Let’s continue to navel gaze while Europe sinks

Source: Mr. G. M. Mangion¸ PKF Malta

As published in the The Malta Independent on Sunday the 7th of July 2013


During a brief business visit to Budapest I enjoyed sunny weather as I strolled on the banks of the Danube adorned by faded monuments and classic buildings that reveal the past glory of a country that¸ not so long ago¸ formed part of the glorious Hapsburg Empire. Still¸ Hungary an ex- Communist county that now forms part of the EU has seen better days in its economic history and one can easily notice the general pessimism in the business sector particularly the risk averse banks some of which had their fingers burnt on a number of non performing property loans. But the political sentiment expressed by the common people who I met reveals a downbeat feeling that the country is facing the doldrums. The aggressive stance taken by Prime Minister Victor Orban against the EU¸ defying its warnings not to touch the Constitution¸ resulted in accusations that the nationalist government is passing amendments to boost its own powers and to weaken the independence of Hungary’s courts. Since achieving a landslide electoral victory in 2010¸ Orban has clashed regularly with Brussels over laws on the media¸ the central bank and the courts. It is true that the official figures show that the annual deficit is below the three per cent of GDP¸ ceiling but one notes the poverty in the central parts of Budapest where one still meets poor people sleeping on cardboard sheets in the open and beggars roam the streets amid the affluence of shops selling luxury goods such as Luis Vuitton¸ Burberry and Madison.

Not unlike Malta¸ the Hungarian Justice minister wants to reform the courts from their Byzantine system inundated with litigious cases¸ which take decades for justice to be served. Yes¸ the government was to amend the Constitution to resolve the problem of overburdened courts with appropriate structural changes (reminiscent of Franco Debono). For a start¸ Budapest will remove a clause that allows it to impose new taxes to cover payment obligations arising from rulings of the European Court of Justice or other international courts. The question is whether the reforms go too far and weaken the power and prestige of the judiciary such that since 2010 hundreds of laws were revamped¸ but Orban who claims his changes are democratic because of his large parliamentary majority has silenced critics. In his defence¸ Orban plays a Robin Hood style politics threatening the interests of foreign business lobbies with hefty taxes on banks¸ energy and telecoms. So yes the pendulum did swing to the far right in Hungary and there is a general feeling of helplessness among the professional elite that they are sitting ducks expecting future rallies against their interests by the populist government. So does this classify Hungary as another bailout contender¸ which will soon need to go begging for more IMF loans? Will its people protest in the streets¸ as has happened in Turkey and Brazil who were turning to extremist movements merely to express their discontent against elected politicians? Discontent is growing and the list of ailing EU economies now includes the sudden failure of Portugal¸ which is facing higher interest charges to borrow on the markets to plug its increasing deficit.