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The Moustache of Reform to the EP(P)?

by DoDo Tue Mar 3rd, 2009 at 02:49:25 AM EST

Last week, in the midst of the financial crisis and racist hate crimes, the European Parliament elections briefly grabbed the headlines in Hungarian media. The reason: the choice of a party as the leader of its list.

Lajos Bokros on a photo from Index.

Lajos Bokros became (in)famous (and his surname, which means "bushy", turned a curse word) in 1995, when the Socialists brought him into the then government as finance minister to prepare and conduct a brutal austerity programme. Then he returned into economics, but remained a high-profile advocate of reforms.

As you'll see, the Bokros nomination is definitely not the standard dumping of party human resource no more fit for the front lines. But Bokros is not exactly a popular figure with the wider public, either (as opposed to the politico-media elite): his choice tells more about views of the EU and progress.

Attached: an overview of the EP elections in Hungary.

Ed. note: part of our European elections series. -- Jérôme

Bokros's whirlwind ministership

Bokros even has a link to the current exposure of Hungary and much of Central and Eastern Europe [more on this in a comment] to the financial crisis: he came into the finance ministry from a major bank, which he prepared for privatisation (something he then oversaw as minister...).

The "Bokros Package", his 1995 austerity programme to right state finances, was a mixed bag: most of it was neolib measures like radical social spending cuts and accelerated privatisation, but also import tariffs. At the macro-economic indicators level, it worked spectacularly. At the social level, it brought (further) misery that needed years to get back from. At the political level, it was more or less self-defeating: once economic numbers were improving, to get back some of the lost popularity, the then PM wanted to water it up -- at which point Bokros resigned, just one year after he started.

To expose bias and to give some indication of the man's style, I note the unpopular measure that on the long run hurt the governing parties most: the introduction of tuition fees for students (including yours truly). Perhaps surprisingly, back then the motivation was not neolib dogmatism, but class: the majority was supposed to feel that everyone is making sacrifices because the spoilt brat free-wheeler students pay, too. Of course, instead, there were big student protests with popular support (and lasting resentment after their failure - this was when today's right- and far-right youth emerged).

One of the protests I was at converged at the finance ministry. A cocky Lajos Bokros came out to 'talk to us', faced a minutes-long concert of boos with a wide grin, and shouted his standard fare into the microphone. While he enjoyed a fight, his popularity sank to a spectacular 9%.

Lajos Bokros in 1995, photo from Index.

Who is drafting Bokros and why?

Bokros is a neolib faithful, and following his departure from politics, he preached reforms in the media whenever he got the occasion. He did so from the position of a grey eminence: he became Europe and Middle East Director at the World Bank, and adviser to a number of CEE governments.

Given the above, it should be unsurprising that he had better and closer relations with the (neo)liberal Free Democrats (SzDSz) party rather than where he came from, the Socialists. Yet, to everyone's surprise, it wasn't SzDSz that asked him to lead its EP list. It was a small right-wing party, the Hungarian Democratic Forum (MDF).

Today's dwarf MDF is actually the remains of the main coalition partner in the first freely elected government. On the economy, that government oversaw a brutal recession, all the while favouring slow 'reforms' (i.e. a limited implementation of IMF advices), and the necessity of the 1995 austerity reform was also blamed on this policy, so any friendship is more recent.

The self-image of today's MDF is as 'civilised' conservatives, as a pragmatic West-European-standard alternative to the clientelism of both main parties, to the reckless populism of main right-wing party Fidesz, and the extremism of far-right splinters. This brought them above 5% in the 2006 elections to everyone's -- positive -- surprise (see The Laughing Fourth). They make much about the "credibility" and "responsibility" of policy drafts and political declarations. Their declared model to follow is German chancellor Angela Merkel's CDU.

MDF's EP campaign is to highlight this European-ness in pro-European-ness. And, it appears, they think the Moustache of Reform would be the best symbol of that...

EP elections outlook - Hungary

MDF is hoping for a good showing in the 7 June EP elections thanks to motivated and interested voters. With 22 MEP seats up for grabs (two less than in 2004), passing the 5% limit narrowly can be expected to be worth 1. (Thus MDF's current MEP was less than pleased about being pushed to second place.)

