I’m in trouble again. I don’t know where to start because in the last three days an incredible amount of news emerged from the turbulence of Hungarian political life.
But perhaps I should first say a few words about topics we’ve already covered but thanks to the Hungarian penchant for not letting sleeping dogs lie remain in the news. This compulsion on the part of the Hungarian government to answer every criticism usually works against them. To take but a single instance of how counterproductive these constant counterattacks can be, consider the case of the German children’s show on the Kinder Kanal (KiKa) about the Orbán government’s attitude toward democratic rights. There is no need to describe the details of the case, but the Orbán government took this “affront” so seriously that Viktor Orbán himself felt it necessary to tell the Germans off about “brainwashing” German children. The result? Another cartoon, this time showing Viktor Orbán dressed up as a clown stomping his feet and threatening his critics. Did Hungary need this? Certainly not. And did HírTV, a pro-government television station, have to respond with a primitive cartoon of its own about Angela Merkel who can do anything because Germany has a lot of money? Again, certainly not. In fact, it would have been best to have said nothing.
Well, something similar is going on at the moment but on a much more serious level. The Hungarian government has taken offense at criticisms from sources a bit higher up than a kiddie show in Germany.
In the first instance, the Hungarian National Bank’s new deputy governor decided to write a letter to the editor of The Wall Street Journal in connection with an opinion piece published in the newspaper by George (György) Kopits, former chairman of Hungary’s Fiscal Council between 2009 and 2011. I wrote about this hard-hitting letter in which Kopits called Viktor Orbán’s newly constructed regime “a constitutional mob rule.”
Newspapers normally give a government or important state institution the opportunity to answer any article it finds objectionable. So The Wall Street Journal had to publish at least part of Ádám Balog’s letter to the editor. Balog, a thirty-two-year-old with no banking experience, gained the favor of his boss in the Ministry of the Economy from where he followed György Matolcsy straight to the Hungarian National Bank. Now, it seems, he’s the bank’s “hit man.”
A very short letter appeared only in the European edition of the paper although Kopits’s piece appeared in the American edition as well. Let me quote the text that The Wall Street Journal decided to publish:
In his recent op-ed, George Kopits urges action against Hungary by international financial markets and the European Union (“Constitutional Mob Rule in Hungary,” March 28). Mr. Kopits criticizes the operations of Hungary’s central bank in particular.
The operation of the National Bank of Hungary is lawful and transparent, contrary to Mr. Kopits’s claims. Under the leadership of new governor Gyorgy Matolcsy, the central bank has replaced an essentially one-person management system with a system based on a broader foundation. During this transition, the turnover in the central bank’s staff, including managers and subordinates, was less than 4%. That means that essentially the same people work at the Hungarian central bank as before.
The real threat to the authority and professionalism of the central bank lies not in such changes to management, but rather in criticisms, like Mr. Kopits’s, that are not supported by facts.
Adam Balog / Deputy Governor / National Bank of Hungary
That was published on April 2. Obviously, the leadership of the Hungarian National Bank was dissatisfied with the excised version of Balog’s letter to the editor. They decided to make public the original, which was full of ad hominem attacks against Mr. Kopits.
Here is the original version:
Gyorgy Kopits’s outlash harmful for the interests of Hungary
A discredited person criticizes the Hungarian central bank in the international press
Gyorgy Kopits, a former member of the National Bank of Hungary’s Monetary Policy Council has urged action from international financial markets and the European Union against Hungary. Mr. Kopits heavily criticized Hungary, and the operations of the central bank in particular, in the editorial section of the Wall Street Journal on March 27.
American readers may not be familiar with Mr. Kopits’s career in Budapest. He was a member of the Monetary Policy Council of the National Bank of Hungary between 2004 and 2009. He received the request to fill that post from Zsigmond Jarai, who was finance minister in the first government of the current Prime Minister Viktor Orban, who Mr. Kopits furiously criticized in his article, and then was appointed by the same government to the post of central bank governor.
