The tenth anniversary: Hungary and the European Union

It was ten years ago that ten new countries were admitted to the family of the European Union: Lithuania, Poland, Slovakia, Latvia, Estonia, Czech Republic, Malta, Hungary, Slovenia, and Cyprus. The Hungarians were somewhat disappointed because they felt that Hungary was better prepared for membership than some of the others and had hoped that the admission would not be wholesale, that Hungary would be handled differently from the rest.

Since then an incredible amount of money has arrived in Hungary from Brussels, but unlike some other countries in the region Hungary has not made good use of this largesse. To make the size of the contribution easier to grasp, 16 Metro4s could have been built from the EU monies. Or, between 2004 and 2013 the money Hungary received amounted to a gift of half a million forints for every citizen of the country. Or, as someone put it, Hungary received 2 billion forints every day for the last ten years from the Union. In forints, Hungary received 6.2 trillion forints that went straight into the budget while another 2.1 trillion came in some other form of financial assistance. In the last four years 90% of all government investment came from the European Union. Yet there is little to show for it.

The results are especially disappointing if we compare Hungary to other countries in the region. In 2004 Hungary’s economic advancement measured in GDP per capita was 63% of the EU average. Today that figure is 67%, only 4% higher. Slovakia, on the other hand, during the same period managed to gain 20% and now stands at 77% of the EU average. The very low Hungarian wages have also been slow to rise. Ten years ago the average wage was 93,000 forints. It is now 151,000. But in terms of real wages that is only a 12% rise. The number of jobs has grown by 38,000–only 1% more jobs than in 2004.

According to The Economist there are four clear winners among the new member states: Lithuania, Latvia, Poland, and Slovakia. One has only to look at the IMF chart below to see how badly the Hungarian economy has done in the last ten years despite EU subsidies that were the highest, given the size of the population, of any country in the region:

10-year EU tagsagThe Bruegel Institute, a European think tank specializing in economics, published a study yesterday entitled “10 years EU enlargement anniversary: Waltzing past Vienna.” According to the study, measured in terms of purchasing power Warsaw, Bratislava and Prague now have a higher GDP per capita than Vienna. Budapest failed to surpass Vienna, although it is not too far behind.

Enikő Győri, the person responsible for Hungary’s dealings with the European Union (I don’t envy the woman), naturally puts a better spin on the state of affairs. She emphasizes that Hungary’s EU membership is “an unqualified success.” I guess she is right if we look at the inflows, but the story is different when we look at the meager results. She claims that in the last ten years Hungary managed to increase its GDP by at least 10% and its economic growth by 1.2% . These figures apparently come from an unnamed Belgian research institute. She had to admit, however, that on the basis of purchasing power Hungary in 2004 was in second place, just behind the Czech Republic, whereas by 2014 both Slovakia and Poland managed to surpass Hungary. The Washington Post described the last ten years in countries such as Poland as a period of “galloping growth.” That was certainly not the case in Hungary.

The tenth anniversary came and went, but there was no commemoration of Hungary’s ten years in the European Union. Magyar Narancs published a very, very short article. It had only a headline and a “picture.” The headline read: “A telling picture of the celebrations of the tenth anniversary.” And underneath was an empty picture frame. ATV collected a list of comments by politicians from both camps. Those from Viktor Orbán’s side were uniformly negative. We must keep in mind, however, that the prime minister said in his victory speech that the election results showed that Hungarians want to stay in the European Union, albeit with a strong national government. There is no alternative to the European Union.

The Orbán faithful try to follow his lead, although it is clear that they find it difficult to be enthusiastic. Gábor Stier in an opinion piece in Magyar Nemzet does write that “we are on the right path,” but he bemoans the lack of “solidarity” in the Union. I don’t know how many more billions of euros would be enough for Stier to feel true solidarity coming from the richer members of the Union. And naturally, he is uncomfortable with the “crisis of values” the Union allegedly suffers from. But in the end, he even risks saying that the “rules of the club are a disciplinary force that keeps Hungary on the straight and narrow.”

Before we get too optimistic about future relations between the Orbán government and the European Union we might want to take a look at a headline in today’s Magyar Nemzet: “The European Union wants to shove dangerous honey down our throat.” Here we go again!

