In June 2017, the Hungarian government passed a highly controversial law on the "Transparency of Organisations Receiving Foreign Funds”, also known as “LexNGO”. This law deems that organisations receiving more than 24,000 euros from foreign foundations or states must be officially registered as a “foreign funded organization” - which they should then announce on their publications, website and press statements. The new ruling bore striking similarities with Russia's law on foreign agents, passed in 2012. It was justified on the grounds that foreign-funded NGO-s can serve “foreign interests” and thereby endanger the sovereignty and security of the state of Hungary.

The anti-Western hysteria has turned into a witch-hunt, with the governmental side portraying foreign funded organisations as soft power tools aiming to undermine the government’s power. It can lead to “innocent”, non-political organisations being blacklisted because they receive funding from one of the bigger external donors of the Hungarian civil and cultural sector. Germany is definitely one of them, along with Norway, the European Union and the United States. Particular attention is being paid to George Soros, the new archenemy of the Hungarian government.

For a long time, the European Union was something of a safe haven for civil society. Viktor Orbán, the Hungarian Prime Minister has put an abrupt end to this era, aiming to label civil society organisations as political enemies. Since 2010, when Orbán returned to power, NGOs with foreign funding have been at the brunt of governmental crackdowns, including police raids, tax office investigations and political smear campaigns. “LexNGO” is the escalation of this illiberal logic that does not tolerate NGOs and aims to silence and intimidate critical voices.

This political environment added to the already existing challenges of the Hungarian NGO sector: lack of long-term funding sources and the absence of a real social constituency. Civil society in Hungary slowly adapted to the hostile political environment, many started to form loose coalitions to respond to the attacks.

Right now, few of those who fall under the scope of “LexNGO” decided to protest against the law by not registering themselves – risking their termination by the authorities. But even if the worst scenarios will not occur, “LexNGO” might become a suitable tool to divide civil society internally, turn away NGOs from politics and have an intimidating, chilling effect on the civic sphere.

The European Union’s institutions so far gave an atypically strong and quick response: In May 2017, the European Parliament decided to start a process based on Article 7 of the Treaty of the European Union that may result in the suspension of certain membership privileges because of Hungary’s abandonment of the EU’s Fundamental Rights. Also, an infringement procedure has already been launched against Hungary because of this law.  But generally, after the adoption of the “LexNGO” the international uproar was less loud than after the attacks against the Central European University in Hungary, and EU member states remained rather silent.

In this “choir of silence”, Germany raised its voice officially against the LexNGO – but have done nothing so far beside this rather obligatory criticism, mainly from the SPD-led Foreign Ministry. The very generous and beneficial donor activity of German cultural foundations such as the Goethe Institute and party foundations such as the Friedrich Ebert Stiftung and Konrad Adenauer Stiftung operating in Hungary makes the NGO and think-tank grantees of Germany especially vulnerable to attacks coming from the Hungarian government, enabling them to easily label NGOs as German agents in the future.

Generally, we can see a pattern where there is some sporadic criticism and calls for sanctions in Germany because of Hungary’s illiberal tendencies, and they are getting louder in the campaign. The official political line, especially from CDU-CSU, is to defend their allies in the European People’s Party. As an important example, most MEPs of German CDU and CSU defended Orbán in the European Parliament, voting against triggering Article 7 in May. Also, Chancellor Merkel has recently refused the calls for financial sanctions against Eastern member states that are abandoning the common policies.

This soft attitude can be well explained by Realpolitik, mainly German business and industrial interests. But the stakes are high: Orbán is working on undermining Germany’s political influence in the region and speaking out against German influence louder and louder. Orbán was also vocal about his hopes that the “revolution” can hit Germany as well – or, in other words, that AfD will triumph. Furthermore, the government of Hungary, since 2010, have abandoned almost all elements that were previously adopted from German’s consensual democracy. They have been ignoring the opposition, weakening the Constitutional Court, changing the German-style electoral system and undermining media freedom.

With the official state attacks against the NGOs, Hungary changed gear, while going directly against the core values of Europe and Germany. And as the case of Poland indicates, Hungary’s illiberal policies have a spill over effect in the region, spreading to Poland and elsewhere. Orbán and Kaczinsky are doing their best to destroy Germany’s positive image in Central Eastern Europe, painting Germany as the capital of the liberal, decadent, pro-immigration EU that is doomed to fail. For this reason, tolerating Hungary’s behaviour for short-term interests would be a huge long-term, strategic mistake for Germany – a point worth to consider after the elections are over.