Season of reform under way in Hungary, but legacy of last autumn lingers

Letter from Budapest: It is a year since a quiet autumn Sunday gave way to Hungary's worst violence in half a century, when smashed glass and tear gas covered parts of genteel Budapest and the deep fissures in Hungarian society were laid bare before the world.

The spark was a leaked tape of a closed Socialist party meeting at which prime minister Ferenc Gyurcsany admitted that his government had lied "morning, noon and night" to ensure they were re-elected that April, after having "done nothing for four years".

"We screwed up. Not a little, a lot. There is no country in Europe that has been as boneheaded as we have . . . Obviously we lied throughout the past 1½, two years . . . You cannot tell me of one significant government measure we could be proud of . . . I almost died having to pretend for the past year that we were actually governing."

And on it went, a tirade as stark and expletive-riddled as most of Gyurcsany's critics could manage - from the mouth of the millionaire premier himself.

The leak of the recording on September 17th last year triggered more than a month of anti-government protests outside parliament in Budapest, some of which were marred by clashes between mostly far-right youths and police that left hundreds of people injured.

Gyurcsany survived his remarkable mea culpa, and his government is now trying to push through radical cost-cutting measures to slash a huge budget deficit and prepare the country to adopt the euro. As he said in his now infamous speech: "The moment of truth has come swiftly . . . Reform or failure. There's nothing else. And when I'm talking about failure, I'm talking about Hungary, the left and . . . myself."

Hungary has the largest per capita budget deficit in the EU, and successive governments from right and left had spent far more than they could afford, driving the country into a deep economic hole from which it has yet to emerge.

Last year, Gyurcsany admitted that only "divine providence, an abundance of cash in the world economy, and hundreds of tricks" saved Hungary from a currency crisis, an escape that the chief of its central bank last month called "disgustingly lucky".

The government has already raised taxes, while also closing hospitals, sacking thousands of teachers and increasing charges for healthcare, and it plans more major reform of public transport and the medical, education and benefits systems.

Having weathered last year's protests, Gyurcsany now has to hold his coalition government together long enough to implement the painful changes and act quickly enough to show popularity-boosting positive results before the next elections in 2010. By then, he hopes to have almost balanced the budget and placed a newly efficient Hungary on track to adopt the euro, perhaps as soon as 2011 or 2012.

Gyurcsany's drive to strip down and rebuild Hungary is helped by the €22 billion that is being pumped into its coffers by the EU, but perhaps his greatest domestic ally is supposedly his fiercest enemy - the right-wing opposition party, Fidesz. The party threw away a healthy pre-election lead last year through inept campaigning, then failed to oust Gyurcsany with street protests, and now sees his government's popularity creeping back up from record lows.

While the Socialists made the radical choice of Gyurcsany to lead and reinvigorate their listless party in 2004, Fidesz is unwilling and unable to see beyond Viktor Orban, a once-iconic leader now tarnished by two consecutive election defeats.

Orban was a prominent speaker at pro-democracy rallies in the late 1980s, and founded Fidesz as a liberal party in 1988.

He gradually took it to the right during the 1990s, however, and is now criticised for courting Hungary's extreme nationalist vote.

Gyurcsany derides him for failing to condemn unequivocally either the far-right hooligans whom police blamed for last year's street violence or the newly formed Hungarian Guard, which sports symbols associated with Hungary's wartime fascist regime.

Late last month, on another quiet Sunday in Budapest, about 3,000 people watched the Hungarian Guard inaugurate its first 56 members, who were dressed in black uniform.

"This is the day of victory," proclaimed Gabor Vona, founder of the guard and leader of the far-right Jobbik party, which has seats on several local councils across Hungary.

"The Hungarian Guard was formed to carry out a real change of regime and to save all Hungarians," he said of a group that pledges to "defend Hungary physically, morally and mentally".

The guard plans to induct more members on October 23rd, when Hungary commemorates its failed 1956 uprising against Soviet rule.