Orban does the totally expected thing

It may have been noted by readers of this blog that just as the media has decided that Hungary is still a far off country of which we know next to nothing but it also seems to be having events that might affect the rest of us, interest in those events dried up here. Well, not quite. A long posting on the subject is in the works.

In the meantime, it is sufficient to say that the Prime Minister, Viktor Orban, seems to be bowing to the inevitable.

The Hungarian government is expected to propose changes to its central banking legislation in the coming weeks, in order to secure a credit line from the EU and the International Monetary Fund (IMF).

The changes will be a response to the European Commission's legal challenge to Hungary's new legislation. The Commission claims that the law restricts the independence of the central bank, and must be revised before Hungary is allowed to start negotiations on a credit facility.

Of course, he may yet go back on that as well and the whole charade might start for the third (or is it the fourth time).

It is not unreasonable to call this a response to unconscionable bullying on the part of the EU on whom no less a person than Frank Furedi called to stop but there is also the fact that Hungary needs that credit line and it is, therefore, not unreasonable to expect her government to behave in a slightly less petulant and childish manner.

The real problem stems, I suspect, from those promises that were made to all former Communist countries when they were part bullied, part bribed into joining the European Union. Money was going to pour there and every problem would be sorted out. Sadly, yet again, those of us who warned that it will all end in tears, seem to have turned out to be right. Just call me Cassandra.

How long will this last?

I stay away from the blog for two days and all sorts of things happen, not least with Blogger, but that's another story. There seems to be a treaty but it is not an EU treaty, so we shall not be debating it and certainly not voting on it. And now for the big news:

European finance ministers looked unlikely to reach a target of boosting IMF resources by 200 billion euros to ward off the debt crisis on Monday, after Britain said it would not take part in a plan aimed specifically at helping the euro zone.

In a three-hour conference call, ministers also assessed plans for tighter euro zone fiscal rules - a new 'fiscal compact' - that policymakers hope will insulate the 17-country currency zone against a repeat of the two-year debt crisis.

Treasury sources said Britain had made it clear on the call it would not participate in the plan to increase IMF resources by up to 200 billion euros, with 150 billion of coming from euro zone central banks.

"We were clear that we would not be making a contribution," one treasury source said, while another added that there was "no agreement on the 200 billion" euro funding boost.

A Treasury official says? Well, then it must be true.

ADDENDUM: Rowena Mason and Tim Ross in the Telegraph tell us that Britain is not the only country that is gibbing at the thought of more money being sunk into the euro:

However, many members of the IMF, including Britain and the US, are refusing to put in extra contributions to save the currency.

And, as one reads on, one finds the following ominous words:

Officials last night admitted Britain could still give up to £10 billion to the IMF for a new global bail-out fund, just not one specifically aimed at saving the euro.

Not everything is as it is first reported. In fact, nothing is.

You mean he didn't veto this?

Troubling news for all those who are rejoicing about the Boy-King vetoing treaties, getting us out of the euro (when were we in?), putting us on the same footing as Switzerland and generally restoring Britain's pride in herself: it seems that there is a fair chance that Britain will have to cough up another £30 billion in the form of loans to the IMF (loans?) that will be used to shore up the eurozone, which is not, incidentally what the IMF is supposed to be doing.

The fund revealed in its official Survey Magazine that non-euro countries would put up a quarter of all new money under the EU summit deal.

“European leaders agreed to make bilateral loans to the IMF of as much as €200bn —with €150bn contributed by eurozone members and €50bn from other members of the EU,” it said.

The report relied on a briefing by IMF chief Christine Lagarde, who was in the room with EU leaders during last Friday’s summit talks. Britain is the EU’s only large economy outside the euro.

The EU statement contained no reference to the €50bn figure for non-eurozone states. “If Britain has really agreed to this, it is a huge deal,” said Julian Callow at Barclays Capital.

