Europe rejoices Orbán’s defeat – but Hungary’s future still remains controversial

The ouster of Hungary’s conservative nationalist leader Viktor Orban is being seen as a victory for liberal democracy and the EU.

The leaders of Poland, France and Germany and European Commission President Ursula von der Leyen were among prominent EU figures to congratulate Prime Minister-elect Peter Magyar on Monday after he won a decisive victory in the country’s election on Sunday.

The ousted prime minister regularly used Hungary’s veto power to block EU decisions, fiercely criticized the bloc and obstructed aid to Ukraine in support of his ally Vladimir Putin – notably blocking billions of dollars of loans and funding to Kiev.

Critics of the EU also say that Hungary’s 62-year-old “illiberal state” was built on rule-of-law commitments the country made when it joined the EU.

Von der Leyen said: “Hungary has chosen Europe. A country reclaims its European path. The Union is becoming stronger.”

Financial markets also appeared to agree, with the Hungarian forint hitting a four-year high on Monday morning and 10-year government bond yields falling by 50 basis points.

Both the Kremlin and the White House considered the Eurosceptic Orbán to be an ideological kindred spirit and a thorn in the side of the EU.

Orbán’s Hungary had acted as a blockader in EU decision-making and policies on immigration, energy and funding for Ukraine.

His ouster and the election loss to the 45-year-old Magyar – a former member of Orbán’s Fidesz party until he founded the centre-right opposition Tisza party two years ago – will be seen as a blow to both Moscow and Washington. America Vice President JD Vance sent to Hungary In support of Orbán just before the elections.

Timothy Ash, senior emerging markets sovereign strategist at RBC BlueBay Asset Management, said the “winners” of the Hungarian election are “Hungary, Europe, Ukraine, the little guy.”

And “losers”? “Trump, Putin, Vance, the big men,” Ashe told CNBC by email.

The White House has not yet commented publicly on the election results. A Kremlin spokesman said Moscow respected the election result and would work for “practical relations” with the country’s new leadership.

Holger Schmieding, chief economist at Berenberg Bank, commented on Monday that a clear majority of Hungarian voters had rejected Orbán’s “illiberal democracy, his anti-EU antics and his pro-Putin leanings.”

“No European policymaker has done more to weaken the EU’s internal cohesion and external influence over the past five years than Orbán,” Schmieding said, citing the prime minister’s efforts to soften sanctions against Russia. stop aid to ukraineRecently vetoed a 90 billion euro ($105.2 billion) loan to Ukraine.

He said Russia may now see tougher EU sanctions, while the bloc may be able to offer more financial aid to Ukraine.

Schmieding said, “More European support for Ukraine is a major blow to Russian President Vladimir Putin. Over time, it could also affect his calculations about how long he can continue his war amid severe strains on the Russian economy.”

Victory 138 seats out of 199 The Magyar Tisza party enjoys a “super-majority” in the Hungarian government and the ability to implement sweeping reforms and policies.

Analysts say the Magyars may try to undermine Orban and his Fidesz party’s changes to Hungary’s constitution and weaken its influence over the country’s laws and media.

However, as a conservative and former proponent of “Orbanism”, it is unclear how much Magyar would deviate from Orbán’s approach.

On Monday, Magyar Posted on Facebook That he would “work for a free, European, well-functioning and compassionate Hungary over the next four years.”

This would be welcome news to Brussels officials, who since 2010 have expressed concern over Orbán’s increasingly autocratic tendencies and pressure on the judiciary and press.

Some analysts told CNBC that what matters is the extent to which Hungary’s political direction will converge with Europe’s political mainstream, with Ukraine’s EU accession, Russian energy, relations with the US and the EU’s broader immigration policy unlikely to remain contentious issues.

Russia also has a strong hold on Hungary’s energy mix.

Does Orban’s departure mean that “Europe now speaks with one voice on all these issues from one day to the next? I don’t think so,” Carsten Nickel, managing director of Teneo, told CNBC on Monday.

He said, “If you look at Trump, the ability of this US administration to maintain pressure on Europe is ultimately tied to trade risks, security risks from the European side to the US. That’s not going to go away. So I think some of the structural factors that give Putin influence, that give Trump influence in Europe, are not going to disappear.”

Zsuzsanna Vegh, a program officer at the German Marshall Fund, told CNBC that it will take time for Hungary to get rid of its dependence on Russian oil and gas. The Eastern European power has continued to import Russian energy supplies despite the war in Ukraine.

“When it comes to the cold, hard facts, Hungary remains dependent on Russia in terms of energy, nuclear, oil, gas, so it’s going to be a complex process of renegotiation,” he told CNBC’s “Europe Early Edition.”

“This is a relationship that will need to be reconsidered, and it will be one of the major challenges for the Magyar government in the coming months and years.”

Still, while he hoped the new government would “take a more cooperative approach toward the EU,” Magyar had already listed foreign policy priorities in his victory speech on Sunday that reflect Hungary’s commitment to Europe.

“He effectively doubled down on Hungary’s classic foreign policy priorities, placing the country firmly within the EU,” he said.