Orbán’s Canossa?

I really didn’t think that by the time I normally sit down to write my posts we would have much information about the outcome of Viktor Orbán’s negotiations in Brussels. So, originally I thought that I would return to my original calling, history, and write something about World War I, specifically about the enthusiasm of Hungarian writers and poets for the war.

However, I think I will be able to scrawl a few preliminary notes on the Hungarian prime minister’s trip to Brussels that was described by a fellow politician as “Orbán’s Canossa.” I got the distinct impression that Viktor Orbán was almost certain that “a political deal” would be sealed during his conversation with José Manuel Barroso. The conversation lasted two solid hours and, although Orbán tried to put on a good face and announced his great satisfaction with the way the talks had proceeded, the very fact that Barroso was nowhere to be seen after the meeting was not a good sign.

Here are two pictures taken on the occasion. The first one was shot before the talks with Barroso and the other after he talked to Martin Schulz. On the first picture one is struck by the forced grin Orbán is capable of, especially when he is in a tight spot:

Orban kezet fog, 12-01-24

This is exactly the same smile he put on when, shortly after becoming prime minister, he tried to convince Barroso that the European Union should allow Hungary to have a 7% budget deficit.

Orban mosolya, Barrosoval valo talalkozas

And as long as we’re in the picture gallery mode, let’s see how Orbán looked after his talk with Martin Schulz, the president of the European Parliament.

Orban scared 12-01-24

Yes, Orbán’s day in Brussels started with Martin Schulz. One ought to know that Schulz is a German Social Democrat. Until about a week ago when he was elected president of the EU parliament, he was the leader of the Progressive Alliance of Socialists and Democrats caucus. So, Schulz’s political views are far removed from those of the populist right-winger Viktor Orbán. Another problem the Hungarian prime minister had to face while negotiating with Schulz was that the German Social Democrat is very well informed about the political situation in Hungary. He has visited the country innumerable times, and naturally his closest ties are to the Hungarian socialist politicians. Also, he seems to be doing his homework and knows only too well that Orbán is a master of double talk. He talks in Brussels as a real democrat and a trustworthy ally while in Budapest he compares Brussels to Moscow in the Soviet times.

It is quite clear that Mr. Schulz doesn’t like Viktor Orbán. In fact, according to Brussels gossip there are few people among EU politicians who actually like the Hungarian prime minister. He managed to alienate most of them. And that is a real drawback when it comes to negotiations of this sort.

But at least Schulz agreed to a joint press conference after their talk, which is more than Barroso did. According to the reporter for the BBC, during the press conference Orbán was largely quiet while Schulz lambasted him for using “European rhetoric” in Brussels and attacking it in Budapest. This is an “inadmissible approach.” And he continued: “So, the Europeans should take into account that he is a clever man as a party leader, but he should take into account that the European leaders are not stupid.” Finally, Schulz shared his feeling that his talk with the Hungarian prime minister “would lead Prime Minister Orbán to reflect.” Or, as the correspondent of CBS put it: “Orbán found himself standing by listening while Schulz doled out criticism.” Put it this way, I wouldn’t have wanted to be in Orbán’s place at that moment.

It was evident even before Orbán’s talk with Barroso began that he couldn’t expect much better treatment from the president of the European Commission. As it turned out, Barroso and Schulz had agreed on a common platform before Orbán’s arrival in Brussels.

What do we know about the Barroso-Orbán conversation? Not much because unlike Schulz, Barroso said nothing after the meeting and unfortunately Orbán’s descriptions of such negotiations are normally misleading. He did mention a few unimportant items that Barroso insists on, but otherwise he was quite vague. He praised his own performance (I had a good day!) but had to admit that he has no idea “how some of the open questions will influence the start of the credit negotiations with the IMF,” adding that “we can only offer our good intentions and therefore we hope for a speedy beginning.” Hungary received the legal objections and the Hungarian government will answer them soon.

From the rather incoherent summary of his press conference it seems that even the question of György Matolcsy’s dismissal must have been discussed, but currently Orbán’s attitude is that “Hungary is a serious place with serious ministers” so I assume the prime minister is not moving toward Matolcsy’s departure. But to show his earnestness to be a willing and serious partner in the Union, suddenly he offered Hungary’s adherence to the financial pact of the eurozone countries. The one he originally vetoed together with David Cameron of Great Britain.

