Saturday, March 21, 2009

BUDAPEST (AP) - Hungary’s prime minister stunned the country Saturday by announcing his resignation because he had become an “obstacle” to the reforms needed to pull the country out of its worst financial crisis since the end of communism nearly 20 years ago.

Ferenc Gyurcsany, of the ruling Socialists, made the unexpected announcement at his party’s congress, saying he was keeping a pledge made in January 2008 to change the leadership if the embattled party’s popularity failed to recover.

“Support for us has not grown. On the contrary, it has diminished,” Gyurcsany said. “I propose forming a new government with a new prime minister.”

The Socialists have governed with a minority in parliament since May, when a coalition partner walked out unsatisfied with Gyurcsany’s commitment to reforms.

In the meantime, Hungary is struggling to deal with the global financial crisis, and has received $25.1 billion in loans from the International Monetary Fund and other institutions. Investors’ confidence about the country’s ability to meet debt payments has substantially weakened the Hungarian currency, the forint, preventing the central bank from lowering interest rates to help boost the economy, which is expected to shrink by as much as 5 percent in 2009.

Gyurcsany’s reputation was badly damaged in 2006 when state radio broadcast a speech he made at a party meeting admitting he lied about the state of the economy to win elections a few months earlier. The broadcast sparked weeks of protests and riots that left hundreds injured.

“I’m being told that I myself am the obstacle to the cooperation and stable government majority needed to implement changes,” Gyurcsany told party members Saturday.

Gyurcsany seemed to be hedging his bets, however. Hours after saying he would resign as prime minister, he was re-elected chairman of the Socialist Party with over 80 percent of the votes. The post gives him a say in choosing the next prime minister, who would then need parliamentary approval.

Gyurcsany said he would notify parliament of his decision Monday, and called for a meeting of Socialists in two weeks to choose a candidate to head the new administration.

Parliament could elect the new prime minister on April 14, state news agency MTI reported, citing unnamed sources in the Socialist Party. It was not clear if the candidate would be from the Socialists or another party. But the Socialists, with less than 50 percent of parliament’s seats, would need several votes from opposition or independent lawmakers for their candidate to succeed.

Lawmakers were expected to chose a new prime minister to lead until general elections scheduled in 2010, instead of calling an early vote.

But center-right opposition party Fidesz ruled out participating in talks to find Gyurcsany’s replacement, saying it would instead propose parliament’s dissolution and early elections.

“The Socialist government is the country’s disgrace, and early elections are in the country’s interest,” Fidesz said in a statement.

Analysts said Gyurcsany’s announcement could be a ploy to strengthen his position within the Socialist Party, which is expected to do badly at June’s elections for the European Parliament.

“It is not clear whether his true intention is to give up his place … or whether he simply wants to show that there is no alternative to him,” said Orsolya Milovan of the Perspective Institute, noting that Gyurcsany did not mention any candidate who could replace him.

Parliament named Gyurcsany as prime minister in late 2004, after his predecessor, Peter Medgyessy, was ousted midway through his four-year term amid dwindling popularity.

Gyurcsany won a full term outright in April 2006, but was badly damaged by the revelations of the broadcast a few months later.

A poll released Wednesday by research firm Median showed Gyurcsany’s popularity stood at 18 percent _ the lowest ever for a prime minister since Hungary’s return to democracy in 1990. The poll had a margin of error of between 2 and 6 percent.

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