News / Europe

Hungary Crisis Stokes Fears of Debt Contagion

Hungary's PM Viktor Orban addresses the European Parliament in Strasbourg,  Jan. 18, 2012
Hungary's PM Viktor Orban addresses the European Parliament in Strasbourg, Jan. 18, 2012
Henry Ridgwell

The European Union is launching legal action against Hungary over new legislation passed in Budapest, which the EU claims breaks European law. The Hungarian laws covering regulation of the central bank, the judiciary and the governments' data protection office took effect on New Year's Day.

EU officials say the new laws threaten the independence of those institutions.  It’s the latest escalation in a row that threatens to derail Hungary’s economy - and comes as fears grow that Europe’s debt crisis is spreading east.  Meanwhile, Hungarian officials say they are ready to modify some of the controversial laws.

The European Commission President Jose Manuel Barroso said Wednesday it is time to act against recent legislation passed in Hungary that appeared to breach EU law.

“The college has just decided to launch infringement proceedings against Hungary on three issues, the independence of the national central bank, the retirement age of judges and the independence of the data protection authority," said Barroso.

Later on Wednesday,  commission president Barroso said he had received a letter from Hungarian Prime Minister Viktor Orban that Hungary planned to modify some of the legislation that has raised EU concerns about democratic rights.  Barroso said the Hungarian president had indicated he is willing to work with the EU commission.

An estimated 2,000 people converged in the Hungarian capital Saturday to demand a withdrawal from the EU. Csanad Szegedi, a member of the European Parliament singled out the European Commission president.

"Our problem is that the Barroso-types, elected by nobody, have thrown the Europe of nations to the mercy of global financial circles," said Szegedi. "Hungary has been occupied.”

Polls show support for Hungary’s far right is rising, just as the country tries to battle bankruptcy.

Talks between Hungary and its lenders, the EU and the IMF, derailed late last year.  Neil Shearing is from the analyst group Capital Economics.

“First and foremost you have a government that has completely lost the trust of markets," said Shearing. "You have a government that has antagonized the international financial institutions, the IMF, the EU, the ECB [European Central Bank] through various reasons, assaults on the central bank’s independence.  But at the same time this government is incredibly popular at home.”

Hungary is not part of the eurozone.  Its own currency, the forint, has plunged in value.  With government bond yields soaring, Hungary’s Prime Minister Viktor Orban has been forced to make a reluctant return to lenders to seek a bailout. Again, economist Neil Shearing:

“That against a backdrop of huge amounts of foreign currency borrowing that Hungary undertook in the latter part of the last decade and the brewing crisis in the eurozone, and strong trade and financial linkages with western Europe is obviously a very combustible mix," he said.

Single mother Diana Maroevich took out a Swiss francs loan to buy her apartment in 2007.  Since then, her repayments have gone up sharply as Hungary’s currency has weakened.  

The government was forced to step in to help hundreds of thousands of Hungarians stuck in similar situations. Maroevich says she was close to bankruptcy.

“In about half a year we could get back on track with our flat mortgage and it would be the end of our sleepless nights," said Maroevich.

But analysts say Hungary’s troubles are not over - and the risks of a default and a threat to other eastern European economies are real.

You May Like

China May Be Biggest Winner From Ukraine Crisis

Missile sales, oil and gas shipments are among many areas that may drive Beijing and Moscow closer together in coming years More

Obama Faces a Chaotic World and the Limits of Power

Current foreign policy issues bring into focus challenges for US policymakers who are mindful of Americans' waning appetite for overseas military engagements More

SADC Meeting Lesotho Officials to Resolve Stalemate

Official says regional bloc has been engaged with leaders in Lesotho to resolve political disagreement that led to coup attempt More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
West Africa Ebola Vaccine Trials Possible by Early 2015i
X
Carol Pearson
August 30, 2014 7:14 PM
A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video West Africa Ebola Vaccine Trials Possible by Early 2015

A U.S. health agency is speeding up clinical trials of a possible vaccine against the deadly Ebola virus that so far has killed more than 1,500 people in West Africa. If successful, the next step would be a larger trial in countries where the outbreak is occurring. VOA's Carol Pearson has more.
Video

Video Survivors Commemorate 70th Anniversary of Nazi Liquidation of Jewish Ghetto

