Direkt36 ’s Brussels spy story piece is vivid—park-bench coffees, a recruitment push, whispers about pressure on Commission texts—but it leans on anonymous voices and loaded phrasing, not published artefacts or a clear benchmark for what’s over the line in a city where allies routinely collect on allies. Published on 9 Oct 2025 as a cross-border exposé, it brands Hungary’s tradecraft as uniquely malign without showing receipts or a comparative baseline. This isn’t “kill the story”—it’s invert the workflow: do the hard analytical and investigative work before the prose. Otherwise it’s the same old “their spying is malign, our liaison benign” trope in a new wrapper.

The story painted a vivid picture: Hungarian diplomats under intelligence cover roaming the EU quarter’s parks, inviting Hungarian Commission staff for coffee, fishing for gossip, and—in at least one dramatic encounter—sliding across the table a recruitment declaration to sign.

The lead figure—known only as “V.”—was said to have headed Hungary’s clandestine network in Brussels until his recklessness brought the operation down in 2017.

Other vignettes fleshed out the network: another officer, “E.,” who after his Brussels stint reportedly reappeared inside an EU security directorate as a national expert; Hungarian officials allegedly pressured by intelligence handlers to tweak Commission reports; and a permanent representation led by future Commissioner Olivér Várhelyi, accused of turning a blind eye. The through-line was stark: Hungary’s Információs Hivatal (IH), the civilian foreign-intelligence service, was not serving national interest but the narrow political power of Viktor Orbán’s government.

Presented in the polished tones of international investigative journalism, the article promised to expose a hidden scandal. Yet beneath the drama, the evidence rests almost entirely on anonymous recollections, “according to sources” attributions, and rhetorical flourishes. No expulsion orders, no leaked tasking memos, no administrative footprints. In other words: it lands more like a morality play—or a political play—than a dossier.

The Blind Spots of “Objective” Investigations

Brussels is arguably the world’s busiest square mile for political intelligence. It packs the European Commission, Council, Parliament, and NATO headquarters into one neighborhood—plus a sprawl of permanent representations, think tanks, lobbyists, consultancies and security services that quietly trade information every day. In that ecosystem, the line between diplomacy, liaison, open-source intelligence (OSINT)1, human intelligence (HUMINT)2, signals intelligence (SIGINT)3, and outright espionage is thin, negotiable and often judged in hindsight. Precisely because of that ambiguity, any investigation that seeks to recast routine collection as scandal owes readers the highest standards of evidence. Otherwise, it’s political prose.

The article at issue—the multi-outlet collaboration asserting that, in the mid-2010s, IH ran clumsy recruitment operations in Brussels, was exposed, and saw its local network “collapse”—invites a contrarian reading.

Not because allies never overstep (they do), nor because consortia can’t add value (they can), but because the piece leans so heavily on anonymous recollection, interpretive framing, and rhetorical escalation that its own claim to objectivity becomes a live question.

This essay stress-tests the article’s evidentiary standards, framing choices, and proportionality. It also asks what “public interest” looks like when reporting on historical tradecraft in a city where everyone spies on everyone else—yes, allies too.

Take 1. What the Article Claims—And What It Actually Proves

At core, the article claims that (a) IH officers under diplomatic cover attempted to recruit EU-employed Hungarian nationals (!!!); (b) one officer (“V.”) pushed so aggressively that he drew institutional attention; (c) by 2017 the “network” effectively collapsed; and (d) the purpose was partisan power rather than statecraft.

Some of this is inherently plausible. Allies do cultivate compatriots; services do overreach; specific officers get burned by sloppy tradecraft. None of that is extraordinary. But extraordinary claims—collapse of a rezidentúra years later, or tasking to serve a single political clique—require documentary artefacts, administrative footprints (persona non grata actions, accreditation refusals), declassified tasking, disciplinary records, or court-verified facts.

What we actually get is a chain of anonymized recollections, a handful of vivid vignettes, and a cascade of evaluative language (“obviously and clumsily / nyilvánvalóan és ügyetlenül,” “irresponsibly / felelőtlenül,” “like a domino, it dragged the whole system down / dominóként rántotta magával az egész rendszert”). Institutions are quoted with “no comment”—standard in this domain—while the narrative treats that silence as corroborative shadow.

