Ukrainian crisis

Viktor Orbán on the world stage and at home

Every second Friday Viktor Orbán spends about twenty minutes with a servile reporter from Magyar Rádió who asks the great leader about his achievements and plans. But before I cover the latest pearls of wisdom coming from the prime minister I want to share some thoughts about an unexpected private meeting between Chancellor Angela Merkel and Viktor Orbán preceding the European Union Employment Summit held in Milan on October 8.

Critics and opponents of Viktor Orbán’s domestic and foreign policy initiatives were dismayed over news of the meeting. Just when the United States finally seems to be showing signs of greater resoluteness in its dealings with the Hungarian government, Angela Merkel rewards him with a private meeting. Hungarian opposition papers pointed to Merkel’s broad smile and assumed that the encounter had to be friendly. But this might not have been the case. Of course, we don’t know what transpired during the meeting, but there are a few signs that may indicate a less jolly encounter than Merkel’s smile would indicate.

The official government website republished the MTI summary of the encounter, based on information supplied to the news agency by the prime minister himself. What can we learn from that brief description? “First and foremost [they] talked about foreign affairs.” The second topic was energy policy. As far as foreign policy is concerned, I assume the topic was Hungary’s reluctance to support the common EU resolve concerning further sanctions against Russia if necessary. It is also possible that Merkel mentioned her disapproval of Viktor Orbán’s eastern orientation. When it comes to the country’s energy policy, I’m almost certain that Merkel brought up Hungary’s sudden decision to stop sending natural gas to Ukraine three days after the CEO of Gazprom paid a visit to Viktor Orbán.

How do I surmise that? A careful reading of this short report on the meeting makes that interpretation more than plausible. Let me quote the appropriate passage verbatim: “Hungary will be part of the common European efforts, but at the moment she must establish her own energy security. Thus, Hungary now is busy with feeding its own storage facilities.” After January 1, 2015, when the Slovak-Hungarian gas pipeline is functioning, “we will be able to send non-Russian gas to Ukraine, if our Ukrainian friends would like it.” I should call attention here to Orbán’s emphasis on the source of the gas intended for Ukraine. That strongly indicates that he agrees with the Russian position that selling Russian gas to countries outside the EU is illegal.

As for the possibility of a discussion between Merkel and Orbán on Hungarian-EU relations, my source is Viktor Orbán’s Friday morning interview. While until now we have heard only criticism from Orbán concerning the West, which is in decline and on the wrong track, during the interview Orbán praised German economic strategy. The German mentality of hard work and prudence is the basis of  successful economic policy. I might add here that praise of German economic strategy was somewhat ill-timed in the wake of dismal economic news from the country.

As far as future domestic policies are concerned, the Friday morning interview was singularly uninformative. There has been much talk lately about a new era coming, but Viktor Orbán refuses to provide any details. A careless remark by Mihály Varga a couple of weeks ago prompted speculation about the introduction of new austerity measures. Rumor has it that the government cannot hold to the 3% deficit, which may followed by the reintroduction of the excessive deficit procedure by the European Commission. And that would mean turning off the money spigots from Brussels. A government denial followed Varga’s remark, but people are not convinced that austerity measures are not in the offing. The budget that should already have been presented to parliament is still nowhere. According to Orbán, he and Varga will go through the numbers this afternoon.

There was only one topic on which Orbán was more expansive: his ideas about education. Specifically, producing skilled workers. He has big plans for something he calls “dual education,” which will produce a highly skilled workforce. After a student has been in school for eight years he would enter a course of study that would combine some academic study with hands-on work experience. It would be a kind of apprentice (inas) program. There is nothing new under the sun. Many of us still remember Nikita Khrushchev’s introduction of precisely the same type of education. We also remember that it was a huge flop and the experiment was abandoned. I guess Orbán thinks he can do a better job.

But if Khrushchev’s experiment was a bad idea in the 1960s, it is a terrible idea today. Who thinks that eight years of elementary education are enough to produce highly skilled workers who nowadays need higher math, computer skills, and–most likely in Hungary’s case–the command of a foreign language, just to mention a few requirements? The very word “inas” (apprentice) conjures up images of the little boy who was apprenticed to a master and who was terribly exploited by him. He lived with the master’s family and often did all sorts of things that had nothing to do with his future trade.  But in those days one didn’t need a lot of education to learn how to make shoes or to become a bricklayer. Today I would say that to become a skilled worker one should finish high school and have at least a two-year associate’s degree.

journeyman

Back to olden days

I agree that training a skilled workforce is needed, but Hungary is unlikely to be a country where industry dominates. The service sector will most likely remain the mainstay of the economy, as elsewhere in western countries. Moreover, it is not true, as Orbán claims, that “the road to successful life is through crafts” because statistics prove that university graduates’ compensation greatly exceeds the salaries of non-graduates. I fear, however, that he will introduce his ridiculous ideas on education very soon. He promises such legislation this year. I wonder what impact such a reorientation of education will have on the current educational system, which has already gone through a very hard time because of the nationalization and centralization of all public schools. One could also ask where they will find teachers by the thousands to instruct students to become skilled workers by the age of 16 or 18. What will happen to those teachers who today teach academic subjects? The whole thing sounds not only crazy but injurious to the country.

This year was spent mostly on campaigning for three different elections, and therefore the Orbán government had relatively little time to come up with ever new ideas and proposals that become law in record time. I fear this legislative respite is over, and the prime minister will have quite a few surprises for us in the coming months.

