A tale of two cities: Budapest and Bucharest

Discard please the naive belief that onerous DEI compliance regulations and procurement law are designed to protect ordinary people. In truth, hyper-regulation is an uncommonly effective instrument for consolidating market power. The great transnational corporations of the West possess vast, dedicated battalions of lawyers, HR people and compliance officers across the globe. To the joy of institutional investors who demand fashionable ESG credentials before deploying capital, these giants welcome the red tape because it acts as a barrier against nimbler competitors.

Look at Hungary, where Viktor Orbán spent more than a decade painstakingly constructing a business class designed to shield the country from foreign takeovers and enrich himself, his family, and his party. The Western establishment eventually saw that they could not defeat Mr. Orbán by preaching liberalism, a creed he had thoroughly discredited at home. Instead, they found their instrument in Peter Magyar, who cleverly maintained the familiar populist rhetoric while handing over the economic architecture behind him to figures with deep roots in multinational corporations and American energy interests, particularly liquefied natural gas.

In Romania, the challenge took the form of a sudden sovereignist surge, epitomised by the unexpected rise of Călin Georgescu. The cancelling of the presidential election in which Mr. Georgescu came first in the first round may or may not have been done at the fiat of the Americans or may have been a spontaneous attempt to please the Americans, by the courts which represent, of course, the Romanian deep state but the subsequent victory of Nicușor Dan and the consolidation of a mainstream, centrist coalition prevented any outbreak of economic nationalism, making sure Romania remains a highly predictable, risk-free environment where Western companies operate untroubled. When a mainstream, Europhile coalition passes sweeping EU directives, the commentary invariably treats it as a triumph of progressive governance, whereas in reality it functions as a highly effective economic filter.


The sprawling bureaucracy of Diversity, Equity, and Inclusion (DEI) and data protection serves an identical purpose by imposing a burden on local firms that lack an army of HR managers and good internal and external lawyers. A small, highly compliant elite of large domestic firms thrives because they possess the capital to absorb these administrative shocks, actively welcoming Brussels regulations because they destroy many of their rivals.

Viktor Orbán delighted in vexing the authorities in Brussels by fiercely resisting European Union directives to phase out Russian gas, but confronting Donald Trump, whose fierce supporter he was at a meeting in the White House he asked for and received a one-year waiver from U.S. sanctions on Russian hydrocarbons. The price of this American indulgence was a $600 million commitment to purchase American LNG and nuclear fuel—a transaction resembling nothing so much as a geopolitical protection fee.

Under Péter Magyar, Budapest finds itself trapped in this expensive American embrace. Though Mr Magyar has dutifully pledged to meet the European Union's 2027 deadline for a total abandonment of Russian energy, the stubborn realities of infrastructure mean Hungary must still petition Washington for extensions to that very waiver. Under her new prime minister Hungary is still compelled to pay a ransom to the United States simply to keep its domestic grid alive without any need for a visit from the seductive and brutal Kimberly Guilfoyle.