László Szerencsés

FIDESZ has been in power since 2010 and enjoys strong institutional stability with two-thirds constitutional supermajority in the Hungarian Parliament. Similarly, the economic environment has been stable when the coronavirus hit the country, characterized by a low unemployment rate of 3,8%,[1] and a stable expected real GDP growth for 2020 of 3,33%[2], which is considered to be high in the European Union (EU).[3] The ruling party’s legitimacy is strongly bolstered by these economic successes achieved in the past 10 years. Although the pandemic threatens workers’ job security,[4] Hungary’s responses addressing unemployment so far have lagged behind its counterparts among the Visegrád Group countries[5] and in Western Europe.[6] Instead, the government’s crisis management in general is driven by their regime security purposes focused on extending executive powers to stabilize their dominance in both economic and political fields.

The Coronavirus Act as an executive tool

The main executive tool to centralize power in the hands of Prime Minister Viktor Orbán has been the introduction of a special legal order. Article 53 of the Fundamental Law of Hungary allows the government to declare the “state of danger” in the event of a natural disaster or industrial accident, or to mitigate its consequences. As long as the “state of danger” is in effect, the government can adopt decrees, which stay valid for 15 days without the approval of the legislative. Yet, it is the Parliament that can extend the decrees’ validity, otherwise they lose effect after this period.[7] However, Article 54 rules that it is the government who terminates the “state of danger” if the conditions for its declaration no longer exist.[8] Hence, both the declaration and the termination of the special legal order fall under the judgement of the executive branch, which allows for a radical shift of power from the legislative to the executive. Although the Fundamental Law does not specify a pandemic as an event that could be referred to when introducing the “state of danger”, neither oppositional parties nor courts had objected against the decision. Yet, the government’s intent to adopt a law that would abolish the Parliament’s formal approval every 15 days caused outcry among critics.

The Act on the containment of coronavirus, adopted by the Parliament on 30 March 2020, endows the government to extend the decrees’ applicability until the end of the period of “state of danger”.[9] Although the opposition demanded the governing party to specify a time-limit in the law,[10] FIDESZ’s only concession was to include one single phrase that vaguely limits the government that it would exercise its power only “to the extent necessary and proportionate to the objective pursued”.[11] The Act stipulates that the Parliament can revoke this authorization at any time, and the Constitutional Court remains operative during the “state of danger”. Thus, in theory, the Act meets constitutional requirements, but in practice it falls short of separating powers because the so far almost uninterrupted 10-years rule of FIDESZ with a two-thirds supermajority has already considerably damaged inter-branch relations.

Graph 1: Results of the Hungarian National Assembly Elections in 2014 and 2018

Source: Reuters Graphics[12]

The executive argues that the Parliament’s right to revoke the extension of the decrees is a stronger guarantee than the time limit,[13] and that the Act meets the principles of necessity and proportionality.[14] Also, despite the coverage of some misinformed international news outlets,[15] the Parliament remains in session. According to the Act the government is obliged to report to the Assembly, or in its absence, to the Speaker of the Assembly and to the leaders of parliamentary groups during the “state of danger”. However, there are three main doubts that those arguments do not dispel.

First, the governing party enjoys two-third majority in the Parliament, thus it is highly unlikely that they would withdraw the authorization of the government to rule by decree without a time limit until the end of the “state of danger”, that is defined by the executive. The Act regulates that no by-elections or already called elections shall be held during the time of the special legal order; therefore, the governing party’s majority is not expected to be corrupted until the government terminates the “state of danger”. Second, the Judiciary is still free in Hungary, but the Constitutional Judges tend to vote in line with the party’s preferences that voted them in the Court.[16] Given that by now all of them were appointed under FIDESZ tenure, there is a meager chance that they would go against the decrees’ content in times of such a sensitive political environment. And third, even if the FIDESZ dominated Parliament revoked the extension of the decrees, the “state of danger” would still remain in force because Article 53 of the Fundamental Law allows it not only during the period of danger, but also to contain its consequences. Whatever that means, neither the Fundamental Law nor the Act on the containment of the coronavirus specifies those consequences. Thus, it remains open to the government’s interpretation and it may lead to the sustainment of the “state of danger” as long as they deem it is necessary. Thus, to put it briefly, the real question here is what the government does with this authorization, and not the Act’s constitutionality or its alignment with European legal norms.

