World
Robots and happy workers: Productivity surge helps explain US economy's surprising resilience
WASHINGTON (AP) — Trying to keep up with customer demand, Batesville Tool & Die began seeking 70 people to hire last year. It wasn’t easy. Attracting factory workers to a community of 7,300 in the Indiana countryside was a tough sell, especially having to compete with big-name manufacturers nearby like Honda and Cummins Engine.
Job seekers were scarce.
“You could count on one hand how many people in the town were unemployed,” said Jody Fledderman, the CEO. “It was just crazy.’’
Batesville Tool & Die managed to fill just 40 of its vacancies.
Enter the robots. The company invested in machines that could mimic human workers and in vision systems, which helped its robots “see” what they were doing.
The Batesville experience and others like it have been replicated countlessly across the United States for the past couple of years. Chronic worker shortages have led many companies to invest in machines to do some of the work they can’t find people to do. They’ve also been training the workers they do have to use advanced technology so they can produce more with less.
The result has been an unexpected productivity boom, which helps explain a great economic mystery: How has the world’s largest economy managed to remain so healthy, with brisk growth and low unemployment, despite brutally high interest rates that are intended to tame inflation but that typically cause a recession?
A Halter robot collects a finished piece for blood pressure pumps from a Mazak Integrex at Reata Engineering and Machine Works Thursday, Feb. 15, 2024, in Englewood, Colo. (AP Photo/David Zalubowski)
To economists, strong productivity growth provides an almost magical elixir. When companies roll out more efficient machines or technology, their workers can become more productive: They increase their output per hour. A result is that companies can often boost their profits and raise their employees’ pay without having to jack up prices. Inflation can remain in check.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, has likened surging productivity to “magic beanstalk beans for the economy. … You can have faster income increases, faster wage growth, faster GDP without generating inflation.’’
Joe Brusuelas, chief economist at the tax and consulting firm RSM, said, “The last time we saw anything like this was the late 1990s.”
That was when a productivity surge — an early payoff from the sudden embrace of laptops, cellphones and the internet — helped allow the Federal Reserve to keep borrowing rates low because inflation remained under control even as the economy and the job market sizzled.
A worker at Reata Engineering and Machine Works programs a Mazak Variaxis machine used to make semiconductor pieces, Thursday, Feb. 15, 2024, in Englewood, Colo. (AP Photo/David Zalubowski)
This time, the Fed’s aggressive streak of rate hikes — 11 of them starting in March 2022 — has managed to help cool inflation from a four-decade high of 9.1% to 3.1% while causing little economic hardship.
“I would have said it’s not possible,’’ said Sal Guatieri, senior economist at BMO Capital Markets. “But that’s exactly what happened.’’
A year ago, nearly every economist was warning that a recession was all but inevitable. Fed Chair Jerome Powell himself warned in 2022 that beating inflation would inflict “some pain” in the form of widespread layoffs and higher unemployment.
By last month, Powell was sounding a different note. With unemployment barely above a half-century low, the Fed chair told reporters, “We’ve had a very strong labor market, and we’ve had inflation coming down.”
He did caution that the central bank wants to see further progress in slowing inflation. Yet the Fed is so optimistic that inflation is heading toward its 2% goal that it hasn’t raised rates since July and is expected to cut rates multiple times this year.
A box of parts for blood plasma pumps sits ready for shipping from Reata Engineering and Machine Works Thursday, Feb. 15, 2024, in Englewood, Colo. (AP Photo/David Zalubowski)
Perhaps the likeliest explanation is the greater efficiencies that companies like Batesville Tool & Die have managed to achieve in the past year or so. Before productivity began its resurgent growth last year, a rule of thumb was that average hourly pay could rise no more than 3.5% annually for inflation to stay within the Fed’s 2% target. That would mean that today’s roughly 4% average annual pay growth would have to shrink. Yet higher productivity has changed that equation: There’s now more leeway for wage growth to stay elevated without igniting inflation.
“A lot of that pressure on business finances — that normally causes them to raise prices — has been offset by strong productivity growth,’’ Guatieri said.
At a news conference this month, Powell was asked whether he believed higher productivity helps explain why the economy has kept growing steadily even while inflation has tumbled.