Mr. Kopits held his position in the Monetary Policy Council, the top decision-making body of the central bank, in a period when lending in foreign currencies was on the rise. Foreign currency loans continue to place a major burden on tens of thousands of Hungarian families and firms to the very day. The National Bank of Hungary is among those that are now making efforts to mitigate the damages, to lower the impact.
Gyorgy Kopits’s criticism of the central bank—while it harms the prestige of the independent central bank—also lacks credibility. As the president of the Fiscal Council, Mr. Kopits approved Hungary’s 2010 budget, in which revenues were significantly over- and expenditures underestimated. Without immediate measures, the budget deficit of the 2010 budget would have been above 7% of gross domestic product as against the originally planned 3.8% of GDP viewed as attainable by Mr. Kopits.
The operations of the National Bank of Hungary are lawful and transparent. The new central bank’s management under the leadership of [new central bank governor] Gyorgy Matolcsy replaced the essentially one-person management system with a system based on a broader foundation in March. Turnover in the central bank’s staff, including managers and subordinates, was less than 4%. That means that essentially the same people work at the Hungarian central bank as before. Not the changes in central bank positions but rather the malicious writings similar to that of Mr. Kopits, which are not supported by facts but are unfounded, are posing a threat to the authority and the professionalism of the central bank.
Ádám Balog, Deputy Governor, Magyar Nemzeti Bank.
You will, I’m sure, notice that the English of the original version leaves a lot to be desired. And, instead of answering Kopits’s criticism, Balog hurls personal attacks on him. He is “a discredited person.” He is ungrateful because he received his post on the Monetary Council of the Hungarian National Bank thanks to Viktor Orbán whom he now “furiously” criticizes. During his tenure on the Monetary Council wrong decisions were made concerning “lending in foreign currencies,” so he is responsible for the current financial problems of hundreds of thousands of Hungarian families and businesses. Kopits not only “harms the prestige of the independent central bank” but “also lacks credibility” because he was “president of the Fiscal Council” that approved the 2010 budget despite the fact that in that budget “revenues were significantly over- and expenditures underestimated.”
Similar personal attacks were launched against Professor Kim Lane Scheppele the other day by Gergely Gulyás, the great Hungarian “expert” on constitutional law. I am almost certain that the letter was not written by Gulyás. The language of the text and its reasoning points to someone who received his legal training in the United States. Moreover, the author of the letter is thoroughly familiar with laws of individual U.S. states which, with due respect to Gergely Gulyás’s wide ranging knowledge of the law, is probably outside the purview of someone who received his law degree at the Catholic Péter Pázmány University in Budapest.
The ad hominem attacks on Professor Scheppele are similar in tone to those Ádám Balog leveled against Kopits, but they are considerably more sophisticated. The document is worth reading in its entirety, but here are a few choice tidbits: “unfounded allegations,” “factual mistakes,” “academic freedom … does not equal freedom from facts,” “egregious mistakes ,” just to mention a few descriptions in the first couple of paragraphs of a fairly long letter. The author of the letter even accuses Professor Scheppele of misleading Paul Krugman who allowed her to use his blog in The New York Times, because if he knew about all the misinformation in her writing Krugman “would surely object to … using him in such ways.” Body blow after body blow.
I can only surmise that the Orbán government came to the conclusion that they crossed the line with the latest amendments to the constitution, which may have grave consequences for Hungary. Therefore, serious critics like Kopits and Scheppele must be discredited. I expect these attacks on critics of the Orbán government to continue unabated.
My suspicion that the Fidesz political elite fears serious countermeasures from the European Union was only reinforced when I heard Viktor Orbán’s Friday morning interview on Magyar Rádió. According to him, Hungary’s economic performance doesn’t warrant the continuation of the excessive deficit procedure, but he expects no fairness in Brussels toward Hungary. The country must be prepared for the possibility that the European Union will not be satisfied with the current figures and the government’s predictions for 2013. Hungary will be punished unfairly.
Critics must be discredited one way or another. Just as the Austrian paper, Der Standard, said the other day: “Fidesz politicians are bloodthirsty, unscrupulous, and vindictive.”