Central Europe Review - Hungary: We Have Enough Problems As It Is

We Have Enough Problems As It Is
Viktor Orbán and the new parliamentary year
Gusztáv Kosztolányi

"I'm telling you that it is not worth souring the taste of the food in people's mouths. We have enough problems as it is."

—Viktor Orbán in his speech before the Hungarian Parliament on 4 September responding to criticisms that the one-off bonus payment to health care sector workers was a mere drop in the ocean.

Percentiles speak out

According to an opinion poll conducted in August by Gallup, competition between the MSZP (Socialists) and FIDESZ (Alliance of Young Democrats, the party to which Prime Minister Viktor Orbán belongs) is intensifying, with the coalition party catching up slightly. A second poll carried out by Tárki shows that in the popularity stakes, not much has changed. A third poll, by Marketing Centrum, suggests that ordinary Hungarians are more favourably disposed towards the government in terms of their evaluation of its activities.

Of the respondents in the Gallup poll, 27 per cent would vote for the MSZP and 23 per cent for FIDESZ (compared with July where 26 per cent favoured the Socialists and 19 FIDESZ). Of those certain of which party they would elect, 33 per cent plumped for the Socialists and 28 per cent for FIDESZ.

In the Tárki poll, the MSZP enjoys a four percentage point lead amongst those entitled to vote, which rises to seven points amongst party voters and 15 points amongst party voters committed to making the trip to the polling booths.

The Marketing Centrum poll indicates a greater balance between support for FIDESZ and the MSZP, the most significant change being a four per cent drop in support for the MSZP amongst the respondents as a whole (Source: Magyar Nemzet, 29 August 2000).

A matter of interpretation

In the afterglow of successful St Stephen's Day celebrations (20 August is our national day), Orbán could be justified in feeling his position had been bolstered. In his speech marking the official opening of the new parliamentary year, he abandoned what has been characterised as his antagonism towards the opposition, striking a more conciliatory tone. Setting direct political attacks aside, he preferred a subtler approach cataloguing the achievements of the past six months before setting out his vision of the tasks that lay ahead for the coalition.

His speech assumes all the more importance because of the juncture at which it was held: half way through the term of office, an appropriate occasion to pause for thought and review progress rather than waving a red rag in front of political enemies.

His selection of issues on which to focus attention was predominantly economic and social, partly because real improvements have taken place in these spheres, partly to demonstrate unequivocally that the Socialists do not have a monopoly on concern for the weaker and less prosperous elements in society. He wanted to prove, in other words, that he (and, by extension, his party) has a social conscience.

Since 1998, a number of ambitious aims had been pursued by the country, he reported. He would concentrate on three of these, all of which were linked to tackling the unfavourable impact the changeover to democracy had wrought in the lives of citizens and their families. Not able to resist a dig, he ascribed these to a lack of a true appreciation of the general situation and bad decisions taken previously (by the Socialist-led coalition).

Our achievements—their failures

Until the current government came into power, economic growth and monetary balance had been mutually exclusive concepts: the one was eternally achieved at the expense of the other. FIDESZ wanted to ensure that a proper balance between the two was established and that the untapped latent sources of energy, initiative and the spirit of enterprise amongst the population at large and within the economy could be given an opportunity to find expression in the interest of achieving a growth rate twice that of the EU's.

The second aim, which Orbán classified as the most important for his government, was to ameliorate the position of families bringing up children. For too long, a new addition to the family had been synonymous with running the risk of sinking into poverty. Families had thus lost out more than any other group in society since the changeover. The final aim was that of increasing wages whilst retaining Hungary's competitiveness in the context of a globalised market.

According to preliminary data, economic growth in the first six months of the year would exceed six per cent. Inflation was still single-digit in spite of the high oil prices on the world market and in spite of the rate of depreciation doubling in the countries of the EU.

Hungary, by contrast, had succeeded in slowing the pace of depreciation, albeit not to he extent originally hoped for. State debt had, for the first time in 15 years, fallen below 60 per cent in relation to GDP, thereby reaching the level prescribed by the Maastricht criteria for EU member states wishing to join the single currency. The budgetary deficit likewise continued to shrink.

Attracting foreign capital to Hungary remained a priority for the country and therefore also for its government (Orbán is careful here to identify the coalition intimately with the welfare of the nation, as custodian of its best interests, by implication disqualifying the opposition from this role).

Alongside this, however, there was an equally important concern: that of stimulating small and medium-sized enterprises (SMEs) for the benefit of the economy as a whole.

The six per cent growth represented a qualitatively different phenomenon to the spurts of growth in the past (again he is dissociating the attainments of his government from those of its predecessors). Internal demand was on the increase, people in Hungary were spending more. Income from tourism - healthy for SMEs - had hit a record high growing by 14.2 per cent.

Justified optimism...

The picture in industry was equally encouraging: exports had increased by 32 per cent and domestic sales by 9.3 per cent, both of which betrayed that the contribution made by Hungarian SMEs was beginning to make a difference. The thorny issue of eliminating regional disparities in terms of attracting investments had yielded modest, though positive, results.

Of the 900 million dollars' worth of investments poured into Hungary over the last two years, 35 per cent flowed into the five counties comprising the Northeastern part of the country and there was reason to be optimistic that this trend would be maintained.

