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Hungarian riots blow EU reforms off course

Hungary’s austerity economic reform package – required under EU fiscal rules – may be blown off course following riots in Budapest.

Violent protests in the Hungarian capital followed a leaked tape revealing that the country’s Socialist Prime Minister Ferenc Gyurcsany has misled voters in recent elections.

“We lied in the morning. We lied in the evening,” he said. “Hungarians want to live like those in the west, but they are unwilling to adopt the western norms.”

“We made people believe that they have nothing to do, that we will give them happiness as a gift.”

Gyurcsany is accused of lying over his election promises of tax cuts only then to impose €3.6bn in tax rises and welfare cuts after winning at the polls.

And, the latest row is set to fuel stiffer domestic opposition to deep cuts and welfare reforms Budapest must implement if Hungary is join the euro.

Hungary is running the EU’s highest budget deficit and on September 1 submitted a tough austerity package aimed at bringing Budapest into line with Brussels fiscal rules that underpin the euro.

The European commission has yet to approve or discuss Hungary’s euro convergence programme that aims to reduce a 10.1 per cent of GDP budget deficit in 2006 to 3.2 per cent in 2009.

“We are still analysing the programme, we did not expect the commission to decide until the end of September or the beginning of October,” said a commission spokeswoman.

“This will be an important step to set the framework for significant budgetary adjustment to redress imbalances… we do acknowledge that measures are obviously painful.”

The commission’s official spokeswoman stressed that Hungary’s fiscal programme would be judged on hard economic facts  - and not questions surrounding the political probity of Gyurcsany.

“The events in Hungary are a matter for the democratic institutions in Hungary,” she said on Tuesday. “We are not in the role of making value judgements on individual governments.”

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