Debt crimes and misdemeanours in Hungary

By bne IntelliNews August 12, 2011

Phil Cain in Graz, Austria -

Hungary's rightist Fidesz government is considering how to prosecute three former Socialist Party prime ministers for the "political crime" of running up the national debt, despite growing alarm even among some of its own party members.

Changing the penal code retrospectively, as suggested by Prime Minister Viktor Orban's spokesman Peter Szijjarto, would have no precedent bar that of the Nuremberg trials, Fidesz MEP Jozsef Szajer told the Nepszabadsag newspaper on August 9. A better alternative, Szajer said, might be to prosecute them under existing law for causing "grave damage to society."

That's hardly a better option for many, who are outraged by the decision of the Fidesz members of a parliamentary committee on July 31 to examine how to press charges against those responsible for increasing national debt from 53% of GDP to 80% between 2002 and 2010. The opposition Socialist and Politics Can Be Different parties boycotted the committee formed to apportion economic blame. Fidesz-controlled budget and constitutional committees will decide on the next step.

The threat of jail is "a pure PR show," says Tibor Szanyi, a leading member of the Socialist party, but adds that the consequences could be anything but.

Kristian Szabados, director of Political Capital, a political consultancy agrees. "It is very serious," Szabados tells bne. "People can turn to the Constitutional Court, but that too is filled up with Fidesz politicians."

Legal resolution, Szabados says, might only come from taking the case to the European Court of Human Rights in Strasbourg after a show trial lasting two to three years.

The Budapest three

Having won a two-thirds majority of parliamentary seats in April 2010, Fidesz does not need support beyond party ranks to push through its agenda, described by Orban as "revolutionary". In April, the PM used his government's supermajority to amend the constitution without opposition participation.

The accused include three Socialist former prime ministers: Peter Medgyessy (2002-04), Ferenc Gyurcsany (2004-09) and Gordon Bajnai (2009-2010). Gyurcsany is the principal target: a third of Hungarians would like to see him prosecuted for mishandling the economy, according to a survey published by the Fidesz-leaning Nezpont Institute. Over half of Fidesz supporters feel this way, the survey said.

But prosecution may be too indiscriminate to please Fidesz voters, reckons Szabados. "They are targeting Gyurcsany, one of the most hated former prime ministers in Hungary. But I don't think voters would support the criminalisation of Mr Medgyessy or Mr Bajnai - they are seen in a totally different way."

The deep-seated hatred for Gyurcsany is largely the result of a leaking in 2006 of a recording of him addressing a closed-door Socialist Party meeting saying his government lied for over a year-and-a-half to secure re-election earlier that year. In it, he thanks "divine providence, the abundance of cash in the world economy and hundreds of tricks" for keeping the economy afloat. The release of the recording and subsequent mass demonstrations in Budapest failed to persuade him to resign, though he eventually went three years later saying he had become a hindrance to economic and social reforms.

The new constitution, passed on April 18 and coming into effect from January 1, makes it illegal for the government to allow debt to be increased to more than half of the GDP of the previous year. But under Hungarian law, and Article 7 of the European Convention on Human Rights, you cannot prosecute someone for breaking a law created retrospectively.

Deputy Prime Minister Tibor Navracsics, talking to pro-government HirTV in August, said laws already in place during the period of the Socialist government might be enough, "if sufficient evidence is available." The prosecution, he said, would be on the grounds of "providing false figures" or being "dishonest or negligent" in use of public money.

Some dispute the figures, saying the rise in national debt relative to GDP was largely the result of GDP falling because of the global crisis. GDP shrank 6.3% in 2009, before returning to just 1.2% growth in 2010.

Gyurcsany himself admitted to the committee for finding economic culprits that the high level of spending during his two term was a mistake. But he also argued the spree began with the 1998-2002 Fidesz government, which introduced a mortgage subsidy. He also says that government was responsible for a third of government overspending between 2000 and 2010.

The Socialist Party's economic spokesperson, Imre Szekeres, sees misdeeds in the policies of the current Fidesz government too. The recent disassembly of private pension funds, which cut the debt from 81% to 77% of GDP, was a matter of "shifting the public deficit onto private citizens."

The size of the debt, the Socialists argue, is less of a problem than a budget deficit increased by the introduction of a 16% flat tax at start of this year. Economists also note that while Hungary's debt is high compared with other transition countries, it isn't when compared to the UK, France or Germany.

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