However, I don’t think that this impressed Barroso. After the meeting he released a communiqué in which he emphasized that the talks were “constructive” and that the Hungarian prime minister stressed his willingness to come to an understanding. He is looking forward to the Hungarian answers to the points raised in the accelerated infringement proceedings against Hungary. However, Barroso also made it clear that small legal changes will not be enough because “it is necessary for a member state over and above the laws of the community to also embrace the common values of the Union.” And finally, and perhaps this is the most weighty line in the communiqué, “even after the negotiations there are political misgivings in the wider sense about Hungary which must be handled by the government.”

Orbán’s fellow politicians, government and party spokesmen were belligerent this morning. Tibor Navracsics said that the retirement age of judges is not negotiable and Gabriella Selmeczi, Fidesz’s spokeswoman, announced that Klubrádió will “not ring out.” She emphasized that Klubrádió offered only a fraction (sic!) of the money the winner of the frequency did. This is the law of the land and no one will tell Hungary what to do. However, at about the same time András Arató, the owner of Klubrádió, was received by Neelie Kroes, European Commissioner for Digital Agenda, who promised her help in making sure that the only opposition radio station will continue in Hungary.

Orbán’s misfortune is that by now everybody knows his game and no one trusts him. So I have the feeling that the EU will keep holding his feet to the fire.

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Minusio
Guest
“Finally, Schulz shared his feeling that his talk with the Hungarian prime minister “would lead Prime Minister Orbán to reflect.”” Eva, I watched the Orbán performance on several TV news last night. I fully share your observations but would like to add a few more. As you said, Schulz referred to Orbán’s “doubletalk” before and doesn’t like it. But in his statement to the press Orbán did it again: He swore all oaths on how much of a European he is and fully and wholeheartedly embraced European values, but that he needed EU support (i.e. moolah) to calm down or win over his people who had become more and more disenchanted with the EU and its demands, etc. Not so long ago he told the same people how he had “smacked some faces” in Brussels and why he went to “defend Hungary against foreign lies” just a week ago. To me, Orbán gave the impression of a man who really doesn’t get it, someone totally out of his depth. Barroso also underscored that a visit and a talk are no substitute for conducting the infringement procedure and fulfilling EU requirements. Back to the quote at the beginning: Schulz didn’t mean… Read more »
Member

Eva, on the previous thread I posted some questions at 9:52 Am related the Orban’s press conference at this morning. I think my questions flew under the radar. Would you be kind to share your take on what Orban said.
Thanks.

Petofi
Guest

This looks a bit like fly-fishing with the Orban-bait: you toss him out, than you reel him in; you toss him out and reel him in; then you take off the weeds and toss him out again….

Öcsi
Guest

I think Orbán’s bluff has been called. Orbán, like so many nationalists who turn inward and talk to the tribe, doesn’t grasp the fact that Europe understands Hungarian.

Member

I’m watching Obama’s state of the union speech. I’m sure we can argue some of his promises but it’s still a wonderful, uplifting, positive speech. Such a great guy!
Hungary deserves better then this lying bozo Orban … we can do better! Change!

Sackhoes Contributor
Guest

Mutt Damon: I share your impression about the State of the Union speech. One touching aspect: Gabby Gifford, who was shot in the head a year ago by a madman (and who announced she will not run this year) was helped by her Republican fellow Representative (Gifford is a Democrat). Whenever Gifford wanted to stand up to applaud Obama, the Republican stood with her, even though the rest of the Republicans in the hall did not. He explained later: friendship is stronger than politics. BTW, had Gifford not been shot, she and the Republican would be campaigning for the same Senate seat.
I wish I could imagine similar scenes in the Hungarian Parliament…

data center storage
Guest

Yes we can actually, great post.

