Nations in Transit 2009 - Hungary

by Balázs Áron Kovács and Bálint Molnár

Capital: Budapest
Population: 10.1 million
GNI/capita: US$17,470

The data above was provided by The World Bank, World Bank Indicators 2009.

Nations in Transit Ratings and Averaged Scores

* Starting with the 2005 edition, Freedom House introduced separate analysis and ratings for national democratic governance and local democratic governance to provide readers with more detailed and nuanced analysis of these two important subjects.

NOTE: The ratings reflect the consensus of Freedom House, its academic advisers, and the author(s) of this report. The opinions expressed in this report are those of the author(s). The ratings are based on a scale of 1 to 7, with 1 representing the highest level of democratic progress and 7 the lowest. The Democracy Score is an average of ratings for the categories tracked in a given year.

Executive Summary

The year in Hungary was marked by voters' rejection of government reforms at the March 9 referendum, the subsequent breakup of the ruling Socialist-Liberal coalition leading to the first minority government since 1990, and the early effects of the global financial crisis in the autumn. The state's involvement in Hungary's otherwise free-market economy appears unsustainable, yet the public does not indicate a readiness to rearrange these sectors.

Hungary is a parliamentary system dominated by two parties – the Hungarian Socialist Party and the right-wing Fidesz-Hungarian Civic Association – with three minor parties having independent factions. Democratic institutions are robust and likely to hold despite reckless party politics, illiberal rhetoric, high-profile corruption, and radicalization on the political Right aimed at the minority Roma population. The political elite appear consumed with an inbred competition for power and a disregard for the need for substantial reforms, losing touch with the voting public.

The long-standing social tensions released since 2006 stem from the country's lack of fundamental reforms, the central government's provision of services beyond its capacity, and public reliance on the state instead of private and nongovernmental sectors. Hungary's unresolved Communist legacy, including the role of the secret services prior to transition and the management of privatization, still haunts the sociopolitical landscape.

National Democratic Governance. In 2008, Hungary had a minority government for the first time since 1990. While this limited the government's space to maneuver, the country continued to function. The global financial crisis reached Hungary's already weak economy early on and could potentially reduce extreme partisanship, a staple of Hungarian politics, at least in financial and economic policy. The rejection of government reforms at the March referendum created a risky precedent that may result in the country's long-term inability to reform. The growing radicalization of Hungarian nationalists took a progressively racist turn, with serious and sometimes deadly attacks against the already marginalized Roma community. While radicalization of politics is a major concern, it does not threaten the country's constitutional order and did not prompt undemocratic measures to suppress it. The March referendum, however, may undermine the country's ability to govern. Hungary's rating for national democratic governance worsens from 2.25 to 2.50.

Electoral Process. Hungary's electoral system ensures free and fair elections in which political parties may alternate in power at both national and local levels. The March 9, 2008, referendum on the government's social reforms was conducted successfully and according to accepted democratic standards, with a majority of voters rejecting the proposed reforms. Hungary's rating for electoral process remains unchanged at 1.75.

Civil Society. Hungary's legal framework is generally hospitable to civil society, but tax regulations and other administrative requirements may threaten the sector's long-term sustainability and development. The presence of extreme illiberal views among civil society groups and the population continued to intensify in 2008, with the far-right Hungarian Guard becoming increasingly visible and active. Some positive developments include the grassroots response to the Guard by diverse civil society organizations and segments of the general public. The banning of the Guard by the courts in December is unlikely to stem the country's growing tide of radicalization. Owing to increased radicalization and continuing challenges to sustainability, Hungary's civil society rating worsens from 1.50 to 1.75.

Independent Media. Hungarian media are generally free and diverse. The market is dominated by commercial outlets in both broadcast and print media. Public service media continue to struggle with lack of funding and occasional political meddling, but some signs point to increasing stability and sensible reforms in programming on public TV and radio. A new draft media law presented at the end of 2008 indicated renewed desire among political parties to increase their influence over the media, but the draft was withdrawn following massive criticism from all corners. The public television chair remained empty after the board's party delegates were unable to agree on a suitable candidate, highlighting the continuing politicization of public service broadcasting. Hungary's rating for independent media remains at 2.50.

Local Democratic Governance. The local governance system in Hungary struggles with inefficiency, overfragmentation, and a lack of human and financial resources in many small municipalities. Despite nominally significant independence, local self-governments are overdependent on the central redistribution of local taxes and other revenues, and many distressed municipalities required repeated government assistance in 2008. Although there was widespread agreement on the need for change, no reforms were implemented to improve the structure and performance of the sector, as the required two-thirds parliamentary consensus was largely out of reach in the polarized domestic climate. An intensifying standoff appeared to develop between some municipalities and the government over laws regulating social services. Owing to the lack of substantial reforms and recurring local corruption associated with municipal governance, Hungary's rating for local democratic governance worsens from 2.25 to 2.50.

Judicial Framework and Independence. Fundamental civil and political rights in Hungary are guaranteed by an independent judiciary, the Constitutional Court, and the ombudsmen. There are no reports of systematic torture or ill-treatment of defendants. Parliament was unable to vote on a new Supreme Court president until the end of 2008 following the expiration of Zoltán Lomnici's six-year mandate. The long due debate on judicial accountability, which may improve the practices and transparency of the judiciary, continued throughout the year. Hungary's rating for judicial framework and independence remains unchanged at 1.75.

Corruption. While continuous legislative efforts have brought Hungary's anticorruption legal framework closer to international standards, the lack of effective implementation and political will in such areas as party finance reform demonstrates the country's continued struggle with high-level corruption. The government launched an ambitious and comprehensive anticorruption initiative in 2007, but the effort had fizzled out by the second half of 2008, with many prominent civil society partners resigning from the top anticorruption coordination body in protest. Investigations into scandals from previous years did not progress in any meaningful way, and new scandals came to light with distressing regularity, mostly involving public procurement. Owing to lack of progress on the government's much-touted anticorruption initiative, the lack of political will to resolve party and campaign financing, and continuing scandals in public procurement, Hungary's corruption rating worsens from 3.00 to 3.25.

Outlook for 2009. The top issue in 2009 will most likely be the global financial crisis and its effects on the Hungarian economy. This is expected to force the government and the opposition to cooperate on economic matters and ensure that the minority Socialist government stays in power until the 2010 elections. The crisis also opens a narrow opportunity to carry out much-needed reforms with lower political cost. The year will be characterized by intense campaigning for the Summer European Parliament elections, perceived by many as a litmus test for the 2010 general elections.