The grandeur of Budapest is encapsulated by its Neo-Gothic Parliament building sitting on the banks of the Danube on the bustling Pest side of the river, facing the quieter hills of Buda opposite.

This is a European capital with a rich history but Hungary is still counting the cost of communist rule, which continues to cast an economic shadow decades later.

It is against this backdrop, supporters say, that recent reforms to the university sector should be judged, with the adoption of performance-based funding to drive competitiveness, along with new boards of trustees designed to harness the power of universities to support economic rejuvenation.

When the new model was introduced three years ago, however, it sparked an extraordinary stand-off with the European Union, which raised concerns about autonomy in light of the political ties of some board members and blocked universities that adopted the model from accessing funding streams including Horizon Europe and Erasmus+.

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Associated Press / Alamy

In an interview with Times Higher Education, Bal¨¢zs Hank¨®, Hungary¡¯s minister for culture and innovation, addressed the ongoing dispute, elaborating on both the intent of the reforms and the impact of the funding impasse, which he said had barred thousands of young people from the EU¡¯s student mobility programme, and researchers ¨C including a Nobel laureate ¨C from Horizon funding.

He also rejected suggestions that the so-called trust foundation model breached institutional autonomy, and said efforts to resolve EU concerns had yet to elicit a constructive response.

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Critics have highlighted that Hungary¡¯s prime minister, Viktor Orb¨¢n, has commented that the government would not appoint board members who were ¡°internationalist¡± or ¡°globalist¡± in their outlook. And they have accused the Fidesz government of applying financial pressure to push universities to adopt the foundation model.

But the genesis of the reforms, Dr Hank¨® insisted, sat with the universities themselves, which first proposed the changes and then voted for them with a two-thirds majority in their senates.

¡°When you are a state-owned university your structure is so strict, but when you are talking about education and innovation there should be flexibility,¡± he said.

¡°So, in 2020, many of the universities described a new model, and some of them [based that] on an international comparison ¨C how are things working in the UK or US or other countries?

¡°What they proposed was a kind of private model, where there is a long-term agreement with the government ¨C it is important to be clear about that, because it was not in the mind of the government to have a new model, it came from the university side.¡±

As such, he argued, ¡°the debate with Brussels [about these reforms] is not between Brussels and the Hungarian government, the debate is between the decision of the university senates and Brussels¡±.

While the initial take-up was limited to a smaller group, Hungary now has 21 universities operating under the new model, accounting for about two-thirds of the country¡¯s student population.

Under the approach, universities sign up to a six-year funding agreement, as well as a 25-year strategic agreement, and Dr Hank¨® said that improvements were already evident in a range of areas.

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Speaking at the THE European Universities Summit in Bremen earlier this year, he noted that the fact this was an agreement on both sides was ¡°a very important point of autonomy¡±, and that in the second year of the new model it had delivered increases in new diplomas and in the number of students in STEM disciplines, enhanced universities¡¯ role within their regions, and driven research excellence, including publications in top journals and intellectual property stemming from research.

Dr Hank¨® elaborated in his interview with THE, explaining that the goal of the ministry, which also oversees vocational training, lifelong learning, innovation and science policy, was to deliver ¡°service-oriented, impact-driven¡± tertiary education that ¡°delivers for Hungarian society¡±.

¡°Universities are not for themselves, they are for society and the economy,¡± he said.

¡°That¡¯s the heart of our model. The members of the boards of trustees are coming from industry, from the fields in which the universities should have an impact.¡±

An example, he said, was the board at Semmelweis University, where Dr Hank¨® was previously a professor, which includes representatives from Hungary¡¯s largest hospital and its main pharmaceutical company, as well as from the US-based Mayo Clinic to provide an international perspective.

Asked whether this led to a greater focus on applied fields, Dr Hank¨® referred to Ferenc Krausz, the Hungarian physicist who won a Nobel Prize in 2023, to highlight the importance of curiosity-driven research.

However, he said, ¡°you have to allocate the money very carefully, because you need output ¨C that is why in our performance-based system we finance outcome: social, intellectual, economic¡±.

Returning to the Brussels dispute, Dr Hank¨® noted that Professor Krausz ¡°is also associated with Semmelweis University ¨C and because of that his funding is blocked, which really is strange¡±.

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What, then, is his answer to the primary charges of the EU: that the reforms, and politically connected individuals on boards, constituted an unacceptable breach of university autonomy?

¡°Go back to 2022, and Brussels asked two things of the Hungarian government,¡± Dr Hank¨® said.

¡°One was that procurement processes should be obligatory for all universities ¨C OK, it already was, but we put it into law ¨C and the second was that if anyone has a conflict of interest as a member of a board of trustees they should [recuse themselves from the decision]. We also put that into the law.

¡°What was the EU response? The exclusion decision from Horizon, Erasmus and other funding.¡±

The reason, he said, was a belief in Brussels that board members ¡°have an influence on that funding ¨C who will be involved in Horizon, who will not, who will benefit from Erasmus+, who will not.

¡°But it¡¯s not true. If you know Horizon and Erasmus, there is no decision point in universities or the maintaining body. These are direct funds, not indirect funds.¡±

In a further effort to resolve the concerns in early 2023, Dr Hank¨® said that ¡°all the ministers and state secretaries stepped out of the maintaining bodies. Again, no change from Brussels.

¡°Discussions started, and they wanted members of the boards of trustees to have limited [terms of office] ¨C our proposal was two times six years.

¡°They also asked for a cooling off period, whereby if I am a politician there is a year or two years in which I cannot serve on a board. We agreed.

¡°Finally, 11 months ago we discussed two other proposals. One was that we had to kick out all of the university professors and rectors from the boards of trustees¡­the other was that international NGOs should be given the right to propose new members, which is absolutely a sovereignty issue ¨C if a university would like to have someone from an international field they can ask.¡±

These last two proposals, Dr Hank¨® said, were ¡°red lines¡± for Hungary to which it was impossible to agree, and in the intervening 11 months he said there had been ¡°no answer¡± from the EU.

As a result, he said, the government determined to recommend to parliament the changes to the law that Hungary proposed to Brussels at the start of the year.

However, he said, ¡°we will put in the last paragraph that this law will come into force when Brussels or the [European] Commission give the right to Hungarian students and researchers to get into Erasmus and Horizon programmes again¡±.

In the meantime, Dr Hank¨® said, several universities had lodged an appeal against the funding block, and the government is ¡°backfilling¡± Horizon funding in instances where a Hungarian university is an associated partner.

A national student mobility programme had also been introduced to fill the gap of Erasmus+, although Dr Hank¨® said international partnerships under the new arrangements were more easily found in Asia or North America, because there was a sense in Europe that Hungary was ¡°blacklisted¡±.

The ongoing standoff can be viewed in the context of Hungary¡¯s broader position in Europe, at a time when the government¡¯s conservatism is frequently at odds with its neighbours.

But Dr Hank¨® was insistent that differences in political approach must be kept separate from funding decisions that had impacted, among others, thousands of Hungarian students.

¡°Hungary has a very complicated history, and we had 40 years of communism under the Soviet Union where [the attitude was] that you are all the same,¡± Dr Hank¨® said.

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¡°After a situation like that it is important to rebuild your national identity ¨C with respect to others.¡±

john.gill@timeshighereducation.com