Archive for the ‘European Union’ Category

Vote now, ask questions later

September 17, 2010 Leave a comment

Prime Minister Viktor Orbán’s Fidesz party is trying to win the October 3 municipal elections using roughly the same tactic that brought it a 68% majority in Parliament last April: Make vague, crowd-pleaser promises without disclosing the dirty details of how they will be fulfilled – or more importantly, who is going to pay for them. There is certainly nothing unusual about politicians making unrealistic promises. But Fidesz has raised it to an art form: When pressed for more information, party leaders not only resort to tried-and-true political subterfuge, they behave as if they have no obligation to explain themselves.

Fidesz’s state secretary in charge of healthcare, Miklós Szócska, last week refused to elucidate his plans to overhaul the medical system, saying it would inappropriate during a political campaign, according to the Népszabadság newspaper.* This is an interesting take on democracy: A sitting government should clarify its budgetary priorities only when the voting is over. The press would have skewered Szócska in the United States, where he earned his master’s in public administration from Harvard University. But his words barely made a ripple on the Hungarian political radar screen.

Leading Fidesz candidates see no reason to defend their positions in public debates – a basic tenet of democracy in developed countries. István Tarlós, the runaway favorite to become Budapest mayor, refuses to go head-to-head with his rivals. His spokeswoman said Tarlós prefers to spend his time with the people of Budapest rather than other politicians. Ákos Kriza, Fidesz’s mayoral candidate in Hungary’s third-biggest city, Miskolc, did not show up for a September 15 debate with incumbent Socialist Mayor Sándor Káli and independent Ákos Hircsu. This means neither Tarlós’ nor Kriza’s ideas will be subject to the kind of scrutiny that only a debate can bring. Of course, both men have a strong precedent: Orbán refused to debate other parties’ nominees for prime minister ahead of the April 11 ballot.

Fidesz is also keeping its plans for the 2011 budget under wraps. On July 5, Fidesz restored an old law that extends the deadline for the government to present its draft budget until Oct. 31 in election years. Without this change, the Orbán administration would have had to send its 2011 spending plan to Parliament before the municipal vote. It is understandable that a brand-new government needs an extra month to get its spending priorities in order. However, Fidesz is facing an EU-imposed budget-deficit target of 2.8% of GDP for 2011, which would be a record-low shortfall since 1995. The budget is therefore bound to bring some negative news, whether it be delays in promised income-tax cuts, lower social spending or sector-specific corporate levies similar to the “bank tax.” Problem is, voters will not know the details until after the polls close.

Nonetheless, Fidesz is poised to sweep every county and nearly every major city on election day, if opinion polls are correct. Popular revulsion toward the main opposition party, the Socialists, is so strong that many Hungarians will stick by Fidesz no matter what they say. Perhaps it would be wise to recall the words of U.S. President Andrew Jackson: “Eternal vigilance by the people is the price of liberty.” In modern-day parlance: “Democracy: Use it or lose it.”

*Szócska’s office declined to confirm or deny whether the Népszabadság quote was accurate.

Alex Kuli

Fidesz’s Deficit-Loosening Ideas – Who Will Be the Disciplinarian?

Alex has just arrived back from Brussels, where he had the honour of posing a question to Gert-Jan Koopman, economic affairs adviser to European Commission President José Manuel Barrosso:

Alex: In Hungary, the people who are almost sure to win next April’s elections are talking about letting the budget deficit slide to 7.5% instead of the 3.9% agreed with the IMF. Since the country is small and is not a member of the Eurozone, would this pose a problem for the European Commission?

Koopman: “That would obviously be a problem… Hungary has a convergence plan and we would hope that Hungary sticks to it as much as possible.”

“It’s true that Hungary is a small country that doesn’t use the euro. But if every member starts relaxing its budget discipline… then we wouldn’t have much discipline anymore.”

