Saturday, March 7, 2009

A very Hungarian coup?

Personally I'm not adherent of conspiracy theories, especially as they were extensively used in the 20th century to adress very complex social processes in a very simplified way. The results are well known, unfortunately and fortunately. But as historian I have to admit that conspiracies exist.

Maybe we have witnessed one this week in Hungary? A series of events following each other and pointing to the same object raises the question even for me. What exactly happened? The trigger was the EU summit last weekend, obviously not bringing any immediate relief for the countries in ECE. Some suspicion would have been justified at that very moment, as those politicians eagerly seeking the ground for a common standpoint during the preparatory phase of the summit, surprisingly declared that there is no need to treat the region as a whole. The German press next day fired a salvo on Gyurcsány Ferenc, praising the wise politics of the German chancellor and describing the events as a complete failure and serious setback for her Hungarian colleague, whose every proposal were rejected. Although more nuanced opinions existed (check the link in the psotscript of my previous post), this point of view soon became dominant in the Hungarian press and Gyurcsány was portrayed as a ballast, an outcast of Europe. Political analysts, economic "experts" suggested in a barely veiled way that he was a burden.

After two days of hammering, on Wednesday came a sudden event - a declaration of supervisory authorities from ECE about the unjust opinions on the vulnerability of the banking system of those countries, once again emphasizing the differences between the individual cases, signed by five authorities, the Hungarian one lacking. Either because of this event, or only simply as a parallel process, the excahnge rate of the forint against the euro suddenly fell to a new lowest ever level. This was immediately presented in the media as the edge of the abyss, the begining of the inevitable, because, as the titles were phrased, the forint was dissociated from the region, the markets gave right to those, who declared that Hungary has its own poblems, not to be compared to and bound together with the other ECE countries, with more sound fundamentals. Next day even the largest and most prestigeous daily newspaper appeared with an article on its cover bearing the title: "The markets want reforms, the stock exchange and the forint 'came lose' from the region, The chair of the MDF [Hungarian Democratic Forum, centre-right party] proposes extraordinary parliamentary session" (The online edition titled an article on the previos day as "How important is the Gyurcsány-factor in the thrashing of the forint?".) Once again experts argued on behalf of an abdication of Gyurcsány, new informations (?) surfaced - from informators unwilling to disclose their names - about a pathetic preformance of the prime minister in London at Tuesday, where he discussed the government's proposals and the story of dissociation continued even on Friday. That day Sándor Csányi, the boss of Hungary's largest bank, OTP mentioned the early elections as a possible solution. (Later he disclaimed it, alleging that it was only one of his aides.)

Up to this point it is an ordinary story of incompetence and wishful thinking, as I will point it out later. But rumours were spread in the country since Wednesday as well, aimed to destabilize the financial system with a rush of clients for their savings. One of my friends was called from Geneva (!) just to be asked whether it is realistic that OTP will freeze savings accounts that day, another friend of mine was told that Gyurcsány would announce sovereign default in minutes. This latter piece of gossip was circulated even at Friday. On Friday the National Bank and the supervisory authority was forced to issue a declaration about the stable foundation of the banks in Hungary and the guarantees backing clients savings. The simultaneity of these events are not the only possible argument on behalf of a conspiracy theory. The story of disscotiation was clearly an invested one, without any real basis even on Wednesday, not to speak of Thursday or Friday, as it could have been clear for anyone checking the real time currency rate charts at any suitable website. The curve, showing the change in the exchange rate of Forint, Zloty and Czech koruna was almost identical on Wednesday, Thursday or Friday, the curve of the forint only moved upwards regarding the y-axis. It happened almost at once, only lasted for ten or twenty minutes, not longer, and from that point point the changes correlated with the changes in the rates of Zloty or Czech koruna. I'm not a well-paid broker, but it was quite clear even for my mediocre eyes.* (The story was changed a bit, as it was clearly not true. At the moment the dissociation is interpreted that forint stays at a historic low against euro, while the other two currencies - although moving simultaneously and parallel - not. But, pardoxically, it is not a supportive but a counterargument. As those currencies were considerably far from their historical low even at Wednesday, if they would have been attained this level since then, it would have meant a very different movement from that of the forint.)

