The end of the rule of law in Hungary

We can no longer speak of democracy in Hungary. I'm not exaggerating. In fact, reading through some of my earlier posts about what I expected if Viktor Orbán wins the elections, I realize that I was too optimistic. Not in my wildest imagination could I have predicted what has been happening in the last few months. The rapid passage of bills submitted by individual members and thus not requiring any preparation or public discussion was followed by filling all the so-called independent posts with Fidesz  men. The government's accounting activities are supervised by a party hack, the president is the puppet of the prime minister and stupid to boot, the budgetary council is on the verge of extinction. Individuals' savings have been illegally seized, the constitution has been changed six times, laws have been tailored to suit members of the inner circle, the constitutional court has been castrated, and smear campaigns are launched against people who criticize Orbán and his government. One could go on and on.

But what happened today really boggles the mind. I think I mentioned earlier while discussing the budget that the government not only expropriated fourteen months' worth of social security taxes paid into private funds; it also considered it essential that practically all of the current investors in these pension funds move over with all their savings to the state-run social security system. We are talking about an incredible amount of money. The "success" of the budget depends in no small measure on the willingness of people to move back to the state system. The government needs their money, not just for paying current pensioners but for all sorts of unnecessary things that Orbán considers important for political reasons.

But it looked as if the Hungarians who have money in these private funds were not so easily swayed. Many of them came to the conclusion that it might not be advantageous. Századvég conducted a poll on people's willingness to switch, and it turned out that György Matolcsy, who was counting on 90% returning to the state, was as usual too optimistic. Only 51% were contemplating such a move, 37% said that they definitely want to remain with their current private fund, while 17% didn't know or didn't want to answer. Something had to be done.

Well, the government did something. Today Matolcsy announced that anyone who decides to remain with his private pension fund will not be eligible for a full pension even though the employer pays social security taxes on his behalf. He will get only whatever he and his employer pay into the private fund. That is called blackmail and is clearly illegal. Or at least it is illegal at the moment. Tomorrow they will make it legal. It is only a question of a couple of hours. Someone will submit the necessary bill and the Fidesz-KDNP machine in parliament will vote yes.

The Constitutional Court has no jurisdiction over the matter. In the first place, it was just deprived of its right to rule on issues concerning the budget. Second, considerations of the sanctity of property were not included in the bill governing the jurisdiction of the constitutional court. Thus, the constitutional court is powerless. But let's assume that the brave judges ignore all this and rule that this move was unconstitutional. So what?

By now I think we can safely talk about a concerted attack on democracy and the rule of law in Hungary. And this is not the end. László Sólyom was right when he talked about the slippery slope. Hungary is inevitably sliding into a state where "democracy" will be mentioned only in the constitution. Or perhaps not even there.

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Pásztor Szilárd
Guest

😀

Kevin Moore
Guest

Just a small note here.
The situation is actually a lot simpler than it may seem. Up to a few years ago, people were forced by law to enter the private pension fund system. These funds in Hungary are largely managed by the economic circles behind the Socialist party. Now it is being completely reversed. The government now also announced that they were lowering the allowed maximum percentage of administrating costs of these private funds from 4.5 to 0.2 That pretty much equals to saying “would the last one shut the lights please.”
The only thing I don’t understand is why the government chose such a complicated way of doing this reverse operation. Why didn’t just they demolish the private funds by law, just as simply as they were created by law?
Strange, the those crying for democracy now didn’t cry when people were simply forced into the private system.

An
Guest

Right Kevin, this is just really sweet of the current government to threaten its people that if they don’t switch back they will be totally kicked out of the state system .. so those who’d be crazy enough to stick with the private pension fund, will loose whatever they had already contributed to the state fund (which was 75% of all their pension contributions) + they loose whatever their employer is paying to the state fund after them. So they will be still paying in the system (their employers will) but they will not be entitled for any benefit from it.
When I was “forced” to join the private funds (and I wasn’t forced really) there was not one penny, sorry, “filler” that I lost on the deal. Tell me that those people who retire in 10-40 years will get even the nominal value of their contributions to the state fund… they won’t.

Eva S. Balogh
Guest

Kevin: “These funds in Hungary are largely managed by the economic circles behind the Socialist party.”
Certainly, like Sándor Csányi, head of OTP!!!

