Fidesz-Managed Foundations Assume Control of Hungary’s Higher Education System
Through a recent $1.7 billion allocation (comprised of government funds and various property assets) to the privately managed foundation, Mathias Corvinus Collegium (M.C.C.), Victor Orban has expanded the mandate of his governing party, Fidesz, to include the unilateral administration of Hungary’s university system. The immensity of the monetary transfer coupled with the deliberate inclusion of private, Fidesz adjacent interests represent the further consolidation of Orban’s autocratic power and jeopardize institutional legitimacy through unfettered kleptocratic corruption. Though the geopolitical implications cannot yet be quantified, the impact of Orban’s politically motivated annexation of Hungarian higher education on capital markets and electoral politics could, potentially, be significant.
Transfer of Administrative Powers
On April 27th, Hungary’s ruling party, Fidesz, adopted legislation which restructured the administrative hierarchy governing Hungary’s 11 primary state universities by transferring oversight to organizations managed by Orban’s political confederates. Because Fidesz enjoys a supermajority in the National Assembly, Orban and party officials were able to directly revise the constitution to reflect the transfer of administrative powers. Should the opposition be triumphant in next year’s parliamentary elections, reversing Fidesz’s legislative course would still require a two-thirds majority, an unlikely outcome in a political ecosystem dominated by Orban’s omnipresent support networks.
Given the likely resiliency of the legislation, a series of privately managed foundations, buttressed by the transfer of $1.7 billion in government assets, will administer the Hungarian higher education system indefinitely. The relative enormity of the asset package is significant per se. The $1.7 billion allocation is effectively equal to 1 percent of Hungary’s GDP and the fund that M.C.C. now manages exceeds the state’s higher education budget.
The new law circumvents the ongoing reform efforts pursued at state universities while conveying unbounded administrative authority upon the boards of various private foundations. M.C.C.’s board, a product of Fidesz’s insularity, is comprised of Orban adjacent associates who enjoy lifetime appointments and collectively control the election of new members. Balazs Orban (no relation to Victor Orban), in addition to his duties as Minister of State within the office of the Prime Minister, is chairman of M.C.C.’s board and will manage the foundation’s newly acquired assets.
The incestuous composition of M.C.C.’s board and the effective privatization of Hungarian higher education represent a largely self-referential, politically motivated parliamentary maneuver seemingly designed to deliberately, over time, advance Orban’s broad illiberal agenda and, transitively, the populist-nationalist priorities of Fidesz.
Strategic Consolidation
Freedom House, in their 2021 “Freedom in the World Report”, classify Hungary as a “partly free” hybrid regime. This most recent classification represents a significant regression from the watchdog’s 2010 rating of a “fully free” democratic state. Freedom House’s rescission of its “democracy” designation follows the chronology of Orban’s political ascension (beginning 2010) and Fidesz’s successive constitutional revisions delimiting the autonomy of Hungary’s independent institutions. Fidesz’s usurpation of Hungarian higher education is an extension of Orban’s decadal pattern of consolidating institutional control in pursuit of a more resilient iteration of illiberal democracy.
Fidesz’s unilateral control over Hungarian higher education, defended by privately managed proxies, is an obvious extension of Orban’s penchant for strategic amalgamation. In 2018, Orban, legislatively supported by Fidesz, consolidated nearly 500 private Hungarian media outlets into a single, state adjacent foundation, the Central European Press and Media Foundation (KESMA).
Hungary’s contracting media habitat increasingly resembles the state media apparatuses employed by communist regimes to regulate the consumption of objective, factual reportage and to stifle oppositional dissent. The homogeneity of aggregate political coverage, offered by Hungarian media outlets broadly sympathetic to Fidesz and Orban’s dictatorial contrivances, reinforces the government’s implicit command of the sociopolitical narrative and undermines efforts to increase governmental transparency and accountability.
