Greetings from Budapest, and happy Thanksgiving to our American subscribers! First and foremost, if you haven’t already, please check out our shiny, brand new website. I still can’t get over how good it looks. Second, get prepared for a healthy dose of fresh scoops: a skyscraper in Budapest; a public referendum hinting at Huxit; and much more. And click and read our great stories. Recently, together with our core partners, we participated in both the juicy NarcoFiles and the Cyprus Confidential international investigations. And last but not least, please convince your friends that they should take a taste of “Goulash” by subscribing at this link! – Szabolcs Panyi, VSquare’s lead Central Europe investigator
Back in 2016, when the soon-to-be founders of VSquare gathered in Warsaw to discuss our cross-border initiative, we worked to come up with a name. Although we eventually settled for VSquare (standing for V4, the Visegrád Four countries), the runner-up name for our site—proposed by Investigace’s Pavla Holcová—was goulash. But no brainstorming session is ever really wasted, and the name will be served as our new newsletter.
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. In this edition, we’re serving a regional round-up and also taking a look at what’s going on in Brussels.
DE-ORBÁNIFICATION COMING FAST TO WARSAW
As soon as the new Polish government takes power, Maciej Szymanowski, director of the Wacław Felczak Polish-Hungarian Cooperation Institute in Warsaw, is expected to be fired, according to experts on Polish-Hungarian relations with whom I’ve talked. Named after the renowned historian, who taught a young Viktor Orbán in 1987 and later even became an honorary member of his (then extremely liberal) Fidesz party, the heavily politicized Felczak Institute, launched in 2018, has actually been nurturing cooperation between PiS and Fidesz and their (now extremely conservative and far-right) hinterlands. Although Felczak is running on Polish public money and its head was appointed by the Polish prime minister, in reality, it has been advancing the Orbán government’s interests in Warsaw as a soft power/PR operation, according to sources familiar with the institute’s workings (read VSquare’s previous story on this). Since the two countries’ positions are now rapidly diverging due to Orbán’s pro-Kremlin attitude, Felczak, with its full-fledged support for Orbán’s policies, is actually out of step with core Polish foreign and security interests, and has been since at least February 24, 2022 (we have a long read on this one, too). However, once the Law and Justice-appointed Szymanowski is fired and Felczak is de-Orbánificated, it’s unclear what will actually remain of the institute.
POLAND TO INVESTIGATE PEGASUS, FOREIGN ESPIONAGE MAY COME TO LIGHT
Earlier this week, Poland’s likely-to-be next prime minister, Donald Tusk, announced plans to create a special commission to investigate “the use of surveillance tools and methods which have been a question of a public debate for months, especially their immoral and illegal purpose.” While Tusk and the Polish opposition may mostly be interested in how the outgoing Law and Justice government has spied on them with the infamous Pegasus spyware, there’s much more to be uncovered. “Poland has built the most massive tech capabilities in recent years,” one EU country’s senior diplomat dealing with security issues told me, highlighting the concrete and direct knowledge of, for example, Poland hacking the smartphone of a European ally’s government official with Pegasus a few years ago. Moreover, officials working for the European Commission in Brussels also told me that some of their Polish colleagues clearly and strongly suspect their own government to have been behind certain unexplainable leaks, which could have only occurred through cyberespionage. However, the Polish Sejm’s new Pegasus committee will only be launched at the end of this year—so there’s still time to shred some more sensitive documents.
EU TO ALLOW SPYING ON JOURNALISTS BECAUSE OF… RUSSIA AND CHINA?
Meanwhile, in Brussels, the debate over whether journalists should be surveilled or not is expected to heat up again as the draft of the upcoming European Media Freedom Act (EMFA) is in the final phase of negotiations. The issue is with EMFA’s Article 4, which was supposed to ban the surveillance of journalists and their sources, including the use of spywares like Pegasus or Predator. However, a French initiative—supported by Germany and the Netherlands, among others—started pushing for an exemption. Under the EU Commission’s latest draft, the act would not prevent the use of surveillance and spywares against journalists if it can be justified on national security grounds. “Politically, a full ban is just not realistic, so we have to achieve what we can. Some countries argue that their intelligence services need the ability to monitor Russian and Chinese journalists, for example,” an EU Commission official directly involved with the EMFA told me in Brussels.
