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IMF-deal would not threaten sovereignty

December 16th, 2011

An agreement with the IMF would not curtail Hungary’s sovereignty, even if it would somewhat limit the economic options available to the government, a liberal commentator suggests.

Although the right and the radical right worry about the loss of sovereignty, an IMF agreement has become indispensable since Moody’s downgraded Hungary to junk status (see BudaPost November 28), Tamás Szigeti writes in Szuverén.

In international relations, sovereignty is the prerequisite of participation in international fora. Sovereignty, however, does not imply that states may do whatever they want, Szigeti notes. Countries are parties to various international agreements and treaties which create obligations that they must fulfil. This is particularly true for small countries which need to rely on international cooperation to secure economic growth and well-being.

An IMF agreement should therefore not be seen as a limitation of Hungary’s sovereignty, even if the IMF does impose certain conditions. An agreement should be regarded rather  as an opportunity which should not be missed. Otherwise, the country’s economic prospects would be severely limited, partly as a result of the global crisis, and partly due to the wrong-headed economic strategy that the government has pursued so far, Szigeti concludes.