How does Hungary's 'government of peace' arm itself?

While the Hungarian government has for many years been using bellicose rhetoric, this use has only intensified since the invasion of Ukraine. Though it was not the invasion that prompted the drive for the improvement of the Hungarian military. After ascending to power in 2010, Fidesz initially announced a series of programmes which would ultimately prove insignificant. Real improvement began in earnest in 2014, in a similar fashion to other NATO member states.

Why 2014? In short, Russia’s annexation of Crimea forced NATO member states into action. And in Hungary, the positive economic performance of the country allowed for increased spending on military development. This was also supported by a change in attitudes towards security among the population.

Between 2010 and 2014, NATO’s defence planning was spearheaded by the UN’s "out of area" operations, i.e., those operations not directly affecting the territories of member states, due to the conflicts in Afghanistan and Iraq. During this period and at NATO’s request, light armament acquisition was prioritised and, generally, less was invested on defence.

Since the Russian threat took more concrete form in 2014, the mindset within NATO changed. The importance of territorial defence came to the fore, leading to a shift in policy towards the procurement of heavy weapons and a greater emphasis on defence spending.

Though, according to some experts, it was neither the annexation of Crimea in 2014, nor the subsequent agreement reached at the Wales NATO summit that most influenced Hungary’s defensive planning. Rather, the migrant crisis of 2015 put military development squarely at the centre of government thinking.

There was certainly scope for this development: in 2014, defence spending constituted just 0.8% of GDP, a paltry amount in comparison to others within NATO. In comparison, in 2023 we reached the threshold of 2% envisaged for member states, a percentage which the government has committed to maintain into the future. Indeed, the 2024 figure for military expenditure is expected to amount to 2.1% of GDP.

As can be seen on this graph, the Hungarian government typically spent less on defence as a proportion of GDP than the Polish, Slovak, or Romanian governments until the 2% threshold was attained.

The program, not for publication

In 2017, then Defence Minister István Simicskó announced the Zrínyi 2026 Defence and Miliary Spending Program (a Zrínyi 2026 Honvédelmi és Haderofejlesztési Program), "the largest and most comprehensive defence programme of the last twenty-five years". The program projects that the government is to have spent more than 9,6 billion USD on defence by 2026.

Current military development projects should conform to the framework set out in the Zrínyi 2026 program, but the program is not publicly available, with the exception of a leaflet containing few specifics but plenty of photos. Neither is the plan’s content widely known by military experts.

According to a source who has insight into its development, though, current procurement patterns are in keeping with the directives as set out in Zrínyi 2026. What is known is that the program is divided into two parts: the defence part and military development part. The former includes the provisioning of adequate supplies, alongside the development of the reserve system. The latter concerns all the abilities and weapons systems of the Defence Forces, as well as the combat equipment and gear of soldiers.

What and from where?

The issue of buying or producing in-house is particularly sensitive in defence industries all around the world. In addition to the given circumstances in a country (economic situation, raw materials, etc.), political and strategic considerations also contribute to this decision on internal proportions, since the extent to which a country depends on imported military equipment and raw materials affects its ability to promote its own interests.

Domestic defence procurement in recent years can be placed within a German-Turkish-Israeli triangle.

According to the sources involved in the technical development of Zrínyi 2026, so few defence and security companies could be found within Hungary when the project was being designed that, with their cooperation, it would have been impossible to equip even individual sections, let alone the entire army. The Orbán government had to look abroad.

Building upon existing relations with the automotive sector, German industries were a natural first choice for the government. Industries to which the government has now committed itself for another 30-40 years as, on average, this is the active service life of a weapons system, provided there is no war. It is worth dwelling on such relations with Germany for a moment, since the Hungarian economy is becoming dependent not only on the performance of the German automotive industry, but now its arms industries as well.

Why is the government increasing our exposure?

The German automotive industries based here can be considered among the main contributors to the Orbán government’s economic policy performance, as the German automotive giants, the Hungarian government, and influential players in German politics have developed a system of relationships based upon mutual advantage and dependence. (This has been discussed at length by Direkt36.)

Under Chancellor Angela Merkel, the major car companies present in Hungary, unlike large German companies in other sectors, have not been being persecuted but have significantly improved political relations. These same political relations have also been bolstered through arms sales in the same period. Major purchases from German companies (Airbus H145M and H225M helicopters, Leopard 2 tanks, PzH 2000 self-propelled tanks, etc.) started to be announced in 2018, since which time the German government’s interest in the Hungarian rule of law situation has taken a backseat. By 2019, Angela Merkel, in contrast to the thoughts of the EU’s anti-fraud office, publicly announced that Hungary was making good use of EU funds.

