Nowadays, you should think twice about whether you would like to advise the government of Hungary
We were unable to “Stop Brussels” and due to the “new guy”, Orbán’s term for Macron, Paris is increasingly becoming a threat. As a short-term solution, we can launch a “Stop Paris” and a “Stop Berlin” campaign, but beyond mobilising the pro-Fidesz forces and administering the rapid burn of public money by PR agencies and newspapers owned by friendly oligarchs there is a little chance for changing the foreign policy of the leading European powers. Furthermore, we need the advertisement space currently to “Stop Soros”.
Unfortunately, it seems that some of the European leaders would welcome a two speed Europe, which would consist of some member states belonging to the eurozone while others are left behind. At the same time, those outside of the Schengen and eurozone are in even bigger trouble, but we should not deal with their problem at this point. Furthermore, the French would like to have a separate budget for this non-eurozone grouping, and it is highly unlikely that they would like to create this budget by creating a new hat, instead of restructuring the current EU budget. Concisely, they have their targets set on our cohesion funds and the common agricultural policy, and let us not have any illusions about whether the eurozone majority will happily support their plans.
Nobody is trying to hide that one of the main goals of a two-speed Europe is to isolate the problematic Central European countries into a quarantine. They have already managed to split their unity. Foreign policy leaders from Bratislava have launched a roadshow in Europe to highlight that if Slovakia has to pick between the first tear and the V4, the decision-making process will not take more than a second.
Furthermore, elections are coming and this will be a long and bloody winter….We can build a campaign once again based on cuts to utility costs or the launching of a national consultation process, but still voters might not appreciate Fidesz guiding the country into the second class of Europe. So, what should we do now?
The best option would be to announce Hungary’s willingness to join the eurozone.
But, why do we have to announce that at all if we have signed every document about joining the common currency, and we have only prolonged the date of the accession to the far future? The answer is easy: if every major project can be announced or opened at least three of four times, there is no reason why such a project as the euro should be any different. What has to be announced, in fact is a bit more technical: the introduction of ERM II. That means that forint is allowed to float within a range of ±15% with respect to a central rate against the euro. Obviously, this is hard to communicate, so it is enough to tell the people that the government is starting the introduction process of the euro.
What are the potential risks? First of all, to be a bit technical: there is no consensus on the immediate and mid-term economic impact. Previously, experts agreed that euro was producing heavy losses for the new members; however, on a mid-term basis, this picture is much more mixed and in several Central and Eastern European countries, these experiences are rather positive. On the other hand, losing independence on the field of monetary policy is a serious threat for Fidesz that it has already had to fight once against the IMF to fully control this area of our economy. Obviously, we have to highlight personal interests of the Central Bank president, György Matolcsy, a close ally of Orbán, who has used Central Bank funds to create foundations and build a massive clientele system managing billions of euros. On the other hand, to give a bit more political perspective, independent monetary policy will not save us from the devastating impact of a second-class EU membership.
Obviously, there are a number of international impacts to consider as well. Our closest ally, Mr. Kaczynski would feel that he was being left alone, but the Czechs themselves are preparing a similar move ever since they have unpegged the crown from euro this April.
On the other hand, what would Orbán gain on this political and economic turn?
First of all, those European decision-makers and opinion formers criticizing the Hungarian Prime Minister based on his anti-European stance, disintegrating policies and populism will be in deep trouble. The current option of a two speed Europe would be seriously hacked, and he could provide a strong answer to those saying there is not a single strong leader East of the Alps. His European leadership aspirations would be finally boosted.
He would not be risking much with the public as well. The introduction of the euro would not be necessarily against his populist policies. Unlike in Poland or in the Czech Republic, the majority of Hungarians support the introduction of the European currency according to the latest Eurobarometer surveys. Previously, the risk was that euro would unveil the differences between the Hungarian and European wages, but that has already happened, therefore the government is giving up its economic policies. Prior to 2017, economic growth was based on the cheap labour force, but this year wages and the job market exploded, and by the time of a potential accession to the eurozone, this risk could be practically eliminated. As cheap labour force is not supporting future investments, we have to consider other factors, such as security, something that eurozone membership can further support.
Political outlooks are the most promising of all. Focusing the launch of the Hungarian election campaign to this agenda, would destroy the strategies of all oppositional parties. Centrist and left-wing opposition would have no other choice but support the current prime minster on introducing euro, while Jobbik would need to take a U-turn back from the centre to the far right. Although they could potentially win a few percent of the votes with an anti-euro campaign, they would, at the same time, find themselves isolated light-years away from the political centre, where they have positioned themselves in the last two years.
Therefore, Mr. Prime Minister, it does not seem much to lose. It is time to “Stop Brussels” with a single press conference. In addition, the fun part is: following the election and EP campaign in 2019, you can still announce that ERMII is not suitable for us….
Dániel Bartha is Director for Centre for Euro-Atlantic Integration and Democracy.