Tamás Fellegi, minister of national economic development, resigns

It was shortly after 10 o’clock this morning that Tamás Fellegi in the company of András Giró-Szász, the government spokesman, arrived to give a press conference. The announced topic certainly didn’t include Fellegi’s resignation. It was an unexpected development. After all, it was only a few days ago that Fellegi was named to head the Hungarian team that is supposed to handle the very difficult negotiations with the IMF and the EU.

For some time my impression was that Fellegi’s importance within the government was on the rise. More and more tasks were taken away from György Matolcsy and given to Viktor Orbán’s old friend and university professor, Tamás Fellegi.

First he was named commissioner in charge of the Russian-Hungarian negotiations. After many months of wrangling he triumphantly announced the purchase of MOL shares by the Hungarian government. As it turned out, it was a bad deal. The Hungarians bought the shares for too high a price and since then MOL has done rather badly on the stock market. Shortly after the Russian negotiations he was sent to negotiate with the Chinese, but it seems that the much touted “strategic alliance” with China didn’t materialize. A few smaller Chinese companies are opening plants in Hungary, but nothing more than that.

It is impossible to know who was responsible for the Hungarian government’s new Eastern economic orientation. But whether it was Viktor Orbán who came up with the idea of setting sails to the Eastern winds or Fellegi, so far the strategy hasn’t panned out.

Fellegi2

Fellegi announced his intention to resign as a result of his latest assignment of heading the Hungarian negotiating delegation. This, said Fellegi, is a very complicated and difficult job which requires his complete attention. He couldn’t simultaneously run the ministry and negotiate with the IMF and the EU. He explained that he announced his intention to resign to Viktor Orbán yesterday. Odd timing, indeed. Yesterday Orbán was already in Marseilles at the twentieth congress of the European People’s Party. Today he is attending the EU summit in Brussels.

A couple of hours later, news of Fellegi’s resignation appeared in several English-language papers. Bloomberg gave only the bare facts, but the Hungarian papers tried to find reasons behind the resignation. According to Népszabadság Fellegi resigned because, if he hadn’t, he would have been fired. Viktor Orbán apparently was dissatisfied with his work. His greatest sin was his handling of Malév, the Hungarian national airline; it received generous government subsidies that are most likely against EU laws. Fellegi was also unsuccessful in enticing the Chinese to invest heavily in Hungary and especially to buy the ailing Malév. It was only a few days ago that it became clear that the Malév deal had fallen through.

HVG claimed that in addition to his lack of success abroad, Fellegi simply wasn’t a good minister. He spent far too much time away from home, and the work of the ministry wasn’t satisfactory. According to 168 Óra there have been rumors for weeks that Fellegi would not stay on the job for long. The paper thinks that “one of the pilots of the sinking torpedo boat escaped.” Thus, Fellegi saw the handwriting on the wall and decided to quit before the collapse. Index thinks that Fellegi’s resignation is part and parcel of a large structural change being contemplated by the prime minister. It is possible that the two ministries, the Ministry of National Economy under György Matolcsy and the Fellegi’s Ministry of National Development, will be reorganized perhaps as one unit. In this case Matolcsy can be eased out from his current position and perhaps Fellegi could receive some high position after the negotiations are over.

Ferenc Gyurcsány’s Democratic Coalition has a different interpretation which Csaba Molnár, deputy-chairman of the party, apparently learned from reliable sources. According to Molnár, Fellegi resigned because Viktor Orbán wouldn’t allow him to announce a change of economic policy to the IMF delegation.

I’m also inclined to see a connection between Fellegi’s resignation and his meeting with Irina Ivashchenko, head of the permanent IMF delegation in Budapest, yesterday. I suspect that Fellegi became convinced after this meeting that without a complete change of economic policy, meaning giving up Matolcsy’s unorthodox methods, there can be no successful negotiations with the IMF.

