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With the Russian President Vladimir Putin shortly to meet US President Donald Trump to discuss the Ukraine war in Budapest, we take a look at Russian-Hungarian relations, the trade dynamics between them, and why it is beneficial for Budapest to be involved in a Ukraine settlement. The Russian president and Viktor Orban, the Hungarian prime minister, spoke on Friday (October 17) to make preparations. The Putin-Trump Budapest summit is expected to take place towards the end of this month or in early November.
Hungary serves as a bridge into the heart of Europe and provides crucial infrastructure and investments between West and East. Its economy is well-developed, with key industries including automotive manufacturing, which also has an export component; electronics; and pharmaceuticals. Agriculture is also noteworthy, as the country produces grain, vegetables, and fruits for both domestic consumption and export. The chemical and metallurgical industries primarily export to the rest of the European Union (EU).
Hungary’s trade policy is heavily influenced by its membership in the EU, granting it access to numerous trade agreements. This includes agreements with Canada (CETA), South Korea, Japan, Vietnam, and New Zealand, with the latter beginning provisional enforcement in 2024. The EU maintains Economic Partnership Agreements (EPAs) with countries across Africa, the Caribbean, and the Pacific, which Hungary benefits from as an EU member.
In addition, Hungary’s trade relations are supported by the European Economic Area (EEA) agreements and bilateral treaties the EU has with non-EU European countries like Norway, Switzerland, and Iceland. However, Hungary does retain warm relations with Russia and has been critical of EU attitudes towards Moscow. It powers its industrial base by importing gas from Turkiye, some of which is Russian in origin.
Hungary has a population of approximately 9.68 million. It has a GDP (PPP) of around €196.15 billion, with a GDP per capita (PPP) of approximately €14,171. The country’s GDP growth is projected at 2% for 2024, indicating stable economic performance.
Hungary’s bilateral trade relationship with Russia has seen fluctuations in recent years: it was valued at approximately €4.75 billion in 2021, increased to €9.26 billion in 2022, but fell to €6 billion in 2024. Of this, about €5.5 billion was Hungarian imports of Russian gas.
Hungary’s main exports to Russia include pharmaceutical products, such as packaged and special medicines, as well as miscellaneous manufactured articles and food preparations, although the volume of these exports has been affected by sanctions and supply chain difficulties.
The Hungarian government has been highly vocal in its defense of its Russian gas supplies, saying that without this access, and switching instead to more expensive imports, the Hungarian economy would reduce its economic productivity by about 10% of its GDP. Hungary also suffers in part because it is landlocked and therefore dependent upon other neighboring countries to follow similar policies. At present, Italy, Austria, and Slovenia, together with Bulgaria and Serbia, have been supportive and have the infrastructure in place to deliver gas to Hungary.
However, pressure from Brussels to change these mindsets has been intense. Consequently, Viktor Orban, the country’s prime minister, has stated that he was elected by the Hungarian people to do what is best for Hungary and that Brussels should respect this democratic position. Brussels, for its part, is saying that Hungary must follow EU policy.
In 2021, Hungary signed a 15-year contract with Russia to supply gas bypassing Ukraine. The agreement provides for the supply of 4.5 billion m³ of gas per year—3.5 billion m³ through Serbia and 1 billion m³ through Austria. It will be possible to change the terms of the contract only after ten years. Last year, Hungary received a record volume of natural gas from the Russian Federation—7.6 billion m³ through the Turkstream main gas pipeline
However, Hungary also aims to reduce its gross inland gas consumption by 16.5% by 2030, a goal that contrasts with broader EU targets. The government’s position is that the country’s energy mix should remain a national competency and should not be compromised by reliance on just one source. Hungary’s battle with Brussels to impose its own will remains an ongoing issue. There is also the issue of compensation to Gazprom should Hungary cancel its gas contract, an amount that could run to tens of billions of euros and which thus far Brussels has shown no interest in acquiring.
While Orban remains defiant towards the EU and is consequently partially loathed by elements in Brussels, he does face national Hungarian elections next year, in which he will be aiming for an unprecedented fifth consecutive term of office. Brussels will be highly supportive of his main rival, Péter Magyar. Yet again, Trump’s influence could be key—as he and Orban get along, with the decision to base a Trump-Putin summit in Budapest a sign that Orban retains Trump’s political preference. Orban will be wanting to ensure that his influence is also seen as influential in any US-Russia-Ukraine peace agreement.
While Russia-Hungarian trade will be a backdrop to the main event, it will be there. Viktor Orban’s concern will be ushering Hungary into an influential position in a post-war Ukrainian development strategy, including contracts for Hungarian companies to assist with a Ukrainian rebuild. The total cost of reconstruction and recovery in Ukraine has been estimated by the World Bank as requiring €506 billion over the next decade. Orban will be wanting to secure Hungary’s portion of that, while Putin wants a settlement in the east, and Trump wants both peace for his Nobel Prize credibility and the prospects of renewed US-Russian trade ties. Neither Zelensky, Von Der Leyen, nor any other European leader is going to be part of this particular round of influence.
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