Public relations are not a strong suit of left-liberal governments in Hungary. In fact, some MSZP voters just moan and say that the government’s communication is outright dreadful. The opposition on the other hand is excellent in this department. For example, some of the relatively minor accomplishments of the Orbán government, like the Széchenyi Plan, were magnified beyond recognition in government communications. A couple of billion forints of investment in this plan was sold to the public as the cornerstone of the country’s bright economic future. This kind of strategy might be successful for a while but it has its obvious pitfalls in the long run. What if the promises are not fulfilled? What if claims are contradicted by facts? Ever since 2002 Fidesz’s strategy has been to repeat ad nauseum that everything is terrible. They built a whole election campaign in 2006 on the slogan that Hungarians’ “lives are worse now than four years before.” The only problem was that everybody knew this was simply not true. The problem was just the opposite: people lived too well. To my mind, Fidesz has been making the same mistake of late. I know people will counter: How can you say that when all opinion polls predict a smashing Fidesz victory? Yes, that’s true, but how long can Fidesz keep saying, for example, as Péter Szijjártó did today, that the fifty days that have elapsed since Gordon Bajnai formed his government “have been fifty days of hopelessness”? Not for long when the facts contradict this assertion.
Today Gordon Bajnai made sure that Hungarians understand some of the accomplishments of his first fifty days as prime minister. He and his closest co-workers made several appearances starting with Magyar Rádió in the early morning and continuing with a press conference while his finance minister had a long interview in the afternoon with György Bolgár on KlubRádió. As for his style, Bajnai was modest: “We don’t have reason to celebrate but we should certainly give an account.” He emphasized that the steps he and his government have taken will ensure long-term economic growth and will allow the country to extricate itself from the economic crisis. Bajnai, I think correctly, talked about the international community’s positive opinion of his government’s activities to date. He emphasized that his government doesn’t really care about the election results of this weekend or next year; rather, he wants to ensure the economic well being of the country for decades to come. He mentioned the strengthening of the forint against the euro and the U.S. dollar and claimed that people who took out loans in foreign currencies decreased their payments by 400 billion forints. He mentioned that in the last fifty days the swap rate decreased by half. The IMF renewed its loan agreement with Hungary, and during the day there were half sentences uttered to the effect that perhaps the country might not even need the next installment. Sooner or later people will have to realize that there are improvements, especially if one can believe that globally the second half of 2009 will begin to show signs of recovery.
The solid majority (MSZP and SZDSZ) behind the government facilitated legislation. A legislative marathon began a few days after Bajnai took office. A few numbers from the last fifty days: 21 pieces of legislation, 26 executive decrees, and 32 government regulations were voted on or acted upon. The legislative activity didn’t stop for a minute. The decision was made to invest 1,800 billion forints (EU money) into the building industry, and the government established a fund of 1,400 billion forints to provide credit to middle-sized and small enterprises. Another 30 billion was put aside for a program for companies in financial trouble. Their employees worked for only four days and received wages accordingly while the fifth day was spent improving their skills at the government’s expense.
The less popular legislative activity involved saving money on welfare programs, like thirteenth month pensions to 3.5 million pensioners or not giving an extra month’s wages to 700,000 public employees. They reduced the salaries of ministers and managers of state-owned companies. Changes in the tax system are aimed at stimulating employment by reducing payroll taxes and boosting personal consumption by lowering the income tax.
And finally I would like to show two charts that appeared in today’s Népszabadság. The left column of the first chart shows the expected budget deficit of EU countries for 2009. The worst are Ireland, the United Kingdom, Latvia, Spain, and France. Hungary’s -3.9% is not bad, especially if we compare it to countries in the region: Poland (-6.6), Slovenia (-5.5), Lithuania (-5.4), Romania (-5.1), the Czech Republic (-4.3), or Austria (-4.2). The right-hand column shows the year over year drop in industrial orders as of March 2009. Again, although the situation is not rosy in Hungary it is better than in most European countries. As I said earlier, it will be difficult to maintain for another year that Hungary is in ruins and is a country of hopelessness. If I were an advisor to Fidesz I would suggest a change in strategy. Although a few polls indicated further erosion in the MSZP voter base, the declines are not substantial in spite of the severe cutbacks introduced by the Bajnai government. The European parliamentary elections will most likely bring a huge Fidesz victory, but if the MSZP doesn’t lose its nerve the successful government activities should bring more positive political results. And the socialist party shouldn’t lose its nerve because from their point of view it would be moronic to hold elections now when everybody claims that MSZP’s popularity is at its lowest.
Let me reproduce here another chart of the year-to-date movement of the Hungarian forint against the euro. That is, how many forints does it take to buy one euro? The forint is still not as strong as it was at the beginning of the year, but it has gained strength in the last fifty days. And if we compare it to the high of the year, in the neighborhood of 316 forints to the euro, it has done remarkably well. A very strong forint has its pitfalls, as we all know. A weaker currency is good for Hungarian exporters. Admittedly, it is not so good for people who want to travel to other countries or for those who took out loans in foreign currencies. The lower bar chart shows the rates of unemployment in select European countries in addition to the EU average. The blue indicates the situation in March 2008 and the magenta a year later. Yes, Hungarian unemployment went up but not as dramatically as in some other countries. The European average in March 2008 was 6.7% ; today it is 8.3%. In Hungary it was 7.4% and now is 9.2%. Admittedly, the Hungarian rate is artificially depressed because the percentage of active workers in the population between the ages of 16 and 60 is very low by European standards. The new tax code may help to increase the size of the work force. Another government program is directed at welfare policy. People who are able bodied will no longer receive welfare payments gratis. They will either be employed by local governments in public projects or, if they haven’t finished grade eight and are under the age of 35, they will have to go back to school.
One rarely has the opportunity to read in one place all the changes that have been made in the last fifty days. The sporadic news of positive steps is drowned out by the daily noise that predicts the total collapse of the country. Viktor Orbán, for example, doesn’t say that his government’s first job will be to lead the country out of the recession. Its “first task will be the removal of the rubble.” I really doubt that this strategy will be as effective as it appears at the moment.