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Gyurcsány’s lies, riots may prompt rout in Hungarian elections

Hungarian Prime Minister Ferenc Gyurcsány, weakened by protests and riots after he admitted lying about the state of the economy, may get a further battering in local elections this weekend. The ruling Socialist Party has the support of 25% of the electorate in Budapest ahead of the October 1 national municipal and mayoral vote, according to Gallup, compared with 44% in the April general election. Gallup polled 825 people between September 14 and 21. The margin of error is 3.5%. Gyurcsány took over the Socialists in September 2004 and led them to a second consecutive victory in April. Street clashes last week and demands for his resignation, after he admitted on a tape the government lied about the economy, have made the local elections a vote of confidence in the premier. „The government would weaken further” if it loses votes, said Attila Juhász, a senior analyst at research company Political Capital in Budapest. „Gyurcsány’s position can be shaken if parts of the currently tight coalition parties back away from supporting him.” So far, that hasn't happened. The governing parties, which have a 34-seat majority in parliament, pledged support for Gyurcsány in the face of the most sustained street violence in the country since Soviet tanks crushed an anti-communist uprising fifty years ago.
The opposition has called the October 1 vote a referendum on the austerity measures. „If the results of the October 1 vote show that Hungarian people reject the package, then the Prime Minister must go and take the package with him,” said opposition leader Viktor Orbán, a former prime minister, at a press conference in Budapest on September 19. Gyurcsány is raising taxes and axing subsidies for natural gas, medicines and electricity to curb the European Union's largest budget deficit and meet terms to adopt the euro. People used to a decade of government handouts are more concerned about living standards than changing currencies.
„The thousands of people who form the mass bases for the protests are farmers, railway workers or healthcare professionals who either lost their jobs or stand to see a decline in living standards,” said Gergely Hudecz, a political analyst at DZ Bank AG in Budapest. The government has little choice, economists say. The deficit will swell to 10% of GDP this year, up from 7.5% in 2005 and way above the 3% deficit limit imposed by the EU on euro aspirants. With economic growth expected to slow to about 2% in the next two years from an average of 4.5% over the last ten years and inflation seen rising to 7% next year from last year's 3.6%, the government is seeking to reassure investors that a decade of economic mismanagement is over. „The Hungarian government has pursued policies that break the rules in the book of liberal economics: expanding public sector to unsustainable levels, expanding spending to meet it,” said James Oates, a senior adviser at CA IB International Markets in London.
The average monthly wage rose by 90% in Hungary in he past six years, while inflation averaged 6.6%. Now the government tells people not to expect wage increases in the next two years, while prices will grow faster. Gyurcsány, a former businessman, is the first Hungarian premier to lead his party to a second consecutive term since the end of communism in 1989. The leaked tape in which he admitted the government misled voters about the need for restrictions sparked protests on September 17 that started peacefully and degenerated into street violence that left almost 300 people injured. The public outcry over the obscenity-laced speech means Gyurcsány may struggle to push through the austerity program. „He lost his moral credibility for a lot of people,” said Antal Birkás, a political scientist at the University of Debrecen, in a phone interview yesterday. „He will be under tremendous pressure. He can count on very tough clashes in parliament.” (Bloomberg)