Wondercat
Guest

Whatever the bulk of opinion represented on HUNGARIAN SPECTRUM may hold regarding OV’s chances of obtaining that EU / IMF loan, the foreign-exchange markets rate them highly: HUF359 / GBP1 this morning, nearly an 8% improvement from last week. Hmmm.

enuff
Guest

OV can’t do uplifting, all those years in opposition had mess up his mind set. Picking a fight is still his forte!
yes, HU deserves better!

Wondercat
Guest

From the KURIER: “Orbán legte Barroso einen Zeitplan für Gesetzesänderungen vor. Doch sein Vizepremier Tibor Navracsics dämpfte die Erwartungen: Es sei keineswegs zwingend, noch am Dienstag ein Abkommen zu fixieren.” Not at all urgent to settle things this Tuesday, sez Navracsics, although VO presented Barroso with a timetable for changes in the law. Any word from Brussels on this (rather than from B’pest)?

Petofi
Guest

If the EU and the IMF have any sense at all, the only thing they’ll give Orban is what comes out of a duck’s ass-
This maniac has to be stopped NOW.

GW
Guest

It’s not a matter of the EU and the IMF having sense or not. It is a matter of Hungary meeting a fixed set of rules and criteria. Hungary needs money, so it needs to borrow that money internationally and is seeking a form of loan guarantee from these international institutions, which means that funds provdied by other countries would have to be applied in case Hungary cannot pay back money it borrows.
The funds that the EU and the IMF would put at Hungary’s disposal in this event come from the net-creditor members nations (which is to say, they come from the tax payers in those nations) of each organization and can only be given or promised by these organizations if the debtor meets fixed sets of rules and criteria.
These rules and criteria are thus non-negotiable. An applicant for credit or another instrument from the EU or IMF knows this full well, even (one would hope) Mr Orban, whatever his public posturing and rhetoric. The creditor countries contribute on the basis of these rules and critieria and neither the EU nor the IMF can negotiate an exception to these rules and criteria for Hungary or any other country.

Paul
Guest
Some interesting quotes from today’s news reports: “Hungary said it does not intend to draw funds from any loan package and will continue to finance itself in the markets, even if that is at higher interest rates than it could obtain from the IMF and EU. Orbán said that without an agreement, Hungary would be able to keep raising money in the markets for the next year or two. But he said that over the long run, borrowing in the markets at current yields of around 9% would be unsustainable.” http://www.portfolio.hu/en/economy/hungary_pm_hopes_to_secure_imf/eu_financial_backing_by_end-march_wsj.23683.html In discussing the conflict with the EU over the government’s perceived attempt to legislate away the Hungarian National Bank’s independence, he called the law passed allowing the merger of the MNB with financial regulator PSZÁF “not a major bone of contention” and then said he’d be willing to let go “for the sake of peace” the similarly controversial new statute allowing government representatives to sit in on meetings of the central bank. But then he said that the requirement that the head of the central bank swear an oath to the constitution was a “red line” (vörös vonal) that he would not cross. http://www.politics.hu/20120125/what-exactly-are-the-hungarian-governments-red-lines-in-eu-dispute/ So, they don’t need the… Read more »
Member
@ Paul, Have you read my comment yesterday and watched the video of Orban’s press conference with my world by word translation? I am just asking as no one commented on it, and your post at 9:55 M today is almost the same thing I have posted yesterday and a few days back. Orban already stated before that Hungary intends to finance itself from the open market even if the terms are not as favourable as an IM loan would be. I fail to see the logic here, but I guess you cannot find logic when it come to Orban. Orban said (as per my comment yesterday) that they are only looking for loan guarantee, not for a loan from the IMF. Let me repost: Orban at this press conference yesterday highlighted again that there were no legal request to change anything whatsoever in the new constitutions. http://audiovisual.europarl.europa.eu/NewsAlertDetail.aspx?g=427 Orban also said that there were only two requests made by the EU regarding any other issues: 1. The independence of the National Bank. He mentions that for the last twenty years the Commission had no problem with the practice that they are raising concerns now, and because of it he says,… Read more »
Paul
Guest

Some1 – sorry, no, I haven’t had time to read back through the last few days. I just quickly checked no one else had posted those links today.
As for no one commenting on it – that happens to me all the time! I spend hours (sometimes it really is hours!) writing something and it just disappears into blog post doom…
I will try to catch up tonight.

