After the IMF Chief's visit in Budapest

To remind everyone: in advance of the somewhat unexpected visit of Dominique Strauss-Kahn to Budapest the liberal press had little to say while the right-wing media, initially quoting anonymous financial experts, spent quite a bit of time predicting the worst consequences of the impending visit. Surely, they argued, the IMF is so dissatisfied with the performance of the Hungarian government that Hungary will either have to return the money already received or, under the best of circumstances, will not receive the remainder of the sum promised. The couple of economists who gave their names, unlike the anonymous experts of earlier analyses, didn't go that far but nonetheless accepted the premise that there were strained relations between the Hungarian government and the IMF.

And then came the famous date: January 13. Strauss-Kahn spent the morning with Prime Minister Ferenc Gyurcsány, Finance Minister János Veres, and the head of the National Bank, András Simor. Then there was an official luncheon after which Strauss-Kahn met the members of the Finance Committee whose chairman is Mihály Varga (Fidesz). Immediately after the meeting Varga gave a press conference during which, answering a question from a reporter, he announced that even "the head of the IMF realizes by now that the deal between the IMF and the Hungarian government will not be a success story. On the contrary, it will be a failure. Neither the country nor the IMF will come out well from this affair." He added, answering another question, that he had the distinct feeling that the "IMF itself no longer has any illusions" about the Hungarian government's resolve to put its house in order. He further elaborated that the IMF didn't demand that any particular steps be taken and, therefore, continued Varga, the Hungarian government did nothing.

There was only one problem with all this. Not a word of it was true. Varga was too hasty when he gave his press conference before the joint press conference of Strauss-Kahn and Gyurcsány. It turned out that the IMF is totally satisfied with the Hungarian government. A couple of hours after the joint press conference Stop, another internet newspaper, headlined its coverage: "The Visit of the Director of the IMF Is a Huge Fiasco for Fidesz." But even Portfolio that had been certain only two days before that the IMF would punish Hungary for its bad behavior had to report Strauss-Kahn's words: "I would like to emphasize that everything is going the best possible way in Hungary." It's true that the headline of the article in which this sentence appeared said that according to Strauss-Kahn "Hungary's Future Is at Stake."  For the sake of accuracy let me quote the official statement of Strauss-Kahn about the results of his visit: "I welcomed the authorities' efforts to advance policies that are bringing about a rapid reduction of financial market stress in Hungary and will contribute to create the conditions necessary to facilitate appropriate reforms in government finances and in the banking sector. . . . The 2009 budget is consistent with the size of the fiscal adjustment envisaged under the program. It will be important that budget execution delivers the programmed expenditure restraint." (See homepage of the IMF.)

Strauss-Kahn further elaborated on this in an interview given to Népszabadság. To the question whether his visit was prompted by "unexpected difficulties to overcome with the Hungarian government," Strauss-Kahn answered: "On the contray, since the announcement of the government's economic program in October, financial market conditions in Hungary have improved more quickly than we expected." He continued that "the IMF and the ECB are coordinating closely in supporting Hungary's economic program." Strauss-Kahn pretty well repeated the same on MTV (Az Este) last night. That was not good news for Fidesz and especially for Mihály Varga who was caught red handed. He tried to explain himself away on ATV (Egyenes beszéd with Olga Kálmán). He blamed sloppy journalists who forgot an important word while transcribing his predictions about the failure of the cooperation between the IMF and the Hungarian government. They left out an important word "perhaps" or in Hungarian "lehet." Unfortunately in today's technically advanced world it is easy to check the video of the press conference and Mr. Varga didn't tell the truth. He used "lesz" (it will be) instead of "lehet" (perhaps it will be).

So today the papers supporting Fidesz somehow had to explain the whole thing away. One way to get out of hot water is simply ignore everything Strauss-Kahn said. According to Tamás Nánási (Magyar Nemzet) "despite the optimism and broad smiles the director's visit was not a polite protocol visit." So Strauss-Kahn is actually lying. He says all sorts of nice things but actually he came to tell the Hungarians off.  But the most outrageous part of this opinion piece is the claim that the "credit from the IMF doesn't seem to have any practical advantage." No practical advantage? After all, according to most people Hungary would have faced bankruptcy without it. As for the forthcoming changes that must be made in the budget estimates due to the changing economic climate, the author simply can't accept the fact that there is a world economic crisis that also affects Hungary. He ends the article by warning that bankruptcy remains in the offing because the government is still not telling the truth to the Hungarian people and to prospective investors.

Fidesz decided to turn away from the IMF credit and Strauss-Kahn's positive assessment of the Hungarian government's handling of the crisis so far. They decided to emphasize the changes that must be made in the budget due to the changing economic climate. László Kövér announced that the country has neither a budget nor a government. And of course, if there is no Hungarian government one cannot praise it either. Therefore, Strauss-Kahn's words are meaningless.

