Orban Seeks to Cut Losses as Ally Toppled by Plagiarism Row

Hungarian Premier Viktor Orban will seek to shore up his support after the exit of President Pal Schmitt, who helped centralize his power over European Union objections, political analysts in Budapest said.

Schmitt resigned yesterday after he was stripped of a 1992 doctoral degree in sports because of plagiarism. Orban nominated Schmitt in 2010, ignoring objections in his ruling Fidesz party, and declined to call for his departure as the issue divided his electorate.

The first resignation of a Hungarian president since the end of communism weakens Orban at a time when he faces pressure by the EU to surrender some powers that Schmitt helped deliver. The European Commission’s concerns for independent institutions have blocked talks on an International Monetary Fund-led bailout which Orban requested in November as the forint fell to a record and the country’s debt was cut to junk.

“Orban has to pay close attention to who he’ll nominate as a successor because neither his electorate nor his party may tolerate another mistake like Schmitt,” Attila Antal, a lecturer at Eotvos Lorand University’s Institute of Political Science in Budapest, said in a telephone interview.

Hungary’s ruling coalition asked Orban to nominate Schmitt’s successor on April 16, state news service MTI said, citing Janos Lazar, head of the ruling Fidesz party’s parliamentary group.

Market Gains

The forint has rallied 7.2 percent against the euro this year, the most in the world behind the Polish zloty, as investors bet Orban will deliver on a January pledge to reach a quick agreement on loan conditions. The benchmark BUX (BUX) stock index has advanced 8.6 percent since January compared with a 23.6 percent gain for Romania’s Bucharest BET index.

More than four months since first requesting aid in November, Orban has failed to convince the EU that independent institutions such as the central bank and the judiciary are free of government influence.

“The key question is whether this will impact the IMF negotiations in any way,” Ilan Solot, a strategist at Brown Brothers Harriman in London, said by e-mail. “We are inclined to think” that “a weaker Orban, with less degrees of freedom, is more likely to give in to IMF-EU demands rather than double down on his antagonistic posture.”

Next President

Fidesz invited all five parliamentary parties to take part in consultations about the procedure to elect the next president, Lazar said yesterday, according to the MTI state news service.

The legislature, where Orban’s lawmakers have a two-thirds majority, has 30 days to choose a successor to Schmitt. Until then, Laszlo Kover, the speaker of parliament who co-founded Fidesz with Orban, takes over his duties.

Schmitt bowed to pressure to quit after Budapest-based Semmelweis University stripped him of his doctoral title in sports last week. Schmitt initially resisted, saying on public television on March 30 that there was “no link” between his doctorate and the presidency.

All of the opposition parties in parliament demanded Schmitt’s resignation to restore the honor of the presidency. The newspaper Magyar Nemzet and the news magazine Heti Valasz, which back most government policies, both called on Schmitt to quit.

Largely Ceremonial

While the office of the president is largely ceremonial and the bulk of executive power lies with the prime minister, Schmitt’s predecessors regularly returned legislation to Parliament or sought Constitutional Court review. Schmitt signed off on every piece of legislation Orban sent him, including a new constitution, fulfilling a pledge he made when taking office that he wouldn’t block the government’s agenda.

Losing Schmitt is a “very serious and direct defeat for Orban,” Gergely Gimes, an analyst at Political Capital in Budapest, said in a telephone interview yesterday. “This scandal may narrow Orban’s maneuvering room within his party, where until now he had an aura of invincibility.”

Orban is locked in a tug-of-war with the European Commission over his powers. Hungary sent its responses to EU concerns about the central bank, judiciary and data-protection agency last week. The European Commission will assess the responses as fast as possible, Pia Ahrenkilde-Hansen, spokeswoman for European Commission President Jose Barroso, told reporters yesterday in Brussels.

‘Good’ Successor

Orban may minimize damage to his standing by showing pragmatism and appointing a “good” successor to Schmitt quickly, in the same way German Chancellor Angela Merkel did last month, according to Attila Tibor Nagy, a political analyst at Meltanyossag, a center for political analysis in Budapest.

Merkel backed the election of Joachim Gauck, 72, a former pastor and East German anti-communist activist, whose election she opposed in 2010. Merkel’s pick at the time was Christian Wulff, who quit on Feb. 17 to face a criminal probe that may lead to corruption charges. He denies any wrongdoing.

“Orban’s interest is to move as quickly as possible and to put this embarrassing episode behind him,” Nagy said. “A successful new candidate may help him prevent a hemorrhaging of support within his party.”

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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