Hungary’s free press caught in a catch-22 over foreign funding

One of the most symbolic early moves of Donald Trump’s second term has been the dismantling of USAID, the U.S. Agency for International Development. While best known for its global efforts to combat poverty and hunger, USAID has also played a quieter but crucial role in supporting independent journalism—particularly in Central Europe and the Balkans.

The fallout is already being felt in Hungary, where the decision has cast a long shadow over the country’s fragile independent media landscape. Átlátszó, a prominent investigative outlet that exposed several high-profile corruption cases involving Hungary’s ruling Fidesz party, relied in 2023 and 2024 on USAID-linked funding for an estimated 10–15% of its budget. Speaking to Reuters, editor-in-chief Tamás Bodoky said the organisation now faces the urgent task of securing alternative sources of funding to continue its work.

Telex, one of Hungary’s largest independent news platforms with a staff of 110, is also bracing for impact. CEO Márton Kárpáti told The Fix that while 60% of the outlet’s revenue comes from advertising and 30% from reader subscriptions, around 10% is sourced from grants—some of them American. In 2023, Telex received approximately 103.8 million forints (254,000 EUR) in international tenders to support investigative journalism and new projects.

“The situation is quite uncertain,” Kárpáti said. “Realistically, we expect foreign funding to shrink, and competition among independent media for what remains will only intensify.”

The full impact of U.S. funding cuts on Hungary’s independent media is likely to be felt in the coming year, according to Ágnes Urbán, a university professor and a member of the Hungarian media watchdog Mérték. “There is some good news,” Urbán told The Fix. “Mid-sized and larger national outlets have already begun shifting towards reader-supported models, relying more heavily on subscriptions and paywalls. We can expect them to double down on these efforts.”

A decade ago, the idea of Hungarian media being sustained primarily by its readership would have seemed far-fetched. “Today,” Urbán said, “we’re seeing several promising examples.”

But while national players may weather the storm, Urbán warns that around ten smaller, local outlets—particularly those outside Budapest—are far more vulnerable. “These organisations often lack the capacity to generate revenue and rely heavily on foreign grants, most of which come from the United States. Without that support, many will likely be forced to shut down.”

The uncertainty is already triggering shifts across the sector. The U.S. Agency for Global Media, which oversees Radio Free Europe/Radio Liberty (RFE/RL), has become another target of the Trump administration and tech billionaire Elon Musk. The agency’s future remains in legal limbo, and while RFE/RL’s Hungarian bureau continues to operate for now, there are growing concerns that their website would not be operational in its current form for much longer. The lack of clarity has already prompted two renowned senior journalists to resign and seek opportunities elsewhere.

The shifting political winds in Washington have triggered a range of responses across Europe.

On one side, there are growing calls to safeguard media freedom initiatives that risk collapse following the dismantling of USAID programmes. On the other, several senior European politicians have argued that, in light of rising geopolitical tensions, foreign aid budgets should be trimmed in favour of increased military spending—now a top priority within the EU bloc.

For now, Urbán sees no clear consensus emerging. “We’ll likely have a better picture in 2026, when the European Commission must approve the next Multiannual Financial Framework (MFF), which will shape spending from 2028 to 2034,” she said. “If there’s agreement within the EU that we are in a hybrid war with Russia, and that countering disinformation is a strategic priority, then we can expect more funding for independent media,” Urbán added.

Then there’s the issue of Hungary, and how the EU institutions will choose to address the country's democratic backsliding. Urbán believes the bloc will soon face a choice. “It’s a political decision,” she said. “Will they say Hungary is a serious problem and invest in civil society and independent journalism? Or will they conclude the situation is too far gone to fix, and that spending money there no longer makes sense?”

It is hardly surprising that the Hungarian government welcomed the decision to cut US funding for independent media. For years, pro-government propaganda has portrayed critical outlets as unpatriotic and tools of foreign influence, coining the term “dollar media” to suggest that independent journalists are funded by the Biden administration or Hungarian-American philanthropist and financier George Soros. 

As political dynamics in Washington shift, so too have the narratives in Budapest. Government-aligned media have quickly adapted, identifying new alleged backers of Hungary’s free press. The latest target is Direkt36, an investigative outlet that gained widespread attention with The Dynasty, a documentary exploring the fortunes of Prime Minister Viktor Orbán’s family and close associates. After the film’s success at home and abroad, a smear campaign accused the outlet of being part of a Ukrainian intelligence operation.

