Defeat in war: Supporters of the Hungarian government try to find explanations

Gergely Szakács, a stringer for Reuters in Budapest, described the mood of Hungarians who apparently “reacted with dismay … to a policy U-turn which set the country on course for another International Monetary Fund programme, with Prime Minister Viktor Orban the main target of their disenchantment.”

One has the sneaking suspicion that the journalist working for Reuters talked only to Fidesz supporters because only those could hope after the elections last year that “we will really see some drastic changes.” And now they are disappointed.

For those who have never been under the spell of Viktor Orbán this latest turnabout is not at all surprising in light of the deteriorating market conditions, the state of the Hungarian forint, and the ever growing sovereign debt. In the last couple of days some of the government bond offerings had to be scrapped and Hungary’s financial situation kept looking worse and worse. Moreover, the skeptics never believed that the “unorthodox economic policies” would be successful and therefore they figured that it was just a question of time before the “war of economic independence” must come to an end.

The ordinary Fidesz voter who, like the overwhelming majority of Hungarians, knows very little about international finance, is disappointed. He believed the government propaganda about the great strides the government was making toward economic recovery and now it turns out that all that talk was just talk. And he remembers Ferenc Gyurcsány who admitted that politicians in the past had promised pie in the sky instead of telling the truth. Then came his arch-rival, Viktor Orbán, the current prime minister, who first claimed that he had never lied in his life and naturally, unlike Gyurcsány, he will never lie to the Hungarian people. And now here it is: “He said this would not happen and then it did happen…. This is just more of the same…. We should not even be surprised that the prime minister says one thing and something else happens in the end.”

So says the man on the street, but what do right-wing publicists say in the slavishly pro-government papers? Let me summarize a couple of opinion pieces.

The first one, “After the war of independence,” was written by Tamás Nánási in Magyar Nemzet. Nánási was obviously deeply shaken by the news that the Hungarian government is returning to negotiate some kind of a deal with the International Monetary Fund. “Let’s not try to embellish what has happened. Negotiating again with the IMF equals surrender.” For those who believed in the success of “the war of independence” this turn of events is “painful.”

So, let’s see what kind of reasons Nánási could find to explain Viktor Orbán’s failure. As far as the weakening of the forint goes, his explanation is the simple-minded charge of “speculation” against the Hungarian currency. He seems to detect “a co-ordinated effort to force Hungary into this situation.” According to him the Hungarian economy is in great shape but “on the basis of unfounded rumors” a “financial hysteria” developed. He blames journalists working for The Wall Street Journal and Bloomberg for spreading these rumors. And then, of course, there are the rating agencies and the speculators. According to him, there was a concentrated effort to make sure that the war of independence would fail.

He and his friends were hoping for some at least verbal assistance from Brussels but it didn’t come. It seems that the Union is only concerned with the problems within the eurozone. That Hungary is “in the crossfire of a speculative attack” doesn’t matter to them. Hungary tried to be an A student, but when “it was in trouble Brussels forgot about it.”

After all, Brussels doesn’t like “the mention of our independence.” In fact, the Union is pleased that Hungary decided to turn to the IMF. And here is Hungary which will be lucky if it manages to receive “a loan that doesn’t mean that the IMF can interfere with the country’s governing.” But, Nánási adds, “we shouldn’t have any illusions. After all, the bayonets are behind our backs.” Hungarian government bonds might soon be downgraded to junk if Hungary doesn’t play ball.

Nánási finished his article with something he borrowed from László Bogár, a far-right professor of economics. The IMF reminds him of a hefty guy who appeared at a doorstep of a pub and offered protection against thugs. The owner of the pub turned the offer down because he thought that he could defend his pub by himself. But then one day someone set the pub on fire and the owner found that after all protection was necessary.

The other right-wing publicist who wrote an opinion piece in Magyar Hírlap, a paper farther to the right than Magyar Nemzet, was Gergely Huth. The title also refers to Orbán’s forced surrender. Huth’s language is more radical. The article begins: “This is disgusting and stomach turning.” It is disgusting because it became clear that “the so-called free market is nothing else but pillage by the favored.” The heartless West watched without a blink of an eye the sullying of a small country’s sovereignty. Hungary in the last few months was indeed at war. It fought, somewhat similarly to the Poles against the invading German armies in 1939, without the slightest chance of success. But then at least one knew who the enemy was.