Member

When most of todays workers retire the state pension won’ be worth the air exhaled in promising it.
It is clear that the sole purpose of this “reform” is to plug the massive gap in the Hungarian state coffers.
Unfortunately Viktor Orban seems to be adopting the Latin American approach to the budget, if you can’t raise it in taxes simply confiscate it.
The Latin American precedent suggests that once the pension funds run outnext they take private bank accounts.

m
Guest

The EU power is serving mainly Germany, the country with the most foreign investment. FIDESZ is putting discriminating taxes on EU i.e German owned companies. Probably the pension insurance companies are also German dominated. So, let’s see how the EU(aka Germany) will react. FIDESZ, this must be acknowledged, is very “creative” these days in every field. The only snag is, they hurt not only MSZP, but also Germany at every step. It is easy to see, what follows, we have seen how Ireland had to change the governement instantly.
To be honest, after the financial crisis, the property guarantee is shaky all over the world, clearly banks are not safe places anymore, and other forms of property, first and foremost pension rights are ignored, abused. The FED when keeping the interest rate low by most probably a gimmick, is ruining the pension system which needs a certain interest rate for the pension capital.
So FIDESZ is acting not alone.

Eva S. Balogh
Guest

Kevin: “The only thing I don’t understand is why the government chose such a complicated way of doing this reverse operation. Why didn’t just they demolish the private funds by law, just as simply as they were created by law?”
Your democratic instincts are truly admirable.

Kevin Moore
Guest

I bet you cried for democracy when entering private funds was made obligatory.

Paul
Guest

I love ‘Kevin”s logic here. Why are we getting so worked up about being hung, drawn and quartered, when they could have just shot us?
What a bunch of nit-picking, negative, moaners we are.
But while we’re discussing logic, I’d love to know what goes through Fidesz’s mind when they decide who should post, ‘Joe’ or ‘Kevin’.
Maybe they think that their trolls have different characters, that one is more suited to certain topics than the other. Or maybe they think that we see one of them as more reasonable?
Odd, really, when they sound so exactly the same.

An
Guest

@Kevin: “I bet you cried for democracy when entering private funds was made obligatory.”
How about the government gives you 8% of your taxes back, FORCES YOU to take it with the stipulation that you have to keep that money on an investment account until you retire. Would you cry?
Now how about that the government decides to take all the money back that is on your investment account, while in exchange it promises that you won’t be shortchanged… except it does not go into specifics how that will be guaranteed? Wouldn’t you cry?

pachysandra
Guest

Now that I see things like that I think of my grandparents. They thought that it simply cannot happen, that soldiers turn up, and empty their house completely. It happened. They couldn’t believe that a complete stranger would move in their house. It happened. So I’m not naive. But what’s the difference this time? We don’t have a gun pointed at our head. And still, many people in Hungary think it is normal that the government takes away million Forints from them and puts it in a black hole you know nothing about. Please remember that these are the same people who refused to pay 300 Forints (~1GBP) for a visit at a doctor. Real mistery for me… I have a nice bank saving, so I try to find a way to get it out of the country before they tax it or say that I don’t need it but they do. And also I’m looking for a job abroad. I wouldn’t say I’m afraid, I’m just fed up.

Thomas
Guest
Back to the title which was “The end of the rule of law in Hungary”. This is what a wrote about my observations to my girlfriend in Hungary who is a professor in social geography and the head of a small research institute within the MTA: “Eva Balogh writes that she was too optimistic when she wrote earlier about how bad Orbán would be for the country. I think she still is, and you are, too. You all don’t want to realise that Orbán meant (and practised) a paradigm change of the system long before he was re-elected. This is why there were no austerity measures after the municipal elections which everybody expected except me. What Orbán needs he takes from where he can get it. Everything is subordinate to the “people’s will” as defined in his book. Soon the “truth” will be so filtered that nobody can see it. Non-Fidesz-controlled media (press, radio, tv) will be covered with libel suits or will have to pay crippling licence fees. Until the Internet will be controlled as it is in China, it will be the only source of unbiased information. But the number of people interested in knowing the truth (or… Read more »
Rigó Jancsi
Guest

@ Kevin: You are right. Every patriotic Hungarian should freely give his or her money in times when the nation is endangered and the foes are everywhere. In Brussels, Vienna (the dangerous Lendvai), Bucharest, Bratislava (sure it will be Pozsony again in a few years), Tel Aviv and of course within Hungary (everbody who has the misconception that free speech means to be allowed to critize the goverment). The army needs to be strenghtend in times like this, that is a budgetary priority, Hungary needs to be able to defend itself against the enemies inside and outside the country. In such times, nobody should whine and wonder how he or she will pay for accommodation and food as pensioner. There will be a solution, and Orbán will guide us there. Hajrá Orbán, the great and wise leader.

QWERTZ
Guest

It is good to see Mr Pasztor is smiling. I hope he will still be smiling his pension is paid out to him, and he realises it is a lot less than was promised to him. That is, if it hasn’t been all spent already, by this government or whatever comes after.

