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Ten years ago, Viktor Orbán’s government began modernising Hungary’s armed forces. Today, Hungary produces armoured vehicles, ammunition, small arms and helicopter components. However, allegations of corruption have cast a shadow over the country’s rearmament process, leaving Péter Magyar’s new government with the crucial task of rebuilding trust with NATO and Hungary’s closest allies.

Four Hungarian cities – Zalaegerszeg, Várpalota, Gyula and Kiskunfélegyháza – have become key centres of the country’s defence industry. A decade ago, Viktor Orbán’s government decided to replace Soviet- and Russian-made military equipment while combining military modernisation with efforts to attract foreign defence companies to Hungary.

The government offered Germany’s Rheinmetall and other companies joint ventures and local production in exchange for technology transfers and the ability to manufacture military equipment under licence. A series of transactions marred by corruption allegations, however, led to the emergence of 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 helped create it.

Poland is building the strongest army in its post-war history, spending record amounts on defence. But do massive arms purchases guarantee security, or do they create new dependencies and long-term commitments?

Time to Leave Old Dependencies Behind

The first step in this direction was the Zrínyi programme, announced in the winter of 2016 and described as Hungary’s largest military modernisation project 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 justified it not only by the threat from Russia, but also by the rise of Islamic State in Syria and Iraq and the migration crisis in Europe.

These arguments were part of the politically useful anti-immigration rhetoric of the time.

Tamás Csiki Varga, a security policy analyst and senior researcher at the University of Public Service, explained that the main objective of the Zrínyi programme was to re-equip and rearm the Hungarian Defence Forces while gradually phasing out technologically obsolete Soviet and Russian systems.

Implementing the programme required integrating it into NATO defence planning, under which member states do not need to develop every capability independently but instead complement one another within the framework of collective defence and joint operations. Hungary’s military development strategy therefore set two milestones: establishing a medium brigade by 2023 and achieving full equipment and operational readiness for a heavy brigade by 2028.

The regional trend reveals a clear pattern: simply purchasing a weapons system and bringing it into the country is no longer enough. Governments are seeking to link procurement with some form of defence-industrial cooperation, domestic production or assembly capabilities, Csiki Varga noted.

He also pointed out that Hungary’s procurement policy deliberately focused on European products, while Poland and the Baltic states opted for close bilateral relationships with the United States. Entering such an agreement with a technology partner effectively resembles a strategic commitment lasting thirty or forty years.

Rheinmetall and Building a Domestic Defence Industry

Since 2018, the modernisation of the Hungarian military has been accompanied by projects carried out with partners from Germany, Sweden, Norway and France, with Rheinmetall playing a key role.

Hungary offered the German defence group low-cost labour and state subsidies, gaining access in return to technology, production know-how and international networks. Csiki Varga noted that once the country reaches a level that allows it to export weapons, Rheinmetall will enable Hungary to enter the global market.

The company developed the Leopard 2A7HU tank for the Hungarian Defence Forces, with 44 vehicles delivered from Munich. In 2020, Hungary also ordered 218 Lynx KF41 infantry fighting vehicles. The first were manufactured in Germany, but production was subsequently transferred to the Rheinmetall Hungary plant in Zalaegerszeg.

The Hungarian military was the first in the world to introduce the vehicle into service. This also means, however, that the Lynx has no combat experience yet, Csiki Varga noted, adding that potential buyers will first ask how it has performed under wartime conditions.

Europe is returning to compulsory military service. Following the experience of the war in Ukraine, nine EU countries already have conscription, while others are planning to introduce it. Experts are divided over the economic and social costs and the risks of returning to the old system.

Arms Factories and New Industrial Capabilities

Another major project is the Rheinmetall Hungary Munitions ammunition factory in Várpalota, which opened in 2024. In Gyula, Airbus Helicopters Hungary manufactures 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 remains the JAS 39 Gripen. In 2024, Hungary purchased four additional aircraft, increasing the fleet to 18. For medium-range air defence, the country opted for the NASAMS system, developed by Norway’s Kongsberg and the US-based RTX.

Despite the expansion of infrastructure, Hungary still needs greater industrial capacity. Csiki Varga described many of these projects as greenfield investments – built from the ground up – and stressed the need to genuinely integrate small and medium-sized Hungarian companies into the defence-sector supply chain.

The defence industry could reach the level of productivity required by the armed forces between 2028 and 2030. Since the launch of the Zrínyi programme, however, the nature of modern warfare has changed, particularly because of drones.

