Is the tide turning?

Maybe. Initially, most political commentators were very cautious when they analyzed the possible effects of Viktor Orbán's leaked "informal chat" with former students of the political scientist, László Kéri. Some of them, for example Attila Gyulai of Political Capital, were sure that the contents of Orbán's speech "would not affect the present political balance." (Gyulai's conversation with Ferenc Vicsek in Klub Rádió's Saturday afternoon program, Hetes Stúdió. Others with perverse logic suggested that the leaked speech "may even be advantageous to Fidesz and Viktor Orbán." Why? After all, two very damaging things emerged from what Orbán had to say. First of all, that he was lying all along when he promised the Hungarian people an earthly paradise once he takes over. Second, that he would introduce an austerity program far more stringent than the current government's. A population that refused to cough up a couple of dollars in co-payment was not likely to be jumping with joy after hearing what Orbán had to say.

In any case, I didn't believe any of these off-the-wall predictions and had a sneaking suspicion that this whole business would be detrimental politically to Fidesz. My feeling was reinforced after seeing Orbán's desperate attempts at explaining himself away. Every second day he appeared on different television programs and tried to "refine" (finomítani) the message. However, no refining could get him out of the hole. I said to myself: Surely Orbán himself knows that this speech was a big mistake. But let's wait and see what the opinion polls say. Well, the first opinion poll's results became public yesterday. Fidesz, of course, still leads by a mile, but in one month Fidesz lost quite a few voters while MSZP gained some. In May, the difference between the two parties among those who say that they would definitely vote was 42%. Today it is only 33%. Fidesz's support dropped to its lowest in the last six months: in the voting-age population it is only 41% while MSZP managed to climb up to 20%. (If you recall, MSZP's support was as low as 13-15% in this category a couple of months ago.) The pensioners were not happy with Orbán's plans to change Swiss indexing to an indexing based solely on the inflation rate. Orbán's popularity among retired people last month was 41%; today it is only 36%. In the population as a whole Orbán's popularity dropped from 51% to 48% while Gyurcsány's very low 19% moved up to 23%. Of course, one must keep in mind that 30% of the sample claimed no party preference or affiliation.

Another blow to Fidesz may have been István Stumpf's rather careless remarks concerning the possibility (advisability?) of changing the constitutional prerogatives of the president. A much stronger position would be desirable, said Stumpf, and perhaps Orbán would be just wonderful as a president but of course with much greater powers. According to rumors, the Fidesz leadership is mighty upset with Stumpf, especially since it was through Stumpf that Kéri approached Orbán for a visit with his students. In fact, Stumpf was present at the ill-conceived gathering. Again, I think the Fidesz leadership's radar is pointing in the right direction. Stumpf's ominous words worried the left-liberal segment of the population and most likely frightened SZDSZ away from any kind of deal with Fidesz, if this rather confused SZDSZ leadership ever thought of such a deal.

On Monday Gyurcsány appeared on Az Este, a late evening political program on MTV. He seemed to be in a very upbeat mood and was his old combative self. Yesterday morning he gave a long interview on Mokka, an early morning show on TV2. Here his performance when confronted with a rather antagonistic reporter reminded me of his debate with Viktor Orbán when he basically won the 2006 elections. He had at least three reasons to be happy. First, parties learn about polling results before they are released to the public, and he saw what may be an inflection point in Hungarian political sentiment. Moreover, by then he must have known that Mercedes Benz had chosen Hungary for its new factory that will employ some 2,500 workers. He must also have known that the European Union's Center for Technology and Innovation would be established in Budapest. All this is, of course, excellent news for Hungary and helps the cause of MSZP and the government.

The media is very excited about Daimler-Benz's decision. The shrinking camp of left-liberal journalists note that the German automaker wouldn't be investing money in a country that is in the throes of economic and political collapse. I understand that this particular foreign investment is the largest in the history of the Third Republic. According to Gyurcsány himself (in his blog), once this plant is operative (2011) it could add between one and one-and-a-half percent to Hungary's GDP. It would, in addition to the 2,500 people employed at the headquarters in Kecskemét, also provide employment to about 10,000 people who will be working for different local sub-contractors. Admittedly, this is not 100,000 jobs a year as Orbán promised, but it is very significant indeed.

All in all, it's no wonder that Gyurcsány looked so happy and relaxed. Another interesting bit of information. Two days after Gyurcsány appeared on Az Este Orbán also appeared. What surprised me is that according to rating statistics kept by the television station, more people watched Gyurcsány than Orbán. In the case of Orbán people started to watch the program but eventually switched channels.

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Today’s essay is splendidly opportune to inspire a bit of meditation on one of the fundamental questions of the political life in Hungary. Namely, will the boundless nacionalistic and irresponsible propaganda, or the tenacious and expert work attract the approval of the electorate?
In my experience, in most cases, the professionalism wins out. Of course, it takes more time and entails more risk.
It appears that Gyurcsany is on the cusp of this dichotomy coming to the fore.
On the other hand a bit of communication may still be included in the proper governmental work end yet the government is completely impotent in that arena. It is not enough to do their work properly it also should be publicized to the electorate. Their hope is, it seems, that the results will speak for themselves. Those results however may materialize too late, or too gradually to aid the electoral fortunes of the government.
We may also invest a bit of faith in the unbridled greed for power that always betrayed Orban so far.


There is no question the last days have been good for the Government and the Daimler decision good for the country as a whole. You were also correct at the slight turning of the tide on public opinion (I did not foresee such a big move), though I would say it is far too early to say that this portends a longer term shift in attitudes. One thing is clear, and has always been the case, Orban becomes his own worst enemy at those times when absolute hubris takes over.
The one really disappointing thing coming out of this episode however, is that Orban had a legitimate point on pensions and doing away with the Swiss indexation system. Now that he has gotten beaten up on this and the MSZp has demagogued the issue, this is probably now “off the table” for either side into the next election cycle. Gyurcsany says he wants to build a national consensus, but to do so he must lead from the front on issues like this and not take the easy road (like Orban usually does).

John Hunyadi
“I understand that this particular foreign investment is the largest in the history of the Third Republic.” No, that is not correct. As Gyurcsany commented, it is the largest investment in Hungary in a previously undeveloped site (ie a greenfield investment). Here are some data on cumulative automotive investments in Central Europe to put it into context. As you see, the Daimler investment is not particularly large and is dwarfed by Audi’s ongoing investments in Hungary. Who Where How Much Audi HU E2650m (to 2010) VW CZ E2200m (to date) Toyata PSA CZ E1300m (to date) Daimler HU E800m (to 2011) Hyundai SK E800m (to date) PSA SK E700m (to date) Hankook HU E500m (to date) Peruform CZ E400m (to date)
John Hunyadi

The Daimler investment was headline grabbing because it was unexpected and because Daimler is a well-known brand. It is also a welcome morale boost for Hungary, but only because Hungary has lost other high-profile investments in recent years, in favour of Slovakia, Czech Republic, Poland and Romania. It seemed as though Hungary had lost its appeal to foreign investors, but this news suggests it has regained it.
The reality is more prosaic. Hungary has continued to receive investment but at lower levels and of a different type (more services, less manufacturing, more suppliers, fewer OEM manufacturers with well-known brands). As wage costs rise (inlcuding the tax component), Hungary is becoming less attractive for all but the least labour-intensive manufacturing. Hungary can still compete in services outsourcing against its main competitors in Central and Eastern Europe, but even there wage costs and skill shortages may start to bite in future.