I think it is unnecessary to go into great detail on the causes of the suspension of talks between the IMF-EU delegation and the Hungarian government. There is a spate of very good articles on the subject that appeared in English practically minutes after the delegation announced its departure. I found the first report on the event in Origo, an internet newspaper. On the same day ABC, the Wall Street Journal, and the English edition of Deutsche Welle informed the world about what was happening in Budapest. This morning Business Week (Bloomberg) gave an excellent account. I could only summarize them and that would be superfluous.
Instead I would rather talk about the Hungarian media's reporting on this piece of news. As the readers of this blog know only too well, the Hungarian media is sharply divided between left-liberal and right. In the last few years there were few friends of the government in the media. HVG, which years ago was considered to be a liberal weekly, began shifting, especially its on-line edition, toward the right. Index, the most read on-line paper, was always considered to be pro-Fidesz and anti-government. Hírszerző paraded for a while as neo-conservative.
Since the new government was installed I have been seeing a certain change in orientation and mood in the Hungarian media. I first started noticing that Index was becoming quite critical of the Orbán government. HVG has been steadily returning to its former liberal tone. Hírszerző, with the exception of a few opinion pieces, decided to be liberal rather than conservative. It is possible that the new government's unusual aggressiveness, especially the planned media law that is more suitable for a dictatorship than a democratic republic, prompted this shift on the part of the Hungarian on-line and print media. But whatever the orientation of these papers, they are still more or less reliable sources of information.
This is not the case on the right side of the spectrum. Magyar Nemzet is clearly a Fidesz party paper, as is Heti Válasz. Magyar Hírlap is even farther to the right; it was only a few months before the elections that the paper started supporting Fidesz against Jobbik. I think that the right-wing media's handling of the present crisis–because one can call the suspension of negotiations a crisis–provides a good example of what is wrong with the papers supporting Fidesz.
While all the non-right-wing papers I looked at immediately reported, in detail, on the failed negotiations, there was absolute silence on the other side. Heti Válasz, allegedly a moderate paper, didn't bother to report on the IMF-EU fiasco at all. Magyar Nemzet put up a short article toward the bottom of the front page today at 10:20 a.m. At least that was the situation when I checked around 4:00 p.m. Hungarian time. A person who reads only Magyar Nemzet wouldn't have the foggiest idea about what is happening with the stalled IMF-EU negotiations. The headline read: "Matolcsy: Negotiations are continuing with the IMF and the EU." The innocent reader who didn't hear that the IMF-EU delegation had left town could rightfully say: "Of course they are continuing because the last time I read the paper it said that negotiations would go on at least until Monday." That's bad enough, but the paper continued: "The minister informed the public that the EU Council in close cooperation with the employees of the IMF finished [lefolytatta] the fifth inspection of the financial assistance." What, what? The verb "lefolytatni" indicates the perfect tense. A completed act. As we know, as far as the delegation was concerned, it was not mission accomplished. So, this was a brazen lie on the part of Magyar Nemzet. In any case, if the negotiations had been concluded, why should the negotiating partners continue the already finished negotiations? It doesn't make the slightest sense and says a lot about the professional level of the newspaper's journalists.
I guess the fellow who wrote this masterpiece, allegedly on the basis of the perfectly good summary by MTI, felt close to the end of the article that perhaps he should say something about why "continuing the negotiations" is at all necessary. He came up with this: "The EU delegation announced earlier that the Hungarian government needs more time to provide additional details…." So, the delegation is returning home and 'it will strive to bridge the still existing differences of opinion.'" What? The EU delegation "earlier" indicated what? When earlier? A few months ago, a few weeks ago? Moreover, from the last sentence one gains the impression that the burden of bridging the differences lies with the delegation which will do its very best to accommodate the Hungarian government's needs.
This article has subsequently disappeared from the first page of Magyar Nemzet's website and has been hidden in its bowels, following the weather report, the election of the speaker of the house on Thursday, BKV's plan to borrow 5 billion, and other pieces of news of less importance. But I guess the farther back it gets the better since it is such a disgraceful piece of writing. This evening a new article appeared on the paper's website. It seems that Magyar Nemzet has fallen in love with the verb "continue" because the headline of this second article reads: "The government continues the politics of structural reforms." The relatively well informed reader will ask: What? Continuing the politics of structural reforms? What structural reforms? The last structural reforms that were attempted in Hungary occurred in 2006, and by 2008 Fidesz managed to torpedo the only one that was initiated in the field of health care.
But don't worry. Headlines in Magyar Nemzet often have nothing to do with the content of the article. This is also the case here. Instead, Magyar Nemzet in one short article tries to summarize all the possible consequences of the breakup of the negotiations. Suddenly, the readers of Magyar Nemzet will discover that the suspension of the negotiations most likely will result in a further weakening of the forint. That tomorrow when the Hungarian National Bank's Monetary Council gets together they might raise interest rates. The article also mentions that the bank tax might retard economic growth. The reporter goes so far as to quote economic analysts who predict that investors will consider the departure of the delegation a sign that Hungary will not stick to its promised course of austerity. That might make investment in Hungary riskier.
Among all this bad news there is a subhead in red: "JP Morgan: The government's announced steps will be sufficient." We don't know when the analysts of J.P. Morgan said that and what they were referring to. Moreover, this subhead sticks out like a sore thumb because it is in no way related to the content of the article. I suspect that both the headline about structural reforms and the subtitle about steps taken being sufficient were stuck there to lessen the blow to the readers of Magyar Nemzet who most likely learned about all this for the first time.
The question is what happened between 10:20 a.m. and 6:10 p.m. My feeling is Magyar Nemzet received word to prepare the ground for the austerity program that is coming soon. Political observers predicted that the Orbán government would postpone any hard economic decisions until October 3 when local elections will be held. My feeling is that the government will have to reverse itself on many issues, including the bank tax and changes in the tax system, very soon–not after October 3–because otherwise serious financial problems might once again beset the country.