An optimistic prediction: The Orbán regime’s inevitable demise

I would like to report on a lengthy article that appeared on 444.hu on September 18, 2014, written by someone who calls himself “Nolite Timere,” “don’t be afraid” in Latin. The piece has the upbeat title “The NER’s coming demise.” An optimistic title, that is, for those who are opponents of the Orbán regime. It is a prediction few people believe today in Hungary. In fact, an increasing number of editorial and op/ed pages forecast exactly the opposite. So, let’s see on what basis Nolite Timere makes his prediction.

Before I attempt to summarize his argument, let me remind everybody that NER is the abbreviation of Nemzeti Együttműködés Rendszere or, in English, the System of National Cooperation. In the first few months of the Orbán administration one could hear a lot about NER, but by early July I wrote that, despite Péter Szijjártó’s best efforts, the designation had disappeared from usage. Well, the name may have disappeared, but Viktor Orbán’s proclamation of NER signaled the beginning of a new era and a new political system. The text of the proclamation can be found in the above cited post.

Nolite Timere begins his argument by saying that NER rests on shaky foundations. Its support comes exclusively from Fidesz voters. The graph below shows the tight correlation between those Hungarians who support Fidesz and those who are satisfied with the performance of the government.

Therefore, opposition to the government automatically means opposition to the regime. Once this government loses power, the new government will most likely try to dismantle the NER. A lot of economic and political players may even find themselves in legal trouble. Therefore, maintenance of the Orbán system is of vital importance to those in power today.

Blue: the country is moving in the right direction. Orange: voters' support of Fidesz Source: 444.hu

Blue: the country is moving in the right direction. Orange: voters’ support for Fidesz
Source: 444.hu

The graph shows how the population reacts to financial fluctuations. At the beginning of 2012 only about 17-18 percent of the population was satisfied with the government’s performance, but as soon as utility prices were lowered and the impoverished population got a few thousand extra forints a month, they were once again ready to support Fidesz and its government. Conclusion? Viktor Orbán must make sure that he can reduce the number of dissatisfied voters for twenty or thirty years by increasing the well-being of the population. Nolite Timere’s prediction is that he will not be able to pull this off. At least this is what earlier efforts tell us.

All regimes since 1919 attempted to do two things simultaneously: continuously raise living standards and at the same time satisfy the expectations of their own base. The Horthy regime failed because it was unwilling to break up the large aristocratic and church estates; Mátyás Rákosi favored those who came from the working class and the peasantry to such an extent that by 1952 there was widespread hunger in the country; János Kádár refused to give up the primacy of the communist party in economic matters and therefore could maintain the modest but steady rise in living standards only as the result of  cheap Soviet energy and foreign loans. Once there were no more loans and no cheap oil the regime collapsed. The slow economic growth that began in 1995-96 lasted only as long as there were state-owned companies to be sold. After 2002 the economic growth could once again be maintained only through indebtedness. In 2008 that came to an end.

Hungary’s perennial problem ever since modern capitalism arrived in the region is a lack of capital. Since 1990 almost all capital came from abroad, and this has at least two serious drawbacks: it is expensive and it can be moved at any time. However, a country without its own capital must first rely on foreign sources. This was the case in Hungary between 1867 and 1914. Originally 60% of all investment came from Austria and Germany, but over the next 35 years a new generation of Hungarian capitalists grew up who learned from their foreign colleagues and amassed capital of their own. By 1914 only 25% of investment came from outside of the country. (Note that Viktor Orbán wants to achieve the same shift in the source of investment in a few years. Failure is guaranteed.)

Nolite Timere is convinced that in a country short on capital it is dangerous to build a regime that has only shaky legitimacy, as NER does. “The trick can be achieved only with foreign help … the regime survives only as long as foreign capital is coming in.” There was no appreciable economic growth in Hungary, yet the government lowered taxes, raised pensions, built stadiums. Where did they get the money? In part from foreign companies, in the form of extra levies, the lowering of utility prices, and many other tricks that took away large chunks of these companies’ profits. In some cases the companies even had to dip into their own capital to satisfy the Orbán regime’s appetite.

The second source is naturally the European Union. Between 2007 and 2012 Hungary received subsidies equivalent to 21% of the country’s GDP. In 2013 monies coming Brussels amounted to 5% of the GDP. In 2014 it will most likely be higher. In brief, “the future of the regime depends on the availability of foreign capital.”

The author is convinced that the end is nigh. All the money taken from foreign firms and received from the European Union was only enough to raise real wages modestly in the second half of 2013 and early 2014 in preparation for the coming election. As a result of the large amount of capital pumped into the economy, GDP growth in 2014 is expected to be substantial. Government propaganda points to this as a great success that will continue into the future. This is unlikely, claims our author.

Banks and other foreign companies are at a breaking point; they can absorb no additional levies. Bayern LB, owner of MKB, is a case in point; it threw in the towel and sold its Hungarian holding to the state rather than pay all the debts it accrued as a result of the government’s interference in its business activities. It is very possible that others will follow. If the state then sells these banks and other concerns to its supporters, it will be difficult to extract more taxes from them or even to maintain the low utility prices. After all, there will be no foreign money coming in to replenish the losses.

