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Hungary's Orban keeps up verbal attacks on EU

11 march 2012, 12:08
Hungarian Prime Minister Viktor Orban. ©AFP
Hungarian Prime Minister Viktor Orban. ©AFP
Hungary's controversial Prime Minister Viktor Orban is keeping up his war of words with the European Commission, even though Brussels could be about to make the country's dire economic situation even worse, AFP reports.

"I am elected, Hungary's government is elected, the European Parliament is elected too," a defiant Orban told a German newspaper in a recent interview. "But who elected the European Commission, where is its democratic legitimacy?"

In the latest episode of a running tussle, the EU executive on Wednesday gave Hungary one month to bring contested laws into line with EU principles or find itself in the dock of the European Court of Justice.

The new laws covering the forced early retirement of judges, data protection and reforms of the central bank are under a contested new constitution that critics say is fast making the EU member state undemocratic.

Brussels also warned that Hungary's bid to secure a 15-20 billion euro ($20-26 billion) credit line from the EU and the International Monetary Fund depended on Budapest proving its commitment to the EU's democratic principles.

Asked whether the EU was ready to reconsider the funding request, after talks were suspended late last year due to worries over Hungary's legislative reforms, Commission spokeswoman Pia Ahrenkilde said, "The conditions are not yet met."

Brussels also last month threatened to freeze 495 million euros ($650 million) in EU funds destined for Hungary in 2013 unless Orban's government took credible steps to rein in the deficit.

But appearing on Thursday night before the Hungarian chamber of commerce, Orban slammed the EU's policies as "stupid," saying they "do not help us get out of the crisis ... it punishes the good and rewards the bad."

His audience however will have been aware more than most of the economic challenges facing the former communist country of 10 million people.

Unemployment is around 11 percent, higher than the EU average, foreign investors and banks have been spooked by Orban's unconventional economic policies and the forint currency has fallen sharply.

Despite easing in recent weeks, Hungary's borrowing costs on financial markets are sky-high and its debt is classed as "junk" by all three major credit rating agencies. The central bank's main interest rate is seven percent.

Capital Economics said last week "a fragile banking sector, unorthodox and unpredictable government policy and a deterioration in global risk appetite will cause Hungarian assets to come under further pressure over the next 6-12 months."

Graft watchdog Transparency International warned last week also that the country "has been captured by powerful interest groups," with party financing and the business sector facing the "most alarming corruption risks."

But the EU and the IMF appear reluctant to ride to the rescue, having walked away from preliminary talks in December.

"I have been waiting for two months. I have mandated a minister. I am open to all negotiations, but still they don't come," Orban said on Thursday.

For Peter Kreko, director of the Political Capital think-tank in Budapest, the reason that Orban is continuing with his "bravado" is not that he is blind to Hungary's economic problems. Instead, he is "playing to the electorate."

Since winning a landslide election in 2010, Orban's centre-right Fidesz party has lost half of its support, opinion polls indicate, with the extremist Jobbik party picking up disaffected voters, Kreko said.

Orban is also hoping time is on his side, Kreko believes.

"He is hoping that things will get better internationally, that bond yields will fall, that the forint will revive, meaning that his situation will no longer be desperate ... and he won't have to accept all the IMF and EU's demands."

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