No surprise: György Matolcsy will be the new chairman of the Hungarian National Bank

One can only marvel at the speed at which nominations for high positions are approved in Hungary. Early this morning we learned that the inevitable had happened: György Matolcsy was nominated to be the new chairman of the Hungarian National Bank, with his post as head of the Ministry of National Economy to be filled by Mihály Varga. Two or three hours later we heard that the parliamentary committee had found both candidates to be outstanding. On Monday, I’m sure,  the House will confirm them and members of the government parties will stand and rhythmically applaud the excellent job Matolcsy did in ensuring Hungary’s “economic success” in the last three years.

How subtle. The capitons read Greetings to Mr Matolcsy / At last the Hungarian National Bank is in Hungarian handsPhoto falramentaparlament.blog

How subtle! The posters read: Greetings Mr. Matolcsy / At last the Hungarian National Bank is in Hungarian hands
Photo falramentaparlament.blog

Although the final result was never in question, there was some heat during Matolcsy’s confirmation hearing. Even outside of the chamber the MSZP spokesman called Matolcsy a “ridiculous public figure”; inside, members of the opposition questioned Matolcsy’s suitability for the post. Fidesz members of the committee welcomed Matolcsy’s assurance that he plans to pursue a conservative monetary policy. He emphasized his determination to keep inflation in check and promised to stop the spread of bank loans in foreign currencies. On the other hand, Tibor Kovács (MSZP) envisaged a bumpy road for the new chairman because of his reputation. His appointment holds not so hidden dangers for Hungary’s financial stability, he added. Gábor Scheiring (PM = Párbeszéd Magyarországért) also had a few harsh words to say about the appointment of the least successful member of the cabinet to be head of the central bank. MSZP, Jobbik, and independent members voted against him but naturally it didn’t matter.

During the hearing Matolcsy talked a lot about the sins of his predecessor, András Simor. According to him, the Hungarian National Bank didn’t fare well under his six-year stewardship; Matolcsy promised a bright future for the bank over the next six years. Well, we know how much Matolcsy’s predictions and promises are worth. Otherwise, he tried to calm nerves as much as possible and gave the impression of a man who knows his job. The trouble is that Matolcsy really doesn’t have any banking experience. But he sounded, at least on the surface, knowledgeable and responsible with a couple of incomprehensible sentences. He promised to achieve price and financial stability while supporting the government’s economic policies. He added that he will safeguard the independence of the Hungarian National Bank, something a lot of people doubt at the moment, both in Hungary and abroad.

Matolcsy’s nomination and confirmation hearing didn’t roil the currency market. As almost every commentator pointed out, the markets had already priced in Matolcsy’s appointment. But even if the forint didn’t budge, credit default swaps (CDS) did rise. During the month of February they fluctuated between 290 and 305; today they moved up to 310. Not a steep rise but perhaps significant nonetheless. In any case, according to domestic and foreign commentators Matolcsy will be cautious for a while, testing the water before he makes any significant changes in the bank’s policies. But then he will probably stir things up. For example, in the past he talked about the desirability of weakening the Hungarian currency. Peter Attard Montalto of Nomura is convinced, as are most economists and opposition politicians, that the Hungarian National Bank will cease to be an independent institution. Montalto is also certain that Matolcsy will make decisions that may not be beneficial to the Hungarian economy but will further the political goals of Fidesz.

We don’t know yet what will happen to the two vice chairmen. Will they be fired or left in place for the sake of appearance? The two current vice chairmen always voted with the chairman, but since the appointment of five extra members of the monetary council they were consistently in the minority. In the past Viktor Orbán insisted on appointing a third vice chairman, but that plan was thwarted by András Simor and the European Central Bank. Now it seems that a third vice chairman will be appointed after all. Matolcsy handpicked his favorite man from his ministry, Ádám Balog, assistant undersecretary in charge of taxation. Balog was instantly replaced by another government official. So, the appointment of a third vice chairman has been in the works for some time.

