Orban’s €500 Million North Macedonia Loan Displays Balkans Clout

(Bloomberg) -- North Macedonia secured a €500 million ($549 million) loan from Hungary in the latest evidence of Prime Minister Viktor Orban’s growing influence in the Balkans.

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Reviled in much of the European mainstream for his pro-Russian positions and strongman-style governing, Orban has found allies in southeast Europe, including Serbia’s longtime president Aleksandar Vucic as well as in North Macedonia, where the nationalists returned to power earlier this year.

The unusual bilateral loan from Hungary, which is otherwise cash-strapped and has about €20 billion of European Union funding suspended over graft and rule of law concerns, was made by the state-owned Hungarian Export-Import Bank, North Macedonia’s Finance Minister Gordana Dimitrieska-Kochoska said in Budapest on Tuesday.

The loan has a 15-year maturity and its annual interest of 3.25% only kicks in from the third year, the Finance Ministry said in a statement that praised the terms for being better than what North Macedonia could otherwise secure from market financing. The money will be used for regional development and support for the economy, it added.

Orban visited North Macedonia last month after Prime Minister Hristijan Mickoski hailed him as a “hero” for the financial support. The Hungarian leader, the EU’s longest-serving premier, called the funds an “investment in Hungary’s security.” He has also sought to leverage Hungary’s six-month EU presidency to speed its enlargement into the Western Balkans, so far unsuccessfully.

“Europe won’t be whole without the integration of the Balkans,” Orban told reporters at the European Parliament in Strasbourg, France on Tuesday.

The ruling VMRO-DPMNE-led coalition took power in June for the first time in seven years after the then-ruling Social Democrats failed to advance the country’s EU accession talks. In 2018, Orban’s government granted asylum to Nikola Gruevski, the former nationalist prime minister and VMRO-DPMNE party chief who fled his nation to avoid a two-year sentence for abuse of power.

North Macedonia’s nationalist government isn’t the only one to benefit from Hungarian loans. Magyar Bankholding Nyrt., a partially state-owned lender whose stakeholders are closely aligned with Orban, has given a close to €10 million loan to Spain’s far-right Vox party last year and to the French National Rally of Marine Le Pen earlier. Both parties are now members of Orban’s Patriots for Europe group in the European Parliament.

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