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Is there a plan B in the wake of EU threats?

February 24th, 2012

A centrist analyst wonders how Mr Orbán’s government might act in response to the threat of  the European Commission to freeze hundreds of millions of Euros in EU subsidies. Gábor Török speculates that it would not be an unreasonable act for Fidesz to call an early election.

On Wednesday, February 22, the executive body of the EU proposed the suspension of  495 million Euros in development subsidies, unless Hungary makes further efforts to reduce the public deficit below the required 3 percent of GDP – a target which the country has missed each year ever since its admission to the EU (see BudaPost February 22).

The Orbán government has done everything in the past months in order to reach an agreement with the IMF and the EU and thus become eligible for a loan, Gábor Török writes. Although government officials have sent some mixed messages, they have realized that in the absence of a deal with the international organizations, the country may face insolvency, which would have catastrophic political consequences for Fidesz.

It is not entirely clear, however, how the government will react to the European Commission’s threat to freeze hundreds of millions of Euros, he writes. Further austerity measures seem unavoidable, which would most probably weaken the popularity of the government. This, Török believes, would make it harder for Fidesz to win the next election scheduled for 2014, since it seems unlikely that the economy will recover significantly during the next two years.

As an alternative, Fidesz could call for an early election, while it still leads the polls, Török speculates. By doing so it could seek public approval for painful cuts in public spending, and then hope that things improve during the following four years. Török admits that this would not be a risk-free strategy, but the opposition parties do not seem to have increased their popularity, and so it is unlikely that Fidesz would lose a snap vote.

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