Hungary's meandering takeover negotiations with Austrian bank Raiffeisen have dominated regional and international discourse over the past two days. Stratfor noted yesterday that these talks are not just about a financial transaction — they are also an expression of Hungary's unique set of policies in response to the strategic challenges it faces.
A diplomatic gaffe by a minor Hungarian government official Jan. 7 has garnered little international attention but is as worthy of examination as the Raiffeisen saga, if not more so. Szabo Jozsef Andor, the agriculture attache with the Hungarian Embassy in Bucharest, gave an interview to a Hungarian-language newspaper in Romania. According to the diplomat, Hungary is drafting a program through which to buy plots of land in Western Romania, where the Hungarian-speaking Szekely minority lives. The Hungarian Foreign Ministry's spokesperson publicly rejected the statement, and the ambassador in Bucharest even denied that his subordinate had given an interview about the issue. While controversial, this very idea fits into Central European countries' wider regional initiative to protect their economic and territorial control.
Another Paradigm Shift
The incident is another revelation of the extent of Budapest's geopolitical concerns and provides insight into the changing dynamics within Central Europe. For the past two decades, the perennial battleground between Russia and the West that spans the corridor between Poland and Bulgaria was quiet. Following the collapse of the Soviet Union and other European communist regimes, these countries found refuge in the seemingly ever-expanding and flourishing European Union.
Now, the paradigm has shifted again. The European Union is mired in a deepening crisis, with Brussels increasingly focused on the problems of the eurozone countries as Russia becomes relatively more assertive. As a response, countries in Central and Eastern Europe are reassessing their foreign strategies.
The regional push to keep national control over agricultural lands is part of this trend. These moves have deep political significance in Central and Eastern Europe, a region where nationalism remains strong and most countries maintain century-old territorial disputes. In addition, ahead of Hungary's general elections to be held in the first half of 2014, Hungarians living abroad recently gained the right to vote — making the issue of extraterritorial land ownership politically beneficial.
In Hungary, a country that still feels intensely slighted by the 1920 Treaty of Trianon, which dismembered the country and gave the lands in question to Romania, the media has focused on the potential purchase of territory in another country. However, this initiative is among several in the region whose more important goal is to prevent foreigners from buying land. When Central and Eastern European nations joined the European Union between 2004 and 2007, they were granted the right to apply moratoriums on the sale of lands to foreigners. These countries feared that individuals and companies in Western Europe would take advantage of their stronger economies and buy cheap farmland in the new member states. The transitional periods were supposed to end in January, prompting a string of counteractions by Central European countries.
In October 2013, Bulgaria's parliament controversially approved an extension of the moratorium on farmland sale to foreigners until 2020. Under pressure from the European Union, the law was brought up for assessment in the Bulgarian Constitutional Court. Bulgaria did not relent and announced that the country could set up an agency or commission to impose restrictive measures on land use by foreigners.
In the case of Romania, Bulgaria asked the EU Commission to allow a limit on the land sales for individual foreigners of 100 hectares — a proposition that Brussels rejected. Bucharest is now trying to encourage Romanians to buy land by offering them economic incentives, such as state guaranteed loans. A new law passed at the end of 2013 set a series of buying pre-emption rights, which gives the state a greater degree of oversight on land sales.
In July 2012, the Hungarian government approved a bill banning foreign investors from buying farmland. Under pressure from the European Union, Budapest issued a new, toned-down version of the law in June 2013. The current law restricts land ownership to professional farmers who have lived and worked in Hungary for at least three years.
Even if some of Hungary's recent measures and statements from Hungarian officials ahead of the elections have a clear idiosyncratic tone, it is becoming more evident that Budapest is not alone in seeing the future ramifications of a weakening European Union and a rising Russia. The issue of control over national farmland is perhaps the first that has brought about the unilateral yet parallel shaping of policies in Central Europe. In the future, and for other issues, all countries in the region will not react exactly the same way, but from Poland to Bulgaria, it is becoming increasingly clear that an almost automatic alignment with the West is no longer the default foreign policy in light of growing uncertainty about the future of the Continent.