In 2024, the Hungarian government intensified its efforts to discredit independent journalism by establishing the Sovereignty Protection Office. Headed by Tamás Lánczi, a former speechwriter for Orbán, the office is tasked with investigating alleged foreign interference. In practice, it has become a political tool aimed at targeting NGOs, activists and undermining trust in the free press.

Lánczi has taken to social media to address readers of independent outlets directly, claiming they have been misled into believing their donations sustain these organisations. He alleges that most of the funding comes from abroad, framing the acceptance of foreign grants as a form of corruption that compromises journalistic integrity. These claims have been widely debunked by independent outlets, which have provided evidence to refute Lánczi’s false accusations. 

Then on 14 May, the moment long feared by Hungary’s independent media arrived. After months of smear campaigns and political pressure, the government—facing waning domestic support and, for the first time in over a decade, a real risk of losing the 2026 elections—opted for the nuclear option. A draft bill was introduced that would severely limit access to foreign funding for any organisation blacklisted by the newly established Sovereignty Protection Office. The legislation, widely likened to a similar law in Russia, is seen as a direct threat to the survival of independent media outlets and civil society groups that rely on international support. If passed, it would mark a significant escalation in the Orbán government’s campaign to silence dissent and tighten control over the country’s media landscape.

While the precise implications of the new law remain unclear, the threat is already having a chilling effect. Under the proposed rules, affected organizations would lose eligibility for Hungary’s 1 percent income tax donation program, and could only accept foreign funding with prior approval from the tax authority. Violations could trigger steep penalties: accepting unauthorized foreign support could result in fines of up to 25 times the amount received, and repeated infractions could lead to the organization’s dissolution.

Independent media in Hungary appear to be caught in a Catch-22. Foreign funding has become important for financial sustainability, yet accepting it exposes them to attacks from pro-government propaganda and gives the government a pretext to further dismantle what remains of the country’s free press.

But for Kárpáti, this is a false dilemma. “I don’t think anything would change if we gave up these funds,” he says. “The attacks would continue regardless, just with a different narrative. These accusations are absurd anyway—independent media in Hungary can be branded as foreign agents simply for receiving EU grants, as if Hungary weren’t part of the EU.”

For Kárpáti the issue is about more than just money. “The largest US grant we’ve received was for a media literacy programme in schools,” he explains. “There was no political content—it was about teaching students how to edit videos, how to spot fake news, skills that are missing from the state curriculum. We’re proud of receiving such international support and of how we used it.”

Yet media organisations may soon be forced to reconsider whether applying for international support is worth the risk.

While the Hungarian government has long portrayed independent media as reliant on murky foreign funding, it is, in fact, the pro-government media conglomerates—closely aligned with Prime Minister Viktor Orbán—that are being sustained through artificial means. As explained by Telex, the Hungarian media landscape was sharply divided following Orbán’s return to power in 2010. Pro-government outlets began receiving generous state advertising, often their only lifeline despite running at a loss. Meanwhile, critical and independent media were systematically excluded from such funding—even when market logic would have justified it—making it increasingly difficult for them to remain competitive. Today, the Prime Minister’s Office is the single largest advertiser in Hungary’s media market, followed by state-owned enterprises and firms with strategic ties to the government. These companies, wary of political repercussions, largely avoid placing ads in independent outlets—fearing that doing so could invite retaliation.

This imbalance has prompted Magyar Hang, an independent publication, and another anonymous complainant to file a formal complaint with the European Commission. They allege that the Hungarian government has violated EU competition law by disguising state subsidies as advertising. The complaint claims that since 2015, media outlets loyal to the government have received over €1 billion in unlawful state aid.

“If the European Commission launches an investigation and finds that the market was distorted, pro-government media could be forced to repay the public funds—potentially leading to their collapse,” said media analyst Urbán. “Such a ruling would fundamentally reshape Hungary’s media landscape.” According to Urbán, a decision from the Commission could come as early as this year. However, should the outcome be unfavourable, the Hungarian government is almost certain to appeal, dragging the process through the courts and delaying any final resolution. In the meantime, Hungary’s independent press will be forced to navigate mounting financial and political pressures unlike anything it has faced before.

Source of the cover photo: Ricardo Gomez Angel via Unsplash