The Fall of the Third Hungarian Republic 1989-2011

by Carl Rowlands

Hungary's new constitution is a grim development in a Europe where democracy has already been suspended in Greece and Italy

First published: 07 January, 2012 | Category: Europe, Politics, The Right

Since New Year’s Day, Hungary is no longer officially a republic. Signs on the border crossings and all official documentation have been changed accordingly. The new constitution, with its talk of historical destiny and stated desire for continuity with Horthy-era Hungary, has been enacted in its entirety. This new ‘Fundamental Law’ stands as the basis for a wholesale revision of the judiciary, media regulation, employment law, education and electoral system. It’s a constitution which is notable for grand, immodest proclamations, with the drafters ‘being aware of our responsibility before Man and God.’ It repeatedly refers to Christianity, the need for national and spiritual values, the predominant role of Hungary in the Carpathian Basin. 

However, perhaps most importantly, it is open-ended, with countless references to future ‘cardinal acts.’ So, not only is the constitution protected by a two-thirds majority – all of the associated law is similarly entrenched. In practice, this means the existing, regressive, tax system and inbuilt majorities of placemen in the governing councils of the state and judiciary are sheltered by a vague, overreaching fundamental law. As we now know, the new Hungarian state will be centralized, acquiring most, if not all, property currently held by municipalities. Any changes will require a two-thirds majority from an electoral system designed to perpetuate the governing Fidesz party. So far, so grim. However, the question might arise: why? Why would a government with an already strong majority attempt to lock the country into such a long-term, and potentially deadly, embrace? 

Firstly, I suggest trying to follow the money trail for an answer. Since the mid-2000s, Orban’s Fidesz have been the recipients of money from the ‘new’ domestic capitalist class in Hungary, those who established enterprises during the transition to capitalism and the period following its arrival. In the confused and unaccountable period during the early 1990s, networks of new and well-connected businessmen emerged. Bankers inherited monopoly positions  based purely on habit and tradition, which helped to funnel capital to the powerful construction magnates who had quickly established companies to benefit from money from the European Union’s investment in infrastructure.  Another key resource bloc for Fidesz are rentiers, those who accumulated property in the last twenty years. The result is that there are two coalitions of major moneyed interests battling for territory within the ruling Fidesz party, in addition to various local business interests.  Fidesz politicians are under consistent pressure to provide for their ‘national capitalist’ sponsors. The main prize is the allocation of government contracts, positions of influence in economic development roles and the opportunity to dispense EU funding to favoured clients and allies. The centralisation, social stratification and lack of oversight engendered by the new constitution and, most importantly, its associated cardinal acts, are designed to work well for those in positions of national economic pre-eminence. 

Given the importance of money to the functioning of the new Hungarian state, the authoritarian nature of the regime at least partially exists to ensure a guaranteed flow of resources. The constitutionally-engineered imposition of a flat tax rate – absent from most editions of Mein Kampf - would appear to confirm that there is no classically fascist blueprint behind the regime being established in Hungary. However, aspects of the laws as applied may well contain elements of a generic totalitarian approach. The labour laws, for instance, aim to consolidate neo-feudalism, perpetuated by a set of educational reforms which will reestablish selection at the age of 10, and consign almost half of children to a limited, ‘vocational’ education where unpaid labour in local small businesses is to be prioritised above learning anything about the outside world. 

It’s notable that, until recently, the President of the European Commission, José Manuel Barroso, was pretty quiet on the subject of the highly undemocratic reforms being pushed through Parliament by the Fidesz majority. What made Brussels wake up, with a jump, was the proposed reform to the way that the Supervisory Council of the Hungarian National Bank is appointed. On the surface, this may appear less obviously totalitarian than other new laws. Yet the implications are enormous. 

Were the Fidesz party machine to establish control over the National Bank, it would allow politically-expedient access to all of Hungary’s foreign currency reserves. It would establish implicit control over all financial institutions in Hungary conducting affairs in Hungarian forints, including the foreign subsidiaries of Austrian and German banks. And, likely as not, it was these banks who sounded the alarm in Brussels, rattled by the imposition of an artificial conversion rate for Hungarian mortgage holders, disturbed by expropriation of private pensions and panicked by the prospects for a Hungarian economy increasingly dominated by politically connected networks. Control of the National Bank would be part of the creation of a truly corrupt client state, connecting immovable political power with stable sources of foreign and domestic capital.

Sinister legacies of the former communist system live on in the cellar of the new regime, just as they did with the former socialist government. Security and surveillance, blackmail, informers and blacklists provide the unspoken continuity between Kadar’s Hungary and the present day. The promotion of Hungary’s deeply conservative and backwards-looking Catholic Church, to the detriment of religious freedom, can be seen through the prism of political manipulation of religious organizations, a mainstay of communism in action. Arguably, Fidesz are the true, corrupted inheritors of the old Hungarian Socialist Workers Party. So state news broadcasts provide a bizarre, filtered view of the world, where inconvenient faces are blurred out, and the agenda itself is determined by ‘national-Christian’ values. 

The Socialist Party remain discredited, bereft of ideas and talent. Though the Socialists have participated and united with other forces, the opposition has mainly emerged from new, embryonic organisations. The new Hungarian Solidarity Movement has been a mainstay for activism, along with campaigns for press freedom, liberal educational values, racial tolerance and human rights. Many of the most productive protests have been initiated by the green LMP party, whose younger MPs initiated a blockade of Parliament before Christmas, in protest at the maniacal, unconsidered and undemocratic reforms being railroaded through. The United States, attuned and sensitive to opposition criticism, has led the diplomatic assault on the constitutional changes.  Critics of US foreign policy might have to grudgingly acknowledge the role played by the State Department in reminding Hungary of its stated commitment to democratic values. 

These changes in Hungary are reprehensible, indefensible. But if we take a step back and look at Great Britain, perhaps we see similar forces at work, less obvious, more considered and concealed.  The UK gives 15 private companies around 42 billion pounds every year. Through academies, free schools and reforms to local government, the tendency to centralization is apparent, combined with growing nationalistic tendencies. Perhaps we shouldn’t regard Hungary as an aberration, in a continent where democracy has already been suspended in Greece and Italy.

Carl Rowlands is an activist and occasional writer based in Budapest.
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