Ildikó Csuhaj, a journalist for Népszabadság, is usually very well informed on the affairs of Hungarian parties. She is normally the one who gets the scoop on the not so public utterances of party leaders. Once again she was the first who managed to get a bit more information about Orbán's speech at Kötcse than was available on Viktor Orbán's website. It seems that the official summary had mighty little to do with reality because from it one could learn only that "the century of utopias is over" and that "the socialists' attempt at modernization" is coming to an end.
Ildikó Csuhaj on the same day, September 4, learned a little more about the content of the speech. She found out from people present that it was not one of Orbán's usual campaign speeches. As they said, "It was realistic."
Two days later, on September 6, Ildikó Csuhaj learned more details: "Orbán promised an austerity program of trillions" in the next two or three years. The informants told the journalist that the prime minister's speech was perhaps "too honest." The conclusion of Népszabadság was that next year will see the introduction of a severe austerity program. Orbán seems to have realized that there is no other way: the strict fiscal policies introduced by Ferenc Gyurcsány and Gordon Bajnai must be continued.
As we know, in the last couple of months the Orbán-Matolcsy duo kept emphasizing that they don't want anything to do with the IMF. They put their faith in the European Union. However, on August 29 Olli Rehn, European Commissioner for Economic and Financial Affairs, made it quite clear in an interview with Vasárnapi Hírek, a Sunday paper, that an agreement between Hungary and the EU under the present circumstances was out of the question. "Instead of increasing the budget deficit, Hungary should follow a sound fiscal policy which is a prerequisite for sustainable growth." I think it was at this point that Orbán had to face facts. The European Commission was in no mood to allow Hungary to increase the deficit. It must be kept at the agreed level of 2.8%.
Viktor Orbán most likely realized on August 29, if not earlier, that the "economic freedom fight" was over. But if the message of the brief interview with Rehn in Vasárnapi Hírek was too subtle for some people, the published exchange of letters between Edit Herczog, MSZP member of the European Parliament, and Olli Rehn, the commissioner, made the European Commission's position crystal clear.
Herczog, after summarizing the events since the suspension of negotiations between the IMF-EU and Hungary, posed the following questions: "Exactly what was the reason for the early departure of the EU delegation?" and "What are the conditions for renewed negotiation between the EU and Hungary?"
Rehn's answer expressed satisfaction with the Hungarian government's promise to hold the deficit at 3.8% this year. "The government, however, couldn't give further information about a number of open questions." The promised "corrective" steps still haven't been taken and the things that have been done are considered to be temporary measures. The Hungarian government must make "strenuous efforts" to keep the deficit in 2011 under 3% in "a sustainable manner." He specifically mentioned a sore point: the Hungarian railways and the incredible losses incurred there. In his opinion the new Hungarian government has done absolutely nothing to decrease the losses. In fact, Rehn is convinced that the losses of MÁV will be even greater next year.
He also mentioned the extra taxation of the financial sector which is too high: 0.7% of the GDP. Such high taxes on banks and other financial institutions "will have an adverse effect on investment and economic growth." He expressed his opinion that the bill passed on the bank levy is most likely not in conformity with the laws of the European Union. Rehn didn't forget the beleaguered Hungarian National Bank and its chairman, András Simor. He emphasized that "the complete independence of the bank must be assured."
"The Commission's apppropriate authorities, together with the International Monetary Fund, are ready to continue the negotiations when they are convinced that the negotiations will be successful. Similarly to the program approved in 2008 a possible future program must be based on the creditable undertaking of obligations to follow solid fiscal policy."
Well, I think that this should be transparent for everybody. Even the average citizen. And because MTI made this exchange of letters public it should appear in most Hungarian papers and on the electronic media as well. I will pay special attention to Magyar Nemzet, the Fidesz mouthpiece, which doesn't like to give bad news to its readership. Yet even there I noticed a slight change in policy. The paper today published an interview with László Urbán, currently the Hungarian representative at the European Bank for Reconstruction and Development and someone who at one time was quite close to Fidesz. Urbán said point blank that Hungary should sign another agreement with the IMF. He went even further and said that "it is a mistake to name as the goal of the economic war of independence a higher indebtedness. Because a greater deficit means exactly that." I was most surprised that Magyar Nemzet published this interview.
The intriguing question is how Viktor Orbán will communicate this complete turnabout in his government's economic policy. One obvious tactic is to blame the former government for everything. However, that doesn't take care of all those empty promises about the paradise that awaits the country and its people once he is prime minister. Perhaps there is the danger of Orbán's secret speech at Kötcse being compared to Ferenc Gyurcsány's speech at Őszöd: winning an election on promises that can't be fulfilled. We know what happened to MSZP's popularity right after the announcement of the austerity program. Orbán in his speech actually made reference to a potential hit on Fidesz's popularity.
If one is wondering why Orbán didn't wait with this speech until the local elections, there is an easy answer. Tomorrow the finance ministers of the European Union will meet and discuss the Hungarian situation. He couldn't postpone the decision.