The result is a story that asks readers to substitute trust in unnamed sources for the evidentiary anchors that make strong claims falsifiable.

If “V.” truly tried to have a target sign a source cooperation agreement (beszervezési nyilatkozat), where is a redacted image? If a rezidentúra “collapsed,” where are expulsion notes, accreditation withdrawals, or oversight references? If EU security flagged actors, where are document numbers, case IDs, or dates? Absence doesn’t prove events didn’t occur—intelligence is messy and rarely leaves tidy public trails—but without artefacts, dramatic assertions remain interpretive rather than demonstrative.

Take 2. Brussels Is Not a Church: Parity of Practice Matters

One framing pillar claims that “network-building and information-gathering (hálózatépítés és információgyűjtés)” of this type belongs mostly to non-EU powers (Russia, China, Iran), not EU member states. That’s a political framing, not reality. Network building and information gathering based on this is one way to gather intelligence. In Brussels, capable EU and NATO members run some mix of intelligence tradecraft and liaison-based collection against one another’s policies, intentions, and negotiating positions.

The Merkel–NSA–Denmark episode did not happen on Mars: a Danish review showed the NSA4, with Copenhagen’s help, tapping Danish internet cables to monitor senior EU leaders, including Angela Merkel. Leaks later showed U.S. surveillance of French presidents Chirac, Sarkozy, and Hollande, serious enough for the Élysée to convene an emergency meeting. Germany’s BND5 curtailed elements of its NSA cooperation - hardly limited to ‘war on terror’ —after disclosures that U.S. “selectors” had hit European officials and firms. And the UK’s GCHQ6 ran the sweeping Tempora program, tapping hundreds of fibre-optic cables and sharing the take with Washington, effectively vacuuming up European traffic transiting the UK.

These cases show allied-on-allied intelligence in Europe is structural, not aberrant—so it’s misleading to treat Hungary’s alleged operations as unprecedented. The Szájer-scandal7 did not arise from a concerned citizen’s police report; it bore the hallmarks of a European peer-service operation, underscoring how politics, leverage, and intelligence narratives constantly collide in the heart of the EU quarter.

If the article claims Hungary went beyond accepted allied norms, it owes a comparative baseline: how, concretely, did Hungarian methods deviate from what France, Germany, Italy, or others have historically considered “within bounds” in Brussels? Without that, readers are nudged toward a moralized asymmetry: when “they” do HUMINT, it’s malign; when “we” do liaison and networking, it’s benign. Emotionally satisfying, analytically thin.

Take 3. From Networking to Espionage: Where Is the Line?

The piece is strongest where it describes conduct that—if documented—would cross the line: payments for sensitive information, an attempt to get a target to sign a cooperation document, or requests for non-public internal texts. But most vignettes orbit the liaison/intelligence gray zone common in Brussels: coffees with compatriots in parks, spot-and-assess mapping (“tippkutatás”)8, gauging attitudes, trading gossips. None of this is a smoking gun.

The legal/diplomatic threshold is not whether a diplomat asks questions, but whether they induce transfer of protected information by means that breach the Vienna Convention and host/organization rules: payment, improper inducement, or coercive leverage. Even then, practice tends to be handled administratively (silent withdrawals, cooling-off) rather than via scandal. If the article claims a breach, it should show precisely where the conduct crossed codified lines—not rely on the reader’s moral intuition that “this felt wrong.”

Take 4. Motive Imputation Is Not Evidence

The sweepiest claim is that IH’s Brussels activity served partisan power rather than the state. That may be true—but without access to tasking orders, budget lines, and distribution lists, it’s inference, not proof. Governments routinely redefine “national interest” around their agenda. To show partisanship, you would need documents linking collection directly to political rather than policy objectives. The article doesn’t provide that.

Raising the Bar: Beyond Narrative

Cross-border formats (Der Spiegel, Der Standard, De Tijd) lower risk and broaden reach, but they can create echo effects—shared sources and frames can mimic independent corroboration. That’s why method transparency isn’t optional: how many sources, how many first-hand, what corroboration steps, and which claims rest on a single voice. The same goes for funding or institutional briefings—if an NGO, OSINT lab, or peer agency shaped the story, readers deserve to know.

