15/03/2010 - Analysis - 1st round
The President of the Republic of Hungary, Lazlo Solyom announced on 22nd January that the next general elections would take place on 11th and 25th April. In doing this he reduced the length of the electoral campaign which will be the shortest the country has known since the end of communism in 1989.
During the entire four years of this legislature the spectre of an early general election emerged on several occasions but finally it will be at the end of their mandate that the Hungarian parliamentarians will be standing for their seats again.
According to all of the polls the Socialist Party (MSZP) in office since 2002 is about to suffer a resounding defeat and the Alliance of Young Democrats (FIDESZ), the main opposition party led by former Prime Minister (1998-2002), Viktor Orban is due to win the election. The far right party, the Movement for a better Hungary (Jobbik) which won 14.77% in the last European elections on 4th-7th June 2009 may cause upset in the results. Although it seems that matters are settled it remains to be seen how big a majority the FIDESZ will enjoy.
The Hungarian Political System
The Orszaggyules (a unicameral Parliament), comprises 386 representatives elected for a four year period.
The electoral system is one of the most complex in the world. Of the 386 representatives 176 are elected by a majority vote in two rounds within single list constituencies, 152 are appointed by proportional vote within 20 "counties" (Budapest elects 28 MPs in this manner) and finally 58 are elected from national lists on the basis of the remainder from the voting in the single list 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 voters. Within the single list 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 single list constituencies may present lists in the "counties". If a party obtains signatures in at least two districts of a country (8 in Budapest, 5 in Pesc and 3 in Borosd-Abauj Zemplen), it can put forward candidates for the region. If it obtains signatures in at least seven regions it can present a national list.
4 political parties are represented in Parliament at present:
- The Socialist Party (MSZP), emanated from the former single party that was allowed in the People's Republic of Hungary – the Hungarian Socialist Workers' Party – created in 1989 has been in power since 2002 – it is chaired by Ildiko Lendvai;
- The Alliance of Young Democrats-Civic Union (FIDESZ-MPP), is the main liberal opposition party created in 1988 and is led by former Prime Minister (1998-2002), Viktor Orban;
- The Alliance of Free Democrats (SZDSZ), a liberal party and former member of the government coalition is led by Attila Retkes; it is traditionally believed to be the MSZP's "natural" ally
- The Democratic Forum (MDF), created in 1987 it lies to the right but is considered more moderate than the FIDESZ; it is led by Ibolya David.
A serious economic crisis
Hungary is one of the 27 EU Member States most affected by the international economic crisis. It was the continent's third country after Iceland and Ukraine and the first of the 27 to have benefited from IMF aid which with other financial establishments granted it 20 billion € in loans. The IMF aid enabled it to halt the collapse of the Hungarian currency, the forint. This was all the greater because of the tendency to borrow in foreign cash, which is a feature specific to Hungary. Indeed 65% of the loans granted to households and 56% of those granted to companies (in November 2008) in Hungary were given in foreign currency.
The Hungarian economy contracted by 6.7% in 2009, and the recession is due to continue. The GDP growth rate is due to be 0.6% in 2010 before rising to 3.7% in 2011. Inflation is high (forecast at 4.1% in 2010) and unemployment is higher than 10% of the working population (employment was below 50% in the fourth quarter of 2009) and is due to remain at this level until 2012. The budgetary deficit rose to 7% of the GDP in 2009 (according to the government it is due to rise to 3.8% this year and 2.8% in 2011). Finally the Hungarian public debt totals 65% of the GDP, a slightly lower figure than Greece but which is however the biggest in Central and Eastern Europe. It may reach nearly 80% in 2010.
Apart from the economic crisis the very base of the Hungarian economy is particularly vulnerable. The civil service is paralysed: 740,000 people are employed by the State. In addition to this Hungary, which totals 10 million inhabitants is an ageing nation and now has 3 million pensioners; mid-term this situation is untenable i.e. beyond the 30 year mark. The country absolutely needs to reform its health and education system and also combat tax evasion and corruption which are real scourges.
"The Hungarians who consider themselves pioneers in the democratization of Central Europe feel that they have lost their lead position and have even started to lag behind. Neighbouring countries who were even further behind such as Slovakia have adopted the euro. All of the Hungarian governments have patched things over without committing to real reform and the country which attracted many foreign investors is now suffering severely due to the crisis," analyses René Roudaut, Ambassador of France in Budapest since September 2007.
