(Updates after protest starting in first paragraph.)
Jan. 2 (Bloomberg) -- Hungary’s opposition groups held a joint demonstration against the country’s new constitution, which took effect yesterday amid European Union and United States criticism that it curbs democracy.
About 100,000 people gathered today outside the Opera in Budapest, the event’s organizers said. Premier Viktor Orban, who used his two-thirds parliamentary majority to pass the new constitution as the culmination of his self-styled “ballot-box revolution,” was attending a gala in the building to celebrate the legislation.
Orban’s overhaul of the judiciary, electoral law and independent institutions helps the premier fortify his power, opposition groups said. The constitution marks the end of the country’s transition to democracy from communism that started in 1990, Orban told Magyar Nemzet in a Dec. 24 interview.
“This is a full-court press against democracy,” Sandor Szekely, a co-president of the Solidarity Movement, said by phone today. “All checks and balances have been eliminated.”
Lawmakers in Orban’s Fidesz party last week approved a central bank law that expands the rate-setting Monetary Council while curbing the power of central bank President Andras Simor. The International Monetary Fund and the EU broke off talks on a bailout last month over the plan. Orban said he rejected European Commission President Jose Barroso’s request to withdraw the legislation.
Junk Debt Grade
Hungary received its second sovereign-credit downgrade to junk in a month when Standard and Poor’s followed Moody’s Investors Service in stripping the country of its investment grade on Dec. 21.
The forint dropped 16 percent against the euro in the second half of 2011, the worst performance among more than 170 currencies tracked by Bloomberg. It traded at 314.1 at 4:45 p.m. in Budapest, nearing its record-weak 317.92, reached on Nov. 14. The yield on Hungary’s 10-year government bonds rose to 10.11 percent today, the highest since June 24, 2009, according to generic prices compiled by Bloomberg.
Orban shunned IMF aid after taking office in 2010 to protect what he called “unorthodox” measures from oversight. The steps included the effective nationalization of $13 billion of private pension-fund assets and extraordinary industry taxes to control the budget, which had a deficit of 182 percent of the Cabinet’s full-year target at the end of November.
Hungary’s economy may grow at the slowest rate with the highest public debt level this year among the EU’s eastern members, according to the European Commission’s forecasts published in November.
Orban has been reducing the power of independent institutions and asserting his influence since winning elections last year, bucking objections from the U.S. and the United Nations.
Ruling-party lawmakers ousted the chief justice of the Supreme Court, narrowed the jurisdiction of the Constitutional Court, replaced an independent Fiscal Council with one dominated by the premier’s allies, created a media regulator led by ruling-party appointees and chose a party member to lead the State Audit Office.
One judge, Tunde Hando, the wife of Jozsef Szajer, a European Parliament member from Orban’s ruling Fidesz party, will be responsible for naming all new judges, including replacing scores who were forced into retirement last year.
“We have significant and well-founded concerns,” U.S. Secretary of State Hillary Clinton wrote in a Dec. 23 letter to Orban, according to Nepszabadsag newspaper, which published the letter in Hungarian on Dec. 30. She called on Orban to protect individual liberties and checks and balances, Nepszabadsag said.
Foreign journalists are “right when describing what happens in Hungary not just as simple governing, but a regime change,” Orban said in the Magyar Nemzet interview.
“They say this in a disparaging way but I think this is a compliment,” Orban said, according to the newspaper. “We Hungarians have failed for over a hundred years to show western Europe our own virtues.”
Orban’s office and the government spokesman’s office didn’t reply to questions about the nature of regime change the premier described.
Hungary risks losing its EU membership, obtained in 2004, if the government doesn’t reverse course, Mark Palmer, the U.S. ambassador to Budapest between 1986 and 1990, said in a Nepszabadsag interview published today.
“Hungary’s ejection from the European Union is now no longer unthinkable,” Palmer told the Budapest-based newspaper. The country “won’t be tolerated if it no longer counts as a democracy.”
Orban’s Fidesz still leads all parties with 18 percent backing among eligible voters, even as its support plunged from 42 percent in May 2010 when it won the last election, pollster Szonda Ipsos said on Dec. 14. The Socialists are second with 11 percent. Fifty-five percent said they’re “unsure or wouldn’t vote.”
The poll was conducted between Dec. 5 and Dec. 12 and has a 2.5 percentage point margin of error. The next parliamentary election is scheduled for 2014.
Today’s protest outside the Opera will be the first time disparate opposition groups, including two parliamentary parties, will demonstrate together against Orban’s government, Szekely said. Thousands demonstrated last year at various rallies against the new constitution, media law and the scrapping of early retirement benefits.
--Editors: Balazs Penz, Alan Crosby
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