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HUNGARY 2007

FOLLOWING a year of heated political debate and the worst street violence in Budapest in decades, 2007 was relatively calm in Hungary. However, tension remained high between government and opposition with several anti-government demonstrations and some smaller scale rioting taking place on national holidays. But Prime Minister Ferenc Gyurcsany, who had admitted lying to the public about the state of the economy in order to win the general elections in 2006, regained momentum in setting the political agenda. The political focus shifted from demands for his immediate resignation to policy debates and the opposition claims about the incompetence of the cabinet.

Abyss

The government had a difficult task in defending its policies as the economy almost ground to a halt. Although the ballooning budget deficit was reduced to around 5 per cent of the GDP, this came at a high price: economic growth slowed to 1 per cent in the third quarter (the slowest in the EU), inflation peaked at 9 per cent in March, while real income decreased by 5.2 per cent on average. Unemployment also grew to 7.3 per cent. Consequently, Hungarians topped the league of the most pessimistic European nations in a Eurobarometer (EU public opinion) poll regarding their country’s economic situation and outlook.

On 15 February, contributory payments were introduced for patients treated in hospitals and seeing doctors. Many healthcare institutions and hospitals were closed in a prelude to the biggest shake-up of Hungary’s publicly financed health system. From the spring, political fighting centred around the healthcare reform bill. A compromise between coalition parties resulted in what critics called a hotchpotch of private and public health insurance systems. While universal healthcare paid for by taxation was to remain, the national health insurance company was to be broken up into dozens of competing regional insurers, in which private investors could buy shares up to 49 per cent. Following strikes and demonstrations against the reforms, the bill was finally approved on 17 December but President Laszlo Solyom refused to give it assent and sent it back to the National Assembly.

From bad to worse

With the unpopularity of the healthcare reform and the dismal state of the economy already taking their toll, Gyurcsany’s political duel with his arch rival, opposition leader and former Prime Minister Viktor Orban of Fidesz-Hungarian Civic Alliance, left him badly bruised. The popularity of the governing Hungarian Socialist Party (MSzP) and the Alliance of Free Democrats (SzDSz) plummeted to an all-time low, around 25 and 1 per cent respectively, while Fidesz’s support grew to around 65 per cent. Fidesz’s main strategy was to push through its referendum initiative about government policies, announced on 23 October 2006. However, plans for a swift vote in spring and possible early elections as a consequence suffered serious setbacks as the motion was attacked at the Constitutional Court. After a year of legal wrangling, the National Assembly on 17 December approved three out of seven questions to be put to referendum: concerning opposition proposals to abolish tuition fees in higher education, the contributory payments to doctors, and fees for hospital stays.

Hungarian dances

On 23 February, the government privatised Malev, Hungary’s debt-ridden national airline. The winner was Airbridge, a consortium in which KrasAir, a Russian airline, had a majority stake. The sell-off took place despite concerns about growing Russian economic influence in the region. Yet even the prospect of fending off what critics called Russia’s attempts to increase energy dependence in the region was not enough to sweeten a takeover bid by Austrian oil and gas firm, OMV. In June, it doubled its stake in its Hungarian equivalent, MOL to over 20 per cent, starting a bitter fight for overall control of the company and market dominance in Central Europe that was at times reminiscent of historic rivalries between the two countries. OMV, in which the Austrian government and the state of Abu Dhabi had significant stakes, suggested merger, which the management of the fully privatised MOL angrily rejected. On 25 September, OMV launched a hostile takeover bid and said that it was prepared to offer around US$19.7 billion to take control of MOL. On 8 October, the Hungarian defence came in form of a controversial parliamentary act, popularly known as “lex-MOL”, which was designed to protect Hungarian-owned strategic companies from foreign takeovers. On 13 November, the European Commission initiated legal action against the Hungarian government because it believed that “lex-MOL” had infringed European internal market regulations.

En garde

On 3 August, Jobbik, a non-parliamentary, radical right-wing party founded the paramilitary Magyar Garda (Hungarian Guard). Its first 56 members were sworn in by a former right wing defence minister on 25 August. Hundreds joined in the following months at ceremonies and marches where members wore black uniforms with the controversial red-white striped insignia of the House of Arpad, Hungary’s first medieval royal family. The red-white stripes were also adopted by the pro-Nazi Arrow Cross movement during World War II. In December, the Budapest municipal prosecutor initiated the disbandment of the Garda for alleged racism and inciting hatred against Hungary’s Roma minority.

Slovensko

A reference to the Garda also played a minor role in the worst diplomatic row between Hungary and Slovakia for years. On 18 October, Prime Minister Robert Fico of Slovakia said, en passant at the EU Summit in Lisbon, that in Slovakia “nobody could run around in boots spreading illegal views”. Tensions between the two countries, however, had arisen on 20 September when Slovakia’s Narodna Rada reaffirmed the controversial decrees issued by the then President Edvard Benes of Czechoslovakia in 1945. The Benes decrees, which continued to stir emotions in Germany and Hungary, collectively punished ethnic Germans and Hungarians with expropriation and deportation for their alleged betrayal of Czechoslovakia during World War II. President Solyom called Slovakia’s decision as “very humiliating, serious and unacceptable”. Speaker of the Hungarian National Assembly Katalin Szili cancelled a visit to Slovakia in protest.

Eurotrash

On 17 December, Hungary rushed to become the first EU country to ratify the Lisbon Treaty. Popular euroscepticism notwithstanding, the extension of the passport-free Schengen-zone to Hungary on 21 December was a truly joyous occasion for many Hungarians. While the main official ceremony symbolically took place at the Austro-Hungarian border where the “iron curtain” fell, signalling the end of the Cold War, the ending of border controls had a special resonance: it reintroduced free movement in regions, towns and communities that had been cut into two since the 1920 Treaty of Trianon, part of the Versailles peace agreement which had ended World War I.