Hungarian Parties Gearing Up for Campaign

The campaign kicks off

 

• Most political parties have finished their preparations for the election campaign: All prime ministerial candidates have been named and major issues have been settled. Starting early next year, the candidates for prime minister and parliament will take centre stage and the political debate will be dominated by the quest for votes. However, debate over party programs will probably remain superficial since the odds-on favourite to win, Fidesz, will probably remain vague about its specific plans in hopes of maximizing votes. 

• The government, which has been in the forefront of public attention in the past few months, will move to the background. Still, Prime Minister Gordon Bajnai may remain in the limelight as his government's economic performance has been rather well received. Mr. Bajnai wants to maintain his image as a political outsider, so his statements will primarily be related to the economy. Some 49% of Hungarians think Mr. Bajnai is doing a competent job as PM, according to the latest opinion poll by the Szazadvég-Forsense group. The governing Hungarian Socialist Party (MSZP) has had no such luck: Just 17% of committed voters would pick the Socialists, compared to 64% for Fidesz, according to the same survey. 

• Fidesz, the country’s largest opposition party, may benefit from the government’s expected decision to take a low profile. The party’s campaign will try to draw ties between Bajnai and his wildly unpopular predecessor, Ferenc Gyurcsány, and decry the economic hardships of the “Gyurcsány-Bajnai era”. Fidesz will therefore pay close attention to Gyurcsány’s campaign appearances and make them part of its agenda.  

• Gyurcsány’s recent statements indicate that he will play the role of axe-man for the government, lashing out at Fidesz in an effort to sway undecided voters who have no sympathy for the main opposition party. As a result of these two factors, Gyurcsány may become one of the most prominent and divisive figures of the 2010 campaign.  

• The smaller opposition Hungarian Democratic Forum (MDF) is building its campaign around its prime ministerial candidate, former Finance Minister Lajos Bokros. The party is positioning Bokros as an alternative to Fidesz’s PM candidate, Viktor Orbán, and will therefore look for opportunities where Bokros and Orbán can debate their differences. As a first step in that direction, MDF has called for another National Summit meeting. However, Viktor Orbán is much more popular than his rivals, including Bokros, so he has nothing to gain from engaging in such debates. 

• The ultranationalist Jobbik party is building a campaign around its novelty factor and its opposition to Hungary’s political elite. This will make it difficult for the party to talk about alliances with other parties, so party president and prime ministerial candidate Gábor Vona will probably insist that he hopes to form a government by himself. Jobbik is expected to compete primarily against Fidesz since 30% of the largest opposition party’s supporters sympathize with the far-right party, according to public opinion surveys. Fidesz will respond by moving to the centre between MSZP and Jobbik. 

• From the Socialists’ point of view, the largest risk is that their little-known PM candidate, Attila Mesterházy, will come off as a lightweight against the robust political personae of Bokros, Orbán and Vona. Should Mesterházy fail to add content to his campaign, he will further consolidate Ferenc Gyurcsány's position in the Socialist Party.  

 

Pension system overhaul

 

Parliament overhauled the pension system with a law that will remove not-for-profit retirement funds from the market and replace them with profit-oriented pension funds only from 2013. (Under the current system, insurees were shareholders in pension funds; the new system offers no such guarantees). The decision renders the Socialists vulnerable to criticism Fidesz, which accuses the government of placing pension funds in the hands of foreign investors.

 

 

Analysts consensus

 

 

Political Capital analyst consensus: one-month, short term forecast (with change over to the previous month in parenthesis):

 

 

 

 

Key points to watch

 

 

Political events in the coming months

 

 

 

 

Economic events and data releases in the coming month

 

 

 

 

Leading trends

No surprises: campaign preparations in the final stretch

 

MSZP

 

The Hungarian Socialist Party (MSZP) elected Attila Mesterházy as its 2010 candidate for prime minister at its recent party congress. Mesterházy, who is head of the Socialists’ parliamentary caucus, was supported by nearly 90% of the delegates. In his acceptance speech, the candidate talked about leftist values, the importance of standing up to the far right, and voiced mild criticism of former Prime Minister Ferenc Gyurcsány’s policies. The Socialist Party’s relations with Gyurcsány are rather schizophrenic: Party leaders are unable to decide whether giving Gyurcsány a major role in the election campaign would mobilize core supporters or alienate an even greater number of potential voters.  Thus party members simultaneously stand behind Gyurcsány and try to distance themselves from him. Current Prime Minister Gordon Bajnai also spoke at the MSZP congress, but instead of talking about issues to be tackled in the near future, he attacked Fidesz and its economic policy plans. This suggests Bajnai intends to play a key role in the campaign.

