Hungarian Prime Minister Gyurcsány steps down – now what?

Here’s another post which isn’t exactly from me, but from my Global Economy Matters co blogger, and Election Resources On The Internet elections wonk, Manuel Alvarez-Rivera. Anyway, here we go again:

Last Saturday’s announcement by Hungarian Prime Minister Ferenc Gyurcsány that he was stepping down after almost five years as head of government may have come as a surprising turn of events, given that he had stubbornly clung to office despite his growing unpopularity over the course of the last three years. However, what turned out to be completely unexpected was the method he chose to end his mandate: a constructive vote of no-confidence in the National Assembly (Parliament) against his own government.

Under a constructive no-confidence motion, Parliament votes to replace a sitting prime minister with another person, rather than simply bring down the government. This mechanism was introduced in the former West Germany after World War II, in order to prevent a recurrence of the parliamentary deadlock that contributed to the demise of the 1919-33 Weimar Republic.

Constructive votes of no-confidence have been adopted by other European countries – Hungary being one of them – since they ensure cabinet stability by preventing Parliament from removing a government from office without having agreed upon a replacement; in Germany there has only been one successful constructive no-confidence motion, which took place in 1982 when the Bundestag voted to replace Chancellor Helmut Schmidt with Helmut Kohl, after the liberal Free Democratic Party – at the time the Social Democratic Party’s junior coalition partner – switched sides and formed an alliance with the Christian Democratic Union/Christian Social Union.

However, Gyurcsány plans to use the constructive vote of no-confidence to install another Socialist-led cabinet, and his government – which has become the third casualty of the global financial crisis, joining the ranks of Iceland and Latvia – appears to have resorted to this unusual maneuver for one simple reason: to avoid an early election.

Gyurcsány’s post-communist Hungarian Socialist Party (MSZP) won Hungary’s 2006 general election in coalition with the liberal Alliance of Free Democrats (SZDSZ), but in September of that year a leaked tape revealed that the prime minister had lied about the state of the Hungarian economy to secure re-election. Gyurcsány never recovered from this revelation, which triggered widespread protests that degenerated into rioting. Despite mounting calls for his resignation after the ruling parties suffered a heavy defeat in municipal elections held the following October, Gyurcsány refused to step down and subsequently won a vote of confidence in the National Assembly.

The Socialist-Liberal coalition government then went on to impose fees for visits to the doctor, hospital stays and university tuition, as part of an austerity package intended to reduce the country’s large budget deficit (the highest in the European Union as a percentage of GDP) and pave the way for Hungary’s adoption of the euro as its currency. However, Gyurcsány suffered yet another stinging defeat when the measures were soundly rejected by voters in a March 2008 referendum. Shortly thereafter, the Liberals left the government after Gyurcsány sacked the SZDSZ-appointed Health Minister; nonetheless, the Socialists remained in power as a minority government with external support from the Liberals. Meanwhile, Hungary’s already weak economy took a sharp turn to the worse, which left the country no choice but to take a $25 billion international rescue package from the International Monetary Fund, the European Union and the World Bank.

Recent opinion polls have Hungary’s main opposition party, the right-of-center Fidesz-Hungarian Civic Union ahead of the Socialist Party by more than forty (40) points; not surprisingly, Fidesz continues to press for an early vote, while the Socialists are hoping that a new prime minister will turn the party’s fortunes around before a general election is held by the spring of 2010 at the latest. However, barring some completely unforeseen development it is highly unlikely the Socialists will be able to overcome Fidesz’s massive lead, although they could conceivably reduce it. At any rate, Fidesz’s large advantage would almost certainly be amplified by the complicated electoral system used to choose members of Hungary’s unicameral Parliament (reviewed in Elections to the Hungarian National Assembly), which combines French-style runoff voting in single-member constituencies with regional-level party-list proportional representation and a cumbersome top-up national list.

By resorting to a constructive vote of no-confidence, which will be submitted to the National Assembly next April 6 (with a vote scheduled for April 14), Gyurcsány has left President László Sólyom out of the process. Hungary’s head of state has made it clear he favors holding an early election, noting that the new prime minister would be in office for at most one year before the next general election would have to be held; nonetheless, he cannot intervene unless Gyurcsány actually resigns.

In the meantime, the Socialist Party – still chaired by Gyurcsány – has proposed three candidates for prime minister: former National Bank governor György Surányi, former president of the Hungarian Academy of Sciences Ferenc Glatz, and András Vértes, president of the GKI economic institute. The Liberals have already indicated their willingness to support Surányi; poll findings suggest SZDSZ could be wiped out in the next election, so the party has little appetite for an early vote. The Socialists have also been courting the moderately conservative Hungarian Democratic Forum (MDF), whose votes could prove to be crucial if they can’t secure support from SZDSZ.

While an early general election remains somewhat unlikely, it should be noted that voters will still go to the polls next June to choose Hungary’s representatives in the European Parliament, and the outcome of that poll could be indicative of what lies ahead.

This entry was posted in A Fistful Of Euros, Economics: Country briefings, Political issues by Edward Hugh. Bookmark the permalink.

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

3 thoughts on “Hungarian Prime Minister Gyurcsány steps down – now what?

  1. Well, this is a time when Eastern block and particularly Hungarian burning it’s illusions. Like the devil on sunlight.
    Nothing left of the Hungarian economic “miracle”.
    Trickle-down or virtual economy, showing it’s
    real face. In a way, I am glad to see how this things are imploding.
    SBA and SAL loans not going to help either.

  2. I have no hope for the world or USA economy. We are still in denial here (USA) and the masses think everything will be fine because we “are doing something”.

    The reality is that the consumers here are in lockdown financially. Those w/o jobs don’t spend. Those with a job aren’t spending in case they lose their job.

    Toxic assets: There is definitely more than $1 Trillion out there and they are woven together and can’t be separated, thus they have less than zero value.

    As the dominos fall, the economy will get much worse before it gets better. We’ve spent more than $2T and it stabled the Dow, but not the economy or the outlook. We will need $6-8T to recover from this mess and we don’t have it and I doubt we can get investors for that level of debt.

    The economy is looking for confidence in the next move by the US, but it isn’t finding it and it won’t until the USA uses the media to explain to the voters how bad the situation actually is.

    We’re in record breaking territory the past several months with some moves (treasuries) having the least value since the Great Depression. Other indicators, go further back than the 1930s, yet we don’t openly talk about a world wide depression.

    It’s just about unavoidable at this point. In another 3-6 months, it will be here. The DOW was trading at 6800, a point of resistence and came back, but it is a big suckers rally and will go through that and on towards 5500 where the P/E ratios actually meant something.

    Even now, the DOW is being propped up by removing AIG and replacing it with Kraft and again when we banned option trading of financials. The longer we prop it up, the worse the fall will be and it will take longer to restore confidence.

    That’s what people aren’t talking about enough – Time, as in options, interest payments and the inertia and waiting period for any plan to work. We are burning through time as fast as we are money. Time is not on our side. How long until civil unrest on a large scale?

  3. Pingback: Which Will Be The Next Government To Step Down? What Will It Mean? | Death of Time

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