One of the countries opposing the EMFA’s spyware ban is the Czech Republic. “I know from Czech national security insiders that they warned against Russian and PRC intelligence operatives using journalistic covers, and it’s a strong reason for them to make sure no future legislation prevents wiretapping them—obviously, fully in line with the law where a judge has to approve the surveillance,” Jakub Janda, Czech security expert and director of the European Values Center for Security Policy, told me. What makes the situation more delicate is that it’s actually the Czech EU Commissioner, Věra Jourová, who’s spearheading the drafting of the EMFA, and she has a good relationship with her native country’s state apparatus. In a recent interview with our Czech partner investigate.cz, Jourová said she disagrees with a complete ban on spying on journalists because “criminals who are not journalists could abuse it.”
On a personal note: I’ve been reporting on Russian and Chinese espionage for a decade and am fully aware that their spies indeed use journalistic cover sometimes. But I’m also one of those reporters who’ve been surveilled with Pegasus spyware by Hungary’s pro-Kremlin and pro-Chinese government—allegedly justified by national security reasons. As such, I can’t imagine a more absurd argument.
RUSSIAN SPIES COMFORTABLY COMMUTE FROM VIENNA TO BRATISLAVA
Speaking of the Czechs and Russian spies: A new Czech proposal for the EU’s 12th sanctions package would restrict the free travel of Russian diplomats within the EU’s borderless zone. As the Financial Times’ newsletter first reported, the concern is that while more than 70 Russian diplomats (mostly undercover intelligence officers) were expelled from Prague, those posted at UN institutions in Vienna could still easily travel and operate in Czech territory. But that’s not the only country at risk. “After we expelled 35 Russian diplomats from Bratislava, which had a huge impact on their intelligence networks, they started operating in Slovakia from other countries. I can tell that one of those is Austria,” a Slovak government official with direct knowledge of the situation told me recently. However, the new Slovak government, led by Robert Fico and supported by the Slovak National Party—which is even more pro-Kremlin than Fico’s SMER—is very unlikely to get tough on Russian diplomats. On the other hand, for Slovak national security agencies, it will be crucial to prove to EU/NATO partners that they are still reliable allies, regardless of the new political leadership. “We are smaller than Austria and Hungary, more vulnerable, so we have to rely more on our international partners on intelligence sharing,” the Slovak official added.
BUDAPEST SKYLINE COULD CHANGE DRASTICALLY WITH EMIRATI SKYSCRAPER
Hungary’s capital just celebrated its 150th birthday: Budapest was born out of the merger of Buda, Pest, and Óbuda in 1873. And what could be a better birthday gift than selling out half of a district to Emirati billionaires to erect Dubai-style skyscrapers just a few kilometers behind Budapest’s iconic Heroes’ Square? In recent months, Emirati businessman Mohamed Alabbar, the real estate developer behind Burj Khalifa, has been personally negotiating with high-level Hungarian government officials, according to a Hungarian government-connected source with knowledge of the talks. Alabbar’s company, Emaar Properties, is now officially bidding for the area known as Rákosrendező, a huge plot of state-owned land with a run-down railway yard in the middle (those who take the train from Nyugati railway station may very well remember the area’s authentic Eastern European looks).
According to the source, Emaar would essentially build a “mini-Dubai” in Budapest’s 14th district—a whole neighborhood of high rises, filled with both office and residential buildings, including luxury apartments. The crown jewel of the new Budapest neighborhood would be a 220-240 meters high skyscraper, approximately as high as Warsaw’s Palace of Culture and Science or the Warsaw Spire, or Vienna’s Donau City Tower 1 (currently, Budapest’s tallest building is the recently finished, 143 meters high MOL Campus). “Emaar is essentially the UAE itself,” the source close to the Orbán government said. Hungarian and Emirati officials have been meeting very frequently lately, mostly discussing direct investments and financial support for Hungary. The Hungarian National Asset Management Inc. (MNV Zrt.) is currently evaluating Emaar’s bid, which has also been reviewed at the Orbán government’s cabinet meeting some weeks ago. Emaar, MNV, and the Hungarian government did not react to our request for comment, while the Budapest mayor’s office claimed that they are unaware of the project.
HUNGARY PREPARING FOR “GIVE US OUR EU FUNDS!” PUBLIC REFERENDUM?