When the German Nazi army occupied the Polish city of Lodz in 1939, it marked the beginning of a long nightmare for the Jewish community that once made up one third of the population. Roughly 200,000 people were forced into the Lodz Ghetto. Less than 7,000 survived. As VOA’s Kane Farabaugh reports, some survivors gathered at the Union League Club in Chicago on the 70th anniversary of the liquidation of the Lodz Ghetto to remember those who suffered at the hands of the Nazi regime.
Video

Video Cost to Raise Child in US Continues to Rise

The cost of raising a child in the United States continues to rise. In its latest annual report, the U.S. Department of Agriculture says middle income families with a child born in 2013 can expect to spend more than $240,000 before that child turns 18. And sending that child to college more than doubles that amount. VOA’s Deborah Block visited with a couple with one child in Alexandria, Virginia, to learn if the report reflects their lifestyle.
Video

Video Chaotic Afghan Vote Recount Threatens Nation’s Future

Afghanistan’s troubled presidential election continues to be rocked by turmoil as an audit of the ballots drags on. The U.N. says the recount will not be completed before September 10. Observers say repeated disputes and delays are threatening the orderly transfer of power and could have dangerous consequences. VOA correspondent Meredith Buel reports.
Video

Video Ukraine Battles Pro-Russia Rebel Assault

After NATO concluded an emergency meeting to discuss the crisis in eastern Ukraine, the country is struggling to contain heavy fighting near the strategic port of Mariupol, on the Azov Sea. Separatist rebels are trying to capture the city, allegedly with Russian military help, and Ukraine's defense forces are digging in. VOA's Daniel Schearf spoke with analysts about what lies ahead for Ukraine.
Video

Video Growing Business Offers Paint with a Twist of Wine

Two New Orleans area women started a small business seven years ago with one thing in mind: to help their neighbors relieve the stress of coping with a hurricane's aftermath. Today their business, which pairs painting and a little bit of wine, has become one of the fastest growing franchises across the U.S. VOA’s June Soh met the entrepreneurs at their newest franchise location in the Washington suburbs.
Video

Video Ebola Vaccine Trials To Begin Next Week

The National Institutes of Health says it is launching early stage trials of a vaccine to prevent the Ebola virus, which has infected or killed thousands of people across West Africa. The World Health Organization says Ebola could infect more than 20,000 people across the region by the time the outbreak is over. The epidemic has health experts and governments scrambling to prevent more people from becoming infected. Zlatica Hoke has more.
Video

Video Asian Bacteria Threatens Florida Orange Trees

Florida's citrus fruit industry is facing a serious threat from a bacteria carried by the Asian insect called psyllid. The widespread infestation again highlights the danger of transferring non-native species to American soil. VOA’s George Putic reports.
Video

Video Aging Will Reduce Economic Growth Worldwide in Coming Decades

The world is getting older, fast. And as more people retire each year, fewer working-age people will be there to replace them. Bond rating agency Moody’s says that will lead to a decline in household savings; reducing global investments - which in turn, will lead to slower economic growth around the world. But experts say it’s not too late to mitigate the economic impact of the world’s aging populations. Mil Arcega has more.
Video

Video Is West Doing Enough to Tackle Islamic State?

U.S. President Barack Obama has ruled out sending ground troops to Iraq to fight militants of the so-called Islamic State, or ISIS, despite officials in Washington describing the extremist group as the biggest threat the United States has faced in years. Henry Ridgwell reports from London on the growing uncertainty over whether the West’s response to ISIS will be enough to defeat the terrorist threat.
Video

Video Coalition to Fight Islamic State Could Reward Assad

The United States along with European and Mideast allies are considering a broader assault against Islamic State fighters who have spread from Syria into Iraq and risk further destabilizing an already troubled region. But as VOA State Department Correspondent Scott Stearns reports, confronting those militants could end up helping the embattled Syrian President Bashar al-Assad.
Video

Video Made in America Socks Get Toehold in Online Fashion Market

Three young entrepreneurs are hoping to revolutionize the high-end sock industry by introducing all-American creations of their own. And they’re doing most of it the old-fashioned way. VOA’s Julie Taboh recently caught up with them to learn what goes into making their one-of-a-kind socks.
Video

Video Americans, Ex-Pats Send Relief Supplies to West Africa

Health organizations from around the world are sending supplies and specialists to the West African countries that are dealing with the worst Ebola outbreak in history. On a smaller scale, ordinary Americans and African expatriates living in the United States are doing the same. VOA's Carol Pearson reports.

AppleAndroid