Hungarian financial markets have welcomed Peter Magyar’s Tisza Party victory over Viktor Orban. This historic moment could mark the beginning of a post-Orban economic boom. But only if the new leadership capitalizes on it. Hungary’s road map to prosperity will only be achieved by curbing kleptocracy, limiting hostile foreign influence, and reversing the centralization of power.
Hungary has fared worse than its regional European neighbors on inflation, foreign direct investment, and its budget deficit. The financial community saw limited opportunity in an economy where winners were chosen by the ruling party rather than by the market, laws and tax policies shifted unpredictably, and courts could not be relied upon to protect investments. Against this backdrop, Magyar’s key campaign centered on eradicating corruption and resurrecting the economy.
Fortunately, the new leadership’s two-thirds supermajority could be enough to loosen Orban’s 16-year established grip on the constitution, courts, media, higher education, and business. Addressing rule-of-law violations could also unlock roughly $20 billion in frozen EU funds. Equivalent to nearly 10% of Hungary’s GDP, this capital could serve as a powerful financial springboard to attract large-scale private sector investment in critical sectors such as manufacturing, energy, and defense.
But Hungary will also need to expand energy production to power these new investments. Energy security lies at the heart of Hungary’s economic renewal, and breaking free from Russia’s energy ties will be critical to reducing Moscow’s negative influence in Budapest. While neighboring landlocked EU countries have invested in diversifying away from Moscow, Orban instead doubled down on Vladimir Putin.
It is not too late, however, to cancel the Russia-backed Paks II nuclear project. This foolish project would saddle Hungary with a $12 billion loan to Moscow. Instead, Magyar should pursue partnerships on advanced nuclear technologies, such as small modular reactors, with countries such as the United States, Poland, and France. He should also support Europe’s broader efforts to diversify nuclear fuel supplies. Budapest could also accelerate investment in alternative gas interconnections with neighboring Slovakia, Austria, Romania, Czechia, and Serbia, and access alternative LNG suppliers through Poland and Croatia’s infrastructure to phase out Russian pipeline imports via TurkStream.
In the same vein, instead of investing European funds to repair the Russia-damaged Druzhba pipeline, Hungary could prioritize further diversification of oil supplies (including optimizing Croatia’s Adria pipeline capacity) and expand its domestic refining capabilities.
With its energy system secured, Hungary could leverage its valuable expertise and capacity in automotive, battery, and chemical production to revitalize its manufacturing sector. The benefits of Budapest’s market liberalization could also spill over across Europe, as the continent works to close critical energy and defense gaps. Europe’s industrial base has been among the hardest hit by energy crises, and Hungary (already home to an established technology and chemicals industry) is well positioned to help reverse ongoing deindustrialization in these spaces.
Hungarian citizens voted for economic growth anchored in closer EU ties and stronger partnerships.
The question, now, is whether Magyar’s new center-right leadership will replicate Orban’s cronyism or transform the nation into a thriving European economic hub.
Olga Khakova is a nonresident senior fellow in the Atlantic Council’s Global Energy Center.