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REGION: CASH-STRAPPED AND SCANDALOUS HUNGARY
by: Benjamin Tallis
The Prague Post
September 12, 2012
Czech Rep
OrbĂ n's whimsical diplomacy points to rising economic woes
It hasn't been the best of months for Hungary's international
reputation. Already battered by the OrbĂ n government's fondness for
authoritarianism, a diplomatic blunder and a Facebook run-in with
the International Monetary Fund have further dented Hungary's image
abroad. Whether this damage can be repaired and what harm it does to
Hungarians at home depends on the lessons learned.
On Aug. 31, Hungary repatriated Azerbaijani military officer Ramil
Safarov, who was serving a life sentence for decapitating an Armenian
officer studying alongside him on a NATO-sponsored English-language
course. The Hungarian government says it acted in "good faith,"
having believed Safarov would serve the rest of his 25-year sentence in
Azerbaijan. Instead, upon his return he was pardoned by the president,
promoted and welcomed as a national hero.
This stoked the fire of a long-smoldering conflict between Azerbaijan
and Armenia over the disputed region of Nagorno Karabakh.
Demonstrators in Yerevan, the Armenian capital, pelted the Hungarian
Embassy with eggs and burned the flag. Despite Prime Minster Viktor
OrbĂ n's statement to Hungarian public radio station Kossuth that it
was in Hungary's interest to "stay out of this conflict, and this is
now the case," it had achieved the opposite and in doing so had also
provoked criticism from both the United States and Russia.
The Economist claims the cash-strapped OrbĂ n government may have
struck a deal in which Safarov would be released if the Azeris
purchased 3 billion euros worth of government bonds. A former prime
minister, Ferenc GyurcsĂ ny, says his administration rejected a similar
deal and described it as "selling the country's honor for 30 pieces
of silver."
This scandal came amid the Hungarians' ongoing struggle to negotiate
a bailout deal with the IMF, the latest round of which foundered
Sept. 6 as OrbĂ n released a video rejecting the fund's latest list
of conditions on his Facebook page. OrbĂ n effectively de-friended
the IMF, claiming the deal was "not worth it at this price" as the
loan would have required "everything from lowering pensions through
cutting bureaucracy to eliminating the bank tax and money to be given
to banks, which are not in the interest of Hungary."
The IMF had also demanded the cancellation of a bank tax that had
been a flagship policy for OrbĂ n's Fidesz (Young Democrats) party's
populist shift. While OrbĂ n has since reaffirmed his commitment
to an agreement he described as "necessary because of the problems
of the EU," Fidesz's reluctance to pursue a deal at any price is
unsurprising as a large swathe of austerity cuts would be likely to
undermine support for his government.
Alongside his government's unsavory nationalism and pandering to
far-right groups such as Jobbik, OrbĂ n's administration has rejected
the neoliberal orthodoxy that has been near hegemonic since 1989,
eschewing the type of measures that have driven millions of Greeks,
among others, into poverty. Reuters wrote that "companies and banking
sector economists say [these measures have] crippled investment and
undone some of the best reforms pushed through in the decade after
the fall of the Berlin Wall."
It is not without irony that in the same week, Leszek Balcerowicz,
a former Polish finance minister and a poster boy for economic
"shock therapy," was speaking in London on the topic of "What can
the eurozone learn from Eastern Europe's transformation?"
Balcerowicz criticized the EU's social and employment legislation as
being bad for growth and continued to advocate his long-held strategy
of internal devaluations and labor market flexibility. In lauding
the structural changes made in the region, Balcerowicz omitted to
mention Hungary.
OrbĂ n's populist government would not survive the implementation of
such measures, described by academic Stuart Shields as an ideologically
driven "charge of the right brigade" that delivered "too much shock,
not enough therapy" after the collapse of communism.
Economists like Balcerowicz have prioritized rapid privatization over
consideration for the lives of those it affected.
A deterioration of the economic situation and the loss of democratic
identity that accompany such international bailouts would likely
exacerbate the rise of Hungarian nationalism. In this context, OrbĂ n's
economic populism may ironically turn out to be a small ray of hope
for Hungarians keen to avoid emulating the post-1989 poverty that a
full IMF austerity package could trigger. Even if this is a lesson
learned, pursuing shady deals to strengthen Hungary's bargaining
position has backfired, leaving OrbĂ n with more homework to do.
