Last weekend saw the second major protest against the recent re-election of Hungarian Prime Minister Viktor Orban. Tens of thousands marched through the capital, Budapest, angry at the government's increasing control over the media and civil society. Others decried the current electoral system, which gave Orban's party, Fidesz, a two-thirds majority in parliament with under 50% of the vote. It was a reminder of just how much has changed under Orban's rule.

Orban and his Fidesz party were voted in for a third consecutive term on April 8. It was an election – declared free but not fair by international observers – dominated by xenophobia, conspiracy, and smear. There was little discussion of the economy, education or healthcare; instead the campaign was overshadowed by hate-filled rhetoric about immigration in a country with few immigrants. Anti-Semitic tropes were also rolled out and Hungarian-born philanthropist George Soros was attacked.

Hungary was once described as a role model for EU enlargement in Eastern Europe. What went wrong?

Orban helped establish Fidesz in the late 1980s as the Hungarian communist system collapsed. It was classically liberal, progressive, and sceptical of nationalism. While the next two decades would see the party move further to the right, Orban's victory in the 2010 election had few people predicting what would come next.

Orban has consolidated control over the levers of power across the country. Checks and balances have been dismantled, critical voices have been curbed, and civil society has been undermined. He used the majorities gained in the 2010 and 2014 elections to tweak the constitution, pack institutions with loyalists, and change the electoral laws. He has overseen the creation of what is best described as a 'soft-autocracy'.

This is key to understanding how Orban has maintained his grip on the country. Hungary is not a dictatorship. There is no state violence. But he has built a system of centralised power that frustrates criticism and narrows dissent. Independent media, and their stories about Orban's corruption, have trouble being heard above outlets owned by the government. Efforts by opposition parties to reach out to the rural population are hampered by complicated campaign regulation. NGOs and universities face financial hurdles and harassment if they challenge the party line. All this, with the help of billions in public funds, allows Orban to shape much of the country's public political discourse.

Of course, Orban remains genuinely popular. He is seen as responsible for Hungary's economic recovery, and as a protector of Hungarian interests in the face of “foreign enemies.” Hungary's own history is one of conquest and occupation. Orban has taken advantage of that. And while it is true that the political opposition has been stymied, the reality is that it is also fractured, weak and not trusted. Many Hungarians see few other options.

One of the most striking characteristics of Orban's rule is how it has been propped up by certain parts of the European Union (EU). Hungary may be described as a threat to the union's rules and norms, but it is also one of the top recipients of its structural and investment funds. While the Prime Minister gets domestic praise for the country's improving economy, it wouldn't be possible without EU money. Brussels has essentially been subsidising Orban's kleptocracy.

Worse still is the behaviour of certain EU politicians. The European People's Party, an alliance in the European Parliament, which Fidesz belongs to, is a main offender. It has given political cover to Orban's rule, shielding him from wider EU criticism. Why? Fidesz plays a key role in the alliance maintaining its majority in the parliament. Other politicians – from Germany to Austria – have also courted Orban, supporting his views on immigration and identity. Whether this is cynical domestic politicking or a true reflection of a moral vacuum at the heart of Europe, it undermines the opportunity for a broad EU response to Hungary's transgressions.

So what happens now? Orban has called 2018 a “year of great battles”. Those inside Hungary who seek to hold their government to account will be worried. A pro-government newspaper recently published a list of what they called George Soros paid "mercenaries", made up of names from human rights and anti-corruption organisations. The government also plans to pass a new law next month, which would target NGOs with new taxes. Hungary's future looks bleak.

As for the EU, this should be a warning. Brussels lacks smart, effective mechanisms to monitor its funds and put pressure on dissenting members. While ways to manage similar challenges will need to be found – the new EU budget may address this – a substantial dose of self-reflection is needed for those EU elites who have flirted with Orban and his politics. This kind of moral decay is just as dangerous to the future of Europe as any single member state.

Whatever happens, Orban has set a dangerous precedent. He has shown that an EU member can go after the rule of law, independent media and civil society and get away with it.

Lindsay Mackenzie is a writer and editor for CABLE, Scotland's online international affairs magazine.