Some people jokingly call Matolcsy’s economic theories “esoteric” in the sense that few people understand them. Matolcsy wrote several books that presumably offer some inkling of his thought processes. In the near future I will try to summarize what I can find on the subject. One of his “discoveries” is that “success is sometimes invisible, sometimes incomprehensible, unusual, or at times painful.” Here are few of his ideas: Only people matter and not governments, companies, or financial institutions. What matters is what people believe in, what moves them and how they behave. So, what is important is whether success and accomplishment are associated with us.

These are just a few of Matolcsy’s ideas that one can only hope he will not carry with him to the Hungarian National Bank.

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42 comments

  1. God. Those two peace marcher sheep on the picture … Even if they would be dying from hunger they would still refuse to read about basic economic facts.

    They remind me on this classic Hungarian skit. English subs by me (make sure the caption is on). An interview with a politician.

  2. I just would like to know, if someone asked that guy with the sign (or those who put him up to this), what would he answer to the question: why wasn’t the National Bank in Hungarian hands until now, and in whose hands was it?

  3. gdfxx :

    I just would like to know, if someone asked that guy with the sign (or those who put him up to this), what would he answer to the question: why wasn’t the National Bank in Hungarian hands until now, and in whose hands was it?

    I have no doubt that he would tell exactly what he has in mind.

  4. Personally, I do feel sorry for those people with the sign. I am serious. How misguided and cheated you must be to actually march out and support Matolcsy the Hungarian, while the current Hungarian government gives away tax payers money to the churches, to “save” the cities, to give out as paycheque for contracts to Fidesz buddies. How much you must be in the darn not to know how much money those “foreigners” (like the EU) spent on Hungary to rebuild the streets, renovate buildings, and improve Hungarian life in general. THose people should be taken in a “Back to the Future” style to see, the what if… Maybe, just maybe, they would come to their senses.

  5. During the hearing, was Matolcsy asked specifically about his policy plans for the foreign currency reserves? They are, after all, the bank’s instrument of last resort for stabilizing the HUF and the attractiveness to the government of gaining access to those reserves for immediate use in the budget is both self-evident and incredibly dangerous.

  6. Eva S. Balogh :

    gdfxx :
    I just would like to know, if someone asked that guy with the sign (or those who put him up to this), what would he answer to the question: why wasn’t the National Bank in Hungarian hands until now, and in whose hands was it?

    I have no doubt that he would tell exactly what he has in mind.

    Rhymes with shoes.

  7. Guys, worry not, the recession will continue.

    There are no monetary or budget policies which could reverse the trend, the problem is much more fundamental.

    Hungary is a small and very open economy, the policies which might work in the US (a huge and rather closed economy, meaning that a much-much higher percentage of GDP is generated by domestic consumption than in Hungary which is much heaviliy dependent on export and import, with an effective global reserve currency) will not work (and have never worked) in Hungary.

    Investments are low and are still (!) in decline, this means a sure GDP decrease in 2013 and perhaps beyond (crazily, it is the agriculture, with less than 4% of the GDP, which could be our ‘saviour’ as last year was very bad, so this year a 40% increase, which is not unlikley if we have a normal year, could mostly offset decrease in industry and services).

    The issue is trust. Nobody, not even Fidesz-leaning enterpreneurs trust this regime (the Simicska-Nyerges-Patonai-Nyúl-Demján line is different, they ae not enterpreneurs, they are simple oligarchs stealing money).

    The GDP will not increase just because we will have more loans from the National Bank to build new – unprofitable – swimming pools and hotels or spend currency reserves on pension increases just before the elections.

    I am of the view that GDP and broader economic issues anyway don’t matter, what matters is to try to figure out legal ways (remember orbán and Co are lawyers, see Kim Sceppele’s post on Paul Krugman’s blog) to purchase votes.

    Nationalising energy companies (another opportunity to steal, so its a good idea) from NBH loans so that energy prices could be lowered (and the companies would go bankrupt in a couple of years, but that is beyond the elections, right? so we will deal with it later), increasing salaries for – reliable – state employees and pensioners.