In Hungary, the EP elections are run as single-district proportional elections. Any party or association that collected recommendations from 20,000 voters can run.

Certain to get into the EP (again):

  1. Fidesz (Young Democrats): the right-populist main opposition party in Hungary, member of the conservative EPP in the EU. Like five years ago, the list is led by Pál Schmitt, the Chief of Protocol of the International Olympic Committee; followed by the real strongman of the Fidesz MEP contingent, Fidesz inner cabal member József Szájer. As polls stand, EPP can hope for 14-17 seats from Fidesz.

  2. MSzP (Socialists): sole party of a minority government in Hungary, member of the centre-left PES in the EU. The list is led by the least unpopular member of the government (in a country with the approval of all politicians below 50%), foreign minister and former psychotherapist Kinga Göncz, and followed by two more women. As polls stand, PES can hope for 5-6 seats from MSzP, with the (presently) last safe seat belonging to one of the few true lefties in the party, Gyula Hegyi.

Hoping to pass the 5% margin:

  1. SzDSz (Free Democrats): liberals who left the government last year in Hungary, member of the liberal-reformist ALDE/ELDRP in the EU. The list is (again) led by István Szent-Iványi, a foreign policy specialist and long-time EU politician.

  2. MDF (Hungarian Democratic Forum): centre-right parliamentary opposition party in Hungary, member of the EPP in the EU. No official list released yet.

  3. Jobbik (ex Right-wing Youth Community, with the acronym meaning 'right-hand one' resp. 'better one'; today Movement for a Better Hungary): extra-parliamentarian far-right party in Hungary, with ties to Euronat in the EU, in particular with Nick Griffin's BNP. The list is led by Krisztina Morva, who, after a noted career as feminist lawyer, came out as venom-spewing anti-Semitic street and courtroom activist on behalf of far-right rioters. (The party's recent rise was covered in A photo and a story.)

With slim chances to reach 5%:

  • Munkáspárt (Workers' Party): heir to the hardliner Kádárist communists who split from the Socialists in 1989, mostly an old-timer club around eternal party chairman Gyula Thürmer, who also leads the EP list.

  • LMP (There can be a Different Politics): the latest reincarnation of a Green-Left party, no list yet. (The 2004 incarnation failed to collect enough recommendations to get on the ballot.)

Personally, I hope I can help LMP once they start to collect the recommendations, but my vote may depend on calculations around the 5% limit.

As for Libertas and Newropeans, I haven't yet heard much about their local branches, but will keep an eye on them.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Mar 3rd, 2009 at 02:53:01 AM EST
The sole reference to Libertas Hungary in Hungarian is the Libertas Hungary page. It consists of a short text in Hungarian, containing a dozen spelling and a few grammar errors (though it makes more sense than a Google Translate), and is essentially a recruitment call. Methinks Libertas is like a think tank on crack...

Newropeans did appear in the Hungarian media in the past, thanks to its Hungarian member. But nothing recent on the web.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Mar 3rd, 2009 at 11:12:09 AM EST
[ Parent ]
1. Don't take us under the same umbrella!

At the EU summit last weekend, Hungary's PM Gyurcsány failed spectacularly with his call for a €180 billion rescue package for Central Europe (his words; in much of the Western media: Eastern Europe; in reality: only ex-communist new EU members).

The strongest rejections did not come from Western EU members motivated by unwillingness to pay: they came from supposed fellow beneficiaries, which are worried by being taken under the same umbrella with countries in deeper crisis like Hungary. In particular, Estonia and Slovenia protested that the banking crisis doesn't apply to them at all and their financial sector are more healthy than some EU-15 members.

Recently, protests also came from the Czech Republic that they are not Hungary. In general, everyone said that different countries have different problems. Indeed, for example Slovakia, a country still far from recession and predicting growth even this year, is more concerned about Sarkozy's protectionist call on car manufacturers to return home: Slovakia's recent growth was is no small part due to factorories built by mostly French carmakers.

I would also add that a rescue package to new EU members doesn't solve the problems further East (in particular Ukraine), which could also affect us.

