ANALYSIS:Hungary's huge shift to the right in this month's general election has handed the Fidesz party a mandate of historic proportions, but doubts persist about how it will use it, writes DAN McLAUGHLIN
A SERIES of political scandals in Hungary, combined with a brutal recession, a humiliating bailout loan and the introduction of painful austerity measures, all suggested that the outgoing Socialist government would endure a drubbing at the polls. And so it proved.
Sunday’s second round of voting gave the Fidesz party a two-thirds majority in parliament – the first time a party has enjoyed such power in post-communist Hungary – and left the Socialists struggling to hold on to second place ahead of the far-right nationalists of the Jobbik party.
Fidesz’s hegemony will allow it not only to pass legislation without the need for compromise with any other party, but give it the power to change Hungary’s constitution and overhaul key laws on citizenship, the media, elections and local government with apparent ease.
Anticipation that Fidesz would receive such a clear-cut mandate prompted Hungary’s currency and stock market to strengthen and reduced the cost of insuring the country’s sovereign debt against default. Above all, international investors and the markets wanted the election to deliver clarity rather than a messy period of coalition-building that the Hungarian economy could ill-afford.
Now Fidesz has the power that it has craved since being ousted from government in 2002, but it will not be granted a long honeymoon period in which to settle into office and start fulfilling the promise of a better life that it has been making to Hungarians for years.
With the Socialists in disarray, Fidesz leader and prime minister-designate Viktor Orban (46) was able to campaign on the vaguest of manifestos, knowing victory was assured even without concrete proposals on how to energise Hungary’s ailing economy.
With the country already weary of cutbacks, he has painted a hazy picture of Hungary recovering not through a drastic tightening of the purse strings but through a surge in growth. Orban has suggested that he will do this by lowering taxes, slashing bureaucracy and cracking down on corruption, but he has so far failed to tackle the toughest questions – how he will overhaul bloated, inefficient and outdated systems of healthcare, education and local government.
Fidesz has an unhappy record of profligacy, populism and political cowardice when it comes to making painful decisions; though it blames everything on the outgoing Socialists, Fidesz made a large contribution to Hungary’s debilitating national debt during its 1998-2002 term in office.
Orban revealed yesterday that one of his government’s first tasks would be to renegotiate the stringent terms of the €20 billion loan deal with the European Union (EU) and International Monetary Fund (IMF) that saved Hungary from financial meltdown in 2008.
Hungary’s public debt is nearly 80 per cent of gross domestic product, the largest in central and eastern Europe. Its target budget deficit for this year is 3.8 per cent, but Orban said the figure was not realistic and would have to be raised in agreement with the international lenders.
The EU and IMF broadly praised efforts by the Socialists to bring spending under control, and will be determined to keep Orban’s government on a tight rein to ensure Hungary does not go the same way as Greece and require another emergency bailout.
Orban says he seeks “partnership” with the lenders but will not accept foreign “diktats”, striking a tone of staunch independence with a whiff of economic nationalism that plays well with a populace that has been badly buffeted by global financial forces beyond its control.
Experts believe the EU and IMF would raise Hungary’s deficit target, allowing Fidesz more breathing room for tax cuts and less austerity, if it can devise a convincing mid-term plan for substantially reducing the country’s debt.
The failure of successive governments, both Socialist and Fidesz, to overhaul Hungary’s tax system and other areas of its economy saw the country steadily lose ground to its neighbours in the bid to attract foreign investment. Only rapid and radical changes can now put Hungary in a position to prosper when the global economy fully emerges from the recent slowdown.
With the ultra-nationalist Jobbik figuring so strongly at the polls, however, most international institutions will be keen to help a Fidesz government succeed and prevent any further slip to the right in Hungarian politics.
Some analysts believe this election – held during an economic crisis and under Socialists who are tainted by association with the old communist party – will come to be seen as the high-water mark for Jobbik. They expect it to splinter and fail once a centre-right party is in power and the economy starts to recover.
For their part, the Socialists will have to rebuild from the ground up, leaving Fidesz with no real opposition and every chance of securing a second term in office in 2014. Orban was seen by many as Hungary’s political saviour way back in 1989. Two decades on, his country now desperately needs him to deliver.
Dan McLaughlin is based in Budapest