Hungarians often complain that the world knows so little about them. Foreigners mix up Budapest with Bucharest. Some people think that Hungarian is a Slavic language. They don’t know that Hungary was a superpower in the fifteenth century. They are ignorant of how Hungary saved Christian Europe from the wrath of the Ottoman Empire. And one could go on and on.
Well, right now Hungarians can’t complain. The country became world famous practically overnight. It took only a few words from Hungarian leaders to weaken the euro and create turmoil in the world’s financial markets. That was no small feat, although I’m not sure whether this is the kind of fame Hungarians dreamed of.
It was just a little over a month ago that a right-wing party, Fidesz, won the elections with an overwhelming majority and gained a two-thirds majority in parliament. The Hungarian constitutional arrangement is such that a party with a two-thirds majority gets almost limitless power. Most prudent politicians would not exploit this power. After all, only 52 percent of the voters cast their votes for Fidesz. The rest voted three ways: on the left, for the socialists and a new green party and on the right for a far-right party called Jobbik which received 17 percent of the votes.
But Fidesz leaders are anything but prudent and they began their activities in parliament with a barrage of legislative proposals that were supposed to turn the existing order upside down. In fact, Viktor Orbán, the new prime minister, called his electoral victory a “revolution.”
Revolutionary fervor is usually not the best foundation for achieving lasting results, especially when the so-called moderate Fidesz is trying to take the wind out of the sails of the far right. Jobbik demands eventual border revisions; the new government approved dual citizenship for those Hungarians who live in the neighboring countries. Since Jobbik‘s preoccupation with the Treaty of Trianon that fixed the current Hungarian borders in 1920 captured the country’s imagination, the government organized a Day of Remembrance on June 4.
The result? Slovakia with a large (over 10 percent) Hungarian minority, mostly living along the current Slovak-Hungarian border, was furious and struck back. Any Slovak citizen who takes advantage of the dual citizenship offered by Budapest will be stripped of his Slovak passport. If the Hungarians are burying their sorrow in memorial days and statues commemorating Trianon, then the Slovaks will erect memorials celebrating their release from Hungarian bondage. Romania has been quiet until now, but trouble is also brewing there. The head of the Senate’s Committee on Foreign Affairs expressed his opinion that the Hungarian government with its new legislation on the “unification of the nation across borders” is questioning the validity of the Treaty of Trianon.
Oh, yes, the world is watching, especially Brussels. If there is anything the world hates, in Europe as well as in the United States, it is quarrels between countries that both belong to NATO and are members of the European Union. They watch with particular suspicion countries situated in Eastern Europe, a region long infamous for its nationalistic disputes. They want stability and cooperation. The new Hungarian government, however, seems to be creating disputes by feeding on the population’s already strong nationalist sentiments.
But the Slovak-Hungarian dispute was nothing in comparison to Viktor Orbán’s economic “master stroke.” A brief background is necessary here. About a year and a half ago Hungary was in terrible financial straits. No one was buying Hungarian bonds and it looked as though there would be a complete financial collapse. But then, Hungary turned to the EU and the International Monetary Fund and received significant loans on favorable terms. In return, Hungary had to promise to introduce an austerity program. This program was so successful that a year and a half later Hungary’s budget deficit has been brought down to below 4 percent.
Hungary remains under the watchful eye of the IMF and the EU. Every four months the Hungarian government must report to the representatives of the two lending institutions. And they are hard taskmasters, especially after the Greek crisis. It was pretty well known unofficially that Hungary would not be able to renegotiate the terms of the loan. But that situation left Viktor Orbán’s government in the lurch. Although the Fidesz politicians were not too specific about their promises, the general impression among voters was that as soon as a new government was formed, the “unnecessary” austerity program would come an end; a stimulus package would be introduced, taxes would be lowered, and the Hungarian economy would suddenly thrive. That is what people voted for in April.
For reasons unknown to most observers, the new Fidesz government simply refused to face the hard fact that the IMF and the EU will not budge. For months they have been talking about “skeletons in the closet,” meaning that the budget figures provided by the former Hungarian government are false. The real deficit is not 3.8 but 7 to 7.5 percent. So it would not be the current government’s fault that they cannot stick to the numbers approved by the IMF and the EU. Of course, this strategy also includes the implicit accusation that those IMF and EU officials who have been checking every item in the Hungarian budget are fools.
And now comes the absolutely incredible move on the part of the Fidesz policymakers. On June 3 about an hour before Viktor Orbán met with José Manuel Barroso, chairman of the European Commission, in Brussels, two high-ranking officials of Fidesz, Lajos Kósa and Mihály Varga, made speeches about the dire state of the Hungarian economy. Kósa, the managing director of Fidesz, used especially strong words, in effect predicting that Hungary would suffer Greece’s fate. Varga, who earlier served as minister of finance in the first Orbán government (1998-2002) and who was charged by Viktor Orbán to “investigate” the wrongdoings of the government of Prime Minister Gordon Bajnai, almost simultaneously with Kósa talked about an actual deficit of 7 to 7.5 percent instead of the 3.8 percent IMF agreed to earlier.
My hunch is that these utterances in Hungary were supposed to help Orbán with his negotiations. It didn’t work. Instead, about half an hour after MTI, the official Hungarian news agency, reported the gist of the two politicians’ utterances, the forint, the Hungarian currency, began to fall precipitously.
The great Fidesz plan failed and policymakers should have immediately backpedaled in order to stop the financial hemorrhaging that affected both the Hungarian economy and international markets. But the charade continued for one more day. Viktor Orbán’s personal spokesman, 24 hours after the beginning of the debacle, repeated Lajos Kósa’s allegations about the country’s bankruptcy and his comparison of Hungary’s situation to that of Greece. And the forint kept weakening, dragging the euro along. This delay is harder to explain than the original blunder. Perhaps the top brass simply couldn’t agree on a face-saving strategy.
Another 24 hours went by before Mihály Varga gave a press conference where he had to admit that Hungary has no choice but to honor the approved 3.8 percent budget deficit. Of course, he stuck to his original story that the budgetary figures are false and therefore the new government will have to introduce further austerity measures. At the same time it was announced that the cabinet will have a three day emergency session during which the government will decide on the steps to be taken. We will find out next week whether Varga’s speech managed to stabilize the currency.
Everybody lost in this game, including Fidesz itself. But perhaps it will slow down Viktor Orbán’s “revolutionary” zeal. Certainly, the first attempts to turn the world upside down failed miserably.