Hungary's center-right Fidesz wins 2/3 majority

Published April 24, 2010

| Associated Press

BUDAPEST, Hungary (AP) — Hungary's center-right Fidesz party, led by Viktor Orban, a former prime minister who promised to restore "law and order" and pull Hungary out of recession, won a two-thirds parliamentary majority on Sunday, the National Election Office said.

With 98.1 percent of the ballots counted, Fidesz was projected to have 263 seats in the 386-seat legislature, five more than the 258 seats needed to control two-thirds of the parliamentary mandates.

"Today a revolution took place in the voting booths," Orban, now preparing to become prime minister again, told a large crowd celebrating victory in downtown Budapest. "Hungarians proved that it makes sense to believe in democracy because ... we can carry out the far-reaching changes which earlier only revolutions could offer."

Fidesz already had won the right to form the next government in the first round of elections April 11, but the two-thirds majority will allow it to pass legislation without having to secure support from the opposition.

"It's a great opportunity, but at the same time it's a huge risk," said analyst Peter Kreko of Political Capital, a Budapest research and consulting firm. "If there is political failure in the reforms ... they will have full responsibility and can't blame anyone else."

The now-governing Socialist Party will have only 59 deputies in the next parliament, followed by the far-right Jobbik with 47, and a green party, Politics Can Be Different, with 16. There will be one independent deputy.

Socialist Party Chairwoman Ildiko Lendvai said she would resign at the next party congress, to be held in about a month.

Jobbik, a parliamentary newcomer, was able to attract voters in part with its anti-Gypsy and anti-Semitic rhetoric, and on Sunday it sent a warning to the next government.

If Fidesz were to break its pledges, Jobbik would be ready to use "all democratic means inside and outside parliament ... to impose our will on the new Cabinet," Jobbik president Gabor Vona said. "We will prove that Jobbik is an honorable political party which always has the interests of the Hungarian people in mind."

Fidesz, which led the governing coalition in 1998-2002, has pledged to reduce bloated national and local government payrolls, simplify the tax system, grant citizenship to ethnic Hungarians in neighboring countries and halve the number of parliamentary deputies.

Twenty years after the collapse of communism and the 1990 democratic elections, Hungary is paying the price of postponed reforms, costly campaign pledges and the continued appeal of a paternalistic state.

Only a loan of euro20 billion ($27 billion) from the International Monetary Fund and other institutions saved the country from defaulting on its debts late in 2008, while record-high unemployment levels and a recession in which the economy shrank by 6.7 percent last year present a real challenge for the next government.

Fidesz is expected to negotiate with the IMF for a higher budget deficit than the current 2010 target of 3.8 percent of GDP, giving it room to consolidate loss-making state companies and possibly implement modest tax cuts.

"Essentially, Fidesz will deliver reform plans in return for a deficit target which is less detrimental to the growth outlook," said a report from investment bank Morgan Stanley in London.

Analysts said Fidesz could struggle to satisfy voters yearning for easy solutions.

"Fidesz's popularity ... is to a considerable extent based on illusionary expectations of the party's supporters concerning a painless way out of Hungary's current situation," said Sandor Richter at the Vienna Institute for International Economic Studies.

Financial markets seemed to mostly favor the overwhelming Fidesz majority but also warned of risks stemming from Fidesz's past actions.

"We agree that a potential two-thirds majority for Fidesz presents a unique opportunity for Hungary to put in place long-neglected reforms in a wide range of areas," said Gabor Ambrus of research firm 4Cast in London. "These reforms could restore Hungary's lost competitiveness ... and help (it) get out of its current debt spiral."

At the same time, "Fidesz's fiscal track record ... is far from spotless," Ambrus said, as the party has "often showed strong populist tendencies to reap short term political benefits."

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