 

While the entire Socialist Party lined up behind Mesterházy, the debate over the party’s national list instilled new life into conflicts that were meant to be buried. This explains why the only 70% of the delegates voted to approve the list. Because the MSZP has little chance of winning individual constituencies next year, a plum position on the national list has become a matter of political life or death, not simply a symbolic gesture. The first 20 names on the 2010 list is barely changed from the 2006 line-up, despite the Socialists’ dismal performance in government and their much-ballyhooed policy of renewal and rejuvenation. Former Parliament Speaker Katalin Szili was the only one to point this out publicly; she then promptly relinquished her fifth-place position on the party list. Szili has been making a visible effort to develop her own movement within the MSZP that diverges significantly from the party mainstream. Presumably, she is betting on a defeat for the current Socialist leadership in next year’s election and hopes to seize control of the party after it is done. Her effort to establish a new movement within the MSZP has not received overwhelming support, as the majority believes that damage control and unity are of paramount importance ahead of the election. A number of leading female Socialists also gave up their spots on the party list, complaining that many women are too low on the list to get into Parliament, despite the party leadership’s lip service to gender-balance requirements.

 

 

 

 

Fidesz

 

Fidesz members find themselves in a diametrically opposite position: For them, the national list has barely any importance. The party is expected to win the majority of individual constituencies: This means fewer “compensation votes” will be transferred to candidates on the national list, so Fidesz will send the fewer list candidates to Parliament than any other party. Individual constituencies will determine whether Fidesz gets the two-thirds majority it needs to amend Hungary’s Constitution. Fidesz is therefore pursuing a strategy of nominating local strongmen (such as mayors) who are capable of bringing in additional votes on the strength of their local name-recognition. This is evident in Budapest, where seven Fidesz district mayors are running in individual constituencies. Fidesz also picked local officials over party heavyweights in the cities of Győr, where Mayor Zsolt Borkai will run instead of party spokesman Péter Szijjártó, and in Eger, where Mayor László Habis won the nod over Ervin Demeter. This strategy indeed gives Fidesz a stronger chance of winning two thirds. In the medium term it will make life more difficult for Viktor Orbán, as locally prominent representatives with independent mandates are much more difficult to “bring to heel.” This explains why Fidesz required its candidates to commit themselves in writing to local-government reform before the nominations were confirmed.

 

 

MDF

 

After the MDF’s success in last June’s European Parliamentary election, it was obvious that the party’s cooperation with Lajos Bokros would go beyond just winning a seat in Brussels. Therefore few people were surprised when the MDF nominated Bokros, a former finance minister, as its prime ministerial candidate. Close to 90% of the party’s executive board supported Bokros’s candidacy – a big change from the 2009 decision on EP candidates, when the Bokros-led list barely received a majority. The MDF has now managed to put its house in order and has averted new internal conflicts – at least until the parliamentary election is over. In addition, a number of well-known public figures who occupied important political positions at the time of the regime change have joined MDF in the past few weeks. These include Tamás Katona, József Debreczeni, Gábor Roszik and Király Zoltán, all of whom are expected to enhance the party’s image.

 

 

Jobbik

 

Jobbik announced that Gábor Vona will be the party’s prime ministerial candidate in the 2010 election. Jobbik was the only party to forgo an open, democratic nominating process, which demonstrates that the party continues to be controlled from the top despite a broad base of party activists. In the short term, it is precisely the broad activist base that gives Jobbik an advantage over the other small parties. They have the best chance of collecting voter registration cards in all 176 individual districts. In the last few years, popular support for democracy has notably decreased, with less than one-quarter of Hungarians saying they are satisfied with the system. This feeds directly into Jobbik’s anti-establishment appeal.

 

 

 

 

In an unexpected move, Jobbik also named Krisztina Morvai as its candidate for Hungarian president – a largely ceremonial post that is decided in Parliament, not the people. The decision to pick Morvai now can be explained by three factors: (1) Jobbik wishes to demonstrate that it is clearly aiming for a leading position in the 2010 election. (2) Presumably, neither side wanted to upset the power balance between Morvai and Vona, fearing it would lead to pointless conflicts before the balloting. (3) The party also plans to give Morvai a leading role in the parliamentary campaign.

 

 

Budgetary developments

 

The Finance Ministry will have a hard time meeting this year’s budget deficit goal of 3.9% of GDP. The government would have to produce a surplus of HUF 132 billion in December, which is considerably more than the twelfth-month surpluses of the past few years (HUF 48 billion in 2007 and HUF 68 billion in 2008). Still, meeting the budget target is not altogether unrealistic: The austerity package implemented by the Bajnai cabinet significantly reduced year-end expenses at public institutions, while corporate taxes, entrepreneurship taxes and other “special” taxes come due end of the year. The extra revenue from the tax on individual entrepreneurs is all but impossible to estimate at a time of recession. Nonetheless, it is fairly certain that even in the worst-case scenario, the 2009 deficit will not exceed the target by more than a few tens of billions of forints. This is hardly enough to undermine investor confidence. However, strict fulfilment of the deficit target may be important for government PR purposes, so the cabinet may try to improve the balance through administrative measures.

 

 

 

 

Pension system in flux

 

Parliament passed a pension-reform bill that will replace non-profit retirement funds with profit-oriented ones. Under the current system, the insured parties were shareholders in their pension funds; the new system provides no such guarantees. Fidesz sharply criticized the decision and asked President László Sólyom to request a review of its constitutionality. Fidesz hopes to use the pension fund issue to re-stoke the flames of public resentment against health-insurance reform. Fidesz’s communications draw a link between pension reform and the government’s failed healthcare reforms, reiterating accusations that the government is attempting to privatize the system by stealth.