Proportionality matters too. Most alleged events predate 2018 and have long circulated in Brussels corridors. Publishing names, roles, and methods without artefacts risks more heat than light—especially when the payoff is moral clarity rather than hard proof.

Language also betrays bias: “obviously and clumsily,” “like a domino,” “the domain of Russia/China but not EU states.” These aren’t neutral descriptors; they nudge toward condemnation. A rigorous approach anchors claims in artefacts, numbers, and dates—and tests benign explanations rather than waving them away: routine compatriot liaison, spot-and-assess mapping, organizational churn mistaken for collapse. None of these disprove misconduct, but they prevent narrative inevitability.

What Stronger Journalism Would Show

• Receipts: redacted recruitment forms, accreditation notes, expense records.

• Methods: source counts; first-hand vs. hearsay; single- vs. multi-source claims.

• Comparative baseline: how other EU services draw the line in Brussels.

• Chronology: verifiable timestamps anchoring vignettes in time.

• Provenance notes: who supplied which document and how it was corroborated.

Why It Matters

In Brussels, everyone collects—even allies. Journalism that brands one state’s HUMINT as uniquely malign while others’ liaison is treated as benign must meet higher evidentiary standards. Otherwise, it teaches the wrong lessons: that coffee equals espionage, that “no comment” equals guilt, and that allied collection is an aberration.

Skepticism here isn’t cynicism. It’s civic hygiene. If we’re going to name and shame, we must also show and prove.

Conclusion: Evidence First, Narrative Second

A stronger version of this investigation would lead with documents, dates, and administrative footprints—not recollections and rhetoric. If specific officers crossed bright lines, show the artefacts; if consequences followed, cite expulsion notes, accreditation withdrawals, case numbers, ethics files. Otherwise, we’re connecting dots with the ink of suspicion.

Hungarian investigative journalism—at its best—can do this. Too often, as here, the craft leans on scenes and adjectives instead of data and verification. The writing is the easy part; the real work is collection, provenance checks, adversarial corroboration, and method transparency. Without that, moral clarity drifts into moral theatre.

What “working harder” looks like in practice:
• Publish the receipts (forms, metadata, travel/expense, internal memos, docket numbers).
• Show your methods (source counts; first-hand vs. hearsay; how each claim was corroborated).
• Add provenance & funding notes (OSINT vs. insider vs. institutional; who funded; conflicts).
• Provide a comparative baseline (where conduct crosses law, Vienna Convention, internal rules).
• Offer replicability (timelines, appendices, a small public data room for audit).

In a city where everyone collects—friends included—the burden on any newsroom claiming objectivity is to raise the bar above narrative. If we invoke the public interest, we should submit our journalism to the same evidentiary rigor we demand of the institutions we scrutinize.

Skepticism toward this piece is not hostility to journalism; it’s a demand that the work be less performative and more probative.

Do the hard part first—the research, analytics and intel—then write.

Disagree? Good. I don’t write to be right—I write to be tested. Bring your “Tenth Man” view, your sharpest counterpoint, or even a quiet doubt. Sometimes the most useful critique is the one that unsettles my own thinking.

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Growth rates are the trendlines of governance and indicators of momentum. By focusing on annual changes rather than absolute levels, they strip away inherited advantages and reveal whether leaders are truly moving their country forward—and how quickly. Hungary’s decade-long record shows a clear pattern of declining competitiveness: respectable in some years, but consistently outpaced by peers, leaving it entrenched near the bottom of the regional league table.

The Great Illusion: Political Stability Does Not Necessary Mean Economic Performance

Imagine your country as a publicly listed company. Citizens are the shareholders, the Prime Minister is the CEO, Parliament approves the strategy, and auditors—statistical offices, Eurostat, the ECB—publish the accounts. Elections are the annual general meetings where contracts are renewed—or terminated. (And yes, every four years is far too infrequent—which is why, in my essay on rebuilding accountability in public office, I argued for more frequent and enforceable mechanisms of accountability.)

