Viktor Orbán is not a favorite of the West

When on March 19 world leaders gathered in Paris to discuss the details of the Libyan project, the Associated Press introduced the topic with the headline: "Orban is missing, the rotating president, embarrassing." A month before, on February 17, the world found out that the 2011 summit on the Eastern Partnership that was considered an important event of Hungary's rotating presidency of the European Union had been postponed. Allegedly because of the crowded schedule of international meetings of world leaders.The summit will be held in Warsaw during the rotating presidency of Poland. The Eastern Partnership, by the way, is an organization aiming to improve the political and economic trade relations of six post-Soviet states of "strategic importance" (Ukraine, Belarus, Moldova, Azerbaijan, Armenia, and Georgia) with the European Union.

The Hungarians were naturally disappointed but put on a good face. The Hungarian ambassador to the European Union emphasized that the schedule at the end of May was indeed crowded, especially since the G8 summit was scheduled for May 26 and 27 in Deauville, France. Moreover, the ambassador added, the original plan called for Poland and Hungary to be co-hosts of the event, and thus the postponement under joint sponsorship involved little substantive change. The spokeswoman for the Hungarian foreign ministry also tried to make light of the Hungarian government's disappointment, but perhaps inadvertedly admitted that the Hungarian government had tried to change the date from May 27 to May 25 but that date was not suitable either because commemoration ceremonies for the fiftieth anniversary of the Organization for Economic Co-operation and Development were scheduled for May 25. There's always a party somewhere!

According to commentators critical of the Orbán government, it is possible that the crowded schedule was actually created in order to prevent Viktor Orbán from having the summit in Hungary. I wouldn't go that far, but we do know that Orbán is considered to be an "unpleasant fellow" in Brussels. I think that the United States and Western Europe have been watching the new Hungarian government's increasingly nationalistic and undemocratic policies for some time and find them distasteful. One mustn't forget that the first critical editorial on Orbán and his government appeared in The Washington Post already in the summer of 2010, and since then the U.S. government has indicated on several occasions that unless there is a drastic change in attitude in Budapest, U.S.-Hungarian relations will not be cozy. Germany, Hungary's most important trading partner, has also been very critical. Both the German president and the chancellor recently sent a message via the Hungarian president Pál Schmitt that they are watching Hungarian political events carefully.

Although there were already reservations about the new Hungarian government's nationalistic policies during 2010, the real problems began in 2011 after the Hungarian parliament voted for the new media law in the last days of December. I have written a lot about this controversy; here I just want to note that although Viktor Orbán might be very proud of his performance in Brussels when he vehemently defended the honor of Hungary in the European Parliament, in fact right then and there he dug his own grave with respect to his standing in the international community. I don't think that Orbán had been a favorite among his fellow politicians in Brussels even before, but after that performance he was finished. They don't want to have much to do with him. Indeed, they seem to avoid him as much as possible. On photos taken at these EU gatherings one can often see Orbán standing alone, looking on as a circle of people talk to one another.

And yesterday came the unexpected news. On the very same day that the Eastern Partnership summit was supposed to take place but had to be postponed due to scheduling conflicts a similar summit will be held in Warsaw. And while the Hungarians had been unsuccessfully courting Hillary Clinton to attend their summit, this Warsaw meeting will be attended by American president himself! The eastern partners will also be there, but it will be a meeting of the presidents of the participating countries.

The news came like a bolt from the blue. Pál Schmitt, who happened to be in Warsaw yesterday on other business, was told on the spot about the summit and that he was invited. Although it is true that Poland is a much larger and more strategically important country than Hungary and although it is also true that the Polish population of the United States is considerable, one cannot quite shake the impression that the United States in a not too subtle way was making the point that it is having absolutely nothing to do with Viktor Orbán. And it seems to me that Poland was ready to oblige and cooperate with the United States in isolating Donald Tusk's allegedly great friend, Viktor Orbán.

