The release of a recent poll showing that most Hungarians preferred life under communismcaused a mild shock in the foreign community, but provoked little more than a characteristic shrug from Hungarians. After all, under JÃ¡nos KÃ¡dÃ¡r Hungary was one of the least repressive regimes in the Soviet bloc, the â€œGoulash Communismâ€ of the 1980s allowed a certain amount of private business, inflation was unheard of, while the state was able to borrow on Western markets to fund a generous health and welfare system. As the number of Hungarians feeling nostalgic for those simpler times has risen from 53% in the last such survey in 2001 to 61% today, itâ€™s clear that Hungarians are having trouble adjusting to modern-day reality.
Economically, the country has been living in a dreamland since Fidesz got elected in 1998 by running against economic reform. Until recently, no politician dared touch the idea again, until current PM Ferenc GyurcsÃ¡ny made his now infamous speech to party MPs in which he said â€œwe have lied morning, noon and nightâ€ about the economy. That came shortly after winning re-election in 2006 following a campaign in which the growing state and current account deficits remained the â€œelephant in the roomâ€ about which neither leading party said anything.
It was the leak of that speech in September â€“ weeks after Ferenc GyurcsÃ¡ny announced austerity measures and higher taxes â€“ that ignited the now famous riots of autumn 2006.
The irony was rich, then, when similarly candid remarks made by opposition leader Viktor OrbÃ¡n at a closed meeting were leaked to the media. Declaring that his party would win the next elections in 2010 â€“ a nearly universally held assumption â€“ Viktor OrbÃ¡n told the gathering of political science students that there would be no conventional governing for the first two years, and that â€œmany things will hurt many peopleâ€. He said austerity measures will be introduced, and that pensions will be frozen. There were no riots, but coming from an often populist former PM who has resisted any cuts in social spending, this was quite a shock. His image was further damaged by reports that he called GyurcsÃ¡ny â€œa fool, an idiot, letâ€™s face it,â€ largely because of his candidness in his leaked speech of two years ago.
Speaking with what informants described as at times overweening self-confidence, Viktor OrbÃ¡n said he expects to win the next three elections. Rather less plausibly, OrbÃ¡n claimed that he had not really wanted to win the election in 2006, because of the poor state of the economy.
Viktor OrbÃ¡n chose the tabloid Blikk â€“ Hungaryâ€™s most popular daily â€“ through which to apologise for his comments about Ferenc GyurcsÃ¡ny and to deny that he would cut pensions or spending on infrastructure, but his image can only suffer from this.
If OrbÃ¡n was indeed exuding confidence at that private meeting, it was not without reason: His party has a 40-point lead in the polls ahead of their arch-rival Socialists. Moreover, he was basking in the success of the March 9 referendum against daily fees for visits to doctors and hospitals. This stopped the governmentâ€™s health care reform plans â€“ its most sustained effort at structural economic reform â€“ and created the general sense that Fidesz was running the country even though not in power.
More than that, it may have brought them markedly closer to actual power, as it prompted avid reformists the Free Democrats to quit the governing coalition, leaving the country with its first ever minority government. Much of the political class is agog at this novel twist in Hungaryâ€™s young democracy. Many assume that early elections are inevitable and necessary, not least because Fidesz has been demanding early elections and calling the cabinet illegitimate since the leak of GyurcsÃ¡nyâ€™s speech two years ago. Such speculation was further fuelled by GyurcsÃ¡nyâ€™s remark to foreign journalists on May 7 that the government would have no choice but to step down if it lost a vote on the budget or taxes. Though he added that this was â€œnormalâ€ and only a â€œtheoretical possibility,â€ it has excited many opposition MPs who see a chance to get rid of a very unpopular PM.
The mathematics and chemistry of Parliament are against this. Fidesz and the smaller conservative opposition party the Democratic Forum do not have more MPs than the Socialists, so the government cannot be overthrown without the active support of the Free Democrats (SZDSZ).
The small, liberal party is not about to bring the government down, though, as their enthusiasm for structural economic reform, along with some rather unseemly infighting in recent weeks has sent their popularity to a barely perceptible 1-2% (and that among those expressing a party preference).
The other possibility that has Budapest chins wagging is the ousting of Prime Minister GyurcsÃ¡ny by his own Socialist party. Given the low popularity of both party and prime minister, this would make sense, and would nicely echo events of summer 2004, when the party panicked about poll ratings, allowing GyurcsÃ¡ny to engineer the ousting of and then to succeed prime minister PÃ©ter Medgyessy.
The chief argument against such an outcome is that no-one in the party appears strong enough to do it or capable of taking over. Others say that the Socialists will wait on dumping their unpopular leader until they receive a presumed thrashing in the 2009 European parliamentary elections.
Amidst all this political instability the forint has been defying gravity, as well as the forecasts of most analysts, by rising against all major currencies. Despite inflation of near 7% and economic growth barely above 1%, someone keeps buying the forint.
Export growth is part of the story, but a bigger factor is the highest interest rates in the EU. The bond market keeps the currency afloat, while the central bankâ€™s high rates strive to bring inflation down.
It all seems oddly familiar. Thereâ€™s a wildly unpopular prime minister, a government widely seen as power-hungry and corrupt, an economic regime that no-one believes in while the state borrows heavily from abroad rather than trying to get the people to face up to the financial facts of life. In important ways, Hungary has not moved on from the KÃ¡dÃ¡r era at all