Eyes on Hungary: Leading Eastern Europe Away From Socialism, Yet Again
Hungary was an icebreaker for change in Eastern Europe in the 1980s, progressing well after the fall of the Iron Curtain and making a remarkable transition to democracy and a market economy. Hungary's performance was, for years, the envy of other democracies in transition: by 2002 it was attracting more foreign direct investment than all other countries in the region combined. It was among the first in the region to become a member of NATO and the European Union. A country of great intellectual resources and a well-trained labor force, with one of the most stunning cities in the world, Budapest, as its capital.
Eight years ago, a left-of-center government was elected.
It was going to be a continuing success. But complacency set in, lavish overspending on social welfare began, and necessary reforms of the welfare system and government were stalled. Wages rose, and Hungary soon lost its competitive edge. Two years later, in 2006, the social-liberal government of the socialist Ferenc Gyurcsany was reelected -- only to admit weeks later that he had been:
... lying to the public about the economy day in and day out.
Riots and a loss of credibility for his government followed. Corruption reached unprecedented levels; international relations got messy. Hungary drifted politically and economically for the next three years. The country saw the rise of extreme nationalists and long-suppressed anti-Roma (gypsy) and anti-Semitic sentiment.
Last year, the ideological and divisive Gyurcsany was replaced by the pragmatic caretaker Gordon Bajnai. He made clear that he would not run for office a year later, and he didn’t. He was tasked with the leadership of a deeply divided country on the brink of economic collapse, with unemployment rising to unprecedented levels and a looming debt crisis amidst the global economic downturn. Last year the Hungarian GDP fell by 5%.
Bajnai introduced serious cuts in spending, stabilized the economy with the blessing and support of the International Monetary Fund and the European Union, and is today a poster child for crisis management. Breaking with his predecessor, he has been clear about Hungary's relationship to the U.S. and was the first Eastern European country to take in a former prisoner from Guantanamo. He substantially increased Hungary's presence in Afghanistan.
The elections last Sunday were held against this backdrop: a disillusioned society turning away from socialism. The elections resulted in the return to power of the radical-turned-conservative Viktor Orban, a former prime minister. With only a few votes left to the second round, Orban is poised to have a two-thirds (65%) majority in parliament. In U.S. terms, this equates to control of both houses of Congress and the presidency by one party for a whole four years.
The ruling Socialists saw their base shrink from 50% to a mere 19%.
Unfortunately, the elections brought the success of the extreme nationalist Jobbik party, receiving almost 17% of the votes. This phenomenon merits some detailed explanation: with the rise in unemployment and crime rates, with the devastating moral effect of rampant corruption, plenty looked for scapegoats. As it turned out, many of the Jobbik voters are disenchanted, lower-middle class leftist voters. The party campaigned on anti-foreigner, anti-Semitic, and anti-Roma slogans. The magnitude of their appearance is unprecedented in modern Hungary. Fortunately, a brand new party of young people, LMP (A Different Way of Politics), won a handsome 7.5%, winning the sympathy of moderate and liberal voters.
Hungary is ready to leave socialism behind. The incoming Viktor Orban has his task cut out for him -- the worst part of stabilizing the economy was done by the caretaker government, but growth has to be achieved still, and shrewd economic policy is the only way. He must, with determination, fight corruption. He will soon have to deliver some results to the impatient and tired public amidst incredibly high expectations. His challenge is to build national consensus beyond his formidable parliamentary majority.
In order to turn Hungary’s fortune around, he will need to reach beyond his party supporters. He will no doubt continue a strong commitment to relations with the United States, in Afghanistan and elsewhere. He will need to defuse tensions with Hungary's neighbors.
He will need to fight extremism in all its forms, and make unambiguously clear that he will not work with the extreme nationalists.
Hungarians have a special place in history: they were the first to rise against Soviet domination in 1956, and they led the forces of change in 1989. It is time for Hungary to show a pulse and rise to the challenge, and once again punch above their weight in the world.