09/03/2006 - Analysis
On 9th April the Hungarians will vote in the first round of the general elections in which the two main parties will face each other: the Socialist Party (MSZP) led by the present Prime Minister Ferenc Gyurcsany, ruling in a coalition with the Alliance of Free Democrats (SZDSZ) since 21st April 2002, and the Alliance of Young Democrats-Civic Union (FIDESZ-MPP) led by former Prime Minister Viktor Orban (1998-2002).
The political system
The Orszaggyules (a unicameral Parliament), comprises 386 representatives elected for a four year period.
The electoral system is one of the most complicated in the world. Of the 386 representatives 176 are elected by a majority vote in two rounds within individual constituencies, 152 are appointed by proportional vote within 19 "counties" and finally 58 are elected from national lists on the basis of the remainder from the voting in the individual constituencies and "counties", i.e. all of the votes that did not enable the election of a candidate. Each citizen has two votes: he votes for a candidate in his constituency and for the "county" list of a political party. This complicated system aims to guarantee a major representation on the part of the leading opposition party. To be represented in Parliament a party has to win a minimum of 5% of the votes cast.
Each political party that would like to feature on a list in the general elections must receive the recommendation of 750 MP's. Within the individual constituencies candidates can be presented either by political parties or by citizens. Only parties with candidates in at least a quarter of the country's individual constituencies may present lists in the "counties". Finally only parties with a list in at least seven "counties" are allowed to present a national list.
Three political parties are represented in Parliament at present:
- The Alliance of Young Democrats-Civic Union (FIDESZ-MPP), the main liberal opposition party created in 1988 and led by former Prime Minister (1998-2002), Viktor Orban ;
- The Socialist Party (MSZP), a social-democrat party led by Prime Minister Ferenc Gyurcsany; this party was a result of the ruling Communist Party in power until the collapse of communism in 1989;
- The Alliance of Free Democrats (SZDSZ), a liberal party belonging to the government coalition since the general elections on 7th and 21st April 2002; traditionally believed as the Social Party's "natural" ally.
Ferenc Gyurcsany (MSZP) succeeded Péter Medgyessy as Prime Minister in September 2004. The latter, Finance Minister from 1996 to 1998 under Gyula Horn's socialist-liberal government coalition, who belonged to no political party, resigned from his post on 25th August 2004 after the crisis that brought him into conflict with the parties in the government coalition when the Socialist Party was defeated in the European Elections on 13th June 2004. After the European Election, Ferenc Gyurcsany, the then Youth and Sports Minister presented his resignation to Péter Medgyessy who then asked him to wait until the next government reshuffle in which he wanted to replace the Labour and Employment Minister, Sandor Burany (MSZP), and Economy Minister, Istvan Csillag (SZDSZ). The latter with the support of his party refused to quit government. Péter Medgyessy then decided to dismiss him. The Alliance of Free Democrats immediately announced that it would no longer back the Prime Minister. On 25th August 2004 Péter Medgyessy resigned and was replaced by Ferenc Gyurcsany.
Former financial consultant and founder of the Altus company, the forty-four year old Prime Minister, is one of Hungary's richest men. A member of the Socialist Party since 2000 he was appointed three years later as Youth and Sports Minister in Péter Medgyessy's government. In February last 46% of those interviewed by Szonda Ipsos Median, said they had a favourable image of Ferenc Gyurcsany, versus 41% who believed the contrary.
The Results of four years of rule by the Socialist Party
In his speech on the state of the nation delivered to Parliament and broadcast on TV, Ferenc Gyurcsany gave his government's results. The Prime Minister was pleased with the rise in investments and salaries (the average salary in Hungary is around 650 euros), as well as the decrease in taxes and inflation (3.6% in 2005)."The rise in salaries which have hitherto been unknown in Hungary has been to the advantage of most of society," he maintained stressing that at the same time retirement pensions had risen by 25%.
The 50% increase in the salaries of healthcare and education personnel was one of the first measures undertaken by the Socialist Party when it came to power on 21st April 2002. The social-democrat government also reduced taxes (the financial law 2006 adopted in December confirmed another reduction in taxes of four billion euros over five years), income tax therefore dropped from 40% in 2002 to 36% and was abolished on the minimum wage. "We have entered a period of stability for the forint, we have reduced the VAT rate from 25% to 20% and have reduced indirect taxation," declared Ferenc Gyurcsany. Also speaking on "things he was not proud of" the Prime Minister mentioned the public deficit (6.1% of the GDP in 2005), the unemployment rate (7.3% of the working population in 2005) and the incomplete reform of the civil service (Hungary employs 830,000 civil servants i.e. only 170,000 less than in 1989).
In his speech Ferenc Gyurcsany also highlighted his government's major achievements. "We are building five motorways simultaneously to link the countryside with Budapest," he declared stressing that the development of the infrastructures "was not wasted money but an investment for the future." Before 1989 Hungary was almost devoid of motorways and yet, due to its geographical situation, the country is an important axis by which a great amount of merchandise travels from Greece and Turkey on its way to Germany and Austria. The Prime Minister accelerated the motorway construction projects; the Croatian link and the construction of the motorway enabling traffic to avoid Budapest are due for completion shortly.
