Before I summarize a rather frightening editorial that appeared in today's Magyar Nemzet, let me translate back into English a ten-point summary of the Hungarian government's economic policy available only to subscribers of the Financial Times. Because I'm not one of them, I have to rely on the Hungarian translation as it appeared in today's Népszava.
1. Viktor Orbán at the time of the elections promised tax cuts and job creation in addition to renegotiation of the size of the deficit agreed upon earlier.
2. Viktor Orbán won the elections in a landslide; a few days later some members of his government compared the situation of Hungary to that of Greece.
3. Orbán announced his economic plan comprised of 29 points that included among other things a savings of 200 billion forints. He promised to keep the 3.8% deficit which was supposed to calm the nerves of international investors.
4. Fidesz politicians announced that they would like to extend the agreement with the IMF and would like to sign a new agreement from 2011.
5. But the negotiations between the Hungarian government and the IMF came to a halt, which created a whole series of political differences of opinion.
6. After that György Matolcsy, economic minister, said that the negotiations with the IMF are continuing from September on.
7. At the same time Viktor Orbán announced in parliament that he wants to restore the country's economic self-regulation and for that they do not need credit from the IMF. They will rely only on the assistance of the European Union.
8. In spite of protests the Hungarian forint stabilized mostly due to favorable global prospects. But at the end of August the forint started to fall again, shaking investors' confidence.
9. Then the Economic Ministry immediately announced that they are continuing negotiations with the IMF in the fall and they will definitely arrive at an agreement. However, Lajos Kósa later made it clear that this doesn't necessarily mean that Hungary will ask for another loan from the IMF.
10. What will happen next?
At this point the mouthpiece of Fidesz, Magyar Nemzet, felt that somehow they must explain this latest "confusion" that by now seriously threatens Hungary's already shaky financial state. They came up with a fantastic idea: speculators have media connections. As I mentioned earlier, Bloomberg's correspondents in Budapest are Hungarian nationals. So are those working for The Wall Street Journal. This arrangement has many advantages. It is less expensive and therefore these organs can maintain a constant presence in the country. Also, these people are bilingual and are privy to information that might not be available to those who are less familiar with the country and ignorant of the language.
However, this arrangement also has its pitfalls as Magyar Nemzet's editorial today shows. A Hungarian citizen reporting to a foreign news agency might be in some danger if his reporting doesn't suit those in power. Anna Szabó, the author, accuses Bloomberg's correspondent in Budapest, Zoltán Simon, of nothing less than treason. Because "when the Hungarian government bonds are being easily sold and when the former chairman of the Hungarian Accounting Office says that Hungary doesn't need the assistance of the IMF, and even the IMF agrees, can it not be considered treasonous that the Hungarian [emphasis mine] correspondent of Bloomberg claims that without the IMF the Hungarian economic strategy 'might end in crying.'"
Well, let's start with the the truthfulness of Ms Szabó. The Bloomberg correspondent said nothing of the sort. On August 25 Zoltán Simon reported that "Hungary Won't Seek New IMF Loan in Autumn Talks, Economic Ministry Says." At the end of this report Simon quotes Tim Ash, head of emerging market research at the Royal Bank of Scotland Group Plc in London. Ash said: "Why the government needs to make it so clear at this stage why they are not going to seek to renew the agreement with the IMF is beyond me. … They seem determined to prove that they can go it alone, a strategy which could still end in tears."
Anna Szabó presses her case against Zoltan Simon and Bloomberg, alleging a conspiratorial connection between speculators and the media. She cites a statement from October 2008 by the then president of the Association of Bankers who suspected that speculators were behind the fluctation in the Hungarian forint. But he wasn't talking about some secret understanding between speculators and journalists. He simply stated that in the foreign and Hungarian press there are journalists who "interpret the Hungarian situation in a one-sided manner" which he found suspicious and not sportsmanlike. It is quite an assumption to build a whole conspiracy theory on this statement.
It seems that Simon has committed other sins besides quoting a financial analyst. Anna Szabó objects to an earlier Simon report in which he dared to say that "in 2006 the popularity of the socialist party fell to a record low because they introduced an austerity program in order to lower the deficit." This according to Szabó is a falsification of the facts. The loss of the party's popularity was due to lies, their inability to govern, a lack of trust, and corruption. But again Ms Szabó is not telling the truth. Or rather she mixes up dates. The party's popularity fell immediately after the announcement of the austerity program while opinion polls did not indicate a huge drop after Gyurcsány's "lies" became known. The corruption cases becoming public is a relatively new development. So, in fact, Zoltán Simon reported the facts correctly.
Simon is also allegedly guilty of incorrectly reporting Péter Szijjártó's ill-fated interview in early June in which he confirmed Lajos Kósa's comments about Hungary's dire financial situation comparable to that of Greece. This time Simon's sin is one of omission. While Anna Szabó doesn't question that Bloomberg's correspondent correctly reported Szijjártó saying that "it is not an exaggeration to talk about bankruptcy," he had the temerity to leave out the sentence that "Hungary was close to bankruptcy a year and a half ago." Outlandish, isn't it?
Anna Szabó expects more from Bloomberg. Mixing up reporting with editorializing is not a good practice. In her opinion Simon is influencing public opinion when he dares to say, for instance, that "an attack against the chairman of the Hungarian National Bank may have an adverse effect." Or that "Fidesz may ruin the credibility that Gordon Bajnai and András Simor built by attacking the chairman of the central bank." All these reports were written by the same correspondent, she continues, who informed the world about the resumption of the negotiations. Thus, the conclusion is that he was falsely reporting the information coming from the Economic Ministry.
However, there is a problem with Szabó's conclusion. Simon asked the ministry in writing and the ministry answered in writing. Moreover, he received the answer not immediately but a day or two later. Thus, it is unlikely that a low level official misinformed Simon without proper authorization.
I'm just hoping that Bloomberg doesn't remove its correspondent in order to please the Hungarian government. This kind of pressure on the media is a bad sign and should be resisted because otherwise independent reporting from Hungary will cease to exist.