Euro? Maybe later.
October 11, 2012
Relations between Budapest and other European capitals, as well as the EU as whole, have turned tense in the last two years. After winning a two-thirds majority in parliament, Prime Minister Viktor Orban's government enacted media, court and data protection regulations that caught the attention of European Union officials.
Those issues, however, were not the direct focus of his trip to Berlin on Thursday (11.10.2012), although German Chancellor Angela Merkel noted during a press conference that the two had spoken very openly during talks.
"Where there were doubts," changes have now been made, Merkel told reporters.Hungary's relations with both Germany and the rest of Europe would benefit from leaders taking an balanced approach to issues they disagree on, according to Gereon Schuch, a member of the German Council on Foreign Relations and program head for the Robert Bosch Stiftung's Center for Central and Eastern Europe.
"There has been a certain cooling of German-Hungarian relations over the past two years," he told DW. "It's good that there are talks taking place at the highest levels to discuss both German-Hungarian relations as well as Hungary's role in Europe."
Before leaving for Berlin, the Hungarian leader had said that the ongoing euro debt crisis and reforms to the European financial and banking sector would be among the key issues during talks in the German capital.
Adopt the euro? Maybe later.
In an article published Thursday by the German business daily "Handelsblatt," Orban said the euro crisis meant his country no longer was obliged to join the common currency bloc just because it joined the European Union in 2004. While some nations have opted out of membership in the eurozone, all members that joined with Hungary in 2004 committed to taking on the European currency.
"At the time we signed the accession treaty, the eurozone was a very different place," he told the paper, adding that introducing the euro now would be "irresponsible.""Southern European countries were not ready to join the euro, and that's not a mistake we are going to make," he said, adding that Hungary would reexamine joining the euro when the shared currency becomes more attractive.
Schuch said he could he could appreciate Orban's position.
"The current crisis in the eurozone does not motivate countries that do not use the euro to adopt it," he said. "Hungary and other European countries that do not have the euro want to see how the eurozone deals with the crisis before implementing it too."
Hungarians have also seen how Slovakia, which joined the EU with Hungary in 2004 and is a eurozone member, has had to commit to a bailout of other eurozone nations, which makes switching to the euro less appealing to them, Gabor Takacs, an analyst at the center-right Hungarian political think-tank Nezopont Intezet, told DW.
11 months of talks with IMF
Hungary was among the first nations to request financial support from the European Union's rescue funds. In November, Hungary began still ongoing negotiations for a precautionary loan of 15 billion euros ($19 billion) from the International Monetary Fund and the European Union to cope with the effects of the eurozone's financial crisis.Orban's government has insisted to the Hungarian people that it would deal with its debt and budgetary difficulties on its own. The government took out full-page ads in several newspapers on Tuesday stating that it "won't give in" to the International Monetary Fund, with which it is holding talks on additional financial support.
"The approval of support from the IMF provides the Orban government with a safety net so it can refinance its debt on the open market and will not have to get the loan itself," Takacs said. "The media campaign has been interpreted as being anti-IMF, but I do not think that is the case."
Orban is also faced with having to balance an image of not needing a bailout while also being in a position to accept one if needed later on, said Schuch of the German Council on Foreign Relations.
"After taking the position domestically that the country can withstand the euro crisis without the IMF, it could be difficult to say that a loan might be required due to economic necessity," Schuch said.
The ads could serve as the foundation for public acceptance of a potential bailout, Takacs said.
"If it comes to a loan, the ads will show the public now that it came as an acceptable agreement that protects the country's interests," he added.Orban represents a new stage in Hungarian relations with Germany and Europe, Takacs noted.
"There is a different leadership style and different economic policies exist, but I think German investors see the fact that much of the reforms in Hungary are aimed at increasing competition and sustainability," he said.
Schuch also welcomed the matter-of-fact discussions that took place between Merkel and Orban.
"A certain amount of hysteria has surrounded Hungary in the past two years, and there have been problematic developments that need to be closely monitored," Schuch said. "Viktor Orban won a two-thirds majority in democratic fashion and he is using it to make reforms that need to be observed. But talk of a dictatorship is certainly a distortion of reality."