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Elections: an Uncertain, Unsettling Time for Business

Opposition politicos may be buzzing after events in Hódmezővásárhely and the corruption scandals surrounding some senior government officials, yet the ratings for Prime Minister Viktor Orbán’s personal standing and that of his Fidesz party – both around the 50% mark – are about as high as it gets.

These should mean what would be a record-setting third consecutive term for the pugnacious former anti-communist student activist.

Yet despite this popularity, business is wary. “I know of several deals which are on hold until after April 8,” one lawyer active in the Budapest corporate world told the Budapest Business Journal on condition of anonymity.

To an extent, this is normal. Business likes predictability, and any election risks an upset – so unless an incumbent government is messing up big time, there is a tendency to go for “the devil you know”.

And as one Western observer and former banker says; this devil appears to be delivering the goods. “I don’t like him [Orbán]; there’s corruption for sure, but hey, he’s got 4% growth, low unemployment, personal income tax at 15% and corporate tax at 9%. It all seems to be working for now, so who’s gonna want to throw him out?”

In most pre-election speeches, the prime minister has largely stressed the “threat” of the so-called “Soros Plan” and mass migration “overwhelming” Magyar culture. When he speaks on the economy, he emphasizes future growth and more efforts to improve competitiveness in a “work-based” culture. It sounds good.

Independent (and opposition) economists note, however, that the current growth is below average for the region and is boosted by European Union subsidies and a benign world economic environment. The implication is that, without either, Hungary might not fare as well.

Meanwhile, the pension system is unsustainable, the healthcare system is expensive, inefficient and bleeding staff, while the education system is failing all but the upper and middle classes.

What If?

So, what if the opposition should win? Gergely Karácsony, the prime ministerial candidate of the Socialist-Dialogue electoral alliance, currently appears the most likely man to head a new government in the event of what would be an electoral upset.

A somewhat self-effacing political scientist, Karácsony has by many accounts been an effective mayor of Zugló, Budapest’s District XIV, and is seemingly untainted by corruption.

He has named Tamás Mellár, a respected professor of economics, as his shadow minister of finance. Mellár, 64, was an adviser to the center-right government of József Antall in 1992-’94, and later head of the Central Statistical Office, is as sober as they come without being dour. His name should inspire confidence in the business and financial community.

Yet Karácsony also appears unable to resist some electoral populism, promising to reinstate the emotive “13 month” pension, and criticizing the economic policies of pre-Fidesz governments for focusing on attracting “low-added value” Western manufacturing business.

When challenged by the BBJ as to why anyone should vote for him, he replied: “So that we can raise wages, pensions, and we can put the health system and public education into proper shape.”

To get the chance to try, however, Karácsony – or any other claimant for prime minister – has first to win against-the-odds on April 8, and then in all likelihood conduct a very tricky series of negotiations with a panoply of political parties, possibly including Jobbik, in order to form a government.

Both steps appear near-Herculean tasks. The worst result of all for business might be Karácsony achieving the first, but not the second.