David Cameron gave no hint of such an obligation in his statement to the Commons on Monday. “Alongside non-European G20 countries, we are ready to look positively at strengthening the IMF’s capacity to help countries in difficulty across the world,” the Prime Minister said. “But IMF resources are for countries not currencies, and can’t be used specifically to support the euro.”

What else might have happened at that meeting about which we have not been told?

Is it something about the job?

Christine Lagarde, the post-DSK chief of the International Monetary Fund (IMF) is being investigated for fraud.

The Court of Justice of the Republic today asked three appeal court magistrates to investigate whether the former French finance minister is guilty of "complicity in forgery" and or "complicity in misuse of public funds".

If she is brought to trial and found guilty she could face 10 years in prison and a fine of $202,155.

Lagarde, who took up her new post last month, has denied any wrongdoing or illegality in a case stemming from a massive payment to a controversial tycoon out of public funds in 2008 when she was still a minister.

It seems that the IMF executive board has expressed full confidence in Mme Lagarde. If I were her I'd get a very good lawyer. Then again, she probably has one.

Another rebellion (not!)

Last night the House of Commons voted on whether to increase our "subscription" to the IMF or, in other words, whether the UK should hand over even more money for bailing out purposes. As readers will recall, not participating fully in the bail-out was one of the victories the Boy-King has boasted about and a reason for publications such as the Spectator to push his eurosceptic credentials.

The Government won the vote by 274 votes to 246 because the Labour Party voted against the increase. According to ConHome 32 Conservative MPs voted with the Opposition on this crucial matter. Tim Montgomerie lists them. Mostly one can say it's the same old names and, while I applaud their steadfastness, I do wonder about those dissatisfied MPs who have either voted with the government (Ms Priti Patel) or were unavoidably detained somewhere else (George Eustice).

There may be troubles ahead

The case against Dominique Strauss Kahn has run into difficulties. Sensibly, not only has he produced the only possible defence - consensual if possibly rough sex - but he has been spending money to find out more about his accuser, as the NY Post reports.

Strauss-Kahn’s legal team has hired the world’s best private investigators to ferret out every detail about the the accuser’s past.

They have unearthed photographs of her drinking and partying, despite her professed Muslim faith, sources told The Post.

There also seems to be some evidence of her being connected with drug dealers. The New York Times has more.

Prosecutors from the office of the Manhattan district attorney, Cyrus R. Vance Jr., who initially were emphatic about the strength of the case and the account of the victim, plan to tell the judge on Friday that they “have problems with the case” based on what their investigators have discovered, and will disclose more of their findings to the defense. The woman still maintains that she was attacked, the officials said.

“It is a mess, a mess on both sides,” one official said.

According to the two officials, the woman had a phone conversation with an incarcerated man within a day of her encounter with Mr. Strauss-Kahn in which she discussed the possible benefits of pursuing the charges against him. The conversation was recorded.

That man, the investigators learned, had been arrested on charges of possessing 400 pounds of marijuana. He is among a number of individuals who made multiple cash deposits, totaling around $100,000, into the woman’s bank account over the last two years. The deposits were made in Arizona, Georgia, New York and Pennsylvania.

The investigators also learned that she was paying hundreds of dollars every month in phone charges to five companies. The woman had insisted she had only one phone and said she knew nothing about the deposits except that they were made by a man she described as her fiancé and his friends.

In addition, one of the officials said, she told investigators that her application for asylum included mention of a previous rape, but there was no such account in the application. She also told them that she had been subjected to genital mutilation, but her account to the investigators differed from what was contained in the asylum application.

All of that does not necessarily make her accusation against DSK untrue, as Glenn Reynolds points out, but it does make her an unreliable witness whom the prosecutors will not like to put in the box for cross-examination.

So where does that leave us? Not so badly off. Whatever the outcome of this case might be, the truth of DSK's behaviour and the general attitude to male misbehaviour towards women in France (especially on the Left) has now come out into the open and cannot be put back into the secret little box. (Here and here.) That can't be a bad thing.

