New Labour is still cool - in Hungary

Observations on the left

Whatever his troubles at home, Tony Blair may console himself that there is still one corner of a foreign field that is new Labour. His protégé Ferenc Gyurcsany has just become the first Hungarian prime minister since the collapse of communism to win two consecutive terms.

For Gyurcsany and his socialists it is Millbank, not Moscow, that has the answers these days, offering both a ready-made ideology and a powerful peer group to back it. Gyurcsany is the regional linchpin of the Policy Network, Peter Mandelson's think-tank in which Blair is one of the heavy-hitters, while Anthony Giddens supplies the theory.

And the message is going down well. The socialists' Blairite cocktail of reform, modernisation and consumer-orientated state services proved more attractive to Hungarians in last month's elections than the promises of handouts by the populist centre-right party, Fidesz.

The winners did have help from demographics. A generation has grown up knowing nothing of Workers' Day parades and the secret police, and for them Fidesz's anti-communist rhetoric seems outdated. Fidesz, in turn, seemed determined to alienate the young - one of its leaders criticised them for wearing earrings and listening to techno music.

Gyurcsany and his economics minister, Janos Koka, with their smart suits, fluent English and personal wealth, are role models for many. A former communist youth leader, Gyurcsany made his money during the "wild capitalism" of the early 1990s (he denies wrongdoing) and Koka, who is a member of the Free Democrats, the junior coalition partners, is also a millionaire.

According to a British businessman involved in developing the ties between Budapest and No 10, Gyurcsany "wants to be another Tony Blair. He belongs in the western European stream of thought. Gyurcsany and Koka want to modernise Hungary, to change the way it is governed. Their agenda is very similar to that of Blair: they want to withdraw the state wherever possible from the ownership of economic assets."

But providing adequate welfare, health and education at the same time as supporting business and foreign investment will be tricky, not least because Hungarians are attached to the "social" part of the social market economy.

"The socialist parties could not go as far as Tony Blair and become as business-friendly as he is," says Krisztian Szabados of Political Capital, a Budapest research and consulting institute. "People here grew up in a state that promised security, healthcare and employment for all and they still expect that to continue, even among the young generation."

Hungarians have long prided themselves on being politically ahead of the game. They rebelled against Moscow in 1956; their "goulash communism" was the most liberal in the Soviet bloc, and they opened their borders months before the Berlin Wall came down.

Now they have done away with Marx and Engels altogether and it seems they are putting their faith in the ideology of Blair and Mandelson.