    It’s a pretty simply policy, but remember Orbán is the sole decider and he has know idea about or any affinity to economics. It’s a realm he cannot comprehend and in fact he hates it.

    He only cares about power and knows exactly that ‘smart’ governments were reelected even in times of crisis (Milosevic, Mugabe, each many times, Berlusconi almost again, let alone Putin or Lukasenko and so on).

  8. Jean P :

    tappanch :
    Constitutional Revenge
    Kim Lane Scheppele, Princeton University
    http://krugman.blogs.nytimes.com/2013/03/01/guest-post-constitutional-revenge/

    If this professional analysis by Scheppele cannot wake up the EU nothing can.
    Then Orban will be free to finish the job by adding to the constitution his appointment as lifetime regent of Hungary. Republic, kingdom or whatever.

    It is a shame, really, that the EU chooses to bury its head in the sand, instead. I don’t care about the talk how the EU has no real power in this matter, and that it is up to the Hungarian people to deal with this regime… Hungary is part of the EU, and if the EU tolerates this kind of shameful political manipulation of a democratic constitution and democratic principles within its community, it looks bad on the EU as well (not just on Hungary). Not to mention that it sets and encouraging example to follow to all wannabe quasi-dictators in the EU.

    The EU may not have real power in this matter but has tremendous symbolic power and they could voice their disapproval in more certain terms.

  9. Great article from professor Scheppele! I strongly believe that her writings had an influence on the constitutional court. They are not alone. The world is watching.

  10. By the way the two turul troopers on the photo are from the Conquest 2000 Association (Honfoglalás 2000 Egyesület).

    The same group nominated Rózsa Hoffmann last year to become president after Schmitt was bumped for cheating on his thesis. According to them “[Hoffmann] the educated, highly skilled professional, who speaks languages and has a representative appearance would have been a perfect choice.

  11. gdfxx :
    I just would like to know, if someone asked that guy with the sign (or those who put him up to this), what would he answer to the question: why wasn’t the National Bank in Hungarian hands until now, and in whose hands was it?

    Well the fellow has it from Orban,” the Nation cannot be in opposition”. According to this logic, those who do not like Orban-Matolcsy economic policy are not Hungarians.

  12. This seems to be a typical attitude of the right wing (also especially in the USA):

    If you don’t agree with us/our politics – you’re an enemy of the state/nation/people!

  13. The first measure taken by Matolcsy as the head of the national bank (though he hasn’t even started officially) is to change the operational code of the organization (“mukodesi szabalyzat” in Hungarian). The national bank had a multilevel- hierarchy, where the leader of each level was responsible for his own unit (hiring decisions, expenses, etc). Matolcsy’s first decision was to absolutely centralize the system, so that now everything needs to go through him, requiring his signature. Massive layoffs are expected at the National Bank.

    So the destruction of the last professionally competent institution in Hungary has begun.

    http://www.origo.hu/gazdasag/20130302-matolcsy-gyorgy-agressziv-mnbfoglalasra-keszul.html

  14. I’m not sure, but from the article it sounds like Matolcsy changed the National Bank’s operational code a few days before he was even officially nominated for the bank’s presidency, in his capacity as the minister for economy and finance…. I’m not sure how he could do that… does this fall under the competency of the ministry? If yes, that’s very neat…. so in Hungary, if you are a minster , you can use that power to change a few rules here and there that will make your life in your new position so much easier.

  15. The resident Fidesznik on pol.hu proudly declared:

    “M will cleanse the MNB of Simor’s men”…

    Typical Stalinist party language – it doesn’t look good for Hungary …

  16. An :
    The first measure taken by Matolcsy as the head of the national bank (though he hasn’t even started officially) is to change the operational code of the organization (“mukodesi szabalyzat” in Hungarian). The national bank had a multilevel- hierarchy, where the leader of each level was responsible for his own unit (hiring decisions, expenses, etc). Matolcsy’s first decision was to absolutely centralize the system, so that now everything needs to go through him, requiring his signature. Massive layoffs are expected at the National Bank.
    So the destruction of the last professionally competent institution in Hungary has begun.
    http://www.origo.hu/gazdasag/20130302-matolcsy-gyorgy-agressziv-mnbfoglalasra-keszul.html

    Localized Führerprinzip at work.

