Goulash: Blacklist Compiled by Orbán’s Intelligence Agency; Russia’s Meddling in Germany

FRESH FROM VSQUARE

RUSSIA TRIED TO INFLUENCE GERMANY’S ELECTION. WHICH COUNTRY IS THE NEXT TARGET?

Germany’s elections got messy: the far-right AfD surged, Kremlin trolls spammed memes like crazy, and everyone’s still scratching their heads about whether it made a difference. After all, the main target of Russian trolls, the Christian Democratic Union, clearly won at the end of the day. Investigace.cz’s Paul May caught up with Brian Liston from Recorded Future’s Insikt Group, a cybersecurity expert who spends his days tracking these online troublemakers. May and Liston talked about how Russia flooded social media with disinformation to push the AfD’s Kremlin-friendly agenda and broke down differences between various Russian intel-linked cyber campaigns like CopyCop, Doppelgänger, Overload, and Undercut. Extremely informative—read it here.

SLOVAKIA’S DEFENSE MINISTRY UNDER FIRE FOR JETS CONNECTED TO KAZAKH DICTATOR’S FAMILY

It looks like Robert Fico’s government’s pivot to the East went a bit too far. Slovakia’s Defense Ministry recently bought two luxury jets, including one previously used by the daughter of Kazakhstan’s longtime dictator, Nursultan Nazarbayev. But wait, it gets better: the Florida company they bought the jets from is represented in Eastern Europe by a guy previously linked to the notorious Grupo America drug cartel. Oh, and they apparently skipped a crucial legal step: disclosing their true owners in Slovakia’s transparency register. Maybe it’s time the Slovak Ministry started Googling its plane dealers before shopping? Anyway, this cool new story by the Investigative Center of Ján Kuciak’s Tomáš Madleňák is worth a read.

RENAMING THE EU, DISMANTLING THE COMMISSION: FOR WHAT POLISH AND HUNGARIAN ILLIBERALS SEEK U.S. BACKING

Based on a scoop first reported in a previous Goulash newsletter, my latest article uncovers detailed proposals by illiberal groups in Hungary and Poland—the Mathias Corvinus Collegium (MCC) and Ordo Iuris, respectively—to significantly weaken the European Union. Last week, these proposals were presented behind closed doors to The Heritage Foundation, the influential think tank closely associated with the Trump administration. Their suggested radical reforms (titled “The Great Reset”) include transforming the European Commission into a powerless administrative body and drastically limiting the authority of the European Court of Justice, all under the banner of protecting “national sovereignty.” They even propose renaming the EU the “European Community of Nations” (ECN), echoing the structure of the Russia-dominated Commonwealth of Independent States, the successor to the Soviet Union. After the publication of my article, Ordo Iuris publicly released the full study (available here).

SPICY SCOOPS

There is always a lot of information that we hear and find interesting and newsworthy but don’t publish as part of our investigative reporting — and share instead in this newsletter. 

ORBÁN’S INTELLIGENCE AGENCY ORDERED TO COMPILE NGO AND MEDIA BLACKLIST

Viktor Orbán’s central intelligence body has been tasked with compiling a report and a list of Hungarian NGOs and media outlets that have received any foreign funding over the past decade, multiple government-connected sources told me. The order was given to the National Information Center (NIC)—the intelligence agency responsible for gathering and analyzing information from all national security agencies—not long before Orbán made a chilling statement on Hungary’s national day, March 15: “The stink bugs survived the winter. We’ll dismantle the financial machinery that has bought politicians, judges, journalists, fake NGOs, and political activists… They’ve survived too much.” This was itself a follow-up to a previous threat from February, when Orbán talked about the “full elimination of the Soros network,” a promise to crush independent media and civil society: “Let’s shut off the Soros network’s financial taps, and let state authorities fulfill their sovereignty protection obligations… We could be done with the empire’s Budapest outpost by Easter.” While there has been much speculation about what these threats actually mean, the fact that Hungarian intelligence has now been explicitly ordered to properly list those whom Orbán labels as stink bugs and foreign agents—vowing to eliminate them—marks a dangerous escalation. 

One source familiar with the order confirmed that NIC is, of course, not focusing on, for example, Chinese NGOs registered in Hungary but linked to Beijing’s powerful United Front and the Ministry of State Security, nor on organizations receiving money from Russian proxies. Instead, their focus is solely on human rights and advocacy groups and  independent media outlets that received financial support from Europe or the U.S. in the past ten years. While the surveillance of Hungarian journalists with Pegasus spyware was reported—partly by yours truly—four years ago, to my knowledge, this is the first confirmed instance of Orbán using Hungary’s national security apparatus to openly target NGOs and media on a mass scale. While the true purpose of creating such a report and list using national security agency methods remains unclear, the possible outcomes range from declassifying or leaking the report to fuel a naming-and-shaming propaganda campaign by government-controlled media and the Sovereignty Protection Office  to using it as the basis for prosecution, tax investigations, or new discriminatory laws imposing fines. 