Vidra
Guest

The country is not in danger. Hungary has a positive trade balance and the level of indebtedness among households and businesses is way below the EU average.
As Eva has pointed out umpteen times, the problem is simply government mismanagement of its funds and failure to confont the real problems; the railways are a bottomless money-pit, health and education need reform and authorities and the banks must work together to reduce tax evasion.

Odin's lost eye
Guest
I notice that the comments on the ‘Mighty One’s’ actions are becoming more astringent. I am wondering what forms of society Fidesz really intend to create. Two or three tiers. Perhaps a type of feudal society, which will have, at the bottom of the heap the vast majority of ‘Proles’. These wretches will have nothing, no chance of escaping their fate and will be too busy just trying to stay alive to rebel. The proles will be given some sort of minimal education (it could be dangerous to teach them to read and write). Above these will be the Administrators who will have the support of a new AVO and police who will use it to keep the ‘Proles in their place. These will have privileges (special secret shops, etc). Finally there will be the Elite whose word is law, who can take and do whatever they want with impunity. The elite will be guarded by a special Praetorian Guard. This regime will be lethal to anyone anywhere who disobeys the utterances of the ‘Mighty One’ or annoys him in anyway. You think this is a nightmare that cannot happen. Do not you believe it. If Stalin had lived a… Read more »
whoever
Guest

“The country is not in danger. Hungary has a positive trade balance and the level of indebtedness among households and businesses is way below the EU average.”
A shocking level of complacency. Hungary does not truly balance its books, and for the last fifty years has consistently failed to do so, under /whatever/ economic system.
Reasons for this vary, from the dependence on raw imported materials, to cultural factors.
If Hungary is not so much indebted as other countries in the EU, it may actually imply that the level of small business organisation is so basic and primitive, that the idea of obtaining formal loans and credit, which would require a coherent business plan, is rendered utterly unrealistic.
Never mind structural and cultural inadequacies, the lack of a supply of people with the relevant business/technical/linguistic/artistic skills. Hungary is most certainly not OK, it is consistently consuming more than its contribution and is heading for (yet another) mighty Fall. Orbán is really twiddling at the edges of the problems to come.

Hank
Guest

Though I fully agree that the latest pension fund move is, again, a shocking attack on European norms of good governance, I would like to keep things in perspective.
Yes, OV is rapidly undermining the rule of law and the right of property (pensions, Constitutional Court, Budgetary Council, public media, crisis taxes etc etc etc.). Also, they will do everything to change the rules of the political game in their favour.
At the same time, I still think Fidesz will not suspend democracy: postpone elections, suspend freedom of speech and gathering, beating and locking up opposition people, journalists etc. Well, at least not for now (who knows what happens if there is a new national or international crisis of some sort).
So that leaves us with what Fareed Zakaria calls an “illiberal democracy”. That is, I agree, bad enough and the main question is: how long will the Hungarian population (including the decent conservatives in Fidesz) stand for this and what will the EU do, because an illiberal democracy is what you’d expect at its fringes, not among its membership.
There was an interesting article about this in the Guardian two days ago: http://www.guardian.co.uk/commentisfree/2010/nov/23/hungary-europe-democracy-rule-of-law

Vidra
Guest

It’s not complacency, just reflecting on how revolutionaries and counter-revolutionaries work – create a crisis out of a difficult situation and use it a justification for destroying the institutions that oppose them or have the resources they want. I agree that Orbán is in effect merely tinkering with the economy but I don’t think that’s his real agenda.

OpenDog
Guest

Ok, stop the self-pity and start thinking about 2014. If the country doesn’t come up with an alternative OV is the best we deserve. So you, with 3 letter degrees, what are our chances? Looks like a revamped MSZP is the best hope. IMHO they should ditch Fleto (F. Gyurcsany) at least remove him from the front lines. Maybe the party should split into 2 parties. Anyway, do they care at all? What do you think?

Hungarian Calvinist
Guest

Matolcsy’s impertinant blackmailing is intolerable for me.
And when I heard that the government is offering people a “freedom of choice” between TWO pension schemes but if you choose the “wrong” one you’ll be excluded from the other on, I nearly got a stroke.
What does this nitwit think, who the fuck he is? (pardon me my French) But I assume, he had every kind of authority and powers from his boss, whom he is a “right hand” to.
I am now looking forward to some further “consumer-friendly” measures of the frayed mind of our Wise Leader and Great Teacher to have unlimited and free access to my personal property like my banking account or freehold apartment etc. etc. I would gladly sacrifice all my belongings to him, so that he can rule for ever and ever and ever. Amen!