Hungary was run over because the Hungarian government defied the financially powerful. Those within these financial circles are “a repulsive bunch and cold-blooded louts for whom ancient philosophy, Christianity, humanism don’t exist.” These people are “parasites who with their millions manipulate the whole world…. In this war Viktor Orbán and his government stood on the side of the angels.” This war was worth it even if perhaps from the point of view of the Hungarian citizens it was costly.

 

 

Viktor Orbán, like David against Goliath, fought against these faceless financial circles. If there is a second wave in the financial crisis that sweeps over Europe, Hungarians can say: “We at least tried.”

The Hungarian government tried to stop “the colonization of our pockets.” If the Hungarians can’t stop this onslaught of financiers “we, the citizens of the western world, will be slaves together with our great democracy and our rule of the law.” Hungarians “tried, failed, capitulated.” But it often happens that “failed wars of independence end up in landfills that bury powerful empires. We will see.”

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Member

“Those within these financial circles are “a repulsive bunch and cold-blooded louts for whom ancient philosophy, Christianity, humanism don’t exist.” These people are “parasites who with their millions manipulate the whole world…”
It can’t be that the Great Leader has made any mistakes – it has to be those pesky Jews.

Paul Hellyer
Guest

David is right to suggest that underlying these articles is the “dog whistle” of antisemitism. Not surprising but sad and disturbing nonetheless.

Member

It’s amusing to watch how cognitive dissonance kicks in with Fidesz supporters. My Fidesz voter friends went into total radio silence about politics. I’ve never seen so many puppy pictures posted by them in FB like now.
What really made my day today (like a good horror moie sort of way) was Matolcsy’s speech at one of the colleges. Here is the link from the index:
http://index.hu/belfold/2011/11/19/matolcsy_a_siker_lathatatlan
If you speak Hungarian don’t miss the video. If you don’t, grab your spouse and have it translated to you. If your spouse is speaking gibberish, that’s not because she/he forgot the English language …
It’s unbelievable. How could a man with such qualities get this high (literally and figuratively).

Paul
Guest

Well, there is a bright side. Before this happened my biggest fear was that Orbán wouldn’t give in, out of sheer pride and obstinacy he’d go down with the economy.
At least we now know that Fidesz aren’t quite that mad, and the good of the country has finally surfaced as a motivation – even if only at the very last moment.
I fear it’s not over yet though. The IMF talks have yet to happen – let’s see just how much loss of face OV can take. And if Fidesz faff about, trying to get ‘insurance’ (aka a loan) without conditions, how long before the market gets the jitters and we’re back with a collapsing currency and junk status?

Paul
Guest

To a large extent it was the Jews who made modern Hungary.
I was going to ask, so why are they so hated? But I suspect I’ve just answered my own question. There’s nothing your average poor bloody deluded Hungarian distrusts quite so much as success. If he’s made it and I haven’t, he must have cheated.

Minusio
Guest
Just five small things to consider. Some of the the Jews I know in Budapest have prepared to visit relatives and friends abroad for a longer stay, taking their money with them. According to the IMF rules – which Eva spelled out quite correctly – I see no way how Orbán could get his IMF “insurance” deal. So what are we talking about? Hot air. (The IMF doesn’t seem to know of any official talks.) Because of the dual character of the Hungarian economy, the FDI side will continue to produce nice (or at least acceptable statistics). The domestic side is about to shrivel, and as long as the Hungarians aren’t taking to the streets Tunisia-style, nothing much will happen for quite a while. Although this is anecdotal evidence, I know of several families where the youngsters (25+) have gone to Britain or Germany to find a job. Those who already have kids will never return. What looks inevitable, however, is that Orbán may find a way to “regulate” the transfer of capital because Hungary is bleeding white. This will be against EU law, but he will get away with it for a while because EU procedures are slow. Most… Read more »
Miklos Haraszti
Guest
So many guesses here and elsewhere about how these people will swallow what follows, that is, how their public talk will change after the IMF agreement is reached. All these guesses are based on the assumption that logic, facts, mathematics, reality, rationality, economic exigencies, political interests, shame, respect for their own followers, whatever, have an objective force; that there exists an ultimate “must” to publicly admit what they had to stomach. How many times you have to learn the lesson that the constraint to say what is obvious does not exist for the Fidesz-genius. The mantra will rock-solidly be: >>The outcome is non-conditional and non-restrictive, just as we had requested from moment one. It is serving our national goals and interests exactly the way we have always defined them. >What you people — political enemies of our party and our government, and therefore enemies of our nation, or at least people duped by our enemies — what you claim to be “conditions” were in fact requested to be put in the text precisely by us, and are therefore not conditions but victories. On the other hand, what you claim to be further budget restrictions compared to the already promised 1400bn… Read more »
Karl Pfeifer
Guest