On the surface this explanation doesn’t stand up. After all, if Fellegi no longer believes in the success of the negotiations why did he resign from the job as minister of national economic development and not from his new job as head of the negotiating team? But there might be a plausible explanation for this move. If he resigned from the IMF job he would indicate to the whole world that the negotiations are doomed. That would have devastating economic consequences for Hungary. Nobody would buy Hungarian government bonds, the forint would fall, and perhaps the Hungarian economy would head toward bankruptcy. Fellegi couldn’t do that in good conscience. However, by resigning as minister he might not even have the right to head the Hungarian delegation. After all, he is no longer part of the Hungarian government.

Attila Mesterházy, chairman of MSZP, already mentioned Fellegi’s ineligibility for the job and, if my theory holds, Fellegi will be the happiest to hear that. Meanwhile, Péter Mihályi, an economist with long service as an adviser to SZDSZ politicians, is convinced that the Hungarian government has no intention of coming to an agreement with the IMF.

Viktor Orbán will make a decision about the fate of Fellegi over the weekend. I think that he may have already made up his mind about the negotiations and that it may not be a wise decision.

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Minusio
Guest

There is one thing I didn’t quite get: Was his resignation accepted or not? (Apparently, OV wasn’t around.)
If not, it is like some of the others (Hoffmann, Martony), i.e. a non-event.
However he might be the only intelligent rat on the ship. But he will be punished heavily for leaving it.

Ron
Guest

Minusio: However he might be the only intelligent rat on the ship. But he will be punished heavily for leaving it.
He can ask asylum in Canada. It seems to become the new trend.
Whatever the scenario, as to why he resigned. The fact remain that nobody can believe whatever they say.
We can try to analyze this, but it require a psychologist and a lot of time to analyse VO’s brains, if any.

Gabriella
Guest

Orban is pressuring everybody to quit who is not 100 % in agreement with him. Fellegi was unhappy, and knew there won’t be any IMF agreement without giving up the stupid, I mean “unorthodox” economical ideas.
I think everybody understands that these negotiations will not be complicated at all, the IMF will hand them a list, and Orban either accepts them and give up his unacceptable plans, or there will be no deal. Fellegi surely knows that, so his reason for quitting doesn’t stand up.
I tend to agree with those, who think he is one of the first casualties in the remaking of the government. Orban can’t have people around him, who are not 100 % with him. 99% is not enough.
If this is true, at least it means, that there are some among the originally appointed people, who do not agree with Orban and not afraid to make that public. In this case, in a few days we’ll know exactly why Fellegi steps down.

Ron
Guest

The EU top is finished, at least for the time being.
UK and Hungary disagree, Sweden and Czech Republic wants to think it over. Some five countries need to ratify it first in their local parliaments.
According to the statement there will be a new fiscal stability union. In other words a new treaty relating to stringent fiscal and budget rules.
http://media.ft.com/cms/e68292c4-2230-11e1-acdc-00144feabdc0.pdf
Also the IMF will receive an additional EUR 150 billion. Hungary and the UK are against this.
http://www.portfolio.hu/gazdasag/orban_es_cameron_fityiszt_mutattak_az_euronak.159708.html
My understanding of Hungary position is that the 50% budget rule in the constitution is postponed till 2016, while the EU budget rules will be applicable from mid-2012.
Does anybody knew about this postponement.
It seems that Hungary isolate itself more and more.

GW
Guest
Ron wrote: “I think everybody understands that these negotiations will not be complicated at all, the IMF will hand them a list, and Orban either accepts them and give up his unacceptable plans, or there will be no deal.” This is exactly right. The IMF can only give credits and loan guarantees according to the terms of its charter and the conditions of its creditor members. Any government official who describes the IMF’s procedures in any other way is either incompetent or lying. Eva wrote: “First he was named commissioner in charge of the Russian-Hungarian negotiations. After many months of wrangling he triumphantly announced the purchase of MOL shares by the Hungarian government. As it turned out, it was a bad deal. The Hungarians bought the shares for too high a price and since then MOL has done rather badly on the stock market.” Since he was _the_ Hungarian insider on this deal, Hungarian securities authorities and prosecutors should be looking for closely at his accounts and the accounts of those working in his proximity, particularly any foreign and securities accounts. The opportunity for insider trading on this non-transparent transaction was simply far too great. Oh wait… that would require… Read more »
Ron
Guest

GW although I would like to take the credit for this line, it is actually Gabriella who came up with it.