Budapest’s streets are flooded with the Orbán government’s new anti-Soros and anti-EU billboard campaign. These posters show EU Commission President Ursula von der Leyen and Alex Soros, son and heir to Hungarian-American billionaire George Soros, and include the slogan, “let’s not dance to the tune they whistle.” The billboards are advertising the new “national consultation,” essentially a nationwide petition, which the government uses to gather their supporters’ personal data. Meanwhile, according to a government-connected source with knowledge of the preparations, pollsters working for the Orbán government are simultaneously conducting secret internal pollings about a scenario where a possible public referendum would follow up the national consultation.
This referendum would be held together with the 2024 European Parliamentary elections (which is held together with Hungary’s local municipal elections). According to the source, the idea would be to ask voters if they want the EU Commission to release Hungary’s frozen EU funds, and gently connect it with Hungary’s EU membership—meaning to float the possibility of “Huxit” in case “we don’t get what’s ours.” Such a referendum may mobilize pro-Orbán voters, and also put some pressure on the EU Commission. However, I’d like to stress that this really seems to be just a scenario at this stage, not a fully elaborated or approved plan.
Got a nice scoop to include in our Goulash newsletter? Contact me at [email protected]
NEW ON VSQUARE
There are many astonishing stories emerging from a South American leak (more precisely, emails from the Office of the Attorney General of Colombia) and the international investigative journalism project called “#NarcoFiles: The New Criminal Order,” but this one by FRONTSTORY.pl about Polish criminals’ involvement in global drug trade is among my favorites. It turns out that Poland, thanks to its vast sea ports, is both a smuggling hub and a source for cocaine-mixing chemicals, and, more tragically, the native country of criminals who were involved in the assassination of Dutch crime reporter and investigative journalist Peter R. de Vries in Amsterdam in 2021.
We’re quite rich in leak-based international stories. Based on leaked documents from offshore companies in Cyprus, FRONTSTORY.pl, together with the Adriatic regional investigative center Oštro, tells the story of how the former VP of Polish oil giant PK Orlen got involved in a Slovenian real estate development project—just as the original Russian investors started to pull out after Russia’s attack on Ukraine.
Atlatszo.hu analyzed lobbying documents freshly filed with the US Department of Justice. The documents reveal that Viktor Orbán’s government paid tens of thousands of dollars to a Trump-connected lobbyist, David Reaboi. Did he achieve much? Well, at least he tried hard to convince the American Jewish public that Orbán’s anti-Soros billboard campaigns are not antisemitic at all. Fun fact: while the Hungarian government was doing everything to charm Trump, their DC lobbyist casually called him an “assassin of the American right,” and changed teams to support Ron DeSantis instead. Ouch.
“The war proved how urgent it was to deepen journalistic cooperation between the Visegrád countries and the Baltic states—and not only to more effectively investigate Kremlin influence operations and sanctions evasion. As many experts predicted, the war has turned into long-term conflict, and ‘war fatigue’ in the countries of the region, whose societies are feeling the impact of the war, has been growing.” In this mission statement, VSquare editor-in-chief Anna Gielewska explains why we’re putting so much effort into cross-border journalism in Central Europe, and why our region matters a lot these days.
It’s not the friendliest environment for journalists in Central Europe these days, but it’s certainly a hostile one for whistleblowers, as a new regional round-up shows. In recent weeks, for example, Budapest’s Corvinus University fired a professor who initiated an ethics investigation regarding an influential family’s child finishing the semester despite not fulfilling semester requirements. Meanwhile, the new Slovak government fired prominent police investigators despite their whistleblower status, which was supposed to mean that the law protected them from being dismissed.
One of the new features on VSquare is that we’ve archived earlier issues of ‘Goulash’, and will continue to do so – when the next newsletter is sent out, we immediately upload the previous (then two-weeks-old) edition on our site. Here’s the link to check out the archive.
BREWING IN THE BOTTOM
ALL EYES ON DONALD TUSK. Having traveled to all Visegrád countries in recent weeks, and having talked with government officials, diplomats, foreign policy experts and journalists, one conclusion I can draw is this: The long-feared war fatigue seems to be expanding to more and more countries. The news cycle has mostly moved on to the Middle East, and news from Ukraine’s battlefields isn’t particularly encouraging. Under these circumstances, Poland’s incoming government, to be led by Donald Tusk (and opposed by President Andrzej Duda) will have enormous influence—and responsibility—over ensuring continued EU support for Ukraine.