2. The umbrella

The heightened concern about being taken under the same umbrella is in the light of exchange rate developments in the last few weeks: in essence, all the region's currencies fell in concert, whether bad news came from Poland or Hungary or Lithuania.

So, I think there is a general trend in the region, but one about which governments are in denial: to put faith in, and be at the mercy of financial markets.

Financial market trends are not the result of independent rational evaluations of economic prowress and potential. One investor/broker's loss and win depends a lot on what other market participants do, so market movements are herd movements, even without considering misinformation and plain stupidity.

This shouldn't be news: Europe, the whole of Europe is long affected by herd movements disconnected from its own economic reality: after all, the number one factor moving our stock markets seems to be the movements at Wall Street. (In German, there is a common phrase for this I hate to hear again & again from self-unaware commentators and brokers: die Vorgaben aus Übersee = c. "the guidelines from beyond the pond".) But, the governments of Central and Eastern Europe are suddenly discovering and feeling the effects of a herd of Western investors running the other direction...

3. What kind of crisis?

I should emphasize that the fear in the countries most hit by the financial crisis doesn't seem to be a collapse or state default. With the nature of debts (a lot of it owed by local subsidiaries to their owners) and interdependencies, that doesn't seem to be a real fear of governmental and bank decisionmakers. Even Nomura, which has to pay special attention to yen-denominated credits, dismissed this recently.

However, Gyurcsány's plan didn't focus just on rescuing banks, but went into detail on facilitating lending. This is the real fear: that a downturn in lending would starve the real economy (in Hungary, in particular via the throttling of home construction financed with foreign-denominated credit).

4. No ideas

Finally, I note that various governments' reaction to the crisis is a horrible mess of uninspired ideas.

In Lithuania, the new conservative government is fast-tracking its neoliberal shock-therapic reform plans.

In Hungary, the government presented a plan that is a third-wayist mix: a silly combination of reduced company taxes, reduced social spending, and a special regime for people 'left behind'. The proposal includes an income tax reform, which would be two-tiered (eliminating the present middle tier), with tax rates increased for both, as well as the limit of the lower one (in effect, increasing the tax for low-income and high-income people and decreasing for middle-income people).

In Slovakia, the PM, who won elections and is popular with a programme of correcting the social mistakes of prior neolib economic policy, declared that he rejects deficit-based stimulus packages and favours spending cuts instead.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Mar 3rd, 2009 at 03:50:51 AM EST
Heh, this became a diary-length comment...

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Mar 3rd, 2009 at 03:51:11 AM EST
[ Parent ]
Also see comment by ManfromMiddletown.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Mar 3rd, 2009 at 03:55:34 AM EST
[ Parent ]
Herd movements and self-fulfilling prophecies are important things to care about and worry about.

What is so destabilising is the immediateness of financial flows these days - a solution has to be about making these slower, or subject to tougher conditions to be moving around.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Tue Mar 3rd, 2009 at 10:07:41 AM EST
[ Parent ]
Has Bokros changed his ideas in any way in order to join the MDF? ie, has he watered down policies to fit in the party, or is it the party which is willing to go for "bolder" ideas?

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Tue Mar 3rd, 2009 at 10:05:36 AM EST
More the latter. The present MDF says that they would not 'water up' and botch 'necessary' 'reforms' like the Socialists and Fidesz.

I should also emphasize that Bokros still hasn't accepted (or rejected) MDF's call officially; he announced he'll declare his decision on Sunday -- but a newspaper reported that he already did accept it in private.

As for the European angle; I wish half of the  PES, half of the EPP and 90% of ALDE would just form the Market Reform Party. It would be the largest faction, but at least we would know where they stand.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Mar 3rd, 2009 at 10:46:22 AM EST
[ Parent ]
I wish half of the  PES, half of the EPP and 90% of ALDE would just form the Market Reform Party. It would be the largest faction, but at least we would know where they stand.
The reason this doesn't happen is that political parties are based as much on patronage networks as they are on policy or ideology. You can't take 50% of the PES patronage network and graft it onto 50% of the EPP patronage network with 90% of the ALDE patronage network as glue.

But you can have a Grand Coalition government...

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Carrie (migeru at eurotrib dot com) on Tue Mar 3rd, 2009 at 10:51:57 AM EST
[ Parent ]

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