For almost 20 years, the Collegium Budapest has stood as a symbol of a new era of science in central and eastern Europe. Some 700 scholars from 40 countries have spent time in its rarefied intellectual atmosphere — an esteemed institute for advanced study — where, free from teaching and administrative burdens, they have produced hundreds of papers and books in fields ranging from economics to political sciences, theoretical biology and the humanities. Given its widely recognized success, why does the collegium now face threats to its survival?

On one level, its problems are financial. The institute's international sponsors, including a number of western European governments, banks and private foundations, want the Hungarian government to bear much more of the collegium's annual cost, which runs to around €1.2 million (US$1.6 million). The Hungarian hosts currently contribute just €100,000 per year, which goes towards the costs of accommodation and salaries for a core staff of 30 or so visiting and permanent fellows. This is little more than it paid during the relatively lean early years after the institute opened in 1992. Given the country's expanded economic potential and its membership of the European Union (EU) since 2004 — of which it currently holds the presidency — the German government and other sponsors have asked Hungary to boost its share to about half the annual costs. If Hungary does not find the money, foreign sponsors say that they will withdraw their support.

The political and societal challenges ahead certainly demand honesty and trust.

But €600,000 is apparently more than Hungary is willing to pay for an intellectual enclave of international repute, housed in the former city hall in Budapest's historic castle district, provided rent-free by the Hungarian Academy of Sciences.

Miklós Réthelyi, Hungary's minister for national resources (and science), promised last year to examine whether EU structural funds could be used to maintain the collegium. But in December, discussion of the issue was again postponed, adding to concerns that Hungary is no longer interested in keeping the institute alive. The collegium's assembly of members, which will discuss the collegium's future at a meeting in April, is beginning to lose hope.

Perhaps the Hungarian government would not be particularly sorry to lose this academic jewel. The collegium is also known as a haven of outspokenness, and some suspect that the output of some of its scholars is unwelcome in government circles. Hungarian economist János Kornai, for example, recently published a caustic analysis of current political tendencies in Hungary.

If the collegium is forced to close, much will be lost. Institutes for advanced study are a vital element of modern science systems — a niche in the bustle of academic routine where researchers can find the time to elaborate on thoughts and concepts, and exchange ideas with colleagues from other disciplines. In Hungary, the Collegium Budapest brings an international flavour to Hungarian science. Senior figures from overseas are hard to find in its other universities and research institutes.

The Hungarian government should have the courage to do the right thing and take on a fair share of the costs, even if it doesn't primarily serve current domestic needs. Doing so would help to counter the widespread impression — furthered by a new and restrictive media law, and by a badly handled row over alleged misuse of research grants by a group of philosophers with the Academy of Sciences — that Hungary's leadership is drifting towards autocracy and that critical discourse is being stifled. The political and societal challenges ahead certainly demand 'honesty and trust' — the title of a Collegium Budapest project on the post-socialist transformation process. Budapest, with its rich scholarly tradition, has been an ideal place for people to study and reconcile diverging cultures of knowledge in a reshaped Europe. The changes under way in the Arab world may reshape East–West relations on a much larger scale. The Collegium Budapest would be a good place to begin to ponder what that might mean.