Budapest, misleading model for Prague

When the members of the ODS [the conservative and eurosceptic Civic Democratic Party] want to explain to Czech voters why the fiscal compact is against their interests, they cite the example of Hungary and the shoddy and unfair treatment it has received from the European Commission. Prime Minister Petr Nečas [ODS] has said as much in an article published in the dailyLidové Noviny. And he is not alone, other commentators have also been very vocal on this issue, like columnist Karel Kříž who has published an opinion piece with the title “Hungary is only defending its interests” in the same newspaper.

In substance it says that the major European states ride roughshod over the Maastricht criteria and that the bureaucrats in Brussels, who have a fondness for Hungarian post-communists, are eager to take revenge on the poor government led by Viktor Orbán. Barroso is in fact a former Maoist and Ashton a onetime Brezhnevian activist. The message is clear: the government in Budapest is fighting for Prague. And if we do not leap to the defence of the Hungarians, we should bear in mind that Brussels may soon decide to turn on someone else: for example, on us.

Given that Orbán is reducing pensions, notably military and police pensions, the removal of the second pillar of the retirement system [private pensions have been nationalised] will not make any difference on a fundamental level (even though some would consider the move to be an attack on the rich). Insisting that loans should be reimbursed at their initial rate of interest is perfectly comprehensible. Orbán is simply defending his interests. He wants to support the upper middle class and the business community in his country which is close to becoming a mere colony. And the same fate awaits the Czech Republic, whose capital is rapidly being drained away. At least, so says Karel Kříž.

It is not surprising that the violent eruption of the crisis in 2008 resulted in cyclical loss of control and a failure on the part of some longstanding members of the EU to respect certain criteria. However, collective measures are now being applied in compliance with a plan that has been agreed in advance, and the fiscal compact has specifically been designed to prevent a re-occurrence of this type of situation in the future.

Chávez-style sanctions against the private financial sector

However, a temporary failure to fulfill certain criteria has little in common with the obvious falsification of statistics, the neglect of agreed methods and book-cooking that have emerged in Hungary on a scale so grand that it does not even compare with Greece or the Italy of 15 years ago.

Having ignored these principles, Hungary is no longer playing the game by the rules. On this basis, it is clear that the youthful ideologies of EU representatives, which may not be pleasing in themselves, have little to do with the subject at issue. The sanctions against Hungary are not political, they have clearly been crafted by a faceless bureaucrat (and he can thank God that he is indeed faceless), who simply wants to enforce respect for common rules and methodologies. In passing, I should also point out that the European politics is currently dominated by the right, whose representatives are careful to ensure that decisions taken by the civil servants in Brussels are not based on Maoist and Marxist considerations.

I also find it very curious that ardent proponents of a free single market like the ODS and our Prime Minister have such difficulty with the free circulation of capital that they welcome authoritarian Chávez-style sanctions against the private financial sector. How should we explain Mr Kříž’s indignation at “the capital flowing [from the Czech Republic] like water from a burst pipe”? Does this mean that capital should flow into the country, but a flow in the opposite direction is very bad? By gum! Is that what we mean by a free market? Or is it a nostalgic yearning for a national banking system?

The Czechs and Hungarians could have had such a system in their respective countries, but because we allowed our banks to be pillaged in the 1990s (and in the Czech Republic this took place under an ODS government), we had no other choice but to sell them to foreign buyers (something that occurred while the social democrats were in government here).