The beginning of the end?
The end of democracy as we know it
Although for the Constitution's architects the 2nd of January was supposed to be a day of joy and celebration – marked by a grandiose reception at the National Gallery and a gala concert in the National Opera – the cameras of state media outlets portrayed a tired and gloomy-looking Viktor Orbán whose words most probably stifled the excitement of the sons and daughters of the glorious “national revolution” born in the polling booths on 11 April 2010. Far from claiming victory, the Prime Minister told his followers that the revolution had only begun and that Europe and Hungary can only be saved if we are prepared to renew ourselves (by embracing the cultural heritage which underpinned our economic prosperity: the sanctity of marriage and family life, and the spiritual energies that bind person to person in the church of the national community).
As the ruling coalition prayed hard for renewal inside, approximately fifty thousand Hungarian citizens gathered outside the National Opera (the scene of the closing gala concert) to decry the burial of the republic and the slide into authoritarian rule. Not only was this the largest protest since Fidesz's landslide victory a year and a half ago, it was also the first time that opposition groups – citizens' movements and political parties – joined forces to rally against a regime which has undermined democratic rights and marginalized the country, alienating key international partners such as the European Union and the United States. Protesters – as their 9 banners reveal - are aware that the fundamental changes contained in the new Constitution and the cardinal laws complementing it have been pushed through despite serious warnings from abroad. The President of the European Commission warned the Prime Minister twice that the lastminute adoption of the cardinal law on the National Bank (which strips its president, András Simor, of his right to name his deputies, expands the rate-setting Monetary Council from 7 to 9 members, creates a position for a third vice president, and offers the possibility of dethroning Simor by enabling a merger with the Financial Supervisory Authority) would present a serious obstacle to the re-opening of talks between the EU, the IMF and Hungary on the provision of a financial safety net, which had become necessary after Standard and Poor's and Moody's Investors Service downgraded the country's sovereign credit rating to below investment grade in December. The U.S. administration also sent clear signals through its ambassador, the Deputy Assistant Secretary of State and, most recently, Hillary Clinton herself, expressing concern over the dismantling of democratic rights and institutions, the new law regulating churches, and the Media Council's recent decision to withdraw the license from the last radio station providing a forum for critical voices (10).
However, both domestic and international pressure appears nd to have had little effect for the time being. Although the 2 of January was the very first time that Orbán had to leave an event (the gala concert in the National Opera) through the back door, and despite mounting pressure from markets, the Prime Minister has so far stuck to the line he expounded on 30 December, the day Parliament voted on the last amendments (!) to the new Constitution: “We have set goals for ourselves and we will meet the targets we set out to achieve. We will thank those who come forward to help us and politely stave off those who attempt to divert us from our path (11)”. In what follows I will strive to outline the possible causes behind this intransigence. I will then look at the prospects of Orbán's democratic opponents.
Behind the scenes, some pundits have voiced their concern that the Prime Minister may have lost touch with reality. In Budapest's bars you can hear rumors that Viktor is receiving psychiatric treatment in Austria, and that he may be close to a nervous breakdown. Granting that the Prime Minister may not fully grasp the risks of some of his ill-prepared moves – such as the nationalization of the private pension funds, which has undercut citizens' as well as investors' confidence in the rule of law - it is difficult to believe that he does not understand the fundamental implications of the political game he is playing. This is particularly true given the fact that many of his former allies - and even some of his current colleagues – have come forward to remind him of the consequences of international isolation (12).
Viktor Orbán is obviously aware that his refusal to observe Manuel Barroso's request (to withdraw the law on the National Bank and the stability law, which requires a twothirds majority to revoke the flat tax) will further isolate the country within the European Union. So why does he push ahead? On the one hand, he is probably betting that the embattled Union will not impose sanctions on a renegade Hungary in the foreseeable future. Although the Corriere della Sera has recently claimed (13) that the European Council will initiate a procedure (based on Article 7 of the Lisbon Treaty (14)) to determine whether there is a risk of a serious breach by Hungary of fundamental democratic values (enshrined in Article 2 of the same treaty (15)), the complexity of the procedure which could lead to the suspension of certain rights and the ill-fated Austrian precedent reduce the risk of serious sanctions being imposed in the next year. (And that's as far as anyone in the government appears to see right now.) But there might well be other sorts of calculations behind Orbán's intransigence. He may in fact believe that the current moment – at which the economic crisis turned political – is the best time to push through reforms which may otherwise be impossible to accomplish.
