Cost of Turkic Ties: Not Every Billion Is Spending

In the debate over the financial balance of Hungary’s Eastern Opening policy, different types of state commitments are often combined into a single figure. Yet support for the Budapest representation office, capital placed in investment funds and export credit facilities are not the same: they have different purposes, appear differently among state assets and carry different risks.

Based on figures reported in the press, Hungary’s involvement amounts to hundreds of billions of forints. However, this does not mean that the entire amount has already been spent or lost as public money. To understand the balance, actual operating expenditure, equity holdings and lending capacity must be considered separately.

Hungary participates in the organisation as an observer

According to the Ministry of Foreign Affairs and Trade, Hungary has held observer status in the Organization of Turkic States since 2018. According to information on the organisation’s official Hungarian website, its Budapest representation office opened on 19 September 2019.

According to its official introduction, the office supports relations between the organisation and European institutions, while also promoting diplomatic, economic, cultural and scientific cooperation. It is therefore not a standalone investment project, but the institutional framework for maintaining relations.

The Hungarian government justifies Hungary’s participation as a means of expanding foreign economic relations. According to a 2024 government statement, trade between Hungary and the organisation’s member states reached 4.5 billion dollars. However, this trade figure alone does not show how much additional value state involvement generated, nor how much benefit went to Hungarian businesses or the state budget.

The definite operating expense: support for the Budapest office

According to a Telex report based on public-interest data, a total of 4.3 billion forints has been allocated to maintaining the Budapest representation office since 2019. Of the items examined, this is the clearest example of operating expenditure from public funds: it finances the office’s operations and performance of its duties, rather than representing a repayable loan or a saleable ownership stake.

The 4.3 billion forints reported by Telex should therefore be treated as an expense. However, the policy benefit of this support cannot be determined solely from the amount paid. This would require performance indicators showing, for example, which specific economic partnerships, investments or new export opportunities can be linked to the office’s activities.

Equity investment is not the same as lost money

According to the Telex report, Hungary placed 33 billion forints in capital in the Turkic Investment Fund and a further 16.5 billion forints in the Hungarian–Kyrgyz Development Fund. Based on the figures reported by the outlet, this represents a combined capital commitment of 49.5 billion forints.

These amounts should not be treated in the same way as operating support for the office. An equity investment comes with an ownership stake, meaning that the money invested is, in principle, matched by a financial asset. The actual balance depends on what investments the funds make, what returns they achieve and how much Hungary’s stake is subsequently worth.

A 2023 government statement presented the Turkic Investment Fund as a financing instrument for new joint investments, infrastructure development and export opportunities. However, this government objective is not the same as a return already achieved: an investment fund’s performance must be assessed on the basis of its actual portfolio, distributions, losses and the current value of the stake.

It is therefore incorrect to describe the two equity funds automatically as losses, but neither can returns be taken for granted. The key questions are how much the Hungarian state’s holdings are currently worth, whether they have generated dividends or other returns, and what risks the funds have assumed.

A credit facility becomes an actual loan only when drawn

Credit facilities linked to Eximbank are among the largest items in totals running into hundreds of billions of forints. The Telex report mentions a facility of 137 billion forints, while a press report cited by MFOR refers to 233 billion forints. These represent substantial financing capacity, but announcing a facility does not necessarily mean that the full amount has been disbursed.

A credit facility indicates the maximum financing that may be available under specified conditions. To assess the actual financial exposure, it is necessary to examine how much has been drawn, which businesses received loans, the maturities and collateral involved, and how repayments have progressed.

As a general rule, a loan is repayable financing and is therefore not the same as a subsidy. It may nevertheless carry risks for public finances: losses can arise, for example, in cases of default, restructuring or insufficient collateral. Conversely, a properly repaid, interest-bearing loan can also generate income.

Simply adding together the facility amounts therefore shows the maximum financing capacity that may be made available, rather than an amount that has automatically already been paid from the budget or lost. A financial assessment also requires data on actual disbursements and the performance of the loan portfolio.

Why is the total of hundreds of billions not a uniform cost measure?

Reports by Telex and MFOR both present the combined scale of operating support, committed capital and credit facilities as significant state involvement amounting to hundreds of billions of forints. This illustrates the scale of Hungary’s participation, but in financial terms it cannot be regarded as a uniform measure of cost.

The total combines three different questions. For operating support, the relevant issue is whether it is proportionate to the institution’s performance; for equity investment, the value and return of the stake matter; and for a credit facility, the decisive factors are drawdowns, interest income, repayments and the risk of loss.

• Operating expenditure: budgetary resources that have been used without directly creating a repayment obligation or saleable financial stake.
• Equity investment: an ownership stake whose value may rise or fall and which may also generate a return.
• Credit facility: an available financing ceiling; the full amount is not necessarily disbursed.

This distinction does not determine whether the Eastern Opening is a good or bad economic policy. It does, however, prevent every financial commitment from being presented either as a permanent loss or, conversely, as an investment certain to generate a return.

Performance data is needed for a true assessment

The institutional and financial framework of Hungary’s involvement is partly visible: the Budapest office is operating, the state has acquired stakes in investment funds, and substantial credit facilities are linked to the region. However, the economic outcome can only be assessed if the commitments are accompanied by comparable performance data.

For the equity funds, the relevant factors would be the current value of Hungary’s stake, realised returns and the outcomes of projects financed from them. For loans, the amount actually drawn, interest income, overdue receivables and any losses would allow the risks assumed to be compared with the economic benefits achieved.

The scale of trade alone also does not prove the effectiveness of individual state instruments. An assessment would also need to distinguish how far changes in economic relations can be attributed to the diplomatic office, the equity funds and state lending.

Three separate financial categories must be tracked

Based on figures reported in the press, Hungarian state involvement related to Turkic cooperation is significant, making it reasonable to monitor regularly how the funds are used and what results they produce. However, adding the items into a single figure does not answer how much the cooperation has actually cost or what Hungary has received in return.

According to Telex, the 4.3 billion forints spent on maintaining the office is operating expenditure, while the combined 49.5 billion forints placed in the two funds is an equity investment. By contrast, the credit facilities reported by Telex and MFOR are financing ceilings. A credible financial assessment must therefore consider not only the amounts committed, but also the value of the stakes, actual disbursements, repayments and returns achieved.