At the end of February Hungary forecast however that it would not require the last part of the international loan and gave up the idea of further aid from the European Union. "Funding is guaranteed by the markets," declared Finance Minister Peter Oszko. Indeed the forint has stabilized and Budapest has won back the confidence of the markets. Although they may shortly receive the sanction of the electorate the austerity policy and the limiting of public spending undertaken by Gordon Bajnai's government have nevertheless produced good results.
A latent political crisis
In April 2006 the socialists achieved a feat in Hungary, the first since the fall of communism: they were re-elected to government after four years in office. Prime Minister Ferenc Gyurcsany (MSZP), took over from Péter Medgyessy as government head in September 2004, and retained his post after the election on 9th and 23rd April 2006. In June 2006, he decided on some austerity measures (increases in taxes and a reduction in public spending) to reduce the rather significant budgetary deficit.
On 17th September 2006 a cassette which included a speech given by Ferenc Gyurcsany to MPs from the MSZP behind closed doors was broadcast on the Hungarian radio. The Head of State admitted that he had lied to voters to win the general election. "No one in Europe has done such stupid things (allowing public debt to rise and promising wonders to the electorate). It is clear that we have been lying for the last 18 months. It is clear that what we were saying was not true. We have done nothing for the last four years. Nothing. You cannot quote one government measure of which we can be proud," declared Ferenc Gyurcsany.
The reaction to this speech was lively. The opposition said that the government was not legitimate and that the Prime Minister had lied about the extent of the deficit (which proved to be double that announced during the electoral campaign); it had also concealed the austerity plan which it planned to launch. The opposition forces then demanded that Ferenc Gyurcsany resign. Demonstrations were organized which resulted in violent incidents. Just as some people had succeeded in entering the HQ of the national television station to read a petition, a fire started in the building and the police seemed to be overwhelmed. All of this violence was broadcast live on the TV channel Hir which is close to the opposition. Hooligans and demonstrators from the far right, notably from the group of 64 regions, nostalgic of a Greater Hungary, were the leaders in these events. But none of the unions joined the demonstrators, not even those representing the socio-professional categories most affected by the austerity plan, such as doctors and students. Over the days that followed those close to the right finally rejected the violence shown by the demonstrators and the streets of Budapest became calm again.
Nearly four years later the Hungarian political arena is still one of the most polarised in Central and Oriental Europe. "The government and the opposition do not have normal relations. Their tense relationship is the reflection of an extremely divided society, it reflects hate that swamps private life and pervades every street corner," analyses journalist Ervin Tamas. A tradition liberal right, that once focused on companies but which is now oriented towards the state is asking for an increase in unemployment benefits and retirement pensions and faces a social-democratic left which has liberal undertones.
Mitigated Socialist Results and the Forecast of Defeat
Re-elected in April 2006 for a second term in office the MSZP formed a government with the Alliance of Free Democrats (SZDSZ) and started a reform policy which although painful for the population finally brought the desired results since the budgetary deficit that stood at 9% in 2006 lay at 3% in 2008.
In 2007, Ferenc Gyurcsany's government introduced an additional fee of 300 forints (1.75€) on all medical appointments (according to statistics Hungarians go to see the doctor 13 times per year on average in comparison with 5 consultations by the British) and decided to increase university enrolment fees (which total 400€). These two measures became the symbols of the socialist government's reform policy. On 9th March 2008, 83% of Hungarians voted during a referendum in favour of the abolition of the 300 forint fee set for each medical appointment and against the increase in university enrolment fees. This political defeat then significantly reduced the ruling government's room to manoeuvre. The failure of the referendum led to the resignation of the Healthcare Minister, Agnès Horvath (SZDSZ), and finally it led to the collapse of the government coalition on 30th April 2008. The two parties in power notably oppose one another on the pace at which the balancing of the public budget should be undertaken.
Some months later Ferenc Gyurcsany was the focus of a motion of censure in the wake of recovery measures set down by his government after the economic crisis which hit Hungary quite severely. The Prime Minister was obliged to resign on 21st March 2009. Some days later he gave up the chairmanship of the MSZP which he had been re-elected to with 85% of the vote. Ferenc Gyurcsany said he wanted to remain in politics and that his role would depend on his socialist colleagues in the future.
"We made four fundamental mistakes," said the Prime Minister in November 2008. "The first was that we were unable to encourage people save – which is weak – and we encouraged people to spend; the second is to have spent too much between 2000 and 2006 thereby increasing the budgetary deficit (I assume 18 months of that deficit). The ineffectiveness of the reforms (mainly due to the opposition) is the third error and foreign debt on the part of private parties and companies which is common to all of the countries in the region was the fourth," stressed Ferenc Gyurcsany who did say however "we made a serious change in direction after 2006."
