Hungary referendum bears risks for government, opposition

Other News Materials 7 March 2008 06:10 (UTC +04:00)

( dpa )- When Hungarians vote Sunday whether to abolish fees for medical treatment and higher education, the Central European country's political stability could take a hit.

The opposition-led referendum, a continuation of the crisis that gripped Hungary in late 2006, could further weaken the government's tenuous grip on power, damage the opposition or even prompt a return to street violence.

Viktor Orban, leader of the centre-right Fidesz party, has called on Prime Minister Ferenc Gyurcsany's government to resign if it loses the vote on the fees, which are part of unpopular austerity measures aimed at reducing the budget deficit - and, ultimately, at getting Hungary ready to adopt the euro.

Some analysts say a defeat for the governing Hungarian Socialist Party could hurt the country's economic reforms in the long run. Already, polls show the government would win only 15-20 per cent of the vote if a general election were held now.

Orban announced he was seeking the referendum at a street rally on October 23, 2006. That rally ended in chaos when protestors, police and Fidesz supporters clashed in a maelstrom of tear gas, baton charges and Molotov cocktails.

The violence was the climax to five weeks of rioting, sparked by the leak of a tape on which Gyurcsany, of the Hungarian Socialist Party, admitted lying about the parlous state of economy.

The violence has died down, but the fall-out still dominates Hungarian politics.

While Gyurcsany's revelation sparked the protests, the austerity measures provided the fuel that made them burn so brightly. Fidesz has collected hundreds of thousands of signatures in favour of the referendum.

Back in 2006, the government unveiled a package of tax and energy- price hikes, spending cuts and reforms to education and healthcare immediately after winning elections.

As a result, economic growth plunged to 1.3 per cent in 2007, inflation rose to a high of 9 per cent before falling to 7.1 per cent in January and unemployment has risen to 8.1 per cent, its highest in 10 years.

Nonetheless, the government has succeeded in cutting the deficit from 9.2 per cent of gross domestic product in 2006 to an estimated 5.7 per cent in 2007 and looks on course to get it down to 3.2 per cent by 2009.

If the referendum succeeds, there is likely to be little immediate change to the deficit reduction plans, since the government says it will not replace the lost revenue from the central budget.

But the economic damage could come over time, Gergely Boszormenyi- Nagy, a political analyst at the Perspective Institute in Budapest, told Deutsche Presse-Agentur dpa.

"A defeat could lead to a further weakening of the government and could hurt further reforms," he said.

Gyurcsany may hold on for a while if the referendum succeeds, but with general elections looming in 2010 he will not have much time to win back voters, said Krisztian Szabados, director of the Political Capital Institute think tank.

"If his popularity stays low, then we will see a crisis inside the party, which might end in his resignation," he told dpa.

More immediately, an opposition triumph could trigger a return to violence, Szabados said.

"We believe there could be a radical extremist reaction to the referendum and the fact that Gyurcsany won't resign," he said.

Orban, a former prime minister who has led his party since the dog days of communism in the late 1980s, also has a lot at stake. While polls show that a majority plans to vote against the fees, this may not be enough for him to secure victory.

For a referendum to be valid, at least 25 per cent of the electorate must vote the same way. Many referendums on more emotive issues, such as an attempt to give dual citizenship to ethnic Hungarians abroad, failed due to poor turnout.

"If the opposition loses, then Orban faces huge challenges, not only from the public, but from within his own party," said Boszormenyi-Nagy. "The stakes are huge for both sides."