“That’s one way to look at it — yeah,” Powell replied.
The productivity boom marks a sharp shift from the pre-pandemic years, when annual productivity growth averaged around a tepid 1.5%, according RSM’s calculations. Everything changed as the economy rocketed out of the 2020 pandemic recession with unexpected vigor, and businesses struggled to re-hire the many workers they had shed.
The resulting worker shortage sent wages surging. Inflation jumped, too, as factories and ports buckled under the strain of rising consumer orders. Parts shortages arose.
Desperate, many companies turned to automation. Investment in equipment and in research and development and other forms of intellectual property accelerated. The efficiency payoff began to arrive almost a year ago. Labor productivity rose at a 3.6% annual pace from last April through June, 4.9% from July through September and 3.2% from October through December.
At Reata Engineering & Machine Works, “efficiency was kind of forced on us,’’ CEO Grady Cope said. With the job market roaring, the company, based in Englewood, Colorado, couldn’t hire fast enough. Meantime, its customers were starting to balk at paying higher prices.
Semiconductor pieces sit in a shipping box as they are produced in a Mazak Variaxis machine at Reata Engineering and Machine Works Thursday, Feb. 15, 2024, in Englewood, Colo. (AP Photo/David Zalubowski)
So Reata installed robots and other technology to produce more with less. Software allowed it to automate the delivery of price quotes to customers. That process used to require two weeks. Now, it can be done in 24 hours.
Many economists and business people say they’re hopeful, if not certain, that the productivity boom can continue. Artificial intelligence, they note, is only beginning to penetrate factory floors, warehouses, stores and offices.
“Right now, AI is not a critical enabler for us; it’s an assistant and accelerator in certain roles,’’ said Peter Doyle, CEO of Hirsh Precision, which makes parts for the aerospace and medical device industries. “The world is still trying to understand what AI is capable of doing and how quickly it will advance.’’
The early evidence suggests that AI could sustain the productivity gains. A study last year by Erik Brynjolfsson of Stanford University and Danielle Li and Lindsey Raymond of the Massachusetts Institute of Technology tracked 5,200 customer-support agents at a Fortune 500 company who used a generative AI-based assistant in 2020 and 2021. The AI tool provided suggestions for dealing with customers and links to useful internal documents.
Those using the chatbot were found to be 14% more productive than colleagues who didn’t use the tool. They handled more calls and completed them faster. The biggest gains in productivity — 34% — came from the least-experienced, least-skilled workers.
Automation tends to raise fears that machines will replace human workers and thereby kill jobs. Some workers supplanted by robots do often struggle to find new work and end up settling for lower pay.
Yet history suggests that in the long run, technological improvements actually create more jobs than they destroy. People are needed to build, upgrade, repair and operate sophisticated machines. Some displaced workers are trained to shift into such jobs. And that transition is likely to be eased this time by the retirement of the vast baby boom generation, which is causing labor shortages.
Some of today’s productivity gains may be coming not just from advanced technology but also from more satisfied workers. The tight labor markets of the past three years allowed Americans to change jobs and find others that pay better and make them happier and more productive.
One of them was Justin Thompson, of Kalamazoo, Michigan, who had felt burned out by his job as a police officer, with its 16-hour workdays .
“I was literally running myself into the ground,’’ he said.
Thompson’s wife saw a job posting for operations manager at a charter airline. Even without airline experience, his wife felt he could use skills he gains as a Marine Corps infantryman — handling logistics for missions — during tours in Iraq and Afghanistan.
She was right. Omni Air International hired him in 2019.
Thompson, 43, said he he loves the new job, which allows him to work from home when he’s not traveling. And his Marine experience — which included developing ways to improve efficiency — has proved invaluable. Technology helps, too: Thompson travels with a laptop, iPad and mobile printer and uses proprietary software to manage logistics.
Other workers have switched from low-skill jobs to those that pay better and are more productive.
“The people who were rolling tacos on Dec. 31, 2019 … yeah, they’ve moved up,’’ RSM’s Brusuelas said. “They’re doing other things and making a lot more money.”
At Reata Engineering, staffers were trained to use new sophisticated equipment. One 19-year-old employee, a university engineering student, has used AI tools to make company training materials less cumbersome and time-consuming.