Using the powers to implement further budget discipline

The economic response given to the coronavirus crisis has been driven by budget discipline and half-hearted solutions. Although the government increased the expected budget deficit from 1% to 2,7%, this will happen most probably due to the recession and not because of the government’s investment to cure the consequences of the crisis.[17] The government’s economic package accounts for 18–22% of the GDP but the measures taken are mainly budget adjustment and restructuring, and not additional fiscal stimuli. Although they introduced a wage compensation program akin to the German “Kurzarbeit”, in the Hungarian version the maximum amount an employer can receive from the government to support the salary of an employee is €215.[18] It is not sufficient to keep low and medium sized enterprises in business or to convince multinational companies not to lay employees off, even if we consider the relatively lower living costs in Hungary compared to Western European EU member states.

As one of the most disputed decisions of ruling by decree, the Ministry of Human Capacities ordered hospitals to release 60% of the beds for coronavirus patients. This order, perhaps unintentionally, led to sending patients still in need of hospital care home, which a hospital director preferred not to do, and it cost him his job. Demanding the release of high number of hospital beds made the executive subject to criticism because of their alleged ignorance of non-coronavirus patients in need of medical care.[19] Although the Ministry clarified that 58% of those beds nationwide were already free because of the excess capacity in the system,[20] their calculation methods are strongly disputed.[21] Nevertheless, this means that the request to free up the beds was not solely motivated by the increased demand caused by the pandemic. Rather, the government is using the extra powers at hand to solve a long existing problem referring to the coronavirus.[22]

Since the “state of danger” can remain in effect even after the termination of the direct threat posed by the crisis, the government may be inclined to use the special legal order to lower expenses in the already underfunded health care system. The necessity to decrease costs is against the interests of the hospitals, who still need to pay the salaries of their employees, but with less beds and postponed surgeries they may realize less revenue from insurance companies.[23] At this time, we cannot foresee the real consequences of this scenario but if the decrease of excess capacity implies modernization of the Hungarian health care system, it might have positive consequences on the sector, but in light of the approaching economic crisis it is not very plausible. However, if the rationalization will only imply the reduction of costs then the special legal order will assist the executive to continue the decade-long decrement in health care spending.[24] This would be harmful without proper compensation from the central government budget, but it would not be surprising given FIDESZ’s tendency to leave sectors underfunded which do not directly support their short term political survival.

A political economic power game for the sake of regime security and political survival

The emergency powers wielded by the government are also used as political economic tools to assure the political survival of the ruling elite. One of the first political measures introduced by the executive was halving the financing of political parties in the Parliament, which is not a significant loss for the incumbent, but it means cutting the lifeline for oppositional formations.[25] These actions can easily be read as an opportunistic reaction to the 2019 local elections, which meant a surprise blow to the ruling FIDESZ. Opposition candidates won in a number of big cities, among them in the capital Budapest, which showcased that the governing party is not unbeatable.[26]

As a further measure to combat the consequences of the pandemic, another early decree designated special economic zones in which jurisdiction over property ownership, zoning rules and taxation were transferred from the elected city governments to the merely administrative county councils. The first such zone was established in the town of Göd,[27] which elected an opposition Momentum mayor in last year’s local elections. There, Samsung is planning an enormous investment to expand its already existing factory capacities. Since the taxation in the freshly designated special economic zone (of Göd) is not regulated by the local council anymore, the town will lose 1/3 of their budget which on the long term will endanger the popularity of the mayor and his party. These are textbook examples of how the legally hardly disputable supermajority and rule by decree can benefit the incumbent, who would never miss out on a favorable opportunity.

On the economic side, the responses to the coronavirus crisis have been more about strengthening FIDESZ’s grip on power, than about curing the social consequences of the crisis. The government has imposed supertaxes on the banking sector and on multinational retail enterprises, which have already led to layoffs,[28] but the measures did not affect any businesses with close ties to the government. To see this in perspective, it is important to note that Prime Minister Viktor Orbán’s long-awaited wish has been to raise the domestic ownership ratio to 50% in banking,[29] and in the retail sector.[30] This may become relevant after the pandemic, as the Central Bank’s Governor György Matolcsy announced that the post-coronavirus era is an opportunity for the Hungarian economy. The statement is a hint that the government-friendly capital abundant enterprises are just waiting for the green light to grab a bigger share of the banking and retail sectors in the sluggish economic environment following the coronavirus.[31] Thus, with the special legal order, the executive is creating an uneven playing ground to put a selected pool of Hungarian companies in preferable positions.

