Wednesday, January 18, 2012

Hungary under intense pressure from EU over right wing constitution

The European Commission has launched legal action against Hungary's Fidesz government for violations of European Union treaty law and erosion of democracy, marking a dramatic escalation in the war of words with the EU's enfant terrible.

Hungary's defiant premier Viktor Orbán has no hope of securing vital funding from the EU and the International Monetary Fund until the dispute is resolved, leaving him a stark choice of either bowing to EU demands or letting his country slide into bankruptcy.

Yields on Hungary's two-year debt jumped to 9.17pc on Tuesday, an unsustainable level for an economy in recession with public debt of near 80pc of GDP. Hungary's debt was cut to junk status by rating agencies last week.

Capital Economics said Hungary must repay €5.9bn (£4.9bn) in EU-IMF loans and raise external funds equal to 18pc of GDP this year, the highest in Eastern Europe. Two-thirds of household debt is in Swiss francs, leading to a lethal currency mismatch as capital flight weakens the forint.

"Hungary is playing with fire," said Lars Christensen from Danske Bank. "The EU is not bluffing. It will let Hungary go over the edge to make the point that EU countries must play by the rules. Our worry is that Hungary's government has not yet got the message."
Read the rest here.

Hungary's new government is clearly trying to set up some kind of authoritarian system. The EU is not going to stand for it.


The Anti-Gnostic said...

Hungary has a flat tax and an explicitly Christian, Catholic government. I say we bomb those reactionary bigots.

Jason said...

Here's hoping they get even more radical and pull out from under EU tyranny, print their own money and reclaim their country. God speed to them!

The Archer of the Forest said...

Well, that's the pot calling the kettle black.