On 14th April 2009 Gordon Bajnai, outgoing Economy Minister (and former minister of local government and regional development) who is politically neutral succeeded Ferenc Gyurcsany as head of government. Peter Oszko, director of the Hungarian banks of the American financial analysis consultancy Deloitte was appointed Finance Minister and Tamas Vahl, an IT expert, was given the post of Economy Minister. Elected to his position with an easy majority Gordon Bajnai had the support of the MSZP and the SZDSZ and the Democratic Forum (MDF), two parties which did not want to see the organisation of early general elections. The resignation on the part of Ferenc Gyurcsany and his replacement by Gordon Bajnai effectively avoided the election demanded by the FIDESZ. President Lazlo Solyom also declared that Hungary would have emerged quick and better from its problems if the MSZP had accepted the organization of elections in 2008.
Gordon Bajnai said as soon as he took office that he would not stand in the next general election planned in 2010. "My only objective is that in one year's time Hungary will be in a much better position and that it will have won back the investors' confidence. I do not want to be involved in politics, I want to work," he declared adding "the programme this new government will set in place will be painful: it demands sacrifices on the part of many people and will have an effect on all Hungarian families and on each Hungarian." The Prime Minister pushed through a vote on the freezing of salaries and the abolition of the 13th month of salary in the civil service together with the abolition of certain benefits paid to some families. He reduced ministers' salaries by 15% in comparison with that paid by the outgoing government and established his own pay at 1 forint (0,0003€): "One year, one programme, one forint" he declared as his motto.
"We undertook three vital reforms: of retirement pensions, taxation and social aid. The sacrifices made by the Hungarians,, in 2009 and 2010, allowed the government to maintain employment, social services and solidarity. We hope in 2010 to see the budgetary deficit rise to 3. 8% of the GDP, i.e. one of the lowest in Europe with interest rates well below the level they were at before the crisis," analyses Gordon Bajnai after one year in office as head of government. According to the Prime Minister if Hungary maintains its rigorous fiscal policy it might be able to adopt the euro within the next four years. "If we stick to this path, if we maintain a low deficit, we might be the first of the countries in the region who still do not have the euro to adopt the single currency," he declared.
Although Prime Minister Bajnai can be satisfied with his results he has not however in the eyes of many analysts communicated sufficiently on his intention to break away from the Gyurcsany era.
On 12th December 2009, 35 year old Attila Mesterhazy, at present Vice President of the MSZP and leader of the party's parliamentary group was elected to run for Prime Minister in the general elections. "I shall be a merciless opponent for the moderate right and uncompromising with the radical right," he declared. The choice of Attila Mesterhazy – instead of Laszlo Kovacs, former European Commission or Katalin Szili, former leader of Parliament, bears witness to the determination for renewal on the part of the MSZP.
After eight years in power the MSZP's electoral base has withered away because of the economic crisis but mainly because of tax increases, a reduction in government aid, the cuts undertaken to pensions and the abolition of the 13th month of salary. In addition to this their allies in the SZDSZ are undergoing a crisis and therefore it is difficult to imagine them as allies. "The socialists have lost too many voters to hope to win in a realistic manner. They can only prevent the FIDESZ from winning the majority of 2/3 of Parliament," says Attila Juhas, Director of the think-tank Political Capital, adding, "a serious failure may even bring them to the edge of the abyss like the Polish left in 2004."
"We have to lift our heads, straighten our back and show we want to win," repeats Attila Mesterhazy who believes he can win the confidence of the Hungarians thanks to measures taken by Gordon Bajnai's government and by reorienting the MSZP. On 27th February he started a tour of Hungary during which he was due to visit 100 local authorities. "We shall not release the strings on our purse but we shall make investments, we have to make the benefits of growth available to those who have been most affected by the economic crisis without endangering the country's development," declared Attila Mesterhazy. The MSZP would like to reduce social charges on labour by 4% in four years which will increase the employment rate by 1% per year and salaries by 12% in four years. The MSZP said it wanted to launch a new pension programme in 2011. It is trying to show that the FIDESZ is an anti-democratic, irresponsible, dangerous party for the poorest. Gordon Bajnai warned voters saying that a populist government would take the country backwards and that it would destroy the hard won confidence of foreign investors and international institutions. He maintains that a government led by Viktor Orban would compromise the stability and growth which Hungary has now recovered.