The leaders of the regime might try to attract foreign companies, especially German and Austrian businesses, to Hungary, but such recruiting has its limits. After all, the government wants to strengthen those Hungarian capitalists who are friends of the regime. That’s why the government makes a distinction between “good” and “bad” foreign investors, thereby limiting their number. Of course, the question is how long a foreign company can remain a “good company” and when Viktor Orbán will decide that, after all, he made a mistake. Moreover, Nolite Timere thinks that unless some kind of miracle happens, the amount of money coming from Brussels in 2016-2017 will decrease sharply as a result of the very nature of the system of disbursement.

And so Viktor Orbán needs capital from outside the European Union and the United States. Hence the “Eastern Opening,” which up to this point has not brought real results. That’s why Orbán turned to Vladimir Putin last year and signed a 10-billion euro secret agreement for a Russian company to construct a new atomic reactor in Paks. Most of that money will not add to Hungary’s GDP because once construction actually begins on the reactor the lion’s share of the work will be done by the Russian company that “won” the contract. In comparison to the EU subsidies, this Russian money is small potatoes, 120 billion euros a year as opposed to the 30,000 billion coming from Brussels. Of course, it is possible that Orbán is hoping for very inexpensive gas from Russia, which would add another 50 billion euros worth of capital a year.

The maintenance of the Orbán regime in the long run needs all three sources of financing: the EU, Moscow, and Western capital via government bond purchases. If any one of these three falters, the regime itself might be in danger. Brussels must pay without delay. Withholding money might upset the delicate financial balancing act of the Orbán government. As far as Paks is concerned, the Russian-Ukrainian crisis came at the worst possible time from Orbán’s point of view. Even before the crisis Brussels was not exactly happy either with the building of the Southern Stream or with the secret Russian-Hungarian agreement to have Russia build a nuclear reactor inside of the European Union. In addition, one never knows what may happen in the internal financial markets that might weaken the forint further. Hungarian bonds might be less attractive to foreign investors if the United States raises its interest rates in the future. All this could have disastrous effects on the Hungarian economy. This is especially so because the capital that is coming into the country is not being used to lay the groundwork for further economic growth. Instead it is being used to artificially raise living standards, lower utility prices, hand out higher pensions, maintain the flat tax, buy companies to be passed on to friends of Fidesz, and erect state-financed projects like stadiums and renovate state-owned buildings. With such a strategy no country ever became highly developed.

Hungary managed to lock itself into a position of total economic dependence. At this stage the regime no longer cares from whom the money comes or how much it costs in the long run; what counts is that comes and that it comes fast. When foreign capital dries up, this regime will inevitably fail.

Hungary through American eyes

American diplomats have been employing novel ways of communication. For example, yesterday Daniel Fried gave a press conference by telephone from Washington to a small number of Hungarian journalists about the American position on economic sanctions against Russia. Daniel Fried is the State Department’s coordinator for sanctions policy.

Fried is a senior diplomat with vast experience in Eastern Europe. He served as political officer at the U.S. Embassy in Moscow in Soviet times; he headed the Polish desk during the regime change in the late 1980s. After Poland emerged as one of the democracies of the region, he was political counselor at the U.S. Embassy in Warsaw. Later he served as assistant secretary of state for European and Eurasian affairs and special assistant to the president and senior director for European and Eurasian affairs at the National Security Council. So, why does Daniel Fried think that he has to give a long-distant press conference for Hungarian journalists? Surely, because Washington wants the Hungarian public to know the American position on Russian aggression against Ukraine. And it also wants to share its opinion of the current state of Russian-Hungarian relations.

Ambassador Daniel Fried

Ambassador Daniel Fried

Up to this point we have two independent versions of the telephone interview: one from Népszabadság and the other from VilággazdaságI can’t imagine that MTI was not invited, but for the time being there is no MTI report on the event.

The main message was that sanctions will be applied as long as Moscow does not fulfill all twelve points of the Minsk Agreement. A good summary of these twelve points can be found on the BBC website. Russian regular troops are still on Ukrainian soil and “the Russian aggression continues.” The United States wants a political solution to the crisis and is ready to cooperate with Russia in many areas, but Russia must respect the territorial integrity and sovereignty of Ukraine. With its aggression against Ukraine Russia “seriously endangers the European security system that came into being after the 1989-1990 East European events.” If Russian aggression continues, the United States and the European Union are ready to introduce new sanctions.

Fried then turned to specifically Hungarian issues. Hungary and its prime minister should know from Hungarian history what it is like when a country is left alone unprotected in the event of outside aggression. Therefore Hungary ought to realize the importance of the steps that are being taken in this case. Viktor Orbán first claimed that “the European Union shot itself in the foot when it introduced sanctions against Russia” and later at the NATO summit in Wales he declared that “we are hawks when it comes to military security but doves in economic terms.” Fried said that “we all want to be on good terms with Russia, to improve our relations, but this is not the right time for friendship.” Fried cited Russian Foreign Minister Sergey Lavrov’s claim that sanctions only deepen the Ukrainian crisis. “The Russians say all sorts of things, many of them are simply not true. After all, they deny that their soldiers are in the territory of Ukraine.”

During the press conference it became clear that talks took place between the Hungarian and the U.S. governments concerning the sanctions. It seems that the U.S. listened to Hungary’s objections but was not impressed.  The sanctions hurt not only Hungarian businesses but businesses of all nations, including those of the United States. The European Union made a brave decision which Hungary supported.

