Teething troubles for Hungary's new government

17th April 2009, Comments 0 comments

Economy minister-to-be, Tamas Vahl, resigned because of his involvement in a price-fixing cartel in the past, a parliamentary committee announced.

Budapest -- The new government of experts which Hungary hopes will steer it out of its deep economic crisis ran into trouble Thursday when the designated economy minister quit before he had even started.

Economy minister-to-be, Tamas Vahl, resigned because of his involvement in a price-fixing cartel in the past, a parliamentary committee announced.

"The candidate for the post of the development and economy minister, Tamas Vahl, has withdrawn his candidacy," the head of the committee, Gyorgy Podolak, said.

The opposition party Fidesz pounced on the resignation as a sign of the incompetence of newly-installed prime minister Gordon Bajnai, whose fast-tracked appointment had sparked violent protests outside parliament on Tuesday.

As part of the appointment process, the committee hears each candidate for every ministerial post, even if the committee's approval is merely symbolic and not binding for the premier.

Another of Bajnai's choices -- Adam Ficsor for the post of secret services minister -- had already failed to win the committee's support.

"I have the experience and I had plans, I am sorry I cannot do more for the Hungarian economy," Vahl was quoted as saying by Hungarian news agency MTI.

Bajnai expects to be able to name a replacement for Vahl within the next week, his spokeswoman said.

According to a letter sent by international watchdog Transparency International Hungary (TI) to Bajnai on Wednesday, a company formerly headed by Vahl was fined by the competition authorities for price-fixing.

Vahl was former head of the Hungarian subsidiary of German software giant SAP. And the unit was fined in 2004 for price-fixing in the tender for a bid to supply software systems to Hungarian universities.

The conservative daily, Magyar Nemzet, said that other companies where Vahl had also been a manager were similarly fined for forming cartels.

An analyst at the Political Capital think tank, Robert Laszlo, saw Vahl's resignation as a bad signal.

"Together with the failure of Ficsor to win the committee's approval, Vahl's withdrawal hardly reinforces the image of a competent new government, let alone of one which would be able to restore economic stability," Laszlo said.

Like Bajnai, Vahl also came from a business background and he was to have been one of the key players in the new government, which faces the daunting task of getting the country's crisis-ridden economy back on its feet.

Hungary has been one of the countries hardest hit by the global economic crisis and averted financial meltdown only with a hefty lifeline provided last October by the International Monetary Fund, European Union and World Bank.

The creation of a "crisis management government" just a year ahead of general elections sparked violent protests earlier this week, with many Hungarians angered by the decision to appoint an administration of experts without polls.

Bajnai, a 41-year-old economist, was appointed to take over from the deeply unpopular Socialist prime minister Ferenc Gyurcsany -- who resigned last month -- in a so-called "constructive no-confidence vote" in parliament on Tuesday.

The motion, tabled by Gyurcsany's own Socialist party, enabled the grouping, backed by their former allies, the Liberals, to manage a constitutional handover without fresh elections.

Lagging in opinion polls, neither party wanted to face a public vote.

But Bajnai's appointment triggered demonstrations where hundreds of protestors clashed with police.


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