We are spending the New Year in Hungary (until yesterday the Hungarian Republic) which more and more becomes dangerous to its people and its neighbours.  A few days ago it failed to sell its short term bonds and paid nearly ten percent interest to market its ten year bonds (some way beyond the rates regarded as unsustainable by  Greece and Italy).  On the last working day of 2011 it passed legislation to remove independence from the central bank - a move which disqualifies it from IMF help.  Without IMF help it is pretty much bound to default, and in consequence anyone who has any money is rushing to get it out of the country...there is a report from Italy tonight that the EU will suspend Hungarian voting rights, on the grounds presumably of the end of media and judicial independence in Hungary and the vague territorial threats to the country's neighbours (pre Trianon Treaty greater Hungary maps and bumper stickers are popular here). Hungarian economic and foreign policy seems to have progressed beyond rational thought.  Certainly there is no calculation of political advantage.  The Prime Minister Viktor Orban has dismissed recent warning letters from the EU and US as exaggerated and irrelevant. The country seems to be living out some huge political psychodrama in which it is always the victim.  There is a strong flavour of national paranoia in everything from the national anthem onwards.  Hungary doesn't do, but is done to.  Officially here the fascist and socialist periods don't exist. The Fidesz government has used its two-thirds Parliamentary majority, won in the election of April 2010, to introduce a new constitution which declares that Hungary was officially occupied from the German invasion in 1944 to the fall of socialism and indeed the law now declares that the Hungarian Socialist Party (MSP) last in power until 2010 (and the biggest opposition group in the current Parliament) are identical to the Hungarian Socialist Workers’ Party (MSMP) which seized power in 1946-48 after the Russians expelled the Germans and took power. This means that in theory their MPs can be removed from the national and European Parliaments and their assets seized.  All street names etc are being put back to what they were in the late thirties, and the flavour of the state is that of the Horty regime of that time.  (The constitutional narratives here are at the best confused.  Although there has been no king since the declaration of the first republic in 1918 the ancient Hungarian crown sits in pride of place at the centre of the Hungarian Parliament building.  Horty declared himself regent which some think to be Orban’s delusional aim). All this revisionism is convenient in covering up the massive betrayal of the Jews by ordinary Hungarian citizens in 1944-45 plus many killings in the early days of the socialist period.  Again, officially Hungarians are not responsible.  They are the innocent victims of other histories. Some here believe that the government wants to fail and to leave the EU, often cited here as another foreign burden on the long-suffering Hungarian people.  Kati had coffee yesterday with the well known economist Janos Kornai who predicted a putsch from Jobbik, the explicitly anti-Semitic and anti-Roma party. We will see. The only good news is that the world is waking up to all this.  I remember the same time last year when we were lobbying MEPs against Orban becoming EU president there was little response and the wretched Barroso embraced Orban and  said he believed in Hungarian democracy.... There is perhaps less good news from herein Hungary itself.  We attended a demonstration outside the Parliament last night in the closing hours of 2011 which were also the final hours of the third Hungarian Republic, which dated  from the collapse of socialism in 1989 (the rumours are that the barriers are going up to prevent any further demonstrations in such a symbolic place).  It was of course also New Year’s eve, and therefore perhaps not the best time to organize a sombre political event.  Nevertheless, it was not encouraging in terms of numbers: two to three thousand at most ands although some friends were there from the younger generation, few young people.  One of the more complete failures of the last few years has been the Hungarian education system’s utter failure to engage the young in debate on and respect for democratic freedoms.  Club Radio, one of the last brave independent stations to defy state media control, broadcast the event so we can only hope that, starting with the New Year’s demonstration tomorrow, numbers swell into an irresistible popular movement for change. Without such popular support, the outlook for Hungary and its region is bleak.