Friday, April 07, 2006

Hungarian elections

First, here is a much delayed piece about Hungarian politics, pegged to the first round of the elections this weekend. Apologies to those who so kindly fixed me up with interviews and so on: there has been a lot of news about in Europe in the past few weeks and this piece kept on being bumped out of the paper. But I hope I have done justice to it now.

Hungary's election

Sense and nonsense

Apr 6th 2006 | BUDAPEST
From The Economist print edition

The politicians promise everything, but will find life harder if they win

BOTH sides talk nonsense in public while promising in private to be sensible. That, in brief, is Hungarian politics in the run-up to the first round of parliamentary elections on April 9th.

Looking at the government, spendthrift and sleazy, it is easy to see why the opposition is cross. The Socialist-liberal coalition has presided over the worst mismanagement of public finances anywhere in post-communist Europe. Officially, the budget deficit is 8% of GDP. Including off-balance-sheet financing, it is more like 10%. That has helped to stoke a huge current-account deficit, and has now sent the forint to a 28-month low (see chart).

Most damage was done in the government's first two years, in a bid to reward its supporters. As one finance minister from a neighbouring country comments, “I can understand why they made these idiotic promises, but not why they kept them.” When Peter Medgyessy, who became prime minister in 2002, turned out to have a background in communist-era intelligence, that was too much to swallow even in Hungary's forgiving political culture. So in 2004 in came Ferenc Gyurcsany, a tycoon who combines capitalist credentials with family links to the old regime.

Asked to list his practical achievements in the past two years, his supporters look faintly baffled. Their big feat, they say, has been staying in power and getting ready to win the election—which, according to Hungary's often unreliable polls, they seem likely to do. The Socialists are polling around 46%, and, crucially, their small coalition partner, the leftist liberals, seems likely to get over the 5% threshold necessary to enter parliament.

That will be a huge disappointment for the opposition Young Democrats (usually known, by their Hungarian acronym, as Fidesz) and their leader, the outspoken Viktor Orban. Mr Orban has impeccable credentials as a brave and effective communist-era dissident. But he has moved sharply away from the radical liberalism of his youth, in a conservative, nationalist and populist direction. Many Hungarians' discontent with the government tends to evaporate as soon as they look at the opposition.

Mr Orban's campaign has been gaffe-strewn, and his programme is peppered with expensive spending commitments, including bigger housing subsidies. He rails against “luxury profits” and rapacious foreigners, though he insists also that he wants “a country with less bureaucracy, a pro-business government and lower taxes.” His public speeches, though, more often feature lines such as this: “Grant us...a national government in Hungary, which sees the world through Hungarian eyes, thinks with a Hungarian mind and senses in its heart a Hungarian beat.”

That could just be a robust yet defensible bid to appeal to patriotic voters. But others hear a cynical, demagogic appeal to revanchism and xenophobia. Some also charge Mr Orban with coded anti-Semitism. He strongly denies this; so do his Jewish colleagues. Even so, his colourful election tactics put one question-mark against Mr Orban's suitability for office.

His record raises another. His previous stint as prime minister, until 2002, showed mixed results. He ran the economy well—until a vote-grabbing binge in the final year. Hungary gained NATO membership and moved fast towards the European Union. But relations with the neighbours were scratchy. Fidesz still hankers after justice for the Hungarians deported from neighbouring countries after 1945. “Sooner or later, they have to pay,” says one senior figure, “200,000 Hungarians were expelled and lost all their possessions.” That contrasts sharply with the present government's emollient foreign policy of being friends with everybody.

In private, both parties say much the same things: in the short term, there must be fiscal tightening and, thereafter, radical public-sector reform. The first, particularly, will be an unpleasant shock for Hungarians, who have got used to living well but dangerously on borrowed money.

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