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petofi
Guest

“The European Union wants to shove dangerous honey down our throat.”

What else?

The Russians control Orban and Orban controls the Hungarian government.
Sic transit Hungaricum.

Minusio
Guest
“The Hungarians were somewhat disappointed because they felt that Hungary was better prepared for membership than some of the others and had hoped that the admission would not be wholesale, that Hungary would be handled differently from the rest.” How’s that? It’s the first time I hear about this hope or expectation. As far as I know, Orbán knew the EU administration in Brussels quite well, at least during his first premiership (which everybody seems to black out these days), but probably even earlier – when he was still a liberal. Rumor has it that he was involved in preparing Hungary’s accession documentation. What is true is that of all the ten new EU members Hungary had a “perceived” good-will bonus in Western countries. Many people knew Budapest as a favourite and sparkling conference venue and liked the experience – even before 1989. The Germans have not forgotten to this day how Gyula Horn helped to open the iron curtain for East Germans, thus beginning the process of German reunification. Most people abroad – even Hungarian expats – have no idea how to get unbiased (or at least: multi-sourced) information about today’s Hungary. What we know is that since 2010,… Read more »
Member

The Fidesz government of Hungary in deed celebrated the 10th Anniversary with the following posters:
European Union Elections
May 25th
Let send a message to Brussels:
Respect to Hungarians!
Fidesz

comment image

Yes in fact Orban said “in his victory speech that the election results showed that Hungarians want to stay in the European Union, albeit with a strong national government. There is no alternative to the European Union.” That is part of his peacock dance. He also said at some point “don to listen what I say in order to get elected”. Viktor Orban is no man of his words, but a man of his actions. He welcomed the anti-union march (and likely Fidesz financed it), and he also welcomed the threatening poem of Fidesz’ opposition.

Fever
Guest

The EU is a fantastic target for hatred. It is not politically incorrect to hate it like the Jews or the Gipsies.

But most people just need to have their five minutes of daily hatred in Hungary. And the EU is a great and willing target. They don’t care and now anyway many people hate it all over Europe, so is it is nothing strange.

I wonder how DK’s EU-loving campaign will fare. Most people do not love the EU, despite the investments. There is no obligation to love an entity which lavishes you with money but otherwise does not show up with politicians no EU politicians comes to Hungary to cut the ribbons.

It’s like we should love the Chinese because they supply us with cheap shoes and that is good for us because we can by more from the same salary. It does not work like that.

People do not like to love foreigners in exchange for money.

Member

OT
The Press Office of Fidesz released the following statement regarding the Nazi monument on Szbadsag Ter. “After the the extreme left the extreme right has also marched out to the Szabadsag Ter, in order to stir up trouble”
Please take a look on the “Hungarian extremist left” Orban needs to protect Hungary from. The photo was taken at one of the occasions when this extremists from the left were stirring up trouble at the location Fidesz is referring to:
comment image
No kidding Orban needs the TEK!

Second illustration. Extreme leftists chasing Orban.

Member
Max
Guest

Mrs Győri’s state secretariat had organised a conference on 28-30 May in the Castle district to analyse the country’s tenth anniversary of EU membership. Political bigwigs, like Guido Westerwelle, Radek Sikorski and Mikulas Dzurinda attended. But as the foreign ministry was careful not to advertise the conference properly, mainly ministry officials attended, without any political message offered subsequently to the general public.

The central bank goes even further. It celebrates the EU accession by hostng the most famous EU-sceptic politician of Central Europe. The event is co-organised the Hungarian Institute of International Affairs, a think tank of the foreign ministry!!

I doubt there is any central bank in the 28 member states, which would consider to host a lecture wth such a revolting title. Remember, according to Hungary’s accession treaty the country is obliged to introduce the euro…

http://www.kulugyiintezet.hu/events/default.asp?id=ZWUTPW

latefor
Guest

@Fever – “The EU is a fantastic target for hatred. It is not politically incorrect to hate it like the Jews or the Gipsies.
But most people just need to have their five minutes of daily hatred in Hungary.”

Speak for yourself only!
After reading your post, I’ve come to the realization that in the future I will have a cross in one hand and garlic (just to be sure) in the other to protect myself from “bad” spirits before I read the comments on this blog. Hallelujah! LOVE ALWAYS WINS!