Perhaps he should spend less time on Facebook.
http://www.praguepost.com/news/14281-region-cash-strapped-and-scandalous-hungary.html
From: A. Papazian
by: Benjamin Tallis
The Prague Post
September 12, 2012
Czech Rep
OrbĂ n's whimsical diplomacy points to rising economic woes
It hasn't been the best of months for Hungary's international
reputation. Already battered by the OrbĂ n government's fondness for
authoritarianism, a diplomatic blunder and a Facebook run-in with
the International Monetary Fund have further dented Hungary's image
abroad. Whether this damage can be repaired and what harm it does to
Hungarians at home depends on the lessons learned.
On Aug. 31, Hungary repatriated Azerbaijani military officer Ramil
Safarov, who was serving a life sentence for decapitating an Armenian
officer studying alongside him on a NATO-sponsored English-language
course. The Hungarian government says it acted in "good faith,"
having believed Safarov would serve the rest of his 25-year sentence in
Azerbaijan. Instead, upon his return he was pardoned by the president,
promoted and welcomed as a national hero.
This stoked the fire of a long-smoldering conflict between Azerbaijan
and Armenia over the disputed region of Nagorno Karabakh.
Demonstrators in Yerevan, the Armenian capital, pelted the Hungarian
Embassy with eggs and burned the flag. Despite Prime Minster Viktor
OrbĂ n's statement to Hungarian public radio station Kossuth that it
was in Hungary's interest to "stay out of this conflict, and this is
now the case," it had achieved the opposite and in doing so had also
provoked criticism from both the United States and Russia.
The Economist claims the cash-strapped OrbĂ n government may have
struck a deal in which Safarov would be released if the Azeris
purchased 3 billion euros worth of government bonds. A former prime
minister, Ferenc GyurcsĂ ny, says his administration rejected a similar
deal and described it as "selling the country's honor for 30 pieces
of silver."
This scandal came amid the Hungarians' ongoing struggle to negotiate
a bailout deal with the IMF, the latest round of which foundered
Sept. 6 as OrbĂ n released a video rejecting the fund's latest list
of conditions on his Facebook page. OrbĂ n effectively de-friended
the IMF, claiming the deal was "not worth it at this price" as the
loan would have required "everything from lowering pensions through
cutting bureaucracy to eliminating the bank tax and money to be given
to banks, which are not in the interest of Hungary."
The IMF had also demanded the cancellation of a bank tax that had
been a flagship policy for OrbĂ n's Fidesz (Young Democrats) party's
populist shift. While OrbĂ n has since reaffirmed his commitment
to an agreement he described as "necessary because of the problems
of the EU," Fidesz's reluctance to pursue a deal at any price is
unsurprising as a large swathe of austerity cuts would be likely to
undermine support for his government.
Alongside his government's unsavory nationalism and pandering to
far-right groups such as Jobbik, OrbĂ n's administration has rejected
the neoliberal orthodoxy that has been near hegemonic since 1989,
eschewing the type of measures that have driven millions of Greeks,
among others, into poverty. Reuters wrote that "companies and banking
sector economists say [these measures have] crippled investment and
undone some of the best reforms pushed through in the decade after
the fall of the Berlin Wall."
It is not without irony that in the same week, Leszek Balcerowicz,
a former Polish finance minister and a poster boy for economic
"shock therapy," was speaking in London on the topic of "What can
the eurozone learn from Eastern Europe's transformation?"
Balcerowicz criticized the EU's social and employment legislation as
being bad for growth and continued to advocate his long-held strategy
of internal devaluations and labor market flexibility. In lauding
the structural changes made in the region, Balcerowicz omitted to
mention Hungary.
OrbĂ n's populist government would not survive the implementation of
such measures, described by academic Stuart Shields as an ideologically
driven "charge of the right brigade" that delivered "too much shock,
not enough therapy" after the collapse of communism.
Economists like Balcerowicz have prioritized rapid privatization over
consideration for the lives of those it affected.
A deterioration of the economic situation and the loss of democratic
identity that accompany such international bailouts would likely
exacerbate the rise of Hungarian nationalism. In this context, OrbĂ n's
economic populism may ironically turn out to be a small ray of hope
for Hungarians keen to avoid emulating the post-1989 poverty that a
full IMF austerity package could trigger. Even if this is a lesson
learned, pursuing shady deals to strengthen Hungary's bargaining
position has backfired, leaving OrbĂ n with more homework to do.
Perhaps he should spend less time on Facebook.
http://www.praguepost.com/news/14281-region-cash-strapped-and-scandalous-hungary.html
From: A. Papazian