In case anyone thought that Viktor Orbán and his right hand, György Matolcsy, minister of economy, consulted with eleven government-friendly economists because of the country’s dire financial situation he would be wrong. The time of the meeting was fixed weeks earlier and it was to be a routine affair.
At the beginning of September the same eleven trusted economists and financial experts met with the prime minister flanked by Matolcsy and the ever-present Péter Szijjártó. At that time Orbán took a lot of notes while the eleven said whatever they felt was important to share with the prime minister. Details are not known. If any of them told Orbán and Matolcsy that the government’s economic policy was untenable and that it would most likely end in failure, they certainly didn’t listen. How forthright these people were is hard to say.
One can question the use of a meeting where only those people are invited whose criticism, if they had any, is gift wrapped. After all, most of these people are either Orbán appointees in the current administration or served in the first Orbán government.
Mihály Arnold is the vice-chairman of the Office of National Taxation and Customs (Nemzeti Adó- és Vámhivatal); Károly Szász, chairman of the Capital Market Authority (Pénzügyi Szervezetek Állami Felügyelete, PSZÁF); István Töröcskei, undersecretary in charge of the office responsible for issuing government bonds; György Szapáry, Hungarian ambassador to Washington; Lőrinc Soós, vice-chairman of the Hungarian Statistical Office; Zsigmond Járai, minister of finance between 1998 and 2000 when he was named by Viktor Orbán to head the Hungarian National Bank; and Henrik Auth, who was vice-chairman of the National Bank during Járai’s tenure.
In addition there were four economists who did not serve in either of Viktor Orbán’s two administrations: György Barcza, the leading analyst of the K&H Bank; Péter Ákos Bod, professor at Corvinus University; István Hamecz, chief economist of the National Bank; and László Csaba, professor at the Central European University. I guess I don’t have to emphasize that these four economists are all close to the present government. There are a couple of economists who should have been invited, but lately they have been critical of the Orbán-Matolcsy economic policy. One of them, Tamás Mellár, was head of the Statistical Office between 1998 and 2000; the other, Attila Chikán, was economic minister between 1998 and 1999. Both men in writing and in interviews are about as critical of the government’s policies as are the so-called liberal economists. And certainly no one was invited from the “liberal camp.” Thus, it is clear that Orbán doesn’t really want to hear anything that is not exactly music to his ears.
Orbán leaving the meeting with László Csaba
Now, the question is what Orbán actually heard at the meeting that took place on November 25. Well, that’s hard to say. If you believe György Matolcsy, the invited economists said exactly what he and all the spokesmen of the government have been saying for days: “Military operations have been launched against Hungary.” Specifically against government bonds and the forint. The fundamentals of the Hungarian economy are strong. As far as the advice the eleven economists gave, Matolcsy claimed that it was useful. One piece of advice was “to prepare a new plan for economic growth”; another, that “Hungary needs a financial safety net that can be provided only by the IMF and the European Union.” It seems that the eleven managed to make him understand that Hungary will not be able to get the Flexible Credit Line he was hoping for.
So, that was what Matolcsy revealed about the discussions that lasted over three hours. Two of the participants remembered differently. According to them, Matolcsy outlined his own understanding of the situation at the very beginning but was then quiet throughout. Except that sometimes he made faces when he didn’t agree with something he just heard. It seems that he repeated his own explanation that included the “speculative attack” story but apparently the economists present “explained to him that this viewpoint is entirely wrong. The financial world doesn’t work that way.” It’s a pretty sad situation when someone must explain to the economic minister how the financial world actually works. If he didn’t know it before, it is not at all surprising that Hungary ended up in this mess.
As for the prime minister, from the information received from some of the participants, he also seems to be totally ignorant of the workings of the financial institutions. Apparently “the prime minister asked for assistance on the most basic economic questions.” He showed great interest in the subject, “he wanted to understand various details, for example, he wanted to find out about credit ratings, interest rates as set by the central banks, about speculation and about how banks work.” Again, total ignorance of finance and banking.
The participants got the impression that Matolcsy and Orbán really believe in the existence of malicious financial circles and hidden speculators who attacked Hungary. Whether the economists present managed to convince them otherwise, I have no idea. One has the distinct feeling that Orbán in person can exert a magical influence on the people in his presence. He manages to change people’s minds within a relatively short time. For example, the student leaders were seething about Rózsa Hoffmann’s new law and were showing the bravery of lions until they got in front of the great man. After an hour they came out of his office like little lambs who now perfectly understood that the law wasn’t that bad, after all.
It is very possible that Orbán showed great interest in the knowledge of these financial men and economists but deep down he wasn’t convinced at all. One thing is sure. According to one of the informants: “They [Orbán and Matolcsy] are not in panic, although one got the impression that they are just a bit scared.” According to a second informant the economists pointed out “some of the more unfortunate steps taken by the government, for example, the extra levies and paying off forex mortgages way under current rates.” Some of them even brought up the possibility of Matolcsy’s retiring from his post. There was no reaction to that audacious suggestion. The next few days may reveal how much the economists said to Orbán and Matolcsy and how much the two absorbed.