Friday, March 02, 2012

EU and IMF increase pressure on Hungary

From World Socialist Website


By Markus Salzmann
2 March 2012

It is evident that Brussels’ concern has nothing to do with the observance of democratic standards and/or the protection of the Hungarian population against authoritarian measures. When the Fidesz parliamentary majority adopted its new constitution a year ago, criticism from the EU was muted. Some EU representatives expressed their “concern”, but European leaders said little.

 
The right-wing Hungarian government of Victor Orban (Fidesz) is coming under increasing pressure from the European Union and the International Monetary Fund. They criticise Orban for not going far enough with austerity measures and accuse him of curtailing the independence of the country’s Central Bank.
In order to add a democratic veneer to their diktats on behalf of the international financial markets the two institutions have also chosen to criticize some undemocratic aspects of the new Hungarian constitution, although it was adopted over a year ago.

The Hungarian state is near bankruptcy. Both the EU and the European Development Bank (EBRD) have revised downward their growth forecasts for the country and expect a decline in gross domestic product by 1.5 percent this year. Hungary now depends entirely on further loans from the IMF.
In 2008, the country only averted bankruptcy on the basis of such loans.

At the end of January, European Commission President Manuel Barroso, EU Parliament President Martin Schulz, the president of the European Council, Herman van Rompuy, met with the Hungarian Prime Minister in Brussels for informal talks. In order to increase the pressure on Orban, they threatened to implement legal proceedings in connection with Hungary’s budget deficit, which they declare violated constitutional obligations.

The EU Commission has already launched three proceedings, and Budget Commissioner Olli Rehn also stepped up the pressure when he gave a report to European finance ministers criticising Hungary’s efforts to reduce its “excessive deficit”. According to Rehn: “Hungary’s actions were not sufficient to correct the deficit in a sustainable and credible manner”.

The proceedings undertaken by the EU concern the independence of the Central Bank, the Hungarian data protection authority and its judiciary. The EU focus is clearly on the independence of the Central Bank.
According to the EU Treaty, a country’s government cannot interfere in the monetary policy of its Central Bank. In this connection, the EU has criticized the inclusion of a representative of the Hungarian government on the Central Bank Council.

Commission President Barroso said Hungary had “to guarantee the independence of its central bank and its data protection authorities as well as freedom against discrimination for its judges.”
The Commission is determined to take all legal steps necessary to prevent violations of EU law.

EU Parliament President Schulz said he had used the meeting to inform the Premier of “his personal concerns” regarding the new constitution.
He accused Orban of playing a double game. In Budapest, he said one thing; in Brussels, something completely different. He should not assume, however, that EU parliamentarians were stupid, Schultz warned.


It is evident that Brussels’ concern has nothing to do with the observance of democratic standards and/or the protection of the Hungarian population against authoritarian measures. When the Fidesz parliamentary majority adopted its new constitution a year ago, criticism from the EU was muted. Some EU representatives expressed their “concern”, but European leaders said little.


Fidesz is a member of the European People’s Party (EVP), which also includes Germany’s Christian Democrats (CDU) and Christian Social Union (CSU). Orban is the vice chairman of the EVP. Both the new constitution as, well as Hungary’s undemocratic media laws, have been defended by the EVP, and even now there is no evidence that the EVP intends to sanction Fidesz, although this is entirely possible under its statutes.


Criticism of attacks on fundamental rights in Hungary was only raised after Orban challenged the independence of the central bank for his own populist political ends. This is evident from the recent IMF report.

The IMF makes it abundantly clear that further negotiations on allocation of funds can only take place after an agreement has been struck with Brussels. Even Hungarian government officials no longer anticipate an agreement before April.
The IMF calls for swift and ruthless cuts, while ruling out any government interference in the financial system of the country.

The IMF report noted that Hungary had not yet recovered from the crisis of 2008 and 2009, and declared that many government policies had served to shake the confidence of the markets.

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