The French and Greek elections brought forth the same combative opposition to austerity measures as when Fidesz came to power two years ago. The difference is that while Greece is seeking to wriggle out of the cuts laid down in the bail-out package and France is looking to avoid the role of “policeman” undertaken jointly with Germany, Hungary was bent on alternative economic solutions to reduce the state debt and increase the country’s room for manoeuvre according to the credo “the ends justify the means”.
It was no accident that the Hungarian measures met with such opposition in Brussels, which wanted to prevent other countries from going it alone like Hungary. The government recognised that global power relations have changed as a result of the crisis and that there is more leeway to assert individual interests in the weakened European Union.
The European-level “all for one and one for all” thinking is being replaced by an “all for themselves” attitude.
Until the deadlock over forming a Greek government, the eurozone crisis could be summed up as follows: either Greece is helped back onto its feet or it will drag the whole eurozone down with it. After the majority of the Greek society voted against the cuts the question of whether a country should be saved that doesn’t want to be saved is increasingly topical.
To the uninitiated it is incomprehensible why the politicians are risking state bankruptcy and expulsion from the eurozone, but the recent elections show that Greece’s society has not only let go but has also bitten the hand that rescued it twice.
The European Union is powerless in the face of that decision. How did Europe get to this point? How could European integration turn on its head and “life outside the eurozone” become more attractive to the Greeks? Is it conceivable that we are on the brink of the renaissance of the nation states?
‘Ungoverned world’
According to Ian Bremmer’s new book Every Nation for Itself: Winners and Losers in a G-Zero World, we have entered a temporary period of the “ungoverned world”. Unlike America’s earlier superiority of strength or the power of the G7, G8 and G20, today no single nation or group is capable of acting as global leader.
The United States is unable to play that part at present, while the emerging economies are loath to take on the decision-making responsibility. The result is that every state is left to its own devices. Either they fight for their share or they, in the better-case scenario, divide up the remains.
In the long term this entails uncertainly and conflicts, as well as the strengthening of the competition between nations and regions. Nor is the European Union capable of showing strength in its current situation because it is pulled asunder by as many interests as there are members.
No white knights
So how does this theory explain the way the Orbán government is acting? Just as Europe cannot rely on the United States to rescue it from the crisis, Hungary cannot count on the debt-ridden European Union coming to its aid.
While earlier Western funds may have ensured the periodic economic consolidation of the country, this time it is not possible to turn to the West, which is itself in crisis. This recognition led PM Viktor Orbán at the beginning of his term to take unorthodox steps such as the banking tax, which later spread through Europe, the private pension nationalisation, which is likewise not unprecedented, and the courting of the East, as a result of which Hungary recently concluded a EUR 1 billion development loan agreement with China.
Interests, not values
The economic shift away from the European Union, however, is an economic decision driven by interests, rather than, as many think, a step based on political values. It does not mean a departure from Western, European values. The majority of US state bonds are in Chinese hands, yet nobody would question the fact that the United States is a democracy or its economic orientation.
It is difficult to establish exactly what system Hungary is in today because, unlike the extensive examinations of capitalism in the Western countries, in the past 20 years we have not even managed to work through the meaning of the market economy and its social effect, let alone place Hungary within the (changing) trends of global capitalism.
In the wake of the crisis the relationship between the market and the state, and the concept of state capitalism are being reinterpreted in the West. The crisis highlighted the political and economic weaknesses of the global system. Hungarian governments and Hungarian society need to be able to adjust to that new set-up, omitting the period of “fertile contemplation” on the nature of capitalism that benefited the countries to the west of Hungary to such an extent.
“All for themselves” is what is dictated by the current climate. Prime Minister Orbán, responding to the changing global power relations described above, is simply pushing national interests more firmly than was done in the past. He has realised that even if he meets with political resistance abroad, eventually the conflicts will subside in the interests of “keeping the family peace”.