The message was that one cannot play the kind of game Viktor Orbán is playing at the moment. On the one hand, he is a supporter of the common cause against Russia, but when it comes to sanctions he tries to make special deals with Moscow. For instance, Sándor Fazekas, the Hungarian agriculture minister, visited Moscow on September 8 where he had talks with Nikolay Fyedorov, his Russian counterpart. There Fazekas agreed with Fyedorov that “the sanctions don’t offer a solution to the Ukrainian crisis, which should be settled through negotiations.”

And according to leaked documents, we know that Vladimir Putin told Petro Poroshenko during one of their telephone conversations that he “through bilateral contacts can influence some European countries to form ‘a blocking minority’ in the European Council.” The countries he has in mind are Slovakia, Bulgaria, Hungary, and Cyprus. I guess Daniel Fried wanted to make sure that Hungarians understand that Washington fully supports the application of sanctions and that the large majority of the EU countries are also on board.

While we are talking about U.S.-Hungarian relations, I ought to mention that U.S. Senator Ben Cardin (D), who is a member of the Senate Foreign Relations Committee and chairman of the U.S. Helsinki Commission, and Senator John McCain (R) introduced a resolution in recognition of the International Day of Democracy on September 15. Accompanying the introduction of the resolution Senator Carden’s press release talked at length about the sad state of democracy in Hungary where “there is an unprecedented global crackdown on civil society organizations seeking to express their voice and exercise their rights. Earlier this week, Hungarian authorities raided the offices of two NGOs in Budapest in what appears to be part of a tightening squeeze on civil society. Such actions not only undermine democracy but chill investigative reporting on corruption and good governance. Now, more than ever, is the time for the international community to push back on threats to civil society and protect efforts by these organizations to build strong democratic institutions.”

In addition, on September 18 Deputy Chief of the United States Mission to the Organization for Security and Co-operation in Europe (OSCE) Kate Byrnes delivered the following speech to the Permanent Council in Vienna:

Three months ago, on June 19, the United States addressed the Permanent Council regarding an apparent campaign of intimidation directed toward civil society and independent media in Hungary. I regret that I must speak to the Council again on this topic.

As we said in June, just one day after the April 6 elections, the Hungarian government accused organizations that conduct legitimate work in human rights, transparency, and gender equality of serving “foreign interests.” Shortly afterwards, the Prime Minister’s Office alleged that NGOs that monitor and evaluate grant proposals for the EEA-Norway NGO fund were tied to an opposition party. On September 8, Hungary’s National Bureau of Investigation initiated a series of police raids on two NGOs responsible for the EEA-Norway NGO grant program in Hungary. With no prior warning, and in a show of intimidation, over 30 officers entered the NGOs’ facilities and seized the organizations’ documents and computers.

These police raids appear to be aimed at suppressing critical voices and restricting the space for civil society to operate freely. The United States again reminds Hungary of its OSCE commitments to human rights and fundamental freedoms, democracy, and the rule of law.

Mr. Chair, we raise these issues to express our concern about actions that appear inconsistent with OSCE principles, and also to encourage dialogue. We intend to continue to encourage the government of Hungary to observe its commitments and allow NGOs to operate without further harassment, interference, or intimidation. The United States believes that such respect for its commitments will help Hungary to become a more prosperous, robust and inclusive democracy.

Finally, here is something from former President Bill Clinton, who appeared on the Daily Show with Jon Stewart. “There’s the authoritarian capitalism model which is Russia and in a different way China, and it has some appeal. Like the Hungarian Prime Minister – they owe a lot to America; he just said he liked authoritarian capitalism, just saying “I don’t ever want to have to leave power” – usually those guys want to stay forever and make money. And there’s the democracy model …”

Hungary is in the news, no doubt. It would be better if it weren’t.

Hungary is in a difficult diplomatic bind: The “Orbán doctrine” is dead

This morning 168 Óra ran the headline “The Orbán doctrine has collapsed after three days.” The reason is the Russian “incursion” into Ukrainian territory. After that, said Árpád Székely, former Hungarian ambassador to Moscow, there will be neither Paks nor the Southern Stream. Székely actually welcomes the first consequence, a dubious deal between the Hungarian and the Russian government to build a new nuclear reactor in Hungary, but he is sorry about the likelihood of scrapping the Southern Stream project that would have supplied gas to the Balkans, Hungary, and Austria.

While high-level negotiations in the UN, NATO, and EU are going on over the Russo-Ukrainian conflict, I had to think about one of the many fallacies Viktor Orbán presented us with during his pep talk to the Hungarian ambassadors only four days ago. In his speech he indicated that as far as he is concerned old-fashioned diplomacy is passé. “Not that classical diplomacy has lost its magic and beauty” but “we must acknowledge the realities of the economic age in which we live.” Well, the Russo-Ukrainian conflict must be solved by old fashioned diplomacy, and Hungary’s newly reorganized foreign ministry is ill prepared for the task. Moreover, its leaders are constrained by the prime minister’s unorthodox ideas on diplomacy. Orbán’s Hungary is in a bind.

I should note in passing that German-Hungarian relations have cooled considerably. Earlier, I wrote about a warning from Michael Roth, undersecretary of the German foreign ministry, that in his government’s point of view “Hungary is going in the wrong direction.” Since then an even more detailed and stronger statement was signed by Michael Roth, undersecretary in charge of European Affairs at the German Foreign Ministry, and his colleague Tomáš Prouza in the Czech Foreign Ministry. They warned that “Europe is more than a market.” It is a community of shared values.

