In the parliamentary elections held in Hungary on Sunday, April 3, 2022, what they feared happened in Brussels. Conservative Prime Minister Orban, who has clashed with European institutions and left the European People’s Party (EPP) with Fidesz’s party, won an election victory.
Victor Orban: Europe’s longest-serving politician
With his triumphant victory, Orban secured his 5th four years in power. His first four years were from 1998 to 2002, when he ruled the country on the basis of a liberal program. His marginal defeat in the 2002 elections by the Socialist Party led him to conclude that a system of power had been established with roots in Hungary’s communist past, which limited the possibilities for effective exercise of power.
He decided to challenge it vigorously with an impressive mix of pro-people, anti-monopoly economic policies, traditional values and patriotism with tendencies to turn it into nationalism.
The big opportunity was given to Orban in the 2010 elections, where the Socialists appeared divided, throwing public finances out, putting Hungary in a kind of memorandum and facing well-founded accusations of organized prefecture of power.
Orban and Fidesz won the 2010 election with 53% of the vote and since then no one has been able to challenge their political sovereignty. It is characteristic that they won the elections of 2018 with an impressive 49% and in the elections of 2022 they returned triumphantly to the starting base of 2010 with 53%!
The last match was supposed to be different from the previous ones. Six opposition parties, from the neo-Nazi Jobbik to the Socialists, rallied with the main goal of losing Orban.
There is a precedent for diverse political alliances aimed at challenging the dominance of strong politicians. This scenario was successfully played in the Czech Republic and a variation of it in Bulgaria against Borisov.
Polls in recent months have shown Orban and Fidesz leading by 3-5 points and the reduction of undecided gave them a bigger lead. However, no poll predicted the election victory with 53% and 18 points difference from the opposition six-party coalition.
Another impressive result of the parliamentary elections is that the far-right party “Our Homeland”, which expresses Jobbik dissidents, entered the parliament, exceeding the 5% threshold. They did not want to join the opposition coalition and preferred the autonomous course to the base of the far right.
Orbanomics the basis of electoral success
Analyzes attributing Orban’s electoral triumph to his well-founded authoritarianism and privileged relations with Putin are incomplete. They do not take into account the impressive success of his economic strategy, the so-called Orbanomics.
It is an intelligent mix of taxation and control of big business interests, growth with social sensitivity and socially and politically targeted benefits.
The Orbanomcis were initially denounced as dangerous economic populism. Critics now admit that they have contributed to the country’s economic and social development, and find imitators in other former Eastern EU countries.
After forming a government in 2010, Orban tried to negotiate with Brussels the temporary exemption from the budget deficit rule that can not exceed 3% of GDP. It failed and that is why it started pursuing an unorthodox policy.
It first brought under control $ 12 billion in developed private insurance funds, abolishing and nationalizing private insurance funds.
It then temporarily increased the Value Added Tax (VAT) to 27%, but as soon as fiscal conditions allowed, it gradually reduced it to 5% for meat, fish, chicken, eggs and the Internet.
It reduced the corporate income tax to 9% regardless of the amount at which they are formed. At the same time it reduced the insurance contributions of employers.
On the other hand, it imposed new harsh taxes on banks and forced them to bear the cost of mortgage loans in foreign currency, especially in Swiss francs, which turned into a nightmare for borrowers due to the constant appreciation of strong foreign currencies. Orban was denounced by Brussels for his banking tactics, but then Poland, Croatia and Romania made similar arrangements for foreign currency mortgages.
Other impressive initiatives of Orban were the reduction of the electricity bill by 25% during the period 2010-2014.
At times, Orban imposed special taxes on banks, telecommunications, energy and supermarket chains on the grounds that they were making huge profits and had to contribute to financing the government’s social policy. Brussels periodically expressed its objections, believing that through special taxation it was methodizing the reduction of the influence of foreign capital and the creation of national champions controlled by it.
The success of Orban’s economic policy has reduced unemployment from 11.4% to 3.8% and youth unemployment to 10%.
Orbanomics also has an impressive pre-election dimension. From the end of 2021, the government imposed a ceiling on the prices of basic goods, such as flour, oil, sugar and chicken.
Fuel prices, as well as energy, “froze” in the run-up to the elections. There was also a pre-election increase in the minimum wage of 20%, which concerns ⅓ of employees in the private sector.
Since 2012, families with at least three children have been virtually exempt from income tax. From 2019, families can get significant subsidies and loans to buy a car or get a home. In March, the governing majority of Parliament elected for the first time a female President of the Republic, the minister who promoted reforms in favor of families, Katalin Novak.
The achieved economic growth with Orbanomics
Orbanomics did not lead to the economic collapse predicted by their critics, but to the economic growth and modernization of the Hungarian economy.
Hungary’s economy grew by 5.1% in 2018 and 4.9% in 2019. In 2020, GDP shrank by 5% due to the pandemic, but in 2021 losses were offset by 6.2% growth.
Hungary’s extremely extroverted industry accounts for 31.3% of GDP.
The country has a stable trade surplus, with 27.7% of exports going to Germany and 26.2% of imports coming from there.
Hungary is the largest producer in the field of electronics in Central and Eastern Europe, recording impressive advances in mobile technology as well as security issues in the digital economy and information.
In 2019, foreign direct investment in the country had reached $119 billion, with Hungarian companies investing abroad at $50 billion.
The economic success and the interventions of the government have brought a steady rise in the standard of living since the middle of the last decade. In addition, according to international assessments, Hungary is one of the countries with the least unequal income distribution.
Therefore, Orban’s timeless success has solid economic and social foundations.
