Interactive
Euro zone bank stress test calculator
Use the Reuters Breakingviews stress test calculator to calculate how the Target core Tier 1 capital ratio and sovereign haircut levels affect the amount of capital banks need to pass the stress test. Full Coverage
Hungary EU deal hopes dim, PM in Brussels
Hungary's Prime Minister Viktor Orban attends a press briefing after a debate on the infringement proceedings concerning Hungary at the European Parliament in Strasbourg, January 18, 2012.
Credit: Reuters/Vincent Kessler
BUDAPEST |
BUDAPEST (Reuters) - Hungarian Prime Minister Viktor Orban tried to move closer to a deal with the European Commission on Tuesday to rework laws critics say undermine democracy so he can revive stalled international aid talks.
But Orban's deputy tempered expectations of an agreement and
revealed a potential point of conflict between Budapest and the Commission, which has threatened legal action if Hungary does not change laws on the central bank, courts and data protection that critics say undermine democracy.
European Union finance ministers also opened the way on Tuesday for the bloc to freeze cohesion funds to Budapest, saying unorthodox decisions that Orban has used to cut the budget deficit had not brought it below the bloc's ceiling in a sustainable way.
Orban's efforts to centralize power and stack Hungarian state bodies with party loyalists have drawn criticism from Brussels and Washington, which fear they stifle democratic freedoms in the ex-communist country of 10 million.
He has lost much of his support at home, while the economy is heading for recession and investors' loss of confidence has pushed borrowing costs to above 9 percent. Analysts say Orban needs an aid deal to maintain access to the markets.
He will meet Commission President Jose Manuel Barroso on Tuesday to present a timetable for legal changes.
However, Deputy Prime Minister Tibor Navracsics said the aim of the meeting was not necessarily to clinch a deal that would give a green light for aid talks with the EU and IMF to resume.
"I do not know if either the prime minister or the president of the Commission have the ambition to strike an agreement today. The issues at stake are just not that pressing," he told public radio.
A $13 billion private pension grab produced a rare fiscal surplus last year, buying Hungary some time before it must borrow 5 billion euros to fund repayments to bondholders and to the EU and IMF for an earlier loan.
But the economic outlook is grim. The European Bank for Reconstruction and Development cut its forecast for Hungary's economy on Tuesday to a 1.5 percent contraction in 2012, its weakest outlook in emerging Europe.
Confounding market expectations, the central bank left interest rates on hold at 7 percent at a meeting on Tuesday.
Analysts in a Reuters poll had predicted a half point hike after the bank made two such increases since November to staunch investor flight from Hungarian assets. The unexpected hold move knocked the forint half a percent lower versus the euro.
ABOUT FACE
Orban in the past pledged to resist outside pressure from parties like the IMF and EU and take Hungary on its own course.
But then rating agencies cut Budapest's debt to "junk" and the Commission began infringement procedures. After investors fled the forint, driving it to a record low against the euro and pushing bond yields above a ruinous 11 percent, Orban promised to reverse some policies.
It was a major political climbdown for the prime minister who swept to power in 2010 with the strongest political mandate in Hungary's post-communist history although analysts and EU leaders are waiting him to fulfill the pledge.
"We trust that what Prime Minister Orban promised us, namely to comply with EU legislation, will be true," Commission spokesman Cezary Lewanowicz said in Brussels ahead of Orban's meeting with Barroso.
Orban's overtures to the EU and IMF have generally boosted market sentiment, lifting the forint a cumulative 5.5 percent higher since it hit an all time low of 324.2 per euro on January 5.
"Given the government has until February 17 to respond to the European Court of Justice's infringement procedures, Orban will continue to stall, even using his meeting today to get a sense of where Barroso's limits lie," think tank Eurasia Group said in a research note.
A top government official said on Monday that Hungary could have a new funding deal in place worth around 17-20 billion euros by March or April. Points of conflict remain, however.
Navracsics said the government disagreed with a Commission demand that Hungary reverse a law lowering the retirement age of judges from 70 to 62, a move Brussels says infringes on judiciary independence.
Another issue is Hungary's budget. EU finance ministers endorsed a view from the Commission that Hungary had not done enough to bring the gap below the EU's 3 percent of gross domestic product ceiling in a sustainable way.
