Hungarians Vote as Orban Set to Retain Power

Hungarians head to the polls today in a general election, with Prime Minister Viktor Orban leading opinion polls after four years of rule during which his power centralization triggered clashes with the European Union.

Voters will elect 199 lawmakers for four-year terms. Polls opened at 6 a.m. and will close at 7 p.m. in Budapest. Partial results will be published after voting ends.

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

“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)

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.

Fidesz had 36 percent support among eligible voters compared with 18 percent for an opposition alliance led by Socialist Party President Attila Mesterhazy, according to a Median poll published in the HVG weekly April 3. The Jobbik party, which describes itself as “national radical,” had 15 percent support. The green party LMP had 2 percent backing. No margin of error was given for the March 21-25 poll of 1,200 people. A party needs at least 5 percent support to enter parliament.

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,” Median Director Endre Hann said by phone April 3. He added that Median polled more than 2,000 people to get the responses, suggesting a degree of uncertainty with results as voters are reluctant to answer.

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 April 1.

The election being held under a new law for the first time also adds to the uncertainty. Ditching rules enacted when Hungary shed communism 24 years ago, 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.

‘Doing Better’

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 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.

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, including on public works programs that boosted headline employment data.

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

To contact the editors responsible for this story: Balazs Penz at

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