The whole Orbán government is in denial mode. Thus it is hard to say anything definite about today’s political turmoil, except that the IMF-EU delegation packed up and left a day early. It is also pretty certain that this decision came straight from Olli Rehn, European Commissioner for Economic and Financial Affairs, in consultation with the IMF in Washington.
The only thing Olli Rehn seems to have in common with Viktor Orbán is that in his youth he played soccer for his hometown club in Finland’s top division. He studied economics, international relations, and journalism at Macalaster College (Saint Paul, Minnesota) and received a Ph.D. from Oxford University in economics. So, as opposed to Viktor Orbán, he knows something about economics and finance, and in the last year and a half he has had enough of the “unorthodox” economic policy of the Hungarian prime minister and his right hand, György Matolcsy.
Through the grapevine I learned that already late Wednesday night (EST) discussions were underway to change the departure time of the IMF-EU delegation from Hungary. Originally, the team was going to stay in Budapest until early Saturday morning, and they scheduled a whole day of negotiations for today. Instead sometime on Thursday instructions came from Washington and Brussels to interrupt the negotiations. And indeed, early Friday morning the delegation left Budapest.
According to the chief IMF negotiator the informal talks were broken off because the Hungarian government with undue speed was pushing through a piece of legislation that would undermine the Hungarian central bank’s independence. The Hungarian government didn’t show “any willingness to delay passage of the law to allow for further discussion.” The negotiators remained in touch “to determine the next steps.”
The new bank law would subordinate András Simor to a new governor who would be responsible for both the Central Bank and PSZÁF (Pénzügyi Szervezetek Állami Felügyelete or the state supervisory body in charge of financial institutions). The Orbán government wants to pass this piece of legislation in a great hurry. Preferably before “real negotiations” with the IMF-EU delegation begin. According to the pending bill the new chief governor would be nominated by the prime minister and appointed by President Pál Schmitt.
It was around noon today that Hungarians found out about the departure of the delegation and the interruption of the negotiations. Although Viktor Orbán had a radio interview in the morning where he talked about the IMF-EU negotiations, he kept the news of the delegation’s departure to himself. About an hour and a half after the official announcement from Washington and Brussels came a spate of lies, denials, and explanations from the Hungarian side.
The first reaction was an outright lie that came from the office of the government spokesman, the newly appointed András Giró-Szász, formerly a strong Fidesz-supporting “political scientist.” According to this first version the negotiations were informal and were completed (ezek a tárgyalások lezajlottak). The official negotiations will start in January. The reporter for MTI had the courage to retort that Olli Rehn’s spokesman said something else: the negotiations had broken off. I cite courage here because rumor has it that the reporters of MTI are under incredible pressure to report news according to the wishes of the government.
The second version, about four hours later, came from Tamás Fellegi who since yesterday is minister without portfolio in charge of the IMF-EU negotiations. Fellegi said that “the official negotiations were not suspended.” After all, the current talks are only informal. In addition he said something that signals to me that the Hungarian government remains under the illusion, or pretends to be, that “the Hungarian delegation is still ready to negotiate a deal without conditions” (a magyar delegáció továbbra is kész az előfeltételek nélküli tárgyalásra). The only thing I can say: dream on!
Fellegi added that the Hungarian government received a communiqué outlining the European Central Bank’s position on the proposed Hungarian bill on the status of the central bank and they are studying the matter. They will try to include some of the ECB’s suggestions into the bill. So, while the IMF-EU delegation insisted on postponing the passage of the bill, clearly the Hungarian government at the moment isn’t obliging. The Hungarian parliament is going ahead. Hence the departure.
Almost simultaneously with Fellegi’s attempt to minimize the importance of the delegation’s departure, János Lázár, leader of the Fidesz parliamentary caucus and a country bumpkin, assessed the situation as follows. “Negotiations with the IMF and the EU will start in January.” What was going on right now was “simply the members of the delegation getting acquainted.” But Christopher Rosenberg, head of the IMF delegation, certainly didn’t need time to get up to speed; he negotiated the 2008 loan. Moreover, he was the one who visited Hungary every three months or so to check on whether Hungary had fulfilled the conditions of the loan. So, no introduction was necessary.
Lázár then offered the most pathetic explanation for the early departure of the delegation. “I can understand if someone wants to go home for Christmas and wait for the arrival of little Jesus [Jézsuska] elsewhere, not in Budapest.”
As for the return of the IMF-EU delegation, Lázár had no doubts. After all, “Hungary owes a substantial amount of money to the IMF. I think that if someone needs the money, he will take all necessary steps to get his money back.” At this point I really can’t find the right words to describe this stupid boor.
The leaders of the opposition parties are aghast. Mesterházy is certain that Viktor Orbán can no longer handle the affairs of state. He even told Lázár that it might be a good idea to change not just course but also the prime minister. In fact, Mesterházy claimed that he had heard about meetings organized by Lázár himself to discuss setting up a government of experts supported by the Fidesz-KDNP two-thirds majority. Ferenc Gyurcsány said that Hungary is close to bankruptcy and the problem is that the current Hungarian government has no partners or friends in the world. He urged Orbán to change his economic policy and announce a new course on Monday. Otherwise there will be another “speculative attack” as Orbán likes to call the markets’ reaction to his misguided policies.
The Greek and Italian examples prompted some Hungarian analysts to play with the idea that Viktor Orbán may not be the country’s prime minister for long. Even my most pessimistic friends are certain that unless Orbán is ready to change his policies an early departure for the prime minister is definitely in the cards. Mesterházy offered the opinion that “if Orbán lost his mind, at least the Fidesz members of parliament should come to their senses” and get rid of him. János Lázár immediately moved into high gear. He considered the very idea “deliberate provocation” and denied the veracity of the news of his meetings with economists about the possible removal of Viktor Orbán. Lázár “suggested to Mesterházy and his party to get accustomed to the idea that Viktor Orbán will be the prime minister of Hungary at least until 2014.” And again, for the second time, Lázár suggested that Mesterházy visit a psychiatrist, especially because since his last warning “his situation has worsened.”
The Orbán government is in bigger trouble than even the IMF-EU delegation’s departure would indicate. Viviane Reding, EU commissioner for Justice, Fundamental Rights and Citizenship, wrote a strongly worded letter to Tibor Navracsics, minister in charge of matters of justice. In it she expressed serious reservations about the new constitution, stating that it doesn’t conform to European Union law. Apparently, Viktor Orbán also received a letter from Washington expressing concern over the new law on churches and religion. And finally, Thomas Melia gave a long interview in Origo in which he used unusually strong language concerning U.S. displeasure with what’s going on in Hungary. I will talk about these developments tomorrow.