Limited Judicial Independence
Fidesz’s annexation of higher education, the deliberate limiting of media diversity, and, finally, Orban’s foundational restructuring of the judiciary are fundamentally tethered. The supermajority enjoyed by Fidesz has allowed Orban to strategically and overtly reconfigure Hungary’s judiciary to juridically buttress the more aspirational features of illiberal democracy.
Fidesz’s creeping tendrils, seemingly in the interest of party self-actualization, have inhibited institutional autonomy within the judiciary through deliberate reconfigurations of institutional mandates coupled with the appointment of loyal Fidesz officials to leadership positions. The Constitutional Court and the prosecutor-general’s office continue to be subordinated to the expanding notions of illiberalism expressed by the executive branch. The recent strategic annexation of the Hungarian higher education system by Orban controlled foundations represents the practical manifestation of juridical arrogation.
In December 2019, Fidesz’s supermajority allowed the party to pass omnibus legislation establishing, against opposition dissent, a new public administration court that would exist as an entirely separate entity. The European Commission has expressed concern that the operationalization of the administrative court would structurally threaten the broad independence of the judicial system. Exogenously, the almost unmitigated, total collapse of Hungary’s system of checks and balances jeopardizes Hungary’s already precarious relationship with the European Union while unsettling investor confidence in the country’s regulatory environment.
Outlook
The seeming, forward-facing intention of Orban’s administrative usurpation of Hungarian higher education is to facilitate the progression of a nationalist, Christian elite while defending the cultural priorities of Fidesz, electorally, against an increasingly cohesive opposition. Consolidating operational control and significant allocations of public funding within the Fidesz adjacent M.C.C. arguably represents a contingency strategy that hedges against the possibility that Fidesz could comprehensively lose power in 2022 or, at the very least, be forced to govern without the luxury of a supermajority.
Preliminary polls indicate an even race with the opposition remaining unified against the governing party. Should Fidesz’s parliamentary advantage evaporate, the party’s conservative, antiglobalist agenda will be generationally protected and deliberately perpetuated through Fidesz’s dominion over the Hungarian higher education system.
Domestically, substantial parliamentary gains for the opposition may introduce higher magnitudes of party fragmentation. The resultant legislative variability could invite policy incoherence and subsequent political instability as competing entities maneuver for influence. It is unclear, as Hungary continues to express the features of a fully realized anocratic state (defined briefly as a state where the institutional arrangements have features of both democracy and autocracy), how its transitional course from democracy to anocracy will impact capital markets.
Should Orban attempt to revise the constitution to extend prime minister term limits or entertain other destabilizing, antidemocratic measures prior to the 2022 election, such actions could conceivably precipitate substantive concerns regarding the health of Hungary’s regulatory environment and diminish investor confidence.
Hungary continues to demonstrate a lack of concern for EU normative standards, particularly in relation to rule of law expectations. Expressions of Hungary’s extrajudicial belligerence include the consistent misallocation of EU farm subsidies, the recent passing of a sweeping anti-LGBT law, and, presently, the administrative annexation of the Hungarian university system.
The EU’s primary recourse requires activating the punitive mechanisms established within the European Commission’s rule of law framework. The framework tethers European aid to a state’s capacity to broadly uphold the rule of the law. Corrective measures may be program specific, permitting European academic aid to be rescinded as the Hungarian government defies rule of law considerations within the higher education policy space.
Though the European Commission has, historically, been reluctant to pursue coercive action to correct Hungary’s antidemocratic regression, increasing frustration, exhibited publicly by a collection of EU member states towards the Orban government’s discriminatory laws and endemic corruption may be predictive of the commission introducing practical legal measures to facilitate structural reform.
In the medium-term, it is unclear to what extent the diminished institutional legitimacy, apparent across disparate branches of the Hungarian government, will impact the electorate prior to the 2022 elections. Uncertainty surrounding future EU aid distributions and the complex, largely unknown corollaries of these seemingly coordinated political maneuvers may contribute to near-term, domestic political instability while straining Hungary’s geopolitical relations.
