[A-List] Fwd: [R-G] Hungary Rejects IMF
Suzanne de Kuyper
suzannedk at gmail.com
Tue Aug 3 14:13:03 MDT 2010
---------- Forwarded message ----------
From: Gary Crethers <garyrumor2 at yahoo.com>
Date: Tue, Aug 3, 2010 at 5:58 PM
Subject: [R-G] Hungary Rejects IMF
To: Suzanne de Kuyper <suzannedk at gmail.com>
Hungary Rejects IMFAugust 3rd, 2010
The new right wing government of Hungary has done something that the socialists
were unwilling to do. They have turned down the IMF. They have taken left wing
economic policies and affixed them to right wing social policies. National
This is the article from Terra Nova.
“HUNGARY: Austerity Fatigue sends IMF Home
Analysis by Zoltán Dujisin
BUDAPEST, Aug 2, 2010 (IPS) - Hungarian Prime Minister Viktor Orbán has slapped
IMF in the face, shocking an international community used to news of economic
difficulties coming from this small Central European nation. But most Hungarians
have welcomed it, at least so far.
Orbán is fresh from a smashing election victory in April, in which he obtained a
decisive mandate as his conservative party Fidesz – the Hungarian Civic Movement
— gained over two-thirds of parliamentary seats, giving it unprecedented power
in post-communist Hungarian history.
The prime minister recently said no to a new IMF (International Monetary Fund)
credit line that would have prolonged the current 20 billion euro line granted
in 2008 under a more cooperative socialist cabinet.
It was his intent to keep Hungary’s deficit in balance by taxing banks and other
financial institutions with 700 million euros that IMF negotiators found
unacceptable. But Orbán stood firm in spite of international criticism and
warnings that Hungary’s currency will soon collapse as a result of stifled
The bank tax would compensate for decreased income tax, as Fidesz has decided to
establish a 16 percent flat tax, which it hopes will simplify tax collection and
help reduce tax evasion, one of Hungary’s long-standing ills.
The decision is in line with Orbán’s electoral promises, which called for lower
taxes, support for small and medium enterprises and an end to austerity
measures, and is popular among many Hungarians who resent foreign interference
and see it as a recurrent theme in the country’s history.
Many were also happy to hear that when the IMF delegation first arrived in
Budapest three weeks ago, negotiators were informed that Orbán was in South
Africa enjoying the football World Cup final.
After the failure to reach an agreement with the international organisation,
Orbán noted Hungary had already reduced its deficit from 9.3 percent of the GDP
(Gross Domestic Product) in 2006 to 4 percent in 2009, making it “the world
champion when it comes to cutting spending.”
Hungary’s deficit is among the lowest in the EU (European Union), and its public
debt ratio is slightly above average, but “there are other economic problems,
few people work or pay taxes in this country, and there are fears that without
reforms the country will return to the previous situation,” Zsolt Enyedi,
political scientist at the Budapest-based Central European University told IPS.
So far the financial catastrophe that much of the international financial press
predicted after Hungary failed to renew its credit line has not materialised.
Rating companies have threatened with downgrading the country of 10 million, but
are still hopeful the government will re-engage with the international
But Orbán insists any new agreement will be reached “not with the IMF, but with
Instead, he scored points with many Hungarians who since 2006, before the global
financial crisis and under a socialist cabinet, have been subjected to a variety
of austerity packages.
The prime minister, who also ruled between 1998 and 2002, had been considered an
unacceptable figure for the left due to its relations with the extreme right,
but in the last years Orbán has profited from his turn to the left in economic
matters and from the unpopular governmental performance of the socialists.
“Hungary recently experienced a major loss of trust in the political system and
a highly unpopular government,” Ferenc Laczo, a Hungarian student who
participated in the last elections told IPS. “You cannot expect them to do
severe austerity measures when they are aiming to rebuild confidence, especially
as local elections are not far ahead.”
Hungary will elect local officials in October, but the severely unpopular
socialists are not his main worry.Rather, the prime minister needs to keep the
momentum of what he called a “revolution at the ballots” last April to prevent
an even greater rise of the far-right.
Orbán’s Fidesz has for the last decade been accused of pampering the ultra-
nationalist far right, whose strength unexpectedly grew following the global
The last legislatives in April saw the far-right Jobbik, Movement for a Better
Hungary, obtain 17 percent of the vote, compared to only 2 percent in 2006. The
party built on more than resentment against austerity measures and anti-
capitalism. It also switched from anti-Semitism to anti-Gypsy rhetoric, which
resonates with the electorate on both right and left and is more acceptable in
mainstream political discourse.
Orbán’s honeymoon with the far right is seemingly over, but the government feels
obliged to keep distance from the practices of the previous socialist cabinet,
which for years it accused of subservience to international capital. Otherwise
Jobbik, which took a surprising number of votes from former socialist voters,
can claim there is no difference between the present and the previous cabinets.
Fidesz has also been actively showing more nationalist minded Hungarians that it
is still engaged in symbolic issues dear to the right. A recent decision to
facilitate citizenship proceedings for the over two million ethnic Hungarians
living in the regions outside Hungary’s borders has increased regional tension,
especially with the northern neighbor Slovakia, home to 500,000 ethnic
But Fidesz’s “revolution” also involves an increasing “centralisation of power,”
Enyedi told IPS.
“There have been massive layouts in the civil service, it has tried to create
bodies to control the press, it wants to influence nominations to the
constitutional court, and is planning to rewrite the constitution,” the
political scientist says.
“The government is indeed turning to nationalism and authoritarianism, but those
who voted for them were aware of this,” Enyedi says.”
This is a warning to socialists who have been accommodating the international
financial community. If they won’t take them on, then the right will and that
bodes ill for the future of Europe. National Socialism in the forms we have seen
has led to genocide and war after an initially somewhat benign period of
economic reforms. The question is can the left take on the IMF and the bankers
or are they going to vacate the field as they seem to have done in Hungary by
bending over instead of standing up for the interests of the people. Ultimately
the people have to take charge or they will get screwed by the right just as
they always have been. But when the left joins in the plundering of the people,
what options do they have?
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