Furthermore, the IMF (an institution whose time has been and gone, but that's a separate story) has appointed its first woman head. If the case against DSK collapses he may return to French politics and, even, become the Socialist presidential candidate, which will undoubtedly play in the hands of Sarko but, even more so, those of Marine Le Pen. If, on the other hand, the Socialists decide that they don't want the case to be revived too much by innuendo during the campaign, they may well choose Martine Aubry as candidate. Either way, the irony would be very pleasing.

UPDATE: Dominque Strauss-Kahn has been released on his recognizance and his bail returned but he will not be allowed to leave the United States. Next hearing, July 18.

She DID get the job

IMF appoints France's Lagarde as IMF Managing Director.

Probably she will get the job

As this blog has pointed out before, whenever there is a sex scandal in high places, the job subsequently goes to a woman. Therefore, it seems very likely that Christine Lagarde will get the job at the top of the IMF. Now we get news that the US backs her candidacy against potential challengers from other countries, some of which are developing. I think she'll get it.

Osborne is off the hook for the time being

This morning the Telegraph trumpeted that George Osborne our Chancellor of the Exchequer in the strange world we live in, was going to get tough:

George Osborne, the chancellor, will tell EU finance ministers in Luxembourg today that Britain does not intend playing a part in any new aid package for Greece.

As one reads the article, though, one finds that the decision is not actually Mr Osborne's.

Germany and France have signalled that there is no reason for London to pay a share of a repeat bailout, likely to be finalised within weeks and for a similar sum as the first.

At today's talks in Luxembourg, Mr Osborne is expected to say that the issue is one for the eurozone alone.

Britain's only potential contribution to bailing out Greece again now comes from its shareholding in the IMF, in the form of loan guarantees which would only be called in if Greece defaults.

Meanwhile, the IMF is urging the Eurozone (or possibly the EU) to go on pouring money into Greece, who seems curiously reluctant to do anything to help itself, relying possibly on yet more bail-outs. Furthermore, says the Acting Head of the IMF (there was a spot of trouble with the man who is supposed to be making these comments) further integration is needed.

The fund added: "Rapid implementation of the commitment to scale up the European financial stability facility and a further extension of its potential uses would sent a much needed signal that member countries 'will do whatever it takes to safeguard the stability of the euro area'. In this context, it will be essential to bring the unproductive debate about debt reprofiling or restructuring to closure quickly, and avoid and impression that the European stability mechanism will be conditional on debt restructuring."

Nevertheless, the Finance Ministers have decided to wait and see. In particular they would like to see some of those proposed austerity measures and selling of state assets, that the Greeks keep demonstrating against, actually being put into place.

Euro zone finance ministers have postponed a final decision on extending 12bn euros ($17bn) in emergency loans to Greece, until it introduces further austerity measures.

The ministers said on Monday that they expected to pay the next tranche of a 110bn-euro bailout package, backed by European Union and the International Monetary Fund, by mid-July.

Greece has said it needs the loans by then to avoid defaulting on its debt.

Keeping up their pressure on Athens, where public opposition to austerity has been growing, the ministers insisted that disbursement would depend on the Greek parliament first passing laws on fiscal reforms and selling off state assets.

"To move to the payment of the next tranche, we need to be sure that the Greek parliament will approve the confidence vote and support the programme, so the decision will be taken at the start of the month of July," Didier Reynders, Belgian finance minister, said after the meeting in Luxembourg.

Mr Osborne must be relieved.

Probably she will get the job

Will Christine Lagarde become the new head of IMF? She is certainly campaigning as the Wall Street Journal reports.

French Finance Minister Christine Lagarde said she will fly to Brazil Sunday night and also plans to visit the Middle East as she kicks off her global tour to rally support from the emerging world for her bid to lead the International Monetary Fund.

