Brussels’ pressure is off for a while, but there might be political dangers facing the Orbán government

I was planning to write about Hungary’s battle with the European Commission over the deficit, but the news turned out to be pretty much of a fizzle. The government claims success because the Commission accepted the figures provided by the Hungarian government for their projected 2012 and 2013 deficits. The Union’s demand is a deficit that is under 3% of the GDP, and Hungary has been one of the worst offenders in this respect in the last eight or ten years. Year after year the Hungarian numbers were closer to 10% than to 3% and Brussels’ patience has been running out. At last they told the Hungarian government now or never. If Hungary doesn’t want to or can’t oblige, the cohesion funds will be withdrawn.

After several tries Economics Minister György Matolcsy came up with the “right”  numbers, but the results were achieved by introducing measures that included reneging on a pledge to halve Europe’s  highest bank levy, doubling a new financial transaction tax, and special levies on public utilities. Brussels seems to be satisfied, although the communiqué announcing the decision mentioned that “the net effect of these corrective packages is estimated to be around 1.5 percent of GDP but they also include negative growth effects.” In plain language, the structure of the package doesn’t ensure sustainable economic growth accompanied by low deficit numbers.

As usual, the Hungarian government and the European Commission don’t see eye to eye on the exact figures. Since we are quickly approaching the end of the 2012 fiscal year, one can fairly safely say that this year’s deficit will not exceed 2.5%.  However, there are small differences in numbers for the year 2013. Hungary projected a deficit gap of 2.7% while Brussels thinks it will be more like 2.9%. The two sides, however, disagree widely on what will happen in 2014. Brussels is certain that Hungary will not be able to keep the deficit under 3% and that the whole vicious cycle will begin anew.

Matolcsy is extremely pleased with the results, while the opposition has an entirely different opinion of the matter.  MSZP interpreted the Brussels reaction as “an objective criticism”; the European Council granted six months of reprieve for Hungary to correct its figures. Indeed, it will now be next May that the final decision about the cohesion funds will be made. This alleged criticism is most likely accurate because Matolcsy talked about the possibilities of “new measures” that might be necessary.

Since this particular issue between Brussels and Budapest is in limbo for a while, I would like to move on to a domestic issue. Medián came out with its latest poll on the population’s party preferences and that poll included Gordon Bajnai’s  “Együtt 2014” (Together 2014), a civic movement that aims to be an umbrella organization for those opposition forces that are serious about winning the elections despite all the roadblocks Fidesz and the government are relentlessly setting up against the anti-Fidesz forces.

Medián / HVG

Medián conducted its survey in the last week of October. Let me remind everybody that the formation of  “Együtt 2014” was announced at the Milla demonstration on October 23. As Medián put it, perhaps the “war of numbers” was won by Fidesz, but public opinion considered the Milla demonstration and the formation of Együtt 2014 more important. Sixteen percent of the people considered Gordon Bajnai’s appearance on the political scene the most important event of the week.  Moreover, although the Hungarian public seems to be seriously under-informed in general, 61% of the people knew about the new movement and 53% also knew that Gordon Bajnai had a role to play in it.

The appearance of this new movement completely changed the balance of forces in the long stagnant Hungarian political scene, especially on the left. While Fidesz’s support in the adult population didn’t change at all (22%), MSZP lost quite a bit. Without the appearance of Együtt 2014 MSZP would have stood at 17%, its best performance since the elections.  Instead, the party’s popularity sank to 10%. Let me add that Jobbik also stands at 10%. Another party that suffered is DK. Gyurcsány’s party polled a mere 1%. However, one must keep in mind that Gyurcsány announced even before October 23 that if Bajnai is ready to enter the ring, DK will support him unconditionally. One cannot make such an excuse for MSZP because there were unwilling to commit themselves to a common platform and some of the more sanguine MSZP leaders proclaimed that, standing alone, MSZP could win against Fidesz even under the new electoral law that highly favors Fidesz.

If MSZP’s ambivalent attitude toward unity might have caused its huge drop in popularity, it is also true of LMP which by now has only a 3% share of the votes. The number of undecided voters is still high (37%), but less than it was previously.

When it comes to the popularity of individual politicians, Viktor Orbán is down to the ninth place while Gordon Bajnai is in second after President János Áder. The president’s popularity most likely has little to do with Áder’s personality. Traditionally Hungarians feel that they must like the president. Regardless of whether the president is well regarded or not, he always heads the list.

A few more words here about LMP. As I’ve mentioned several times, LMP doesn’t have a single party chairman. It is led by a kind of collective leadership with all the problems and frustrations such a decentralized arrangement can cause. Lately, as I was able to figure out, the party leadership seemed to be split over cooperation with other parties at the 2014 elections. The most adamant against cooperation was András Schiffer, and he was followed by all the others with varying degrees of enthusiasm. Eventually Schiffer resigned his leadership of the LMP parliamentary delegation and the post was taken over by Benedek Jávor whose utterances until now didn’t reveal any differences of opinion on the matter. That is, until today.