At the end of 2021, the Bundestag elected the Social Democrat Olaf Scholz as Chancellor. While the Orbán government has nowhere near such a close relationship with him as it once enjoyed with Angela Merkel, this has not made any significant difference to the development of economic relations. Geopolitical tensions of recent years point towards obstacles within world trade, which will inevitably lead towards the greater interdependence of the two economies, despite any real or apparent tensions between the two governments.

The strengthening of this alignment with Germany, according to the experts we Interviewed, has much to do with the existing political and economic relations, but is also warranted due to military considerations. NATO has been expecting its member states to acquire heavy armaments and, for obvious reasons, looking East was not an option. Of the major Western arms-producing nations, the Italians didn’t come into the question, the French were not producing the heavy tracked vehicles that the Defence Force wanted, the British defence industry was too naval-focused, and the relevant authorities saw little development potential for any heavy weapons produced there. The United States was, at this time, not supplying anyone other than Egypt and South Korea with Abrams tanks. Germany was therefore, from a military point of view, left as the only viable option for the purchase of the requisite heavy weapons.

Rheinmetall as a major player

Rheinmetall is the most important player from the German defence industry operating in Hungary. From these defence giants, the Hungarian armed forces are purchasing:

• Lynx tanks (209 or 256 units for between 1,9-2,2 billion USD),
• the StrikeShield active protection system to enhance the Lynx's protection systems (209 units for at the then exchange rate, approximately 140 million USD),
• ammunition ("worth hundreds of millions of euros"),
• Hero type "suicide drones" ("worth hundreds of millions of euros").

Although Airbus has a German-French majority ownership, the following acquisitions can also be considered as tied to Germany. Twenty H145M helicopters (300 million USD) and a SAMOC air defence control centre, which is needed to organise the various elements of air defence into a unified system.

The Iris-T air-to-air missiles are also German developed. These missiles (30-34 at a cost of €13.6 million each, around 14 million USD at the then exchange rate) are planned to be used on the modernised Gripen fighter.

Besides Rheinmetall and Airbus, the role of Krauss–Maffei Wegmann among the German miliary companies should also be highlighted. The government has put in orders with them for Leopard 2 tanks and PzH 2000 self-propelled howitzers. While the exact cost is unknown, some estimates have put the cost at around 0,8-1,1 billion USD. Close links between Fidesz and the CSU political party in Germany have aided this cooperation with Krauss–Maffei, a company with a strong Bavarian identity. And, although it was never expected that Krauss–Maffei would make large industrial investments in Hungary, this agreement did bring the deal with Rheinmetall closer.  

The Turks in the Picture

Turkey started to develop its military industry at a rapid pace 15-20 years ago and now has cutting edge military equipment in its production arsenal, alongside simpler equipment. It also receives strong political backing. This political will coincides with Hungarian ambitions, and the friendly relations fostered between Viktor Orbán and Recep Tayyip Erdo?an have meant that the door to cooperation in the defence industry stands wide open. Experts believe that German-Turkish military cooperation is much more extensive than that which is publicly visible, so we cannot ascribe this Turkish military procurement solely to the government being big fans of Turkey. Hungarian Defence Forces will buy Gidran combat vehicles from Turkey. A factory for this is to be set up in Gyor in addition to the one already operating in Kaposvár and, according to our information, the purchase of Turkish drones is also currently under negotiation.

Israeli connection, American presence

Israeli military technology has long been seen amongst some of the most advanced in the world. While many consider it as a competitor to the European defence industry, Germany is an exception to this. Berlin is, in effect, opening the gates of Europe to this Israeli technology with its own purchases. 

The Hungarian Defence Forces are buying digital radios and communication systems (E-LynX digital radio family) from Israel as well as eleven ELM 2084 multifunctional radars at a total cost of €8.7 million. Rheinmetall is also involved here as well as Rheinmetall Canada are the ones making the radar compatible with NATO systems. The Spike LR2 anti-tank missile, the purchase of which was announced in July 2021, is also Israeli produced, but how many and for how much the Defence Forces will buy them is still unknown.

The existing German-Turkish and German-Israeli military technology cooperation has simplified Hungary’s entry into this "club", but this in no way precludes the government from buying military equipment from elsewhere. 