Brazil is to be her first stop as it was the first country to have invited her, Ms. Lagarde said in an interview with French radio Europe 1. She told The Wall Street Journal last week that Brazil, China and India were must stops on a global campaigning tour to secure broad backing to be the first woman to lead the international institution.

She is trying to make the various emerging world leaders understand that it should be another European at the helm of the International Monetary Fund just as, traditionally, an American heads the World Bank.

That, they say, is unfair. How about somebody from the BRIC countries or the Middle East? What about their interests? True, but then again, who contributes most money to these institutions. Not Brazil, that's for sure.

While Ms. Lagarde has the backing of most European countries, emerging nations are more skeptical toward her candidacy. Several of them have said the job should go to a candidate from an emerging nation to reflect their growing weight on the world scene, and they have questioned the clubby arrangement under which the job of IMF managing director has gone to a European while the World Bank has been headed by an American. Ms. Lagarde said her trip was intended to allay such concerns.

Mexico's central bank governor, Agustin Carstens, also declared his candidacy last week, while Israeli central banker Stanley Fischer is examining a formal bid to seek the position and figures he has an outside shot at the job if there is a deadlock in the voting, said an official familiar with his thinking.

Mr. Fischer, a former deputy managing director of the IMF, is a long shot. While he is widely respected among central bankers and finance ministers, his current position as Israel's central bank governor would make it tough to win the support of Arab nations and other emerging-market countries, said an Arab official who has worked with Mr. Fischer.

Just imagine what would happen if a Jewish banker were appointed to that position even if he is just a central bank governor. Our conspiracy theorists will go into overdrive.

Personally, I think she will be appointed for one very good reason: whenever there is a resignation over a sex scandal a woman is appointed as a successor.

Of course, they could consider the real solution and that is the abolition of the IMF but, somehow, with that many snouts in the trough, I do not think that will happen.

We had expected you to be ....

Well, maybe not "the next prime minister but three" as Hilaire Belloc wrote so memorably about Lord Lundy who was far too freely moved to tears but, at least the next socialist candidate for the French presidency and, quite possibly, given Sarko's lack of popularity, the next French President. Alas for those hopes. It seems more than likely that Dominique Strauss Kahn's political hopes and career are over.

As the Economist put it:

EVERYTHING was in place to enable Dominique Strauss-Kahn, the IMF head, to declare next month his candidacy for the Socialist primary, ahead of French presidential elections next year. Polls consistently showed that he was the most popular Socialist candidate, and the best placed to beat President Nicolas Sarkozy in a run-off. But Mr Strauss-Kahn’s arrest on May 14th in New York, for an alleged sexual assault, has thrown all those plans in the air, and looks almost certain to wreck his political future.

This is rather a belated acknowledgement of the story that is of some interest and even greater amusement. After all, if the two stories about DSK as he is now known in the media are true then there may well have been others and, almost certainly, a good deal of gossip around him that was, presumably covered up by the various left-wing parties, media outlets and transnational organizations the man fetched up in.

Anne-Elisabeth Moutet, a leading French journalist who can write and broadcast equally well and entertainingly in French and English says on her blog and in the Daily Telegraph:

When the news broke in Paris early yesterday that France’s former finance minister had been arrested by the New York police for alleged sexual assault on a hotel housekeeper, reactions here were split between sheer disbelief, suspicions of entrapment and all-too-many knowing shrugs.

“Dominique Strauss-Kahn is well-known as a seducer,” his official biographer, Michel Taubmann, said. “I can’t believe he would force himself on an unwilling woman. That doesn’t make sense.”

Such a statement would come across as damning in most Western countries. In France, it is seen as a spirited defence. Until today, complicated sexual lives, multiple divorces and serial adultery never hampered political careers. François Mitterrand famously ran three parallel families while president. He appointed a former girlfriend of his, Edith Cresson (a married woman) as prime minister in 1991. His predecessor, Valéry Giscard d’Estaing, used to borrow a Ferrari from his friend Roger Vadim, the film director and Brigitte Bardot’s first husband, when he went on the pull. (He once crashed it into a milk float early one morning on his way back to the Elysée.) Jacques Chirac and Nicolas Sarkozy were known for eyeing up comely reporters and female junior ministers.