In theory, this is democracy. In practice, most citizens evaluate their CEO the way amateur investors judge companies: by scanning one big, shiny number. GDP growth is the favorite headline—politics’ equivalent of a CEO boasting, “Revenue up 5%!” The problem is that reality, like financial markets, doesn’t reward a single number. It rewards sustainable, balanced, peer-beating performance.

No investor would be satisfied with a CEO announcing, “Revenue grew 5%” while competitors delivered 7–10%, margins collapsed, and the product pipeline ran dry. Yet in politics, governments often get away with exactly this trick—especially when there is no competent opposition or an independent media willing to play watchdog.

Hungary is a perfect case. Between 2015 and 2024 it had the most stable government in the region: an uninterrupted CEO (Viktor Orbán), full control of the boardroom (supermajority), and no shareholder revolts. Political stability should have been a competitive advantage: continuity, long-term planning, credibility. It was constantly presented as one.

But the peer-comparison scorecard tells a different story. Across the decade, on economic and financial year-on-year growth rates—the momentum, the trendlines of governance—Hungary’s CEO delivered one of the weakest performances among regional peers. Stability hardened into complacency, and complacency produced chronic underperformance.

That is the illusion. This essay argues for breaking it.

Citizens should act like activist shareholders: benchmarking government performance against peers, measuring not only growth but also stability, discipline, and resilience—and issuing a red card to underperforming CEOs, no matter how glossy their annual letters look.

Hungary Inc.: Turning Statistics Into a Shareholder Report

The logic is simple: you don’t judge a company on one quarter’s revenue, but on consistent performance against peers. The same principle applies to governments.

Between 2015 and 2024, eleven Central and Eastern European (CEE) and Baltic economies—Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia—competed on the same pitch.

Fifteen economic and financial KPIs were tracked annually (Eurostat, ECB). These included GDP growth, GDP per capita, productivity, disposable income, inflation, debt, deficits, employment, wage growth, the current account, and others.

For every indicator, the year-on-year growth rate was calculated—2016 vs 2015, 2017 vs 2016, and so on—to capture direction and momentum. Each year, countries were ranked from first (score = 1) to last (score = 11). For “lower is better” indicators, such as inflation and debt, scores were inverted so that discipline was rewarded. Annual scores were then summed and aggregated across the decade. The lower the total, the stronger the performance.

This produces a robust dataset covering ten years—long enough to filter out one-off shocks and reveal enduring trends.

Crucially, it punishes selective storytelling.

You cannot trumpet GDP growth if inflation wipes out real incomes, debt piles up, or productivity stagnates. You cannot boast about wages if median income in PPS lags peers. Success comes only from broad, consistent improvement.

The results?

Hungarian Government Economic Momentum Scorecard: Yearly Gains, Decade-Long Underperformance versus Peers

Over the decade, on momentum (growth rates), Hungary ranked 10th out of 11—ahead only of Slovakia. Bulgaria, Romania, and Croatia formed the top tier; Lithuania, Latvia, Poland, Slovenia, and Czechia anchored the midfield; while Estonia, Hungary, and Slovakia trailed as laggards. Momentum, after all, is the trendline of real performance.

If this were a corporate peer review, Hungary Inc. would be a laggard stock—not bankrupt, but chronically underperforming its sector.

Hungary’s position was not based on cherry-picked numbers or on “bashing Orbán” emotional narratives, but on year-on-year growth across key indicators: GDP per capita, disposable income, wages, labour productivity, inflation, debt, fiscal balance, exchange rates, FDI, consumption, and inequality1. Each year, every country was ranked from best to worst. Hungary did not break into the top tier on any of them.

Some years looked decent in isolation. But compared with peers, Hungary was consistently outpaced.

Its record was not one of collapse but of lagging momentum—others simply advanced faster.

The fundamentals told the story citizens lived daily. Disposable income held up relatively well compared to neighbors, but at the expense of household consumption, dampening demand and economic vitality. Repeated inflation spikes destroyed the real value of wage gains. The forint’s weakness against the euro added another layer of erosion, making travel, imports, and savings more expensive. Families saw that even as wages rose on paper for some, median wages declined in real terms—and real purchasing power slipped further behind.