The US presence in the Hungarian defence industry remains limited as compared to other countries in our region. This is no doubt partly due to Orbán and co not wishing to "muddy" relations with Russia through large-scale purchases from the US. It is also certainly partly because US arms sales data are public and the system is simply too transparent for the government’s taste. And partly because current political relations with US leaderships are not particularly amicable, so the US is far from the centre of Hungarian defence procurement.     

This does not mean, though, there is no connection: the purchase of the NASAMS air defence system, estimated to cost in the region of 800 million USD, was announced by Péter Szijjártó at the beginning of 2019 (more on this here).

In addition to this, the procurement has been secured of one hundred and eighty AIM-120C-7 AMRAAM and sixty AMRAAM-ER missiles, various missile elements, training missiles, missile containers, and communication equipment. Although of lesser importance as compared to the air defence system, the government has purchased twelve US-made MRZR4 ultralight all-terrain vehicles, as well as various gas turbine jet engines (the FJ44-4 for Aero Vodochody's training aircraft and the V2500 for Embraer).

Other players

The purchase of two KC-390 Millenium military transport aircraft, which can be refuelled in the air, from Embraer in Brazil can also be considered significant. The purchase price has not been disclosed, but experts estimate that the two aircraft could cost around 170 million USD. According to the plans, Embraer also intends to set up an R&D centre employing 200 engineers in Budapest. 

Outside of Hungary, Embraer KC-390 aircraft are only used by the armed forces of Portugal within Europe. So, yet again, it seems that the decision was not necessarily one based on the integration of the aircraft into the system, but more likely on the ideological and political affinity between Viktor Orbán and former Brazilian President Jair Bolsonaro. (Viktor Orbán attended Bolsonaro's inauguration in January 2019 in person. Besides him, this was a gesture made only by Israeli Prime Minister Benjamin Netanyahu and Portuguese President Marcelo Rebelo de Sousa.)

The Defence Forces have previously purchased Mistral missiles from the French and, in 2018, two second-hand Dassault Falcon7x transport aircraft and sixteen H225M helicopters were purchased from the French Airbus.

Given the current political relations, it may be somewhat surprising that at the beginning of 2019 the Defence Forces ordered between 150-200 Swedish made Carl Gustav M4 grenade launchers, estimated to be worth approximately 55 million USD.

Compared to previous years, the 180 million USD spent by the Hungarian Defence Forces in 2022 and 2023 on the replacement of soldiers’ personal equipment is smaller, but not negligible. Unfortunately, the details of who these purchases were made from and what exactly they are for has not been revealed. What we do know is that "the new equipment will furnish the wearer with strength, courage, and pride".

How much?

Like many other things, we don’t know exactly how much money is involved here. Although we are definitely talking about thousands of billions of forints, even without possessing all of the data. Access to this data has, since the passing of the Defence Act in 2011, become much more restrictive, and, even then, some of the purchases have not been financed from the defence budget, but from another defence fund which is completely separate from it.

We do know that the Zrínyi 2026 programme was planned with a budget of at least 9,6 billion USD. Although only part of this amount will be used for procurement, as this budget will also finance, for example, the volunteer reserve system, programmes related to defence education, and the salaries of the members of the armed forces.

This is not the only domain in Hungarian public life where the citizens knows that the government is buying something with their money, but the price is unclear. Contracts are typically signed in euros or dollars and payment arrangements are subject to agreements that are not otherwise publicly disclosed for understandable reasons. But at what euro or dollar rate an instalment is to be repaid can make for a huge difference.

If we only look at the cost of the equipment for which estimates can be found, we seem to be talking about a sum exceeding 5,5 billion USD since 2018, and this may well be only a fraction of the big picture. The Hungarian situation is typical, in that defence forces are largely informed about the purchases through manufacturers’ announcements and there is often no professional consultation with military leadership. This disregard of the needs of the armed forces is often subject to criticism by individual military commanders.

Procurement has, for many years, been decided on business-political grounds by a very narrow circle of interested parties. It is merely fortuitous when such interests align with those of the military. Previously, decisions were made by government commissioner Gáspár Maróth, or those in his immediate surroundings but, after he was replaced, these matters came to rest in the hands of a narrow circle of ministers with business rather than defence experience.

It became clear that the government was looking for business, not military, experience when Maróth was entrusted with miliary procurement, and this became even more evident with the appointment of Kristóf Szalay-Bobrovniczky as Defence minister. Although the minister and reservist captain likes to recall his family’s military past, he is still a businessman with close ties to government.

If we consider defence spending on equipment procurement as a percentage of the defence budget, we can see that the government has been hugely ambitious: in 2022 Hungary almost exceeded 50% (NATO recommends 20%), which puts it in second place in Europe. 