Max
Guest

Correction: the conference took place on 28-30 April

Koller
Guest
Oneill: I only tried to reflect how Fidesz thinks. I know how these guys think, believe me, I have quite substantial relevant knowledge. 75% is the estimation for the combined Fidesz/Jobbik group. Of course Fidesz did not want to risk that from that amount Jobbik could also utilize votes. Moreover, Fidesz could very efficiently operate its get out the vote machinery in Romania or Serbia in the shadows but that just would have been very difficult in the UK or Germany or Austria or Belgium. Politics is very significantly an identity issue, because this is what young people (though as well as older ones) are looking for when they are becoming adults. Politics is not about policy issues. Smart people hoped that it will be like that, but this is not so even in Western-Europe, but especially not in Hungary. In addition, Fideszniks argue that the very first, often implicit step is to decide whether you are a right wing or a left wing person. Once you decided that you go looking for your party. I am not sure, but this is how they reckon. In any case, the left in Hungary has been absolutely unable to provide the younger… Read more »
fever
Guest

@latefor

Please try to differentiate the message from the messenger.

I don’t need the hatred, but I see it every day, I could list all those action gratuite type mini aggressions I encounter on any single day. People apparently need to hate and they need a target, a symbol for such hatred, to vent their frustration.

Orwell saw it perfectly and people haven’t changed much since 1948, especially when the economy has been languishing in Hungary for some 7-8 years now.

I too like to be cheerful, but we are not the majority or the median voter. The readers of this blog are a tiny minority who are absolutely not representative of the majority population.

Bob34
Guest

OT:

Apparently Jobbik receives a lot of money from the Iranians too.

By the way does anyone know which is the private school network which is financed by Jobbik (ie. by Russians, Iranians and Turkish)?

Pretty interesting article.

Of course if Jobbik distributes for example its news letter in 2 millon copies per month, then why does not the Hungarian left do similar things. Or why do not their help the local civilian guards as Jobbik does? It’s not like Jobbik has a patent on campaign methods.

http://nol.hu/belfold/titokzatos-kapcsolatok-1459825

Istvan
Guest
Eva in April posted an essay by Zoltán Pogátsa who is an economist and teaches at the University of West Hungary. I have subsequently read some his work and agree with him that “Twenty years after the transition from communism, the Central and Eastern European (CEE) region is disheartened. The much heralded GDP convergence with Western Europe conceals a bleak picture. For over twenty years employment levels across the region have remained far lower than in Western Europe, while the talented and most dynamic are leaving.” It isn’t that things are just so bad in Hungary, it is that they’d are simply not good all over Central Europe. When Pogátsa looks at the entire CEE, a third to a half of citizens live below the subsistence minimum. Middle class incomes in the region are equal to the bottom 10 percent of wages in Western Europe. Regional educational systems underperform. Middle classes can be estimated to constitute less than 10 percent of voters. To point out the relative failure of the Hungarian transition is to ignore how all of Central Europe has been used as a source of surplus lower wage labor for Western Europe and in the case of the… Read more »
Member

OT So sorry that I continue with this “conversation” even though we had two previous Blog entries regarding this, but I feel it is important that we keep this theme somehow going. Orban is obviously counting on the who thing slowly dying away, the monument opens and that will be that. THere are still daily protests going on but it is not “news” any more, just like Rogan’s millions, or the tobacco shops, the land deals…..
Alice Fried is apparently the threat that Fidesz refers to through its communication office as threat to “stir up trouble”. She is from the “extreme left”, one of the protester who was charged by the Prosecutor. She is the sole survivor of the holocaust from her family. In protest of the nazi monument Orban / Fidesz is putting up to commemorate not only the survivors but those who are responsible for Fried’s family’s death, she spray painted on the plastic that covers the site “I survived the Shoah…”
Look how the extreme left looks like according to the current Hungarian government:

petofi
Guest

@latefor

“I will have a cross in one hand and garlic (just to be sure) in the other to protect myself…”

Ahem. Yes, another true believer in Orban’s “Keresteny Magyarorszag”.

So then, “Love”…did you say “Love”–only for, and by, and of…Christians, right?

