History of Hungary - Third Republic (1989- )

Third Republic (1989- )

The first free parliamentary election, held in May 1990, was effectively a plebiscite on communism. The revitalized and reformed Communists performed poorly despite having more than the usual advantages of an "incumbent" party. Populist, center-right, and liberal parties fared best, with the Hungarian Democratic Forum (MDF) winning 43% of the vote and the Alliance of Free Democrats (SZDSZ) capturing 24%. Under Prime Minister József Antall, the MDF formed a center-right coalition government with the Independent Smallholders' Party (FKGP) and the Christian Democratic People's Party (KDNP) to command a 60% majority in the parliament. Parliamentary opposition parties included SZDSZ, the Hungarian Socialist Party (MSZP), and the Alliance of Young Democrats (Fidesz).

Between March 12, 1990 and June 19, 1991 the Soviet troops ("Southern Army Group") left Hungary. The total number of Soviet military and civilian personnel stationed in Hungary was around 100,000, having at their disposal approximately 27,000 military equipment. The withdrawal was performed with 35,000 railway cars. The last units commanded by general Viktor Silov crossed the Hungarian-Ukrainian border at Záhony-Chop.

Péter Boross succeeded as Prime Minister after Antall died in December 1993. The Antall/Boross coalition governments struggled to create a reasonably well-functioning parliamentary democracy in a market-economy, and to manage the related political, social and economic crises resulting from the collapse of the former Communist system. The massive decline in living standards led to a massive loss of political support.

In the May 1994 election, the Socialists won a plurality of votes and 54% of the seats (with the new Prime Minister, Gyula Horn) after a campaign focused largely on economic issues and the substantial decline in living standards since 1990. This signaled a wish to turn back to the relative security and stability of the socialist era, but voters rejected both right and left-wing extremist solutions - no such party gained seats in parliament. After its disappointing result in the election, leadership of the Fidesz party opted for an ideological shift from a liberal to a conservative party. This caused a severe split in the membership and many members left for the other liberal party, the SZDSZ, which formed a coalition with the socialists, leading to a more than two-thirds majority.

The coalition was influenced by the socialism of Prime Minister Gyula Horn, by the economic focus of its technocrats (who had been Western-educated in the 1970s and 1980s) and ex-cadre entrepreneur supporters, and by its liberal coalition partner the SZDSZ. Facing the threat of state bankruptcy, Horn initiated economic reforms and aggressive privatization of state enterprises to multinational companies in return for expectations of investment (in the form of reconstruction, expansion and modernization). The government adopted a fiscal austerity program, the Bokros plan in 1995, which had dramatic consequences on social stability and quality of life. The government introduced post-secondary tuition fees, partially privatized state services, but supported science both directly and indirectly, through the private sector. The government pursued a foreign policy of integration with Euro-Atlantic institutions and reconciliation with neighboring countries.

The Bokros plan and efforts at privatizations were unpopular with voters, as were rising crime rates, allegations of government corruption, and an attempt to restart the unpopular program of building a dam in the Danube. This dissatisfaction among voters helped to propel center-right parties into power following national elections in May 1998. Fidesz gained the plurality of parliamentary seats and forged a coalition with the Smallholders and the Democratic Forum.

The new government, headed by 35-year-old Prime Minister Viktor Orbán, promised to stimulate faster growth, curb inflation, and lower taxes. It inherited an economy with positive economic indicators, including a growing export-surplus. The government abolished tuition fees and aimed to create good market conditions for small businesses and to encourage local production with domestic resources. In terms of foreign policy, the Orbán administration continued to pursue Euro-Atlantic integration as its first priority, but was a more vocal advocate of minority rights for ethnic Hungarians abroad than the previous government had been. As a result of a 1997 referendum, Hungary joined NATO in 1999. In 2002, the European Union agreed to admit Hungary, along with 9 other countries, as members on 1 January 2004.

Fidesz was criticized by its adversaries for the party's presentation of history, particularly the 1989 system-change. While Fidesz had suggested that the Socialist party is the moral and legal successor to the hated state party of the Communist past, the Socialists would assert that they had been those who had pushed for change from within, derided Fidesz members for crediting themselves as the sole creators and heirs of the system-change.

In the 2002 election the MSZP/SZDSZ coalition won over Fidesz/MDF coalition in a fierce political fight, with record-high 73% voter turnout. Péter Medgyessy became the new prime minister.