This response strengthens our opinion that Fidesz, which is all but certain to win Hungary’s April elections with an unassailable majority, will face huge difficulties if they ignore the 2010 budget-deficit target of 3.9% of GDP and try to implement fiscal stimulus policies. The main barrier is not IMF, as several analysts have suggested, but rather the European Union as it trembles in the shadow of the financial markets.

In our previous analysis we described the situation following the Greek crisis as possibly advantageous for Hungary:

Predictably, the Greek crisis caused a domino effect in emerging markets as investors became skittish. The prestige of the euro has also been seriously damaged. Even so, Hungary should be grateful to Greece. After 2006, Hungary gained a reputation as the “liar of Europe” – not just because of former Prime Minister Ferenc Gyurcsány’s infamous “Oszöd speech,” but because of Hungary’s much higher-than-expected budget deficit in 2006. Hungary can now pass on this title to Greece… By tightening their belts and pursuing strict fiscal policy during the recession, Hungarians have become models of prudence, to such an extent that Greek Prime Minister Geórgios Papandréou attempted to calm the markets by saying he would follow the Hungarian path.

At the same time, we added:

The bad news is that Fidesz, the party that is all but sure to win this April’s election, cannot let the deficit climb back upwards.

Fidesz’s chances of renegotiating Hungary’s $15.7 billion (€11.5 billion) loan from the IMF may be better. We should recall the rumours that the IMF had agreed to allow Fidesz to run a deficit of 5.5% of GDP for 2010. While this hearsay has proven false (Fidesz, still an opposition party, is not a typical negotiation partner for IMF), it is based on the fact that the IMF has been open to modifying the terms of its loans in the past.

Fidesz will have a much tougher time convincing the EU that it needs to loosen its deficit target. Koopman’s comment reflects fears of a domino effect – if Hungary wants to loosen the conditions, everyone else will, too. Given the shock over the Greek crisis, the Hungarian economy’s less-than-stellar reputation, and past experience, fears of Hungary falling back into a state of “fiscal alcoholism” would be justified.

Fidesz seems to be getting the message: The party’s policy wonks are talking less and less about fiscal stimulus and Fidesz’s election manifesto is cautious on this question. On the other hand, Fidesz still hopes it will have some room for bargaining – and they probably do. Former National Bank of Hungary Governor Zsigmond Járai, an economist close to Fidesz, recently declared that a 5% GDP deficit would be acceptable for both the IMF and the EU. Given that Fidesz’s “offer” was 7-8% several months ago, we can see a clear tendency toward improvement. And, since serious doubts have arisen about Hungary’s ability to fulfil its 2010 deficit target, 5% may prove quite realistic.

Even if the IMF and the EU are willing to let Hungary’s deficit rise slightly (8% of GDP is out of the question), the price of their indulgence may be deep and extensive economic reforms – an extremely unappetizing prospect for the next government.

Peter Kreko-Alex Kuli

Women in the CEE countries: still not appreciated?

March 9, 2010 1 comment

March 8 is the day Europe honors its women, regardless of whether they live in the western or eastern halves. But that’s where the “equality” ends. When it comes to political, economic and social status, females are much better off in the older European Union members than in the former communist states.

Roughly one in four MPs in the EU is female. However, the proportion of women lawmakers in the 12 members that have joined since 2004 is 16%, compared to 29% in the EU15. Since 1998, female participation in national parliaments has increased 8% in the old member states; while some new members have followed this trend, the Czech Republic, Slovakia and Romania lag behind. Hungary has even registered a decline in its proportion of female MPs.

Proportion of female MPs in national parliaments
  Hungary Romania Czech Rep. Slovakia Poland Bulgaria EU15 average
January 1998 11.4% 7.3% 15.0% 14.7% 13.0% 10.8% 21.3%
January 2010 11.1% 11.4% 15.5% 18.0% 20.0% 20.8% 29.3%

Perhaps parliamentary elections in spring 2010 will bring change in Slovakia, Czech Republic, and Hungary. But regardless of the outcome, male domination of Hungary’s national assembly is unlikely to change: Less than 8% of candidates in single-member constituencies are female. The problem should not be solved by positive discrimination or quotas, as these tools frequently reinforce negative stereotypes about women (They’re weak, that’s why they need institutional support.) Still, change in gender norms would be beneficial.