“The whole point is not to lay people off,’’ said Cope, the CEO of Reata Engineering. “The point is to make people do jobs that are more interesting’’ — and pay better, too.
World
As Trump forces NATO to pay up, alliance races to close military gap with US
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This is part one of a series examining the challenges confronting the NATO alliance.
NATO has become a “bloated architecture” too dependent on American military power, former senior national security advisor Keith Kellogg told Fox News Digital.
As President Donald Trump pressures NATO allies to spend more on defense — ordering the withdrawal of 5,000 U.S. troops from Germany and signaling possible cuts in Spain and Italy — a deeper concern is emerging inside the alliance: despite years of rising European defense budgets, NATO still depends heavily on American military power, from missile defense and intelligence to logistics and nuclear deterrence.
The growing gap between political commitments and real military capability is now fueling calls for structural changes inside the alliance as NATO confronts mounting threats from Russia and instability in the Middle East.
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NATO’s imbalance is not theoretical — and it is not new, retired Lt. Gen. Keith Kellogg told Fox News Digital, “I told the president… maybe you ought to talk about a tiered relationship with NATO,” Kellogg described conversations with Trump in his first term about the alliance’s future. “…we need to develop a new, for lack of a better term, a new NATO a new defensive alignment with Europe.”
Kellogg added the alliance has expanded politically but not militarily — creating what he sees as a growing gap between commitments and real capability.
NATO Secretary-General Mark Rutte, President Donald Trump and Britain’s Prime Minister Keir Starmer pose during the NATO Heads of State and Government summit in The Hague, Netherlands, on June 25, 2025. (Ben Stansall/Pool/Reuters)
“You started with 12, and you went to 32, and in the process, I think you diluted the impact,” he argued, calling today’s NATO “a very bloated architecture.”
“They haven’t put the money into defense. Their defense industry and defense forces have atrophied. When you look at the Brits right now, they could barely deploy forces: they have two aircraft carriers, both under maintenance. Their brigades are like one out of six that work. And you just look at the capability, it’s just not there. So I think we need to realize that and say, well, we need something different,” Kellogg, who is the co-chair of the Center for American Security at the America First Foreign Policy Institute, told Fox News Digital.
But not everyone agrees the alliance is losing relevance.
“It has never been more relevant,” said John R. Deni, a research professor at the U.S. Army War College, who says NATO remains central to U.S. national security.
“The reason for that is twofold,” he said. “One, it’s our comparative advantage versus the Chinese and the Russians… they don’t have anything like this.”
“And the second reason… NATO underwrites the security and stability of our most important trade and investment relationship,” he added, referring to economic ties between North America and Europe.
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NATO chiefs of defense hold a meeting in Brussels on Aug. 20, 2025, with screens displaying allied leaders joining remotely to discuss Ukraine. (Fox News)
Dependence: Design or Weakness?
By around 2010, the United States accounted for roughly 65% to 70% of NATO defense spending, according to analysis provided by Barak Seener from the Henry Jackson Society, a London-based think tank.
“They’ve always been dependent on the U.S.,” Kellogg said of the European allies.
“The allies overall rely upon one another for deterrence and defense by design,” Deni said, explaining that alliances exist to “pool their resources” and “aggregate their individual strengths.”
Deni pointed to ground forces as a clear example of what the U.S. gains from the alliance, noting that “there are far more allied mechanized infantry forces on the ground than there are Americans.”
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Still, he acknowledged that reliance has at times gone too far.
“In the past… it was fair to say that the European allies were overly reliant upon the Americans for conventional defense,” he said, pointing to the 2000s.
That, he said, was partly driven by U.S. priorities — as Washington pushed European allies to focus on wars in Afghanistan and Iraq rather than territorial defense.
A Polish Army soldier sits in a tank as a NATO flag flies behind during the NATO Noble Jump VJTF exercises on June 18, 2015, in Zagan, Poland. (Sean Gallup/Getty Images)
Seener describes NATO as “formally collective, but functionally asymmetric,” with the U.S. providing a disproportionate share of “high-end capabilities.”
That asymmetry is most visible in nuclear deterrence.
