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Hungary’s troubles with the EU

January 17, 2012

Belgium’s spending freeze has convinced the EU commission of its resolve to keep its deficit and debt under control. Hungary faced a similar threat, yet due to its lack of budgetary reforms, will be receiving economic punishment from the EU. Economic Commissioner Olli Rehn threatened to suspend some of its development assistance that it receives as a new EU member. In an unrelated, but perhaps more consequential decision, the EU said it would start legal action next Tuesday to resolve the increase in authoritarian measures in Hungary.

Viktor Orban and Jose Manuel Barroso meet in Brussels in 2010 (AFP)

The Hungarian regime has been under close watch by those interested in its adherence to EU standards of democracy and human rights. According to the Wall Street Journal, “The Hungarian government says it is ‘ready to discuss’ the new laws but continues to maintain that they are in line with international norms.” Prime Minister Viktor Orban, who took office in 2010, has limited the authority of the Constitutional Court, reduced the power of the central bank’s president, forced out judges and prosecutors by changing retirement rules, and gerrymandered districts to solidify his party’s grip on power for years to come. The EU has seen evidence of what the New York Times calls “creeping authoritarianism” since Orban arrived in office, if not before. Counting on Hungary’s dependence on financial assistance has not created the concessions desired by the IMF and the EU, providers of said assistance.

Orban still seems dismissive of the EU’s economic complaints. He was quoted in the Washington Post as saying, “They criticized only the past, it’s a clear sign that we are close or we even have an agreement on the possible and wished performance of the Hungarian economy and the budget in 2012.” He sees a promising future for Hungary despite the current difficulties. The Commission, however, says Hungary is relying on “one-off revenues,” failing to make permanent budgetary reforms. While Hungary will not face the financial sanctions made possible by the EU Council’s December treaty agreement, the withholding of development assistance may be just as significant.

Malta and Cyprus joined Belgium in making budget adjustments to meet the Commissions new requirements for economic austerity, while Poland was seen as adequately addressing their economic needs. The EU commission’s new rules have yet to show real teeth with sanctions against a Eurozone member like Belgium. Nonetheless, the EU may use Hungary as an example for other recent EU members and candidate members lacking democratic gusto.

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