Palace Coup?
Did the Prime Minister of Hungary pull away or was he pushed?
After a hectic week looking for someone to replace the outgoing prime minister, Ferenc Gyurcsany, it appears that an endgame is in sight. Late Sunday night Gordon Bajnai emerged as the candidate chosen to succeed Gyurcsany. Presently the Economics Minister within the current government, Bajnai had already made it clear what will be in store if he confirmed as prime minister: his program is “going to hurt for everyone”.
In a tragicomedy display of political incompetence, Hungary’s disintegrating left desperately went through over a dozen candidates before finally settling on one. At times the pace in which candidate names changed was so fast that even before a candidate had time to reply they were taken off the list. In the case of Bajnai, he was already suggested as a possible candidate at the very beginning but was rejected by the Liberals.
Yet this wasn’t the only major event of the past weekend. Not only was Gyurcsany preparing to leave office as prime minister, he also suddenly found himself out of a job as head of the Socialist party. To what extent this exit was sudden is debatable. On the one hand there are those feel that the party leadership finally had enough of Gyurcsany and that they sent him packing. Others feel that this exit, along with his decision to resign as prime minister, were all meticulously orchestrated events. In any case, what appeared to be a solid position as both head of the government and head of the party in just two weeks simply had vanished.
Even before his announcement on the weekend, there was speculation that Gyurcsany might leave the political scene. The weekend before he publicly lashed put at the judiciary accusing them of political bias in favour of the right wing opposition. Many regarded this as a sign that Gyurcsany feared eventual legal ramifications for his past activities. Already, a number of prominent left-wing politicians -- some of them with very close ties to Gyurcsany -- have been charged with corruption. The fear is that he soon could be next.
Along these lines, rumours have been circulating that Gyurcsany is about to take on a leading managerial position at Gazprom. These rumours are nothing new. Early last year there was a similar rumour that Gyurcsany had secured for himself a golden parachute for when he prepares to leave his comrades in the lurch while he jumps to safety. These rumours were fuelled when he suddenly travelled to Moscow and signed a deal with Russia for the South Stream project. The South Stream project, a natural gas pipeline which will run through Bulgaria, Serbia and Hungary to Austria and operated by Gazprom, is seen as a rival to the Nabucco pipeline, a planned natural gas pipeline supported by the EU that will transport natural gas from Turkey to Austria via Bulgaria, Romania, and Hungary.
Still, there are many who feel that although Gyurcsany will be stepping out of the limelight, he will nonetheless still be active behind the scenes. The new candidate for Prime Minister appears to reinforce this view. As Economics Minister under the Gyurcsany government, Bajnai helped to develop some of the disastrous policies which have helped lead Hungary to the fiscal mess it’s now in. With only about a year until the next national elections, some feel that there is little Bajnai can actually do except act as a fall guy and deflect much of the blame for the country’s woes from Gyurcsany.
In many ways, the situation at present is reminiscent of Hungary in 1944
Toward the end of the Second World War, the situation in Hungary seemed hopeless. Still, the Arrow Cross under Szalasi decided to take up the challenge in order to help safeguard Nazi Germany’s precarious position. Some 65 years later Bajnai appears to be doing the same for the EU and multinational interests.
Even before the financial crisis had made itself felt in 2008, there has been pressure from the EU and multi-national interests to introduce so-called “reforms”. These so-called reforms, however, had little to do with constructively fixing aspects of the Hungarian economy which were not working properly. Rather, they were aimed at further increasing the influence of global capital within all aspects of the Hungarian economy. A case in point was the health care sector.
For years there has been mounting pressure to privatise public health care. Yet most Hungarians have been sceptical of such plans, and in a referendum in 2008 overwhelming rejected measures which were already being introduced, most notably user fees. This rejection of the government’s so-called reform package was so overwhelming that it ultimately led to a break in the governing coalition between the Socialists and Liberals. As a result, Hungary has been ruled by a minority government ever since.