Seener said the U.S. provides the overwhelming majority of NATO’s nuclear arsenal — including intercontinental ballistic missiles, submarine-launched systems and strategic bombers — meaning deterrence ultimately relies on the assumption of U.S. retaliation.
A NATO official told Fox News Digital that, “The U.S. nuclear deterrent cannot be replaced, but it is clear that Europe needs to step up. There’s no question. There needs to be a better balance when it comes to our defense and security. Both because we see the vital role the U.S. plays around the world and the resources that it demands, and also because it is only fair.”
“The good news,” the official added, “is that the Allies are doing exactly that. They are stepping up, working together — and with the U.S. — to ensure we collectively have what we need to deter and defend one billion people living across the Euro-Atlantic area.”
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Boeing CH-47 Chinook helicopters of the U.S. Army 12th Combat Aviation Brigade fly over a Lithuanian Vilkas infantry fighting vehicle during the Allied Spirit 25 military exercise near Hohenfels, Germany, on March 12, 2025.
The Systems NATO Cannot Replace
Beyond nuclear weapons, the dependence runs through the alliance’s operational backbone.
Seener pointed to U.S.-provided intelligence, surveillance and reconnaissance — as well as logistics and command systems — as essential to NATO operations.
“Without U.S. intelligence and surveillance, NATO loses situational awareness and early warning capabilities,” Seener said, adding, “So that means that Russia, for example, can attack Europe. And theoretically, if there’s no NATO and the U.S. is not involved, Europe would not be aware, or it would take it too long to be able to defend itself.”
Kellogg also says that much of Europe’s military capability falls short of top-tier systems.
“For the most part, their equipment, if you had to grade it A, B, C, D, E, F, they’re kind of like B players or C players,” he said. “It’s not the first line of work.”
He pointed to air and missile defense as a key gap, noting that while European countries rely on U.S.-made systems such as Patriot and THAAD, “they don’t have a system that’s comparable.”
Kellogg attributed that to years of underinvestment, saying European defense industries “have atrophied,” adding that the United States is also now “relearning that as well.”
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President Donald Trump and Poland’s President Andrzej Duda talk during a working lunch at the NATO leaders summit in Watford, Britain, on Dec. 4, 2019. (Kevin Lamarque/Reuters)
Deni said the picture today is more mixed.
“Alliance defense spending has been up… and has spiked far more after 2022,” he said, pointing to Russia’s invasion of Crimea in 2014 as a turning point.
But he cautioned that capability gains take time, noting that many improvements are still years away from full deployment.
Deni pointed to recent European purchases of U.S. systems as evidence of growing capability, noting that countries including Poland, Romania, Norway and Denmark are acquiring the F-35 fighter jet from the U.S.
“You can’t build an F-35 overnight,” he said, adding that many of these improvements will take years to fully materialize.
A NATO official told Fox News Digital the alliance “needs to move further and faster” to meet growing threats, pointing to new capability targets agreed by defense ministers in June 2025.
Keith Kellogg speaks during the Warsaw Security Forum on Sept. 30, 2025, in Poland. (Marek Antoni Iwanczuk/NurPhoto via Getty Images)
The official said priorities include air and missile defense, long-range weapons, logistics and large land forces, noting that while details remain classified, plans call for a fivefold increase in air and missile defense, “thousands more” armored vehicles and tanks, and “millions more” artillery shells. NATO also aims to double key enabling capabilities such as logistics, transportation and medical support.
The official added that allies are increasing investments in warships, aircraft, drones, long-range missiles, as well as space and cyber capabilities, while boosting readiness and modernizing command and control.
“These targets are now included in national plans,” the official said, adding that allies must demonstrate how they will meet them through sustained defense spending and capability development.
The NATO official also noted that European allies lead multinational forces across Central and Eastern Europe, while the U.S. and Canada serve as framework nations in Poland and Latvia, alongside ongoing air policing missions and NATO’s KFOR operation in Kosovo.
A Swedish Air Force JAS 39 Gripen fighter aircraft takes off from southern Sweden on April 2, 2011. (AP Photo/Scanpix/Patric Soderstrom, File)
What happens if the U.S. is stretched?