By now it has become quite clear what the Prime Minister meant when a few days before the elections of April 2010 he pronounced the enigmatic words: “Small majority, small change – Big majority, big change”. His “revolution”, contrarily to what many foreign spectators believe, has not been confined to the domain of the polity - that is the set of relations linking citizen to state and citizens to each other. What Orbán's frequent allusions to the sovereignty of nation and state actually conceal is an orchestrated attempt at enlarging the economic niche of the “national bourgeoisie” (defined as entrepreneurs supporting his regime) and extending state control over the economy through the means of direct and indirect pressure, and the nationalization of services and assets in key sectors. The overarching goal appears to be a country less dependent on multinational capital, an economy providing more room for small and medium sized enterprises, and a strong state endowed with the ability of intervening in both the economy and society in the name of the public good. (These goals nicely come together in initiatives such as the newly introduced proposal to establish a state monopoly over the sale of tobacco products, which may only be sold from the 1st of January 2013 in kiosks holding a license issued by the Minister of the Economy, György Matolcsy. The monopoly allows the government to cash in extra money from the sale of licenses; it also cleverly shuts out multinational commercial chains from the tobacco market, while privileging Hungarian franchises, which entertain close relations with the government.) Now, Orbán has little reason to doubt that such a quick and thorough restructuring of the economic edifice would be difficult to achieve in an era of greater stability in Europe. (Multinational capital and European institutions may, under different circumstances, react much more harshly.) There are good reasons to believe that it cannot be implemented even now, but the Prime Minister appears to be convinced that it is worth a shot.
One of the most perplexing pieces of this puzzle is the Orbán- Matolcsy tandem's apparent deafness to signals sent by market forces. When Viktor Orbán came to power the Swiss franc was worth 195 forints. One and a half years later the franc's price has reached a staggering 260 forints. The interest on 10-year government bonds went through the 10% ceiling in the first days of January. The main reason behind this frightening turning away from Hungarian money and assets is that investors are more and more certain that the government's failure to introduce promised structural reforms, coupled with the two billion euro hole punched in the budget by the flat tax and growing fear that the deal with the IMF may not materialize, will lead to another debt spiral and, ultimately, bankruptcy. The fact that the tandem is aware of this threat was made apparent by the hasty decision to end the economic “freedom struggle” (which Matolcsy announced last year (16)) by asking the IMF to provide a financial safety net for Hungary. So why launch an attack against the last independent institution, the National Bank, at a time when markets are already nervous and the country is in the spotlight of international attention? The only rational explanation one can think of is that the coffers of the National Bank – which had been stocked up since the financial crisis first hit the country in 2008 – provide a last resort solution to the spiraling debt problem (17). Although economic experts have warned Orbán both publicly and privately that such a move would send the forint into a nosedive and make interest rates on sovereign debt skyrocket (18), the right-wing majority has maneuvered itself into a room with no openings except for one emergency exit. The introduction of the flat tax (which it cannot revoke without severe damage to its legitimacy) went hand in hand with the imposition of draconian austerity measures on all economic sectors and social groups - except the highermiddle class, Fidesz's core supporters whom it cannot afford to alienate. With the five billion euros “stolen” from the pension funds already spent, and China (whom the government has sought to cajole into lending at lower interest rates) refusing to budge, it looks as though the currency reserves were the only financial cushion the government could count on. Unfortunately for the government, the National Bank's head has so far resisted the pressure to open the coffers – hence the introduction of the new law on the National Bank, a pure instance of political blackmailing.
The situation looks more and more like Catch 22: Orbán believes he has no other choice than to curtail the independence of the National Bank. This rings the alarm in the Commission whose President will probably have no other choice than say no to the continuation of talks between Hungary and the IMF. Without backing from the Monetary Fund, the chances are high that Hungary goes bankrupt in a few months. This would instate a political crisis, which Orbán may not survive. The whole scenario sounds almost absurd, but it is beginning to look possible. Yet, even if the ruling coalition realizes that it is heading towards the wall and pushes the breaks, the government will have lost a great deal of its legitimacy in the eyes of many.
The dilemmas of the democratic opposition
Facing a government, which is driving in the wrong direction on the highway and with the radio turned off, the opposition seems to be in for an easy ride. In my first article (19) written nine months ago I had signaled that Fidesz's tax reform had already fractured the “historic bloc” (an improbable coalition of the pro-capitalist bourgeoisie, and sections of an economically and socially insecure petty bourgeoisie and proletariat), which had lifted the party to power. Less than a year after the parliamentary election Fidesz lost half a million, mostly working class voters. (The main reason was the ill-prepared tax reform, which provoked a drop in wages at the bottom of the workforce (20)). Since then the main governmental party's popularity has further declined: today, only 26% of the total voting population say they would vote for Fidesz. Of those who remember having supported Fidesz in April 2010 only 56% say they would support it now. This dramatic turn of the tide has, however, not been paralleled by a comparable strengthening of the parties in opposition. The numbers show that only the far-right has substantially benefited from the ruling coalition's problems: Jobbik's 21 support grew from 7-8% to 11-12% in the last twelve months (21). The Socialist Party's popularity has hovered around 12-14%. Prime Minister Gyurcsány's breakaway Democratic Coalition can count on 2-3% . The greens (LMP) in the meanwhile have managed to stabilize their support around 4% among the total population. If we only look at those who can name their preferred party, we see the following: Fidesz still leads by approximately 40%, the democratic parties are at 35%, whereas Jobbik has climbed close to 20 %. The democratic opposition's key problem, besides the fact that it is disunited, can be summed up shortly: electoral apathy. In December 2011 only 40% of voting age Hungarians said they would surely turn out to vote, while 40% said they have no preferred party. In other words, these parties have not yet found a way to reach out to voters who have grown disillusioned with the government (22).