The need for so-called “reform” in Hungary is now regarded as urgent since the plans of some foreign investors have gone sour. A notable case is that with Hospinvest, a holding company which has been buying up hospitals in Hungary. The activities of Hospinvest are dubious as is the state of its finances. Recently, the European Bank for Reconstruction and Development (EBRD) sold its 30% stake in the company. It’s perhaps no coincidence that the EBRD took this action soon after a court in Hungary nullified the privatisation of a hospital in the town of Eger, the process of which was clearly illegal.
Although calls for “reform” can still be heard, it’s clear that the days of brash privatisation in Hungary may soon be over. The general population have begun to feel for themselves the full effects such policies. Not only has the financial crisis led tens of thousands to lose their jobs, but several thousand are on the verge of losing their homes as well thanks to the predatory lending practices of banks. The government is undoubtedly complicit in all of this. Rather than focusing on the construction of government housing, housing policy was left in the “hands of the market”. Thus, people who could never afford to own their own property were duped into taking on risky loans in order to buy a new home since there was no other alternative.
The desperation of some is such that not only have they lost their livelihood and their homes, but their future as well. Before the true face of global capitalism reared its ugly head, many fell for government propaganda (in Hungary, foremost propounded by the Liberals) that “the market is a better manager” and that the state should be whittled down to near nothing. As a result, many believed that by exchanging their state pension scheme for a private one, they would be better off. Newcomers to the labour market, meanwhile, had no choice: they had to adopt a private pension scheme.
Having lost their jobs and now soon to lose their own homes, some have realised that they won’t even have a pension either. Most if not all of what they worked and saved for is gone since these private pension schemes put the vast majority of their assets into the stock market which has lost two-thirds of its value since its peak in 2007. No promises of an eventual upturn can console those who see before them totally emptiness.
As a result, the number of suicides in Hungary directed related to the financial crisis have slowly but surely been rising. Already Hungarian suicide rates are at record levels and among the highest in the world. Among Hungarian males, for every 100,000 there are 44 suicide attempts. Life expectancy paints an equally grim picture: 65 years is the life expectancy of an average Hungarian male.
Growing wariness toward those with some kind of background in the business world
It’s against this backdrop that Bajnai hopes to push forth the dictates of western capital. As an unscrupulous believer in neo-liberalist dogma, his proposed nomination to the post of prime minister was predictably welcomed by the market analysts abroad. Consequently, observers forecast that his proposed nomination would help strengthen the local currency, the weakness of which has compounded the problems of those suffering from the burden of foreign currency based loans.
If the Hungarian forint is any indication of present trends, then it appears that the proposed nomination of Bajnai has had the opposite effect. Since the week long farce of trying to find a candidate to fill in the space vacated by Gyurcsany, the Hungarian forint has been slowly but surely weakening. On Monday, with the announcement that Bajnai might be the next prime minister of Hungary, this decline quickened in pace.
One reason for this is although Bajnai may fit the profile of the type of person the EU, the IMF, and others would like to see head the new government, this 41 year old entrepreneur is laden with a notorious past. Indeed, Bajnai as prime minister ultimately might turn out to be even more controversial than that of Gyurcsany.
Already his statement that the measures he will introduce will “hurt everybody” is not a good sign. Recent polls show that a vast majority of people, some 76% of respondents, feel that such measures would lead to street protests and civil unrest. It’s quite possible that the prospect of this happening is what led Gyurcsany to step down in the first place.
These same polls also show that people aren’t very happy with the undemocratic backroom wheeling and dealing which has been going on lately. Indeed, a majority of people see a new election as the best solution for combating the present political and economic crisis. Not only this, 38% of people feel that someone with a background in economics was required to lead the country of the mess that it’s now in; the rest feel that this isn’t necessary, that integrity and responsibility is the most important instead.
In Hungary there is a growing wariness toward those with some kind of background in the business world, especially banking. This is something that is not limited to this small Central European country but is apparent elsewhere as well -- and with good reason. In every country there seems to be an emphasis in the mass media on economic and business “experts” to help economies get out of the mess they are in. Yet it’s these very same experts which led countries to the predicament they now find themselves in.
