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

This US Epidemic Keeps Getting Worse

One in 4 Americans suffers from this condition More

How to Safeguard Your Mobile Privacy

As the digital world becomes more mobile, so too do concerns about eroding privacy and increased hacking More

'Desert Dancer' Chronicles Iranian Underground Dance Troupe

Film by Richard Raymond is based on true story of Afshin Ghaffarian and his friends 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.
Scientists Say Plankton More Important Than Previously Thoughti
X
George Putic
May 26, 2015 9:26 PM
Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video US-led Coalition Gives Some Weapons to Iraqi Troops

In a video released Tuesday from the Iraqi Ministry of Defense, Iraqi forces and U.S.-led coalition troops survey a cache of weapons supplied to help Iraq liberate Mosul from Islamic State group. According to a statement provided with the video, the ministry and the U.S.-led coaltion troops have started ''supplying the 16th army division with medium and light weapons in preparation to liberate Mosul and nearby areas from Da'esh (Arabic acronym for Islamic State group).''
Video

Video Amnesty International: 'Overwhelming Evidence' of War Crimes in Ukraine

Human rights group Amnesty International says there is overwhelming evidence of ongoing war crimes in Ukraine, despite a tentative cease-fire with pro-Russian rebels. Researchers interviewed more than 30 prisoners from both sides of the conflict and all but one said they were tortured. Henry Ridgwell reports for VOA from London.
Video

Video Washington Parade Honors Those Killed Serving in US Military

Every year, on the last Monday in the month of May, millions of Americans honor the memories of those killed while serving in the armed forces. Memorial Day is a tradition that dates back to the 19th Century. While many people celebrate the federal holiday with a barbecue and a day off from work, for those who’ve served in the military, it’s a special day to remember those who made the ultimate sacrifice. Arash Arabasadi reports for VOA from Washington.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.
Video

Video Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.
Video

Video On Film: How Dance Defies Iran's Political Oppression

'Desert Dancer' by filmmaker Richard Raymond is based on the true story of a group of young Iranians, who form an underground dance troupe in the Islamic Republic of Iran. This is the latest in a genre of films that focus on dance as a form of freedom of expression against political oppression and social injustice. VOA’s Penelope Poulou has more.
Video

Video Turkey's Ruling Party Trying to Lure Voters in Opposition Stronghold

Turkey’s AK (Justice and Development) Party is seeking a fourth successive general election victory, with the goal of securing two-thirds of the seats in Parliament to rewrite the constitution and change the country's parliamentary system into a presidential one. To achieve that, the party will need to win seats in opposition strongholds like the western city of Izmir. Dorian Jones reports.
Video

Video Millions Flock to Ethiopia Polls

Millions of Ethiopians cast their votes Sunday in the first national election since the 2012 death of longtime leader Meles Zenawi. Mr. Meles' party, the Ethiopian People's Revolutionary Democratic Front, is almost certain of victory again. VOA's Anita Powell reports from Addis Ababa.

VOA Blogs