Last week I traveled to Budapest to attend a conference on the thorny issue of EU-Ukraine relations. The visit prompted me to explore an apparent paradox. Here is a decent little country in the heart of Europe—good food, safe streets, rich soil—which could be a Pannonian version of Holland, but it is not a happy place. Hungary presents a comfortable, modestly prosperous image to the visitor, but it is inhabited by people prone to melancholy, who complain more bitterly of their daily lot than their far poorer eastern neighbors. Recent surveys suggest that Hungarians are “extremely dissatisfied with their lives and pessimistic about their future.”

What went wrong? I shared a light lunch with a friend whose assessments of Hungary’s social and political scene are trustworthy. Dr. Peter Kiss is an Hungarian-born American who retired from the U.S. Army a decade ago after 20 years’ service. Back in his native city, he now teaches at the elite University of Public Service (formerly the Miklos Zrinyi National Defense University). Peter is a Cold Warrior of yore. As a high school senior and then student in the bland years of Janos Kadar’s “goulash socialism,” he could only dream of the fall of the Wall. A cultural and social conservative, he should be a natural ally of Hungary’s present, ostensibly nationalist government—but this is not the case. Peter’s experiences of Hungary’s post-communism have been disheartening, prompting him “to start reading some leftist papers.”

My first question concerned Viktor Orban, Hungary’s Prime Minister for the past three years, who has the reputation of l’enfant terrible of the European Union. On May 17 he deepened his government’s latent tensions with Germany by comparing the policies of German Chancellor Angela Merkel to the 1944 Nazi invasion of his country. “The Germans already sent the cavalry once, and in the form of tanks,” Orbàn told listeners to his weekly radio broadcast last Friday, “Our request would be that they did not send them again.” Who is Orban, and what does he stand for? Someone who is chronically in the EU’s bad books, and who has the guts to stand up to Merkel, presumably is a decent sort…

Peter Kiss: I have a negative view of Orban. Everything done by him and his party has only one goal: to keep Orban and the party in power. If riding the nationalist sentiment gets them there, then they will act accordingly. If some other ideology appears preferable, they will embrace it. In the meantime they are not doing much good for the country, for the economy, and for the prosperity of the average Hungarian. The policies of this government have made the economic environment unpredictable. Investors are either fleeing the country if they can, or else they are stuck. Foreigners with investment capital will think twice or three times before they commit themselves to a project in Hungary. The rate of investment has fallen significantly over the past three years. Orban is a very dividing person. He thrives on conflict. He picks up fights when there is no real sense or need for those fights. He has successfully divided the country between his supporters –who have very close ranks, and who have a strong leader they can follow—and the opposition which is disunited. Orban managed to create a very firm base of support, very determined and united, but he has not been a good leader for the country.

ST: But he has resisted various attempts by Brussels to meddle in Hungary’s internal affairs…

PK: True enough, but the EU is no longer an economic community, it is a political union which expects certain rules to be followed. Orban has challenged this by removing, over the past three years, various checks and balances that allow democracy to function. For example, over the past twenty-odd years the Constitutional Court had functioned as a watchdog, but with the majority that Orban has gathered at the last election he has managed to undermine that role. The Court’s authority is now severely limited. It no longer has the ability to examine the constitutionality of new laws concerning taxation. Even constitutional amendments adopted in Parliament are beyond the Constitutional Court’s reach. When it found certain items in the new law on the media unconstitutional, it was powerless to change them. The same applies to the electoral law, which many Hungarians find objectionable. Too many laws are passed with the two-thirds super-majority which makes them untouchable, either by the Constitutional Court or by the parliamentary opposition. The fact that the constitutional authority and legislative authority are no longer divided is really a self-inflicted wound by the Hungarian polity. In the U.S. a constitutional amendment needs to be ratified by two-thirds of the states. There is no equivalent check in Hungary’s case.

ST: But from the vantage point of a traditional American conservative, there are many aspects of Hungary’s current scene that seem agreeable. “Same-sex marriage” is not an issue, immigration is not an issue, and the obsession with PC multiculturalism is absent. Hungary appears to be a stable, pleasingly monocultural society…

PK: Yes, absolutely. I am not saying that the Orban government is wrong on every count, but even a broken clock is right twice a day. My objection is that if you draw the balance sheet, in my view the balance is negative. Take the demographic problem. In Hungary it is as bad, or even worse, than in many parts of Europe. The problem is exacerbated by a very high level of emigration. Many young people go to Germany, Austria or other EU countries, initially with the intention of eventually returning, but few actually do.

The Gypsy minority of 8 percent has three times the birth rate of the non-Gypsy population, and the tension between those two communities is not good for the country in the long run. The Gypsy problem exists partly because of the Gypsies, but also in a large part because of the Hungarians’ attitude towards them. The Gypsies are the big losers of the collapse of Communism. Since then, successive governments have tried, and failed, to handle the problem. Meanwhile, the Gypsies’ demographic growth results in their increasing presence, which is resented by the majority population.

I see a negative cultural transfer taking place, manifested in a very strong far-right movement, Jobbik. It is probably stronger than anywhere in Eastern Europe, and with 17% of the vote they are in parliament. They enjoy a strong following among university students, so it is not only a blue-collar phenomenon. I am not suggesting that Jobbik is part of a brewing insurgency, but extreme movements—of the far-left or the far-right—tend to have a dual character. There’s the official party, represented in parliament, and there’s the movement with a radical agenda, somewhat like the official Sinn Fein and the IRA in the 1980’s. We have not seen that level of violence yet, but the street gangs are there, the potential is there. Their deputies have the immunity and the respectability of having been elected, and they can easily deny any connection with the street gangs. But if you are skeptical enough, or cynical enough, you can see something similar in the case of Fidesz, Orban’s party. They are the majority party with all the power that this gives them, but there are also the rubble-rousers who follow the leaders’ guidance. I see significant potential for future discord, especially since there seems to be little chance of any major economic improvement in the years to come.

The political, social, and economic problems of today’s Hungary are largely invisible to the casual visitor. Budapest seems vibrant and prosperous. The city’s half-dozen Danube bridges that connect Buda’s hilly maize of cobbled streets and alleyways with Pest’s belle-epoque business district are teeming with foreign tourists. Not all is well in Pannonia, however, and Hungary will provide a barometer of the wider dilemmas and tensions of the Old Continent in the years to come.