Volatility punished the overall score. Economies that avoided wild swings steadily climbed the table. Hungary stumbled with repeated “yellow cards”: inflation shocks, fiscal swings, inconsistent income growth. For investors, volatility destroys trust; for citizens, it creates daily insecurity—whether their paycheck will stretch or their savings will hold value.

One fact sets Hungary apart: it had the most stable government in the region from 2015 to 2024. While most countries saw contentious changes, Hungary kept a single management team in place. In corporate terms: a CEO with full control, uninterrupted tenure, no shareholder revolts. That stability should have been an advantage—continuity of strategy, long-term planning, investor confidence.

Instead, relative performance across ten years of year-on-year growth rates left Hungary at the bottom of the momentum league. Stability did not translate into efficiency, productivity, or future readiness. It calcified into complacency.

If the country were a listed firm, analysts would conclude: “Revenue growth positive, but balance sheet weak; margins eroded by inflation; volatility risk elevated.” In other words: a sell recommendation, not a buy.

The Unfulfilled Role of Shareholders

In capital markets, CEOs cannot hide for long: analysts, rating agencies, and financial media publish comparisons that strip away spin. If a company trails its sector, investors know it.

Opposition parties, the supposed shareholders, rarely translated Eurostat and ECB tables into narratives ordinary citizens could grasp. Facebook likes mattered more. They failed to apply pressure, failed to offer credible solutions, and remain stuck on the “bitching lane” of politics. Nobody explains how they would outperform the government—what they would build better.

Independent media, another set of shareholders, reported individual statistics but seldom built comparative, holistic stories about the economy. They were politically critical of the government, but largely silent on its real economic anomalies. Instead, they leaned on emotional narratives that deepened polarization.

In ten years, neither opposition nor media effectively challenged the government’s narrative. Even now, as economic and social pressures create a growing pool of potential protest voters, the alternative CEO and board have no clue how they would address the country’s challenges.

Citizens—the real shareholders—were given banners (“5% growth!”) instead of scoreboards (“10th of 11 over the decade”). Without opposition or media pressure, complacency flourished. The CEO stayed in place despite chronic underperformance.

If citizens acted like activist shareholders, they would demand the same discipline markets demand: benchmarking against peers, consistent execution, and clear strategic direction. They would ask whether Hungary grew faster than Bulgaria, Romania, and Poland; kept debt lower than Slovenia and Czechia; innovated like Estonia and Lithuania; and raised median incomes above inflation. The scorecard answers no.

Remaining in the business metaphor, the investor’s logic is clear:

Recommendation: Hold / Sell. Growth respectable, but peers outperform. Balance sheet and volatility risks high. Key pipelines weak.
Peer comparison: Ranked 10th of 11 over the decade. Only Slovakia fared worse.
CEO accountability: In any listed company, activist investors would demand change. A CEO who underperforms the sector for a decade is replaced.

Yet in politics, incumbents survive by celebrating isolated wins. A “5% GDP” headline is the CEO’s glossy annual letter—carefully crafted to obscure a decade of missed benchmarks.

The Final Verdict

The CEE league on momentum (growth rates) is not about humiliating any flag. It is about cutting through selective growth storytelling and asking the only question that matters in a competitive region: compared to whom?

On that measure, the Hungarian government failed. Ten years, fifteen KPIs, thousands of datapoints: second from the bottom, despite unmatched political stability. In business, no investor would tolerate such a CEO. Shareholders would revolt, boards would fire management, and new leadership would be installed.

Citizens should be no less demanding. The scorecard doesn’t care how polished the speech is—it only cares where you rank when the numbers are added up. And Hungary, after a decade of stability, sits near the bottom of its league.

For shareholders, the verdict is clear: red card for the CEO.

Would you keep your CEO?

Disagree? Good. I don’t write to be right—I write to be tested. Bring your “Tenth Man” view, your sharpest counterpoint, or even a quiet doubt. Sometimes the most useful critique is the one that unsettles my own thinking.

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Hungarian banks not long ago sold citizens the dream of affordable homeownership through Swiss franc mortgages—only to turn them into lifelong debtors. This essay reveals how banks profited, how governments staged “solutions,” and why the 2025 CJEU ruling C-630/23 could finally upend the system.

