Hungary’s growing cyber infrastructure has put the nation on the map in terms of telecommunications and logistics. It also may have put a target on its back.

Hungary has been making a name for itself in the world of cyber affairs in recent years. 5G telecommunications networks and artificial intelligence (AI) research centres established by Chinese technology giant Huawei have dominated the spotlight, but other accomplishments have begun to materialize. Partially thanks to Huawei contributions, the East-West Gate Intermodal Terminal has strengthened the nation’s position as a logistics hub. Along with a growing industrial base that is automated by robotics and artificial intelligence, Hungary has made a substantial use of technology for its benefit.

The benefits come not only from the East. German defence contractor Rheinmetall recently constructed a campus in the western city of Zalaegerszeg focused on the development and manufacturing of the next-generation Lynx fighting vehicle. Adjacent to the facility is the Zalazone, a research development campus that researches future AI technologies such as autonomous driving.

For a small nation like Hungary, this rise in its portfolio brings the expected conventional domestic benefits such as an increase in tech-oriented jobs for its populace and an influx of foreign capital into its economy. But the real prize is the increase in regional influence. The growing portfolio in cyber and artificial intelligence-augmented infrastructure adds credence to its regional influence and status as a crossroads state between the East and the West.

But with the increase in cyber assets comes an increase in risks as well, both from the outside as well as within.

Hungary has previously been the target of cyber-attacks by Russian elements with most notable incidents taking place in recent years when Russian hackers attacked Hungarian government networks. With the present-day war in Ukraine, the danger to Hungary only increases with its position as a member of NATO and the growing role of cyber in its society. But the more potent issues come from inside the nation’s border.

Hungary’s burgeoning cyber sector comes thanks in no small part to its investments from China, but they also have become one of the biggest concerns for its international relations. Since 2019, the defense hawks of Washington and Brussels have repeatedly cited cybersecurity concerns about Chinese cyber investments in the nation. This is on account of Hungary being a NATO member at a time when the West’s relations with Beijing range from tense to border-line hostile. While most of Europe has pushed out Chinese-based companies such as Huawei and ZTE, Hungary has made Chinese technology a stable of its telecommunications apparatus, including its emergency services infrastructure.

There is precedence for espionage concerns. A former Huawei sales director, Weijing Wang, is currently on trial in Poland for charges of spying on behalf of Chinese intelligence services. He was seeking business contracts for Huawei that would yield access to state and local government data centres. In 2010, China built a new headquarters for the African Union in Addis Ababa, Ethiopia as a “testament” to the relationship between Africa and China. Eight years later, it was revealed the entire building was one giant listening device for Chinese intelligence services. Such headlines have made many national leaders reconsider or cancel business relationships with Beijing. But Hungary has not been one of them. Hungarian leaders have previously stated that they have seen no evidence of a security threat from Huawei. To its credit, Budapest has also recently passed legislation stipulating standard cybersecurity measures being enforced on electronic systems considered to be “high-risk” which are set to be implemented at the start of the new year.

Concerns from Hungary’s Western allies still remain.

The primary issue at play for the West’s leadership is the cybersecurity of NATO’s member states,

an issue that has become more potent as more of the world’s infrastructure, public discourse, and other pillars of society have all gone online. Hostile relations with China and Russia have included not only matters of espionage, but also offensive cyber action taken such as Moscow’s spreading of disinformation during the 2016 U.S. elections and Chinese exportation of its state surveillance equipment and infrastructure as it has in Uganda, increasing that country’s ability to illegally spy on political opposition. Russia’s cyber campaign in Central and Eastern Europe as a part of the war effort in Ukraine has added urgency to the cybersecurity anxieties of the West.

The greatest benefit that Hungary has reaped from its status as the meeting point between the East and the West is its ability to work with interests of both Eastern and Western powers. The greatest danger incurred is becoming a target because of this status. In the case of cybersecurity risks, Hungary’s status as a NATO member means its connection into Europe’s defence apparatus may pose a risk. The fear of Western leaders is that Hungary would act as an unknowing bridge for potentially hostile forces to target the alliance’s institutions or critical infrastructure such as telecommunications. China meanwhile dismisses such claims, insisting that it has no such intentions. Most of the concerns highlighted are still primarily theoretical, with the exception to well-documented cases of espionage.

What is primarily at stake for Hungary is the issue of its image.

To security officials, Hungary’s technological relations with China, and Budapest’s rejection of security concerns, appear at best to be naive while at worst pulling away from the alliance. Should the view persist, Hungary could find itself alienated from its allies.

What will determine whether the situation plays to Hungary’s favour or not will be the ability of its leaders to balance the concerns of its security partners with the benefits it gains from its economic ones. With its society becoming more dependent on cyber infrastructure, what is undeniable is the necessity to protect it from hostile foreign influence and manipulation. Its Western allies offer the greatest opportunity to accomplish that but would likely come at the cost of its Chinese-built infrastructure. Keeping its infrastructure, and the benefits it brings both in terms of infrastructure and relations with China will mean its security relationships suffer.

Between economics and security, and its relations with the East and the West, Hungary’s ability to successfully balance competing dynamics is one that seems to have little room for error. Its growing cyber sector makes that tightrope even narrower and the consequences much more visible and impactful.

The views expressed by our guest authors are theirs and do not necessarily represent the views of Hungarian Conservative.