The growing integration of the global economy has created asymmetric networks of interdependence, becoming a notable challenge in contemporary global political economy. As Farrell and Newman argue, certain states occupy central “chokepoint” positions within key economic and financial networks, granting them disproportionate control over trade flows. Through this structural asymmetry, dominant actors can weaponize interdependence by using access to or exclusion from these networks as a tool of coercion against dependent states, thereby transforming economic ties into instruments of geopolitical power. Applications of this insight have primarily focused on relations between hegemonic powers and peripheral targets, yet an important gap remains in the literature. Existing studies tend to overlook whether similar dynamics emerge when the coercing actor is a regional institution, and the target is a liberal democracy embedded within that very institution. Does the logic of weaponized interdependence still hold when power is exercised internally?
This study addresses this gap by examining the case of Hungary, whose relationship with the European Union (EU) has been strained by the suspension of approximately €22 billion in cohesion and recovery funds in 2022. In response, Hungary has deepened its economic ties with China, becoming one of the largest recipients of Chinese investment between 2022 and 2024. Against this backdrop, the question remains: does weaponized interdependence theory explain Hungary’s strategic economic reorientation toward China in response to EU financial coercion between 2022 and 2024?
The analytical article aims to validate weaponized interdependence theory, demonstrating that the theory also operates within the liberal international order itself, extending the theory’s scope conditions and contributing to debates about the limits of institutional coercion.
Weaponized Interdependence Theory
To explain how asymmetric economic structures generate political power, Henry Farrell and Abraham Newman developed the concept of weaponized interdependence. Building on Keohane and Nye’s foundational observation that interdependence creates sensitivity and vulnerability between states, Farrell and Newman argue that the architecture of global economic networks is not flat but hierarchical. Certain states occupy structurally central positions, so-called “chokepoints”, within networks of finance, trade, and technology, granting them structural leverage over states that depend on network access. When chokepoint states choose to exploit their structural position for political ends by, for example, cutting off their adversaries from network flow, the result is weaponized interdependence. 
Farrell and Newman identify two primary mechanisms through which chokepoint power operates. The first is the panopticon effect, where network centrality grants dominant states privileged access to information flowing through the network, which can be used for surveillance and intelligence purposes. The second, which is more relevant here, is the chokepoint effect. Dominant states can deny or restrict access to the network entirely, imposing severe economic costs on dependent states. The second mechanism of financial coercion examined in this article is network denial, applied to the EU–Hungary relationship.
McDowell’s research on financial sanctions in the international currency system illustrates how this mechanism operates in practice. He demonstrates that US dominance over global dollar-based financial infrastructure enables it to impose financial sanctions that generate political risk for dependent states. The centrality of the dollar and the high US enforcement capacity are precisely the kind of chokepoints Farrell and Newman describe. Critically for this article, McDowell further shows that states exposed to this risk adapt their behaviour, for instance, by seeking to reduce dollar dependence or build alternative financial arrangements, diversifying away from the dominant network to restore strategic autonomy. This dynamic echoes Keohane and Nye’s foundational insight that states facing costly dependence will seek to reduce their vulnerability by cultivating alternative partners; a prediction McDowell’s empirical work confirms.
An examination of Hungary’s behaviour tests the theoretical prediction that a state structurally dependent on a dominant actor’s economic network, when faced with the weaponization of that dependence as political coercion, will respond by diversifying its economic dependencies to reduce vulnerability and restore strategic autonomy. While Farrell and Newman’s framework focuses primarily on how chokepoint power is exercised, this prediction of diversification is supported by McDowell’s empirical findings and the broader literature on interdependence. Having established the theoretical framework, the discussion now turns to the case of Hungary to test whether the prediction holds.
Case Study: Hungary and EU Financial Coercion
As a full member of the EU and NATO, Hungary is structurally integrated into the Western liberal order. The EU accounts for the majority of Hungary’s trade and investment flows, embedding it in European financial networks and thereby rendering it vulnerable to EU-level economic leverage. At the same time, the Orbán government has reinforced strong political incentives to resist EU conditionality by grounding its electoral support in anti-Brussels nationalism. This forms part of a broader illiberal political strategy that portrays EU institutional pressure as an external threat to Hungarian sovereignty. This makes Hungary a most-likely case, in which the theory’s predicted response should be particularly observable. As a result, evidence of adaptation would provide only weak confirmation of the theory, while failure to adapt would constitute a strong challenge to its validity.
The EU as Chokepoint Actor
The EU exercises chokepoint power over Hungary through its control of cohesion and structural funds, which constitute a significant share of Hungarian public investment and are particularly important to Hungary as a relatively lower-income member state compared to wealthier EU members. Hungary’s access to these flows is not negotiated bilaterally but mediated through EU institutions. The EU therefore occupies precisely the chokepoint position Farrell and Newman describe: a central node through which Hungary must pass to access resources it cannot easily replace
In April 2022, the European Commission triggered the conditionality mechanism against Hungary, citing systematic rule-of-law violations after Orbán had undermined judicial independence and media freedoms, leading to democratic backsliding. By December 2022, the Council had suspended approximately €6.5 billion in cohesion policy commitments following its assessment that Hungary’s remedial measures were insufficient. Including Recovery and Resilience Facility funds, total frozen funds reached €22 billion, equivalent to roughly 12 to 16 percent of Hungary’s GDP, representing the most significant financial coercion ever deployed by the EU against a member state. This weaponization of Hungary’s structural dependence created precisely the conditions under which the theory predicts diversification away from the dominant network. The mechanism was of explicit conditional nature, as funds would be released only upon domestic institutional reforms in areas including judicial independence and anti-corruption frameworks. The EU had converted Hungary’s structural dependence on European fiscal and financial networks into political leverage.
