Hungary seeks new PM as crisis deepens

Tue, Mar 24, 2009, 00:00

THE CZECH government faces a dangerous vote of no confidence today and Hungary is searching for a new prime minister, as the economic crisis takes a political toll on central Europe.

After failing with four previous votes to unseat the centre-right government of prime minister Mirek Topolanek, the left-wing Czech opposition now has a good chance of wooing the four independent MPs it needs to secure the required 101 votes in parliament.

Victory for the opposition would destroy the government’s mandate for the last three months of the Czech Republic’s term as president of the European Union, after which elections would probably be held. It would also jeopardise possible parliamentary votes on the Lisbon Treaty and US plans to build part of a controversial missile defence system near Prague.

Critics accuse the government of economic mismanagement, abuse of power and sleaze: the trigger for the latest no-confidence vote was a claim that a prime ministerial aide had pressed a television channel to drop an unflattering report about a pro-government MP.

The ruling coalition led by the Civic Democrats (ODS) has 96 seats in parliament, while the opposition Social Democrats and Communists have 97 seats, and are confident of persuading four of seven independent MPs to vote with them to oust the government.

Their confidence was boosted by former ODS finance minister Vlastimil Tlusty’s pledge to convince ODS defectors that the government had made too many mistakes to continue in power.

“This time, we will be successful, the government, which works against people, will be finished,” said Social Democrat leader Jiri Paroubek.

In a bid for support before the vote, Mr Topolanek warned that “political instability will only deepen uncertainty and concerns, and will hurt the chances of successfully overcoming the consequences of the economic crisis.” The Czech Republic, along with neighbouring Poland and Slovakia, are facing a sharp drop in economic growth this year, but are on a far stronger financial footing than the Baltic states and Hungary, which are the worst-hit countries in the EU.

Lithuania’s government was voted out last autumn, and Latvia’s fell last month. This weekend, Hungary’s Socialist prime minister, Ferenc Gyurcsany, finally succumbed to dreadful popularity ratings and predictions of a deep, prolonged recession. “The new premier will face an unfathomably huge challenge,” said Zoltan Lakner, an analyst at Budapest’s Vision Consulting. “The person, probably an economist, needs to have crisis management experience and possibly a fully fledged crisis management plan.”

Mr Gyurcsany hopes to avoid an early election by having his party nominate a replacement early next month, after which parliament would vote on that person’s candidacy by mid-April.

The next premier will have to satisfy demands from liberal parties to overhaul social spending and the tax system, while appeasing the left wing of the Socialist party, which fears the impact of budget cuts on Hungary’s poor. Mr Gyurcsany’s successor will have to toe the strict financial line imposed by the International Monetary Fund, which is leading a €20 billion emergency loan for Hungary.

Mr Gyurcsany is unlikely to be the last central European leader to fall in the near future. “Uncertainty surrounds the way forward and what exactly this means for the outlook for reform and the stabilisation of Hungary’s battered markets,” Timothy Ash, head of emerging-market economics at Royal Bank of Scotland, said of Mr Gyurcsany’s resignation. “The on-going recession in emerging Europe is likely to have significant social and political consequences in Hungary and the wider region.”