You may recall that Orbán has been courting Poland and has stressed on every possible occasion that Poland is the cornerstone of Hungary's foreign policy. But it seems that Prime Minister Tusk realized that being too close to Viktor Orbán is not to his advantage. He sold his friend down the river, let's face it.

In today's Népszava two former Hungarian diplomats were asked about the unexpected change of venue. Péter Balázs, former foreign minister, considered the announcement about the summit in Warsaw "a double loss for Hungary." The original summit is being postponed while the hastily organized new one will also be held in Warsaw and not in Hungary. On the other hand, András Simonyi, former Hungarian ambassador in Washington, emphasized that one mustn't confuse the original summit with this meeting. As far as he knows, "aside from the unpleasantness caused by the media law, the Hungary presidency is faultless." I guess it all depends on who's keeping score.

 

 

 

Comments

[Ron]

I am not surprised about the aforementioned article. It started with Wikileaks mentioning that Victor Orban is equally liable to play with fire. In international politics that is not done. This together with not keeping his promises, his speech at the EU, his non-appearance in France, and probable a couple of other things we do not know about, makes him a liability. Honour and keeping your word is very important in international politics. Without that you are a sitting duck, and that is exactly what happened.

[late night]

The main point is, Hungary/O.V. didn't toe the line on Libya word for word as required!

[someone]

Let's not forget that Orban also will not let Brussels dictate.He wanted to be left alone. He got what he wished for. He got his independence.It is unfortunate that Hungarians are the ones who will pay for Orban and his band's arrogance.

[Sandor]

Eva: Prime Minister Tusk realized that being too close to Viktor Orbán is not to his advantage. He sold his friend down the river, let's face it.
I think you are unjust to Tusk.
He would be a fool letting himself be embarrassed by Orban and then make nice of it. The responsibility lies with Orban for being the jerk that he is and Tusk shouldn't be expected to smooth things over for him.

[Odin's lost eye]

Perhaps one morning Orban Viktor will wake up and realise that most folk in the European Union just do not like him.

[Johnny Boy]

Odin's lost eye: and perhaps one morning you will wake up and realise that you are completely wrong because Orbán, a vice president of EPP, is on good terms with everyone who counts in the European Union. (Note that I hereby exclude the pedophile Kohn-Bandit and the like.)

[NWO]

No question that Orban is not too popular in Europe or likely among the U.S. Administration. let's face it, Hungary is too small and too non consequential to be hosting major international summits. They don't hold the Democratic National Convention or the RNC in Sioux City, South Dakota either. Poland is and will increasingly be a major player in Europe both in terms of economics and foreign policy(right below Germany, France and the UK) and on par with or ahead of Spain, Italy etc. Poland has also always (since the changes) been very much pro-US in its outlook and foreign policy (unlike Hungary).

Despite these set backs to Hungary and the potential for a brusied ego for Orban, yesterday, however, proved (shockingly in my estimation) that Hungary still seems to be popular among US dollar investors, being able to sell $3.75 bn bonds (combination of 10 and 30 yrs) at 310 and 330 bps over Treasuries. This was an amazingly successful auction and comes despite the budget deficit problems etc. in Hungary and new threats to the Euro zone from Portugal. Orban, Matolcsy and the rest are probably feeling pretty smug today.

[Kirsten]

NWO, the investors surely do remember that last time that Hungary was in trouble, the EU (and others) came to rescue. Why should that change? Hungary is a member of the EU (no matter how cooperative).

[Eva S. Balogh]

NWO: ". Despite these set backs to Hungary and the potential for a brusied ego for Orban, yesterday, however, proved (shockingly in my estimation) that Hungary still seems to be popular among US dollar investors, being able to sell $3.75 bn bonds (combination of 10 and 30 yrs) at 310 and 330 bps over Treasuries."

Makes no sense, if you ask me. Hungary is in trouble.