One can of course believe or reject that a conspiracy to overthrow the government was underway last week and it is far from being proved by the facts I gathered here. I'm not sure either, although the density of the events seems to be a bit more than simple coincidents. And even though I have a terrible opinion on so-called "experts" and "analysts" in Hungary, and I would be glad to have proven that they are so stupid guys as not being able to interpret two charts besides each other, but the concerted efforts to create a panic, a sudden fall in the rate of the forint and the effort to portray it as a result of Gyurcsány's incompetence and status as the least accepted politician by his colleauges in Europe also can be explained as something deliberate as well.

I don't know what could have been the aim of such a move, who could have been behind such an action. Maybe it was just someone trying to take adavntage of surpise events. Maybe not only. (I advise everybody who would rather rely on facts not to move beyond this point, as the following are simple speculations, funny games of mind.) Passionate haters of the opposition leader, Viktor Orbán can create a narrative interpreting the events as his attamept to return to power. He met with every key foreign actor of the story before the EU summit (Merkel, Donald Tusk, who, although convoking a mini-summit of ECE leaders, at the EU event simply rejeted the idea of the necessity of a common approach, and Mirek Topolának, Czech premier and current president of the EU Council, who was another ECE politician arguing against the common treatment.) Orbán certainly has close connections to the Hungarian economic elite, who are willing to accept his political strategy: not to disclose any specific measure before he can achieve an electoral victory from fear of alienating the electorate. They clearly think that although Orbán won't campaign with the necessity of asuterity measures, rather with populist promises, he will realize their program, put forward as the so-called "Reformszövetség" (Reform Alliance) agenda. Orbán scheduled his usual "State of the Nation Adress" to this Friday and it was unusally uninteresting and without content, as if he would have been preparing for another situation, the announcement of victory over the enemy and his own return as the saviour. But there is the possibility of an attempted coup inside the ranks of the Socialist Party in the hope that with this debacle Gyurcsány can be eliminated not only from the government, but from the party itself. I suppose that the worst fear of many socialists is the possibility that the present premier could retain his position of party chairman even after the looming electoral defeat. And another possibility is an action organized by the economic elite to push forward their program, in many points opposed by the government and force the prime minister to accept it, instead of another. As their proposed measures would be very advantageous for the larger companies and those with the highest income in the country, while putting the burden on those with the lowest income it is an eminent material interest of theirs not to allow to implement other measures. As the prime minister at Friday announced that he would even like to propose more profound changes than the "Reformszövetség", maybe he was impressed by the events... (Although without any specific measure it could even mean cahnges to the contrary direction...)

Two more observtions on this topic. Firstly, it is far from being certain that we have seen a conspiratory action, but if it would be true it is extremely irresponsible, as the tactics was to bring the country to the edge of default, where it is far from being sure that the worst can be impeded. Secondly, there is many legitimate reason to argue in favor of Gyurcsány's resignation, especially as he is far fom having a clear and coherent concept about the necessary steps, he is not able to separate the handling of the crisis (contorlling the budget deficit at any cost, with ad hoc measures) and the setting of a new direction for the country, not regardless of the experiences and conclusions of the crisis, that way sometimes just allowing the confusion and insecurity to grow. But if the most prestigeous newspaper would like to side with those, who calls for this move from Gyurcsány it would be more honest and maybe even more effective to write and publish an article with a cover title" "Gyurcsány has to take his hat" and not to mingle with dubious actions with dubious means threatening to move the country towards the catastrophe. (Well, this last sentence was very emphasizedly preceded by a huge "IF".)

*It is nothing to do with possible events at next week, I'm not an oracle to foretell the future. But even the story of dissociation was not a story of futue events, but story of what allegedly happened.
P.S, For those who are familiar with Hungarian here is a transcript of a TV program with a good economist, who apparently do not share the stupid approach of the "experts" and analysts. I'm proud of myself. :)

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