Moreover, most people find it inexplicable and abhorrent that business leaders from large corporations and banks are given huge sums in salaries and bonuses when they had actually brought their enterprises to the brink of ruin. In most other professions, if a person doesn’t do their job properly they are usually fired on the spot; in the business world, however, they are given a bonus. As one observer noted, “what enrages people is that these are the guys who built the bomb, and now we're having to pay them to dismantle the bomb.”
In Hungary and elsewhere, slowly but surely the true face of modern day capitalism is showing its true colours, and people don’t like what they see. In effect, the global business elite which have penetrated into the ruling echelons of most governments around the world operate as a sort of economic mafia. As with any form of organised crime syndicate, all these people belong to a fraternity and know one another. Along these lines, the problem for many governments around the world is that the political mood has become poisoned as a result.
Yet it’s not only this which will hamper a new administration in Hungary, but also the fact that the proposed new prime minister has blood on his hands which he hasn’t been able to wash himself clean of. Throughout the country Bajnai is known as “goosy Gordon” because of his involvement in the bankruptcy of a large poultry processing company a few years ago. Then many goose farmers were left under the illusion that the company was still solvent when they entered into contracts for their animals to be raised and then slaughtered. Shortly after this, the company went bankrupt leaving the farmers in the lurch. The livelihood of many was ruined; some ended up committing suicide as a result. Hence, some consider the notion of Bajnai as prime minister as morally obscene.
Bajnai is not only controversial because of his business past but also because of his political present. As Economics Minister he acted as the liaison between the EU and the Hungarian government and oversaw the transfer and use of EU money in Hungary. Many within the country are not satisfied with the way in which EU funds has been handled by the Hungarian authorities. In one notable case, Bajnai justified the purchase of hi-tech water cannon for use against refugees and illegal immigrants crossing the country’s eastern frontier, when in actual fact the vehicles along with tear gas and other weapons were purchased in response to the anti-government demonstrations in October 2006.
Because of the peculiarities of the Hungarian political system, a person unpopular and controversial as Bajnai can still find themselves at the head of a government. Not only this, it is expected that he will introduce another five ministers from outside of parliament. In this respect, Hungary’s democratic deficit is quite apparent. In essence, a government can be established which isn’t accountable to the electorate since it wasn’t the electorate which had put it there in the first place.
Despite the fact that Bajnai has now received the backing of leaders from the political left his nomination to the post as prime minister is still not assured. Things still can go wrong: for one, the Socialist congress which will formally acknowledge him as their candidate for prime minister will take place only on the coming weekend. Until then, anything can still happen. Also, not all the liberals were keen on his nomination. In fact, they had rejected him the first time round. Thus, when parliament votes for the new government there is still a chance that he won’t receive enough support in parliament.
There has also been some speculation on whether Gyurcsany will actually leave the political limelight. In theory, he is still both the head of the ruling Socialist party and the prime minister of Hungary. If during the Socialist congress this weekend he decides to change his mind and he has enough support, then everything could very well stay the same as it was before. Comments made by Gyurcsany on Monday in where he said that he felt that he had to step down because others were conspiring against him has led some to believe that Gyurcsany may yet change his mind.
Others, on the other hand, feel that the process has already gone too far and, in some ways, is now too out of control for Gyurcsany or anyone else to manage. Some even believe that the entire political circus of the week before was staged and that Bajnai was “the chosen one” from the very beginning. The reason for the political farce last week is because of his political and business past. Thus, people were left guessing to the point of exhaustion of who would be the next prime minister, to the extent that many were happy that someone finally was chosen.
In the end, whether Gyurcsany pulled the process along or was pushed from power is a moot point. If all goes well and a new government is finally established after Easter Monday, it remains to be seen what can be done in the short space of time it has until the next general election which is only a year away. One thing is for certain, however: whatever it is Hungarians are already bracing themselves for the worst.