HUNGARY

At rank 25, Hungary continues to rank among the bottom third in the Status Index (no change relative to SGI 2009).

The strong trend toward political polarization under way since the 1990s has not abated. In 2008, the Fidesz party succeeded in legitimizing its radical opposition with a referendum against the socialist minority government’s reform program, foreshadowing Orbán’s landslide victory in the parliamentary elections in April 2010.

The greatest gains have been made in economic areas. Domestic security has suffered as a consequence of the extreme right’s activities, which have resulted in riots and other violent action.

Hungary’s quality of democracy has deteriorated further (rank 25).

Profound political polarization under way in Hungary is tearing at the fabric of democratic institutions there. This is manifest in an increasingly politicized media and judiciary, though the latter has been less affected. Polarization has undermined public deliberation between contending parties and made it impossible to fill vacant positions in key public institutions (Constitutional Court, Audit Office).

Violence against Roma and gay people by right-wing extremists is rapidly growing. Widespread corruption and the ineffective regulation of party and campaign financing further undermine the quality of democratic institutions.

Hungary ranks 23rd in the SGI’s economy and employment category.

Hungary faced severe economic and fiscal difficulties in autumn 2008. With the backing of the IMF and EU, the Gyurcsány and Bajnai governments successfully fended off a currency crisis.

An overhaul of the tax system helped reduce Hungary’s high non-wage labor costs.

Ambitious labor market reforms aimed at expanding employment opportunities yielded limited results.

Attempts to attract foreign investment met with some success, but relatively little has been done to facilitate home-grown investment.

At rank 22, Hungary’s ratings on individual social affairs measures have shown mixed gains and losses relative to the SGI 2009.

Successive governments during the review period implemented reforms including pension benefit cuts and an increase in the official retirement age from 62 to 65, increasing the sustainability and intergenerational equity of the country’s three-pillar pension system.

The socialist governments’ willingness to engage in reforms markedly declined after a 2008 referendum on health care fees was rejected by voters. Little attention was paid to integration policy or to increasing social and regional disparities.

While income inequality declined somewhat in the mid-2000s, it strongly increased during the economic crisis.

Given Hungary’s geographical location and membership in NATO and the EU, external security risks are widely perceived to be low. Public interest in foreign affairs focuses primarily on Central Europe and on the plight of Hungarian minorities abroad.

In some regions, the Hungarian state’s hold on the monopoly of power is slipping. Street riots and politically motivated violence at the hands of the extreme right have increased dramatically.

These developments are in part attributable to the lack of action taken by the Gyurcsány and Bajnai governments, but also to Fidesz, whose accusations and intimidation aggravated police politicization.

At rank 23, Hungary’s resources sustainability record remains comparatively weak.

General awareness of environmental issues has increased, in part due to conflicts with Austria over cross-border pollution. However, fiscal consolidation has undermined any new environmental policy ambitions.

Research and innovation policy has not yet been a focus of government attention. A 2009 act on the Hungarian Academy of Sciences failed to overhaul Hungary’s basic research institution.

The education system has continued to drift. Marked regional and social disparities in primary and secondary education quality have increased, and vocational training has eroded. Universities are constrained by a lack of funds, even as the number of students has risen.

At rank 28, Hungary’s management performance has declined dramatically in relative comparison (-8 ranks relative to SGI 2009).

In recent years, successive governments have faltered in terms of strategic planning. The application of impact assessments for regulations has not improved considerably. Policy implementation is somewhat better, thanks to the strong position of the prime minister. Local governments rely heavily on transfers from Budapest.

Institutional learning suffered considerably in Hungary mainly because officials rejected outlined institutional reforms.

While the government is largely accountable to the legislature, the participatory competence of citizens and intermediary organizations is rather low.

At rank 27, Hungary’s rating on governmental steering capability fell substantially relative to the SGI 2009 (-10 ranks).

Policy-making in the period under review has been dominated by short-term crisis management. The institutionalization of scholarly advice is weak, while the Prime Minister’s Office has always been comparatively strong.

Various attempts to improve impact assessments have been made since 1987. New guidelines published in 2006, modeled on EU approaches, had not yet been officially adopted by the close of the review period.

Governments have made some attempts to improve societal consultation and policy communication, but overall success in these areas has been mediocre at best.

At rank 21, Hungary’s policy implementation assessment has improved somewhat relative to the SGI 2009 (+4 ranks).

Despite the dismal economic situation and substantial political resistance on the part of the center-right Fidesz party, the Gyurcsány and Bajnai governments succeeded in improving Hungary’s fiscal situation and in preventing a currency crisis. However, they were less successful in addressing longer term issues.

Both administrations managed to ensure compliance by ministries. This reflects in part the prime minister’s strong role in the political system.

Local governments, which get about 90% of their revenues from the central government, are often financially hard-pressed to fulfill the tasks assigned to them.

Hungary’s plunge in assessed institutional learning capacity relative to the SGI 2009, from rank 9 to 23, largely reflects the failure to implement institutional reform.

The government adopted comprehensive reforms of the executive branch after the 2006 elections. Badly prepared and implemented, this reform provoked strong resistance within the administration and was eventually abandoned. Moreover, no regular monitoring of institutional governing arrangements takes place.

Government structures only partly meet international and supranational requirements. At the central government level, coordination of EU affairs has improved. In contrast, attempts to improve subnational governments’ policy implementation capacities have been less successful.

At rank 24, executive accountability in Hungary suffers as a result of weak media and NGO sectors.

Few citizens are well-informed about government policy-making. Interest in policy is comparatively low.

Media organizations cover government decisions in only a rudimentary manner. Public and private TV and radio stations alike largely limit themselves to infotainment programming, and display considerable political bias. The sophistication of parties and interest associations is relatively low.

On the positive side, the legislature has considerable oversight powers. Parliamentary committees may request most government documents, and are normally well informed. Ministers and experts can be summoned to hearings, and ministers tend to take such questioning seriously.