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The price of an agreement with the IMF and the EU

January 9th, 2012

Left and right wing commentators agree that the Hungarian government has no choice but to reach an agreement with the European Union and the International Monetary Fund. While Népszabadság and Népszava urge the cabinet to return to European norms, both Magyar Nemzet and Magyar Hírlap believe that there is no need to crawl on all fours to the lenders.

The Hungarian government has made every possible effort to start and conclude talks with the International Monetary Fund and the European Union at the earliest  possible moment –Prime Minister Viktor Orbán said on Friday after a meeting in his office with the Governor of the National Bank of Hungary András Simor, Economy Minister György Matolcsy, chief negotiator Tamás Fellegi and head of the Prime Minister’s Office Mihály Varga. The PM said the economy ministry and the central bank would hold daily consultations in order to help restore confidence in the forint. On Thursday morning Tamás Fellegi, the cabinet minister in charge of negotiations with the IMF, announced that everything will be on the table at the talks, and that Hungary is ready to make concessions. He added that there are no preconditions on the government’s side, and also hinted that PM Viktor Orbán has authorized him to negotiate a possible stand-by agreement, rather than a looser precautionary credit line as originally envisaged by the government. (See BudaPost January 6th.)

The European Union and the International Monetary Fund expect the Hungarian Prime Minister to turn back from the dead end street – writes Ervin Tamás in Népszabadság.

He asserts sarcastically that one of very few governmental success stories is the creation of an autocratic power structure, which has however generated unprecedented international criticism.

In Tamás’s view, rather than meddling with Hungary’s internal affairs, international critics simply insist on respect for international norms, the same norms supported by the anti-government demonstrations earlier this week (See BudaPost, January 4th / ). The left-wing columnist suggests that mere gestures and a half-turn in government rhetoric will not be enough to smooth the path to an agreement with the IMF and the EU.

Another left wing daily, Népszava also accuses the government of trampling underfoot those European norms which all member states accept when joining the EU. “One cannot be inside and outside at the same time,” – warns veteran anti-government commentator Tamás Mészáros, who also remarks ironically that “not even Viktor Orbán can manage” to be in both places at the same time.

“It is obvious that Europe has had enough of this constant fudging by Hungary,” – the columnist asserts, and accuses the government of “trying to trick EU lawyers,” by claiming that Brussels’ objections by are reflected in the amended version of the Act on the National Bank.

It will prove much more costly for PM Viktor Orbán to retreat from a law which has already been passed. But he will be forced to pay that price, before even his own party rejects him, the left wing commentator predicts. Nevertheless, he is not convinced that an agreement will be reached. The ‘restoration of democracy’ will be a precondition of the agreement with the IMF and the EU, he adds, but does not believe “that will be possible under Viktor Orbán and today’s Fidesz”.

In a down-to-earth commentary, Magyar Nemzet warns that Hungary can ill afford to take offence when it is criticised by foreign newspapers or politicians. The pro-government daily is convinced that the EU and the United States have decided to break Hungary’s back, which would cost the country dear.

There is no need to crawl, as (despite all the mistakes the government has made) the Hungarian economy is still in better shape than some of the older member states” – writes Gábor Stier. He believes that it would be a mistake to think that the whole world is against Hungary. He acknowledges that Hungary is now rather isolated internationally, and suggests that some degree of self-examination is indispensable if it is to get out of the cross-fire.

Another right wing daily, Magyar Hírlap finds Hungarian foreign policy surprisingly passive. Ferenc Sinkovics takes the examples of Greece and Ireland, as the former succeeded in writing off a remarkable part of its debt, while the Irish “are successfully blackmailing world powers with the idea of a referendum.”

Hungary is a sovereign state, and that should be the starting point of foreign policy – advises Magyar Hírlap. Sinkovics believes that (irrespective of political colouring) the only question dividing Hungarian society today is whether to capitulate or to resist. What is at stake is the future of Viktor Orbán, as the international powers are waiting for his fall, and there are politicians in Fidesz too, who are closely watching the PM’s reactions for the very same reason.

In another commentary in Magyar Hírlap, Gergely Huth warns that the same left wing politicians who are now criticising the government sent Hungary down the slope in the first place. As Socialist politicians (like party leader Attila Mesterházy and parliamentary deputy Tibor Szanyi) talk about sending the government packing, the columnist warns that it was the MSZP who mired Hungary in debt in a thriving international economic environment from 2002 on, and who stood behind their prime minister Ferenc Gyurcsány after his infamous “we lied” speech in 2006 (see BudaPost, 2011).

“We should never forget that it was Gyurcsány and [his Minister of Finance] János Veres two years later, who ran to the IMF to ask for a 20 billion Euro credit line at the first sign of the global financial crisis,” – Gergely Huth continues. Had the Socialists not ruined the country, he suggests, Orbán and his cabinet could now be working on the reforms of the local administration, education and other important issues, instead of waiting for speculators to buy government securities.

The government knows very well that it must reach an agreement with the EU and the IMF, but is also conscious of the huge political price it will have to pay for it. And that is the reason behind its hesitant rhetoric – Gábor Török writes in his blog.

The centrist explains the conflicting messages issued by government representatives, suggesting that the cabinet is preparing the public for the inevitable, while trying to minimize the ensuing political damage.

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