Kellogg’s warning is direct: NATO’s deterrence depends on U.S. presence.
“The one you always have to worry about… is Russia,” Kellogg, who was Trump’s special envoy for Ukraine and Russia in 2025, said.
If U.S. forces are tied down elsewhere, NATO could face serious strain — particularly in areas like intelligence and logistics.
For Kellogg, the danger is delay. “We won’t know until it happens,” he said. “And then you won’t be able to respond to it.”
Deni, however, said the alliance remains a strategic asset — not a liability.
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A NATO military force stands guard outside the World Forum in The Hague ahead of the two-day NATO summit on June 22, 2025. (Remko de Waal/ANP/AFP)
The question, he suggests, is not whether NATO still works. It is whether allies can adapt fast enough to keep it working.
World
Europe Day: 40 years of ties between Spain and the European Union
The Spain that knocked on Europe’s door 40 years ago was a country that had only just emerged from 40 years of dictatorship.
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Spain’s democratic transition, still fragile in some respects, found in European integration an institutional anchor, a guarantee that the freedoms it had won would not be reversed.
Felipe González, who had applied for membership in 1977 as leader of the Socialist opposition and was now governing as prime minister, saw it clearly: joining Europe was not just about economics. It was a statement of political identity. Spain was rejoining the community of democratic nations from which Francoism had excluded it.
The figures for that Spain of 1986 show how far back the starting point was: per capita income was around 7,300 euros, life expectancy was 76 and the population had yet to reach 38 million.
Exports accounted for barely 4.9% of GDP and infrastructure lagged decades behind European standards. Forty years on, per capita income is above 31,000 euros, life expectancy has reached 84 and exports have climbed to 34% of GDP.
None of these transformations can be separated from EU membership.
The early years: opening up and the shock
The initial stages of integration were not easy. Spain had to face the abrupt opening of its market to European competition, which triggered tensions across whole sectors of the economy, especially in industry and agriculture.
The Common Agricultural Policy (CAP) profoundly reshaped the Spanish countryside, forcing through painful reconversions but also opening up new markets for Mediterranean products. Olive oil, fruit, wine: Spanish agriculture found in Europe a stage for expansion that had been unthinkable until then.
At the same time, European structural funds began to flow into a country that was in desperate need of them. The motorways that now link the Peninsula, the trains that criss-cross the country, the modernised ports, the telecommunications systems: all of this was built to a large extent with financial backing from Brussels.
In four decades, Spain has received more than 185 billion euros in European funds for infrastructure, employment, innovation and regional development. Without that injection, modernisation would have taken generations longer.
An unexpected symbol of those early years was the Erasmus programme, launched by the European Community in 1987. What began as a modest university exchange initiative gradually became the defining experience of a generation.
Spain became the country that receives the most Erasmus students in all of Europe, and more than 1.6 million Spaniards have taken part in the programme over these four decades. For many young people, Erasmus was not just a semester abroad: it was the first time they truly felt European.
Maastricht and the dream of the single currency
The year 1992 marked a turning point for all of Europe, and Spain was fully aware of its significance. The signing of the Treaty on European Union in Maastricht transformed the European Economic Community into the European Union proper and opened the way to the single currency.
For Spain, Maastricht also meant taking on economic convergence commitments that required deep reforms: deficit control, keeping inflation in check, budgetary discipline. It was the price of having a seat at the top table.
In parallel, 1995 brought another of the great achievements of the European project: the entry into force of the Schengen Agreement in Spain, alongside Germany, France, Belgium, Luxembourg, the Netherlands and Portugal.
For the first time in modern history, citizens could cross Europe’s internal borders without showing their passport. The Schengen area was not just a convenience for tourists; it was the physical embodiment of an idea: that in Europe, people’s freedom of movement was a right, not a privilege.
And then the euro arrived. On 1 January 1999, Spain became one of the eleven founding countries of the eurozone, adopting the single currency for financial and commercial transactions.
On 1 January 2002, notes and coins reached citizens’ pockets and the peseta disappeared for good. It was a moment full of emotion and also tinged with a certain melancholy: the peseta was being abandoned, a currency with centuries of history, but something bigger was being gained, the feeling of sharing an economic destiny with hundreds of millions of Europeans.