During the previous week, the first investment in the Hungarian steel industry for a considerable length of time had taken place with the handing over of a new steel works in Ózd. A guaranteed foreign market for its output existed (Ózd has long been suffering from the downturn in the steel industry's fortunes, racked with unemployment and crisis, so a ray of hope there bodes well for the state of the country as a whole). Motorway building had also commenced, in itself a huge investment in the more backward regions.

...and cautious optimism

As regards another threat to Hungary's survival, demographic decline, there were grounds for cautious optimism based on information from the last six months. The number of marriages had gone up by ten per cent and 1300 more children had been born in the first half of the year compared with the figures for the previous year. The death rate had fallen by four per cent.

Orbán saw this as proof that his policy of making the family the centre of attention had paid off, going on to thank those young people who had decided to start a family or add to their existing families. These changes for the better could only hope to slow down the underlying process and so the government would have to go on giving support to working families with children well beyond the current term of office.

As far as housing was concerned, in the course of a year the number of building permits issued had gone up by 38 per cent. At the same time, 18,000 new flats were being constructed. The opposition had ended its nationwide campaign against the Orbán administration's housing policy having seen the light: the coalition was on the right track.

Orbán proceeded to call upon the opposition and government alike to avoid jeopardising the success of the new housing policy but to help people take advantage of the various allowances to an even greater extent (here he includes the opposition in a worthy undertaking, appealing to its better judgement on a moral plane).

On the wages front, workers in the health care and social services sector had been given an extra month's wages as a bonus. This was made possible by the overall boost in the performance of the economy, achieved in spite of the series of natural disasters, which had struck the country, draining its resources. It was only fitting that the extra payment should be made to these workers by way of thanks for their honest toil. The labour of ordinary citizens had, after all, made the payment possible in the first place.

Grand plans, breakthrough, bright future...

Looking ahead to the future, the government intended to stick to its guns in raising the minimum wage in Hungary to HUF (Hungarian forint) 40,000 (USD 130.6) a month. 80 per cent of the population endorsed the plan, and Orbán hoped that this would be enough to persuade the social partners of the desirability of implementing it.

The general budget and the social security funds' budget would not only be debated together but would also be agreed on for a two-year period, covering 2001 and 2002 (a major break with tradition and hence a real bone of contention). Petty political squabbles should be set aside in the light of expert advice and the interests of the country: the Hungarian economy had to become predictable, stable and reliable so that plans could be laid on a longer term basis and the best means of achieving that was a two-year budget. Such a budget would also facilitate the debate on tax reforms.

One initiative in particular merited parliamentary backing: that SMEs employing less than 50 people should not have to pay any taxes until their income had exceeded HUF ten million (USD 32,643). This would mean HUF 70 to 80 billion in terms of the budget. At the same time, the government also wished to lower social security contributions by three per cent in 2001 and a further three per cent in 2002. That the economy would be able to sustain the loss without this involving swinging public spending cuts was evidence of the general upturn.

Further plans included increasing the amount of support given to families, for example by increasing the income threshold for taxation so that families with one child would not pay taxes until their earnings exceeded HUF 400,000 (USD 1306) a month; for families with two children the corresponding figure would be HUF 643,000 (USD 2099) and for those with three children, HUF 1.35 million (USD 4407).

All the financial resources essential for the implementation of the Széchenyi Plan had been set aside in the forthcoming two-year budget. The agricultural package had been agreed on thereby setting the stage for a breakthrough in 2001 (HUF 180 to 190 billion more would be spent in the agricultural budget in 2001 and 2002 than was the case in 2000).

R and D would be allocated an extra HUF 17.5 billion (USD 57.1 million) with an old injustice removed, as employees of academic research institutes would see their wages put on a par with those of university teachers, and a further HUF 140 billion (USD 456.9 million) would be made available to the health service over the next two years.

In conclusion, Orbán expressed his hope that the Parliament would, in the year ahead, agree on as many decisions as possible, and that those decisions would be worthy of a country with a thousand-year past and a bright future.

...with a lingering shade

In the ensuing debate, Orbán was accused by István Csurka (leader of MIÉP, the extreme right-wing opposition party) of bragging (the opposition did have to carp about something or it would be a tacit endorsement of the enemy!). He retorted by questioning why it was reprehensible to mention the real improvements that had taken place.

Indeed, although it is possible to interpret the entire speech as FIDESZ blowing its own trumpet, any other ruling party would have done the same thing, especially at such a crucial point in the mandate. Orbán consistently allowed ordinary Hungarians to take centre stage in his opening address, praising the too often unsung heroes of our society, giving credit where it is due (and strategically revealing a humbler side to his personality).

When I think of how Orbán actually queues at the buffet during and after his football matches, I cannot help but think there is hope for him yet....and am reminded of the scene in the groundbreaking film A Tanú (The Witness), where comrade Pelikán innocently stirs up the hornet's nest by quibbling with the lone swimmer in the public baths who, as it turns out, is none other than comrade Bástya himself, omnipotent Minister of War, second-in-command of the state and who has had the pool closed to the rabble so he can have it all to himself.

That was the old school style of lording it over us ordinary mortals. Let's hope it is consigned to the past forever.

Gusztáv Kosztolányi, 16 September 2000

Moving on:

Source:

Magyar Nemzet, 29 August 2000;
Orbán's opening address to the Hungarian parliament.