Try contemplating your navel, latefor, and discover what you’re really about–

An
Guest

Bob34: “Apparently Jobbik receives a lot of money from the Iranians too.
………
Of course if Jobbik distributes for example its news letter in 2 millon copies per month, then why does not the Hungarian left do similar things.”

Maybe the left doesn’t have the financing for aggressive campaigning, like distributing print materials in the millions, pay trolls to spread their ideology on the Internet, plant their people in student organizations, etc.

Not to mention there is no “left” in the sense as there is Jobbik. The left is a collection of different and competing parties, some are with differing ideologies (left, liberal, green, pro-capitalists, anti-capitalist)

petofi
Guest

Financing…

So the setup is this:

—Orban and Fidesz steal the government blind and therefore have limitless financing;

–Jobbik gets tons of financing from Russia and Iran;

–the opposition–if they were to get money from abroad–would be attacked vociferously 14 ways to Sunday about ‘foreigners influencing Hugarian affairs’.

**Please note that not one word has been shed about the foreign financial support for Jobbik.

petofi
Guest

In attempting to attain that sparkling, loving attitude (a la latefor) I’m trying to count out the recognizable benefits of four years of Orban rule. I’ve come up with one: I like the new yellow
covering for taxicabs. I’m all for it. But in discussing this with a driver, I’ve discovered that nothing has been done to control unlicensed cabs or drivers and their outrageous overcharges.
Whatever city investigators exist, only monitor the licensed cabs because they’re afraid of being assaulted by the illegals.

Such is the very nature of Fidesz ‘advancement’…

Kirsten
Guest
Istvan: “To point out the relative failure of the Hungarian transition is to ignore how all of Central Europe has been used as a source of surplus lower wage labor for Western Europe and in the case of the Poles cheap skilled trades workers for the USA too.” The path that was taken in 1990 was not independent from the situation that prevailed in 1989 and the ideas that were around at that time about what should be done. Economic policies: At that time, the countries had perhaps some GDP per capita (at that time called net material product and calculated according to other methodology than GDP) that was higher than in the mid-1990s, after the transition crisis. But: what was the composition of this “GDP”, how much were these products asked for (I think that one very pointed example of one professor of mine was the value produced by professors for the history of the Communist party, but that is of course an extreme example). Was that really something that could have continued were it not for the Comecon? Plainly, who would buy all the Ikarus buses? The Communist economies – even if they on paper led to some… Read more »
petofi
Guest

Hungarian Greed and Self-Promotion was on view immediately during the 1989 regime change.
If we but think back, the right, public-spirited way was to study the various ways in which to change the government and constitution. To my mind, inviting foreign public policy experts to advise the government would’ve been the right way to go. But the Hungarian politicians–both
national and local–couldn’t wait to divvy up the wealth.

I can think of two things that were mandatory. One, the amalgamation of Budapest’s 23 districts into four or five, cutting all the surplus bureaucracy. Along with this, the privatization of apartments should have involved the passing to invididual buildings the storefronts that they possessed (rather than privatizing them, usually to district friends etc.). Second, the national
government should’ve been no more than 150 members with mandatory probity measures for ministers and top civil servants.

And of course, the 2/3 provision was putting a bomb in the hands of children–it was and is ridiculous, with the Felcsutian showing exactly how one can cannibalize laws and institutions ‘legally’.

Istvan
Guest

Kristen my reading of Pogatsa is that Hungary and other Central European states are in a low wage dependency trap in relation to the economic engines of the EU. It is clearly not a classic imperial relationship, but it’s unequal to be sure and under the exiting rules of the game Hungary will not catch up in terms of standard of living either. I also highly recommend his book titled The Political Economy of the Greek Crisis (2014) there are lessons to be applied from that situation to the situation of Hungary.

I think the dynamics of the unequal relationship with the west are a driving force in the rise of the Jobbik and also the collapse of the liberal/left. Things of course could be much worse, Hungary and other Central European states, with the possible exception of the Ukraine, have not descended into the hell like situation of Mexico where thousands die in gang wars each year and the authority of the central state is often in question. Thanks Kristen for your thoughtful comments.

