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Hungary's incoming prime minister, Péter Magyar, has edged his nation nearer to European resources previously blocked due to rule-of-law violations under Viktor Orbán's administration.

Yet further hurdles lie ahead regarding another key set of funds Hungary has been unable to tap: the EU's SAFE initiative (Security Action for Europe).

Hungary is the sole EU member state whose proposal for affordable rearmament financing remains unapproved by the European Commission. Over €16.2bn stands allocated for this central and eastern European nation.

Obtaining these loans proves vital for Hungary's military modernization. The amount is large enough to fund ten years of armed forces upgrades - an investment the country could not sustain given its strained finances after 16 years under Orbán's leadership.

Hungary allocated just over two percent of GDP to defence during 2023 and 2024. Serious doubts persist, however, about whether the underperforming economy can sustain the rise to 3.5 percent of GDP as required by Nato commitments.

Without the SAFE loans, defence outlays could slip below two percent of GDP this year, notes Tamás Csiki Varga, a defence policy analyst at SV/SD Consulting.

Numerous challenges block access to the financing, and the window for resolution is narrowing quickly.

"The positive development is that following the government transition, along with discussions and the broader political agreement between the new prime minister, Magyar, and Ursula von der Leyen, rule-of-law issues appear largely resolved in broad terms," Varga observes.

Directing Funds Clear of Orbán-Linked Oligarchs

Although political conditions seem ready for approval, technical requirements present greater difficulties. The new administration has indicated that the proposal from the Orbán era requires revision. In practice, the incoming government must prepare and submit an updated plan for the SAFE programme.

This stems from the Orbán government's design of the loan framework to favor oligarchs tied to Fidesz networks, according to Varga.

The foundations for such channeling were already established.