Homeownership is Hungary’s Holy Grail.

Hungarians don’t just like to own homes — they worship them. After centuries of losing land to empires, wars, and politics, a house isn’t just a roof here. It’s a shrine to security. That’s why 92% of Hungarians own their homes, one of the highest rates in Europe.

But in the early 2000s, banks found a way to weaponize this cultural obsession. They dangled foreign currency (FX) mortgages — loans denominated in Swiss francs (CHF) or euros (EUR) — that looked like a ticket to middle-class heaven. Glossy ads. Cheerful bankers. Numbers that made regular forint (HUF) mortgages look like daylight robbery.

And we believed them. Why wouldn’t we? When the priest, the banker, and the politician all sing from the same hymn sheet — trust authority, obey the experts — who dares hum another tune?

The Pull and the Push: How to Sell a Trap

• The pull: 5–7% lower interest rates compared to standard HUF loans. CHF loans were cheaper because Switzerland had lower interest rates than Hungary.

• The push: TV spots and ads where a banker told you, “Your income doesn’t matter — just your property.”

Let that sink in. Your income didn’t matter. Only your house did. Because to the banks, you weren’t a borrower. You were collateral wrapped in skin.

The Hungarian Banking Association even went on record in 2006, assuring people that the forint would never weaken beyond 270–275 HUF/EUR. Spoiler: it tanked to nearly 330. That wasn’t just a bad forecast — it was the financial equivalent of a doctor prescribing cigarettes for a cough.

FX mortgages became the preferred option promoted by both the financial and political systems. The entire banking industry pushed a very aggressive mortgage propaganda.

How Banks Profited — Twice

Every FX loan was a magician’s trick:

You applied in forints (HUF, Hungary’s national currency).

You were approved in forints.

You were told the numbers in forints.

Then — abracadabra! — at contract signing, your loan turned into a Swiss franc chimera.

At disbursement, Banks converted francs to forints at below-market rates, padding their pockets. For Repayment, your forints were reconverted to francs at worse rates, gutting your repayment power.

Profit in. Profit out. All legal. All applauded.

And if the forint strengthened?

Many banks hedged both ways. That wasn’t risk management — that was you betting on both horses and still losing.

Government’s Pseudo Steps — Orchestrated Theater

When the Swiss central bank unexpectedly allowed the franc to jump, it rattled Central and Eastern Europe, with Poland and Hungary hit hardest as countless franc-denominated mortgages became unserviceable and family budgets were thrown into disarray.

The Hungarian state didn’t bungle the FX mortgage crisis. It choreographed it.

Between 2011 and 2015, instead of letting courts enforce EU consumer protection rules (i.e. EU Directive 93/13/EEC on unfair terms in consumer contracts) provides that contracts with unfair terms are not binding on consumers, and unfair terms must be removed (they “shall not bind the consumer”), with certain consequences, the government staged a series of “solutions” that looked good on paper but were theater for the cameras:

• Fixed-Exchange Windows (2011): Only the wealthy could participate. If you had cash, you got temporary relief. If not, you got a front-row seat to your own financial funeral.

• 2015 Conversion: Foreign-currency mortgages were converted to forints at prevailing market rates — after the forint had fallen 73%. Borrowers absorbed the entire loss. Banks smiled. Politicians called it a solution.

The result? Families who had repaid more than the original loan still owed the same amount. The government didn’t fail to protect citizens — it ensured banks could never fail on its watch.

In Hungary, “helping people” meant legalizing the FX scam, going against the EU consumer protection rules and blocking all legal remedies. That’s not incompetence. That’s prioritizing profit over people, then dressing it in bureaucratic respectability.

Poland vs. Hungary: Same Storm, Different Boats

Poland faced the same FX mortgage tsunami, but its courts, not politicians, handled significantly better the fallout. By 2025, nearly 190,000 lawsuits had been filed there, many ending with borrowers recovering real money.

Hungary? The government blocked legal avenues, staged “pseudo-solutions,” and declared the matter closed. Justice wasn’t delayed here — it was abolished by decree.