According to Hungarian sources, Hungarian diplomats have been trying for some time to entice Chancellor Angela Merkel to visit Hungary for the annual German-Hungarian Forum. After all, this is the twenty-fifth anniversary of the German refugees’ safe passage to Austria thanks to the action of the Hungarian government in 1989. If she could not come, they at least hoped for a visit by the new foreign minister, Frank-Walter Steinmeier. Well, it seems that Budapest will have to be satisfied with an assistant undersecretary as the representative of the German government. The highest ranking German participant will be Reinhold Gall, social democratic minister of the interior of Baden-Württemberg.

Now, to return to the current diplomatic challenge. After the failure of the meeting between Vladimir Putin and Petro Poroshenko in Belarus, several thousand Russian troops crossed the Russian-Ukrainian border. Subsequently Prime Minister Arseny Yatsenyuk announced that his government will introduce a proposal in parliament to change the non-aligned status of the country and to request membership in the North Atlantic Treaty Organization. Some observers immediately announced that Ukrainian admission to NATO was very unlikely. However, NATO chief Anders Fogh Rasmussen made a statement today in Brussels, saying: “I’m not going to interfere in political discussions in Ukraine. But let me remind you of NATO’s decision at the Bucharest summit in 2008, according to which Ukraine ‘will become a member of NATO’ provided of course, Ukraine so wishes and fulfills the necessary criteria.” A strong warning for Russia. Putin often stressed that Russia will not tolerate a NATO presence on Ukrainian soil.

Meanwhile, EU foreign ministers are recommending tougher sanctions against Russia. They gathered in Milan today for an informal meeting to discuss the Ukrainian crisis. Tibor Navracsics represented Hungary in Milan, but I could find no report on his position in the Council of Foreign Ministers. We know that Germany, the Netherlands, Sweden, Latvia, and Denmark were strongly in support of tougher action.

"German

German Foreign Minister Walter Steinmeier is arriving at the informal meeting of EU foreign ministers in Milan

Tomorrow the European Council will meet again to decide on the President of the European Union and the EU Foreign Affairs Chief. According to the latest intelligence, the next President of the European Union will be most likely Donald Tusk, prime minister of Poland.

Tusk’s government has been among the most hawkish in Europe over the issue of Ukraine. Just today the Polish government announced that it will allow the plane of Russian Defense Minister Sergey Shoygu to fly over its territory only if the plane changes its status from military to civilian. Earlier his plane was barred altogether from Polish air space. Russia was not very happy. Its foreign ministry declared that Poland’s closing its air space to Shoygu’s plane is “a major violation of norms and ethics of the communication between states.”

Today three of the four members of the Visegrád4 (Poland, Czech Republic, Slovakia, and Hungary) issued statements about the Russian incursion. Poland’s foreign ministry said that it regards the incursion of Russian troops into the southern regions of the Donetsk province “as actions that fulfill the attributes of aggression, as defined in UN documents–Resolution 3314 of the United Nations General Assembly.”

The Czech statement was equally strongly worded. “The Czech Republic considers the incursion of the armed forces of the Russian Federation into the territory of eastern and southeastern Ukraine a fundamental threat to peace and stability of all of Europe.” It called on Russia “to immediately withdraw its troops from the Ukrainian territory.”

The silence from Slovakia was deafening.

Hungary chose an intermediate position and released the following statement: “We are closely monitoring and evaluating the situation on the ground, and we are in contact with our EU and NATO allies. A confirmed incursion of  Russian regular military units on Ukrainian territory would gravely escalate the crisis. In line with our consistently expressed earlier position, we emphasise that only a political process can lend a sustainable solution to the present crisis and therefore we support all diplomatic efforts to this end. The upcoming extraordinary European Council meeting and the informal meeting of the EU foreign ministers offer good opportunities for harmonizing the European position on this matter.”

Two of the opposition parties, Együtt-PM and DK, called on the government to stand by Ukraine’s independence and territorial integrity. The former also wants the Hungarian government to suspend preparations for the expansion of the Paks Nuclear Power Plant while Russian troops remain on Ukrainian soil. The party also asked Orbán to use his good offices with Putin to convince the Russian leader to withdraw his troops from Ukraine.

DK wants to call together the parliamentary committees on foreign affairs, national security, and defense and to have the government prepare a statement that condemns Russian military action against Ukraine. In addition, Tibor Navracsics should call in the Russian ambassador to Hungary to convey to him Hungary’s condemnation of Russian aggression. Naturally, none of these suggestions or demands will be considered by the Orbán government.

On the other hand, I believe that Viktor Orbán will quietly vote with the majority on all the issues that will be discussed at tomorrow’s European Council meeting only to go home and report on the excellent ideas he gave to his colleagues about how to solve the Ukrainian crisis.

In a tight spot: Orbán’s Hungary between Russia and the European Union

The last time I talked about the Hungarian government’s attitude toward the the Ukrainian crisis was at the beginning of March when, most likely as a result of Polish urging, Hungarian foreign minister János Martonyi joined his Visegrád 4 colleagues and condemned Russian action in the Crimea. Soon enough, Zsolt Németh, undersecretary in the ministry, called in the Russian ambassador to express Hungary’s disapproval of Russian aggression. By that point I thought that Hungary would remain resolute in defense of Ukraine. But something happened between March 4 and 18, when Hungary retreated from its earlier position.

