Standing up to the EU

Hungary brings to its presidency a history of tensions with the EU on economic issues.

In late November, the European Commission predicted that over the next few years Hungary would grow modestly, with the pace picking up gradually, and that its budget deficits would increase sharply.

Hungary’s government had slightly different figures for growth, and its deficit forecasts were far more optimistic. The differences were enough for György Matolcsy, Hungary’s national economy minister, to hit the roof. The Commission’s forecasts were not just wrong, but “professionally unfounded and ethically unacceptable”. Not only had the Commission’s forecasts proven wrong on every occasion in the past five years, he added, but, by accepting the previous government’s budgetary “deceptions”, the EU’s executive had tainted itself, he said, implying that its advice was not needed.

There has been tension in relations between Hungary’s government and the European Commission ever since José Manuel Barroso, the Commission’s president, vetoed the young government’s plans to finance tax cuts with a larger deficit.

Attempts to cap the pay of András Simor, governor of the Hungarian National Bank, who was appointed by the previous government, drew fire from the European Central Bank, which overruled the move, saying it was an attack on central bank independence.

Deficit clashes

Budgetary policy was also the issue in the most recent spat, when Hungary, along with other central and east European countries, wanted the Commission to accept a more generous deficit accounting procedure for countries that were running a higher deficit in order to finance the transition to a partially funded pension system – as Hungary itself is.

Will clashes be a feature of the presidency? Viktor Orbán, the prime minister, has a long history of prickliness with the EU.

During his previous term in office, before Hungary’s accession, he was widely quoted as suggesting that there was “life outside the European Union”. His government nonetheless worked hard to meet the accession requirements.

Recently, he hinted that Hungary needs to look east as well as west. However, his travel plans ahead of the presidency, as part of which he is visiting every EU leader, betray his enthusiasm for the platform the presidency offers.

Abrasive Hungary may be, but self-interest may win out.

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