It doesn't happen too often that one reads an interesting story in a newspaper (Origo) about the total chaos that reigns in an important government office and one can say: "Oh, yes, I know all about this." But this is what happened to me yesterday.
I have a friend who has a friend who has been telling my friend incredible stories about what's going on in an important agency she is working for. According to her, the office's 230 employees have absolutely nothing to do because the government decided to "reorganize" it, and the new undersecretary in charge of this office didn't have enough time to figure out what to do with either the office or the employees. For almost two months now–the reorganization took place on January 1, 2011–the highly qualified economists receive their salaries but because of lack of work spend their time surfing the net, chit-chatting, and worrying about their futures. According to the people who were willing to talk, they wouldn't be missed even if they didn't show up, but they are too conscientious to skip work entirely.
That would be bad enough in any office, but this particular agency is a very important one. Or at least it was very important until the Orbán government decided to "reorganize" it. It is the former Hungarian Investment and Trade Development Agency (ITD Hungary) that was founded in 1993 by the Hungarian Ministry of Economy and Transport (today György Matolcsy's Ministry of National Economy) to help implement the government's investment and trade promotion policies. It functioned as an independent corporation and was not part of the state apparatus.
This is a large organization with eighteen regional offices, and through the embassies' commercial attachés it is present in forty-three different countries. Its job is to entice foreign investors to Hungary. Until December 31, 2010, ITD Hungary Zrt. operated as the Hungarian government's investment and trade development agency. But then they decided to "nationalize" it. On paper the agency's functions have been taken over by a new department, Nemzeti Külgazdasági Hivatal (NKH; National Foreign Economy Office). The reality is something else.
The agency's former "owner" through the Magyar Fejlesztési Bank (Hungarian Development Bank) became the new National Development Ministry of Tamás Fellegi. But with the reorganization of ITD, the new National Foreign Economy Office ended up in György Matolcsy's ministry. ITD is gone and the new NKH has nothing to do. That is the upshot of it. It also means, of course, that Hungary's efforts at promoting foreign trade have come to a halt. ITD at the time of the changeover was busy with fifty different projects which cannot move forward. I can well imagine what the foreign partners think of all this.
If I understand it right, the problem is that the National Development Ministry didn't do anything about moving ITD's assets and employees over to Matolcsy's ministry. The only thing that has happened up to date is that 150 employees received a letter in which they were informed that NKH is ready to take them over. On what basis these 150 people were chosen no one knows. It is also not at all clear what will happen to the rest of the employees. But even those who received an offer are not exactly eager. As government employees their pay will be considerably lower than before when they were not in the civil service. In any case, everybody is looking for a job. Even the higher-ups are doing the same, even the ones the Fidesz government appointed to head the new "phantom" agency.
During the long days when they are not surfing or looking for jobs the employees are trying to figure out what exactly is going on. According to rumors Zsolt Becsey, undersecretary in charge of foreign trade in Matolcsy's ministry, is too busy to bother with such trivial matters as the fate of the agency. He also has something to do with the EU presidency and hence has no time to take care of the "ex lex" status of ITD/NKH.
The situation is no better in the regional offices. When Origo's journalist tried to inquire from the spokesmen of these regional agencies, he was told that "they are strictly forbidden to give out any information" to the media. One of them laconically said: "The only thing I can say is that the situation is the same as in Budapest." These regional centers didn't receive any information about their fate. But apparently there is a document signed by György Matolcsy at the end of January stating that instead of eighteen regional offices there will be only six: in Győr, Szeged, Debrecen, Miskolc, Pécs, and Székesfehérvár.
Origo talked to the president of the agency, but she knew nothing. The reporter visited Fellegi's ministry and learned that it is Matolcsy's ministry who is in charge and therefore all questions should be addressed to that ministry. At the time the article was written no answer had come from Matolcsy's ministry to Origo's questions concerning ITD/NKH.
This is a very serious situation. Hungary needs foreign investment, and the office that is supposed to deal with foreign trade is not even set up yet. Foreign investors already had a cold shower or two with the Orbán government's decision to levy extra taxes on them. You may recall that the CEO of Deutsche Telekom was especially upset. He was in fact so upset that Deutsche Telekom's new financial service center that will employ 500 people will be established in Bratislava and not in Hungary.
Between the total chaos in the foreign trade department and the extra taxes on foreign companies there is likely to be a negative effect on foreign investment in Hungary. It will be interesting to watch the statistics.