A decade ago, Viktor Orbán’s government launched a programme to modernise the military. However, it has been overshadowed by allegations of corruption. Péter Magyar’s government now faces an even more important task.
Ten years ago, Viktor Orbán’s government launched a programme to modernise Hungary’s armed forces. The country now produces armoured vehicles, ammunition and small arms, as well as components for helicopters.
However, the rearmament programme has been overshadowed by allegations of corruption, and Péter Magyar’s government now faces an even more important task: restoring the trust of NATO and Hungary’s closest allies.
Zalaegerszeg, Várpalota, Gyula and Kiskunfélegyháza are four Hungarian cities that have begun to play an important role in the country’s defence industry. A decade ago, Orbán’s government decided to replace Hungary’s Soviet- and Russian-made military equipment and linked the process to efforts to attract foreign arms manufacturers to the country.
It offered German defence company Rheinmetall and other companies joint ventures and low-cost local assembly in exchange for licensed production.
However, a series of transactions marked by corruption allegations also created a “national champion” controlled by one of the former prime minister’s close associates. Its future is now uncertain following the collapse of the political system that created it.
Goodbye, Sasha
The first step was the Zrínyi programme, announced in the winter of 2016 and described as Hungary’s largest military development programme since the fall of communism.
Although it coincided with the broader European rearmament process following Russia’s annexation of Crimea in 2014, the Orbán government’s official narrative was somewhat different.
According to the government, the motivation was not only the security threat posed by Russia, but also the rise of Islamic State in Syria and Iraq and the migration crisis in Europe. This explanation fitted well with Orbán’s anti-immigration rhetoric.
“The main objective of the Zrínyi programme was to re-equip and rearm the Hungarian armed forces while gradually phasing out the remaining technologically outdated Soviet and Russian systems,” said Tamás Csiki Varga, a security policy analyst and senior researcher at the University of Public Service.
This process, of course, could not be considered separately from the NATO defence framework.
“Within the transatlantic alliance, member states do not need to develop every capability independently. Instead, the goal is to ensure that they can defend themselves and operate together.”
Hungary’s military development programme therefore established two milestones: the creation of a medium brigade by 2023 and the full equipment and operational readiness of a heavy brigade by 2028.
The regional trend is clear: it is no longer enough simply to purchase a weapons system and bring it home.
“Governments are trying to link procurement to some form of defence-industrial cooperation, production or assembly capacity, preferably located in their own country,” Csiki Varga said.
“In Hungary’s case, there was a deliberate decision in procurement policy to buy European products whenever possible,” he added.
The alternative chosen by Poland and the Baltic states would be a close bilateral defence relationship with the United States.
“When a state enters such an agreement with a technology partner, it is essentially a marriage lasting thirty to forty years.”
Building a corporate network
From 2018 onwards, Hungary’s military modernisation was accompanied by projects with German, Swedish, Norwegian and French partners. The most important of these was Rheinmetall.
Hungary offered the German defence group cheap labour and state subsidies in exchange for technology, production know-how and access to international networks.
“If we reach the point where we are able to produce for export, Rheinmetall gives us an entry point into the international market,” Csiki Varga said.
Rheinmetall developed the Leopard 2A7HU tank for the Hungarian armed forces, with 44 units delivered from Munich. Hungary also ordered 218 Lynx KF41 infantry fighting vehicles in 2020.
The first vehicles were produced in Germany, but production was later transferred to the Rheinmetall Hungary plant in Zalaegerszeg.
“The Hungarian armed forces are the first military to introduce this vehicle into service, which also means that the Lynx does not yet have combat experience,” Csiki Varga said. “That will be the first question potential buyers will ask: has this vehicle seen war?”
Another key project is the Rheinmetall Hungary ammunition plant in Várpalota, which opened in 2024. In Gyula, Airbus Helicopters Hungary produces high-precision components for helicopters.
At the end of June, Colt CZ Hungary became fully Hungarian-owned after its Czech parent company sold its majority stake to the state-owned N7 Defence Holding.
The main fighter aircraft of the Hungarian air force is the JAS 39 Gripen. In 2024, Hungary ordered four additional aircraft, bringing the fleet to 18. For medium-range air defence, it opted for the NASAMS system, developed by Norway’s Kongsberg and the US company RTX.
