ALMOST all the developed world ranging from Britain, Western Europe, North America, Japan and Australia are in the grip of a deep recession. With varying degrees of misery all of these places are suffering a decline but increasingly politicians and economists are worried most about Eastern Europe.
Hungary's economy fell by 6.4 per cent in the first quarter of 2009 according to an official report (Reuter 15 May). Once the brightest economic hope of formerly communist-administered Eastern Europe, Hungary is set to suffer a severe and unnecessary self-inflicted wound by embarking on a brutal austerity programme as it seeks its separate way out of the world recession. The brunt of the projected economies will burden the most vulnerable segments of society.
A similar tragedy is also occurring in many countries elsewhere in this region. The reason is that their leaders are still steeped in the obsolete discipline of the bygone Soviet command economy.
Gordon Bajnai, a non-party technocrat and former businessman, has just been sworn in as Hungary's new prime minister. He had been endorsed by a crisis conference of the ruling Hungarian Socialist Party (MSZP) to replace Ferenc Gyurcsany, the prime minister who had tendered his resignation. Bajnai, the 41-year old former economy minister in Gyurcsany's cabinet, has also won the support of the neo-liberal Free Democrats (SZDSZ), the Socialists' erstwhile coalition partners.
These two parties command a decisive majority in Parliament. The dominant ultra-conservative Fidesz Opposition would prefer parliamentary elections in the realistic hope of securing a landslide victory.
Gyurcsany resigned because he said he perceived himself as an obstacle to national economic recovery from conditions generated by the deepest and most widespread global recession experienced since the Second World War. Hungary is the third East European country to face a government crisis triggered or exacerbated by the recession.
Its austerity programme coincides with the emergency release of a staggering 830bn euros, through the International Monetary Fund (IMF), …