orbán immediately and gleefully announced that he made parking free because covid.

Then the government started to demand that Budapest bails out its businesses, from an empty budget. When they said the budget is empty, the government accused them of mismanagement. Again, gleefully.

In the end Orbán collected much more than Soros’ original gift to Budapest and didn’t stop there. The border clampdown that bans foreigners from entering the country was the last blow to Budapest and it is not expected to be lifted any time soon. Tourism, the top industry has ground to a halt, hospitality services have come to a full stop, sending shockwaves through every other industry. Whoever is not bankrupt yet will soon be. And the government demands that the city should bail them out. See if they can.

Gergely Karácsony, the non-Orbánist Budapest mayor has been working to emerge from the economic chokehold designed to strangle Budapest. This time with local referendums. Along with other cities they are lobbying Brussels to let local authorities spend some of the money directly. If subsidiarity in spending is really desirable, goes the argument, municipalities are better than national governments after all.

But even if European politicians somehow come out of Orbán’s various blackmailing schemes and manage to reroute some of the money to ease Orbán’s chokehold on municipalities, Orbán should not be expected to accept his defeat and just be quietly sad.

If the miracle somehow happens and Budapest gets money directly, without Orbán’s permission, expect it to be clawed back, either in the form of direct taxes or through indirect means. Orbán’s entire rule rests upon starving non-loyalists, he simply cannot afford this to happen. And on the political level an autocrat must not allow an effort against him to succeed, and punishment is more important than not sustaining economic damage himself. Not that he would, just saying.

Orbán had already offered to forego serious billions of EU recovery fund money just to avoid rule of law scrutiny. If that money cannot go to him directly, it must not reach the country. Also, he effectively blackmailed the entire EU with the move because staying out of the common bond scheme would make it impossible and other countries wouldn’t be able to raise money either. That’s the real story. No damage done to anyone is too large for him, his priorities are clear and cannot be changed or he can say goodbye to staying in power. And that won’t be allowed.

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