The Hungarian environmental disaster: Quick update

I think that this terrible disaster is a godsend for the Orbán government. Tough measures are demanded by the population that is, by and large, anti-capitalist. The owners of MAL are a perfect target for people's venom against all rich people and especially those who in their opinion got valuable state properties for "peanuts." According to the common belief, these new owners in twenty years didn't put a penny into the factory and their only concern was making money. They didn't care about the well being of the people living nearby. They were parasites who didn't give a damn what will happen. If the sludge covered half of Hungary it was fine with them.

If you think that I'm making up these stories, you are wrong. I heard all of the above this morning from people phoning into György Bolgár's talk show on Klubrádió. The listeners of this particular show are usually quite a sophisticated bunch, but from the above it is clear that the worst passions have been let loose as a result of this accident. People don't seem to care about the responsibility of the builders of the storage facility or the questionable expertise of the people who declared the "vat" safe. No one is inquiring what the environmental agencies did or didn't do when a few days before the accident they inspected the facility. When the reporter who was conducting the program today mentioned that after all the environmental inspector certified that all was well, the answer from a listener was that "sure, they were bribed by these dirty capitalists." In fact, according to another man, the  "experts" are also bribed. So, everybody is corrupt but the capitalists are the worst because they are not only corrupt but also rich. A sin in some people's eyes.

Viktor Orbán is well aware of this deep-seated hatred of the monied class, and now he can reap the benefits of an environmental disaster. There has been a lot of talk about nationalization of certain sectors, like the energy sector or utilities in general, and here is a golden opportunity to act.

The government has not yet nationalized MAL Zrt, but it took the first steps toward such an outcome. It placed the company under state supervision and appointed a government commissioner who will have full control of the company's finances. And as Orbán mysteriously announced, it will be this commissioner who will make suggestions about the future of the aluminum factory. Moreover, in the future the state can act, unckecked, every time it deems it necessary from an environmental point of view. I already see what a wonderful time Zoltán Illés will have with this possibility.

Just before Viktor Orbán made his speech in parliament the police arrested the CEO of MAL Zrt., Zoltán Bakonyi, charging him with public endangerment causing the death of several people in addition to damaging the environment. Viktor Orbán talked about criminal liability. Mihály Tóth, professor of criminal law and earlier a judge, thinks that the decision to arrest Bakonyi was hasty. Indeed, no investigation has taken place, yet criminal charges are levelled against Bakonyi and I assume soon enough against the other owners as well. The reporter who interviewed Tóth suggested that perhaps public pressure is behind the decision. Tóth very properly remarked that the law is not familiar with the concept of public pressure.

The decision is especially questionable when on the very same day the World Wildlife Fund made public its opinion that the European Union's regulations concerning the storage of toxic waste are not stringent enough. Today I heard another Hungarian expert complain about the very structure and material of the storage area which according to him is simply not safe. He worked on storage areas in several places, outside of Europe, where the walls of the storage area are made out of reinforced concrete, not slag like in Hungary.

It is very possible that the structure itself, built twenty-five years ago, couldn't take the amount of rain that fell on Hungary this year. It looks as if MAL Zrt. followed the environmental regulations, but perhaps the regulations themselves were not stringent enough. However, I sure wouldn't like to be in the shoes of the owners of MAL Zrt. Viktor Orbán already announced that punishment this time will be real. Not like in the past when there were years of litigation. It will be swift and the punishment will be commensurate with the crime.

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Johnny Boy
Guest

How do you know the regulations were followed by MAL Zrt.? Because they say so?

Paul Haynes
Guest

“It looks as if MAL Zrt. followed the environmental regulations, but perhaps the regulations themselves were not stringent enough.” is what Eva actually wrote.
Quite different from stating that she “knew” the regulations were followed.

Mark
Guest
“According to the common belief, these new owners in twenty years didn’t put a penny into the factory and their only concern was making money. They didn’t care about the well being of the people living nearby. They were parasites who didn’t give a damn what will happen.” Whether this is true in this case, or not, is an open question. But when we are confronted with these sorts of reactions, what we are seeing is real anger about the nature of the economic change-of-system that has building for a while. Way back in 1996 I spent a week inside Dunaferr, which then still employed close on ten thousand people. When I spoke to workers about the changes their fury at a managerial class that had exchanged their checked shirts for suits and ties, and their bicycles for large German cars (and though I am not directly quoting them I am closely paraphrasing them) was palpable. Where the workforces of industrial companies were downsized, or they have closed this has intensified this feeling. What is more, former workers were proud of their factories and their products; believed they worked hard; were promised improvement in 1989, and believe they have been… Read more »
Mark
Guest

“There has been a lot of talk about nationalization of certain sectors, like the energy sector or utilities in general, and here is a golden opportunity to act.”
To be quite honest I fail to see how this would be a bad thing. Selling key utilities to multinationals generated a huge hole in the current account as domestic subsidiaries repatriated their profits, and I fail to really see the substantial investment in infrastructure that privatization here was supposed to achieve.