Under the socialist-liberal government, the economic balance of the Hungarian economy started a downfall, while quality of life, infrastructure and technology boosted. On 12 April 2003, Hungarians voted to join the European Union (EU), with 83% of the votes in favor. Since the EU had already accepted Hungary as a possible member, the four leading political parties (MSZP, Fidesz, SZDSZ and MDF) agreed to establish the required prerequisites and policies and to work together to prepare the country for the accession with the least possible harm to the economy and people while maximizing the positive effects on the country. On 1 May 2004 Hungary became a member of the EU.

In the elections of April 2006, Hungary decided to re-elect its government for the first time since 1989, though with a new Prime Minister, Ferenc Gyurcsány. The left-wing strengthened its position, with the coalition of the Social Democrats (MSZP) and the Liberals (SZDSZ) reaching 54 percent of the vote and gaining 210 seats as opposed to the previous 198. The parties of the former term (Fidesz, MDF, SZDSZ, MSZP) won parliamentary seats again. The new parliament assembled in late May 2006, and the new government was formed in June 2006.

The new government presented plans to reach balance and sustainable economic growth by removing subsidies to the growth of standard of living, which it had not included in its campaign. A leaked speech was followed by mass protests against the Gyurcsány government between 17 September and 23 October 2006. It was the first sustained protest in Hungary since 1989. From 2007, when increased inflation caused by tax increases decreased the standard of living, a complete restructuring of the state-administration, energy sector, relation towards private economy, health sector and welfare supports took place. Members of affected professional unions describe the measures as lacking discussion and uncompromising. The country joined Schengen Area at the end of 2007.

In 2008, the coalition broke up over the disagreement whether the insurance side of the health sector should be state owned and therefore decided in policies the by state or by private companies. This conflict was followed by a successful public referendum, initiated by Fidesz, calling for the elimination of university tuition fees, direct payments at visitations of doctors by insured patients, and daily fees at hospital by insured patients. This effectively stopped the restructuring of health care, while it remained completely publicly owned.

The 2008 financial crisis caused further budgetary constraints. After Gyurcsány's resignation, the Socialists put forward a "government of experts" under Gordon Bajnai in March 2009, which would only make essential macroeconomic decisions.

In the first round of the 2010 spring general elections, the center-right Fidesz received 2.704 million votes, i.e. the votes of 33.69% of the 8.026 million eligible voters or 52.73% of the 5.128 million actual voters for party lists, which resulted in more than two-thirds of the seats in Parliament. Fidesz took 263 seats, the Socialists 59, radical, far right nationalist Jobbik 47, and the newly founded Lehet Más a Politika (Politics Can Be Different) 16, with one seat taken by an independent. In the autumn municipal elections, Fidesz achieved a majority in almost all local and mayoral elections, winning the traditional strongholds of the liberal parties.

The newly formed government set three priorities around which it intended to govern: the New Constitution, holding those who committed criminal deeds during the former government to account, and creating jobs.

The rationale for accepting a New Constitution was that the constitution of the Third Republic was a heavily modified version of the 1949 communist constitution, which was transformed to be the base of a western-style democracy during the Round Table Consultations during the System-Change of 1989-90. The preamble of the 1989 version of the 1949 Constitution even stated that it is a temporary constitution in effect until the new constitution is accepted.

FIDESZ regarded itself empowered by the people to form the new constitution on its own. FIDESZ believed this on the bases that it won a two-thirds majority in the parliament by popular support, while the opinion of the opposition parties was that only a multi-party compromise over a new constitution would be legitimate, regardless of the ratio of the parliamentary seats. The FIDESZ-accepted constitution entered into force on Jan. 1, 2012. It did not introduce radical differences to the state-structure: for example, the election of the President of the Republic remained done by the majority of MEPs. However, the new constitution was criticized by the opposition parties and also by civil organizations for what they perceived as the governing party weakened the checks and balances previously established by the 1989 version of the 1949 constitution. For example, the 1989 version allowed any MEP to request constitutional review at the Constitutional Court in advance of any law, while the 2012 constitution only allowed this to a joint initiative by one-quarter of the members of parliament. The new constitution eliminated the right of an ordinary citizen to appeal to the Constitutional Court and also made it harder to demand public referendum. An other example of what other parties regarded as the weakening of the checks and balances: the FIDESZ 2/3 majority has doubled the required signatures that individual MEP nominees need to enter the election, negatively impacting the chances of small parties sending delegates to the parliament.

Former President of the Republic László Sólyom, who was an active participant of writing the 1989 version of the 1949 constitution was among those who raised concerns over the weakening of the checks and balances.

The government also launched what it dubbed the 'war against public debt', intended to reduce the debt of the state as much as possible. Despite the government's efforts, as of yet the national debt has not decreased. The reason for it is that much of the national debt was taken up in foreign currencies, and the national currency weakened during the government's term.