The EC proposes to suspend structural funds to Hungary

Without precedent - why does the EU punish us? is the title of a (surprisingly objective if we look at the article but not at all surprising if we look at the author) article in the Hungarian financial and economic portal portfolio.hu. The author, István Madár, in my opinion one of the best macro-economists in Hungary (he taught my son but as he graduated already more than five years ago, there is no conflict of interest) who never associated himself to any party and was always realistic and politically neutral in his opinions. He did not publish much in political newspapers but slowly seems to appear more. He explains why Hungary is the first to suffer the freezing of part of the cohesion funds (the part of structural funds to be managed by the central government) due to its excessive deficit and why the Commission had no other choice. This is the logical next step - not to be postponed - in the excessive deficit proceedings under existing legislation and also under the new fiscal rules which were brought to almost-finalisation by the Hungarian presidency and of which the Hungarian prime minister is so proud.
It has to be noted that this is only a proposition which gives nine months to the Hungarian government to react and rectify the problems indicated.
In spite of the nice numbers about the primary budget balance, the structural balance is far from the required 0.5% and the outlook is bleak. And even the nice numbers are due to one-off drastic measures - confiscation of private pension funds, crippling taxes on foreign enterprises.
It makes thus no sense to speculate how much the conflicts on political issues have influenced the decisions - as there was no choice. Hungary is the country with the longest history of excessive deficit procedure. It is a little paradox that György Szapáry, who was the deputy president of the National Bank, and went to denounce the Gyurcsány-government at the EU when it wanted to avoid the excessive deficit procedure by transferring the motorway-building loans into a company, is so much in favour with FIDESZ that a law was amended to enable him to take the position of the Hungarian ambassador to Washington.
What is more important, though, is that the government should take measures to remedy the situation instead of waving the primary deficit numbers as the only defence.
Another paradox must be discussed here: A lot of people expect the EU to put pressure on the Hungarian government to preserve democracy and follow a reasonable and just economic policy. The measures taken will, according to some opinions, increase anti-EU sentiment in Hungary, however. I think that Hungarians should solve their own problems but again, the EU has no other choice than to speak up, and take measures, in defence of its common values.