Protest and political crisis mark launch of government’s convergence programme
In the context of heated political debate over Hungary’s new convergence programme and the strict economic measures introduced by the re-elected socialist–liberal government, a leaked prime ministerial speech on 17 September 2006 proved highly contentious. In the speech, delivered to a closed session of socialist members of parliament in May 2006, the prime minister acknowledged that he had lied about the state of the economy and that he failed to reveal to voters the full scale of the forthcoming austerity package prior to the April general elections. The speech led to unprecedented political tensions in Hungary, accompanied by mass rallies and street violence. In the aftermath, it appears that trade unions and employers are in a stronger bargaining position: in return for ensuring social peace and providing political support for the convergence programme, they may be able to call for compromises from the government.
The Hungarian government was invited to submit a revised convergence programme update to the European Commission by 1 September 2006, aimed at meeting the Maastricht criteria for joining the euro-zone (HU0609029I). While preparing the programme, the re-elected socialist–liberal government admitted that the budget deficit for 2006 would be above 10% of gross domestic product (GDP). Therefore, the government was forced to introduce a package of strict economic measures in order to increase tax revenues and reduce budget expenditure.
Widespread opposition to reforms
The package met with strong criticism from the employers and protests from the trade unions. Among the unions, the Democratic League of Independent Trade Unions (Független Szakszervezetek Demokratikus Ligája, LIGA) and the National Federation of Workers’ Councils (Munkástanácsok Országos Szövetsége, MOSZ) adopted the most radical standpoint. On 28 August 2006, they set up the National Demonstration Committee (Országos Demonstrációs Bizottság), demanding the withdrawal of the package and the renegotiation of the convergence programme. The Committee called for a demonstration on 28 October.
The Trade Unions’ Cooperation Forum (Szakszervezetek Együttmuködési Fóruma, SZEF) and the Alliance of Autonomous Trade Unions (Autonóm Szakszervezetek Szövetsége, ASZSZ) heavily criticised the government for ignoring the trade unions’ proposals (HU0607039I) and, as a last resort, threatened industrial action. In September 2006, a new wave of protests began against the reform initiative, including the following activities:
- Public sector unions appealed to the Constitutional Court (Alkotmánybíróság) for certain measures to be annuled.
- University students announced demonstrations against the planned introduction of tuition fees.
- Emergency doctors threatened to stop working on-call hours unless their wages were increased.
- Pharmacists protested against the planned liberalisation of their closed market.
New impetus for political opposition
The major opposition party, the Alliance of Young Democrats – Hungarian Civic Union (Fiatal Demokraták Szövetsége – Magyar Polgári Szövetség, FIDESZ-MPSZ), rejected the entire package and accused the government, led by the Hungarian Socialist Party (Magyar Szocialista Párt, MSZP), of lying in the election campaign by promising better living standards. Political debate became increasingly bitter in the run-up to the 1 October municipal elections. FIDESZ called for a mass rally for 23 September, at which several hundred thousand people were expected.
Tensions increased following the leaking of Prime Minister Ferenc Gyurcsány’s speech, which had been delivered at a closed meeting of the MSZP parliamentary party in May 2006. In his speech, Prime Minister Gyurcsány tried to convince his fellow members of parliament of the need for austerity measures. Moreover, he acknowledged that he had lied about the state of the economy and had failed to inform voters about the full scale of the forthcoming package before the April general elections.
In response, FIDESZ demanded that Prime Minister Gyurcsány resign and declared that the government was invalid, given that its electoral victory was based on the manipulation of economic figures and outright lies. The President of FIDESZ, Viktor Orbán, stated that the upcoming municipal elections should be seen as a referendum on the government, and called for the setting up of an interim expert government to lead the country out of the political and economic crisis.
Street violence and deepening political conflict
The leaked prime ministerial speech caused a national uproar. On 17 September 2006, demonstrations were staged in front of parliament buildings, demanding the resignation of Prime Minister Gyurcsány. The number of demonstrators varied between 3,000 and 20,000 people in the capital, Budapest, and similar rallies took place in major cities across the country. A small, non-parliamentary party called on the business community to refuse to pay taxes until the government had resigned.
The demonstration at the parliament soon escalated into unprecedented street violence. On 18 September, a few hundred right-wing extremists and football hooligans hijacked the peaceful anti-government demonstration and attacked the building of the Hungarian State Television (Magyar Televízió), after their request to broadcast their petition had been refused. Watched by a crowd of several thousand people, the rioters set fire to cars and managed to occupy a part of the building by overpowering a small and shocked police force. The siege of Magyar Televízió was followed by fierce clashes with riot police for two more nights in the centre of Budapest.