As I previously reported in Goulash regarding NIC’s role in such anti-democratic operations, Orbán seriously risks jeopardizing intelligence sharing with Western partners as it becomes increasingly likely that shared intelligence from countries like the Netherlands or Germany could be misused to target Hungarian civil society instead of real security threats. Also, the foreign funding now deemed a threat to Hungarian national sovereignty by Orbán and investigated by his intelligence could just as well include funding from the British or French Embassy—or even standard European Commission grants. (NIC and Hungary’s government didn’t reply to my request for comment.)

HUNGARIAN PUBLIC FUNDS FLOWED TO POLAND—NOW ORBÁN WANTS THEM BACK

Globe Trade Center S.A. (GTC), a Poland-based real estate holding company, is at the center of one of Hungary’s largest corruption scandals, which has come to light in the past few days. The story traces back to the early 2010s, a time when Viktor Orbán’s close confidant, in-house ideologue, and economy minister, György Matolcsy, was appointed governor of the Hungarian National Bank. Soon after, he began putting public funds into foundations, which in turn funneled money into a murky web of companies—with GTC at the center. This is how billions of forints from the Hungarian National Bank ended up in the Polish company’s luxury and office real estate projects—a process marked by overvaluation, excessive costs, and a stock price crash. 

But where did the money actually go? A newly published report by Hungary’s State Audit Office—which my colleague and I at Direkt36 obtained in draft form before its release (read about it here)—has also pushed for criminal charges, alleging that at least some of the funds ended up in companies linked to György Matolcsy’s son’s friends. And how is there an investigation when Hungary’s authorities are controlled by Orbán loyalists? Simple: Orbán and Matolcsy had a serious falling-out years ago. Now, as a criminal investigation looms, sources close to the Orbán government tell me that, behind the scenes, negotiations have been underway between Orbán and Matolcsy’s circles for some time over transferring at least some of the assets from one dynasty to another. However, complications arise from the fact that a significant portion of these assets is officially owned by a Polish company under Polish jurisdiction—potentially giving Donald Tusk’s government leverage to further complicate matters for Orbán amid already strained Hungarian-Polish relations.

BUDAPEST EXPECTS WESTERN UKRAINE’S ETHNIC HUNGARIAN POPULATION TO RELOCATE TO HUNGARY

Hungary’s government is preparing for the depopulation of Transcarpathia, the western Ukrainian region partly inhabited by ethnic Hungarians, according to a government-connected source familiar with Hungarian-Ukrainian relations. The Orbán government’s complete blockade of Ukraine’s EU accession not only crushes hopes for Transcarpathia’s future within the bloc but also contradicts Orbán’s long-standing “national reunification beyond borders” policy. This strategy is supposed to support the EU and Schengen accession of neighboring countries to ensure free movement between Hungary and Hungarian diasporas. However, with Ukraine’s membership bid stalled and the war’s future uncertain, many of the remaining ethnic Hungarians in Transcarpathia are expected to leave as soon as they can. Beyond security concerns, economic factors are also playing a major role. As Ukraine’s poorest region, Transcarpathia previously offered almost no opportunities for those looking to sell their property at a decent price. However, as Western Ukraine has become the country’s safest area and is expected to emerge as a post-war economic and population hub, property values have risen. This shift means that ethnic Hungarians who stayed through the initial waves of war now have a viable opportunity to sell their homes and relocate. According to my government-connected source, the remaining Hungarian diaspora in Transcarpathia is now estimated at around 70,000—almost half of the 125,000-135,000 recorded in a 2017 study.

BREWING IN THE BOTTOM

By popular demand, we’re bringing back a short and to-the-point portion of bi-weekly analysis of developments in Visegrád region politics. Here’s a quick taste of what’s been brewing in Central Europe, brought to you with the help of VSquare’s Tamara Kaňuchová.

While less visible than its southern neighbor, Slovakia’s human rights reputation is also in tatters. The United Nations has criticized the Fico government’s policies in a 16-page letter signed by eight independent special rapporteurs and experts. The concerns focus on LGBTI+ rights, press freedom, judicial independence, government interference in culture, and restrictions on NGOs. Fico seems unfazed by criticism. Even after meeting with EU member state ambassadors at the Government Office, he stated that his positions remain unchanged. He reiterated that he will not support military aid for Ukraine; intends to work on renewing Russian gas transit through Ukraine; and declared that “Slovakia will never support any EU sanctions against Hungary for its sovereign positions,” signaling that he would veto an Article 7 procedure. As the anniversary of the May 15, 2024, assassination attempt on Fico approaches, Prosecutor Katarína Habčáková from the Prosecutor General’s Office has closed the investigation and officially classified the attack as an act of terrorism. This classification has been confirmed as the final decision. Juraj Cintula’s case file spans more than 6,200 pages, and he now faces a life sentence for the attack.

