Sunday’s Referendum in Hungary

Posted on March 10, 2008 by Edward Hugh

As I have just indicated in my last post Hungarians went to the polls yesterday in a vote over whether or not to scrap government-imposed fees on visits to doctors and hospitals introduced as part of a belt-tightening adjustment programme, designed to bring what was at the time of its introduction the EU’s largest fiscal deficit back into line with Commission criteria. The referendum, as was well to be expected, resulted in a resounding defeat for the government, and with 94 percent of the votes counted, each of the three questions placed on the ballot received 82-84 percent support, according to data from the national election office OVB. As I say, to the intelligent observer this result should not have been entirely unexpected – the reason being, as I suggest in my previous post, that Hungary’s citizens may well now be suffering from what could best be described as a severe bout of “belt tightening fatigue” – and the outcome may may well initiate a period of political instability in Hungary (signs of a rift between the ruling Socialist – MSZP – Party and junior coalition Free Democrats – SZDSZ – partners were only too evident in an inadvertent moment yesterday, captured live for all the world to see by HirTV) and Prime Minister Ferenc Gyurcsany’s administration will need to struggle hard to maintain the credibility and integrity of its economic adjustment programme in the referendum aftermath, while “punters” in London meticulously dedicate themselves to trying to short HUF denominated assets to the best of their ability (that is when they are not otherwise entertained trying to short the Spanish Banks or Italian government debt). Continue reading →

Black Friday in Budapest?

Posted on March 10, 2008 by Edward Hugh

Question: how would you have known they were holding a referendum on the government’s difficult and unpopular economic adjustment package in Hungary on Sunday? Answer: just take a look at what happened in the Hungarian financial markets last Friday.

It should not have been too difficult to see all this coming, yet financial analysts seem to have been strangely silent on the potential implications of the latest political twist in Hungary’s ongoing economic agony. And where they have not been silent they have generall been trying to downplay the referendum’s importance. Only last week Goldman Sachs’ Hungarian analyst István Zsoldos was busy reassuring us that the coming referendum would have no lasting impact on the evolution of Hungary’s long drawn out economic crisis (although he did admit that the short-term political noise was “likely to intensify”). I beg to differ. I think the consequences of Sunday’s vote are going to be important and long lasting (indeed I had the referendum pencilled in in this post as the third of my potential tipping points for Hungary’s economy, with the the second one being the last interest rate setting meeting of the central bank, when, of course, they did scrap the currency band), and they are going to be important and long lasting regardless of whether or not the Hungarian authorities manage to plug the now growing breach in their credibility and the value of HUF denominated instruments in the short term. Continue reading →

Dreams of empire (plus bleg for our Turkish readers)

Posted on March 8, 2008 by Guy La Roche

Via Dutch weblog Sargasso. Somebody in Turkey posted the following video to YouTube:

This was picked up by Sargasso and one of their Dutch readers posted the following response:

Totally inane, of course, but I think it is rather amusing.

And now my bleg for our Turkish readers. Is the YouTube video Great Türkic State a spoof or is there something more serious, as in juvenile fantasies, behind it? Unfortunately, I cannot read the comments to the vid, hence the question. I know of Turkish nationalism, but I cannot believe this would extend to… China.

By the way, please do not forget to scroll down on our main page and read the latest episode of Douglas Muir’s excellent Frozen Conflicts series.

Update: Huib Riethof has an interesting background article that explains the Dutch video response.

The author of the video doesn’t explain him(her)self. I presume, that he/she followed the same fantasy as the young princess Wilhelmina (born 1880) did during the nineties of the 19th century, when she drew a Dutch imperium over most of Northern Europe, and adding all (former) Dutch possessions in the world (see above).

Frozen Conflicts 3: Welcome to South Ossetia

Posted on March 8, 2008 by Douglas Muir

I’m working through the frozen conflicts in ascending order of awfulness. Two posts about Transnistria can be found here and here.

So, South Ossetia. Little mountainous region up in the back of the Caucasus. Used to be part of Georgia. Declared independence in 1991, just as the Soviet Union was falling apart. There was a shooting war for about a year, which left around a thousand people dead, some tens of thousands ethnically cleansed. When it ended, most of South Ossetia had de facto independence, which they’ve maintained since then with strong support from Russia.

