In 1988, a group of 37 university youths and young intellectuals set up the Alliance of Young Democrats – the Hungarian Civic Party (FiDeSz – MPP) out of the “desire for freedom” and as a protest against the realities of Hungary. One year later, the man who in 1993 would become the president of the Alliance and in 1998 the country’s Prime Minister, baffled the public opinion in the country and abroad with a speech during the burial of Imre Nagy, when he called for free and democratic elections and urged the Russians to extract their troops, stationed in the country since the 1956 revolution. Ten years after this incident, Orban’s party ascended to power and, along with the Independent Small Owners’ Party and the Hungarian Democratic Forum, continued the reforms begun in the early ’90s. In 1999, the country was granted NATO membership at the Washington summit.
An alliance for a new Hungary
The stand Orban took in 1988 was, in fact, the message of a generation eager to take over from the old “kadarists” and bring Hungary back into the European space after Kremlin-sent tanks isolated the country for a long time.
Gradually, they did take over. In administration, management and in major political parties, the people generally called “generation ’89,” aged between 25 and 30, are holding key positions. In fact, this is the main and most certain achievement the Orban government can take pride in. The “change of guard” has often been demanded by the “young democrats” and after 1998, words finally turned into action. Nevertheless, there is no generation conflict, but a conflict between mentalities. For instance, the current Foreign minister, Janos Martonyi, is much older, but that did not prevent him from supporting accession into European and Euro-Atlantic structures. Rather, Hungary’s new ruling elite shares a specific spirit of time. Most members in the Orban government have studied abroad, and were instilled with the spirit of market economy and community principles.
In other chapters, the Orban Cabinet managed to continue what the socialists had begun: a rule-of-law state, a market economy, and accession into EU and NATO. In fact, in the 1998 electoral campaign, the FiDeSz leaders were very specific about striving for “more than a change of government, but less than a change of system.” In other words, as Orban explained in an interview to “Europai utas” shortly after taking office as Prime Minister, they want to take over institutions whose foundations were laid in 1990, but without any structural changes in the organisation of the state.
On the road to Europe
Before they stepped in, the young democrats had set bold goals – 7% annual economic growth, eliminate corruption and streamline the tax system. Until then, the Horn government had failed to make any impact on the Hungarian citizens, aside from a selected minority, but the Orban Cabinet, although sometimes short of goals, has brought more change into the life of the average man. Between 1997-1998, economic growth was consolidated and encouraged by an inrush of foreign investment. A restructured public system and a substantially improved payments balance has permitted the government to reduce the public debt. The pillars of economic development in the last two years were erected by the 1995 stabilisation programme. The first result was a growth in industrial output, from 2.3% in 1996, to 11.1% in 1997. In 1998, GDP grew 5.1%. As to structural reforms, two of the most important chapters were already completed by 1997: a new pensions system and a complete privatisation of the banking system.
This situation partly explains the Hungarian economy’s survival in the hostile environment that existed last year in Central and East Europe during the Balkan wars. Amidst the general hostility, 1999 saw Hungary on a growing streak thanks to massive foreign direct investment and structural reforms in the commercial sector, which helped Hungary win new foreign markets in the euro zone. A growth in exports, coupled with falling imports, led to a lower-than-forecast current account deficit: according to the Economist Intelligence Unit (EIU), it was $2.8 billion, the equivalent of 5.8% of GDP. Although inflation was 9.8%, much above the early-year forecast, it was lower than the 14.3% in 1998. At the same time, unemployment reached 9.6%.
This year’s budget is based on a 2.5% growth in expenses, so that the deficit remains around 3.5% of GDP. Inflation is forecast at 6-7%, while imports are expected to rise 9-11%, leading to a 2.5 billion-dollar shrink in the current account deficit. Nevertheless, compared to the other countries in central Europe, international financial institutions are unhappy with the progress of reform in the social security system (particularly in health insurance). Among the other OECD member countries, Hungary has the lowest standard of living, and the international community is worried about its slowness in building an appropriate system.
Benefits for Hungarians everywhere
Despite these shortcomings, the Orban government can take pride in having contributed to the country’s return into the European family. A NATO member and on a fast lane to EU membership, Hungary has also secured an important role in Central Europe. This could have a positive impact on the Hungarian communities living in the Carpathian space. The resulting improvement of the economic situation has allowed the country to grant more substantial financial support to Hungarians living outside its borders, whose fate is permanently in the attention of Budapest officials. The Hungarian Parliament has been able to allocate HFR 2 billion for the establishment of a private university in Transylvania. Also, Budapest has been committing much debate to the law on the status of Hungarians everywhere, which grants a set of rights to the Diaspora in Central and East Europe.
Besides these economic advantages, Hungary, as a NATO member, boasts a particular geo-strategic importance in the European portion of the Alliance. During and after the Yugoslavian conflict, the Budapest diplomacy has tried to contribute to re-establishing balance in this region of the old continent. Numerous meetings were held with Serb opposition leaders, in the attempt to unite them into common front against Milosevic.