Fittingly, it was at a summit held in Madrid in December 1995 that European leaders finally agreed on the name of the new currency: the euro.
Institutional leadership on five occasions
Over these 40 years, Spain has not limited itself to benefiting from the European project: it has also helped to build it. Since 1986, the country has held the Presidency of the Council of the European Union on five occasions, the most recent in the second half of 2023, under the motto “Europe, closer”, making it one of the member states most committed to driving the Union forward institutionally.
Three presidents of the European Parliament and nine European commissioners have been Spaniards over these four decades, a presence that reflects Spain’s growing weight in Europe’s political architecture.
Spain has also helped design some of the EU’s most important policies. It played a leading role in developing cohesion policy and in boosting the EU’s social dimension.
It was instrumental in including in the Amsterdam Treaty a sanctions mechanism for states that breached the Union’s fundamental values. And for decades it has played a distinctive role as a bridge between Europe and Ibero-America, drawing on its historical, cultural and linguistic ties with Latin America to enhance the EU’s external projection.
The great crisis and test of the euro
The years of the Great Recession brutally tested the strength of the European project and Spain’s resilience. The 2008 financial crisis triggered a devastating recession in the country: unemployment climbed above 26% in 2013, the construction sector collapsed and the financial system had to be partially bailed out with European funds.
The austerity policies imposed from Brussels fuelled deep social discontent and fed European scepticism among parts of the population that had borne the brunt of the cuts.
Even so, Spain did not abandon the euro or the European project. It opted for reform and recovery within the EU framework, and from 2014 it entered a growth cycle that was among the strongest in the eurozone. Painful as it was, the crisis also ended up showing that EU membership offered a safety net that would have been unimaginable alone.
The banking rescue coordinated by the European institutions, the financial solidarity mechanisms, access to capital markets underpinned by the European Central Bank: without Europe, the fallout could have been much more severe.
The pandemic and the NextGenerationEU funds
If the 2008 crisis was a test of endurance, the COVID-19 pandemic in 2020 was something different: a demonstration that European solidarity could evolve into new, more ambitious forms.
For the first time in the history of European integration, the Union took on joint debt to finance the recovery of its member states. The NextGenerationEU funds made more than 140 billion euros in grants and loans available to Spain, the largest injection of European resources in the country’s history.
The pandemic was also a reminder that, when it works, European solidarity is an extraordinary asset. The coordination in vaccine purchasing, the European COVID certificate that made it possible to restore mobility, the joint response to an unprecedented threat: all this showed European citizens, Spaniards included, that the EU project was not just a market but also a community of shared destiny.
Forty years of transformation
The numbers tell a powerful story. Spanish exports of goods rose from 12.6 billion euros in 1986 to 141.5 billion in 2024. Real GDP has grown by more than 100% since accession. Life expectancy has increased by eight years over the past four decades.
The population has grown by more than 10 million people, largely thanks to immigration made possible by European prosperity. And more than 1.4 million young Spaniards have benefited from the European Youth Guarantee scheme to get into work.
The Spanish prime minister, Pedro Sánchez, has marked the day on his x.com account, stressing that the European Union is Spaniards’ home and future, as well as their privilege and their responsibility.
The challenges of the next 40 years
The anniversary is not only a time for celebration. It is also a moment for honest reflection on what still remains to be built. Territorial inequalities between the autonomous communities remain significant.
The green transition, population ageing, digital transformation and migration flows pose challenges that no country can face alone. Russia’s invasion of Ukraine has reshaped Europe’s security map and forces Spain to rethink its contribution to common defence, as we have also seen with the US–Iran conflict and threats against European bases.
The new generations, who have grown up knowing no reality other than the European one, expect the Union to respond more effectively to these challenges. For them, Europe is not a historic achievement to be defended, but a starting point to be improved. That demand, far from being a threat to the project, is perhaps its best guarantee for the future.
Forty years on from that January night in 1986, European membership is now so taken for granted that it is hard to imagine Spain outside it.
World
Peter Magyar Prepares to Take Over as Hungary’s Leader From Viktor Orban
Peter Magyar, the former opposition leader, prepared to be sworn in as prime minister of Hungary on Saturday, after winning an uphill election campaign to unseat Viktor Orban, whose 16 years in power made him a global icon of nationalist right-wing politics.