I suspect that Jávor learned earlier about the Medián survey that showed the spectacular 14% popularity of Együtt 2014. Yesterday Jávor announced that “Hungary is in serious crisis and it is facing a very important election.” In this situation “it is our historic responsibility to examine all possible instruments that would create the opportunity to defeat the Orbán government.” He announced that the party has to make a decision on its relationship with Gordon Bajnai’s movement. Therefore, he suggests beginning negotiations with Együtt 2014!

A few days ago deep disappointment could be sensed in liberal circles about the willingness of politicians on the left to cooperate, but it seems that they are not as stupid as some people think. They are coming to realize that under the current circumstances there is no other solution but to work together. Otherwise they will witness the systematic destruction of Hungarian democracy and the ruin of the country’s economy. A lot of people think that four more years of Viktor Orbán would do irreparable harm to Hungary.

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hunleonidas
Guest

Reblogged this on hungarianvirus.

spectator
Guest

“A lot of people think that four more years of Viktor Orbán would do irreparable harm to Hungary.”

– Isn’t he already?
Whoever else coming to power in 2014, must face with the ungrateful task to clean up the stall of Augias after this blind rampage, and there is a very big chance, that due to the ‘future proofing’ actions of Fidesz – just about everyone in office, all over the country is a sect-member – the outcome is rather dubious.

The question really isn’t if it goes, to topple Orban, but what are we gonna do, after it happened..?
There I see a lot’s of uncharted areas, and the time isn’t on our side.

(Yes, I said ‘our’ because I believe in an Orban-free Republic of Hungary as an only alternative.)

Paul
Guest
Apologies in advance for doing my usual. I desperately don’t want to be the one who constantly reminds people of how unlikely a Fidesz loss in 2014 will be, but there isn’t any point in any of this discussion if we don’t face the reality of the situation. Even if positive signs like today’s turn into electoral reality and a broad-left coalition is established and does begin to attract large popular support, there are two huge obstacles to any chance of overthrowing Orbán: Firstly, he has already gerrymandered the electoral system in favour of Fidesz, and he will do so more if he thinks it’s necessary (a reminder, if any was needed, that he can pass any law he likes, and nobody can stop him). Secondly, even if the left do manage to get more votes than Fidesz, it’s still extremely unlikely that they will manage to get an overall majority. Even in the most left-favourable situation, both Fidesz and Jobbik will hold their core votes, so any left coalition will need to gain something like 40% or more to get control of the government. The most likely outcome of a left revival is not the left in power, but… Read more »
petofi
Guest

Ahh, the innocence of ‘western’ minds!

Ask 10 Hungarians and, unless you hit a motherlode of Fideszers, you’ll get 10 answers as to why Orban released the Azeri…to whit, lucre…as in millions of euros.

Moreover, by next election time, Orban will have done enough to satisfy the most sadistic of Felcsutian dreams. So…why would Orban hang around past 2013, pray tell? I really see him de-camping, possibly for Dubai, or Capetown, or even–god forbid–England (though I think he would be persona non grata there). So now we should have a muscular Bajnai group taking on the headless Fidesz and a (rapidly disintegrating) Jobbik. Then all we have to watch out for are Schiffer Andras and some back-stabbing MSZP-ers.

Let’s be hopeful!

What’s more, having won a 2nd term, Obama might just start to feel his oats and read the riot act in some well chosen places around the globe…

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Member
I just do not think that we should just brush aside Viktor Orban’s current speech in the Hungarian Parliament. (Eva did mention it although.) It is an important speech, as it puts all of Orban’s actions in perspective. http://www.youtube.com/watch?v=o5J06vjzlDQ&feature=player_embedded For those of you who do not speak Hungarian: Orban: “All I can tell you, there are benefits of precise compositions. You must know that in the eighties, I didn’t fight against the dictatorship, but against those who were working on the dictatorship. THose were your party comrades.” Now, Dr. Tamas Horvath was only 11 years old in 1989 when the Kadar regime was turned over. Orban’s speech is a reply to Dr. Horvath, who dared to ask why in the last two year Orban is working so hard to bring back a one-party system in spite of that it was Orban who fought against such system in the eighties. Dr Horvath points out rightly so, that “Our Prime Minister just clarified that his only problem with the system prior to the nineties that it was not him who set in the chair of Janos Kadar.” I also would like to add, what we’ve mentioned here many times, that currently there… Read more »
Louis Kovach
Guest

Dr.Balogh: The government claims success because the Commission accepted the figures provided by the Hungarian government for their projected 2012 and 2013 deficits. The Union’s demand is a deficit that is under 3% of the GDP, and Hungary has been one of the worst offenders in this respect in the last eight or ten ”

Not exactly, both deficit and GDP are independently calculated by the various esstablishments (EU, IMF, etc.) some monthly, some quarterly.

