As economies teeter, leaders in Europe warn against extreme populism

Hungary's economy is approaching "meltdown," analysts warn, adding another financial crisis within Europe and raising concerns about more extreme populist moods gaining ground. 

The forint, Hungary's currency, has been spiraling downward. The European Commission says the nation is expected to have the lowest growth and highest debt in 2012 among the former Soviet satellites of Eastern Europe.

But a deeper concern among European leaders familiar with the continent's history is the effect of prolonged low wages – or no wages at all – on ordinary people. Such conditions breed unrest, populism, extreme nationalism, and hatreds. The effect can be an undermining of social and democratic health, especially in states or regions of Europe like Hungary with a relatively shallow history of rule of law.

Always in the continental shadows is the memory of the 1930s, when economic chaos and popular frustration in Germany led to the rise of the Nazi party and fascism.

“Our worst enemy right now is populism,” said Italy’s minister of economic development, Corrado Passero, at a conference of top European leaders and economists on Friday at the French ministry of economics. Mr. Passero was responding to a question on Hungary's status that other elites and officials felt was too sensitive to approach. “When the pace of economic growth is too slow for too long,” he said, “and fears about the future become too high, we are entering dangerous territory.”

A European crossroads

Hungary is an EU member but not part of the 17 member eurozone. The former Soviet satellite is situated in something of a European crossroads: It borders Austria in the north and Serbia in the south, two cultural opposites in Europe.

While Hungary has veered sharply to the political right – in 2010 elections the neo-fascist Jobbik party won a substantial 17 percent – it retains a center-right government elected by a 53 percent margin.

Yet the combination of economic chaos, and recent authoritarian moves by Prime Minister Viktor Orban, are causing worry about its overall direction, including a rising far right, reports of beatings of minorities including gypsies and Roma, and nationalism.

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