For these general elections the MSZP has united with the Tiszetelet Tarsasag, a pressure group of pensioners led by Andor Schmuck (a former party member and MDF candidate in the April 2006 elections) representing 820 pensioners' clubs with 142,000 members. This movement is fighting for the establishment of measures in favour of pensioners and for greater punishment for crimes against the elderly. The MSZP has said that it wanted to take up some of the proposals in its electoral programme such as for example the reform of pensions for widows.
Finally a new party that lies to the left, One free people for Hungary (Szema), was created on 19th November by some former SZDSZ members. The party wants to mobilize 280,000 liberals and a million people on the left according to its leaders who feel like "political orphans."
What kind of victory will it be for the FIDESZ?
"We shall ask explanations of all of those responsible for having led Hungary into the situation in which it now finds itself," repeats Peter Szijjarto, the FIDESZ spokesperson. The party has announced its intention to prosecute former Prime Minister Ferenc Gyurcsany and former Finance Minister Janos Veres for withholding certain information that was in their possession with regard to the budget in 2006. FIDESZ leader, Viktor Orban, has accused the Hungarian Central Bank and the financial market authorities of being responsible, together with Gordon Bajnai's government for the collapse of the Hungarian economy. "The Central Bank should have reduced its interest rates more rapidly which would have enabled workers to maintain their jobs," he says. "The appointment of Attila Mesterhazy is a relic of the Ferenc Gyurcsany's era," stressed Peter Szijjarto, adding "Attila Mesterhazy represents a past that the Hungarians want to leave behind; he is the symbol of austerity measures which made life in Hungary so difficult and which prevented the country's growth."
The youngest prime minister in the EU in 1998 Viktor Orban believes that his time has come again. The economic crisis and the austerity measures approved by the government are godsend for the one who is rebelling against the rigour imposed by the MSZP. "The first priority is to put Hungary back on the road to recovery," he says. "Hungary needs strong leadership. Hungarians have had enough of weak governments. The political elites have to return to common fundamental values which are work, family, health and order, declared the opposition leader adding, "The State is unable to maintain public order, the police no longer controls the situation." He intends "to put an end to theft and threats."
In the FIDESZ's opinion an absolute majority is a condition sine qua non for the party to be able to govern. It is aiming for the 2/3 majority in Parliament a result which will enable it to modify the Constitution. "If we can form a government without it being a coalition, the first in 20 years, the Hungarian economy will have real chance of recovery," he declared. He says that his government will enable the eradication of sterile disputes for the next 20 years. "The clash of values that causes disputes will soon be replaced by a central political force that will be able to work in the national interest because it will avoid permanent debate," he stressed in the weekly Nagvitas (Enlargement) launched by FIDESZ last December.
On 8th February 2010 during a TV programme on MTV, Viktor Orban excluded any government coalition with the far right party, Jobbik. To seduce voters who might feel tempted to vote for Jobbik the FIDESZ does not hesitate in playing the card of nationalism using the theme of Greater Hungary and promising to grant dual nationality to Hungarians living abroad. "The cultural essence is something which differentiates us from other national groups and which the government must try to protect," declared Viktor Orban. On 4th June 1920 with the Trianon Treaty Hungary lost more than 2/3 of its territory and 3.3 million of its citizens who were pushed beyond the country's borders into countries like Austria, Czechoslovakia, Romania and Yugoslavia. 1.4 million Hungarians live at present in Romania (i.e. 6.6% of the total population), 520,000 in Slovakia (9.7%), 293,000 in Serbia (3.9%), 156,000 in Ukraine (0.3%), 26,000 in Austria (0.3%), 16,000 in Croatia (0.3%) and 6,000 in Slovenia (0.3%). "Sometimes it is tempting to speak out loud and offer radical solutions but those who launch radical ideas out loud will have no chance of making them a reality tomorrow," says Peter Szijjarto, accusing the government of being responsible for the rise of Jobbik.
If as forecast in all the polls the FIDESZ wins the general elections it will also inherit the economic recession. The party sent out contradictory signs about what it will do in terms of the economy. "We shall adopt a government policy and an extremely different economic policy," indicated Peter Szijjarto. At the heart of the party's economic programme is the reform of the State, a decrease in interest rates and an increase in employment.