Is this posturing justified?

It must be said that there was (and is) room for improvement: the Hungarian defence industry almost completely disintegrated around the time of the regime change at the beginning of the 1990s, despite previously possessing significant capabilities and military R&D activity. No government subsequently made any substantial progress in this area until the mid 2010s.

In comparison to its neighbours, Hungary has been the latest to modernise its armed forces. Although the government is now strongly pushing this unprecedented acceleration in army development and equipment procurement, other countries in the region are doing the same and, indeed, typically with higher defence spending per capita.

The Orbán governments have been increasing defence spending since 2014 but, since 2017, their spending on military acquisitions has accelerated to a pace which has never been seen before.

All the experts we interviewed concurred that this is certainly not one of Fidesz’s worst policies, but rather can be classed as among one of the better ones.

This emphasis on military development is, from a military standpoint, rational as, simply put, we keep spending money on defensive forces so that we need not deploy them. However, while the data on defence spending is difficult to access and any defence-related strategy (defence industry, military development, or defence industry innovation) is kept secret, it is understandable that citizens believe that these thousands of billions of forints be spent in other areas, such as education or health.

And, while high-tech army recruitment posters are regularly encountered all over the country, the results of the astronomical amounts spent on manufacturing relocation and procurement will not lead to a high-tech armed forces. Rather, at best, we will have a normal defence force equipped with modern military technology and members who will not be seen as ‘preservers of cultural legacy’ by their allies in international exercises, as our sources in the armed forces are, only half cynically, in the habit of remarking from time to time.

Szilárd Németh, as State Secretary in 2018, set the goal for the army to become the strongest in the region. This it will not be. Firstly, everybody in the region is developing at a similar pace and, secondly, it is pointless to compare the Hungarian Defence Forces with Polish or Romanian forces, which operate on a different level and possess entirely different capabilities. But this does not mean that the development that has been initiated is not necessary.

The increased attention paid to procurement and the increased expenditure improve the position of the Hungarian Defence Force in the international rankings: according to the annual analysis of Global Firepower, which takes into account not only military factors, but also geography, economics, and natural resources, Poland is ranked 20th, Romania 47th, Slovakia 67th, the Czech Republic 48th, Bulgaria 58th and Hungary 54th out of 145 countries in the world ranking (for comparison: in 2014 it was 60th).

Problems of staffing and expertise

In this article we have been concerned with the issue of procurement, but it should also be mentioned that the lack of manpower and expertise is a problem that cannot be compensated for by all the procurement in the world. And this wave of rejuvenation in the armed forces will only serve to exacerbate this. The question thus remains as to who will use the tools and resources that will be delivered or produced in the coming decades. The ageing Soviet-Russian equipment still in service in some places will be almost completely withdrawn when the acquisitions mentioned here are received. What will be its fate? Stored as spare equipment is the probable answer. The government in no way wishes to hand any equipment over to Ukraine in exchange for Western equipment.    

It should also be stressed that the announcement of an acquisition does not imply an immediate change in the military asset pool, as such assets must be contracted years in advance. There was also debate within the armed forces about the grounds for the purchase of tanks, although, based on the experience of the conflicts of recent years, it seems that they are very much needed. It would, therefore, appear that Orbán and co. placed the order in good time, as a Leopard 2 can now, for example, cost about one and half times more today than when the government announced the purchase a few years ago due to the huge industrial upswing.

There could be a faster transition in the field of drones, but the government is still trailing behind. Everybody now wants these after seeing their use in the war in Ukraine. Negations are, our sources say, still ongoing, but increased demand has driven their price sky high. Though initiatives are being taken. The first domestically produced jet drone prototype is to be unveiled in the summer, but these should be considered nowhere near as prominently as the acquisitions. In the summer of 2023, Orbán announced a joint Israeli-German-Hungarian venture that would be set up to develop and produce combat drones. This will naturally involve Rheinmetall’s participation and is just the beginning of a much longer process. 

All the equipment purchased will take a few years yet to arrive, and then staff must be trained to use it properly so that it may effectively take the place of the equipment being withdrawn. Of course, some recently acquired equipment is already in use, for example, government officials routinely use the Airbuses and Falcons, purchased for troop transportations, for their sourjourns around the world.

While German military technology has a reputation for reliability, the Hungarian state has been acquiring a lot of equipment that is yet to be tested in combat (e.g., Airbus helicopters or Lynxes) and is not being used by other armed forces. Lynxes are not even in service with the German army, and are used nowhere else outside Hungary, while Gidrans are only in service with the Turkish army.