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  • Writer's pictureThe Paladins

Postcard from Budapest

What is the problem that Hungary is having with the European Union right now? Those immersed in the conflict over Ukraine might be inclined to simplify it in terms that Hungary’s current Prime Minister Viktor Orbán is pro-Moscow and he is doing everything he can to try to frustrate European sanctions or agree upon European aid to Ukraine as part of a package of measures to resist the second Russian invasion of Ukraine. However the truth is far more complicated than that; to understand how deep-seated Hungary’s malaise is you have to understand why ordinary Hungarian people support Mr Orbán in his hardline negotiating postures with the European Union which after all were not the platform upon which he was originally elected as a pro-European liberal democrat from 1998 to 2002. Only now has he emerged as an apparent hardliner and an anathema to Brussels and Berlin. What went wrong in the interim, in his second term since 2010, in which he has increasingly been portrayed as a pro-Muscovite hardline populist?

The answer to this question is not something to do with Mr Orbán (save that he is indeed a populist in the sense of adopting policies that the majority of the population want to be pursued and trimming his sails accordingly) but that the Hungarians are profoundly disappointed with their experience of European Union membership. This was explained to me good-humouredly and in some detail to me by an articulate and literate Hungarian on a recent visit to the country’s capital who is now reduced to driving a taxi for EUR4 an hour for maximum of EUR650 a month. This is the reality of middle class wage labour in Budapest today and wage stagnation has coincided with persistent price inflation ever since Hungary joined the European Union in 2004, with the result that Hungarians can now no longer afford to live. Prices are the same as in Germany and yet the salaries are a fraction of those found in Germany. Therefore for Hungarians the European free market has been a free market to exploit them and grind them into poverty.

My interlocutor understood clearly one of the principles of the European free market. Because goods can cross borders without tariffs or other restrictions that might increase their prices, the costs of goods in supermarkets is likely to be the same across the European Union. In Vienna, just a couple of hours away from Budapest, the prices of daily staples are essentially the same in the hypermarkets and yet the Viennese are so much wealthier. It is inevitable that membership of the single market causes price inflation amongst daily comestibles, because those goods will move to wherever they can be sold for the highest price with the result that they cost the same price everywhere. That is the point of the free market and, free movement of goods taken on its own, it entails poverty for entrant countries.

What the Poles realised and embraced upon entry to the European Union at the same time as Hungary, and what the Hungarians failed to perceive, was that the the free movement of goods was only one of several freedoms enshrined in the EU’s free market and the other one was workers which gave Poles and Hungarians alike the opportunity to travel abroad and to seize jobs that were being taken by labourers in Western European markets, charging less for their labour and thereby undercutting them and then repatriating their salaries and revenues to their countries of origin. This flattened out of the single market, as over a million Poles moved to the United Kingdom just to work and then bring money home once the programme of economic ironing out, in which wages inevitably went down in western Europe and up in entrant countries in eastern Europe, followed the flood of workers westwards. The free movement of goods was never supposed to work on its own. It required a movement of labourers. The reason why the European Union was a success for the Poles and not for the Hungarians is because the Poles were prepared to move and the Hungarians were not - or not in nearly such large numbers as were the Poles and some other eastern European member states.

This is what makes the difference between a happy EU accession state and an unhappy one: the liquidity and mobility of labour. Because if labour does not migrate, for whatever cultural, linguistic or other reason, then the European Union is not going to work out for that country.

In Hungary this is what has happened. Hungary is a proud imperial nation with a pompous if largely decrepit grandiose capital city and a proud history that imagined EU membership would restore Budapest to its former glory after the dull and drab Soviet years in which this once glorious historical city was left in the doldrums as a haven for a few spies and eccentric academics. Hungary did not suffer nearly so much as Poland during World War II; Poland was virtually completely destroyed and then neglected by Soviet occupation, whereas Hungary maintained a soft fascist government in power until the Nazi occupation in 1943 and swift Soviet “liberation” in 1944. Hungary’s aspirations for democratic socialism were squashed by the Soviet Union in the Cold War period but the country’s pride was not quenched and when the new European political and economic order emerged at the end of the Cold War Hungary imagined that she would again stand tall amongst the shining spires of Europe’s great cultural capitals. Alas it was not to be, as the European single market turns out to be a pretty menacing and harsh Thatcherite method of levelling out workers, removing them from places where there are no jobs and pushing them towards western markets where there are insufficient workers. And Hungarians, for all of the reasons relating to their history, culture and extremely distinctive language and traditions, did not want to be pushed that way.

What we are left with now is a situation in which more than one in three elderly people in Hungary live below poverty and educated graduates are driving taxis or serving drinks to fly-fin stag parties from Britain and France because these are the only jobs in Budapest that pay even remotely cheerily. Budapest has not been renovated and a few five-star luxury hotels for the gilterrati classes aside, the city remains distinctly shabby and with Hungarians feeling their capital is now little more than a decrepit museum.

Mr Orbán has been reacting to popular dismay with the European Union by trying to unravel EU free market and other laws through loosening the EU’s grip on the courts, and for this reason the European Union has been delaying reconstructing and assistance funding after the COVID pandemic and other much-needed sources of support in order to try to bind Hungary’s politicians into the European orbit. In the interim you now hear young Hungarians hark back to the Soviet times when the state gave you an apartment, food to live on, a respectable job where you could make a decent wage in dignified circumstances (not just serving alcohol to drunk foreigners) and now Mr Putin in Moscow takes advantage of this lingering Soviet sentiment by trying to infect Hungarian politics with Russian money and influence, building two new nuclear reactors in Paks south of Budapest, amongst other glamour projects designed to appeal to reminiscences of comparative Soviet grandeur for Budapest. And the greater majority of Budapest, once you get away from a handful of spruced up tourist sights in the centre, looks shockingly bad. It is easy to see how the proud Hungarians feel they have gotten nothing out of the EU compact, because they did not all want to move abroad.

What the answer to the Hungarian conundrum is, nobody quite knows but I suspect a version of it is likewise being played out in Slovakia where there is disenchantment with EU free market policies as giving nothing to Slovakians and a reminiscence for better times before the coming of Brussels and the European Union’s free markets. The problem is that if you tailor specific solutions for these countries to provide them with contentment, then every new accession state will demand the same and the dual principles of free movement - of goods and workers alike - will break down. The Union does not work with only one and not the other, any more than would the United States of America if you stopped people from. Moving around the country to seek work through legal or cultural reasons. Some fresh thinking is needed, or we will find a new range of “Balkan” EU member states with the same quandary as Hungary. As my interlocutor said to me, “we have Balkan salaries and jobs but EU prices; we get the worst of both worlds. Who would want to join the EU?” Unless someone can answer that question decisively, EU expansion may come crashing to a halt which would be a catastrophe for European geopolitics.

In the interim, once glorious Budapest continues to look relentlessly shabby. It is terribly sad.


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