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Further lessons of the Greek crisis

July 20th, 2015

Opinions diverge sharply on who is at fault for Greece’s financial difficulties and whether the solution accepted by the parties is a step forward or backward. A right-wing author thinks Hungary managed to avoid being plunged into a comparable crisis thanks to the unorthodox policies pursued by the government after 2010.

In its weekly editorial, Magyar Narancs thinks both dominant and competing interpretations of the events in Greece are mistaken. According to one version, what we have witnessed was a fight between democracy as represented by the Greek government and a supranational bureaucracy embodied by the institutions of the European Union. In reality, the Greek government was facing European leaders who were elected just as democratically as they were themselves. Those European politicians have to take into account the expectations of their own electorates, and it’s difficult to find a compromise between the many democratically legitimate interests in Europe. Ultimately, such a compromise was found and Magyar Narancs therefore believes that far from being a harbinger of the disintegration of the European Union, what has happened was a victory of European democracy which has proven its ability to keep dialogue alive in an unprecedentedly critical situation.

In his Figyelő editorial, György Dózsa takes a much more pessimistic view of the Greek case. The Euro was originally meant to be a tool of political integration, he recalls, but the financial crisis proved the opposite. In fact when the Euro-zone ran out of ways to put pressure on the Greek side, it simply asked the European Central bank to close “the money tap”. German politicians made a mistake when they decided to continue financing an insolvent Greece in the first place, and now they don’t have the courage to admit that mistake. The general public prefer to lay the blame on the allegedly lazy and corrupt Greeks. On the other hand, Dózsa continues, the governing left in Greece rejected the restrictive fiscal policies advocated by the EU and the IMF, but did precious little of their own to stabilise their own country. If you want to be defiant towards your creditors, the first thing you have to do is to pay your debt on time, just like Hungary has been doing. And since Hungary has always been punctual in debt servicing, Dózsa believes that the present government is wrong to assert that the two countries were in a similar position five years ago, when Fidesz came to power (and claim by implication that if Hungary is incomparably better off today, it is due to the path chosen by its conservative government).

In Demokrata, Andor Kárász disagrees with that analysis. While the Greek debt substantially increased as the government followed the advice of the EU and the IMF, Hungary managed to reduce the debt burden, because it avoided measures restricting domestic consumption and taxed multinationals in order to balance the budget. Hungary has been fiercely criticised in the West for choosing that road, and when the left-wing Greek government tried to increase the tax on company profits, international creditors vetoed its project. Still, the year 2014 proved the Hungarian government right, as the GDP grew by 3.6%, the second highest growth rate within the European Union, after that of Ireland. Kárász believes that growth is sustainable, for it is based on an increase in domestic consumption. Greece on the other hand saw domestic consumption fall by 15% over the past five years.

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