Kirsten
Guest
Istvan, I believe that such interpretation of the situation is already making the identification of strategies to raise wages difficult. Greece is for me more an example for a government and state bureaucracy that is preventing a country from growing. Western investment was not too large, the country has not even been very industrialised (certainly not in comparison with Hungary in terms of the importance of industry for GDP). It has borrowed money in the West, to pay for social peace and transfer money to the many beneficiaries including “networks” without being able to collect sufficient taxes (including because of tax breaks for some “strategic” businesses), and when it became impossible to further raise money and devalue the currency because of euro membership (which Greece pushed for, not the other member states), it got into trouble. I do not want to suggest that the crisis strategies were the most smart conceivable but an interpretation that rests only on some “cheap labour” and a “dependency trap” in Greece and that does not see how ineffective Greek government is in view of the many vested interests quite a convenient short-cut. (It is certainly not some “dependency strategy” that led to the outcome… Read more »
latefor
Guest

@Petofi- “So then, “Love”…did you say “Love”–only for, and by, and of…Christians, right?
Try contemplating your navel, latefor, and discover what you’re really about–”

LOVE is for everybody!
As far as my self discovery is concerned, it’s all in my recently released book available on Amazon.com/kindle, titled: Arty, Crafty, Nasty

cheshire cat
Guest

Istvan & Kirsten

very informative and enjoyable discussion, thank you!

(with some answers to Wolfgang’s questions yesterday, too)

cheshire cat
Guest

Kirsten

“… the post-Communist countries do share a lot of the difficulties of transition, but Hungary has given up the goal of catching-up altogether. Instead of trying harder and searching for ways how to bridge the gap, the “West” is evil and “subsistence” wages are the norm.”

how very true!

Istvan
Guest
Kristen from the perspective of US investment some of it can be developmental for the long run and other investment is what can be called predatory. China has in the last 20 years tried to force investments to be developmental, effectively generating a small Chinese middle class. and a significant wealthy class whose children are now running around all over Chicago in sports cars while attending the University of Chicago and other institutions.Their model is a form of state capitalism, South Korea to be honest has a similar policy but with less state intervention. Mexico has no ability to contain predatory US investments because of the North American free trade agreement and their internal development has been deeply impacted. A great number of supposedly US made autos are assembled with parts made in Mexico including engines. These factories are very high tech but the engineers and computer programers are all in Detroit. The Mexican workers are relatively well paid drones as are their Mexican factory foremen who live in a society under siege near the Us border. There is free trade and then there is beneficial trade, In some respects the EU prohibits Hungary from leveraging its labor pool like… Read more »
Kirsten
Guest
Istvan: “American investors are not bad people but their role is to make money not give money away to develop other nations.” What are the possibilities then of countries that wish to “develop” from a post-Communist level? You inherit: some level of education (quite good in technical subjects, underdeveloped in areas related to government and society, so how to manage society in the absence of directives and pressures), some capital stock (most often quite run-down, except perhaps in some prestige objects, public infrastructure in run-down shape, housing if not privately repaired also in dire need of renovation, in industry depending on branch but most often well below the level in Western industrial peers), agriculture either organised in large, more or less ineffective industrial units, or in small family subsistence farms such as in Poland, a quite substantial amount of economic activity running beyond the official economy, in some cases governments that still relied on Western credit to finance the state, and a society that feels that it should now receive some reward for the years with undeservedly small income from official activities. In the more developed Western economies in the meantime, technological progress made their products in some way always… Read more »
Kirsten
Guest

And some more numbers: GDP per capita in euro 1995 and 2013:

euro area of 12 countries (the founding members plus Greece) 18.400 – 29.200 (+59 %)

Bulgaria 1.200 – 5.500 (+358 %)
Czech R 4.300 – 14.200 (+231 %)
Estonia 2.000 – 13.800 (+590 %)
Latvia 1.500 – 11.600 (+673 %)
Lithuania 1.400 – 11.700 (+735 %)
Hungary 3.400 – 9.900 (+191 %)
Poland 2.800 – 10.100 (+261 %)
Slovenia 8.100 – 17.100 (+111 %)
Slovakia 2.800 – 13.300 (+375 %).

roberta
Guest

Kristen: the numbers are average, obviously. The numbers cannot reflect – among others – the regional disparities. The problem is not necessarily Hungary’s lagging behind its peers, but that – given for example the lowest work force participation among these countries – a huge number of people live from a fraction of the amount the GDP figures would indicate and these people have zero hope that their situation will change and, what is worse, they know that.

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