In sum, the government’s handling of the coronavirus crisis does not formally go against legal norms in Hungary, but it significantly contributes to strengthening the political and economic positions of the incumbent political elite. Even if the government decides to terminate the “state of danger” in May as some would expect,[32] they have used the available time to accelerate the political and economic centralization of power, which they can continue without the special legal order in effect as well.  Due to the formal parliamentary and judiciary checks on power, the extension of the decrees without a clear time limit is not unconstitutional. Yet, the vague wording of the “state of danger’s” termination in the Fundamental Law opens ways for the government to prolong the order beyond socially and economically necessary limits. This extended period of special legal order may serve as a chance to further centralize decision-making and budgeting in the government’s favor, and to disinvest in sectors such as the health care, where further cuts in financing might have severe consequences. At the same time, the “state of danger” and the Act on the containment of coronavirus accelerated the already extensive capital accumulation and chances for power grabs of the executive and their affiliates. Thus, the government’s economic and political management of the crisis does not target the main challenge, the rising unemployment, but it maintains budget discipline and opens windows to government-friendly companies to take over the underperforming sectors of economy.

[1] Although the emigration and the government’s disputed Public Work Scheme have contributed to the low unemployment rate, there is a consensus shared even by the critics of the FIDESZ government that their economic track record is positive. On unemployment see: OECD. Unemployment rate. https://data.oecd.org/unemp/unemployment-rate.htm ; on the public work scheme see: Kormány. Information on the current status of Public Work Scheme (PWS) in Hungary. https://kozfoglalkoztatas.kormany.hu/download/8/3a/51000/Information%20on%20the%20current%20status%20of%20Public%20Work%20Scheme%20(PWS)%20in%20Hungary.pdf;

and on emigration from Hungary see: OECD. Economic Surveys – Hungary. https://www.oecd-ilibrary.org/docserver/eco_surveys-hun-2019-en.pdf?expires=1587556963&id=id&accname=oid006727&checksum=03D94AC692818BBA9F4E0AE309B91E7B

[2] OECD. Real GDP forecast. https://data.oecd.org/gdp/real-gdp-forecast.htm

[3] Eurostat. Real GDP growth rate – volume. https://ec.europa.eu/eurostat/databrowser/view/tec00115/default/table?lang=en

[4] Since the 2014 declaration of illiberal democracy by Prime Minister Viktor Orbán in Hungary, one of the government’s main slogan is the „work-based state”. The government in its rhetoric contrasts liberal values against the vaguely defined term of „work-based state”, and their declared goal is the attainment of full employment without immigration. See more: Kormány. A munkaalapú állam korszaka következik.  https://www.kormany.hu/hu/a-miniszterelnok/hirek/a-munkaalapu-allam-korszaka-kovetkezik

[5] The Visegrád group countries are Hungary, Slovakia, Poland, and the Czech Republic. See more: G7. Mind a három másik visegrádi ország nagyobb támogatást ad a bajba került cégek dolgozóinak, mint Magyarország. https://g7.hu/kozelet/20200429/mind-a-harom-masik-visegradi-orszag-nagyobb-tamogatast-ad-a-cegeinek-mint-magyarorszag/

[6] For an overview of the economic measures in Hungary and in the EU see: Portfolio. Itt az Orbán-kormány teljes koronavírus-mentőcsomagja – Bővült a lista. https://www.portfolio.hu/gazdasag/20200417/itt-az-orban-kormany-teljes-koronavirus-mentocsomagja-bovult-a-lista-426566; and France24. The race to save jobs: European governments step in to pay wages. https://www.france24.com/en/20200325-the-race-to-save-jobs-european-governments-step-in-to-pay-wages

[7] Hungarian Fundemantal Law. https://www.kormany.hu/download/f/3e/61000/TheFundamentalLawofHungary_20180629_FIN.pdf

[8] Ibid.

[9] Act XII of 2020 on the containment of coronavirus. https://berlin.mfa.gov.hu/assets/77/49/43/cc3672166e33b2cf015ce4371aeedf19417c2710.pdf

[10] 24.HU. Nem támogatta az ellenzék a felhatalmazási törvény keddi elfogadását. https://24.hu/belfold/2020/03/23/koronavirus-orban-viktor-felhatalmazasi-torveny-parlament-ellenzek-kijarasi-tilalom/

[11] Act XII of 2020 on the containment of coronavirus. https://berlin.mfa.gov.hu/assets/77/49/43/cc3672166e33b2cf015ce4371aeedf19417c2710.pdf

[12] Reuters Graphics. Hungarian election. http://fingfx.thomsonreuters.com/gfx/rngs/HUNGARY-ELECTION/0100619X2QP/

[13] Die Welt. „Ungarn tut nur das, was alle in Europa tun“.  https://www.welt.de/politik/ausland/article207175133/Judit-Varga-Ungarn-tut-nur-das-was-alle-in-Europa-tun.html

[14] Mandiner. Varga Judit: Megvédjük a koronavírus-törvényt. https://mandiner.hu/cikk/20200423_varga_megvedjuk_a_koronavirus_torvenyt

