Hungary’s ruling party is poised to approve the transfer of a vast array of state assets to new quasi-private foundations in a move Prime Minister Viktor Orban’s rivals say will cement his grip on power regardless of elections.
Parliament will vote on Tuesday to create endowments for more than a dozen foundations with state assets ranging from apartments, a palace, stakes in blue-chip companies, a steelmaker and a soccer stadium worth billions of dollars.
The majority of the foundations will run state universities and will be led by Orban’s close allies, in some cases ministers in his government.
Hungary has also asked the European Union to channel a fifth of the grants the country is eligible to receive from the EU’s 800 billion euro ($965 billion) pandemic recovery fund to the “modernization of universities,” which would be overseen by the foundations’ boards. That risks triggering action from the European Commission, which may withhold funds from any state seen damaging its financial interests.
The endowments come a year before what’s expected to be the tightest parliamentary election since Orban’s return to power in 2010.
While the government says it’s a novel way to modernize everything from higher education to cultural policy, opposition leaders have denounced the foundation model as an attempt by Orban and his allies to ensure they maintain influence over the economy and the institutions that shape national thinking even if they lose elections.
“This is the organized theft of the assets of the Hungarian people,” Gergely Arato, a member of the opposition party Demokratikus Koalicio, said during the parliamentary debate.
There’s been no comprehensive tally of the total value of the wealth transfer. But the stakes in energy company Mol Nyrt. and pharmaceutical company Gedeon Richter Nyrt — which until now have been overseen by whichever government is in power — alone total about $2.5 billion, according to Bloomberg calculations.
Orban has struggled to explain the need to outsource the task of running state organizations such as universities and cultural bodies to what will essentially be private foundations. Trustees will be able to serve lifelong terms, according to the law, which sets stringent criteria against the ouster of the foundations’ leadership.
The government filed the bill arguing that the “diversity and dynamic change of public responsibilities warrant a rethinking of the state’s role.”
“The foundations can only spend the endowment for public good, on education,” Orban said in parliament on Monday.
Opposition leaders said that in addition to posing a corruption risk, the foundations will allow Orban and his allies to push a nationalist, anti-LGBTQ and anti-immigrant agenda that has steered Hungary away from the European mainstream.
A dozen European Parliament members wrote to European Commission President Ursula von der Leyen on Monday, urging her to block funding, according to Politico, which obtained a copy of the letter. The new institutions comprise “opaque funding structures” that would be “shielded from public scrutiny,” they wrote.
Under Orban, Hungary has plunged in Transparency International’s annual corruption perceptions index and is now tied with Bulgaria and Romania as the nation with the biggest graft challenge in the EU. The watchdog said cronyism was a “key feature” of the Orban government.
(A previous version of this story was corrected to fix the name of the political party in the seventh paragraph.)
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