The Council of the European Union released a statement in which it stated that “the EU does not recognize the illegal ‘referendum’ and its outcome.” The EU and the U.S. agreed to impose sanctions against Russian and Ukrainian officials considered responsible for the referendum. Sanctioning would proceed in three stages, with the final stage including economic sanctions.

In an interview with CNN on March 18 János Martonyi indicated that Hungary would be a very reluctant participant in any action against Putin’s Russia. If an economic conflict were to develop between the EU and Russia, “one of the EU national economies hit most would be Hungary due to its vulnerability to energy supplies.” A few days later Viktor Orbán claimed that they checked all the numbers and indeed Hungary would be a huge loser if economic sanctions were leveled against Russia.

In fact, it seems that Hungary is one of the three most reluctant EU members when it comes to taking a stance against Russian aggression. The other two countries are Greece and Cyprus. Both Greece and Hungary depend on Russia for about 50% of their energy needs while Cyprus, though it doesn’t need Russian gas, does want its oligarchs’ money. As Judy Dempsey, the well-known journalist, remarked, “Cyprus’s reluctance is linked to its status as a lucrative parking place for Russian money.” In the same article she stated that “East Europeans aren’t united either. Hungarian Prime Minister Viktor Orbán, who recently signed a major nuclear energy contract with Russia, has played down the entire Ukraine crisis and Russia’s annexation of Crimea. In contrast, the Baltic states are so afraid of their giant neighbor’s appetite that they are taking a tough line despite a total dependence on Russian gas.” (For a complete list of the EU member states and their respective attitudes toward Russian sanctions, take a look at the chart in Judy Dempsey’s article.)

Well, there is playing down and playing down. At the outbreak of the crisis Viktor Orbán announced that “Hungary is not part of the conflict.” Just before the March 6 summit Orbán released a statement in which he made no reference to Russia at all. He announced that the topic in Brussels will naturally be Ukraine but added that “for us the most important consideration is the security of Hungarians in Subcarpathia.” It is “from this viewpoint that we look at the events. By sending the foreign minister to Subcarpathia we wanted to make sure that the Hungarians there know that they can count on us.”

Last Thursday Orbán had a chance to talk with Angela Merkel before the start of the summit. The meeting, in the presence of Péter Szijjártó, lasted half an hour during which, I’m certain, Orbán wanted to convince Merkel to refrain from additional sanctions. Originally 21 Russian and Ukrainian individuals were barred from entering the EU and their bank accounts were frozen. It seems that Orbán wasn’t persuasive enough because Merkel, who was keen on adding 11 more persons to the list, managed to convince her colleagues to embark on the second stage of sanctions against Russia. After the meetings Orbán announced to Hungarian journalists that the issue of Paks didn’t come up. In his usual cocky manner he announced that “there is nothing to discuss in this connection. It is a closed issue.”

In the end Orbán, representing Hungary, signed the agreement that cites Ukraine’s desire to become part of the European Union sometime in the future. The Hungarian prime minister made it clear, however, that minority rights in Ukraine are his primary concern. If the language law that would have curtailed the free use of Hungarian in Subcarpathia had been enacted, he wouldn’t have signed the document. He added that the Ukrainians must conduct a meticulous nationality policy and that at the same time the Ukrainian government must restrain the nationalistic far-right elements within the country.

He then turned to his ideas about the most desirable source of energy, which in his opinion is nuclear power. In this respect, he is following the lead of Great Britain. And that takes me to a newly published article on CNBC’s website by Javier E. David. The author argues that “the new Cold War brewing between Russia and the U.S. has the potential to go nuclear–just not in the conventional sense.” As a result of the Ukrainian crisis, a debate developed as to whether the United States can use natural gas to counter Russia’s global ambitions. But “some experts say the real front in the global energy battle lies not in oil and gas, but in the arena of nuclear technology.” According to the World Nuclear Association, Rosatom is building 37 percent of the new atomic facilities currently under construction worldwide.

nuclear2

The article cites Barbara Judge, former chairperson of the U.K. Atomic Energy Authority, who describes the situation as follows: “The Russians view nuclear as an excellent export product. . . . They are using it as part of their plan to establish themselves as a geopolitical power.”  How do they achieve this? By lending poorer countries money. “Countries that need nuclear often do not have the funds to pay for it.” By financially helping these countries purchase nuclear technology, Russia “is using that money as a lever to open the door.”

It is because of these considerations that Viktor Orbán might be mistaken and that, after all, the case of Paks might not be closed.

Viktor Orbán finally spoke against Vladimir Putin; Kim Scheppele’s “Hungary, An Election in Question, Part 1”

Over the next five days, in addition to my regular daily posts, I will republish Professor Kim Scheppele’s five-part series on the pitfalls of the new election law that makes free and fair elections in Hungary doubtful. The article, entitled “Hungary, An Election in Question,” originally appeared on Paul Krugman’s blog on February 28, 2014 in The New York Times.

The reason that I asked Professor Scheppele to allow me to publish her article on Hungarian Spectrum is because, although we always knew that the newly enacted law was slanted in favor of the current government party, news coming from Budapest of late indicates that the situation is worse than we ever imagined. The opposition’s advertising options have been greatly restricted. And it seems that even the few posters the opposition candidates managed to put up are systematically being torn down. Budapest and other cities are full of posters of so-called civic groups campaigning for the government while the opposition has virtually no advertising presence. So, the more people read Professor Scheppele’s analysis of the new Hungarian  electoral law the better.

