Hongarije moet economisch orde op zaken stellen voor het in 2011 EU-voorzitter wordt (en)
EUOBSERVER / BRUSSELS - Brussels has warned that markets will "punish" the EU unless it restores faith in its financial governance. But the 2011 Hungarian EU presidency risks setting a bad example amid a struggle to rebuild its economy and a recent turn toward nationalism.
"I have encouraged Prime Minister Viktor Orban i to do everything that is in his power to address the structural problems for Hungary, to continue and to accelerate if possible fiscal consolidation efforts," European Commission President Jose Manuel Barroso said on Thursday (3 June) after meeting the new Hungarian leader in Brussels.
"I believe that without these efforts we will not be able to fully restore confidence in Europe's economy. Without confidence, there will be no growth, without growth no recovery. So the issue of financial credibility is fundamental," he added.
Under the Lisbon Treaty, the rotating EU presidency has a less showy role on the international stage. But Mr Barroso pointed out that Budapest, which is "in a very delicate situation" economically-speaking, will be responsible for steering the EU's economic reform programme when it takes over the helm in January.
The first semester of 2011 will see the commission put forward legal proposals for joint EU economic governance. It will also see member states hammer out agreement on concrete projects to meet the Europe 2020 growth agenda and launch talks on the €1 trillion or more EU budget framework for the 2014 to 2020 period.
Hungary was among the first EU countries to come close to financial ruin in the aftermath of the 2008 banking crisis. It was saved by a joint EU-IMF bail-out involving painful austerity measures. But its 2010 deficit risks breaking the EU's three percent of GDP stability rule, with analysts predicting deficit levels of five percent or more this year.
The right-wing prime minister, Viktor Orban, who stormed to victory with a two-thirds majority against the incumbent Socialist government in April, has already made symbolic cuts in the number of MPs and city councillors on the state payroll.
On Thursday in Brussels, Mr Orban promised to press ahead with the austerity and economic reform agenda, saying: "We are clear about the responsibility that's on our shoulders as the presidency of the European Council."
But his poetic depiction of the April vote could raise financial analysts' worries that he is laying the ground for a bigger-than-expected budget overshoot by blaming the previous government for the financial mess.
"We have not chosen between ideologies. We have not chosen between parties. Hungarian electors wanted to close down an era, the post-Communist era as we call it because they got fed up with lack of transparency, too much bureaucracy, corruption, too much taxes and irresponsible politicians," he said.
Mr Orban's remarks on transparency could also trigger fears that Hungary's financial reporting has not been up to scratch, recalling the Greek statistics fraud.
"What is going on now in Hungary is the restoration of transparency. So without having a transparent situation, it is difficult to discuss any figures. First of all, we have to clarify what the figures are in fact," he said.
A good example?
Mr Barroso and Mr Orban made light of Hungary's new law to offer dual citizenship to over 2 million ethnic Hungarians living in neighbouring states.
The law, passed last month, has stirred security concerns in Slovakia, which is home to 500,000 ethnic Hungarians and which faces ethnic tensions following legislation restricting the use of the Hungarian language. Another recent bill also spoke of the "tragedy" of the post-World War I Trianon treaty, which ceded 72 percent of Hungary's territory to neighbouring countries.
Mr Orban's nationalist discourse is echoed in the meteoric rise of the far-right Jobbik party in Hungary, which won 47 seats in parliament in the May vote and which threatens to embarrass the country's EU chairmanship as much as the Slovakia dispute.
"I have asked Prime Minister Orban to discuss this issue [the Slovakia dispute] with the partners in the EU, in bilateral contacts ... but in a truly European spirit," Mr Barroso said.