Gordon Bajnai, Hungary's P.M., Takes the Lead

Gordon Bajnai became Hungary's prime minister in April when his predecessor, who'd lied about the dire state of Hungary's economy to win an election, was forced out. After warning his countrymen that "this will hurt," Bajnai, a 41-year-old former investment banker, embarked on a series of bold reforms. He recently sat down with NEWSWEEK's Ginanne Brownell to talk about the economy, the Lisbon Treaty, and climate change. Excerpts:

Hungary has suffered from this economic crisis. How are things now?
Hungarians are used to crisis, and so far we have avoided meltdowns. Last October, when the crisis hit us, Hungary was seen as a risk because a significant number of people had foreign-currency loans and the potential of our economy had been reduced by a lack of reform. But we were one of the first countries to turn to the IMF and the European Commission. And that put the floor under the risk of financial free fall.

How did you restore confidence?
We quickly introduced three major reforms in pensions, taxes, and social aid. We expect to have a 3.8 percent budget deficit next year—one of the smallest in Europe. Bank interest rates are significantly below pre-crisis levels. JPMorgan says Hungary may be the first of the Polish-Czech-Hungarian trio to introduce the euro, while Merrill Lynch says Hungary may come out of the crisis in the strongest fiscal position of all OECD countries. We have become a frontrunner in terms of fiscal stability.

Was the Lisbon Treaty the only option for the future of the EU?
Hungary was the first EU member to ratify Lisbon. That shows our commitment. The only way forward is through more cooperation, more coordination, and, if necessary, more integration. If Europe wants to maintain its geopolitical influence it needs to retain its economic influence by strengthening its competitiveness. That will require more flexible political management, and this is what Lisbon is bringing about.

But there has been much talk about expansion fatigue.
Despite all the quarrels, enlargement has been a success. But we should also be talking of Atlantic integration, because NATO is an important player. Joining these organizations is like standing in a queue, and if [aspirants] don't see the queue moving, they may lose interest. So a road map should be given to these countries. The western Balkans is the next step in this process.

And Turkey?
According to polls, Hungarians seem to be the most friendly to Turkey. Turkey has huge potential, both economically and socially, so the EU should find a way to improve our cooperation. It may take years, but there needs to be [a plan] to bring Turkey closer.

The EU just elected a new president and a high representative. Can 27 countries agree on a foreign policy?
A key [aspect] of the Lisbon Treaty is that Europe is now potentially able to have one voice on foreign affairs. One of the lessons of this crisis is that we need more coordination on a global level. There are certain issues where European countries clearly have a common interest. Climate change is a good example.

Do you think anything will actually come out of Copenhagen?
Copenhagen is a unique opportunity and could be the last chance for a long time to do something about climate change. There is strong unity in Europe, and we've put our money where our [mouth] is by offering significant financial contributions as well as emissions cuts. But we can't do it alone; we need other major players to join us. This is a global problem, but the solution is local. The minimum result should a principal agreement that can be turned into a practical arrangement in the coming months. Without that, we will be missing a huge chance for the world.