By Zoltan Simon - Agence France-Presse

BUDAPEST - A surge in Western European opposition to cross-border competition has spilled over into Central Europe, becoming a central issue in Hungary’s upcoming general elections and dominating Polish politics.

Hungary’s main opposition Fidesz party is vowing to put an end to an era of “ruthless capitalism” by strengthening the state’s role in the economy, giving preferential treatment to local companies over multinational firms and conducting a partial review of past privatizations.

The governing Socialist party, on the other hand, has pledged a continuation of market-friendly policies and promises that a “triumphant Hungary” can emerge from global competition.

The main theme of Hungary’s election, the first parliamentary vote since the country joined the European Union in 2004, echoes the dissonance in Europe over support for market liberalization on the one hand, and opposition to foreign takeovers on the other.

Earlier this month, an EU summit in Brussels that focused on how to make Europe more competitive economically by the end of the decade was marred by protectionist maneuvers to foil two major cross-border financial deals.

France announced that the state-controlled gas utility GDF was to merge with the energy group Suez, a move seen in Italy as an attempt to thwart a bid for Suez by the Italian electricity giant Enel.

Meanwhile, Spain blocked German energy giant E.ON’s hostile takeover bid for the electricity company Endesa.

“Economic nationalism, egotism and introversion have gained strength in Western Europe because of weak growth,” Peter Balazs, a former European commissioner, told AFP.

“It should surprise no one if this protectionist wave in turn spills over into Central Europe and infects the new member states,” Balazs, now a professor at Corvinus and Central European University in Budapest, said.

Hungary’s Socialist Prime Minister Ferenc Gyurcsany, who backs privatizations, has said he wants the country to specialize in certain sectors with a strong value-added component, such as bio- and information technology, and leave others in which the country does not have a competitive edge.

“The policy of the Socialists is not to shield Hungary from competition but to have Hungary give it a go and win. We want a triumphant Hungary,” Gyurcsany told a campaign rally in the eastern city of Eger on March 23.

Gyurcsany’s main opponent in the election, Fidesz leader and former premier Viktor Orban, has supported protectionist policies favoring Hungarian companies in all areas in an effort to preserve and create jobs.

“Our philosophy is that there are economic opportunities in Hungary and these should be above all for Hungarians,” Orban told rail-workers in Budapest on Tuesday.

“We either choose Hungarian solidarity or indifferent ruthless capitalism,” he also said in an interview with Work, Home, Family, a Fidesz campaign pamphlet mailed to voters ahead of election day.

The Socialists and Fidesz are in a dead heat in opinion polls ahead of the April 9 vote. A runoff is scheduled for April 23.

But Hungary is not the only country in the region where protectionism has gathered strength.

In Poland, another post-communist country and the largest new EU member state, the conservative government announced last Tuesday that it would block the planned sale of Zespol Elektrownia Dolna Odra (ZEDO) to Endesa.

Prime Minister Kazimierz Marcinkiewicz said ZEDO would instead become part of a state-controlled energy giant.

Marcinkiewicz is also battling the European Commission to block the merger of Italian UniCredit’s two Polish units, Pekao and BPH, which would create a foreign-owned leader in the Polish banking sector.

One of the few decisions which Poland’s fractious three-party right-wing coalition has been able to agree on was to probe suspicious bank privatizations in the past 16 years.

Distrust of foreign firms and takeovers are often linked to the corrupt privatization process that followed the fall of the Iron Curtain in 1989, analyst Miklos Losoncz said.

“There are people who feel that our countries sustained many injuries in the privatization process and the transition to a market economy, and it is not difficult for a political party to exploit these and call for protectionist policies,” Losoncz, head of research at the Budapest-based Economic Research Institute, told AFP.

“There is in all of this a nostalgia for communist times,” he said.

A September survey by the Median polling firm found that only 9 percent of Hungarians wanted to continue privatization, which is nearly at an end here, compared to 54 percent who said it should stop. and 27 percent said some privatized assets should be returned to state ownership.