Recalcitrant Hungary and Poland Exhaust Europe’s Patience

Hungarian prime minister Viktor Orbán enters the European Parliament in Brussels for a debate, April 26
Hungarian prime minister Viktor Orbán enters the European Parliament in Brussels for a debate, April 26 (European Parliament)

The European Parliament has opened an investigation into the state of democracy and rule of law in Hungary, which is ruled by the self-described illiberal democrat Viktor Orbán.

The resolution, introduced by liberal and left-wing groups, passed on Wednesday with the support of 68 members of the conservative European People’s Party, to which Orbán’s Fidesz belongs.

The mainstream right has long shielded Budapest from scrutiny, despite Orbán’s years of attacks on the courts, the central bank and the media, the removal of checks on his parliamentary majority and his pursuing of economic and migration policies that defy the European mainstream. Read more

Trump’s European Admirers Are Deluding Themselves

United Kingdom Independence Party leader Nigel Farage speaks at the Conservative Political Action Conference in National Harbor, Maryland, February 26, 2015
United Kingdom Independence Party leader Nigel Farage speaks at the Conservative Political Action Conference in National Harbor, Maryland, February 26, 2015 (Gage Skidmore)

Donald Trump’s unexpected presidential election in the United States has delighted his ideological counterparts in Europe. Brexiteers in the United Kingdom think he will give them a better deal than Hillary Clinton. Populists in France and the Netherlands responded to Trump’s victory with glee. So did ultraconservatives in Central Europe.

They should think again. Trump may be a kindred spirit and his triumph is a setback for the liberal consensus that nationalists across Europe and North America agitate against. But he is no friend of European nations. Read more

The Trouble with Electing an Outsider

Businessman Donald Trump appears at the Conservative Political Action Conference in National Harbor, Maryland, February 27, 2015
Businessman Donald Trump appears at the Conservative Political Action Conference in National Harbor, Maryland, February 27, 2015 (Gage Skidmore)

What made Donald Trump seek the presidency?

A bit of armchair psychology is required to answer that question. Based on the way way he conducts himself and the many profiles I’ve read about the man, I think it’s safe to say that a powerful motivator was his desire to prove himself. Read more

Comrades in Arms

Hungarian prime minister Viktor Orbán and Russian president Vladimir Putin answer questions from reporters in Moscow, February 17
Hungarian prime minister Viktor Orbán and Russian president Vladimir Putin answer questions from reporters in Moscow, February 17 (Facebook/Viktor Orbán)

Sometimes in politics everything is exactly what it looks like.

This was the case when the prime minister of Hungary, Viktor Orbán, visited Moscow last week, extended a gas contract with Russia and told the Russian president that the period when the EU automatically extended sanctions against Russia was “behind us.”

The moment of honesty came when Vladimir Putin and Viktor Orbán got to compliment each other on their Syria and refugee-related policies. “We value greatly the efforts made to resolve this problem [of Middle Eastern refugees],” said Orbán, adding, “We wish you great success in your international initiatives.” Putin then said, “Our people has sympathy for the position taken by the Hungarian government” on the refugee crisis.

And yes, in a perverse way, the two policies do indeed work very well together — that is, to suit the needs of the two leaders: Russia’s intervention in Syria aggravated the war and the refugee crisis. Which, in turn, strengthened Orbán’s position in Hungary and in Europe. Which, in turn, helped far-right parties and Putin allies and weakened the EU.

This unspoken but existing alliance, ultimately, against the EU and against the solution of a refugee crisis that benefits them both, was behind the chumminess that the Hungarian prime minister and the Russian president showed in Moscow.

