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Hungarians Vote in Elections as Orban Set to Retain Power

Photographer: Attila Kisbenedek/AFP via Getty Images

Hungarian Prime Minister Viktor Orban delievers a speech to his supporters in Budapest, on March 29, 2014. Close

Hungarian Prime Minister Viktor Orban delievers a speech to his supporters in Budapest,... Read More

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Photographer: Attila Kisbenedek/AFP via Getty Images

Hungarian Prime Minister Viktor Orban delievers a speech to his supporters in Budapest, on March 29, 2014.

Hungarians are voting in a general election, with Prime Minister Viktor Orban set to extend his rule after four years of rule during which his power centralization triggered clashes with the European Union.

Turnout by 5:30 p.m. local time was 56.8 percent, compared with 59.3 percent in 2010. Voters will elect 199 lawmakers for four-year terms. Most polls close at 7 p.m. in Budapest, with some stations working extended hours to accomodate long lines to complete voting by 8 p.m., Ilona Palffy, the head of the election office, told state news service MTI. Partial results will be published later today.

Orban’s Fidesz party won a two-thirds parliamentary majority in 2010, which it used to rewrite the constitution, curb the top court’s power, staff agencies such as the central bank and public media with allies and pass new election rules. Orban clashed with international partners and foreign investors as he weaned the budget off International Monetary Fund aid, seized private pension-fund assets and levied industry taxes to cut the deficit. He dismissed concern at home and abroad over the erosion of democracy as foreign lobbying.

“Orban has carried out the most significant concentration of power since” the end of communism, said Gabor Filippov, an analyst at political research institute Magyar Progressziv Intezet in Budapest. “He did that by using the rhetoric of a freedom fighter to blunt criticism against his government.”

The forint has weakened 13 percent against the euro in the past four years, more than the currencies of other eastern EU members that haven’t adopted the euro such as Poland, the Czech Republic, Romania and Bulgaria. The benchmark BUX stock index fell 28 percent, compared with a 2.5 percent decline in the MSCI Emerging Markets Index.

‘Uncomfortable’ Investors

Gains on forint debt at 38 percent were better than those for Poland and the Czech Republic, yet were the worst at 6.5 percent when adjusted for price fluctuations, according to the Bloomberg Riskless Return Ranking.

“Investors remain uncomfortable with Orban’s increasingly autocratic rule, his philosophical turn away from Western Europe” as well as the “penalizing treatment of targeted private sectors and the accompanying erosion of business confidence and private investments,” said Phoenix Kalen, a London-based strategist at Societe Generale SA. (GLE)

Poll Lead

Even so, the 50-year-old prime minister is set to trounce rivals, according to surveys by the polling companies Ipsos, Median, Nezopont, Tarki and Szazadveg, as Fidesz focused its campaign on popular government-mandated utility price cuts that reduced household energy bills by 20 percent.

“I hope there won’t be a change of government as I agree 90 percent with the current policies,” including tax benefits for his three children, said Balazs, 40, a doctor who voted in Budapest. He declined to give his last name, saying he may lose patients who favor the opposition if his views are known.

Fidesz had 34 percent support among eligible voters compared with 20 percent for an opposition alliance led by Socialist Party President Attila Mesterhazy, according to an Ipsos poll published by MTI state news service yesterday.

The Jobbik party, which describes itself as “national radical” and wants a referendum on EU membership, had 14 percent backing. The green party LMP had 3 percent support. No margin of error was given for the March 28-April 3 poll of 1,000 people. A party needs 5 percent support to win seats.

Fidesz Victory

“The real question appears to be not who’ll win the election but the size of Fidesz’s victory -- whether Orban will retain his two-thirds majority,” Endre Hann, director of Median, another polling company, said by phone April 3.

Polls indicating an overwhelming Fidesz win are misleading because Hungarians are “scared to voice their opinions” as they fear retaliation by the government, Mesterhazy said in an April 1 interview. Fidesz may win a “narrow” legislative majority, the party’s parliamentary leader, Antal Rogan, told the news website HVG.hu April 1.

Fidesz cut the number of lawmakers by almost 50 percent, redrew electoral districts and introduced a method of converting votes to seats that rewards the winner.

Opposition Muzzled

Opposition parties struggled to get their message out after Orban banned paid TV advertising for political parties and limited spots on public networks. The rules didn’t apply to the government, which flooded the airwaves with ads of “Hungary is doing better,” a slogan matching that of Fidesz.

The changes and restrictions contribute to making the election “no longer fair,” former Prime Minister Gordon Bajnai said March 30 as he campaigned for the opposition alliance. The government and Fidesz reject the assessment. A mission from the Organization for Security and Co-operation in Europe is monitoring the vote.

Orban, a father of five, is seeking to add to the eight years he already spent as Hungary’s premier, including a 1998-2002 stint, more than any other politician since the end of communism 25 years ago.

Anti-Communist Leader

He burst onto the political scene as the Cold War world order crumbled. A self-described liberal, anti-communist student leader in 1989, Orban called on Soviet troops to leave Hungary. He’s been a member of parliament since 1990 and first became prime minister at the age of 35 in 1998.

The two-thirds parliamentary majority won four years ago helped the government fight EU bureaucrats and banks, Orban told a cheering crowd on March 15, as he asked voters to give him another supermajority today.

Objections, over which Orban mostly prevailed, included the erosion of checks and balances, such as a cut in the Constitutional Court’s powers, the ouster of the Supreme Court’s chief justice and the creation of a media watchdog exclusively led by ruling-party appointees.

In the economy, Orban focused on keeping the budget deficit under control to keep EU funds flowing, while trying to stick to a pre-election pledge to end austerity. Rather than using direct taxes to raise revenue, the government introduced Europe’s highest bank levy and a transaction tax on commercial lenders as well as special taxes on telecommunications and energy companies.

Growth, Budget

Investment fell 5.2 percent in 2012, the fourth consecutive year of contraction, according to the Budapest-based statistics office. It has trailed eastern EU peers every quarter for the past four years, according to Eurostat data. Investment climbed in 2013, helped by a 34 percent increase in government spending.

That contributed to the economy growing 2.7 percent in the fourth quarter from a year earlier, the biggest increase in seven years. The budget deficit was 2.2 percent of GDP last year, which means the country is poised to avoid returning to EU monitoring for fiscal offenders, Economy Minister Mihaly Varga said March 31. Hungary exited the excessive-deficit procedure last year for the first time since it joined the bloc in 2004.

“Another super-majority” for Fidesz “may spook a few observers and spark some worries that an emboldened Fidesz may once again embark on a path of unorthodoxy,” Pasquale Diana, an economist at Morgan Stanley (MS) in London, said in an April 2 report. “Though we seriously doubt that the next four years will be as eventful as the last four.”

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

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

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