Johnny Boy
Guest

Ok Paul, if you intend to split hairs, let me re-formulate my question: what makes you side with MAL Zrt. on this case?

Johnny Boy
Guest

Mark: good point on how many factory workers feel. This is exactly how the regime change looks like from “below” (note the quotation marks). In Hungary the employees’ pride, along with their motivation to work, should be restored. To achieve this, they need to trust and respect their managements, and vica versa. This is what is missing now.

Paul
Guest

I split no hairs, I was merely pointing out that your assumption about Eva’s views had no basis in what she had actually written.
Any more than your bizarre assumption that I “side with MAL Zrt” has any basis in anything I’ve written.
No one in their right mind would “side” with anyone until the facts are known.

Paul
Guest

“post-socialist capitalism in Hungary needs pretty radical reform if the population are going to accept it, and it is about time that both sides of the political spectrum accepted this.”
A good post, as always, Mark, and plenty of food for thought.
But, what exactly do you mean by ‘reforms’ and, given the reality of Hungary’s place in Europe and the world, it’s size, wealth, history, etc, what chance do you see of them being implemented (and by whom)?
And what happens if the system isn’t reformed? Is it the whole population that feel this way, or just those who worked under the old system? The under 40s I know, although not happy with opportunities, etc, don’t seem to share this anger. Perhaps, in time, this situation will rectify itself, as the younger generations, who have only ever known the new reality, take over from the bitter oldsters?

latefor
Guest

To Mark-
I do agree with you. Hungary needs reforms but I do not believe that the Hungarian population would accept “radical” reforms.
With information technology as it is today,
people are more aware of the world in general then they were in the early 1990’s.

Odins lost eye
Guest

Amongst the comments on an article in ‘politics.hu’ about the violation of air space there is an interesting link. It is well worth a look.

pgyzs
Guest

It is interesting to go through the American comments (not the ones which are probably made by Hungarians) on this matter
http://news.yahoo.com/s/ap/eu_hungary_sludge_flood#mwpphu-container
Apparently, they are not very satisfied with the responsibility issues raised by the resolution of the gulf contamination by BP and other such issues and clearly want to see US corporate leaders detained.
I also don’t believe in rushing legal actions and I really hope he will be convicted in a fair trial if he’s guilty. On the other hand correct me if I’m wrong but he was arrested on suspicion of public endangerment causing multiple deaths and environmental damage. Well the suspicion holds. I’m curious if he is going to be kept behind bars or to be released to defend himself from the outside (Excuse me for not knowing the proper legal terminology in English, I guess it’s not “on free legs”:) ) If anything this sends a very good message towards public morality compared to companies being able to deny responsibility all the time before.
On the other hand I’m concerned about this rushed lex-Mal, not because implications about the current matter, but because its rather vague definition of what might constitute grounds for government takeover in the future.

pgyzs
Guest

On the other hand sometimes they write something like
“I applaud the Turkish Gov’t logical reasoning.”
😀

whoever
Guest

The Hungarian government can have all the regulations it likes. Hungary is almost ungovernable and implementation of these regulations is a bit of a joke. Is there actually an environmental inspectorate, or does it only exist on paper to comply with EU accession?
Money shouts in modern Hungary and rich people feel they can do what the hell they like. In his statements, Viktor Orbán is going with the flow (no pun intended) as this situation infuriates many people. The people who are infuriated, along with the wealthy, also regard themselves as somehow entitled, despite a general reluctance to work. ‘How’s my neighbour got a new car? Why haven’t I?’ I agree with what Mark has written here, but I think he downplays this sense of ‘entitlement’ which can be observed in various manifestations throughout Hungarian society.
If only it were so simple as ‘only’ renationalising some of these utilities. Though that would be a start to achieving a realistic political economy, it probably won’t result in a different culture emerging which would allow a modern economy to evolve. Any nationalised industry in the current context would soon become a snakes pit of brown-nosing and patronage. Hey, it’s Hungary!

