Orbán blames Brussels for Hungary’s economic misery, but even within his own circle this is now being doubted aloud
For thirteen months, Hungarians could use tanks for the equivalent of 1.16 euros per litre. This measure should have lasted until the end of December, and Orbán hinted at an extension. But in recent days hundreds of places in the country started with a fuel shortage. Hungarians panicking, at the pump starting long queues.
The government blames sanctions on Russian oil, which came into effect on Monday. But the effect of the chronic oil supply is limited. Russian oil (65 percent) enters the country through pipelines, which are currently excluded from the sanctuaries. In reality, other exporters are ignoring Hungary because they earned too little due to the price cap, a major cause of the shortfall.
Yet the government again points to the war in Ukraine as the main cause of the economic malaise in the country. The government says that sanctions disproportionately harm Hungarians and is setting itself up with price caps as a protector against high fuel prices and universal.
Screaming resolved
Other price caps, for example on certain foodstuffs, will remain in force. Petrol now costs €1.56 per litre, still one of the lowest prices in the EU. But the price may rise further, given the certainty of 21.1 percent.
In fact, the economic chaos in Hungary is mainly caused by a hole in the state treasury due to extravagant spending just before the elections, the lack of billions in EU funds and a falling confidence among foreign fragments due to the conflict with the EU. Hungary therefore desperately needs those funds.
But the €5.8 billion health plan from the European Recovery Fund has not yet been approved, and the European Commission is proposing to freeze a further €7.5 billion over concerns about corruption and the rule of law. Orbán plays the game hard. On Monday, Hungary blocked a European aid package for Ukraine, according to other summaries, as a means of pressure to get European money loose on an individual basis.
Criticism from unexpected quarters
Orbán often makes friends in Brussels, but also in his own country this week is sharply criticized. From the unexpected corner. György Matolcsy, Orbán confidant and director of the universal central bank, completely burned down the government’s economic policy on Monday. For someone so close to the current prime minister, that is highly exceptional. According to Matolcsy, Hungary is on the verge of a major crisis and is technically too fragile.
Expensive price caps would “go against the basic rules of economics” and boost rather than curb the universal. The bank manager said something new: he is looking for the cause of the problems in the period before the Russian invasion of Ukraine. This contradicts the government’s view that all economic distress in the country is due to war and sanctuaries. Cracks appear in the Hungarian government’s narrative. Economic problems cannot be solved with rhetoric, but with money. That is therefore the main objective of the discussions in Brussels last weeks.