Hungary’s Diversification Response
Rather than pursuing compliance with the EU, Hungary responded in the manner weaponized interdependence theory anticipates. It moved to diversify its economic dependencies, deepening ties with China as an alternative economic partner and thereby reducing the EU’s structural leverage over its policy autonomy.
In 2022, Contemporary Amperex Technology Co. Limited, the world’s largest electric vehicle (EV) battery manufacturer, began constructing a gigafactory near Debrecen. It constitutes the largest foreign investment in Hungarian history and was certainly not an isolated transaction but the centrepiece of a broader strategic shift. Further major Chinese investments followed from BYD and EVE Energy in the EV and battery sector, and in 2023, 44 percent of all Chinese FDI directed toward the EU flowed into Hungary, with China being Hungary’s largest source of foreign investment since 2020. This influx of Chinese EV investment did not go unanswered in Brussels. In October 2024, the European Commission imposed definitive countervailing duties on Chinese-built battery electric vehicles, ranging from 7.8 percent for Tesla’s Shanghai-made vehicles to 35.3 percent for SAIC, layered on top of the EU’s standard 10 percent car import duty. The measure, framed as a response to unfair state subsidisation of the Chinese EV value chain, arguably reinforced rather than reversed the logic of Hungary’s diversification: Budapest’s embrace of Chinese manufacturing capacity on EU soil became, if anything, more strategically valuable to Beijing as a means of routing around the very tariffs the Commission had just imposed. Simultaneously, Hungary deepened infrastructure ties with China through the Chinese-financed Budapest-Belgrade railway and expanded Huawei’s role in its 5G infrastructure rollout. Both actions were pursued in explicit disregard of EU de-risking recommendations.
Hungary’s Eastern Opening policy predates 2022, but its dramatic acceleration coincides directly with the EU’s deployment of financial coercion. This sequencing is consistent with the logic of weaponized interdependence, which suggests that exposure to coercive chokepoint power can accelerate efforts by vulnerable states to diversify their economic dependencies. The Orbán government has framed its strategy as one of “economic neutrality” by maintaining open economic channels with multiple powers instead of accepting subordination within the single network of the EU. Even if one questions this framing, the structural outcome remains clear. By absorbing Chinese capital, Hungary diversifies its sources of external financing, reducing its vulnerability to EU fiscal leverage and expanding its room for political manoeuvre.
Hungary’s behaviour within EU institutions during this period further validates the theoretical prediction, as Hungary repeatedly vetoed EU-level sanctions on Russia and delayed military aid to Ukraine, using its institutional position to impose costs on the EU for continued financial coercion. This dynamic, in which the targeted state uses its own network position to raise the cost of coercion, is consistent with weaponized interdependence theory’s account of how dependent states resist structural leverage.
Conclusion
The evidence presented in this study substantiates the argument that weaponized interdependence theory effectively explains Hungary’s economic reorientation toward China in response to EU coercive measures during the 2022–2024 period. Faced with the EU’s suspension of funds and the deployment of its structural position as a chokepoint actor to coerce domestic institutional reforms, Hungary did not comply. Instead, it pursued a deliberate strategy of dependency diversification, absorbing Chinese capital at an unprecedented scale and deepening infrastructure ties with Beijing. Hence, this pattern aligns precisely with the theoretical prediction derived from Farrell and Newman’s framework, as supported by McDowell’s empirical findings and broader interdependence literature. States subjected to chokepoint coercion will seek to reduce structural vulnerability by acquiring alternative dependencies.
The Hungarian case therefore makes a specific and original contribution to existing literature. Weaponized interdependence theory has primarily been applied to relations between external hegemonic powers and peripheral targets. The same structural logic operated within the liberal international order itself: an EU member-state, formally embedded in Western institutions, responded to intra-institutional economic coercion through the same diversification mechanism. Therefore, this extends the theory’s scope conditions in a meaningful direction, and institutional membership does not neutralise coercive interdependence.
Since the period under study, this dynamic has taken an unexpected turn. In April 2026, Viktor Orbán’s Fidesz was defeated at the polls by Péter Magyar’s Tisza party, which won a two-thirds supermajority, ending sixteen years of rule under which the diversification strategy analysed here was pursued. Yet early signals from Budapest complicate any simple compliance narrative. Magyar has pledged closer EU alignment and reduced dependence on “Eastern autocracies,” but remains open to pragmatic cooperation with China. This suggests that even under a government more institutionally aligned with Brussels, the dependencies created during the diversification period are not easily unwound.
As economic coercion becomes an increasingly common tool of governance, understanding when it produces compliance rather than defection becomes a central question of the global political economy.