  17. wolfi :
    This seems to be a typical attitude of the right wing (also especially in the USA):
    If you don’t agree with us/our politics – you’re an enemy of the state/nation/people!

    In the USA the right wing has a whole range of representatives, from conservatives in the classic sense of the word (such as the late William F. Buckley Jr.) to neo-Nazis. I think the majority of this non-homogeneous group does not agree with this statement. They are the most ardent supporters of the Constitution, a document that that assures freedom of speech for everyone, even when that speech is detestable.

  18. An: ” I don’t care about the talk how the EU has no real power in this matter, and that it is up to the Hungarian people to deal with this regime… Hungary is part of the EU, and if the EU tolerates this kind of shameful political manipulation of a democratic constitution and democratic principles within its community, it looks bad on the EU as well (not just on Hungary).”

    I think I am not the only one who wrote this repeatedly: also the EU has to be approached not from some romantic picture of mature democracy on the EU level as well as in all member states, ability to provide high standards even against the will of strong vested interests and so forth, but as an organisation that is subject to a number of influences and constraints. And that has been built on the expectation that all member states indeed do adhere to the most basic principles – because they really believe in these principles. The problems of Hungary are also not the biggest problems of the EU currently. The problems with the currency, with the UK, Italy or Greece appear more urgent than the problems of a country where the population has (out of whatever reason, fear or intent) provided the current government with a 2/3 majority in free elections and also since then has appeared quite content with the outcome (if they do not leave). Democracy is not a consumption good to be provided by the state or international organisations, it is something that people must want and actively work for. It is unfortunate if people do not care about possible and realistic ways out of this regime. To say: but the others must do something that will stop OV, independently of what they are designed to do, and independently of the support that such action would get from Hungarians themselves, sounds good but is quite mythical.

  19. @Kirsten: I am not saying that others should do something for Hungary, or for Hungarian democracy, just that the EU should actually raise its voice in a case of an obvious breach of those democratic principles, which are, as I understand, the foundations of the community.
    If they let this pass, the talk of the EU being founded on democratic principles is a joke and a hypocrisy. And they should protest OV, not because I expect them to stand up for Hungarians (Hungarians should stand up for themselves, in that we agree), but because they need to stand up for the democratic values of the EU.

    Sure, the EU have more important things to do, more pressing problems to solve, and there is plenty of good reasons why they don’t get involved in a more vocal manner. But how is this reasoning and behavior is different from the behavior of the average Hungarian? Just like the EU, the average Hungarian also has plenty of good reasons why he/she doesn’t stand up to the regime (fear of losing one’s livelihood being one) and more pressing things to do (finding a job, finishing school, figuring out how to pay next months’ bills). I think, from a moral point of view, the lack of a more vocal protest on the EU’s part is just as condemnable as the lack of a more vocal protest on the part of the Hungarian population.

    The EU behaves EXACTLY like the average Hungarian… duck and cover, hide head in the sand, and hope this will pass and till then, figure out how we can live with it. And once again, I emphasize, I don’t expect the EU to stand up for Hungary, but I do expect the EU to stand up for the EU and for those democratic principles which it claims to value.

  20. An, I do not say that the EU is an exemplary organisation in many respects. But what should be accepted first is that matters are as complicated as you described above and Europeans would really do themselves a favour if they eventually agreed what (except a place from where you can get money) they want the EU to be. The average European does not have very elaborate opinions on that. The EU has serious defects in its design to deal with problems of monetary union, energy policies, democracy within its member states and the like. I am certainly not opposed to more integration, including more rights for “Brussels” to intervene in countries when this appears urgently necessary (Hungary, but also Greece), but to arrive there you need the countries and the populations to agree on what exactly this shift of competences to Brussels should encompass, and – not less crucially – you need the support of the 27 or from summer 28 countries, either from the populations in referenda or at least from their representatives. This is where “Europe” stands.