This turning away from politics rather than towards the opposition is one of the reasons why the ruling coalition felt that it could push through almost any reform it wanted (including some – e.g. the pension scheme - which actually hurt its core supporters most) without having to consult anyone. Fidesz could also count on docile media outlets to limit discontent and lay blame on the former socialist “comprador elite” (as well as foreign speculators) for the economic woes experienced by the country. But the latest protests indicate that this is no longer enough to keep the most disgruntled segment of society off the street. The fifty thousand people who showed up at the demonstration held on nd the 2 of January come mainly from the ranks of the capital's educated middle-class whose commitment to democracy comes from a personal (or family) history of involvement in the events of 1989/90. Most of them never sympathized with Orbán. More importantly, they have little connection to social groups living outside Budapest, without whom Orbán's “System of National Cooperation (23)” cannot be democratically dismantled. This does not mean that the protests are insignificant. On the one hand, they have provided an avenue for voicing concerns, which had not been heard for twenty years, thereby bringing educated young people closer 24 to the world of democratic politics (24). On the other hand, and perhaps even more importantly, they have brought together a weak and fragmented opposition - the burgeoning prodemocracy movement (led by human rights activists) and left-of-center political parties – and provided it with a common platform: resuscitating the beheaded republic. This is crucial because only a broad democratic alliance stands any chance of defeating both Orbán and the far-right. The first-past-the-post electoral system (together with its 25 gerrymandered electoral districts (25)) introduced by Fidesz clearly spells out the need for the selection of common democratic candidates at the next elections (normally scheduled for 2014).
Before they dive into the discussion of electoral strategies, the parties in opposition need to develop a credible program, which would allow the country to emerge from its economic crisis. This is easier said than done. For one thing, the Socialists, LMP and the Democratic Coalition hold quite different views on such crucial matters as the intervention of the state in the economy, the provision of public services, the priorities of economic development, the reform of the energy sector, and so on. Next, and this is at least as significant, the Socialist party – which had proven to be an incredibly rusty, corrupt piece of machinery while in power - has in no way dealt with its poisonous past and people. If it doesn't get rid of its tainted power-brokers, such as treasurer László Puch; if it doesn't commit itself to a transparent system of partyfinancing; if it continues to act as the barely camouflaged conveyor of economic interests – then there is a good chance that the left-of-center will lose the next elections or (in the case of an electoral victory) repeat the mistakes of the previous left-liberal governments. Third, not only practices have to change – faces do too. This is best highlighted by the so-called “Gyurcsány problem”. The former Prime Minister, who remains deeply unpopular, presents an incredible liability for the burgeoning democratic opposition. While shutting his Democratic Coalition out of the republican platform would be difficult to justify, allowing him too much space is perhaps even worse, for voters are likely to identify the whole alliance with his arrogant personality and mendacious politics.
If these difficult hurdles are overcome, there still remains the audacious task of finding a common candidate for the post of Prime Minister. Here, the key question is whether the democratic parties will be able to find someone capable of mobilizing the silent majority which has slipped into apathy and needs to be convinced that the left-of-center is capable of setting the country on a better track. The republican camp may count on the backing of the eight-hundred thousand people who hold loans in Swiss francs and have not had access to the government's recently introduced repayment scheme (26). They will be reminded day after day of the harm that the right-wing government's policies have done to their lives. So will the almost 1 million working poor who have lost out on the tax reform, as well as the unemployed masses waiting at home in vain for the 1 million jobs promised by the government to materialize (27). The big question is whether the dispossessed, frustrated segments of the lower middle and working class who will turn out to vote will opt for more reserved, but also more realistic politics or rather turn to the social demagogy of Jobbik. This is impossible to tell at the moment. One can only hope that democrats will be up to the task and that the not-so-cheerful roller-coaster ride that the country has been taken on (which has made a lot of us sick) will have had a sobering effect on our fellow citizens…
Kristóf Szombati is co-founder of the green party LMP (“Lehet Más a Politika“).
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