The New Game-Changer: Case C-630/23

On April 30, 2025, the Court of Justice of the European Union (CJEU, Case C-630/23) dropped a bomb. It declared:

• Contracts that dump all currency risk onto uninformed consumers are unfair.

• Removing the unfair term isn’t enough — restitution must restore the consumer to the pre-contract position.

• Partial refunds? Not acceptable. Crumbs don’t fix decades of policy negligence.

If this ruling is enforced in Hungary, the FX mortgage saga isn’t history — it’s a live wire. Thousands of cases could be reopened. Banks could face massive paybacks. The government’s 2015 “grand solution” could be exposed as unlawful window dressing.

The Bottom Line — How a Generation Was Sold Out

Hungary didn’t just mismanage FX mortgages. It mis-sold reality itself.

Foreign-currency loans were marketed as opportunity. In truth, they were a masterclass in shifting risk while preserving profit. Borrowers became collateral, contracts were traps, and governments acted as referees only for the winning team: the banks.

When the 2008 crisis hit, the Swiss franc appreciated by more than 70% against the forint. Families were crushed. Banks collected hidden spreads. Government “remedies” arrived too late or excluded the majority.

Poland chose courts over decree. Hungary chose legislation over justice.

The C-630/23 ruling proves one thing: the contracts may be old, the propaganda stale, but the injustice is still alive. Hungarians didn’t just buy homes. They subscribed to a system designed to bleed them slowly.

Will Hungary seize this chance to correct history, or double down on the narrative that everything was done “for the people”?

Disagree? Good. I don’t write to be right—I write to be tested. Bring your “Tenth Man” view, your sharpest counterpoint, or even a quiet doubt. Sometimes the most useful critique is the one that unsettles my own thinking.

Don’t forget to subscribe for more Critical Hungary Insights!

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Notes for Foreign Readers

1. HUF: Hungarian forint, Hungary’s currency.

2. FX mortgages: Loans denominated in foreign currencies (CHF or EUR).

3. CJEU: European Union’s highest court. C-630/23 is a landmark ruling on unfair consumer contracts.

4. Polish comparison: Shows a neighboring country addressing FX mortgages with legal recourse rather than political decree.

In Hungary, “freedom of enterprise” is a trap. The law does not protect entrepreneurs; it ambushes them. To obey the system is often to perish within it. The Hungarian entrepreneur who survives is not the most compliant, but the most evasive—the one who bends the rules just enough to stay alive. Here, illegality is not an exception to the system. It is the system’s byproduct. The grey economy is less a shady alternative than a state-sanctioned refuge—the only place where survival remains possible. Paradoxically, the true outlaw in Hungary is not the rule-breaker, but the rule-follower.

Politicians, policymakers, and the National Bank proclaim their devotion to “strengthening” small and medium-sized enterprises. But the framework they impose—punitive taxes, suffocating regulation, predatory enforcement—ensures the opposite.

In Hungary, compliance isn’t rewarded; it’s penalized. The entrepreneur who plays strictly by the book shrinks, fails, or disappears. The one who survives often does so by slipping into informality. This isn’t moral weakness. It’s systemic design.

The obstacles are not glitches in the system. They are the system. Each policy tilts the field further against small players. And when legality becomes impossible, illegality becomes inevitable.

Let’s follow the chain of pressure.

The Domino Effect of Systemic Barriers

1. Standard VAT Rates

Hungary’s standard VAT rate of 27 %—the highest in the European Union—puts domestic SMEs at an immediate disadvantage. Germany’s rate is 19 %, meaning identical goods cost about 8 percentage points more in Hungary—equating to approximately 6–7 % higher prices at the consumer level. In price-sensitive markets, that difference can determine who survives and who shrinks.

While the EU’s 2021 e-commerce VAT reforms—particularly the introduction of the One-Stop Shop and removal of low-value import VAT exemptions—did simplify compliance and boost collected revenues Taxation and Customs Union, they did not alter the underlying VAT rate, nor fully address the long-standing competitive handicap faced by Hungarian micro and small businesses.

2. VAT Payment Frequency

Unlike most EU peers who pay quarterly, Hungarian microbusinesses hit a low monthly threshold that forces pre-financing VAT. This creates chronic liquidity crises: often entrepreneurs pay the state before they get paid by clients.

