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If asked to name the greatest threat facing Europe today, the continents leaders would probably point to Russias invasion of Ukraine. The war has completely upended European politics, sending millions of Ukrainian refugees into neighboring European Union countries and putting states nearest to Russia on high alert. Disagreements over further sanctions on Moscow following the Russian militarys atrocities in Bucha have begun to expose the cracks in Europes fragile unity.

But another, more insidious, threat can be found within the EUs own borders, one that it only now truly appears to be waking up to.

Last week, Hungarian Prime Minister Viktor Orbn was reelected, securing not only four more years in power but a two-thirds supermajority, thus enabling his ruling party, Fidesz, to unilaterally amend the countrys constitution. For years, he has overseen the steady destruction of his countrys democracy, transforming Hungary into what some scholars refer to as a soft or competitive autocracy, in which elections are held but the oppositions ability to compete in them is severely undermined. Orbns influence over Hungarys institutions, coupled with his control over state coffers and the airwaves, has made elections ostensibly free but far from fair. Such was the implicit verdict of a team of election observers from the Organization for Security and Co-operation in Europe, which concluded that the Hungarian contest was marred by the absence of a level playing field. Including a lack of transparency about campaign finances and pro-Fidesz bias in the Hungarian media, all of the issues that we raised this time around were raised in previous reports as well, Jill Stirk, a former Canadian ambassador leading the OSCE mission in Hungary, told me. Perhaps the most pervasive issue was the overlap between government information and campaign messaging. Whether it was on the war in Ukraine or on economic issues, Stirk said, in some instances, it was really hard to know who exactly was speaking.

For all the attention being paid to the autocratic threat from Russia, the European Union seems belatedly to be coming to the realization that autocrats among its ranks are just as great a risk. Last week the EU announced that it would, for the first time ever, apply new powers enabling it to withhold funds from countries that fail to meet the blocs democratic standardsa move that could cost Budapest tens of billions of euros.

That this decision should come amid the war in Ukraine is an encouraging sign that perhaps Europes leaders have finally recognized the importance of tackling threats to democracy both within and beyond the bloc. But by waiting so long to act, the EU has made its task that much more difficult.

Read: The EU watches as Hungary kills democracy

The question, then, is what took so long? The bloc has ostensibly long had instruments by which to keep its member states in line with its core values, though it hasnt always had the easiest time implementing them. Perhaps the most obvious example of this was in 2018, when the EU moved to suspend Hungarys voting rights within the bloc under Article 7 of the Lisbon Treaty, citing a serious breach of the EUs founding values, including freedom of expression, democracy, and the rule of law. But this process requires the unanimity of all EU member states, and Poland and Hungary, which have had Article 7 proceedings triggered against them, each acted as an assured veto for the other, rendering the process effectively redundant.

But the EU isnt without leverage. Under a new mechanism, which was introduced in 2020 and approved by the European Court of Justice this year, the bloc now has the power to withhold its funding from any member state where rule-of-law violations could affect how the money is spent. Daniel Freund, a Green Party member of the European Parliament and one of the negotiators behind the so-called conditionality mechanism, told me that though it was designed to prevent abuse of the EU budget, it can in effect be used by the EU to compel member states to enact reforms and to punish those that dont. It cannot be that we send billions of taxpayer money to a country where this money is being stolen, where its being misused, where its actually used to attack the European Union and its principles, Freund said. You cant be part of a club, not play by its rules, but keep all the money. That just doesnt work.

Such funding cuts would have a huge impact on Hungary, which is one of the largest per capita recipients of EU funding, and on Orbn. The prime minister has spent more than a decade enriching himself and his cronies with European funds. As Orbn faces a costly election tab, rising inflation, and an energy crisis brought on by the war in Ukraine, he cant exactly afford to lose any fiscal support right now. Its for this reason that the prime minister wrote to Brussels last month requesting the release of the blocs pandemic-recovery funds, billions of which have been withheld from Budapest over corruption concerns.

He will attempt to lobby, blackmail, by hook or by crook, to solicit this financing from Brussels, Mujtaba Rahman, the managing director for Europe at the Eurasia Group, a research firm and consultancy, told me. Orbn is running a kleptocracy and so these funds are pretty important to him politically and pretty important for the equilibrium that hes created around him.

Even if money is a powerful form of leverage, the threat of losing it is unlikely to have a transformative effect on Orbn, at least in the short term. In response to the EUs announcement that it would begin the process of applying the conditionality mechanism, his government urged Brussels not to punish Hungarian voters for their choice and cautioned the bloc against making the same mistakes as the Hungarian left. The Hungarian prime minister has since positioned himself as the greatest obstacle to additional European sanctions on Russia over its atrocities in Ukraine, further demonstrating the cost of the EUs inactionnot just within the bloc, but beyond it. Orbn has already been vindicated by winning another term; any attempts by the EU to reverse Hungarys democratic decline is already 10-plus years too late, Rahman said.

From the May 2022 issue: There is no liberal world order

But so long as the bloc continues to overlook, much less subsidize, autocracy within it, the whole European project is at stake. Its late, but its not too late, Freund said. This is one of the core fights of the European Union right now. In a way, [its] the fight for the soul of Europe.

Read more:
The Other Threat to Democracy in Europe - The Atlantic