Page 62 - AEI Insights 2018 Vol 4 Issue 1

AEI Insights, Vol 4, Issue 1, 2018

interconnected economy. Such criticism is further warranted by the fact that the EU has
invested heavily into propping up the Hungarian economy. It is a contradictory stance to
demand to follow one’s own way while receiving funds from the very organization it seeks to
defy.

But moving away from the abstract, one can demonstrate how the Government’s economic
policies directly interfere with common European projects. The European Union is in the
process of creating a Europe-wide common energy infrastructure. As one expects this is a
monumentally complex undertaking. The blueprint for this project can be seen in EU
Parliament and Council Regulation 347/2013. (EUR-Lex, 2013) The key goal of the project is
to create an integrated and modern common energy infrastructure that eliminates inefficiencies
present within the current fragmented nation-based infrastructure. One issue for such a project
is financing: who and in what manner should pay for such an infrastructure. The EU prefers to
limit direct government investment, favouring private sector financing, i.e. to incentivize
privately owned energy firms to build this infrastructure. The goal is to execute the project
without significantly increasing government expenditure. However, private corporations are
self-interested entities. Investment into national energy markets is conditional on the
profitability of said markets. And this is why the EU is primarily concerned about the
Government’s utility policy. By cutting the profitability of the Hungarian energy market the
EU anticipates a reduction in private investment, especially when it comes to financing new
infrastructure projects. A 2014 overview of the EU energy markets highlights that the
Government’s utility pricing policy has contributed to reduced investment and the mothballing
of non-critical assets in Hungary as private sector players are discouraged from committing
resources to a hostile market environment. (European Commission, 2014) Furthermore, the
perceived move of the Hungarian energy markets move towards a more centralized
government-owned state is antithetical to the EU’s development plan that favours the
privatization of the industry. And energy companies are also targeted by the aforementioned
special tax, further reducing the attractiveness of the Hungarian market. Hungary’s ‘own way’
goes against a common strategy seeking to solve a continent-wide problem that is well beyond
the Government’s narrow domestic view.

Once again one can observe that, while the Government appeals to popular nationalist
sentiments to quash EU criticism, the issue cannot be satisfactorily reduced to the EU merely
meddling in the domestic affairs of Hungary. Hungary has voluntarily joined the European
Union exactly because of the Union’s ability to coordinate on the European level and it
explicitly endorsed or became signatory to the Europe-wide plans against which it seeks to
rebel now. The dangers of this process are the same as discussed above in the context of the
refugee process, i.e. the potential undermining of the credibility of EU agreements and thus the
EU’s ability to coordinate on the supranational level.

Conclusion

Hungary has been dealing with major issues, whether it is the refugee crisis or economic
planning. There is room to debate on both issues, e.g. the procedures by which the EU awards
refugee status need to be reformed to accommodate the interests of all member-states.
However, the Government chooses to pursue its ‘own way’, often contrary to existing
international law. At the same time it deflects all criticism by employing the politics of
sovereignty to paint any criticism as an attack. This is a largely unproductive process that
removes much needed space for discussion on whether Hungary is on the right track on the

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