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New Europe’s Old Problems

The riots in Budapest, incited by leaked tapes that show Prime Minister Ferenc Gyurcsany openly admitting that his government had lied for over a year about the country’s dire finances, are but the latest evidence that things are going seriously wrong across Eastern Europe.

Last June, the Slovaks evicted the government that brought the country out of the international isolation and economic malaise that it had suffered under the autocratic regime of Vladimir Meciar. Mikulas Dzurinda, whose reforms provided the country with growth and economic stability, was replaced by Robert Fico, a leftist who, having forged an alliance with Meciar and a neo-fascist party, has also adopted a worrisomely populist tone.

That same month, Hungary reelected Gyurcsany, who had pursued a supposedly reformist program, but also oversaw a massive accumulation of public debt. Earlier plans to adopt the euro quickly have now been shelved, with the target date pushed back to 2011 or 2012. But even that may be wishful thinking. Meanwhile, financial markets fret about the country’s budget deficit and talk of a serious crisis.

Meanwhile, the Czechs managed to elect a perfectly hung parliament. Prime Minister Mirek Topolanek is an advocate of urgently needed reforms, but he lacks a parliamentary majority and is pressing for a fresh general election in the first half of 2007. With no means of stemming election-year fiscal expansion, the Czechs, too, have been forced to abandon their 2010 target date for euro adoption.