Mutt Damon
Guest

Meanwhile on Planet Hungary …
Remember Laszlone Nemeth? Orban’s National Development Minister since December, who is the only female politician who uses the traditional husband name + “ne” name so the evil liberal press still can’t stop laughing when they write about her. Other interesting fact is that she has no degree and her experience is buying and selling rattan furniture fro years. Her ministry has a 600 billion HUF budget by the way. Ok, this just the Orban way …
So, the lady has released her tax reports. Get a load of this. She has 14 million still in the OTP private pension funds and not surprisingly, she took a 39k CHF loan.
Wait a minute … we were told that the CHF loans were the result of the conspiracy of left liberal media and the greedy bankers that brainwashed it into our head. We were also told that private pension funds were gambling away our money on the stock market …
Is she completely stupid or just doesn’t read the papers? Or …

Ron
Guest

Some1: Orban also said that there were only two requests made by the EU regarding any other issues:
1. The independence of the National Bank. He mentions that for the last twenty years the Commission had no problem with the practice that they are raising concerns now, and because of it he says, he cannot bow to the reasons, but he will bow as this is what they want him to do. THe issue is that a member of the government would participate in the Monetary Council’s session.
That is not true. In 2005 Gyurcsany wanted to change the Central Bank Act, and also there the EU voiced concern regarding the Central Bank’s independence. Gyurcsany amended the law accordingly.

Mutt Damon
Guest

Meanwhile on Planet Hungary …
Did you know that the new Hungarian basic law (aka. constitution) is very close in its words and spirit to the Constitution of the United States of America? If it wasn’t that apparent for ya read this:
http://www.crisismagazine.com/2012/hungary-under-siege-again
At the end the author quotes Matthew Day from The Scotsman.
This gentleman is a member of the Hungarian Academy of Sciences (has a real Dr title).

Member

“She has 14 million still in the OTP private pension funds and not surprisingly, she took a 39k CHF loan.”
Ah… I was wondering why Ms oneill’s decision to deliver the two finger Churchillian salute to Viktor last year,when he “asked” for her private pension, was looking ever more astute.
The latest news is that they (Ms oneill and Laszlone Nemeth), despite the earlier threats and blackmail, will now get the full state pension even if our esteemed Nat Dev Minister and my partner stay with their private pension company.
OK, for slightly murky reasons but still, a small victory for democracy and the rule of law!

Kirsten
Guest
Paul, some1, from the text I got the impression that the MNB through specific policies has indeed “supported” the exchange rate in the past weeks. So the stabilisation and slight improvement may not have been accidental. Even having gone quickly through the IMF text I would still think that while adventurous (and certainly not advisable among civilised countries), OV may have some blackmailing potential, so to speak. Austria got its rating reduced because of the exposure of Austrian banks to Hungary (so Hungary can affect the euro area to some extent), while the MNB has accumulated quite impressive reserves, the current account is in surplus and it does not seem to return to deficits in the next months. Of course, there are all those other points that make growth unlikely, that make governance in a predictable way unlikely etc., but I am speaking about huge market pressures that would force OV to retreat and fully accept the demands of the IMF and the EU (he can still just not comply, wait whether a further destabilisation of the Austrian banks will not make the IMF and the EU more cooperative – I am not saying that this is about to happen… Read more »
Minusio
Guest

Kirsten: I really wonder what your background is.
OV has no blackmailing potential – “so to speak”.
If you were a banker what would you do? Probably you would have rid your bank of all toxic assets long, long ago. That would have been your job!
So what are we talking about? Some banks want to recover their losses. Really?
For the banks, Hungary is a closed and shut case.
It’s only merciful EU that still cares about one of its members – as long as it can.
What do you think?

Kirsten
Guest

Minusio, and how would you interpret the neverending willingness to support Greece, certainly neither a country with an excellent background in governance and compliance? Do you think Viktor Orban does not see that?

Kirsten
Guest

Not of private banks but the several international organisation who try to “stabilise” what can be stabilised, even if some governments and banks etc. are neither worthy of it nor helpful in what they do. Admittedly, this does not have too many parallels with the 1930s, which are so popular also in your argumentation, but it is being done and reported e.g. in the press.

