The European Union and Hungary are in open conflict over compliance with respect for democratic principles and the rule of law. Politically, Hungary is increasingly isolated among its European partners.
While the public debates mainly concern the political consequences of the dismantling of the rule of law in Hungary, the economic effects of these Hungarian policies have been less at the center. This gap is addressed by this IEP study.
Under the title “To adapt, endure, or engage”, the study analyses how the dismantling of the rule of law in Hungary affects German and other European companies which are active in the country. It defines three so-called 'illiberal illiberal economic policies' with which the Hungarian government can put foreign pressure on foreign companies to nationalize strategic sectors. The study is based on anonymized interviews with German companies and analyzes data from the public procurement system in Hungary.
Finally, the paper presents recommendations for German companies, the German government and the European Commission to preserve the foundations of the European single market.
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