    And as regards the point that the EU behaves exactly as the average Hungarian does, I my view there is quite a difference in the options that you have if you act within domestic affairs and international affairs. There is a crucial difference. OV and Fidesz have been able to change the system because people in all relevant places have eventually retreated. From outside, and not only because OV has used minimal violence in his coup, it appears that IF people had a SHARED VISION and if they UNITED, the whole thing would be over within a few days. From outside you can remind OV that it is wrong what he does, require that some parts of the new laws are abolished to be eligible to funds (which Hungary more or less did), you can use the “nuclear option” and you could – against all treaties – intervene militarily. There is no doubt that OV would not survive such intervention but how does that relate to “European principles”? Currently, the European fora are still open to Hungarians, so that e.g. parliamentarians from MSzP in the European Parliament are still able to easily spread their information about what is going on. This should not be underrated. The European institutions currently are overwhelmed by other topics, and yet you should – as in the case of domestic Hungarian affairs – focus on the very practical issues of mobilising people and offering some practical solutions. That makes sense in the EU and in Hungary. And to repeat this thought also, the most important advantage for me of Hungarians managing themselves (even with support from outside) is that the general feeling of “we ourselves cannot achieve anything” will be replaced by something more constructive. Without the feeling that people want and are able to govern by themselves, it is difficult to build a democratic society.

  21. All this talk about the EU doing something misses one rather important issue – who or what exactly is the ‘EU’ in this context? Who is it that we expect to ‘do something’?

    I only have the vaguest idea of how the EU works, but I suspect that it is far from simple to work out who we would expect to be the one (or the committee) to seriously criticise Hungary. Various ‘heads of departments’, ‘ministers responsible for’ or chairs/representatives of committees might comment on Hungary, but they are only able to do this within the context of their specific brief/subject.

    At the parliamentary level, presumably any attempt to censure Hungary would run into political problems, with the right tending to defend one of their own. And at the country/member level, I suspect you are never going to get all the Central/Eastern countries to vote against Hungary.

    So, we need someone who has a wide enough brief to be able to comment on Hungary generally, and who isn’t held back by left-right political considerations, or country level politics. Does such a person exist? And, if they do, wouldn’t they have enough on their hands already with the Euro crisis, Greece, Spain, Italy, the UK, etc?

    And, as I’ve said before, what exactly could they do anyway? A firm statement condemning Fidesz and Orbán might be music to our ears, but Orbán would immediately rebuff and ignore it and nothing would change. Beyond that, any action taken against Hungary would be fraught with problems – not least the very high chance of it backfiring.

    I’m afraid, if you’re waiting for the EU cavalry to come charging over the hill, you’re in for a very long wait.

  22. Thirteen years ago the EU initiated some “sanctions” against the Austrian government for its involvement with Jörg Haider – mainly ceremonial, but effective:
    http://www.wsws.org/en/articles/2000/02/haid-f22.html
    They just refused to speak with him …

    PS:

    Many right-wingers believe in a conspiracy: Haider’s fatal accident was somehow arranged y secret services, the “usual suspects” are the Israelis.

  23. Slightly Off Topic.
    Last Sunday we were walking in Szentendre for the first time in two years. Long Coffee 550Ft (2011: 350Ft). One ice ball 200Ft. (2011: 150Ft). Lots of people walking, but no sitting in cafe, pubs, etc.
    Btw More than a year ago I mentioned that the koscma went bankrupt, than an ital diskont took over, and after three months there was a 100Ft shop. This shop just finished this morning.

  24. To those who write apologetically about EU´s nonenforcement of its own rules.

    The EU was invented after the Second World war by statesmen who were looking for a way to end the eternal wars between European countries. They thought that the best solution would be to create an organisation dedicated to mutually beneficial cooperation between the countries. They realised that such an organisation would be unstable if the member countries were unstable. Therefore they made conditions for membership including democratic government and sustainable public spending.