Thank you for the translation of Huth’s “explanation Eva. It is a nice example of implicit antisemitism.
I’ve the impression that Orbán is only trying to stop the rapid devaluation of HUF. Now it went down from 310 to 304. Should Orbán try to play a trick on IMF the devaluation will continue.
The bootlickers like Bayer, Huth, Bogár and others will try to show that there is a world conspiracy of “parasites” against the brave Orbán, of course helped by the “left living provisionally our homeland” as Zsolt Bayer wrote in his inimitable style.
But one day even the most stupid will understand that the emperor is naked and is ruining the country.
And Miki Haraszti is right: “logic, facts, mathematics, reality, rationality, economic exigencies, political interests, shame, respect for their own followers”, do not count in Orbánistan today.

Joseph Simon
Guest

Orbán might indeed fail due partly to his moral turpitudes, ever so faihfully and unfailingly tracked by Eva, but more importantly because Hungary’s problems are daunting. Decades of socialist industrial policies devastated the country. Csepel, Ózd, Diósgyőr and parts of Budapest itself look like a wasteland. Crumbling infrastructure everywhere. Pulling into the Keleti is almost like arriving in Auschwitz: rusting and dilapidated service buildings, knee-deep weeds growing along the tracks. The station is cordoned off, for fear of falling plaster. Hungary is climbing out of a hole, dugged deeper by Gyurcsány. Hence Orbán is not even starting from square one yet. That is the reality for you to consider.

Member
Dear Simon, I am so glad that finally I can agree with most what you say, and that you put a comment about Hungary based on observation on Hungary and not some foreign land. Yes, I agree mostly what you are saying, but I want you to consider that most Eastern Block countries started from the same disadvantaged position if not worst then Hungary, and at this particular point in time, they are doing better. I am also not sure why you sinle handedly dragging out fro the last twenty years also the whole that GYurcsany dug deeper, as if we reflect on Orban’s first presidency and its economical footprint left behind, I would not say that he was one who who helped to fill the whole. In fact some of Gyurcsany’s economical shortcomings are the direct outcome of trying to fix what Orban massed up with no help from the then official opposition Fidesz. Most of Gyurcsany’s idea’s that were shut down at the time by Orban are coming back now as Fidesz tries to reinvent the wheels. THe reality is that Orban is out of touch with basic economics, diplomacy and co-operation. His goals to benefit ALL Hungarians… Read more »
GW
Guest
Joseph Simon, The socialist/liberal years, including the Gyurcsány period, were far from problematic, but they at least offered a period of currency stability or even growth, privatization initiatives and a convergence with the European mainstream and world financial institutions featuring significant foreign investment, most significantly in telecommunications infrastructure. If we are to be charitable to the present government and grant the possibility of a recovery of the Ft along the lines of the 2008-9 dip and recovery, we are still faced with a series of disastrous policy initiatives, including two years of lost opportunity due to withdrawal from the interest advantages of the IMF credits, the tapping of private retirement accounts (much of which has been effectively thrown away in the MOL investment fiasco), retreat from co-payment or other reforms in medical care, and frivolous spending on PR, prestige object, new security forces, etc.. Most of these failures appear to be due to an improvised style of governing which speaks to the fact that Fidesz did not spend its years in opposition preparing to actually govern and came into office with the burden of eight years of saying no to every government policy (even when said policy was unavoidable and… Read more »
GW
Guest

Some1 wrote:
“His goals to benefit ALL Hungarians and all Hungary are highly questionable together with his character and mental health.”
Are those really his goals? The atmosphere fostered by his years in opposition and in government has clearly been one of a “them against us”, in which he has never missed an opportunity to have the category of “ALL Hungarians” narrowed through the exclusion of the “inadequately Hungarian”, be they liberals, socialists, or members of religious and ethnic minorities.

