The Challenge of Hungary's European Union Presidency: Success or failure?

2011 is the year Central Europe took over Brussels. Hungary will be at the helm of the European Union's rotating presidency for the next six months, to be followed by Poland in the second half of the year. These back-to-back Central European presidencies present an opportunity to improve the region's international prestige – but with the euro currency under fire and the looming threat of debt crises, the timing could not be more inauspicious. Hungary's government, led by the Fidesz party, offers Brussels the advantage of rock-solid parliamentary support back home – a benefit that was sorely lacking among its Belgian and Czech predecessors. However, Hungary's presidency has already been tarnished by the controversy surrounding its authoritarian new media regulations. International angst over the press laws may make it difficult for Hungary to achieve its main goal for the next six months: Bolstering the country's reputation and, by extension, its international negotiating position. For the EU, the main question is whether the Hungarians can prove themselves effective brokers of legislation in the European Council, the EU's most important decision-making forum.

Unfavorable Outlook on the International Level

• The EU presidency – a tough job under any circumstances – represents an extraordinary challenge at a time when the financial-economic crisis is threatening millions of Europeans' livelihoods. New debt crises loom large in fiscally weak countries such as Portugal, Italy and Spain. Since all three are members of the Eurozone, richer countries may be forced to bail them out. The situation ratchets up tensions between member states and casts doubt on the future of the euro currency.
• As president, Hungary will be responsible for brokering EU-level decisions on crisis-management measures. Budapest will have to push through the first-ever "European semester," the EU's system for flagging imbalances in member states' budgets.  It will also oversee the preparation of the union's 2012 budget (the draft is due by the middle of the year). The work of harmonizing these various tasks – not to mention the member states' competing interests – would be a tall order for any government.
• Hungary is in the unfortunate position of assuming the EU presidency at a time when it is under fire over the new media law, which critics say is tantamount to state censorship. The law provides big fines for vague offenses such as "offending human dignity" or failure to report the news in a balanced manner. It has generated contempt toward Prime Minister Viktor Orbán's administration – not just from the European and American press, but also from several European governments. Germany offered robust criticism of the regulations; Luxembourg Foreign Minister Jean Asselborn said the law raises questions about Hungary's fitness to lead the union.
• The Hungarian government has made little effort to allay such concerns. Instead, it has taken a combative stance, trying to discredit both its critics and their arguments. This attitude will hardly help to calm matters. It may further fuel resentment toward Hungary in Germany and France, the EU's most powerful countries.

The EU's Dilemma

• Brussels faces a dilemma vis-á-vis Hungary. On the one hand, the EU has a vested interest in the success of Hungary's presidency and is therefore reluctant to enter the fray over the media law. The 27-nation bloc needs surefooted leadership as it grapples with one of the toughest periods in its history:
  • Support for the EU's supranational institutions is weak and enlargement fatigue is strong. Moreover, the massive cost of shoring up fiscally weak Eurozone members (i.e. the €110 billion Greek bailout package) has undermined Europeans' commitment to the single currency: Many Germans object to the idea that fiscally responsible countries should be forced to pay for the laggards; Slovakia flat-out refused to contribute to the Greek bailout, saying their people do not want to subsidize Greek pensions that are five times higher than the average Slovak's retirement benefits.
  • The turbulence has pushed the euro down against other major currencies: The US dollar strengthened 17% against the euro between January and June 2010, jumping from $1.43 to $1.19; the dollar is now trading at around $1.30 to the common currency. This reflects Europe's ongoing economic crisis.
• On the other hand, many Europeans consider it unacceptable for Hungary, the EU's public face for the next six months, to be pursuing authoritarian policies toward its domestic press. Opinion leaders argue that failure to punish Budapest will send a signal that the EU is incapable of defending its core values. This may sully the EU's reputation among its international partners and allow them to take advantage of the bloc's internal conflicts; at the very least, outsiders may look askance at the Hungarian leadership over the next six months. The European Commission has pledged to review the media law and to sanction Hungary should they find it incompatible with EU rules, but the chances of this happening are low.

Economic Conflicts

• Hungary's government had tense relations with some of its Western European counterparts even before the flap over the media law. Business leaders were upset with the Orbán administration's economic policies, especially its surtaxes on telecoms, energy companies, banks and chain stores, plus its decision to seize workers' private pension-fund savings for state usage. Such measures have placed an especially heavy burden on German multinationals in Hungary, who have made no secret of their displeasure.
• However, this situation is not beyond help: Hungary's government is a staunch supporter of the growth-oriented goals spelled out in the Lisbon Strategy's Europe 2020 program, especially with respect to job creation. The Orbán government's domestic economic policies are in line with Europe 2020's objectives.

Solid Support in Budapest Offers Stability to Brussels

• Hungary's government has been trying to validate itself in the European public's eyes by stressing the stability it brings to Brussels. The Orbán administration is backed by a two-thirds majority in Parliament and enjoys high approval ratings among Hungarian voters. This stable domestic background is a clear advantage for the next six months, especially since the Czech Republic's EU presidency in 2009 and the Belgium's presidency in 2010 were rattled by political crises back home.
• There is little doubt that Hungary's government will remain stable until June, political fiascoes notwithstanding. Fidesz continues to enjoy a crushing opinion-poll lead over Hungary's wildly unpopular opposition (albeit support for the governing party has recently begun to waver).
  • Fidesz's plan to reform the state entitlement system, due in February, will impact the Orbán administration's popularity over the next six months more than any other domestic agenda item. The reforms will undoubtedly hurt the interests of certain groups in society.
  • The other item that will affect Hungarians' perception of their government is the EU presidency itself, because the country's leaders will have to devote more energy to Brussels and less to domestic policy.
• The Orbán government has another advantage in that foreign policy has been the most coherent area of its governance (even though the ill will generated by the press law has rolled back some of its foreign policy successes). The process of closing EU membership talks with Croatia will be especially important for Hungary, which needs to demonstrate its dedication to enlargement and its support for Euro-Atlantic integration in the western Balkan.
• It remains to be seen whether there will be a clash of political cultures between Hungary and the EU. Brussels is known for exceedingly complex decision-making processes and painstaking efforts to iron out differences between competing interests; Hungary's government is accustomed to using its two-thirds parliamentary majority to push through legislation at light speed; it also has a reputation for giving short shrift to professional, civil and political stakeholders.
• It also remains to be seen whether Hungary's state bureaucracy will be able to rise to the challenge of the EU presidency. Hungarian state offices that will be responsible for organizing events and contributing to legislation are currently undergoing a wholesale reorganization.
• The outcome of the Hungary's EU presidency poses far fewer risks for Orbán domestically than internationally. As of December 2010, the majority of Hungarian voters had no idea that Hungary would be running things in Brussels for the first half of 2011, according to a poll published by Policy Solutions and the Medián agency. Moreover, Hungarians traditionally have little interest in foreign policy.
• The main opposition Hungarian Socialist Party (MSZP) is clearly licking its chops for an opportunity to trip Fidesz up in Brussels. In an interview with The Times of London published January 1, MSZP vice president and former EU Tax Commissioner László Kovács labeled Hungary a "de facto one-party state" and called for EU members to exert pressure on the Orbán administration "to defend democracy." This may be a risky strategy: If the Socialists actively attack Hungary's EU presidency, Fidesz may strike back with accusations of hazaárulás (treason) –  a favorite right-wing taunt against the (formerly communist) MSZP.