While the below cited article text is in Hungarian, the tabulation can be understood by English speakers also. Dr Balogh is incorrect in claiming that the EU data was solely based on Matolcsy’s manipulation.
http://www.portfolio.hu/en/economy/commission_hungary_budget_deficit_will_remain_below_30_of_gdp_in_2012_2013.25108.html

petofi
Guest

Orban: Regularly studies Mein Kampf, and the collected speeches of Goebbels…

Paul
Guest
petofi : Ahh, the innocence of ‘western’ minds! Ask 10 Hungarians and, unless you hit a motherlode of Fideszers, you’ll get 10 answers as to why Orban released the Azeri…to whit, lucre…as in millions of euros. Moreover, by next election time, Orban will have done enough to satisfy the most sadistic of Felcsutian dreams. So…why would Orban hang around past 2013, pray tell? I really see him de-camping, possibly for Dubai, or Capetown, or even–god forbid–England (though I think he would be persona non grata there). So now we should have a muscular Bajnai group taking on the headless Fidesz and a (rapidly disintegrating) Jobbik. Then all we have to watch out for are Schiffer Andras and some back-stabbing MSZP-ers. Let’s be hopeful! What’s more, having won a 2nd term, Obama might just start to feel his oats and read the riot act in some well chosen places around the globe… Of course – Obama’s going to have masses of spare time. After all, he’s got nothing domestic to worry about – especially with such a cooperative House of Representatives. And, when he does get all this spare time, I imagine he’ll be only too ready to ignore North Korea,… Read more »
petofi
Guest

@ Paul

Heavy doses of irony, Mr. P.
But with a country of little account (save in the citizens’ own imaginations) one need not send in the Rangers. Just a word or two about the ‘road not taken’, and the like. After all, inspite of Orbanster’s protestations, the US is still looked up to in these nether regions…

Paul
Guest

“After all, inspite of Orbanster’s protestations, the US is still looked up to in these nether regions…”

Unless the US is prepared to back any words with meaningful action, Orbán will ignore them just like he does everyone else. Personally, I can’t see the US even having any words with Hungary. After all, when you look at what Orbán is up to, much as it worries us and other Europeans, it is of little consequence or concern to anyone else. Unless he somehow does something that causes the US problems directly (like what?), they will ignore him and let him get on with building his pathetic little poverty striken Orbánisztán.

After all, it’s not as if the US hasn’t got a history of turning a blind eye towards (or even actively supporting) dictatorships – all of them far worse than anything OV is going to manage.

Guest

The more important/interesting part from Louise’s link:

The EC said the Hungarian economy is characterised by weak potential growth, partly caused by policy uncertainty and increasingly distortionary taxes, most notably very high extra burdens on the financial sector.

“distortionary ” also describes Louise’s postings very nicely …

Louis Kovach
Guest

wolfi: “distortionary ” also describes Louise’s postings very nicely …”

So the facts are distortionary? The blog implying that the given values were based solely on Matolcsy’s values is not? You guys are simply refugees from reality in may of your postings.
Did you grow up reading the Stuhrmer????

Member

Louis Kovach :
wolfi: “distortionary ” also describes Louise’s postings very nicely …”
So the facts are distortionary? The blog implying that the given values were based solely on Matolcsy’s values is not? You guys are simply refugees from reality in may of your postings.
Did you grow up reading the Stuhrmer????

But what was happening before? When the deficit was close to 10% despite the promises? They didn’t do the math by then, but now they suddenly woke up? Perhaps they bought a calculator? They have to rely on figures from the government. By the way if they agreed with our cross-eyed genius today, when deficit becomes 10% again this will still be an offense. What’s you point, Kovach?

Louis Kovach
Guest

Mutt: “But what was happening before? When the deficit was close to 10% despite the promises?”

Dr Balogh wrote on the current comments from the EU. I have commented on her writing. I did not say anything about what happened before, and furthermore that has nothing to do with the current subject.

Member

Louis Kovach :
wolfi: “distortionary ” also describes Louise’s postings very nicely …”
So the facts are distortionary? The blog implying that the given values were based solely on Matolcsy’s values is not? You guys are simply refugees from reality in may of your postings.
Did you grow up reading the Stuhrmer????

Can you please quote where does Eva’s entry says that is based solely on Matolcsy’s numbers? Also, let us not forget how many times the last two years Matolcsy changed those numbers, in order to come up with something close to the EU.
Anyway, please quote!

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Well, the EU seems not as toothless as many people thought – they have been looking closely at these discriminatory taxes and don’t like them at all:
http://www.bbj.hu/economy/ec-asks-hungary-to-amend-retail-telco-crisis-taxes_64357

If Hungary would have to pay those millions (or billions of HUF …) back then what about the budget ?

Ron
Guest

Eva S. Balogh :
Most people suspect that Orbán will have a hard time this weekend in Brussels. EU is planning to take away one-third of the cohesion funds in the next seven years.

Here is an interactive EU budget Thing. See how much they pay and receive. If the EU is reducing, Hungary is still receiving.
http://www.guardian.co.uk/world/interactive/2012/nov/22/eu-budget-interactive-money

Ron
Guest

Here is a story from Euractiv.
http://www.euractiv.com/euro-finance/hungary-flags-major-difficulty-e-news-516204

They predict 30% loss of cohesion funds.

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