Britain, Hungary pledge co-op on economy, environment, security - extended

Elections

British Prime Minister Gordon Brown and his visiting Hungary counterpart Ferenc Gyurcsány pledged on Monday to work together within the European Union to bring progress on economic, environmental and security issues. Hungarian premier sees room to revise Maastricht criteria, hopes to get support for constitution reform.

In a joint statement after bilateral talks at Downing Street No.10, Brown and Gyurcsány said the enlarged EU had the opportunity to become a “genuinely global player” with the signing of the EU Treaty at the informal European Council in Lisbon last month. “The EU must set a delivery agenda on issues that matter to its citizens - such as jobs, growth, climate change and security.” The statement said. The two leaders promised to push forward economic reform to encourage “innovation and competition” and “meet the challenges” of a globalized economy. “We reaffirm our commitment to pursuing the necessary economic reforms at all levels that will enable Europe to meet the challenges of an increasingly globalized economy. We can drive forward the EU’s global competitiveness by promoting innovation and competition, reducing the burden of regulation, and pressing ahead with proposals to liberalize the telecommunications and energy markets.” said the statement.

The two leaders also promised to drive forward EU leadership on climate change at the forthcoming Bali summit and to take “urgent action” on poverty and development by adopting a “fresh approach” to the Millennium Development Goals. The EU should also establish itself as a leader in delivering “peace, prosperity and security” to the wider world, they said. On Kosovo, Brown and Gyurcsány said that the current status of Kosovo was “unsustainable” and called for a settlement to be found “without delay.” 


In an interview yesterday in London with Citibank, Hungary’s Prime Minister Ferenc Gyurcsány discussed the status of new fiscal regulations and structural reform, the government’s stand on exchange rate policy, the state of the coalition and the government’s stance on OMV’s takeover attempts targeted at Hungarian industry peer MOL. While describing the government’s proposed fiscal rules, which would place limits on the primary government balance and the real public debt, Gyurcsány emphasized the importance of sustainable public finances, according to the Citibank release.

“The aim is to have the rules, as well as the creation of a new independent budget office, laid down in the constitution", he said. However, the extent to, which he has won the support of opposition Fidesz MPs remains unclear even though the latter’s votes will also be needed for the necessary two-third majority. Although he mentioned a “broad consensus” in favor of the fiscal tightening, the premier indicated that there are areas of disagreement with Fidesz, Hungary’s leading opposition party. These include the roles of the proposed independent budget office vs. that of the existing State Audit Office. In any case, Gyurcsány indicated that a roundtable debate with major political parties is to take place sometime after Christmas, with a parliamentary vote expected no earlier than next February or March.

In addition to fiscal rules, Gyurcsány also emphasized Hungary’s progress in healthcare reform, dismissing concerns regarding oppositions plans for a referendum on healthcare reform next spring. The Prime Minister told Citibank that the new Convergence Program, to be published next month, will reflect the progress made public finance reform. As far as the government exchange rate policy is concerned, the clearest statement Gyurcsány made was that the government will “say no” to any abandonment of the forint’s intervention band, despite the potential popularity gain, and the National Bank’s support for a freely floating exchange rate.

On the issue of Euro zone accession plans, Gyurcsány suggested that 2011-2013 was the “probable” window for euro adoption, and suggested that in theory at least there might be a good case for revision of the Maastricht criteria, since achieving them can be difficult when a country is enjoying strong growth and raising state-regulated prices in an effort to limit subsidies. As a case in point, he mentioned Lithuania, a country whose application for Euro zone membership was rejected in 2006 for missing the inflation criteria by a very narrow margin.

Regarding the state of the coalition, although Gyurcsány acknowledged the presence of dissenters within the Socialist party whose support he does not have, he remains pleased with the level of his grass-roots support in the party. He claimed to be “someone who never gives up”, and said his aim was to win over supporters for his policies, and to be useful rather than merely popular, Citibank reported.

In any case, Gyurcsány is of the view that the 2010 election is still “very far away”, with the implication that both his personal standing and that of his party could change in the meantime. He acknowledged that both the Socialist Party and the Free Democrats tend to blame each other for their opinion poll ratings, but emphasized the need for the two partners to work together to further the cause of much-needed reform.

Talking of OMV’s unwelcome advances toward industry peer MOL, in the Citibank interview the Prime Minister re-stated his opposition to a takeover of Hungary’s oil company by any state-owned entity, not on the grounds that it would be wrong in principle for MOL to be foreign owned, but because he believes it would be inappropriate for a company in this “strategic sector” to be controlled by a state-owned entity, which may have incentives other than to maximize profits. ((xinhuanet, portfolio.hu)

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