Kirsten
Guest

Only an example, IMF report page 13:
“the MNB’s provision of FX liquidity after the recent early mortgage repayment scheme” and footnote:
“voluntary scheme, which enables commercial banks to hedge against the exchange rate risk and the uncertainty in scale of early repayments in HUF at predetermined and more favorable exchange rates by FX-denominated mortgage debtors pursuant to a government-established mechanism.”
Do you think that this does not also help OV as it reduces the pressures on the exchange rate…? Perhaps there is a market, but there are also – and in Hungary now in particular – many ways how to interfere with it.
Another example, p. 28, primary balance of the state budget. I cannot say whether this is what the IMF says or what the Hungarian government wrote into the report, but that balance is positive in 2012 and 2013. So, OV does not need new money to run the country, he needs it to service debt and honour earlier commitments. He need not do it, and that would be a problem of the creditors more than of his government. I would like to know your opinion on that.

Odin's Lost Eye
Guest

Kirsten Over the past few weeks I have been wondering about the Viktator’s ‘cockiness’ in the face of the of the EU’s activities.
If it is true that Hungary’s balance of payments are positive and that O.V. is asking for assurances from the IMF that a loan would be available if needed. He and his minions are looking at what is happening in Greece and have possibly spotted a way Hungary can beat the EU, hold it to ransom and slide out of Hungary’s indebtedness. And lay the blame on the E.U.

GW
Guest

Kirsten:
” He need not do it, and that would be a problem of the creditors more than of his government.”
Yes, he must pay the money back if he wants to have any expectation of maintaining any reasonable financial ties to the rest of the world.
If Hungary were a rare example of a country with debt repayment problems, he would, indeed, have some leverage in negotiating terms with creditors, but this potential leverage has in fact been much reduced if not eliminated by the greater urgency of problems elsewhere, in particular those of Euro states. For Euro states, Greece or Portugal are urgent problems with domestic relevance, directly connected to their own well-being, Hungary, on the other hand, is a nuisance. The rest of Europe could survive a Hungarian default or exit from the EU while Hungary itself would enter into a crisis unprecedented in recent history.
Most critically, this potential leverage is held in check by the ongoing need to borrow new money, not only to service existing debt but to manage international payment balances.

Ron
Guest

Kirsten: Another example, p. 28, primary balance of the state budget. I cannot say whether this is what the IMF says or what the Hungarian government wrote into the report, but that balance is positive in 2012 and 2013.
And it will remain positive, if :
-the exchange rate do not deteriorate,
-the growth is 0.3% or more in 2012, and 1.5% in 2013. Despite the fact that a recession is expected for this year.
-Hungary does not need to payback the private pensions.
-Hungary does not need to sell MOL at a loss
-Hungary win all court cases in 2012 and 2013 regarding reducing compensations, such as bank compensation for teachers
-Hungary does not have and other negative one off losses.

Kirsten
Guest

GW: ” if he wants to have any expectation of maintaining any reasonable financial ties to the rest of the world.”
Here I have my doubts. He does not honour other contracts, why should he feel so obliged in this case? That is why I wrote that his strategy will be very costly for Hungary, but does that matter to him? I had the impression he would love to see Hungary ‘sovereign’ (= not constrained by international organisations) and self-sufficient. What he does, fits in my impression. But it all starts from the assumption that he intentionally does not play by the rules of the IMF and EU.

Kirsten
Guest

Ron, of course a lot can happen. My point was that the document of the IMF, although critical, confirms the assessment of the Hungarian government that it needs the support only as a safety net. The data as presented in that report indeed do not indicate immediate danger of collapse of either currency nor economy. There is no gaping hole in the budget or current account, as in Greece or Portugal, which would have to be mended with IMF or other money. The problem is in the political environment and OV can hope that the world will have other problems and consider him a ‘nuisance’ as Odin writes.

Ron
Guest

Kirsten indeed a lot can happen. But my point is with the points mentioned, these are not unforeseen expenditures. These are actual situations, which may adversely effect the balance. These items are, according to me, not included in the budget as accrued expenses.