While the Hungarian deficit is set to hit that target, the Commission believes it is only due to one-off measures and the shortfall will grow again in 2013.
"From the moment the ministers approve the Commission's assessment that Hungary has not taken effective action, the Commission is free to decide to suspend up to 100 percent of cohesion funds for Hungary from 2013," an EU official said.
"Hungary will have until the end of the year to act to change the Commission's mind."
(Writing by Gergely Szakacs and Michael Winfrey; Additional reporting by Marton Dunai; Editing by Anna Willard and Hugh Lawson)
- Tweet this
- Link this
- Share this
- Digg this
- Reprints
It’s not like early retiree judges would be sent directly to the guillotine. Although as instruments of the communist regime they are far from being innocent altar boys. Many of the old school judges actively took part sending thousands upon thousands of Hungarians to jails, to be tortured, executed under the old communist dictatorship and during the bloody reprisals after the 1956 revolution was beaten down. Up to this date the same red judiciary feigning its innocence did not find one singe person guilty for atrocities committed against thousands of Hungarians.
For example, they made a ruling that a 1000 years old traditional flag from one of the house of one of the early Hungarian king is illegal. It’s like ruling in Scotland the Scottish kilt is an illegitimate symbol, punishable by law who dares to break the decree.
Another pearl of wisdom is to take away from Hungarians the right of self-defense the Castel Doctrine that was handed down through the ages from ancient Roman Jurisprudence “my home is my castle” when thieves break into someone’s home.
This is a dandy: Hungarians never kept slaves, and slavery as such is not tolerated in any civilized country nowadays. But in the Hungarian countryside it does exist and there is no law against it as a police chief remarked. There is substantial minority in Hungary the roma, or gypsies as they were called before the term gypsy became politically incorrect expression. Anyway, most of the roma minority – about 10% of the population- is unwilling and unable to switch into the modern market economy. Their traditional occupations are gone with the horse and bogy; mostly they don’t have education, nor training or capacity or the will to partake in today’s labor demand. They are anchored in time a hundred years behind in the bygone romantic era when gypsy caravans wandered and freely roamed the highways as the bird flies.
Many roma live on social assistance, a vestige of the communist area where from cradle to the grave the state took care of its people. The more kids the roma have, the higher the welfare check. So they have large families. It’s not rare teenage roma girls of 14 years old to have her first child. Large roma families get paid sometimes more than an average working taxpaying Hungarian stiff.
This is a huge burden on the Hungarians, this where untold amount of cash disappears from the coffers of the government, and hat in hand they run the IMF, to the EU for bailout. It’s a taboo to talk about this, but there are thousands of roma “self government” offices throughout the country that are established for the sole purpose to distribute welfare cash. Neither the “self government” bureaucracy, nor the recipients of welfare contribute to the economy, but they suck the system dry.
To get back to my thread, the same roma on welfare boost their income with all sorts of illegal activities. Crime rate among the roma are astronomical. The pinko commie judiciary coined a clever phrase: “occupational crime”, when the roma gypsies break in somewhere and steal. If the stolen loot is under a certain amount – about a third of an old age pensioner’s monthly pay – the stealing is not considered a crime only a minor offence, and the pinko judiciary system fast tracks the thieves, they let them get away with minimum or no punishment.
Then there is the slavery issue. Some of the same roma minorities keep old helpless Hungarians as slaves. Old lonely Hungarians are enticed to voluntarily go and live with a large roma family. Once they arrive, their papers their bank cards are taken away, and at month end the slave keeper goes to the automatic banking machine sometimes with a couple of banking cards to withdraw the pensioners’ money.
There was a remarkable case not long ago. An old Hungarian guy was kept as slave by a gypsy crime family. The old man tried to escape, but was cut, and brought back. He had to look after horses the gypsies kept. The old guy was sleeping with the horses in the stable. To prevent his escape, he was tied up to a long dog chain so he could work around the horses but prevented him walking out. At first the chains were on his wrist, but his skin got infected, so they moved on to his neck. When feeding time came his chains had to be loosened up so he could swallow.
A police chief in the country was asked why the police don’t step in. His reply was: no one comes forward to report it, and there is no law broken.
No law broken, because the pinko commie judiciary looks the other way. They have rules against traditional 1000 years old Hungarian flags, but not against slavery today in the heart of Europe!
Follow Reuters