EU Warns of "Painful" Times Ahead for Hungary

Despite a wave of anti-government riots, in which 150 people were hurt, Hungarian Prime Minister Ferenc Gyurcsany remained defiant on Tuesday, rejecting opposition calls to step down.

"I had spent three minutes on Sunday night thinking about whether I should step down or whether I had a reason to step down, and the conclusion I came to is that absolutely not," Gyurcsany told Reuters.

At the same time Gyurcsany stressed that his government would "continue and accelerate" the austerity reforms launched earlier this year as part of the country's commitments to the European Union.

A "moral crisis"

The unrest was sparked by the leak of a tape Sunday in which Gyurcsany said he and his Socialist party had lied for four years about Hungary's budget in order to win a general election in April.

Thousands of people took to the streets of Budapest late on Monday. The state television building was set afire and demonstrators clashed with riot police in the first such incident of violence since the collapse of Communism at the end of the 1980s.

Gyurcsany called it "the longest and darkest night of the third Hungarian republic," saying "the borderline between freedom of expression and serious disruption has been obscured."

The main Fidesz opposition party urged Gyurcsany, a 45-year-old millionaire to resign amid what it called a "moral crisis." Ibolya David, leader of the smaller opposition party Hungarian Democratic Forum told Hungarian MTV television: "the prime minister should abandon public life."

"Painful" times ahead

Hungary's soaring budget deficit has also forced it to abandon plans to join the euro single currency in 2010.

European Commission spokeswoman Amelia Torres told reporters in Brussels that it was in the interests of the Hungarian economy and its people that the economic situation was "reined in and brought to relatively sustainable levels."

"I do acknowledge the measures to achieve these results are obviously painful," the spokeswoman for European Economic and Monetary Affairs Commissioner Joaquin Almunia added.

The European Commission, the EU's executive arm, will pronounce by the end of the month on a convergence plan presented by Budapest in its bid to join the group of EU nations using the euro currency. At the beginning of the month the Hungarian government submitted a revised plan to prepare for adoption of the euro under which its public deficit would be slashed from 10.1 percent of gross domestic product (GDP) this year, the highest in the EU, to 3.2 percent in 2009.

To that end, the Hungarian government this summer announced a raft of unpopular austerity measures, including higher taxes and lower subsidies.

"For the future of Hungary"

EU commissioner and former Hungarian Foreign Minister Laszlo Kovacs deplored the political unrest and street violence which has erupted in his homeland, calling for the implementation of the challenging economic program to ease its woes.

"Certainly burning cars and burning public buildings is not a solution," the EU's tax and customs commissioner told reporters in Brussels. "It is very much in the interest of the Hungarian people, but also very much in the interest of the European community, that the situation should be stabilized as soon as possible," he added on the margins of customs talks with Chinese officials.

"There are steps that increase the revenue side and there are even more steps that decrease the expenditure side of the budget," Kovacs said. "The solution is to implement this program for the sake of the future of Hungary," he said urging Hungarian politicians to push party politics to one side for the good of the country.