EU has other fish to fry
It is simply a matter of patience and, hopefully, improving economic indicators. In any case, Hungary’s situation seems to be boosted from day to day owing to the Greek crisis. Right now even the EU’s smallest concerns in that regard are greater than the issue of Hungarian domestic politics, and whatever sins Hungary has been guilty of until now will count as pardonable if the Greeks leave the eurozone.
It appears that however rocky the road has been, in the long term the government’s strategy of “going it alone” is paying off. Is Fidesz more politically aggressive and more willing to take on conflicts than its predecessors? Yes, certainly. Are there likely to be several similar cases within the European Union in the strengthening competition of the nation? That is on the cards.
Your publication of the article by Julia Lakatos from the “centre for fair political analysis” makes me wonder if you have been receiving threats from the media council. I have no idea who the “centre for fair political analysis” are, but can only imagine that they must be some part of the Fidesz propaganda machine.
Lakatos argues that the actions of the Orbán government have now been vindicated by the elections in Greece and France – those countries are now turning against austerity, just as Orbán did in 2010. The Greeks have chosen to leave the Euro instead of staying in it, Europe is in a mess and we have returned to a situation of each country to their own.
Under such a situation, (she argues), the Orbán government has been right to pursue a taxes on banks, which other countries have followed (according to Lakatos) and nationalization of the private pensions, which is not unprecedented. While the E.U. has been upset by these decisions, the government’s policy of “going it alone” will prove to be correct, she argues.
Please let me offer a more accurate assessment of Orbán’s “alternative policies”.
While in opposition, Orbán promised a flat rate tax, so when he came to power he had to deliver. He soon discovered that such a low tax was unsustainable, given the state of the public finances. Rather than admit this, and risk losing his popularity, Orbán found other ways to raise money.
First the multinationals. Most Fidesz supporters fear foreigners, so what better way to please them than to tax the bastards. Bound to be popular, and raise some money. The problem is these nasty foreigners provide a lot of much needed capital, and many jobs, and if you tax them too much they will simply go elsewhere.
The “nationalization” of private pensions, (although a more accurate word would be theft) simply means that the government is saving a huge pension liability for another generation to pay.
“It appears that however rocky the road has been, in the long term the government’s strategy of “going it alone is paying off” argues Lakatos. Really? While foreign investment to the rest of Central Europe is increasing, foreign capital flows into Hungary are now below their 1997 level. In the rest of Central Europe, bank lending is back to what it was before the crisis while in Hungary it is at 83% of the pre-crisis levels and falling.
I am sure that Hungarians of my generation will not thank Mr Orbán when they retire without a pension. And I am sure that Hungarians of my children’s generation will not thank Mr Orbán when they have to go abroad to find work. Still, at least there won’t be any nasty multinationals in the country.
Mr Orbán’s “alternative policies” do not represent an intelligent, well thought out challenge to orthodox economic thinking. They represent the actions of a nationalist government that has lost control of the economy.
While a small minority of the Hungarian electorate may “buy” these Alice in Wonderland theories about the great Orbán government, I believe that most of the readers of the Budapest Times are probably more intelligent than to swallow such nonsense, and I sincerely hope that we will not have to read more such rubbish in the Budapest Times.
Nationalization of pensions is necessary for the future prosperity of middle age Hungarians. More younger Hungarians today are equipped to travel abroad for jobs, Hungarians who were raised under Communism are less economically viable. Stinking filthy nasty EU tossed Hungary a cookie with a little money and promises of hastened modernity if Hungary reoriented its agricultural production. Hungary complied and this alteration devastated Hungary’s agricultural means of production. After that, Hungary was essentially married to EU. Now It seems that many western economies are stagnant and Hungary is suffering from the effects of that before it can benefit from any EU benefits.
The pieces are in place for younger Hungarians to be more economically viable but until that generation matures, Hungary is going to have to deal with all waves the Western Powers create. These waves include the loss of Russian investments and increased isolation from the former Soviet Union.