Gábor
Guest
Mark, well said, a new model of capitalism (I would rather call it a new culture and model of social cohesion) is needed, but I don’t see how it will be the outcome of these events. Especially in the light of the economic plans of the government the capitalists and oligarchs won’t need to pay taxes – this way taking more responsibility for the common good -, as a consequence the state won’t have the necessary resources to establish and run effectively the much needed institutions to rein in them, but every time it will need extra resources it will take it from where wealth exists. (Ok, I fomrulated it a bit as a caricature, but the main point is the same.) I wouldn’t call this emerging model a really new one, as the logical outcome is the formation of a group of capitalists, oligarchs bribing the state in order to get rid of others, nothing specifically revolutionary compared to the last decades. It will bring a weak state regarding the protection of citizens’ rights (as it will not be concerned with them) and social cohesion (as it will rely exclusively on the idea of trickle-down effects) and only such… Read more »
Mark
Guest
whoever: “The people who are infuriated, along with the wealthy, also regard themselves as somehow entitled, despite a general reluctance to work. ‘How’s my neighbour got a new car? Why haven’t I?'” I think we need to be careful here. Jealousy and envy are not uniquely Hungarian attributes, and for those who think Hungary is somehow different or outside the European norm, I would suggest they spend a bit of time looking at what British tabloids write about welfare benefit claimants (and some of the letters this provokes from readers). Nor do I see any great evidence that Hungarians are any worse, or any better workers than those anywhere else. Certainly there are lots of badly organized and corrupt institutions in Hungary – but then, based on my own experiences, I could describe some truly eye watering examples of waste and bad management in the UK that are at least as bad as anything I have seen in the Hungarian context. The real position is that at the beginning of the economic crisis there were 23% fewer jobs in the economy than in 1989. It isn’t a reluctance to work that is the problem – it is the absence of… Read more »
Mark
Guest

Paul: “The under 40s I know, although not happy with opportunities, etc, don’t seem to share this anger. Perhaps, in time, this situation will rectify itself, as the younger generations, who have only ever known the new reality, take over from the bitter oldsters?”
Well, as this is the group that votes for Jobbik I think that position is hard to sustain. I think it is a bit of a myth to suggest that anger is a product of misplaced nostalgia. Now clearly for the c.45% that have lower real incomes today than they had before 1989, it is not surprising that they favourably compare their position under socialism to today, as they actually did lose (though if you ask the same people only a neglible proportion want that system restored). This anger is about the kind of society that has been created in the past twenty years and the lack of security and elemental justice that many people feel.

Mark
Guest
pgyzs: “On the other hand I’m concerned about this rushed lex-Mal, not because implications about the current matter, but because its rather vague definition of what might constitute grounds for government takeover in the future.” It is a very interesting legal manouver and the historical precedents a rather scary. As I understand lex Mal it allows the state to use laws on national security to take over companies without formally nationalizing them. This was done quite a lot in the Second World War in Hungary with companies owned by citizens of allied states. A government commissioner was the put at the head of the company. The last time this was used, I think, was with MAORT in 1948 (it may have been used with Standard and Nitrokémia, but I don’t know these trials as well as I do MAORT). Basically what happened was that Rákosi decided the American owners of MAORT were sabotaging Hungarian oil production and arrested the management who were put on trial. Rather than nationalize the company it was placed under a government commissioners using an almost identical legal construction to one we see here. It was eventually transferred to the management of a joint Hungarian-Soviet Company,… Read more »
Johnny Boy
Guest

Paul: this is exactly my point. The re-formulated question was directed to Eva, not you (sorry it was ambiguous). She sided with MAL Zrt. despite the facts are not known. As for who would do this and with what mind, I leave that to you.

Eva S. Balogh
Guest

pgyzs: “I’m concerned about this rushed lex-Mal, not because implications about the current matter, but because its rather vague definition of what might constitute grounds for government takeover in the future.”
You’re not alone. Too sweeping, too vague and it gives total control to the state to take over private property at will under ill-defined circumstances.

Eva S. Balogh
Guest

Gábor: “”A Tények hétfő esti adásában arról számolt be, hogy a cégvezető meggyanúsításának alapja az hogy: “egy 2009-ben Bakonyi Zoltán által is aláírt katasztrófa tervben nincs benne, hogy mit kell csinálni ilyen esetben, vagyis ha átszakadna gát”. We are not speaking about recompensations etc. but criminal offence with a potential sentence of many years in jail.”
I discussed this with an American friend with legal training. He was stunned.

Eva S. Balogh
Guest

Johnny Boy: “Paul: this is exactly my point. The re-formulated question was directed to Eva, not you (sorry it was ambiguous). She sided with MAL Zrt.”
Until now I was hoping that you’re just unfamiliar with this particular grammatical construction. But now I see that you are purposely misconstrue my position.

whoever
Guest

‘Nor do I see any great evidence that Hungarians are any worse, or any better workers than those anywhere else. ‘
I’m not sure whether you’ve ever been in a ‘normal’ Hungarian workplace. There are no academic studies that I can point to, but my own personal experience and that of many other acquaintances would provide some evidence that there is often a serious lack of initiative and motivation, and a culture of slipshod work. Much is done for show and effect, rather than delivery.

whoever
Guest

I also feel the overall proof will be in the pudding: to what extent do the paths of the Czech Republic/Poland and Hungary continue to diverge? We can see a large gap emerging, one which is simply evident from urban environments and levels of productivity.