And now back to the Hungarian government’s attitude toward Ukraine. It was only yesterday at noon that Viktor Orbán said anything substantive about the Ukrainian crisis. In his statement he kept his concerns narrow and provincial, presumably not wanting to criticize his newly acquired friend, Vladimir Putin. His only concern seemed to be the safety of the Hungarian minority in Subcarpathia. He sent them a message: “you can count on us.” He added that “Hungary is not part of the conflict.” Well, in a narrow sense, perhaps not, but the conflict directly involves the European Union and Hungary’s neighbor, whose territorial integrity has been challenged.

Today the prime minister decided to elaborate on his position, crafting it to be more in line with EU thinking, a wise move since on Thursday he will attend an EU summit in Brussels. He will “represent the standpoint that the European Union will have to respond to the Russian military moves,” a response that has to be “immediate, unambiguous, and integrative.” He further elaborated on the theme when he announced that “the only alternative to war is negotiation. We want negotiations and not military conflict. We want peace, not blood.” Hungary wants a democratic Ukraine. Again, he stressed that “in the whole Ukrainian crisis the most important consideration for Hungary is the safety of Hungarians in Hungary and in Subcarpathia.” Note that he didn’t mention anything about the territorial integrity of Ukraine.

While Viktor Orbán talked to the media in Budapest, Vladimir Putin gave a press conference just outside of Moscow in Novo-Ogaryovo. It was a long and fairly rambling talk in which he announced that he had given up, at least for the time being, plans for the annexation of the Crimea. However, although he knows about and even condemns Yanukovych’s thievery, he still considers him to be the legitimate head of Ukraine and therefore refuses to recognize the interim government formed a few days ago.

Hungary is after all a neighbor of Ukraine

Hungary is after all a neighbor of Ukraine

Mid-afternoon the prime minister’s office released the “Statement of the Prime Ministers of the Visegrád Countries on Ukraine.” If we compare the text of this joint statement of the Polish, Czech, Slovak, and Hungarian prime ministers to Orbán’s words, we see that the joint statement is a great deal stronger. Let me quote a few sentences from this document.

The Prime Ministers of the Visegrád Countries are deeply concerned about the recent violation of Ukraine’s territorial integrity and the fact that the Russian parliament has authorized military action on Ukrainian soil against the wishes of the Ukrainian Government…. We condemn all action threatening the sovereignty and territorial integrity of Ukraine and call on Russia to decrease the tensions immediately through dialogue, in full respect of Ukrainian and international law and in line with the provisions of the 1994 Budapest Memorandum.

The Visegrád Countries believe that the recent military actions by Russia are not only in violation of international law, but also create a dangerous new reality in Europe. The Czech Republic, Hungary, Poland and Slovakia are appalled to witness a military intervention in 21st century Europe akin to their own experiences in 1956, 1968 and 1981….

The European Union and NATO should demonstrate solidarity with and assist Ukraine in this difficult moment and stand united in the face of this dangerous development threatening European peace and security.

A few hours later Zsolt Németh, undersecretary in the Hungarian Foreign Ministry, spoke to Aleksandr Tolkach, Russian ambassador to Hungary. Németh called on Russia to move its troops back inside the Russian naval base in Sebastopol. Németh repeated that Hungary insists on Ukraine’s sovereignty and territorial integrity and considers Russian behavior contrary to international law. So, it seems that Viktor Orbán eventually had to conform to the position held by the United States and the European Union. It must have been a bitter pill to swallow.

* * *

Hungary: An Election in Question, Part 1

Professor Kim Scheppele, Princeton University

Hungary’s parliamentary elections will be held on 6 April. And it is already clear who will win. Unless something truly surprising occurs, the governing party Fidesz is headed to victory. The only uncertainty is whether it will again win two-thirds of the parliamentary seats, a result that would continue to allow it to change the constitution at will.

Fidesz won the last elections in 2010 fair and square. But this time the election is unlikely to be judged so favorably. The whole election framework – the laws, the institutions and even the new electorate – favors Fidesz because the governing party has used its four years in office with its two-thirds majority in the parliament to redesign every aspect of the electoral system to its advantage.

Fidesz also overwhelmingly dominates the offline media and has closed off almost all avenues through which opposition parties can reach the electorate. New decrees from local Fidesz-affiliated officials around the country and misleading instructions from election officials are creating last-minute campaign obstacles that put the opposition even more on the wrong foot.

Under the new election framework, the allied opposition parties cannot win a parliamentary majority, even if they gain more votes than the governing party. Simultaneously, the changes also make it nearly inevitable that the governing party will keep its two-thirds parliamentary majority even if it gets less than half of the overall vote.

Róbert László of the Political Capital think tank in Budapest shows how Fidesz can win a two-thirds majority with less than half of the party-list vote. His model also predicts that a united center-left opposition would need about 6% more votes than Fidesz to win a simple majority in the parliament.

Central European University Professor Gábor Tóka estimates that, under the new system, a united center-left opposition might get 8% fewer parliamentary seats than Fidesz if both got an equal share of the votes.

Political Capital’s “mandate calculator” permits everyone to try out different models and different assumptions. We tried it here in Princeton and, depending on the assumptions one makes about the nature and shape of the opposition, Fidesz could get its two-thirds majority in parliament pretty easily with only 48% of the vote if the other parties perform as polls indicate they would if the election were held now. If the foreign votes split 85/15 for Fidesz (not unreasonable for reasons I will explain), Fidesz could get its two-thirds with only 44%. If Fidesz wins by the same margin it won last time, with 53% of the party-list vote, it would get 76% of the seats in the parliament instead of the 68% it won under the old system.

