Kester Eddy in Budapest -

2014 was a watershed year in Hungarian politics: Viktor Orban, the pugnacious prime minister, and his nominally conservative Fidesz party, fought and soundly won three elections – for the national parliament, European Parliament and local municipalities.

Furthermore, after four years of frenzied law making, once returned to power last Spring, Orban – or his right-hand men – immediately continued with controversial and confrontational policies, for example alleging that non-governmental organisations (NGOs) critical of the government were agents of foreign powers, making warm approaches to Russia and the east while denigrating the “failing” West, and embroiling Hungary in a diplomatic row with the US. Most infamously, in July Orban publicly enthused on the effectiveness of “illiberal” democracies, citing Russia, China, Turkey and Singapore as examples for Hungary to follow.

How and why has Orban done all this? Where does it leave Hungary, politically, socially and economically? And what of the country's future? Gabor Gyori as author, and Andras Biro-Nagy as editor attempt to answer such questions in "Hungarian Politics in 2014" – an 80-page booklet just published on January 23 with the assistance of Friedrich Erbert Stiftung, a German foundation of Social Democratic heritage.

Economic populism

Gyori, who (along with Biro-Nagy) is a political analyst with Policy Solutions, a Budapest think-tank, makes no attempt to dilute what to him is clearly an unpalatable truth: “Fidesz returned with another landslide victory”, he declares in the opening chapter. Although Fidesz saw its share of the vote slip to 45%, almost 8 percentage points down on the 2010 result, by re-writing the election law it still won a two-thirds majority in parliament.

Meanwhile, the opposition left-wing alliance “suffered another disastrous defeat”. Perhaps equally unsettling for the left-liberal camp, the far-right Jobbik strengthened its position, gaining 19.1% of the vote to become “firmly established as a prominent presence in the Hungarian political landscape”.

Gyori cites a number of reasons why Fidesz succeeded in securing a “core base” of at least 1.5mn voters, including its re-writing of the electoral law and its dominance of the media. But he also argues that because economic developments in post-communist countries “tend to be more closely connected to the success of a government than in more developed economies”, the “timely” return of economic growth and the impact of the government-mandated cuts in utility prices were particularly important for electoral success. “Fidesz’s economic populism (ie exceptional sectoral taxes on banks and energy companies, as well as intense state interference in setting utility prices) was bold enough to allow it to enact policies that run counter to economic orthodoxy and democratic principles… [This] satisfied the material desires of broad swathes of the electorate”, he writes.

There are, however, dark clouds on the horizon for Fidesz: economic growth in 2014 was to a great extent “due to massive state outlay, including the well-timed conclusion of (largely EU-financed) infrastructure projects”, meaning the apparently healthy expansion is not sustainable.

All this may not matter, at least in terms of political power, because in essence the Hungarian poor do not vote. And in Gyori's assessment, Orban has a vision of a highly stratified society in which a limited middle-class, mostly connected to Fidesz oligarchs, control the economic services while the masses are employed in cheap labour manufacturing – unwilling to complain for fear of losing even that limited income.

“Apart from the blatant cronyism apparent in the lighter [tax and regulatory] burdens imposed on enterprises owned by Fidesz-aligned oligarchs, the other dark underbelly of this economic policy is that it is based on keeping millions employed in cheap industrial labour, with little social mobility”, he reasons, citing government tax and subsidy policy to aid the middle and upper income-groups, along with restrictions on higher education and unemployment benefits as evidence.

It is a decidedly frightening vision, but one that is not at all removed from reality. But though Gyori notes that Orban's tax policies hitting foreign investors have specifically avoided the manufacturing sector for fear they may up sticks and leave, there is no reason why, if Orban needs the money, he might in future introduce some form of extra “temporary” taxation targeting foreign-owned manufacturers – albeit probably in a milder form than those levied on the banks and retail sectors today.

The author seeks to analyse Orban's vision of “illiberal democracy” – what he terms “the attacks” on critical NGOs and, in a section entitled “Operation, capture, control and contain”, pays special attention to the Fidesz government's media policy.

In his conclusions, Gyori avoids any hard and fast predictions on the economy, but warns that “poverty is increasingly emerging as the single most important social issue facing Hungary”. Saying that 2014 for Fidesz has been “a successful year [that] ends on a bitter note”, he argues foreign pressure – mostly from the US, but also possibly from Germany – has tempered Orban's previously unbridled enthusiasm for Vladimir Putin (although the Russian president is visiting Budapest in February) and notes that the planned introduction of an internet tax stirred an unprecedented public show of discontent with Orban's policies. However, given the failure of spontaneous protests in the past, whether that develops into any meaningful political opposition is debatable.

"Hungarian Politics in 2014" offers a grand critique of – and insight into – Fidesz's most controversial policies since elected in 2010. At the presentation on January 23, Biro-Nagy, the editor, claimed that it is the first annual review of its kind in English: given the complex and convoluted nature of the subject, many will hope it is not the last.

"Hungarian Politics in 2014" is also downloadable, gratis, here.