Couple of things you need to grasp if you’re going to understand South Ossetia. One is, it’s not very horizontal. It’s all mountains, with just enough flat ground for one modest-sized town. Almost all of it is over 1000 meters up, about a third of it over 2,000 meters.

Two, it’s not that big. There are only around 75,000 people in South Ossetia. In both area and population, it’s the smallest of the frozen conflicts.

Three, it’s poor. Really poor. I mean, Transnistria is one of the poorest corners of Europe, but Transnistria is Switzerland compared to South Ossetia. It’s basically 75,000 people living on rocks. Okay, okay, not rocks, but this is a region whose traditional economy consisted of driving sheep uphill in spring and back down again in autumn. There’s no industry to speak of. About one-third of the state’s income comes from charging tolls on the single highway. South Ossetia doesn’t export much but timber, sheep and people. Well, and there was a big counterfeiting operation making US $100 bills a couple of years back. But anyway, point is, not much there.

The Ossetians themselves are one of those weird Caucasus groups. Their language is distantly related to Persian; the Ossetians are supposedly descended from the Alans, a medieval nomadic people who were vaguely connected to the ancient Scythians. The Alans had a small empire going in the northern Caucasus back in the 12th century, but then they got badly steamrollered by the Mongols. The survivors fled up into the rugged slopes of the Caucasus Mountains, which is where their Ossetian descendants still live today.

That’s why there’s a North and South Ossetia, by the way: two regions are separated by the spine of the Greater Caucasus range. These are some serious mountains — jagged savage peaks that go up three, four, five kilometers. There’s only one road connection between the two Ossetias. It goes through the Roki Tunnel, which was blasted out by Soviet engineers back in the glorious Soviet heyday of blasting big holes in things. The tunnel is at 3,000 meters altitude and 3.8 km long, and it gets closed by snow every winter. When that happens, there is no way over those mountains by land whatsoever, unless you’re a trained Alpinist with a few days to kill. Ossetians like to talk about the essential unity of the Ossetian people, but geography isn’t really working with them.

Okay, so much for the basics. Now an obvious question: why should you, dear reader, care about South Ossetia? Continue reading →

In which forms are carefully observed

Posted on March 5, 2008 by Douglas Muir

Via Unzipped – who is rapidly emerging as the go-to blog for stuff about the current situation here in Armenia — I see that four opposition Members of Parliament are being stripped of their immunity so that they can be prosecuted. For, you know, supporting that coup attempt. You know. The coup attempt.

There are all sorts of funky wrinkles to the situation. Like the border incident with Azerbaijan yesterday. The Azeris trying to probe for weakness at a time of crisis? Or the Armenian government trying to distract people with a foreign enemy? Who knows? — Or the luxury store downtown owned by a prominent local oligarch, friendly to the government, that was looted during the (brief) rioting. Attacked because he was a friend of the government? Or is it true that all his staff evacuated hours before, leaving the store a provocatively tempting target? And the crackdown: was it done by President Kocharian just to crush the opposition, or was it more of a poisoned gift to his successor-elect? Once you start thinking in terms of agents provocateurs and double motives, suddenly it’s all a hall of mirrors.

Anyway. Yerevan is about 95% back to normal. Some armed soldiers hanging around at major intersections, and that’s about it. Shops are open, streets are busy. Some newspapers have disappeared from the stands — the state of emergency has shut down opposition papers — but you have to look twice to spot it. I’d like to say there’s a strange underlying vibe but maybe I’m just not sensitive enough. Of course, if you talk to people individually… well, even people who supported the government are pretty rattled.

It’s hard to say where this is going, but I’m still inclined to bet “status quo”.

Failed Saving Throw

Posted on March 4, 2008 by Doug Merrill

Gary Gygax died in Wisconsin, age 69.

European power… sounds like a plan?

