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.
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.