Hungary’s New Constitution Triggers First Joint Opposition Demonstration

Hungarian opposition groups rallied against the country’s new constitution, which came into effect on Jan. 1, the first joint protest against Prime Minister Viktor Orban since he came to power in May 2010.

The rally was held outside the Opera house in central Budapest where Orban and other dignitaries celebrated the constitution that the European Union and U.S. criticized for curbing democracy. It was the first time disparate groups, including two opposition parties, protested together.

An unidentified spokeswoman for Budapest police declined to estimate the number of participants, while state news agency MTI said several tens of thousands joined the rally and organizers claimed about 100,000 protesters were present.

“Viktor Orban claims he’s a strong captain, but he’s the captain of the Titanic, headed for the iceberg,” Peter Konya, head of the Hungarian Solidarity Movement, the event’s organizer, told demonstrators yesterday. “We must join our forces to restore the rule of law and the republic.”

Orban used his two-thirds parliamentary majority to pass the new constitution as the culmination of his self-styled “ballot-box revolution.” The constitution marks the end of the country’s transition to democracy from communism that started in 1990, Orban told Magyar Nemzet in a Dec. 24 interview.

Judicial, electoral and institutional overhauls are helping the premier fortify his power, opposition groups said.

“Yesterday’s events proved that Hungary is a democracy, this is a free and constitutional state,” Peter Szijjarto, Orban’s spokesman said in an interview on commercial television TV2 today.

Central Bank Law

Lawmakers in Orban’s Fidesz party last week approved a central bank law that expands the rate-setting Monetary Council while curbing the power of central bank President Andras Simor. The International Monetary Fund and the EU broke off talks on a bailout last month over the plan. Orban said he rejected European Commission President Jose Barroso’s request to withdraw the legislation.

Hungary received its second sovereign-credit downgrade to junk in a month when Standard and Poor’s followed Moody’s Investors Service in stripping the country of its investment grade on Dec. 21.

The forint dropped 16 percent against the euro in the second half of 2011, the worst performance among more than 170 currencies tracked by Bloomberg. It traded at 315.53 at 2:13 p.m. today in Budapest. The yield on Hungary’s 10-year government bonds rose to 10.33 percent today, the highest since June 9, 2009, according to generic prices compiled by Bloomberg.

IMF Aid Shunned

Orban shunned IMF aid after taking office in 2010 to protect what he called “unorthodox” measures from oversight. The steps included the effective nationalization of $13 billion of private pension-fund assets and extraordinary industry taxes to control the budget. There was a deficit (HUGBCBAL) of 182 percent of the Cabinet’s full-year target at the end of November.

Hungary’s economy may grow at the slowest rate (HUGPTOTL) with the highest public debt level this year among the EU’s eastern members, according to the European Commission’s forecasts published in November.

Orban has been reducing the power of independent institutions and asserting his influence since winning elections in 2010, ignoring objections from the U.S. and the United Nations.

Ruling-party lawmakers ousted the chief justice of the Supreme Court, narrowed the jurisdiction of the Constitutional Court, replaced an independent Fiscal Council with one dominated by the premier’s allies, created a media regulator led by ruling-party appointees and chose a party member to lead the State Audit Office.

One Judge Responsible

One judge, Tunde Hando, the wife of Jozsef Szajer, a European Parliament member from Orban’s Fidesz party, will be responsible for naming all new judges, including replacing scores who were forced into retirement last year.

“We have significant and well-founded concerns,” U.S. Secretary of State Hillary Clinton wrote in a Dec. 23 letter to Orban, according to Nepszabadsag newspaper, which published the letter in Hungarian on Dec. 30. She called on Orban to protect individual liberties and checks and balances, Nepszabadsag said.

Foreign journalists are “right when describing what happens in Hungary not just as simple governing, but a regime change,” Orban said in the Magyar Nemzet interview.

‘Show Our Virtues’

“They say this in a disparaging way but I think this is a compliment,” Orban said, according to the newspaper. “We Hungarians have failed for over a hundred years to show western Europe our own virtues.”

Orban’s office and the government spokesman’s office didn’t reply to questions about the nature of regime change the premier described.

Hungary risks losing its EU membership, obtained in 2004, if the government doesn’t reverse course, Mark Palmer, the U.S. ambassador to Budapest between 1986 and 1990, said in a Nepszabadsag interview published today.

“Hungary’s ejection from the European Union is now no longer unthinkable,” Palmer told the Budapest-based newspaper. The country “won’t be tolerated if it no longer counts as a democracy.”

Orban’s Fidesz still leads all parties with 18 percent backing among eligible voters, even as its support plunged from 42 percent in May 2010 when it won the last election, pollster Szonda Ipsos said on Dec. 14. The Socialists are second with 11 percent. Fifty-five percent said they’re “unsure or wouldn’t vote.”

The poll was conducted between Dec. 5 and Dec. 12 and has a 2.5 percentage point margin of error. The next parliamentary election is scheduled for 2014.

Thousands demonstrated last year at various rallies against the new constitution, media law and the scrapping of early retirement benefits.

To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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