In that context, DSK’s notorious penchant (and more) for a legion of pretty women did him no harm at all. “If anything,” Taubmann recalls, “he was the one harassed, not the reverse — I’ve seen time and again women MPs, party workers, etc brazenly passing on notes, hoping he would notice them.”

Poor chap - clearly the victim of predatory females. Or something. But, as Ms Moutet points out, alleged assault on two women (and more accusations might surface) is a different matter even in France, especially as the arrest was made in New York. Would he have been arrested had the first complaint been made in Paris? It is worth reading Ms Moutet's posting in full - she is very knowledgeable and gives some background to the story, pointing out that the immediate beneficiary of it all is Front National's Marine Le Pen, who is reported as not being surprised at all.

In the meantime here are a couple of articles from Der Spiegel, which support Anne-Elisabeth Moutet's points. Apparently, the appointment of a man who had been a banker or, in other words, actually understood about money, was something of a surprise among the cognocscenti, "but his stewardship of the institution during the global financial crisis drew praise". Must have been all that money he was giving away in bail-outs.

The same issue had an article about French political opinion being "aghast" at the charges.

In the end, it is, as ever, Dan Mitchell with whom I agree. He thinks that, while rapists should be tried and, if found guilty, punished, it is the IMF that we should really go after.

More on the IMF from Doug Bandow, also from Cato. I'd like to think he did not pick that ridiculous title, which is silly even as an attempt at a play on words. The article is very good.

Looks like Hungary will not be joining the euro any time soon

On the Economist blog you will find this rather mysterious news item:

MONDAY may be a good time to pick up Hungarian assets on the cheap. The IMF and the EU walked away from negotiations with the Hungarian government on Saturday after the latter refused to give in to the international organisations’ demands for more clarity on the country’s plans for tax and spending. It seems safe to assume the Hungarian forint will start the week with a sharp lurch downwards.

The reference is to a Reuters story:

The IMF and EU suspended on Saturday a review of Hungary's funding program, set up in 2008 to save the country from financial meltdown, saying it must take tough action to meet targets for cutting its budget deficit.

Suspension of talks means Hungary will not have access to remaining funds in its $25.1 billion loan package, created by the International Monetary Fund and European Union and which it now uses as financial safety net, until the review is concluded.

Not everything is bleak, though:

Christoph Rosenberg, who led the IMF delegation to Hungary, signaled that the Fund wanted more on next year's budget. "By definition when we come next time -- unless we come next week -- the government will have made more progress on the 2011 budget and that will be a very important budget," he told Reuters.

In an interview, he also said the IMF had not discussed the possibility of a new financing deal for 2011 and 2012.

"We are aware of what has been said in public but in our meetings we didn't really get to that point, because we obviously needed to first resolve the policy issues and those have not been resolved," he said.

The EU issued a separate statement saying the conclusion of the review had to be postponed and further talks should be held at a later stage.

"Hungary has returned to a positive economic growth path and now has one of the lowest budget deficits in the EU. I welcome the authorities' commitment to the 2010 deficit target," said Olli Rehn, Commissioner for Economic and Monetary Affairs.

"However, the correction of the excessive deficit by next year will require tough decisions, notably on spending."

What the EU wants to see is that magical 3 per cent deficit target in next year's budget. Without that Hungary cannot contemplate entering the euro (unless it manages to fudge the figures a little better than it has done so far).

As the Economist adds, FIDESZ won a landslide victory in April by promising many things, some of which are mutually incompatible. There are local elections coming in the autumn and the far-right party, Jobbik, with a somewhat left-wing economic agenda, is snapping at the heels of FIDESZ. Perhaps, Prime Minister Orban assumes that faced with the possibility of a victory by Jobbik, the IMF and the EU will relent.