Meanwhile in Hungary, Orbán has made good on another recent threat, with more than 80% of members of parliament passing legislation to ban Pride events under the guise of “child protection.” Much like his crackdown on NGOs and independent media, this attack has gone largely unnoticed by the European Commission, whose paralysis—combined with the ideological support of a Trump-led U.S.—has emboldened Orbán to accelerate his increasingly extreme agenda. The ban also serves a strategic political purpose, as Orbán attempts to poach voters from the far-right Our Homeland party, a move he seemingly views as a last resort to offset his declining popularity. However, opposition leader Péter Magyar’s TISZA party continues to lead in the polls. A March 12 Medián survey puts TISZA ahead of Orbán’s ruling Fidesz, 46% to 37%, with the far-right Our Homeland trailing at 6%. At the same time, Orbán’s “stink bugs” remark and Hungary’s worsening economic outlook—where inflation is now labeled “surprise inflation” in Orbán’s ever-evolving newspeak, following “war inflation” and “sanctions inflation”—are fueling growing public anxiety. The same Medián poll found that 56% of Hungarians want a change of government, while only 35% want Orbán to remain in power.

Poland’s right-wing president, Andrzej Duda, is visiting Hungary alongside a delegation of Law and Justice (PiS) MPs to attend the annual Polish-Hungarian Friendship Day celebrations on March 21. The event had been suspended since 2022 due to the growing rift between the two countries over Orbán’s pro-Kremlin stance and efforts to undermine Ukraine (here’s a long-read recap of how the once closest allies fell out). Duda is set to meet with his Hungarian counterpart, Tamás Sulyok (whose communications director recently made headlines for calling journalists “defects” or “degenerates” and posting a stink bug photo in response to a media inquiry seeking the president’s opinion about Orbán’s “stink bugs” remark.) Back in Poland, the right-wing political landscape continues to shift, as voters increasingly flock to the far-right Confederation (Konfederacja) party. According to four recent polls, Confederation has doubled its vote share over the past year, jumping from 8-11% to 17-21%, while support for both PiS and junior coalition members of Donald Tusk’s government is reliably eroding. At the same time, Tusk’s Civic Coalition remains in the lead with 31–34%, but the combined support of PiS (around 27–32%) and Confederation suggests that the right-wing opposition is on the brink of securing a majority in the polls.

In the Czech Republic, defense spending is becoming a hot topic again. At a Czech security conference, Prime Minister Petr Fiala warned that Russia could be ready for another war within four to six years, emphasizing that Europe must be prepared. Defending his government’s plan to gradually increase defense spending to 3% of the Czech Republic’s GDP, Fiala stressed the need for stronger military capabilities. Meanwhile, the opposition parties ANO and SPD were notably absent from a security and defense meeting on March 13, drawing criticism for their lack of engagement in national defense discussions. Two weeks earlier, President Petr Pavel (previously, chief of staff of the Czech Armed Forces and then Chairman of the NATO Military Committee) argued that defense readiness should be based not just on GDP spending targets, but on the actual capabilities of the military and the resilience of society as a whole. Meanwhile, as a measure to counter Russian influence and propaganda, Foreign Minister Jan Lipavský became the first EU official to suggest that the European Union should discuss stepping in to support Radio Free Europe following the halt of U.S. funding.

MORE FROM OUR PARTNERS

BÖDÖR’S WIFE OWNS A MILLION-EURO VILLA NEAR NITRA. SHE RUNS A BUSINESS UNDER THE SAME ROOF AS THE WIFE OF THE SIS DIRECTOR. ICJK has uncovered new evidence confirming that one of Slovakia’s most notorious oligarchs has close ties to the head of the Slovak Intelligence Service (SIS). (Text in Slovak.)

A FORMER INTERIOR MINISTER OF ONE OF THE REPUBLICS OF THE RUSSIAN FEDERATION OWNS REAL ESTATE IN THE CZECH REPUBLIC. DURING HIS TENURE, HE HARSHLY PERSECUTED THE POLITICAL OPPOSITION. Investigace.cz’s article discusses how the former head of the Interior Ministry of Bashkortostan owns a company and real estate in the Czech Republic. (Text in Czech.)

THE STATE AUDIT OFFICE FOUND HUGE ASSET LOSSES AND OTHER SERIOUS PROBLEMS AT THE HUNGARIAN NATIONAL BANK’S FOUNDATION, ACCORDING TO A LEAKED DRAFT REPORT. The Hungarian National Bank’s foundations lost a lot of money while associates of bank governor György Matolcsy’s son still profited, Direkt36 writes. (Text in Hungarian and English.)

HUNGARIAN COMMISSIONER INVESTIGATING “USAID CORRUPTION” WAS INVOLVED IN A FOUNDATION WITH OPAQUE AMERICAN FUNDING. Fidesz MEP and government commissioner András László is in the U.S. investigating USAID funding of Hungarian NGOs, likely preparing for a crackdown on civil society and media—but Átlátszó.hu found he was also linked to an NGO that received American funding. (Text in Hungarian and English.)

This was VSquare’s 39th Goulash newsletter. I hope you gobbled it up. Come back soon for another serving. 

Still hungry? Check the previous newsletter issues here! 

SZABOLCS PANYI & THE VSQUARE TEAM