PS
Guest

“not just for paying current pensioners but for all sorts of unnecessary things that Orbán considers important for political reasons.”
Do you have any (insider?) information what this money will be spent on? If so, I would be very interested to hear. Or is this latter half of the sentence just added for rhetorical effect? If so, it is a pity; it greatly undermines the argument.

QWERTZ
Guest

PS, if you read Magyar Nemzet you’d see that it is already been blown on a pension hike for pensioners this year, as well as extra maternity leave for women. Laudible causes as they may be, not what pension premiums were intended for. If you see a similar rush of spending, you will know the source of the money.

PS
Guest

Thank you, QWERTZ, but I’m afraid that still doesn’t answer my question. The author does state ‘paying pensioners’ (to which you add the ‘hike’ – goodness knows what they will do with all that money now, although not being a Maygar Nemzet reader I am unaware what the ‘hike’ means in numbers); as for extra maternity leave, given the population decline I am not really willing to accept that a very substantial part of these sums will end up with those young mums to stay for a few more weeks/months (again, numbers?) with the little future taxpayer.
To the extent of my possibilities I have been following this debate for the last three days, but I’m afraid to say that I still don’t understand some basic problems. While the two ‘choices’ listed are very unfairly balanced (as all journalists and most experts – surprisingly, all of them from private pension funds – were keen to point out) I have not read about any viable alternatives. Surely, the government does realise that this will anger quite a few major financial players, but what real choice do they have?
Sorry for the rather long and pesky comment. I am trying to understand…

Eva S. Balogh
Guest
To PS: The “author” stated it several times all those things PS is asking about. While all countries are raising the retirement age, Hungary just added extra 20-30,000 pensioners to the growing number of retirees who will be able retire before the official age of 62. Women who worked for 40 years can retire from here on. So, if someone began work at 18 can retire at 58 or if 16 she will be able to retire at 56. As for the extra “months” of paid leave after childbirth. It is not month it is a whole year. All told three years at 75% of pay. Bajnai government lowered to two years which is still the highest in the world. Fidesz reverted back to three years. Yearly there are about 100,000 children are born in Hungary. So, figure it out. Ten billions were spent on setting up a anti-terrorism unit which seems to be only guarding Orban and Schmitt. 1.3 trillion is going to Hungarian organizations abroad. Extra 40 billion will go to the police. We don’t know how many billions will get the ministry of defense for setting up a reserve army of 6-8,000. All these while because of… Read more »
kormos
Guest

According to George Pilhál:
Ferenc Gyurcsany ex-prime minister, socialist grave-digger, who excites bad memories, played the role of the unfortunate slandered politician in front of accredited foreign journalists. This multicolored person wanted to bring tears into eyes, saying, that Prime Minister Victor Orban wants to show his head to his excited constituencies.
This illusionist tried to classify the difference between the swap valuation of the lot in Sukoro as bagatelle , which according to the prosecution (based on studies by independent experts), 1.3 billion forint. = ap. $ 6,341,463 as per today
This person is organizing all kinds cross wind, but the lauder the cry of the so called democrats and/or socialists, the stronger is the believe that Fidesz is on the right track.
Fidesz promised one thing: to make a new order. They do just that, and I cross my fingers.

Hank
Guest

To PS.
Half of the money (2700 billion ft in total) of the funds is in fact invested in government bonds, that is loans to the Hungarian state. So if all that money goes back to the state, these loans are scrapped out of the books (cause the government won’t have to pay back loans to itself). That means that Hungary’s indebtedness will go down to some 70% of GDP (it is now around 80%). A good thing in itself, but of course the capital employees have been building up for pensions is gone with the wind…..

T. Sanyi
Guest

PS:”…”I have not read about any viable alternatives. Surely, the government does realise that this will anger quite a few major financial players, but what real choice do they have?”
If the government needs money they could reduce spendings or increase revenues (taxes, higher social security contributions, increase debt) – after all, a question of priority. The problem is, with this move they don’t expropriate “a few major financial players”, because the money doesn’t belong to the insurance companies. It belongs to the insured people who should be angered.
So why aren’t masses of the insured angry? I think that is the “smartness” of all of Orbáns financial moves: they don’t hurt large groups of the people. At least, not NOW! It is an expropriation of the future, because one day, the people contributing now (in both systems) will be pensioners and someone will somehow have to pay them pensions… I think it’s like gambling on credit. I hope the odds of the game are good.

Open Dog
Guest

Ah, Pilhal, the great Hungarian journalist. Always entertaining. This is the fellow, who thought Peter Kiss was a pedophile, because he “He was married with one child”.
http://mn.mno.hu/portal/397738

kormos
Guest

Open Dog:
You comment made me laugh out loud, but Pilhar’s silliness does not exonerate Gyurcsany.