The FIDESZ wants to fund its proposals by boosting the domestic market via a reduction in taxation and bureaucracy. It maintains that it wants to create a million jobs over the next ten years and that it will defend Hungarian products. On 5th February last Viktor Orban asked for an extension on the moratorium preventing the sale of Hungarian land to foreign citizens and suggested extending this protection to the country's natural resources, notably water. The FIDESZ wants to reduce taxes, notably tax on property which levies sums on the heritage of the wealthiest Hungarians.
On several occasions the FIDESZ indicated that its economic choices might lead to the budgetary deficit rising beyond the 7% mark of the GDP which the IMF objects to outright. "There is a danger that the Hungarian budgetary deficit will wander from the fiscal path agreed by the IMF once the FIDESZ is in power. But we also think that the party knows that it is necessary to contain the fiscal deficit to support the confidence of the market and financial stability and that its rhetoric may change after the elections," said an HSBC bank director.
The Democratic Forum (MDF) is led by Lajos Bokros, for these general elections, who is standing as the only real challenger to Viktor Orban. "The European elections proved that there was room in Hungary for a responsible conservative party," declared Ibolya David the party's president. The MDF decided to cooperate with the SZDSZ in Budapest. The SZDSZ will put forward 17 candidates and the MDF 14. The MDF has a vested interest in this alliance since the SZDSZ has a more urban, more qualified electorate.
Under the banner of "Work and dignity to build modern Hungary", the MDF is fighting for the extension of the taxation base and a decrease in taxes. According to Lajos Bokros the fact that "only a small group of people pay heavy taxes" encourages tax evasion. The party which has made the balancing of public finance its priority wants to do away completely with tax breaks on revenue even for people who receive the minimum wage. It wants to introduce medical and enrolment fees for university enrolment. Finally the MDF places the emphasis on the need to increase the employment rate by 10 points and to reform the retirement system. "A small number of people put money into the funds for retirement and are paid significant sums," stresses Lajos Bokros. The issue of retirement pensions is a major stake in a country where employment levels are low, the number of pensioners high and where the population is constantly declining. Many are worried that Hungary will soon drop below the 10 million mark in terms of its citizens.
Will the far right confirm its breakthrough?
The Movement for a Better Hungary (Jobbik) succeeded in making a breakthrough in the last European elections. Winning 14.77% of the vote (i.e. 2.6 points less than the MSZP), the national-radical party as it defines itself won three of the 22 seats that the country has in the European Parliament. Founded in 2003 and particularly popular amongst the young voters it stands as a rival to the FIDESZ. Gabor Vona is the candidate standing for Prime Minister.
With the slogan "New Strength, New Radicalism" Jobbik pursues three main goals: the creation of jobs, the maintenance of public order and the enhancement of the community. The party says that its borders are not those of the state but that of the Hungarian nation. "The Hungarians have not experienced autonomy for more than 20 years. Work to restore the right to national autonomy has been thwarted," stresses Krisztina Morvai. A Christian, nationalist party against Hungary's membership of the EU Jobbik says it wants to "chase the post communists and extreme liberals from parliament." It is fighting against a decline in the birth rate, is against abortion and regularly denounces "Gypsy crime". The party wants to introduce morals and religion back into schools and create a police force that is devoted to fighting crimes committed by gypsies. Gabor Vona says he is confident that his party will come out ahead of the MSZP in the general election.
Prime Minister Gordon Bajnai accuses Jobbik of being anti-democratic. "It should be placed in quarantine by all of the democratic forces," he indicated. "I am very worried because it is possible that in Hungary Jobbik the leading far right party will win 10%. It might even become the second party in Parliament or the third if the economic crisis and unemployment continue. Jobbik may win 20% or 30% of the vote and this is worrying for Hungary but also for the entire European project," says Andras Toth of the Political Science Institute of the Hungarian Academy of Science. Success by the far right would modify the political landscape and would impact on neighbouring States many of whom will be renewing their parliaments soon (the Czechs on 28th and 29th May and the Slovaks on 12th June).
Just one month before the election matters seem to be settled and the MSZP in power for the last eight years is due to suffer real defeat. It is difficult however to anticipate the extent of the FIDESZ victory. Although the "small" parties seem to be losing ground they may attract those disappointed by socialism or voters who do not know whether to vote for FIDESZ or not. In a climate of defiance towards the elites Jobbik, which stands as a new party may be the source of surprise and achieve a new break-through.
According to the latest polls FIDESZ is due to win 40% of the vote in the first round on 11th April, followed by the MSZP with 15% and Jobbik 7%. 1/3 of the voters say they still have not made their choice.
Source : Central Hungarian Electoral Commission