MEP Gyöngyösi: Hungarian “war bonds” signs of an impending collapse

When Viktor Orbán became Prime Minister again in 2010, perhaps he had no idea what lucrative years he was going to see in the economy. However, as populist politicians often do, he soon realized that the boom can help him to establish his regime. Although it became clear to him relatively soon that if he wanted to build up his illiberal system, he had to give up his earlier dreams of strengthening Hungary’s middle class, the economic boom and the EU funds made it significantly easier to construct his society relying on cheap factory labour.

Furthermore, the EU funds kept coming, which allowed Orbán to thoroughly line the government-friendly oligarchs’ pockets through the grandiose infrastructure projects while also creating the appearance that the economy was growing.

In the past few years however, Orbán committed some miscalculations: he engaged in too many conflicts and lost his European friends too quickly, and the painful financial consequences became more and more apparent over the last months. Hungary no longer receives EU funds, but Fidesz’ voter base, which already got used to the quasi-Socialist conditions in the last decade, now expects the state to keep up the pretence that their salaries are not quite so worthless after all. Hungary is showing the early signs of economic collapse, with no source of money in sight.

This is the most likely driver of the government’s latest measures to tax savings and push people towards government bonds.

As it was widely reported in the media, the tax on savings will nearly be doubled as of next month, since people will have to pay a social contribution on top of their personal income tax. This is a clear declaration of war on the already very narrow Hungarian middle class, and a gesture to the fastest growing segment of Fidesz’ voter base: the undereducated and the ones looking for social benefits. It’s obvious whose comfort is prioritized by this government.

However, there’s another factor, too: Viktor Orbán recently said in a radio interview that in today’s “hard” times, it’s better for people to keep their money in government bonds.

Plainly speaking, he wants Hungarian citizens to loan their hard-earned savings to their prodigal government. The Prime Minister’s call is a not-so-subtle reference to the hardest times of Hungarian history. The first time when the Hungarian state asked its citizens to subscribe to “war bonds” was in World War I, but they were never repaid after the war was lost and the historical Hungarian state was dissolved. Later, in the 1950s, Hungary’s Stalinist regime expected people to put their money in “peace bonds”, in other words, to finance the insanity of the Communist system. This time they didn’t even promise to pay it back. They had no money for it, either.

The fact that Hungary’s government bonds have become so worthless in the world’s eyes that the PM has to launch a communication campaign, and in fact even bombard school children with unsolicited messages to ask government bonds from their parents as a present, is a clear indication that the Orbán regime is in big trouble.

On the other hand, there is a chance that the people, who have been reconditioned to be unconditionally loyal to the state and the government through a series of campaigns, will fall for the trick and extend Orbán’s reign a bit more, while almost certainly losing their savings. How the consequent social crisis will be managed, you ask? Good question. The current government’s leaders will likely have been gone far away by then…

Disclaimer: the sole liability for the opinions stated rests with the author(s). These opinions do not necessarily reflect the official position of the European Parliament.

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