First of all, Viktor Orbán’s government in Hungary is poised to have Robert Fico’s Slovakia on board to hinder such joint EU efforts. Of course, there’s still some cautious optimism that 1. Fico will either pursue a foreign policy that’s more moderate than his pro-Kremlin and anti-US rhetoric, or 2. that his three-party coalition will at least limit his ability to diverge too much from the mainstream. But while Fico indeed picked pro-Western career diplomats as foreign ministers for his previous governments, this time, he went for a like minded (anti-Ukrainian and pro-Kremlin) party loyalist by choosing Juraj Blanár. “I would like to have it as Viktor has,” was how one Slovak diplomat explained Fico’s choice. And what many analysts don’t get— because this is something that’s not visible by design—is that Hungary’s influence over Slovakia’s new ruling elite is much deeper than one would think.
Moving on to the Czech Republic: many of my discussions in Prague and Brno came back to the same topic. There’s an increasing possibility that the conservative ODS party, the current five-party coalition government’s leading political force, will be willing to switch sides and eventually ally with Andrej Babiš’s ANO party after the next election. Polls are so depressing for the governing coalition—and ANO is so popular, even without actively campaigning—that internal rifts and domestic problems may well paralyze them, slowly draining energy from continuing the otherwise very positive role that the Czech Republic is playing on the international stage.
Then there’s Poland, which—until the last few weeks of the Polish election campaign—has been Ukraine’s most important regional ally. However, the Jaroslaw Kaczyński-led Law and Justice party sacrificed its pro-Ukrainian foreign policy in hope of courting some far-right voters (it didn’t work). It was followed by Polish president Andrzej Duda, previously portraying himself as the most ardent supporter of Ukraine, and as a personal friend of Volodimir Zelensky. In theory, the change in government in Warsaw could lead to the restoration of Polish-Ukrainian brotherhood, which is especially important considering that Poland’s military, intelligence, and economic support for Ukraine is just on a whole different level compared to the rest of the much smaller Visegrád countries.
Where my Polish interlocutors get pessimistic is this: As Tusk is preparing to overturn many of the outgoing government’s key policies and measures, he is set on a collision course with Duda, whom many expect to use his presidential powers to sabotage much of the new government’s agenda. In the end, while both of them seem to be supportive of Ukraine (despite Duda’s recent flip-flopping) and ambitious in expanding the country’s role in regional politics, a more inward-looking Poland may ultimately emerge from their domestic political conflict.
If you liked our scoops, stories and exclusive analysis, give it a try and read some further articles by our partners!
MORE TO READ FROM OUR PARTNERS
MINISTER CSABA LANTOS’ FORMER SECRET BUSINESS REVEALED. Direkt36.hu, the Hungarian partner of the Cyprus Confidential investigation, found that Viktor Orbán’s energy minister had an offshore company in Cyprus at exactly the time that Viktor Orbán was attacking others for owning such businesses. (Text in English and Hungarian.)
IVO RITTIG OWNS LAND IN THE CZECH REPUBLIC THROUGH AN OFFSHORE SCHEME. The Cyprus investigation’s Czech partner, investigace.cz, revealed that controversial Prague businessman Ivo Rittig has an offshore company which owns Kladno airport and the surrounding area of more than 24 hectares, a house in Karlovy Vary, as well as other land scattered throughout the Czech Republic. Before he acquired the company, it was registered under a strawman who is currently in jail for tax evasion. (Text in Czech.)
THIS IS HOW BLACK CUBE AMBUSHED CIVILIANS FOR A GOVERNMENT SMEAR CAMPAIGN. Ahead of the 2022 Hungarian parliamentary elections, journalists and NGO staff were lured into a trap, which had already been thoroughly reported by Atlatszo.hu last year. LinkedIn, the social networking site, has now confirmed that the Israeli private intelligence firm Black Cube was behind this sting operation, which provided materials to the Orbán government and its propaganda media. (Text in English and Hungarian.)
This was VSquare’s ninth Goulash newsletter. I hope you gobbled it up. Come back soon for another serving!
SZABOLCS PANYI & THE VSQUARE TEAM
VSquare’s Budapest-based lead investigative editor in charge of Central European investigations, Szabolcs Panyi is also a Hungarian investigative journalist at Direkt36. He covers national security, foreign policy, and Russian and Chinese influence. He was a European Press Prize finalist in 2018 and 2021.