Karl Pfeifer
Guest

Zsolt Bayer has put it in a nutshell:
“az ideiglenesen hazánkban tartózkodó mainstream baloldal”
http://www.magyarhirlap.hu/velemeny/szabadsagharc_20111117.html
“the temporarily in our homeland staying mainstream leftwing” and the “speculators” are responsible that Orban makes a 180 degree turn. And of course Gyurcsány.
Though this be madness, yet there is method in ‘t.

Paul
Guest

I was worried there, but now I know it’s all the Socialist’s fault.
Phew!

Jano
Guest

GW: “Gyurcsány period, were far from problematic, but they at least offered a period of currency stability”
This is not true either, the HUF/EUR went 315 (actually OV just topped this all time record of GYF last week). Two weeks before having had to turn to the IMF, GYF and Kóka argued, that “only the sidewinds” of the crisis will reach Hungary. The IMF forced GYF to give up the Pannonian Puma idea, but that was just trying putting off the immediate fire.
On the other hand Joe, I don’t think much of what OV had done helped a thing. He has 2/3d majority, still we haven’t seen any major reorganization. All we got is the pathetic propaganda BS and heroic epic of the unorthodox economic policy. I wrote in another post that I didn’t believe in the strict orthodox way either, but being innovative and being stupid are not the same thing.

GW
Guest

Jano, look at the curve for the 2006-2010 period. That low rapidly followed an extreme high (ineed, a bubble) and recovered to an acceptable level close to the mean of the 2002-10 era. This shows that the government and central bank used the tools they had rather well. Please not in my comments that I granted the possibility that the current government might well manage a similar recovery, but I am skeptical given that this would require a degree of growth that would be difficult given the burning that it has given the needed foreign investors and the loss of the pension investments to MOL.

Member

What if Orban actually want the country to default? Think about it. This is the only chance that they can come off as the savior. To reach a point when the only way is up so they can’t make any mistakes anymore.
What kind of pussy dictator is this guy? Every ballsy despot would have sold the bonds for 8 points or more and blame the enemy for the price. Could there be a secret plan? We can’t even produce a decent dictator for Pete’s sake?? This is just our “Hungarian Orange”, like in the movie “Witness”. Little, tasteless, dumb … but ours.
The most disgusting is that the right wing media started to compare the “lost freedom fight” to the 56 revolution.

Jano
Guest

GW: It’s not that hard if the IMF breaks OV just as they did it to GYF. Of course the IMF is not at all bothered with social issues so once again, nasty things are coming and history repeats itself. The only difference now is the lack of a strong opposition. Maybe things will work out fine this time, I don’t really care how much face OV looses in the process.

GW
Guest

Jano, it’s not a matter of the IMF “breaking” anyone. They are simply a lender with transparent and inflexible conditions, but advantageous interest rates and historically generous repayment plans. The demonization of the IMF by the Fidesz government has always been a bit of a mystery to me. While it’s convenient to have a foreign scapegoat like the IMF, if a country has financing needs — and Hungary certainly does — and is willing to agree to IMF’s conditions, particularly for transparency, then the conditions are persuasive.
One wants to know whether it was the scapegoating opportunity or the transparency and disciplinary requirements that put Fidesz so off of the IMF. The transparency of the IMF will certainly pay off for the government if they do end up taking a credit as, unlike private market creditors, they have to go by the figures in the books and cannot chose a creditor on the basis of their p.r.. But the irrational demonization of the IMF has certainly been recorded by all of the IMF’s major creditor members and this will have a real effect.

Jano
Guest

GW: This is exactly what I meant under “braking”.

Jano
Guest

I mean breaking.

Member

GW: “”His goals to benefit ALL Hungarians and all Hungary are highly questionable together with his character and mental health.”
Are those really his goals? ”
Of course not, but these are the goals he is proclaiming, and of course it is not for all HUngarians.
No kidding he is best friend with Bayer.