Comments

[Odin's lost eye]

Professor,
Yesterday I thought you would tell us something like this.
So the Fidesz ‘Spin Doctors’ are at it again. This time they have been caught red handed. No doubt they will try to reinterpret Strauss-Kahn’s words -probably spoken in English- so as to blame the Government. If the loan from the IMF to quote the reported words of Tamás Nánási (Magyar Nemzet) *** “"credit from the IMF doesn't seem to have any practical advantage."” Mr Tamás Nánási (Magyar Nemzet) does not know very much about the IMF! I suspect that the average IMF man has forgotten more about international and national finance than Mr Tamás Nánási or the Magyar Nemzet have ever learned. Men like Mr Strauss-Kahn are the real heavy weights in that game and have access to some of the best advice in the world.
As you also report ** “László Kövér announced that the country has neither a budget nor a government. And of course, if there is no Hungarian government one cannot praise it either. Therefore, Strauss-Kahn's words are meaningless.” **
If Hungary has neither a government nor a budget then the IMF would not have made the loan and Mr Strauss-Kahn would not have left his nice warm office to visit an ice cold Budapest. In cricket the umpire would have called ‘No Ball’ and probably warned the bowler (pitcher in Base Ball). If you use too much ‘Spin’ people cease to believe it and you have shot yourself in the foot!

[dave]

Sadly, all this gibberish that the Fidesz presents is swallowed by their audience smoothly. Fidesz supporters are so much used to believing everything their Great Leader tells them that incoherence (small or huge) is not a problem. If Magyar Nemzet presented Dominique Strauss-Kahn as supporter of Stalin whose opinion is therefore to be discarded, the readers would believe this "fact".

These people (sadly, large portion of the population), prefer to live in a dream world. One cannot expect them to understand the significance of Strauss-Kahn visit's friendly nature.

[Mark]

I think we need to do a bit of untangling here ....

FIDESZ will say everything the government does is bad, because they have said little else since 2002. And it isn't the first time they've come up looking silly, because they have shot first (metaphorically speaking) and asked questions later. In reality, while there are differences in some areas, I'd suggest that a FIDESZ government would have pursued an economic policy little different to that of the current incumbents had it been in power since 2002 (and would be in much the same mess).

The IMF is not in an easy position either. It has a problem of financing, in large part because its major shareholder governments themselves have problems financing themselves. It has also attracted considerable international criticism - and its other big intervention in Central and Eastern Europe, in Latvia, seems to be provoking a very nasty political crisis. There is also a wonderful irony that Dominique Strauss-Kahn is enforcing restrictive economic policies in Hungary - this is, of course, the same Strauss-Kahn who as French Finance Minister, hiked corporation taxes to boost social spending in 1997, as part of the government that aimed to cut unemployment through introducing a 35 hour week (it is a shame that he has not brought the same social democratic philosophy to his institution's "assistance" to Central and Eastern European states). The IMF is not the institution it was in the 1990s, and looking at it in its current state, it is more part of the problem, than the solution.

The question then is whether we believe the Hungarian government's predictions, and whether they have a viable strategy for getting the country out of its current, difficult situation (of course, some of its situation is a consequence of being part of an international economy that is in deep trouble - and therefore some of the solutions have to come from outside of its borders). They are not, and they don't. It is a bit of a problem though that even though the "independent/FIDESZ associated" experts may be right about the gap in the government's predictions, they have no more a viable strategy than anyone in office.

[Eva S. Balogh]

Odin: " No doubt they will try to reinterpret Strauss-Kahn’s words -probably spoken in English"

Yes, in English. Very good English.

[Ricsi]

Nice to see all you Gyurcsány lovers sticking together,playing the same tune whilst the ship sinks !
Are you going to delete this also ??

[Ricsi2]

Hi Éva !

Nice to see the Gyurcsány lovers sticking together whilst the ship is sinking,good to know you will all go under together.
Mike at least made sense with his comment.
Bye.

[hyperthreat]

sloppy journalists is using ONE WORD to build a case for liberalism ?? Are you kidding me? Lehet or Lesz? Maybe he said the wrong word, for crying out loud. I search the internet for blogs in Hungary and this is it?

OMG!

[hyperthreat]

"cut unemployment through introducing a 35 hour week""

BWAHAHAHA!! Why bother working at all if they pay you not to? Socialism, what a load of crap.

[Eva S. Balogh]

Hyperthreat? The name tells a lot. As for your question whether there is any difference between "it may be" or "it will be," yes, there is.

[Ricsi]

Éva,
My apologies, it seemed my access was denied . but now it is open again,and here was I thinking our 'contact' was over.

[Odin's lost eye]

Mike you say *** "The IMF is not the institution it was in the 1990s, and looking at it in its current state, it is more part of the problem, than the solution." ***
I agree with you on this. The problem is the last time this sort of thing happened in 1922 most people in power did little. This time they are trying. I do not think that anyone really knows the whole solution to the problem. I beleive that one now has to go back to the drawing board.