[Odin's lost eye]

Oh dear why is Orban Viktor not exactly flavour of the month in Europe? He is very aggressive, pugnacious and not exactly a ‘Mr Nice Guy’. I do not like him, he is a demagogue. He is vice president of the EPP yes. He got it, I think, because the British Conservatives left the grouping. Someone has to be an ‘also-ran’.

[Mutt Damon]

@NWO: Say what? Does this mean that the 66ers just increased our foreign debt by 5% (I'm not sure about the numbers)? Hey, Johnny! Are on the line?

What does the "at 310 and 330 bps over Treasuries" mean?

[Johnny Boy]

Eva S. Balogh when encountering good news for Hungary: "Makes no sense, if you ask me. Hungary is in trouble."

Thanks for the good laugh. Do you know what this reminds me of? There is the joke with the old peasant when he sees a giraffe in the zoo for a first time and he is like "ilyen állat márpedig nincs" (I insist that there is no such animal).

[Mutt Damon]

@Johnny I'm not sure you understand what's this about. I'm not sure if I am, so somebody more financially literate can enlighten us.

These are US dollar bonds so whoever buys them is betting on two things:

1. The US economy (since the payout is US dollars)
2. They will actually get it back from us

In case of the second they believe that the 66ers will be able to use their majority (10 years from now, sigh) to beat the money out of the population no matter what (yes, your taxes Johnny). Alternatively the Hungarian GDP can skyrocket, but even you Johnny have to have some doubts about that.

So why are you so happy?

[Ron]

Mutt Damon: What does the "at 310 and 330 bps over Treasuries" mean?

bps=basis points
So each bonds has a yield/interest rate, which vary from time to time.
310/330 over treasury means that they pay 3.1%/3.3% on top of the treasury rate. My estimation is that the total yield is above 7%, while Greece had last year around 5%.

It may become more expensive/cheaper if you take into account foreign currency fluctuations (USD/EUR/HUF)

Believe me VO has nothing to be happy about. It could be worse Holland paid in the 80's 11-13%. But in the end the tax payer is paying for it.

[Kirsten]

Mutt: @NWO: Say what? Does this mean that the 66ers just increased our foreign debt by 5% (I'm not sure about the numbers)?

The debt of Hungary can be either in forint or in foreign currency. Some of the debt has shorter and some longer maturity (one of the bonds issued today appears to have a maturity of 30 years). Every year the government needs some money to service the existing debt (pay the interest) and to repay those bonds that mature (are redeemed). For that the government can either use tax income or raise new debt. I read that today's issuance was sufficiently high to cover half of the needs of the government for this year (which I think could mean "needs in terms of foreign currency interest payments and redemption"). But whether and if so by how much the debt of Hungary increases by today's operation cannot be judged from the interest rate alone. It depends on how much of the debt is in foreign currency, how much matures this year, how high the interest was earlier etc. But definitely it does not mean that the whole debt of Hungary increases by 5 %.

[Johnny Boy]

Mutt Damon: for each year, there is a certain amount of bond to be released, and the amount is calculated in the yearly budget. This time we saw two-thirds of this year's estimated bond amount released, and released very successfully.
The bonds went at a lower interest rate than planned (and expected by analysts), which means lower rate to be paid back by Hungary.

And the basic message of the whole auction being very successfully is that Hungary can entirely finance itself from the markets, without any need for intervention from third parties such as the IMF.
I understand this is bad news for all of you who pretended soo outrageous because the government kicked out the shrill IMF. Must be bad seeing that none of your wished visions of an economic collapse seems to follow that step.

[Ron]

Johnny Boy: And the basic message of the whole auction being very successfully is that Hungary can entirely finance itself from the markets, without any need for intervention from third parties such as the IMF.

For now. But please do not forget the interest payments will kick in next year. The income for Hungary is HUF not USD, so the actual interest rate (on HUF value may much higher). That is where the people with foreign currency loans went into problems, the same may apply for Hungary.

The IMF was looking for a long term solution, while this is good for a few months. Unless things changed soon Hungary will be having major problems next year and the year thereafter. Although the exports went up the rest of Hungary is lagging behind.