Kirsten
Guest

Mutt: “What if Orban actually want the country to default?”
In my opinion, Hungary should have asked for a rescheduling of debt in 1990, but at that time it was considered a matter of honour to repay every penny. It is likely that this will be repeated too.

Paul
Guest

Very good point, Kirsten.
Anyone know what the debt was in 1990?

Minusio
Guest

I wonder what we are talking about. This is the latest message concerning Hungary on the IMF homepage:
Statement by the IMF’s Resident Representative to Hungary
Press Release No. 11/420
November 17, 2011
The Resident Representative of the International Monetary Fund (IMF) to Hungary, Ms. Iryna Ivaschenko, today issued the following statement:
“The IMF team currently in Budapest is conducting a regular Article IV review and the second review under Post-Program monitoring of the Hungarian economy. The mission for the Article IV consultation is not a negotiating mission, but a mission to conduct the regular economic surveillance that the IMF performs for all member countries. The IMF has not received a request from the authorities to initiate negotiations on a Fund-supported program.”

Kirsten
Guest
There is certainly also some speculation in the current depreciation of the forint. But the problem is that the Fidesz policies intended to achieve “independence” (economic, political, cultural) are so ill-designed and even more ill-defined that they cannot achieve anything coherent and none of the goals (which are pointless anyway: politically back to the middle ages of Köver’s fantasy where Hungary was strong and independent of its neighbours, economically back to the self-sufficient farmer, and culturally back to the mythical grandeur of the dualismus kora stripped of the modernity of the cities). These goals somehow do not fit into the year 2011. But there appears to be a problem in achieving the defined goals independently of the government in charge. The assessment that “it is just more of the same” should be taken very seriously. If all governments have delivered pathetic results independently of their orientation, this could either point to a systematic failure to find suitable leaders and a systematic failure to install a functioning political system, or a systematic problem in the definition of goals plus the means to achieve them. I really cannot decide which is the bigger problem, perhaps they are mutually reinforcing. To wish oneself… Read more »
An
Guest

@Minusio: That was the statement IMF issued on the 17th, after the first announcement came from the Hungarian Government … they forgot to tell IMF first 🙂
But then they did talk to IMF on the 18th, see here:
http://www.portfolio.hu/en/cikkek.tdp?k=2&i=23290

Paul
Guest

The ‘viewpoints’ at the end of that article are quite interesting:
“As for the timing of the new agreement we need to note that if the government wanted to seal the deal sooner than next year, it probably could. A lot sooner actually, if it was aiming for a precautionary credit deal. There may be three main considerations why it wants to drag out talks until early 2012:
1) it wants to keep alive the early repayment programme conceived for distressed FX mortgage debtors. Applications for the scheme are open until the end of this year, but the cabinet may have further “rescue packages” up its sleeve.
2) it wants to bolster sentiment by announcing a new IMF-EU deal in early 2012 when the issuance of foreign currency-denominated bonds are scheduled, so that it can sell all this debt at a relatively good price.
3) while Hungary is still capable of financing its debt from market sources even amidst the current eurozone crisis, the external market environment could become so tense/fragile/unstable by the beginning of next year that the government wants to start this period of even higher volatility with a financial safety net.”

Kirsten
Guest

Paul, foreign debt amounted to 65 % of GDP in 1990. That is not the same as government debt as this includes the forint denominated debt. The most recent figure that I found for external public debt is 40 % in 2008. I am sure that a more recent figure is available somewhere.

Paul
Guest

Thanks Kirsten. In the time between me posting my question and you answering it, I have been surfing the topic of debt, deficit, etc to try to get to grips with all this.
The result? Absolute and total confusion!
For instance, Hungary’s debt is not much worse than the world average (or at least it wasn’t last year), and quite a bit better than many countries who aren’t in trouble. Even if you look at it as a percentage of GDP this holds true. Ditto the deficit. Hungary also has a positive trade balance.
I’m aware that I’m sounding like JB’s nicer brother here, but I am genuinely puzzled. OK, so it’s nice for us on the saner side of Hungarian politics to assume that the loss of international confidence produced by Orbán and Matolcsy’s meddling is at least part of the problem. But, even without all that, Hungary is regarded as a weak economy, easily prey to problems.
Why?
(That ‘why?’ isn’t only directed at Kirsten, by the way!)

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