Eva S. Balogh
Guest

Ron: “Does anybody knew about this postponement. It seems that Hungary isolate itself more and more.”
When I got up a few minutes ago there was a NYT Alert. As soon as I saw the title: Most
European Leaders Agree to Work on Fiscal Treaty, I knew that Hungary was one of those that didn’t. Absolute madness but perhaps as a result Orbán will sooner or later be removed as prime minister.

Eva S. Balogh
Guest

Gabriella: “I think everybody understands that these negotiations will not be complicated at all, the IMF will hand them a list, and Orban either accepts them and give up his unacceptable plans, or there will be no deal.”
Absolutely correct. Last night I discovered an interview with Orbán in Les Echos, a French paper. The interview was given yesterday. In it he repeats that the only credit line he would accept from the IMF is “discretionary.” Other kind of credit is unacceptable. If that is the case there will be no deal and Orbán will go down the drain together with Hungary.

Eva S. Balogh
Guest

Orbán is lying again to the Hungarians. According to his recollection he, together with the Czech Republic and Sweden, is only postponing decision until the Hungarian parliament decides the issue. Hungary has time, said he, till March to think about it. This is also how MTI reported the situation in two different reports. However, Sarkozy remembers differently and so is the NYT that reported that Britain and Hungary “refused to go along.”

Hank
Guest

But maybe Orbán is rapidly rethinking his position. It is after all not very pleasant to be in the slow lane of the two-speed Europe. This is how David Miliband called it in a twitter, according to the BBC:
Former British foreign secretary David Miliband says David Cameron’s actions showed “weakness not strength”. Writing on Twitter, he says: “UK jumped into rowing boat with Hungary next to 25 nation supertanker. That is weakness not strength.”

Ron
Guest

Eva/Hank: It seems that VO reconsidering his stance, as he does not want to become isolated.
http://www.euractiv.com/euro-finance/cameron-corner-eu-strikes-euro-treaty-deal-news-509574

Member

I love how Orban thinks he will be dictating to the EU and to the IMF. I think if he does not star to cooperate very soon, he will be going down and he will take HUngary with him.
Either way he has three options:
– Keep lying to Hungarians through his corrupted media (MTI) about what is happening and finally he will start to negotiate with the EU/IMF as a civil human being versus the Hungarian barbarian.
– Keep lying to Hungarians through his corrupted media (MTI) about what is happening and let Hungary go down the drain, while letting people believe that it was all conspiracy.
– Keep lying to Hungarians through his corrupted media (MTI) about what is happening, but somehow he will resign as PM.
In either way because of the corrupted MTI and other news sources he will come out of this in most Hungarians’ eyes as the first Hungarian Saint of the 21st Century. It will take a long time before the truth will be understood and maybe taught in Hungary. Also, he will become even richer in the process. I think his and his friends have to motivations: money and saintly status in history books.

An
Guest

@Eva/Hank: “It seems that VO reconsidering his stance, as he does not want to become isolated.”
I don’t think Orban wants to rethink anything, he just does not want to take the responsibility… he is hiding behind the Parliament (which is going to pass whatever he puts in front of it) and playing for time.
Don’t know why anybody is surprised he said no. He won’t join any pact that limits what he can or cannot do in Hungary. He calls this “protecting the country’s sovereignty”, but it’s not about the country, it’s about him having a free hand and not “taking orders from others”, as he mostly sees any EU rule.

Jano
Guest

He’s loosing face with this, and I’m taking it with a grain of salt for now but OV is surprisingly normal here:
http://index.hu/belfold/2011/12/09/orban_nem_tudom_szetszakadt-e_az_eu/
Also Finland might be calling a Veto too. I think that the one making the biggest mistake here is definitely Cameron.