    The EU became a success with respect to its original purpose. No member states of the EU consider each other as enemies anymore and they don’t go to war against each other. Since the end of the Second World War Western Europe has had the longest period of internal peace ever, but now the EU is threatening to fall apart because it has failed to enforce its own rules. European peace will fall with it.

    As utopian thinkers usually do, the fathers of the EU believed in the fundamental goodness and decency of human nature and failed to foresee that some member states might systematically break the rules while insisting on their rights to the last decimal. Breaking the rules on economy is not reserved to Greece and other Mediterranean countries. The decisive powers of the EU, Germany and France, have done it with impunity. The Greek crisis could have been nipped in the bud, if they had not done it. The EU could not take action against the Hungarian government creating a media monopoly because it had long time ago allowed the Italian government to do the same.

    The apologetic claim that the EU has no means to hit the transgressors is nonsense. The real explanation why the EU does not enforce its own rules is that nobody who can match the leaders of the greater powers are ever allowed to hold leading positions in the EU. We cannot change the leadership of the EU but we can at least ask the existent leaders to rise to their responsibility.

  25. Exactly, Jean P. Thanks for explaining it so clearly.

    Paul, I’m not waiting for the EU cavalry; that wasn’t my point. The EU declared to stand on the foundation on certain democratic values. If they don’t have mechanisms to ensure that member states adhere to these, they should be working on developing them rapidly, because Hungary’s case won’t be isolated. For their own sake, really, because now that the markets seemed to have calmed down a bit, the next challenge to the EU will be political, not economic… those member states that start to be fed up with restrictions, unemployment and falling standards of living will be hot-beds for political players that may have some Orban-like “unorthodox” views on how democracy should work. If they look the other way, they will just make it easier for others to follow Orban’s example.

  26. An: ” For their own sake, really,”

    The EU is not an organisation for some chosen politicians who work there “for their own sake”, but an organisation that should be the common interest of the European CITIZENS. By the way, including the Hungarian citizens that are so eager to live by the EU principles. “The EU declared…”, “If they do not have…” “they should be working” somehow misses the problem who this “they” exactly is. The prime ministers of the member states have retained important rights in the decision process of the EU, this includes the PM that Hungary chose, do you mean them by “they”? Or do you mean those people in Brussels who are deliberately – not least by the many euro-sceptic governments – denied important political instruments? The same logic that has to be applied in Hungary, applies here also: the CITIZENS have to pressure the politicians to do something. Perhaps this sounds still unbelievable to many, but the average European citizen is leaning towards euro-scepticism and does NOT want more competences to be shifted to Brussels. So he or she is quite grateful if Brussels does NOT intervene in domestic affairs, and certainly does not put any pressures on politicians to work towards more European integration. You can condemn the EU and its citizens for that, but it would be much more constructive to mobilise people to understand that more powers for Brussels need not be as bad as they believe.

    To Jean P: I would very much like to learn which rules that the EU could enforce it does not, and how you suggest that the interested public could make the EU enforce them.

  27. @ Kirsten: I mean those elected EU officials who were elected by EU citizens (Hungarian and non-Hungarians) and whose job would be to serve the best interest of the EU as a community. Are you suggesting that protecting the democratic values of the EU is not one of those best interests of the community??

    If the community thinks that protecting democratic values really do not worth all the hassle, then something is wrong with the EU community, not only with Hungary. And I am not talking about “forcing” democracy on unwilling member states (it’s really up to each country what form of government they prefer) , but making it clear to them that if they want to be part of the EU, they should adhere to certain democratic values and rules.

  28. An, you have certainly people who do that. You had for instance the debates in the European Parliament. You also have people in other EU institutions that monitor the developments in Hungary closely. But this is only one dimension. Another dimension is whether they have enough powers and support from the bosses (among them the already mentioned PMs of the member states, who have – in opposition to the “original” plans that Jean P was perhaps referring to – retained so important powers that the quarterly meetings of the European Council are one of the most important decision making bodies) to do something about it. That has a quite strategic or political component. The conservative parties in the other member states have been quite cautious in their criticism of Hungary. The list of inconsistencies between principle and reality is quite long, and does certainly not pertain to Hungary only. “Minority rights” is for instance also quite contentious in a number of member states, a potential independence of Catalonia is quite a challenge to the current functioning of the EU.

