A story of a renewal gone terribly wrong

Originally published on 2012/01/31

It is a twist of his­tory, the cruelest one ima­gin­able maybe, that a former Com­mun­ist dis­sid­ent would turn a demo­crat­ic­ally ruled coun­try into an author­it­arian regime. It is even more ironic if such a regime change should hap­pen within the bor­ders of the biggest demo­cracy pro­moter in the world. Unfor­tu­nately, this is exactly what is hap­pen­ing right now in Hun­gary, one of the coun­tries that joined the European Union in 2004. The per­son in ques­tion is the country’s Prime Min­is­ter, Viktor Orbán, the man who let Hun­gary into NATO and prom­ised fun­da­mental changes and a clear break with the past in Hungary.

Since Orbán’s Fidesz party has won the major­ity of the votes in the 2010 elec­tion and ous­ted the dis­graced Social­ist gov­ern­ment under Prime Min­is­ter Gor­don Bajnai, who had replaced Fer­enc Gyurc­sany after the “lies-gate” in 2009, Hun­gary has under­gone a rad­ical change. The party that ran a vir­tu­ally non-existent cam­paign by simply dis­tan­cing itself from the Social­ists, has since last April changed the Con­sti­tu­tion of the coun­try, declar­ing the coun­try to be simply “Hun­gary “instead of the “Repub­lic of Hun­gary”. It has curbed the author­ity of the Con­sti­tu­tional Court and removed its com­pet­ence to rule in ques­tions related to the state budget. It has also adjus­ted the con­stitu­ency bor­ders to give itself an elect­oral advant­age over other parties in future elec­tions. Fidesz has nation­al­ised the pen­sion fund and imposed a new media coun­cil, staffed with Fidesz cronies, to super­vise media out­lets. Cur­rently, close to 80% of all media is con­sidered to be Fidesz friendly. Crit­ical out­lets, how­ever, such as the pop­u­lar Hun­garian news­portal index.hu have been banned from report­ing from inside the par­lia­ment build­ing after a satir­ical take on the gov­ern­ment at the end of the year. Last but not least, the gov­ern­ment recently decided to impose its author­ity over the National Bank, thus effect­ively remov­ing the inde­pend­ent fin­an­cial super­vi­sion in the coun­try. Orbán plans to merge the National Bank with the Fin­an­cial Reg­u­lat­ory Author­ity and would thus give the gov­ern­ment dir­ect con­trol over the institution.

Hun­gary on Russia’s path

All this sounds strangely famil­iar, though recol­lec­tions of such incid­ents hap­pen­ing in a demo­cratic coun­try are rare and do not come to mind. It is a very dif­fer­ent case when one thinks about the begin­ning of vari­ous author­it­arian regimes, and iron­ic­ally the example of Rus­sia eas­ily comes to mind. Under the pres­id­ency of Vladi­mir Putin (2000-2008), Russia’s gov­ern­ment cent­ral­ised power over all major polit­ical bod­ies, such as the Duma (par­lia­ment) which nowadays can hardly be con­sidered to con­trol the gov­ern­ment, or the Con­sti­tu­tional Court, which has repeatedly ruled in favour of the gov­ern­ment and has been called cor­rupt and incap­able by some of its own judges (see here in Span­ish and here in Eng­lish, and in a very dis­turb­ing book by the late Anna Politkovskaya). The media are con­trolled by the Krem­lin and major com­pan­ies have been brought back under con­trol, often without the con­sent of their own­ers. Power­ful olig­archs, such as Berezovsky or Chodorkowski ended up in exile or jail, their com­pan­ies – oil com­pan­ies Sib­neft and Jukos and media out­let ORT, were either nation­al­ised or dis­mantled and sold off.

The European Com­mis­sion has repeatedly cri­ti­cised Rus­sia for its lack of demo­cratic rule and the viol­a­tion of human rights. When Dmitry Med­ve­dev was elec­ted third Pres­id­ent of the Rus­sian Fed­er­a­tion, European lead­ers were hop­ing that reforms would turn the coun­try into a more demo­cratic coun­try. How­ever, Med­ve­dev has failed to trans­form the Rus­sian polit­ical sys­tem. A demo­cratic Rus­sia seems to remains a vis­ion for the dis­tant future.

Mean­while back in Hungary

Sup­port for the gov­ern­ment has been fall­ing rap­idly recently. Only 16 per cent of Hun­gari­ans still back the gov­ern­ment. More than 80 per cent think the coun­try is head­ing in the wrong dir­ec­tion. The national cur­rency has been los­ing around 15 per cent of its value in the past few months. For the second time in a dec­ade the coun­try needs inter­na­tional help to solve its fin­an­cial prob­lems, provided by the IMF and the EU. How­ever, the situ­ation dif­fers from 2008, inso­far that the country’s fin­an­cial insti­tu­tions are con­sidered to be no longer inde­pend­ent. The IMF and the EU have announced they would not con­tinue nego­ti­ations about a new loan if the gov­ern­ment does not loosen its power grab on the National Bank. Hun­gary might need around 20bn euros, which strengthens the pos­i­tion of the EU and the IMF to force the gov­ern­ment to give up its author­it­arian campaign.

Even though it seems unlikely that Orbán will admit that the EU still holds cer­tain power over the country’s polit­ics, the gov­ern­ment does not find itself in a good pos­i­tion. It has been milk­ing the pop­u­la­tion with new taxes, inter­na­tional com­pan­ies are con­sid­er­ing mov­ing their assets abroad and the pop­u­la­tion lost its faith in Fidesz. The country’s credit rat­ing was down­graded by all major rat­ing agen­cies to “junk” status.

In this situ­ation the coun­try will even­tu­ally need help from its European part­ners. This pos­i­tion of weak­ness should be exploited by the EU to ensure Hun­gary returns to the path of demo­cracy. A total over­haul of the changes is not pos­sible but at least the government’s attempts to bring under con­trol the National Bank could be reversed.

This would be a first cor­rect­ive step. Hope­fully it will be the first of many. It would be good for Hun­gary and the EU. Only a func­tional sys­tem of checks and bal­ances (and this also includes non-classic act­ors such as the Hun­garian National Bank) will ensure demo­cratic rule, a pre­requis­ite for mem­ber­ship in the EU. In the long run Hun­gary will need the sup­port of its European part­ners even more to suc­ceed in the inter­na­tional sys­tem. The EU, too, could bene­fit from Hun­gary, its skilled labour force, its invent­ors and entrepreneurs