Wondercat
Guest

Hard to imagine a less confidence-inspiring hair-dye job than Fellegi’s. “Who does he think he’s fooling?” tonsorially or financially…

Odin's Lost Eye
Guest
This was posted in the wrong thread Mr Cameron’s main objection is the tax on Financial Transactions. This tax would be paid to the EU. and the U.K. (City of London) would pay the bulk of these. There are also rules which restrict the activity of Financial Services and other institutions. M. Sarkozy would not give any easement on this clause because it was in the French Interest to ‘gut’ the City of London. There are also certain doubts about the maintenance of principles of ‘Free Trade’ and open competition. Mind you this does nothing to solve the present crisis. This all started by Greece concealing the extent of its sovereign debt when it joined the Euro.s. The problem is someone will have to pay them! Some 1 and An – you are both correct. The Viktator will never give up ruling this land. So far we have only seen the beginning of his Rule. I suspect that the New Constitution will become the ‘Holy Constitution’ etc. Ron I do not think that the Viktator gives a fig about becoming isolated. What he is worried about is gulling more money (for him and his mates) out of the EU. To… Read more »
Eva S. Balogh
Guest

Jano: “I think that the one making the biggest mistake here is definitely Cameron.”
And almost Hungary. Orban changed his mind. The question is whether someone talked to him or whether he was just playing a game. Difficult to tell.

Jano
Guest

Eva: “The question is whether someone talked to him or whether he was just playing a game.”
At this point I don’t really care (I’m interested though of course), I’m glad he made the right call and I hope he’ll stick to it. I was really happy to read the interview I linked above, and his arguments are valid (even though he might have been using them as an excuse). He wasn’t mandated to make this call alone, there should be a parliamentary unity (Ok, Jobbik will opose it) and it has to be communicated pretty damn well. Giving up from the sovereignity can not happen in a room full of prime ministers under peer pressure.

Paul
Guest

“Hard to imagine a less confidence-inspiring hair-dye job than Fellegi’s.”
Wondercat – check this out:
http://szarvas.tumblr.com/
You’ll need to scroll right down to the bottom, or possibly onto page 2 by the time you read this, but it’s well worth it.

Paul
Guest
Gabriella
Guest

Hank: But maybe Orbán is rapidly rethinking his position. It is after all not very pleasant to be in the slow lane of the two-speed Europe.
I think, this was a very complicated or should I say convoluted plan from Orban’s part, he can test what the public wants, and could always say, he was misunderstood, this is not what he wanted.
In a few days, they will be a lot of criticism against UK, Orban is free to change his mind, and the Fidesz Base will believe in Radio Kossuth.

Wondercat
Guest

@paul: **grin**

Member

Ho hum, today’s latest:
“Hungary’s government is targeting a EUR10 billion to EUR15 billion package from the International Monetary Fund and the European Union to help stabilize its economy, preferably with “lighter terms”, but would also accept a “stricter” deal, Reuters reported Saturday, citing bank analysts.”
http://www.marketwatch.com/story/hungary-aims-for-10b-15b-euro-deal-with-imfeu-2011-12-11

Eva S. Balogh
Guest

oneill: “Ho hum, today’s latest: “Hungary’s government is targeting a EUR10 billion to EUR15 billion package from the International Monetary Fund and the European Union to help stabilize its economy, preferably with “lighter terms”, but would also accept a “stricter” deal”
Oh, yes, and only Thursday Orbán said to Les Echos that 4-5 billion precautionary credit line will be more than plenty.

Member

Dr Balogh,
Indeed, although it was the “stricter deal” now “acceptable” which was most interesting for me. A
lso a news release issued-leaked at the weekend makes me think that it is not for doemstic consumption. You will not be surprised to learn that there is no news of it, as far as I can see, on either MTV or Duna.
I wonder if they were anticipating something nasty happening tomorrow externally (another “speculative attack”?) and this an attempt to pre-empt it.

Eva S. Balogh
Guest
Paul
Guest

Those bloody flags again!
If Cameron had that many Union Jacks behind him every time he spoke, he’d wouldn’t be taken seriously for two minutes.

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