17 March 2015

Editorial Note

Europe and therefore Hungary face three serious crises in the coming decade: the energy crisis, the Ukraine crisis, and the crisis over the euro – even though Hungary, having retained the forint, will not be directly constrained by the financial and budgetary rigidities of the single currency.

Monetary independence admittedly carries its own risks, but as the Minister of Justice, László Trócsányi, establishes in his article on the settlement of the “forex” mortgage crisis, governments subject to democratic pressure from the voters will strive to remedy widespread economic hardships more responsively, indeed more vigorously, than will remote bureaucracies.

Two of these three European crises are examined in depth by the diplomat and academic “Americanist”, Tamás Magyarics, in his comprehensive analysis of how the national interests of Washington, Moscow, Berlin, and other European power centres are likely to determine the future of Central and Eastern Europe. It is a sobering analysis. Both the energy and Ukraine crises pit Russia against the West (though the West itself is divided on them). And though both Russia and the West have advantages in these struggles, the author cautiously concludes that the short-term outlook is gloomy for the West, and thus for the CEE countries, but that the long-term one is quite favourable.

Europe’s dependence on Russian energy is the strongest face card in the Russian deck. But this crucial advantage is eroding under the impact of such developments as “fracking”, the increased availability of liquid natural gas, and divisions among energy producers. As energy grows cheaper and available from more producers, Russia will lose revenue and diplomatic influence.

That will have some effect also on the crisis in Ukraine where, however, Moscow has advantages that the West seemingly lacks: notably, a willingness to use force and people such as the “separatists” willing to fight. It is true, of course, that NATO countries spend little on armaments and are visibly conflict-averse. German troops recently had to use brooms rather than rifles in a military exercise.

But the Ukrainian troops loyal to Kiev show no signs of cowardice or low morale. Though woefully under-equipped and denied weapons by a divided West, they regained territory last Summer until Russian troops had to enter Ukraine in force to prevent a Kiev victory. Even today Ukrainian resistance continues strongly in places like Mariupol.

This battlefield militancy rests on an upsurge in Ukrainian nationalism that President Putin himself inadvertently midwifed. It was initially inspired by a popular desire among Ukrainians to escape into “Europe” away from the authoritarian kleptocratic politics that his Eurasian Union all too credibly represents. It has been reinforced since then in response to his “uprising” in eastern Ukraine. It is now an independent historical force. In a nice historical paradox the Russian president may have given Western Europe the soldiers that its own countries no longer provide in sufficient quantity.

If so, that should be added to the scales when weighing advantages in the Ukraine crisis. They are already closely matched. This new factor might well tip the balance against Moscow and – in the long run – push Ukraine into the Western camp. And as Mr Magyarics points out, the closer Ukraine comes to the West, the more securely and permanently Hungary and the other CEE countries will be “embedded” in the West.

It is too early, however, to open the champagne. For the unsolved crisis over the euro is weakening the European Union in all its dealings. It is impoverishing southern Europe, alienating northern Europe, distorting the internal trade patterns of the continent, encouraging political instability and extremism (to the point of toppling governments), and absorbing all the political energy, imagination and revenue that should be devoted to more hopeful schemes.

Why this should be so is hinted at in Péter Ákos Bod’s article where he points out that the economics profession has responded to the 2008 financial crash largely by clinging to the orthodoxy that led up to it. Orthodoxy in the case of the euro holds that there cannot be any modification of the euro structure (by, for instance, dividing it into a two-tier “northern” and “southern” euro), or even a departure from it by a single country, because such things would undermine the EU, its single currency, and the myth of inevitability supporting both. Europe must therefore endure all the ills listed above indefinitely in deference to the rigidity of theory.

Yet as Professor Bod points out in the context of the “social market” economy, it is neither sensible nor necessary nor ultimately even possible to enforce a rigid theory at great cost, especially if its core purpose is generally accepted.

The German social market of Wilhelm Röpke and Ludwig Erhard long ago ceased to exist in anything like its original or theoretical form. It evolved into a conventional West European welfare state. Maybe that was regrettable but it was what voters wanted. Meanwhile, however, key elements of social market theory – such as aid to small and medium enterprises, and a strong pro-competition policy – continue to influence economic policy across the EU because they work well and reflect how Europeans like to do things.

What is needed in the euro crisis is not abandonment of the goal of greater monetary stability but humility, flexibility, practicality, humanity, and respect for ordinary people in how the goal is achieved. Courage on the part of policy- makers, including the courage to admit mistakes, is also needed. It is because Euro-Atlantic institutions, despite the euro and despite their other failings, have more of these qualities than Putin’s Eurasian Union in that they work well and appeal to ordinary people in his world, even at times to his fellow-authoritarians in Belarus and Central Asia.

Courage and decency are needed for more vital tasks than making economic decisions, however. Hungarian Review has devoted several recent issues to the terrible events of 1944–45 in Hungary. In the main our published extracts of memoirs, diaries and histories have revealed sad or shameful events – rapes, murders, betrayals, stories of victims of vile crimes and of their perpetrators.

But there were heroes in those years too. One exceptional case was István Vasdényey, the commander of an internment camp, who protected the Jewish hostages assigned to his care against both deportation to Germany and attempted physical beatings by SS guards. He took serious personal risks in defying the SS, showing both courage and cunning. He treated his internees with dignity and kindness.

His story is told by one of the hostages, Ákos György Bálint, then a very young man, in this issue. After the war Vasdényey visited him and his father, also an internee, to show his respect for them and for the other hostages. That was surely an almost unique occasion.

Vasdényey was given the title of “Righteous Among the Nations” by the Yad Vashem Memorial Holocaust Committee as one of those gentiles who showed selfless courage in rescuing Jews.

As late as 2005 he was one of 658 Hungarians honoured in that way. We should know at least as much about them as about the torturers.