The Russian pro-government press could hardly hide its joy over the visit. Izvestia wrote about a meeting of “not only partners, but friends on principles,” noting that Orbán was the first foreign leader whom Putin met in the new working building at his Novo-Ogaryovo residence. But calling Orbán and Putin friends is an exaggeration. Just as Orbán himself declared last year, Putin “is not a man who has a known personality,” which largely rules out making friends with fellow leaders. Even on principles. Read more

Hungary’s Nationalist Premier Shows Putin Not Isolated

Hungarian prime minister Viktor Orbán
Hungarian prime minister Viktor Orbán (The Council of the European Union)

Russian president Vladimir Putin visited Budapest on Tuesday. The visit was largely devoid of substance but made clear the Russian leader was not as isolated in Europe as most Western governments would have liked.

Hungary’s nationalist prime minister, Viktor Orbán, said his ambitions for the summit with Putin were modest. He assured European ambassadors that he would not try to mediate between Russia and the West over the standoff in Ukraine where the former supports a separatist uprising against the Western-backed administration in Kiev.

Rather, Orbán said he planned to negotiate a new long-term gas supply contract that would allow him to reduce energy bills.

“There is no guaranteed gas supply to Hungarian households after 2015. I need to solve this issue,” he said in a radio interview earlier this month.

Hungary relies on its former Soviet master for most of its oil and natural gas. Russia also loaned the country almost $30 billion last year to shore up its public finances and help pay for the construction of a nuclear power plant.

The new plant should cover about 40 percent of Hungary’s electricity needs. Russia pledged to cover up to 80 percent of the construction costs, equivalent to 11.5 percent of Hungary’s annual economic output.

Before last year’s parliamentary election, in which Orbán’s support dropped 8 percent, the premier forced energy companies to cut their rates, driving up consumer confidence and his party’s popularity but causing business confidence to fade.

Orbán shares Putin’s disdain of Western liberalism and supported the ill-fated Russian South Stream pipeline that was canceled under European pressure last year. He has also expressed reservations about the economic sanctions European countries imposed after Russia occupied and annexed the Crimean Peninsula from Ukraine. He might expect more favorable terms for oil and gas supplies in return even if falling petroleum prices worldwide should reduce Ukrainians’ utility bills anyway.

Hungarian living standards are a third lower than the European Union average. Since coming to power in 2010, Orbán has nationalized Hungary’s private pension scheme, introduced sectoral surtaxes on energy and telecommunications firms as well as supermarkets and weakened the independence of the judiciary. al reforms enacted in 2011 limited the supreme court’s powers and annulled all its previous rulings.

In a scathing 2013 report, the European Commission said Hungary’s business climate had “constantly deteriorated” since Orbán became prime minister, blaming his nationalist economic program and repeated changes in regulations. American rating agencies downgraded Hungary’s sovereign bonds to junk status, citing the Central European nation’s “erratic” and “unorthodox” economic program as well as concerns over the independence of the central bank. Orbán changed the rules so that he could personally appoint central bank board members.

Hungarians Reelect Nationalist Premier, Boost for Far Right

Hungarian prime minister Viktor Orbán arrives at a European People's Party summit in Brussels, March 1, 2012
Hungarian prime minister Viktor Orbán arrives at a European People’s Party summit in Brussels, March 1, 2012 (EPP)

Hungarians reelected the nationalist prime minister Viktor Orbán in a parliamentary election on Sunday, early results showed, and turned out in greater numbers for the far-right Jobbik party.

While Orbán’s national conservative Fidesz party lost support compared to the last election, down from nearly 53 percent in 2010 to over 48 percent, it will still likely get a majority of the seats in parliament.

Jobbik, which got almost 17 percent support in 2010, stood at nearly 22 percent in a tally that was based on a count of about a quarter of the votes. The opposition socialist bloc also stood at 22 percent.

The result for Jobbik was particularly disconcerting for the left which accuses it of being racist and antisemitic.

Orbán’s reelection came on the back of an economic uptick. While the economy contracted 1.7 percent in 2012, it grow 1.1 percent last year and is expected to expand further. Hungarians’ living standards are still a third lower than the European Union average but some of the prime minister’s policies, including a cut in electricity prices, have kept consumer confidence up and inflation down.

Policies in the last four years have included a nationalization of Hungary’s private pension scheme, sectoral surtaxes on energy and telecommunications firms as well as supermarkets and a relief scheme for homeowners that the banks mostly had to pay for.