Mark
Guest
whoever: “there is often a serious lack of initiative and motivation, and a culture of slipshod work. Much is done for show and effect, rather than delivery.” This is actually a rather good description of the British local authority office I once had a summer job in many years ago. whoever: “We can see a large gap emerging, one which is simply evident from urban environments and levels of productivity.” I think you are making an error in assuming that productivity really has a great deal to do with how hard people work. If you think about the problem globally, and apply an objective measure to how hard someone works, i.e. the amount of energy a person expends in the course of a day satisfying material needs, then you will find that the people who work the hardest, actually have the lowest total productivity. Productivity is actually a function of how far a society’s businesses, its institutions, technologies, and social practices support people to be productive. It is emphatically not primarily about the diligence, creativity and or even entrepreneurial spirit of individuals. Now I know that a lot of individualistic ideology tells us this is not the case, but many… Read more »
Mark
Guest

“though I should note that Hungary had a lower GDP than what is now the Czech Republic in 1989, and a higher one than Poland – and this is still the case in 2010”
Just to note – I’m talking here about GDP per capita at PPP

Johnny Boy
Guest

No, your position is clear and obvious: you believe that MAL Zrt. did follow the regulations. This is clear from your whole post. I was just asking what makes you believe this.

whoever
Guest

‘This is actually a rather good description of the British local authority office I once had a summer job in many years ago.’
Yes, as isolated instances, it happens everywhere. But the power of patronage in Hungary seems to blend in with the ‘black’ and ‘grey’ economy, resulting in a very informal, casual approach – not only to employment, but also to the actual work itself. Time and time again I have seen slapdash work and obvious bungling, and then other instances where bungling has been linked with some dodgy deal or another.
Suffice to say, that I suspect policy failure is interwoven with a culture which is paranoid of confrontation – and even of correction – and fails to reward initiative. It’s from this that we can explain the low levels of adult learning, for example. The tragedy for the current government is that the more ‘Hungarian’ the business, the worse it is often run. The few remaining retail 100% Magyar chains are notorious for long-hours, casualisation, cash-in-hand in payment and exploitation. And the stuff they sell is often rubbish.
Foreign exploitation vs local incompetence. What a choice, and what a future.

Leo
Guest
Johnny Boy wrote: “Ok Paul, if you intend to split hairs, let me re-formulate my question: what makes you side with MAL Zrt. on this case?” I could not help my imagination to picture Johnny Boy as an AVH officer interrogating poor Paul. To avert just such a scene we need the rule of law, and that is of course the subject here. Does special state supervision of MAL and the arrest of its director agree with the rule of law or not? Or is it just another aspect of Fidesz´s populism? Now to me it seems to be in the nature of things that people try to make as much money as possible without caring much for anything else. And somehow I expect that to be especially true for a company like MAL (as a westerner with Hungarian in-laws I find it a relieve that MAL is at least a local company). So, if I have my doubts, it´s not because of any sympathy for MAL. But for now we have little to go on. Let´s wait and see. The issue of renationalisation has of course a few other aspects. There is no rule that says a state company… Read more »
Mark
Guest
whoever: “But the power of patronage in Hungary seems to blend in with the ‘black’ and ‘grey’ economy, resulting in a very informal, casual approach – not only to employment, but also to the actual work itself …… I suspect policy failure is interwoven with a culture which is paranoid of confrontation – and even of correction – and fails to reward initiative.” I absolutely agree with everything you write here. Some of these issues are structural and institutional. But issues of work motivation and performance are generally the product of poor leadership. Those at the top fail to lead by example; they fail to set goals and expectations, so that their staff do not understand why they are there – except to pick up their pay cheque; and they fail to reward initiative and ability, instead too often seeing it as a challenge to established patterns of hierarchy. In Hungary this is exacerbated by the neo-feudal culture of the middle class, where a senior position is seen not as a responsibility, but a sinecure, and an opportunity to distribute patronage without any reference to the broader interested. Howver, I do think that this culture too has been greatly entrenched… Read more »
Mark
Guest
Leo: “There is no rule that says a state company has more respect for the environment that a private one.” This is rather important point that has been lost. The dyke was built in the 1980s, when the company was state owned. There is a lot of evidence in the archival records of industrial companies that state ownership under socialism gave managements considerable leeway to ignore public health and environmental concerns to an extent that is quite breathtaking. The dyke broke under private ownership. Furthermore, the nationalization, or rather the taking into state management of the company is a strange response to this incident. After all, I have yet to hear a clear argument as to why this step will do anything to ease this situation. It may be retributive, but then a requirement to pay full compensation and a punitive fine are the best ways of achieving this. I don’t think anyone has realized that under EU law the Hungarian government will have to pay the shareholders compensation for doing this – and that compensation payment will most likely exceed any fines. And, given that the end result is likely to be the European Court telling the Hungarian taxpayer… Read more »
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