The reasons for these phenomena are complex. Underrepresentation cannot simply be explained away by gender discrimination.  Fewer women are interested in politics than men: In the 2009 round of European Social Survey (ESS), a biannual EU-funded poll of societal attitudes, 55% of male respondents said they were “very interested” or “quite interested” in politics. Only 42% of women answered in the same manner.

Gender equality in the workplace is even more important than in politics, as it affects the life of practically all women. Men in the EU still earn significantly more then women, with the average pay gap at about 15 percent, according to official Eurostat statistics. There is no significant difference between the old and new member states in this regard. Lower wages for women are due in part to the difficulty of females getting into management positions. In the CEE countries, this handicap is backed by social prejudices: Nearly half of the Slovakians think women do not always have the necessary qualities to fill such positions, compared to an average 23 percent in the EU15.

Women in the EU12 are also behind their Western European peers in terms of health outlook. Life expectancy is much lower for women in the post-Soviet bloc than in the EU15. Life expectancy for men in the EU12 is even worse. This means more widowed years for women – still not a great perspective.

Communism’s official policy of eliminating differences between women and men in the workplace and politics has clearly failed. Instead, 40 years of state socialism has cemented rigid female role patterns. These countries need years of hard work if they want to change attitudes and thought patterns – and not just among men, but among that section of humanity that is being honoured today. More then 15 percent of Hungarian women agree strongly that when jobs are scarce, men should get preference over women, according to the 2009 ESS survey.


Female inequality is not just an ethincal, but a political risk factor as well. According to World Economic Forum’s latest Corporate Gender Gap Report, leading companies are not doing enough to advance the cause of gender equality. The number of female and male graduates in higher education is almost equal; wasting this potential talent decreases a country’s competitiveness, which has become increasingly important since the global economic crisis struck. Political decision makers cannot afford to damage their country’s competitiveness due to gender inequality.

Right-wing Extremism: a New Threat to Europe

February 15, 2010 1 comment

We have recently released the results of our latest research on right-wing extremism. The fact that right-wing extremism is on the rise comes as no surprise. More and more extremist political parties are achieving political success in local, national or European elections. What we were interested in was the social background of extremism: How deeply is it rooted in different societies in Europe and beyond?

The most important conclusion is that while Western societies seem more or less reluctant to embrace such ideologies, some of the new EU members in the east are highly predisposed to right-wing extremism, as are countries beyond the EU’s eastern borders.

This phenomenon poses several threats to the European Union:

  1. A new division is evolving between East and West. It is similar to the Iron Curtain, though its borders do not exactly follow the original. It is not made of barbed wire, but of ideas and politics. Still, it is capable of separating Europe’s two halves for a very long time.
  2. Mainstream political parties in Central and South Eastern Europe  are reacting to the new popular demand for extremism and may apply some of its features to their own political agendas. It’s not that these mainstream parties will become extremists themselves; however, since politics is about hunting for voters, moderates will have to attract more and more extremists to win elections.
  3. Common features of this new political extremism are Euroscepticism and pro-Russian foreign policies. Both undermine the core values of the European Union.

So what now? Countries that are most infected with right-wing extremism have developed different strategies to cope with it, but none of them seems to work. It is therefore extremely important that decision-makers in Brussels not leave these young democracies to their own devices. Brussels should:

  1. Put more effort into analysing and understanding the rise of right-wing extremism;
  2. Understand that this is not a problem of faraway exotic countries. It will punch Europe in the face sooner than expected;
  3. Set up a network of  experts from outside the political sphere and help them cooperate with one another;
  4. Collect best practices on coping with extremists;
  5. Create a European strategy to halt the spread of extremism;
  6. Tell Central Europe’s mainstream political parties very clearly not to meddle with extremism.

The rise of extremism represents a wake-up call to Brussels.

Krisztian Szabados