Orbán: Hungary will not adopt the euro for many decades to come

Prime Minister Viktor Orbán has declared that his government will no longer entertain the idea of replacing the forint with the euro in 2020, as was previously suggested, and instead expects Hungary’s national currency to remain “stable and strong for the next several decades.” Mr. Orbán made these comments in an interview with the pro-government daily Napi Gazdaság, which is slated to replace Magyar Nemzet as the preferred right-wing publication in Fidesz circles. Based on Hungary’s public budget deficit of -2,5% in 2013 and -2.6% in 2006, the country has already fulfilled one of the critical requirements of adopting the euro, namely: keeping the deficit under 3%.

“It was once an attractive and logical idea in Central Europe that by giving up our own national currency, we could join a region that brought with it security and advantages created by countries more developed than ours. This dream fell apart after the 2008 financial crisis, and following attempts to manage it. It was in these years that the whole world came to realize that the Eurozone was the most clumsy in addressing these problems. Hungary, just like the rest of Central Europe, will wait it out. Those smaller countries, mainly the Baltic nations, that joined the euro faced doubts about whether having their own currencies gave them more security. In the case of Hungary, the Czech Republic and Poland, standing on their own two feet is now a more competitive alternative [to the euro],” explained Mr. Orbán. He added that Polish voters, by electing the populist and nationalist Andrzej Duda as president, effectively turned their backs on the euro as well. (Reuters had written earlier about why the Polish election could “shake up” the European Union.)

The forint is here to stay...

The forint is here to stay…

Realistically, Hungary may be obliged on paper to join the Eurozone, but like Sweden, it is highly unlikely that anyone would ever try to enforce the adoption of the common currency. Hungary doesn’t have an opt-out, but neither does Sweden which is required to abandon the krona for the euro, according to the 1994 Treaty of Accession. Sweden maintains that it will eventually ask its voters, in the form of a referendum, whether to even join the European Exchange Rate Mechanism (ERM II), which is the first step in moving to adopting the common currency. There are no concrete plans to hold this referendum anytime in the near future.

I would expect that if necessary, Mr. Orbán would point to the Swedish example and may argue that pegging one’s currency to the euro is voluntary, even though this is a prerequisite of later joining the euro which, for Hungary, is not technically optional.

But we all know that the European Union is not famous for its teeth, nor is it likely that amidst the various concerns about corruption and authoritarianism in Hungary, forcing Mr. Orbán to adopt the euro is the hill that Brussels plans to die on.

3 Comments

  1. Miklos Banfi says:

    This issue is quite irrelevant at this point. He said that? Who cares? He has no idea what he is talking about, anyways. So the question remains, why did he say this now?

    • Christopher Adam says:

      I suspect he said it as part of a strategy to appeal to voters who have been slowly, but consistently slipping out of his hands and into Jobbik’s embrace. This is the sort of grandstanding and ‘tough talk’ that comes with no real risks. After all, the EU will not force Hungary to adopt the euro, regardless of what’s on paper.

      • I think Orban slowly realizes that he has lost his occult power of the magic of words, at least something he believed will never fail him, changes course and will stop talking to his dwindling herd of sheeple — instead he goes on testing his adversaries and is trying to find new allies by sending out brave messages.

        And at last but not at least he is trying to stir up the water for a little fishing again in hope of receiving another bribe.

        That’s what his all wicked life is about. What he says might sound insane for an outsider but might make a lot of sense for a keep on improvising and reacting gambler.
        It also might be he is just singing his swansong.
        But it remains a guessing game, until we get intel on what poisonous dishes he is cooking in his kitchen.

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