Strained Diplomatic Relations Affecting Hungary’s Economy: A Study on US-Hungary Relationship and its Implications

Viktor Orbán Visits Donald Trump as NATO Celebrations Take Place in Hungary

Historically, Hungary and the United States have had strained relations, which is reflected in Hungary’s economy. In March, Hungary marked 25 years since joining the NATO defense alliance. The celebration at the Central European University in Budapest was attended by the American ambassador, local democracy advocates, researchers, professors, and former ministers. Notably absent from the event was Prime Minister Viktor Orban, who had led Hungary’s entry into NATO in 1999. The American ambassador emphasized Orbán’s commitment to a democratic future as part of the West, even though US-Hungary relations remain strained.

Recently, Orbán visited the United States as a guest of former President Donald Trump but did not meet with the Biden administration. The strained relationship between Hungary and the United States, as well as other EU countries, has created uncertainty in Hungary’s economy. Professor Peter Mihályi from Corvin University of Budapest noted that the United States’ displeasure with the Hungarian government is a significant factor affecting the economy. The strained diplomatic relations could also have implications in Brussels, even if not explicitly stated.

In recent years, Hungary has turned toward the East, with changing tones in the speeches of Western investors. While Germany was once a loyal investor in Hungary, with strong support from Chancellor Angela Merkel, sentiments have shifted. A survey among Germany’s industrial management showed a significant decline in trust in Hungary. Some foreign investors like an Austrian company affiliated with Spar have publicly expressed dissatisfaction with how foreign investors are treated in Hungary. This discontent has not just been limited to EU countries but has also been felt among Western investors.

Despite these challenges, Western companies are still investing in Hungary albeit with some adjustments . Transparency International highlighted that while Chinese projects have introduced a new culture of secrecy in Hungary ,the hostile attitude towards EU countries and USA has not extended to business sector . However ,Hungary has introduced additional taxes particularly targeting foreign companies . The future of Hungry’s economy may be influenced by its diplomatic relations with Western countries and investment climates .

Sophia Reynolds

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