    I do not at all deny that the current state of affairs is bad. But I believe that it is of no use to say that this is quite awful and expect that this alone means anything or changes anything. What follows from saying that we are ashamed. It sounds so “committed” and there are not obvious consequences of that. You may feel “better” but do the addressees know what they are asked to change? OV is also quite awful and still the only way out of this problem is to try to convince people, if necessary in small steps, that it makes sense to be concerned with the state of public affairs in Hungary, get involved, and put pressure on those on the top with very practical demands.

    But what I could repeat again is that I have heard little about Hungarians using the High Court of Justice to remedy some of their grievances. Why is that? In the case of the nationalised pensions the last thing that I remember was that it may after all not be in conflict with the Charter of Fundamental Rights…!?

  29. An: “something is wrong with the EU community”

    That is why I am so much advocating an approach that does not start from morals but from the practical problems. The EU, no matter what has been taught to people in school, is a very political organisation. One of the most important practical approaches is to prefer even a bad compromise to force or breaking-off. Which means that the UK can opt out from numerous common projects, there is this financial bonus for this country, and that bonus for that country, and so forth. In a number of areas, France and Germany are agreeing first, and then “suggest” this (already “bad” compromise) to the other countries. The others can then quite “democratically” accept or not (perhaps they are allowed to opt out). You have referenda in some countries on EU treaties, if they decline, they are asked after some time to vote again, after being granted some “opt-out clauses” or other “compromises”. This is how I suggest the EU is approached. And before you say: what an ugly construction, I would stress that in this very ugly approach it has been possible over the last decades to slowly increase the level of integration. And to include into areas of common interest also things that are considered national matters by many people. Very much to the horror of some average people and politicians. The UK is thinking about leaving outright. Even if the EC may have been founded with other plans in mind, the practical approach has been to try to somehow accommodate all, so that they are willing to continue in the joint project EU.

  30. @Kirsten, I understand, and there is nothing wrong with a compromise-seeking, consensual model, until everybody plays by the basic rules…the question is, how far you should go in “accommodating”. Can you accommodate a member state who is challenging the core values of the community? What is the line? If a government accepts a constitution that is against the values of the community, that is still ok? What if a member state starts silencing the media… is that ok? what if they go further and start jailing people who oppose the government? And so on. what is the line? Or EU countries just accommodate to a member state, no matter what?

  31. An, it is not. But what I am trying to say is that this has no consequences because for the EU there is only the “nuclear option” or criticism and ultimata in very specific, targeted areas. If you think you are denied fundamental rights you have to approach the High Court. Perhaps Jean P will come up with those parts of the treaties that have so far been overlooked and where the EU institutions could be asked in very practical terms to deal with problems in the member states and specifically in Hungary. I believe that the mechanisms to deal with many such problems are still not available and it will need a lot of effort (and hopefully also more support from the European citizens) to adopt such mechanisms. In this regard, I prefer to stress where the EU should be heading instead of repeating how deficient this organisation is.

  32. This approach has never been repeated, and it was also not really succesful:

    http://en.wikipedia.org/wiki/Austrian_People%27s_Party

    “After the Austrian legislative election, 1999, the People’s Party formed in 2000 a coalition government with the right-wing populist Freedom Party of Austria of its then-leader Jörg Haider. This caused widespread outrage in Europe, and the European Union imposed informal diplomatic sanctions on Austria, the first time that it imposed sanctions on a member state. Bilateral relations were frozen, including contacts and meetings at an inter-governmental level, and Austrian candidates would not be supported for posts in EU international offices. Austria, in turn, threatened to veto all applications by countries for EU membership until the sanctions were lifted. A few months later, these sanctions were dropped as a result of a fact-finding mission by three former European prime ministers, the so-called “three wise men” “.

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