Against all odds, Gyurscany is Hungary's longest-serving PM

By bne IntelliNews December 17, 2008

Robert Smyth in Budapest -

Despite the ever-worsening state of the Hungarian economy, the seemingly perpetually embattled Prime Minister Ferenc Gyurcsany has managed to survive to become the country's longest-serving post-communist PM. By hanging onto power since 2004, Gyurscany is proving himself a shrewd political animal and has probably secured his position until the next elections in 2010 - though he's unlikely to survive any further than that.

"Gyurcsany has a good chance of remaining in power until 2010, since nobody, especially not the opposition, wants to replace him in the current dire economic climate," says Balint Torok, an analyst at BudaCash brokerage.

Burnishing his somewhat threadbare reputation is that Gyurcsany is seen as having acted promptly in lining up October's $25bn rescue package from the International Monetary Fund, the EU and the World Bank, rather than pussyfooting around and leaving it until too late to act. "He's proved himself to be a dynamic leader and has been quick to react to the current economic crisis," reckons David Somogyi, political analyst at Vision Consulting in Budapest. "A paradigm shift in the way that the public view the PM may have occurred. He's done what he had to do regarding the crisis and may have stepped out of paradigm that had him labelled him a liar."

Gyurcsany's admission to his party cronies that they'd screwed it up in the wake of the 2006 general election was recorded and leaked to widespread public indignation and no short amount of rioting when the world's press turned its attention to Hungary. While the Hungarian PM might be seen as a good crisis manager vis-à-vis his handling of the current recession, the recession itself further exacerbates Gyurcsany's unpopularity, opines Torok. Many still blame Gyurcsany, or at least his party MSZP (Socialist Party), for the mess that Hungary now finds itself in.

The problems stem from the term of the former Socialist PM Peter Medgyessy, who made the mistake of keeping to his promises on being elected in 2002, which resulted in spending that the country couldn't afford. After taking over from the resigning Medgyessy in September 2004, Gyurscany denied in the run-up to the 2006 election that the problems were really that serious, despite being accused by the opposition that his party hadn't disclosed the true state of affairs to the public. However, by deploying the convergence programme to tackle Hungary's soaring deficit via stringent fiscal policies, he basically admitted the problems were very serious. "The deficit is now relatively low [at around 3% of GDP, as opposed to the 10% it used to be], but in order to achieve this it was inevitable that the rate of growth would slow," says Somogyi.

Economic reforms

While Somogyi says the comparatively troubled state of the economy doesn't necessarily mean that Hungary will have a longer recession than its regional peers, it does mean it has a more limited range of policy tools at its disposal.

Torok calls for economic reforms to get the economy back on a reasonable track and noted that in the last couple of weeks there have been several statements suggesting that new reforms might be coming. "Reforms are important for Hungary's long-term success; unfortunately, in the last few years short-term political gain has been more important than medium-term economic well being," says Torok. "I want to see more changes irrespective of public support considerations, but it's hard to imagine they would want to sacrifice what little public support they have for unpopular fiscal reforms. However, [Gyurcsany's] popularity can't get any lower, so he could go ahead with them."

Although his Socialist party is very much behind in the polls and could already be looking at damage limitation to prevent the opposition FIDESZ from gaining a strong majority in the next expected general election in 2010, Gyurcsany hasn't done his chances of pulling off an extremely unexpected comeback any harm at all. "At the moment I don't think they can win, but because of the crisis there is a slight feeling that anything could happen and Gyurscany has a better chance of being re-elected than before the crisis," says Somogyi.

The big question regarding Gyucsany's prospects for survival, at least until 2010, is what will happen in the European Parliament elections in 2009. In order to avoid serious calls for his resignation should the results be catastrophic, Gyurscany is already trying to reduce expectations. "Europe doesn't exert much influence on Hungarian politics - the MSZP is prepared to lose, and this is not its main focus," says Torok.

Meanwhile, the PM has no serious rivals within the MSZP. While many might not be happy with him, the party is too fragmented for a serious alternative to emerge. Somogyi also notes that Gyurscany has been good at creating a common enemy for his party in the form of former coalition partner SZDSZ (Free Democrats). After the SZDSZ withdrew from the coalition earlier this year, the MSZP desperately needed their former partner's support to get the budget through parliament this autumn. "Facing a possible call for his resignation from SZDSZ leader Gabor Fodor in exchange for his party's cooperation, Gyursany seized the initiative and managed to unite the MSZP, so the SZDSZ was no longer in a position to bargain with socialist leaders behind the PM's back," explains Somogyi.

The regrouping SZDSZ knew that they had to support the budget anyway, because early elections would have been too risky for them. "The turning point for Gyurcsany's short-term prospects was getting support for next year's budget. However, I would put his chance of winning the 2010 election at less than 1%," says Torok.

While Gyurcsany's chance of convincing the Hungarian electorate to give him a second term in 2010 is practically fractional, he's more than likely to be safe until then. He could even embark on reforms that could steer the Hungarian economy out of the worst of the recession that many feel he and his party is responsible for. In doing so, Gyurscany could save his legacy, but whether he puts his neck out to do so is a question to be answered in 2009.

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Against all odds, Gyurscany is Hungary's longest-serving PM

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