Hungary needs to draw lessons from the Russian-Ukrainian war and invest more heavily in autonomous technologies and unmanned systems, which are relatively simple to produce and can also have applications in the civilian sector.

Due to the – to put it mildly – difficult Hungarian-Ukrainian relationship, stemming from tensions between Orbán’s government and President Volodymyr Zelenskyy, there has been no significant exchange of military experience, Csiki Varga said.

In a publication from January 2026, the analyst showed that since 2010, Hungary’s military exports have increased two and a half times, while imports have increased fivefold. Licensed production also increases imports because it involves purchasing foreign components, production packages and licences, as well as the costs of cooperation.

Protection for Ukrainians is expected to be extended, but it remains unclear whether it will continue to cover men of conscription age.

Oligarchs and Control Over the Defence Sector

The defence structures have also seen a strong presence of oligarchs. Another problem weighs on the system created by the Orbán government: former state assets in the defence sector were transferred into private hands under the control of a business group closely linked to the former prime minister.

Seeking to create what it described as an “independent, strong defence industry operating on market principles”, the government first transferred defence-sector stakes to N7 Defence Holding and subsequently sold control of the company to 4iG Space and Defence Technologies (4iG SDT).

For 72 billion forints (€200 million), 4iG acquired majority stakes in nine defence companies, including a small-arms factory in Kiskunfélegyháza, joint ventures with Rheinmetall, the Aeroplex aircraft maintenance company and Austrian mortar and ammunition manufacturer Hirtenberger.

4iG SDT is owned by the listed company 4iG Plc, controlled by Gellért Jászai – the fifteenth-richest person in Hungary during the Orbán era and one of the former prime minister’s trusted associates. Although 4iG is a publicly listed company, Jászai controls more than 52.7 percent of its shares through affiliated private equity funds.

The state subsequently directed additional public funds towards the group. In May 2025, 4iG received 37 billion forints in state support through private equity funds with opaque ownership structures.

That same month, a state-owned company selected one of Jászai’s fund managers to lead a 50-billion-forint defence investment fund.

Only after Fidesz lost power did it emerge that, shortly before the election, the Ministry of Defence had signed a nine-year contract with 4iG worth 1.311 trillion forints (€3.65 billion), binding the state until 2035. The new government of Péter Magyar immediately took steps to terminate these contracts.

A recruitment centre vehicle was destroyed, clashes with police took place and participants were detained. The events in Lviv’s Sykhiv district on 8 July became one of the most prominent symbols of growing opposition to the mobilisation process.

Magyar Must Rebuild NATO Trust

Following the fall of Orbán’s government, Hungary’s new leadership must ensure that the country is once again viewed as a reliable ally.

Csiki Varga stresses that the first step is to close the door to actors whose interests conflict with those of the alliance.

As an example, he cites last year’s initiative by NATO’s eastern members to create a drone-defence system aimed at countering Russia – the so-called “drone wall”. Due to a lack of political trust, neither Hungary nor Slovakia was initially invited, although it is difficult to speak of an effective shield with such a large gap.

At the latest NATO summit, Péter Magyar’s newly sworn-in government quickly reaffirmed its commitments to the defence alliance.

Hungary’s new defence minister, Romulusz Ruszin-Szendi, said at a conference that the door should be closed to Russia, adding that Hungary owed Sweden and Finland an apology for the Orbán government’s delay in ratifying their accession to NATO.

Poland has signed an agreement with the European Commission on loans under the SAFE programme.

The Direction Remains Unchanged

Hungary’s economic situation does not yet allow it to increase defence spending to 3.5 percent of GDP before the end of the decade. The direction, however, remains unchanged: Europe will continue to be the country’s main partner, while production should be located in Hungary wherever possible.

The Magyar government must also improve conditions of service and morale within the military, which were negatively affected by the purges under Orbán, low salaries and pay inequalities.

In 2023, a significant portion of the military leadership was dismissed in an opaque process justified by the need to rejuvenate the armed forces.

Ruszin-Szendi, who was highly popular among soldiers while serving as Chief of the General Staff, has announced the possibility of reinstating those who were dismissed and promised to introduce a new military career model by the beginning of next year.

The urgency is clear: in peacetime, the Hungarian Defence Forces perform their core duties and participate in NATO missions, but they do not have sufficient personnel reserves. The greatest recruitment needs are among enlisted personnel, non-commissioned officers, drivers and armoured-vehicle crews.