3. Narrow Tax Options

The once-popular KATA flat-tax regime, gutted in 2022, now excludes most freelancers, exporters, and growth-minded businesses. What was designed to simplify now penalizes ambition: outgrowing KATA means drowning in complexity.

4. Tax Authority as Predator

Where other EU tax authorities act as advisors, Hungary’s operates like a debt collector. Miss a deadline, and your accounts can be frozen. For small businesses, this often means instant death—not rehabilitation.

5. Consumer Protection Overreach

Hungary extends EU consumer protections to extremes, imposing warranty rules and penalties that multinationals can absorb but one-person shops cannot. Selling a handmade product now carries obligations only a corporate compliance team could meet.

6. Banking Costs

Banks pile on fees—monthly charges, transaction taxes, FX margins—while fintech alternatives are throttled. Small firms pay some of Europe’s highest costs just to move their own money.

7. Public Procurement Gatekeeping

Tenders are written for the big and the connected. SMEs rarely qualify, cutting them off from lucrative state contracts. What should be opportunity becomes exclusion.

8. Licensing and Permits

Starting or expanding a business means weeks—or months—of approvals, inconsistent across municipalities. What takes days online elsewhere in Europe becomes an unpredictable slog in Hungary.

9. Capital Poverty

With collateral-heavy banking and shallow venture markets, Hungarian SMEs remain underfunded. Ideas are not scarce; financing is. Growth stalls because the tools to fuel it don’t exist.

10. Biased Subsidy Distribution

EU funds flow not to the hungry but to the well-fed—large, connected firms. Applications are labyrinthine, deadlines short, criteria selective. For small players, “development support” is a mirage.

11. Forced Informality

Payroll taxes, VAT, and admin overload drive many into the grey economy. This isn’t greed; it’s endurance. Hungary’s informal economy ranks among Europe’s largest because legality itself has been priced out of reach.

12. Administrative Overload

For microbusinesses, half the job is paperwork. Online cash registers, invoice reporting, statistical filings—tasks multinationals outsource but that eat up the hours of a two-person shop. Compliance becomes the business.

13. Cultural Stigma

Entrepreneurs navigating impossible burdens are branded “cheats.” Public discourse blames the victim while ignoring the system that made legality unattainable. The state manufactures illegality, then moralizes against it.

14. Labor Laws as a Growth Trap

Hiring even one employee is prohibitively expensive due to payroll taxes and rigid rules. For microbusinesses, staff expansion often means stepping outside the law—or never expanding at all.

A Paradox of Talent

Hungary has unintentionally bred some of Europe’s most resourceful entrepreneurs. They survive on razor-thin margins, navigate Byzantine bureaucracy, and improvise around arbitrary rules. In another country, these skills would be celebrated as resilience and ingenuity. In Hungary, they are criminalized.

This is the tragedy: the state manufactures informality, then wastes the entrepreneurial energy it produces. What could be Europe’s most competitive SME sector becomes a survivalist underground.

A Broken Incentive Machine

The Hungarian state does not enable enterprise—it manages it. It controls entry points, distributes subsidies selectively, and bleeds small players through taxation and fees. The result is not growth but dependency.

When compliance is impossible, illegality is rational. The grey economy is not pathology—it is adaptation. To condemn entrepreneurs for informality is to punish them twice: first by denying them viable legal paths, then by stigmatizing the survival strategies that follow.

The Way Forward

This need not be Hungary’s destiny. Other European states prove that fairness and proportionality can unleash SME competitiveness. Hungary could:

• Reduce VAT pressure on small players.

• Restore scalable, transparent tax regimes.

• Tailor consumer laws to firm size, not corporate lobbying.

• Open procurement and subsidies to genuine competition.

Freedom of enterprise requires more than slogans.

It requires rules that allow survival without illegality.

Until that happens, Hungarian entrepreneurs will remain trapped in a system where the most law-abiding act may be to stop obeying the law at all.

Disagree? Good. I don’t write to be right—I write to be tested. Bring your “Tenth Man” view, your sharpest counterpoint, or even a quiet doubt. Sometimes the most useful critique is the one that unsettles my own thinking.

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