Although Prime Minister Gyurcsány tried to limit the damage caused by the leaked tapes, he was unable to calm the uproar. The prime minister explained that, when talking about ‘lies’ in his speech, he was in fact referring to the lies of the political class in general about the possibility of maintaining a generous welfare state and a high-spending economic policy. He also argued that the speech was intended to convince his party of the necessity of the reforms, and to make socialist MPs accept the U-turn in the government’s policy. Mr Orbán’s proposal to set up an interim government was rejected by the coalition parties as unconstitutional, and MSZP called on FIDESZ not to organise a mass rally for 23 September 2006, in order to avoid further violence.
Political tensions eased after FIDESZ called off the planned mass rally, based on police warnings that various groups could use the event to detonate bombs to provoke further violence, which the police would be unable to control. After three days, the police regained control of the situation on the streets. The demonstration in front of parliament buildings appeared to lose momentum when the demands of its self-nominated opinion leaders shifted from the resignation of the government to ‘regime change’ and to the election of a new constitutional assembly, mirroring the events of the 1956 revolution against the communist system. The fact that the European Commission accepted the convergence programme at the end of September 2006 also encouraged a return to normality.
Nevertheless, the heated dispute among the major parliamentary parties was not resolved. Although FIDESZ called off the demonstration, it accused MSZP of using the secret police to provoke street violence in order to divert the focus of public debate from the economic situation. In response, MSZP blamed FIDESZ for encouraging violence with its emotive language and political statements. FIDESZ also criticised the European Commission, claiming that by quickly accepting the convergence programme, it was helping the government in power.
Position of the social partners
The social partners took a cautious standpoint during the two weeks of heated political discussion. They unanimously condemned the street violence and LIGA even set up a solidarity fund of HUF 1,600,000 (€6,190) to support police officers who were injured during street fights. Given the poor performance of the riot police, the Trade Union of Employees of the Ministry of Interior Affairs and Law Enforcement (Belügyi és Rendvédelmi Dolgozók Szakszervezete, BRDSZ) issued a statement demanding appropriate staffing, wages, training and equipment for the police.
Among the trade union confederations, the right-wing oriented MOSZ was the only one to call for the resignation of Prime Minister Gyurcsány, in a statement issued on 19 September 2006. However, MOSZ lacks sufficient industrial relations weight to be taken into account. Trade unions in various forms demanded the re-launch of proper negotiations with the government on the convergence programme to avoid any further conflict. At the same time, they condemned the hitherto token consultation that the government had conducted with them.
Meanwhile, the National Association of Entrepreneurs and Employers (Vállalkozók és Munkáltatók Országos Szövetsége, VOSZ) – reacting to the call to refuse to pay taxes – warned the business community to comply with the law and to pay their taxes as due.
Unsurprisingly, the coalition parties – MSZP and the Alliance of Free Democrats (Szabad Demokraták Szövetsége, SZDSZ) – suffered an electoral defeat in the municipal elections on 1 October 2006. More importantly, on the night of the elections, in an unexpected speech, the President of the Republic of Hungary, László Sólyom, called for the resignation of Prime Minister Gyurcsány, claiming that he had lost the moral authority to lead the nation in an economically difficult situation. It is likely that political instability will continue in the forthcoming period, and the government will need enormous political stamina to keep the promises made in the convergence programme.
Although the programme’s economic measures forecast a difficult time for the Hungarian population, on this occasion the political crisis was provoked by the leaked speech of Prime Minister Gyurcsány. The uncompromising and radical tone of the major opposition party, FIDESZ, makes it likely that political crisis will be a permanent feature of the impending period.
The social partners are likely to be in a delicate negotiating position in the forthcoming months. While the convergence programme, which has been accepted by the EU, allows little scope for manoeuvre, it is essential for the government to avoid social conflict. Although employers are critical of increasing taxes, they are primarily interested in political stability and in maintaining the competitiveness of the Hungarian economy (HU0607049I). Continuing the stabilisation measures seems to meet these objectives in the budgetary expenditure cuts (HU0607059I).
Trade unions, in many ways, are enjoying the favour of the MSZP-led government in social dialogue. It seems that a situation is emerging where, in theory at least, the trade unions and employers could conclude a genuine social pact with the government, which is anxious to maintain social peace. In return for political support for the convergence programme, trade unions and employers may be able to achieve meaningful compromises from the government in implementing the reform package.
András Tóth and László Neumann, Institute of Political Science, Hungarian Academy of Sciences