Mr. Magyar, a 45-year-old lawyer, has vowed to reverse the democratic backsliding and embedded corruption that ultimately turned huge numbers of voters away from Mr. Orban’s Fidesz party and handed the opposition Tisza movement a landslide victory less than a month ago.
In April, Tisza, which Mr. Magyar took over in 2024 after souring on Fidesz and breaking from it, secured an overwhelming 141 seats in the national assembly. Fidesz managed to keep control of only 52 seats, despite extensive gerrymandering, near-total control of the news media and a full-throated endorsement from President Trump and his top officials.
The scale of Mr. Magyar’s victory has left Fidesz in pell-mell retreat, and has the potential to give him a powerful hand as he faces the monumental task of dismantling what Mr. Orban called “illiberal democracy” and reviving Hungary’s anemic economy.
But Mr. Magyar will have to prove his ability to lead the country. Many in his parliamentary faction are political novices; so is most of his cabinet.
His job could be harder if Fidesz-appointed dignitaries, including the president, the chief prosecutor, and heads of various judicial, regulatory, and oversight authorities remain at their post. Mr. Magyar instructed them to resign by the end of May
Many former Fidesz loyalists are already distancing themselves from the losing party.
Mr. Magyar has also pledged to hold corrupt businessmen and politicians accountable and to recover stolen funds for the state. That could, at least temporarily, help stabilize the economy.
A key test will be if he can reclaim E.U. funding withheld from the previous government, more than $12 billion of which is set to expire in August.
Voters have faith in him, according to a new poll by Median, an independent pollster that predicted the election result accurately. Seventy-two percent of Hungarians now think Mr. Magyar is suitable to lead the country.
Endre Hann, Median’s founder and managing director, said belief in Mr. Magyar helped overturn the rule of Mr. Orban, as “society gradually came to realize that Fidesz could be defeated.”
This belief persisted after the election. According to the same poll, nearly two-thirds of Hungarians think the country is headed in the right direction, twice the level recorded in November. But the Tisza government will have to “take many concrete steps to meet the high expectations,” Mr. Hann added.
Mr. Magyar will have to tread carefully. He won by pitching himself as a conservative to win over disaffected Fidesz voters. Liberal and left-wing voters disliked many of his views on immigration and L.G.B.T.Q. issues but supported him because he offered the first viable alternative to Mr. Orban in years.
Some expectations for a real change of direction for Hungary, both within the country and abroad, may prove overblown.
Mr. Magyar pledged to maintain border security, even in the face of E.U. asylum policies, while preserving good relations with the bloc. He said he would not veto the $106 billion loan package for Ukraine, though he plans to opt out of the financing.
Progressives hope he will abide by a recent ruling by the European Court of Justice and repeal a 2021 “child protection law” that connected homosexuality with pedophilia and restricted gay rights.
But doing so would risk alienating his right-wing voters, playing into Fidesz narratives that he is a closet liberal and a puppet of the European Union.
Civil organizations, for now, simply hope that Mr. Magyar will see them as partners, said Emese Pasztor, a lawyer and project manager at Budapest-based human rights organization Tasz. She said Tisza’s election victory felt like a “breath of fresh air.”
Ms. Pasztor hoped the new administration would be more receptive to criticism and willing to engage in discussion. “If governance would be transparent, and the public had better access to information,” that alone would be a success, she added.
Budapest’s mayor, Gergely Karacsony, who was vilified by the Fidesz government, is hoping that the relationship between the capital and the state will improve.
For years, the mayor accused Mr. Orban’s government, which drew most of its support from outside the relatively liberal capital, of withholding funding and weaponizing the tax system against the city.
“We’ve lost the last six years locked in a constant financial and political battle with the government,” Mr. Karacsony said in an interview. A lot of the city’s development and investment in infrastructure, which said were in very poor condition, had been put on hold.
“We want to honor 16 years of struggle and usher in a new era in Hungary,” Mr. Karacsony said. “We want to remember the sins of the Orban government to make sure that this kind of exclusionary, hate-driven political culture never takes root again.”
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