Fidesz to end settlement bond scheme prior to amending constitution

October 25, 2016


“We are not going to allow any kind of political blackmail,” is how Prime Minister Viktor Orbán responded on Monday to demands by radical right-wing Jobbik party chairman Gábor Vona to end Hungary’s controversial settlement bond program.

The two party chairmen met last week to discuss Orbán’s proposal to amend yet again Hungary’s Fundamental Law so as to legally preclude Brussels from temporarily resettling asylum seekers in Hungary, a legal solution originally proposed by Jobbik. Vona subsequently recounted to the press that he told Orbán Jobbik would only cooperate if the government puts an end to the sale of settlement bonds — a program which critics say has diverted hundreds of millions of euros from the Hungarian treasury to offshore companies and enabled thousands of non-EU citizens to settle in Hungary without being properly vetted by Hungarian authorities for possible terrorist ties.

Fidesz needs Jobbik’s support to reach the two-thirds threshold necessary to amend its “granite” constitution for the seventh time.

Hungary’s settlement bond program, which Jobbik claims is a “risk to national security,” provides residency permits to foreign citizens purchasing some EUR 300,000 worth of bonds issued by certain designated brokerage companies, which in turn purchase the residency bonds from the Hungarian treasury. For their efforts the mostly offshore companies charge successful applicants around EUR 60,000 apiece. In addition to their “fees” the brokerage firms pocket the interest paid by the treasury after the bonds.

To date some 4,000 bonds totaling EUR 1.1 billion have been sold, according to the Government Debt Management Center (ÁAK).  Because bond holders may obtain residency permits for immediate family members as well, the total number of permits issued to date exceeds 18,000, according to the Ministry of the Interior.

By contrast, Hungary would have temporarily settled some 1,300 asylum seekers under the burden-sharing scheme approved by the European Council. Legal experts believe the proposed constitutional amendment would furnish Hungary with legal grounds for opting out of the program.

According to information from, Orbán had already raised the issue of ending the settlement bond program in early September during Fidesz’s party summit in Balatonfüred, claiming that a changed economic environment had made the program less beneficial to the state and that interest rates, unchanged since 2013, had made it increasingly more expensive to maintain. As a result, the government has reportedly decided to end the sale of the bonds by the end of this year, completely phasing out the program by  2021 so as not to interfere with bonds sold and residency permits already issued.

The issue can go before Parliament as early as Wednesday, which is also when discussions are set to resume on the constitutional changes. As notes, the best scenario for Fidesz would be for a vote to end the settlement bonds program to take place before the final vote on changing the constitution. In this way, Jobbik would have no reason not to support the amendment.