Nevertheless, Hungary still needs greater production capacity.
“In many cases, these are essentially greenfield investments,” Csiki Varga said.
He argues that Hungarian small and medium-sized companies must be meaningfully integrated into production. The defence industry could reach the capacity required by the armed forces sometime between 2028 and 2030.
Modern warfare has also changed since the launch of the Zrínyi programme, particularly because of drones. Hungary must absorb the lessons of the Russian-Ukrainian war and invest more in smart technologies and drones, which are relatively simple to manufacture and can also serve civilian purposes.
“Since Hungarian-Ukrainian relations have been, to put it mildly, complicated, there has been no meaningful exchange of military experience,” Csiki Varga said, referring to the hostile stance of the previous Orbán government towards President Volodymyr Zelenskyy.
In a January 2026 study, Varga showed that since 2010, Hungarian military exports have increased two and a half times, while imports have risen fivefold. Licensed production also increases imports because foreign components, production packages, licences and cooperation costs are recorded as part of imports.
Oligarchs in the Battle Formation
Another problem has overshadowed the Orbán government’s rearmament programme: previously state-owned defence assets were transferred into private hands and placed under the control of a business group closely connected to the former prime minister.
With the aim of creating what the government called an “independent, strong defence industry operating on market principles”, it first placed its defence holdings under N7 Defence Holding. It then sold control of N7 to 4iG Space and Defence Technologies, or 4iG SDT.
For 72 billion forints (€200 million), 4iG acquired majority stakes in nine defence companies, including the small-arms factory in Kiskunfélegyháza, joint ventures with Rheinmetall, the aircraft maintenance company Aeroplex and Austrian mortar and ammunition manufacturer Hirtenberger.
4iG SDT is owned by the publicly listed company 4iG Plc, controlled by Gellért Jászai, who became Hungary’s 15th-richest man during the Orbán era and was one of the former prime minister’s trusted associates.
Although 4iG shares are publicly traded, Jászai controls more than 52.7 percent through affiliated private investment funds.
The state subsequently channelled additional public funds into the group. In May 2025, 4iG received HUF 37 billion in state support through private investment funds with opaque ownership structures.
In the same month, a state-owned company selected one of the managers of Jászai’s funds to manage a HUF 50 billion defence investment fund.
Only after Fidesz lost power did it emerge that the Ministry of Defence had signed a nine-year contract with 4iG worth HUF 1.311 trillion (€3.65 billion) shortly before the election, binding the state until 2035. Péter Magyar’s new government immediately moved to terminate these contracts.
Back to NATO
After the fall of Orbán’s government, Hungary’s new leadership must ensure that the country is once again perceived as a reliable ally.
“The first step is that Hungary cannot remain an open house for actors whose interests conflict with those of the alliance,” Varga said.
“When the initiative to create a drone defence system against Russia – the so-called ‘drone wall’ – was launched among NATO’s eastern members last year, Hungary and Slovakia were initially excluded because of a lack of political trust. But you cannot talk about a drone wall if there is a huge gap in it.”
At the latest NATO summit, Péter Magyar’s newly installed government was quick to emphasise its commitment to the defence alliance.
Hungary’s new defence minister, Romulusz Ruszin-Szendi, said at a conference that “the door to Russia must remain closed”.
He added that Hungary owes Sweden and Finland an apology for the Orbán government’s delay in approving their accession to NATO.
Hungary’s economic situation does not yet allow defence spending to reach 3.5 percent of GDP before the end of this decade. The direction, however, remains unchanged: Europe will remain the country’s main partner, and production should be moved to Hungary wherever possible.
Magyar’s government must also improve the conditions of service and professional morale within the armed forces, which have been damaged by a major “purge” under Orbán, low salaries and pay disparities.
In 2023, a significant proportion of personnel were dismissed in a non-transparent process justified as an effort to rejuvenate the armed forces.
Ruszin-Szendi, who was popular among soldiers during his time as chief of the General Staff, said that those who were dismissed would be given an opportunity to return. He also promised an improved military career model at the beginning of next year.
There is good reason for the urgency. In peacetime, the Hungarian armed forces are capable of carrying out their basic duties and participating in NATO missions.
However, they do not have a comfortable personnel reserve, and recruitment is particularly needed among enlisted soldiers, non-commissioned officers, drivers and armoured vehicle crews.