In short, Fidesz has designed the election to allow itself to win big, even without majority support. Or, to put it differently, Fidesz has designed the election so that the opposition loses even if it wins.

These effects occur because the way that the districts are drawn and the votes are aggregated. It doesn’t even count all of the other things that Fidesz is doing to help the opposition lose, like monopolizing the media, operating an election office that is giving out misleading instructions and only selectively registering to vote Hungarian citizens who are living abroad.

If Fidesz is reelected under this self-dealing system, then it is hard to avoid the conclusion that the election has been rigged. Prime Minister Viktor Orbán’s “mandate” will be tainted.

It’s serious to accuse an incumbent party of potentially rigging an election, so the evidence needs to be strong. In this series of five blog posts, I will show precisely how the outcome of the election is cooked into the rules even before a single ballot is cast. The rules were designed to look “normal” but to allow Fidesz to win in a very particular political context, which is where we will start.

As Fidesz officials are quick to argue, they will win the election because they are the most popular single party in Hungary. Which is true (see graph below). But Fidesz’s popularity has only recently climbed above 30%, a level that would cause analysts in most democratic states to predict that an incumbent party is in trouble, especially given how low Fidesz fell over the last several years. What makes Fidesz look like a winner, however, is that all of the other parties are even less popular.

voting intentionsFor the last month, however, Fidesz has been confronted by a more substantial opponent than it has had during its tenure in office so far. Five left-leaning parties calling themselves the “democratic opposition” have combined to form the Unity Alliance (Összefogás). They have put forward a common slate of candidates for the individual constituencies and they are running a joint party list. Their joint strength might just be enough to challenge Fidesz’s domination of the elections – if there were a level playing field. But they were late to the election party, so to speak, announcing their joint effort only on 14 January 2014 just before the election date was set. So they have some catching up to do.

(The five parties in the Unity Alliance are the Socialists/MSzP headed by Attila Mesterházy; Together 2014/E-14 headed by Gordon Bajnai; Dialogue for Hungary/PM led by Benedek Jávor; Democratic Coalition/DK headed by Ferenc Gyurcsány and the Hungarian Liberal Party/Liberálisok headed by Gábor Fodor. Since the coalition was formed, the Movement for a Modern Hungary/MOMA, headed by Lajos Bokros, a conservative MEP, has agreed to support the joint ticket.)

And then there is Jobbik, which its detractors call the “non-democratic opposition.” This far-right party has become internationally known for its anti-Semitism and anti-Roma agitation, its toxic assertion of nationalism, and its ideology so far beyond the edge of the European political spectrum that its three representatives in the European Parliament cannot affiliate with any party caucus. Fidesz might reasonably worry that it would lose votes to Jobbik on the right, which may be why many – including Jobbik’s leadership – claim that Fidesz is “stealing [their] issues and ideas.”  For its part, Jobbik’s campaign ads this year portray it as substantially more moderate than its reputation in order to steal voters from Fidesz.

At the moment, Jobbik seems to have the allegiance of just under 10% of the electorate, though some worry that Jobbik’s support may climb again to the 17% of the vote it won in the 2010 election. Jobbik cannot form a government with that vote, but is the only party that can seriously challenge Fidesz’s electoral strategy by dividing the vote on the right.

Just as Fidesz faces a challenge to its base from Jobbik, the Unity Alliance is challenged by a party called Politics Can be Different (LMP) that provides an alternative for its voters as well. In the last year, LMP – a small party to begin with – split so that one fraction joined the broader opposition alliance and the rest remained unaligned. While LMP lost support since the split, it still seems to be polling around the 5% threshold needed for a single party to enter the parliament.

Though Fidesz and the Unity Alliance are the two big parties in this race, polling data show that the largest single voting bloc – a clear majority of the electorate for the last several years – is still “undecided.” That large number becomes even more formidable when one considers that more than half of the Hungarians asked do not answer surveys. Is it hard to know if those who do not answer are still engaged in politics at all, and if so, how.

In past Hungarian elections, the turnout had to reach 50% for the election to be valid. But Fidesz changed that rule too so that there is no minimum turnout required any longer. Low voter turnout, then, is no barrier to a valid election.

But even with the large number undecided or apolitical voters, the results are not in doubt. The governing party designed the system precisely to prevent surprises in this particular political landscape, and they wrote the rules to allow themselves to win almost no matter which way opinion breaks and almost no matter what the turnout is on election day. It is hard to see a realistic outcome for this election that doesn’t put Fidesz front and center in the next government. Fidesz will thrive if there is low turnout because the party has a powerful system for bringing out its voters. If Jobbik surges, Jobbik could not govern unless Fidesz were the dominant partner in a coalition. But, perhaps most importantly for judging the fairness of the election, Fidesz will win even if the “democratic opposition” were to pull ahead of them by a substantial margin.

Why is that? According to election experts, the Unity Alliance could only gain a parliamentary majority if it won by more than a comfortable margin in the popular vote. That is because of the way that the system has been designed. Unless there is swing toward the left that is larger than anything we have seen in the post-communist period or unless Jobbik’s support rises by so much that it substantially depletes the Fidesz vote, Fidesz will surely win outright and is very likely to get its two-thirds back again.

How could Fidesz win under almost any likely scenario for 6 April? I will turn to that next.