[15]CNN. Hungarian parliament votes to let Viktor Orban rule by decree in wake of coronavirus pandemic.  https://edition.cnn.com/2020/03/30/europe/hungary-viktor-orban-powers-vote-intl/index.html

[16] Zoltán Szene. The Political Orientation of the Members of the Hungarian Constitutional Court. Constitutional Studies 1 (1). pp. 123-149. https://muse.jhu.edu/article/640098/pdf

[17] Mfor.hu. Orbán Viktor nem véletlenül fél a hiány megugrásától. https://mfor.hu/cikkek/makro/orban-viktor-nem-veletlenul-fel-a-hiany-megugrasatol.html

[18] Portfolio. Itt az Orbán-kormány teljes koronavírus-mentőcsomagja – Bővült a lista. https://www.portfolio.hu/gazdasag/20200417/itt-az-orban-kormany-teljes-koronavirus-mentocsomagja-bovult-a-lista-426566

[19] Népszava. Koronavírus: nyolc nap alatt mintegy 36 ezer ágyat kell kiüríteniük a kórházaknak. https://nepszava.hu/3074040_koronavirus-nyolc-nap-alatt-mintegy-36-ezer-agyat-kell-kiuriteniuk-a-korhazaknak

[20] Kormány. Mindenre felkészültünk az emberi életek védelmében. https://www.kormany.hu/hu/emberi-eroforrasok-miniszteriuma/hirek/mindenre-felkeszultunk-az-emberi-eletek-vedelmeben

[21] Népszava. Nem stimmelnek Kásler Miklós ágyszámai. https://nepszava.hu/3075662_nem-stimmelnek-kasler-miklos-agyszamai

[22] Portfolio. Kiderült a koronavírus miatti kórházi ágyszámcsökkentés valódi háttere. https://www.portfolio.hu/gazdasag/20200423/kiderult-a-koronavirus-miatti-korhazi-agyszamcsokkentes-valodi-hattere-427870

[23] G7. Milliárdokat spórol az egészségügyön a koronavírus-járvány alatt a magyar állam. https://g7.hu/adat/20200417/milliardokat-sporol-az-egeszsegugyon-a-koronavirus-jarvany-alatt-a-magyar-allam/

[24] Hungary’s health care expenditure has been always under the EU average, but despite the economic growth, it has not changed to the better since FIDESZ is in power. See more: OECD. State of Health in the EU. Hungary. Country Health Profile 2019. https://www.oecd.org/hungary/Hungary-Country-Health-Profiles-2019-Launch-presentation.pdf; World Bank. Current health expenditure (% of GDP) – Hungary. https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS?locations=HU

[25] Kormány. Gulyás: járványügyi és a gazdaságvédelmi alapot is létrehoz a kormány. https://koronavirus.gov.hu/cikkek/gulyas-jarvanyugyi-es-gazdasagvedelmi-alapot-letrehoz-kormany

[26] Balkan Insight. Hungary’s Municipal Elections. The Beginning of the End for Orbán?. https://balkaninsight.com/2019/11/11/hungarys-municipal-elections-the-beginning-of-the-end-for-orban/

[27] Magyar Közlöny. 136/2020. Kormányrendelet https://magyarkozlony.hu/dokumentumok/0f3e5ec670c02ca736f3dc2b01e65c4857f8cd77/megtekintes

[28] Portfolio. Koronavírus: kirúgásokba kezdett a Spar a különadó miatt.   https://www.portfolio.hu/gazdasag/20200417/koronavirus-kirugasokba-kezdett-a-spar-a-kulonado-miatt-426768

[29] Mfor.hu. Hiába Orbán Viktor vágya, még mindig nincs meg az 50 százalékos hazai banki tulajdon.  https://mfor.hu/cikkek/makro/hiaba-orban-vagya-meg-mindig-nincs-meg-az-50-szazalekos-hazai-banki-tulajdon.html

[30] G7. Orbán kiadta, hogy magyarosítani kell a gazdaságot, így áll most. https://g7.hu/kozelet/20171228/orban-kiadta-hogy-magyarositani-kell-a-gazdasagot-igy-all-most/

[31] G7. Kormányközeli cégek lehetnek a nyertesei a koronavírust követő felvásárlásoknak. https://g7.hu/vallalat/20200406/kormanykozeli-cegek-lehetnek-a-nyertesei-a-koronavirust-koveto-felvasarlasoknak/

[32] Infostart. Gulyás Gergely közölte, mikor dönthet az Országgyűlés a visszaállásról.  https://infostart.hu/belfold/2020/05/18/gulyas-gergely-kozolte-mikor-donthet-az-orszaggyules-a-veszelyhelyzet-vegerol