In a scathing report, the European Commission last year said the Central European nation’s business environment had “constantly deteriorated” since Orbán was first elected in 2010 as a result of his nationalist economic program and the repeated changes in regulations.

Yet Orbán has pledged more of the same. Foreign investors fear that he will impose more levies on power companies and press ahead with a plan to transfer part of the banking sector into Hungarian ownership.

The European Commission also expressed concerns about the independence of Hungary’s judiciary. al reforms enacted in 2011 limited the supreme court’s powers and annulled all its previous rulings.

Later that year, American rating agencies downgraded Hungarian sovereign bonds to junk status citing the country’s “increasingly erratic” and “unorthodox” economic policies as well as concerns over the independence of its central bank. Central bank board members are now appointed by Orbán personally. He put his former finance minister, György Matolcsy, who designed Hungary’s nationalist economic program, at its helm last year.

Orbán Unlikely to Revise Nationalist Economic Policies

Hungarian prime minister Viktor Orbán listens to a debate in the European Parliament in Brussels, January 18, 2012
Hungarian prime minister Viktor Orbán listens to a debate in the European Parliament in Brussels, January 18, 2012 (European Parliament/Pietro Naj-Oleari)

Despite recommendations from the European Commission to improve its business climate, Hungary’s government is unlikely to revise its nationalist economic policies. Prime Minister Viktor Orbán said earlier this month, “I think what we are doing is successful.”

Orbán has reason to be optimistic. His country’s economy expanded .7 percent in the first three months of this year, but after it contracted through 2012. At the end of last year, Hungary’s economy was still almost 10 smaller than before the downturn in 2009.

The right-wing government responded to the crisis by shutting out foreign companies and investors and raising taxes on some industries to mend its budget shortfall.

Although Hungary is now likely to keep its deficit under the 3 percent treaty limit, in its policy recommendations (PDF) released on Wednesday, the European Commission said the decision to target individual industries had raised “questions about the sustainability of the consolidation efforts.”

Especially because the tax burden is increasingly uneven, with energy and telecommunication companies as well as supermarkets facing sectoral surtaxes, and regulations have changed so much, Hungary’s business environment has “constantly deteriorated” since Orbán was elected prime minister in 2010, according to Brussels. Energy companies have been forced to cut their electricity bills. Foreign investment has been curtailed.

The European Commission is also worried about the independence of the judiciary — constitutional reforms passed in 2011 limited the supreme court’s powers and annulled its previous rulings — and observes that banking oversight is still lacking more than four years after the financial crisis began in the United States.

In late 2011, American rating agencies downgraded Hungarian sovereign bonds to junk status citing the country’s “increasingly erratic” and “unorthodox” economic policies as well as concerns over the independence of its central bank. Central bank board members are now appointed by Orbán personally. He put his former finance minister, György Matolcsy, who designed Hungary’s nationalist economic program, at its helm in March.

Even if Hungarians’ living standards, about 66 percent of the European Union average, haven’t improved since Orbán came to power, some of his policies, including the lower electricity bills, have kept consumer confidence up and inflation down.

Fat Mathilde cites the policy in Magyar Nemzet newspaper as proof that Hungary has provided adequate consumer protection, whatever the European Commission says. “I wonder what else could protect the consumer if not prices?”

Commentators in the business daily Világgazdaság are more critical. Nicholas Hegedus, an energy research company director, laments that the government’s economic policies are “increasingly moving away from the truth.” The European Commission also cautions that Hungary’s growth estimates are “somewhat optimistic.”

However, Nicholas Újvári argues in the same newspaper that the EU’s attempts to force Hungary to change course haven’t paid off. Orbán, he adds, is still favored to win the next election, scheduled to take place early next year.

Orbán’s popularity plummeted through the economic crisis from a 45 percent high at the time of the last election to 24 percent in an opinion poll last month. But that still puts him far ahead of the opposition.