Well, this may be a first in the annals of international financial diplomacy: Viktor Orbán just used his Facebook page to tell the IMF and EU that his government will walk away from bailout talks unless the fund drops certain demands it supposedly made in a letter leaked to the media earlier today.
While it’s hard right now to know what exactly is going on – Index.hu has just reported that the actual letter doesn’t include some of the demands supposedly made – one thing that is clear is that Orbán has decided not to allow his chief negotiator (former prime ministerial chief-of-staff Mihály Varga) any “quiet time” in talk with the country’s would-be saviors in the coming weeks, as was earlier expected.
Another thing that is quite clear is that, if the full list of supposed demands is real (and that’s still a pretty big “if,” since there would be a powerful motive to have it look like Budapest had wrangled a series of heroic concessions) the government will have a very, very hard time selling it to its supporters and other voters. Any one of the items on it (cutting pensions, scrapping the flat income tax and bank tax, introducing a value-based property tax) would be painful enough, politically-speaking, for the government to swallow, given the repeated assurances that no such measures would be taken. Taken together, it is hard to imagine a more epic humiliation.
The question is whether the government and the Hungarian people really have the stomach for another exhausting international confrontation – or “freedom fight,” if you prefer that way of looking at it – and one that could carry a very concrete price, in the form of a crashing forint, soaring interest rates and sudden, radical spending cuts? It’s hard to say, but one indication is that in his video Orbán himself didn’t look very enthusiastic. It may be a long, hot autumn…