Political and economic analysts say they are worried about the electoral promises made by both the ruling coalition and the opposition with the upcoming general elections on 9th and 23rd April in mind. In spite of growth in the GDP (4% in 2005), they believe that too many electoral gifts have been made over the last few years by the right (low interest housing loans financed by the State on the part of the Alliance of Young Democrats in 2002) and by the left (increase in salaries and retirement pensions, State aid to companies over the last four years). These gifts together with heavy structural expenditure are putting accounts into a dangerous situation. Public debt has reached 60% of the GDP and the budgetary deficit is constantly rising. "Since 2002 the government has not ceased taking populist measures," says Laszlo Csaba, professor at the Central Europe's University in Budapest who believes that the cost of these measures represents nearly 3% of the GDP.
The balancing of public accounts is therefore to be one of the next government's priorities. Hungary must absolutely achieve a budgetary deficit inferior to 3% in 2008 if it wants to adopt the euro two years after that. The European Commission recently reminded the authorities of the work they have to do in order to adhere to their commitments and has asked them to present a plan to reduce the budgetary deficit in September this year. The two main parties have therefore started a drive towards a policy in support of employment and the fight against unemployment – a policy that does not however enable the forecast of a reduction in State spending. The Alliance of Young Democrats has already that said that 2016 seemed a more appropriate date for Hungary to join the Economic and Monetary Union and to adopt the single currency.
The Electoral Campaign
On 19th February last Ferenc Gyurcsany was appointed by 517 of the 519 delegates at the national congress of the Socialist Party as the candidate for the post of Prime Minister with the upcoming elections in view. The Prime Minister was the only candidate to stand. "I have prepared myself, I am ready," he maintained on the announcement of his election. During the national congress the Socialist Party presented its electoral programme whose slogan is "New Hungary" This focuses on the development of the economy, with the Social Democrats planning to deploy a major part of European funds towards creating jobs in small to medium sized companies. "The second national development plan defines three priorities: the modernisation of industry, services and tourism," declared Finance Minister, Janos Veres (MSZP). The Prime Minister highlighted his desire to reform the education system and notably the need to develop the teaching of maths, physics, chemistry and IT. Ferenc Gyurcsany would like the numbers of science students to double both in engineering as in life sciences or in more technological subjects. "Hungary's economic priority is to develop a modern, competitive industry in sectors ranging from biotechnology to pharmacy, IT's and communication. These are the sectors in which our country can become a leader," he declared.
As in 2002 the Socialist Party and the Alliance of Free Democrats will stand together in the elections. In three constituencies (Szombathely, Szeged and Kecskemet), the two parties will present one candidate only. According to the leader of the Alliance of Free Democrats Gabor Kuncze, the two parties should not have to compete in more than five constituencies.
For its part the Alliance of Young Democrats-Civic Union has promised, if it wins, to put an end to the "populist policies" employed by the present government and to provide companies with new confidence and to create jobs. The main opposition party has suggested the reduction of social security contributions from 29% to 19%, to further reduce income tax and to pay the equivalent of fourteen months retirement pension to the retired. It plans to dedicate 1.5 billion forint (nearly six million euro) to its economic development plan. Finally the Alliance of Young Democrats-Civic Union suggests the reduction of the number of ministers to six or seven in comparison with the present sixteen.
Since the two main party's programmes are very similar many political analysts believe that the personalities of their leaders will play a vital role during the electoral campaign.
An incident recently marked the campaign when on 3rd February the Socialist Party realised that its Internet server had been broken into. Around three thousand electoral campaign files had been illegally downloaded and published some days later in the daily Magyar Nemzet, a newspaper close to the opposition. The intruder was identified thanks to the IP address and the enquiry showed that it was the Alliance for Young Democrats-Civic Union. The main opposition party finally admitted on 16th February that it had been a serious mistake to have pirated the Socialist Party's server. "Even though one of our enthusiastic employees made a serious mistake it is not the end of the world," declared Antal Rogan, head of the Alliance of Young Democrats-Civic Union's electoral campaign however.
According to all the opinion polls the two main political parties are running neck and neck in the general elections on 9th and 23rd April next. The Alliance of Young Democrats-Civic Union were ahead of the Socialist Party for a long time but although this gap lay at 15 points in December last the difference between the two parties is now only three points. According to a poll undertaken by Szonda Ipsos and Median mid-February 47% of voters said they intended to vote for the Alliance of Young Democrats versus 44% for the Socialist Party. The Democratic Forum (MDF) and the Alliance of Free Democrats are both credited with 3% of the votes i.e. a result lower than vital 5% to be represented in Parliament.
A reminder of the electoral results of 7th and 21st April 2002
Participation rate: 70.43% in the first round 73.47% in the second round
Source Agence France Presse