Posted on March 4, 2008 by Guy La Roche

Just a quick post to point our readers to a very interesting article in The New York Times by Parag Khanna entitled Waving goodbye to hegemony. Hat tip goes to EUlogist and a comment he made over at Nosemonkey’s EUtopia. The article talks about the redistribution of world power after the end of the Cold War and foresees a prominent role for Europe. Plenty of food for thought. Two quotes to wet your appetites (emphasis mine):

In Europe’s capital, Brussels, technocrats, strategists and legislators increasingly see their role as being the global balancer between America and China. Jorgo Chatzimarkakis, a German member of the European Parliament, calls it “European patriotism.” The Europeans play both sides, and if they do it well, they profit handsomely. It’s a trend that will outlast both President Nicolas Sarkozy of France, the self-described “friend of America,” and Chancellor Angela Merkel of Germany, regardless of her visiting the Crawford ranch.

While America fumbles at nation-building, Europe spends its money and political capital on locking peripheral countries into its orbit. Many poor regions of the world have realized that they want the European dream, not the American dream. Africa wants a real African Union like the E.U.; we offer no equivalent. Activists in the Middle East want parliamentary democracy like Europe’s, not American-style presidential strongman rule. Many of the foreign students we shunned after 9/11 are now in London and Berlin: twice as many Chinese study in Europe as in the U.S. We didn’t educate them, so we have no claims on their brains or loyalties as we have in decades past. More broadly, America controls legacy institutions few seem to want — like the International Monetary Fund — while Europe excels at building new and sophisticated ones modeled on itself.

What I found particularly refreshing in this article is Khanna’s focus on the role of “second-world countries”:

They are not in the first-world core of the global economy, nor in its third-world periphery. Lying alongside and between the Big Three, second-world countries are the swing states that will determine which of the superpowers has the upper hand for the next generation of geopolitics. From Venezuela to Vietnam and Morocco to Malaysia, the new reality of global affairs is that there is not one way to win allies and influence countries but three: America’s coalition (as in “coalition of the willing”), Europe’s consensus and China’s consultative styles. The geopolitical marketplace will decide which will lead the 21st century.

I invite you to go and read the article and share your thoughts with us.

Dmitri Medvedev loves Vladimir Putin

Posted on March 2, 2008 by David Weman

Guess what? Medvedev won!

This FT profile is the best I’ve seen, even tells us a little about his upbringing. The key points: Medvedev’s known Putin for a very long time, since they both worked for Sobchak in the early 90s. He’s been a key aide since the beginning, deputy chief of staff, chief of staff, chairman of Gazprom, deputy PM. He’s very loyal. He never sticked his head out, tried to build his own powerbase, or took initiatives.

At least he:

“took on the management of Gazprom at a time when they were a power unto themselves,” says one western executive who worked with him at that time. “People have this image of him being shy and retiring. But if he knows he has the backing of the boss, he can be pretty tough.”

The question is if Medvedev eventually will become the de facto head. The aura and de jure powers of the presidency would be reasons he might. The profile doesn’t make it seem too near at hand, though their close relation could mean he at least will be a genuine junior partner. Another question would be what could happen if Putin would die or partly retire.

Mr Putin needs to stay on as prime minister and as ultimate arbiter because without that presence, hardline groups would “eat him alive”, the senior banker says of Mr Medvedev.

But Medvedev doesn’t seem like a complete nonentity to me. I guess. Really, I make no predictions.

Make your own.

A quiet Sunday in Yerevan

Posted on March 2, 2008 by Douglas Muir

Walked into central Yerevan today.

For those of you who haven’t been following this story: for the last two weeks, tens of thousands of Armenians have been turning out to protest the results of the recent Presidential election. The ruling party’s candidate supposedly won in a landslide, but there’s reason to think the elections were stolen. Yesterday morning, the government ran out of patience, declared a “state of emergency”, and sent a wave hundreds of police into the streets, followed by a second wave of soldiers. There are reliable reports of eight people dead and perhaps a hundred injured.

But that was yesterday. Last night Levon Ter-Petrosian, the losing presidential candidate, issued a statement asking his supporters to stand down. Today…
Continue reading →

A Fistful Of Euros

European Opinion

Monthly Archives: March 2008