Category Archives: Hungary

The Orbán government is determined: it alone will decide on the state of terror threat

At the moment the Orbán government has two serious challenges. One is its absolute determination to introduce an amendment to the constitution that would authorize the government to unilaterally declare a “state of terror threat” that would lead to draconian limitations of the basic rights of citizens for sixty days and that could be extended indefinitely. Since the governing party, Fidesz-KDNP, doesn’t have the requisite two-thirds majority in parliament to pass a constitutional amendment, it would need the cooperation of the opposition parties. Most are, however, suspicious of the real intent of this amendment.

The other headache for the government is the unexpected outburst of discontent among the nation’s teachers, who are being supported by students and parents. Demonstrations and strikes may be forthcoming, not just by the teachers but also by the railroad workers and bus drivers.

Today Viktor Orbán devoted the lion’s share of his usual Friday morning interview to these two challenges.

In a way, the constitutional amendment issue is the easier of the two to solve. Only a few members of parliament need to be persuaded or bribed to vote with the Fidesz majority and the problem will go away. Dealing with tens of thousands of teachers and other dissatisfied state employees is a much more difficult proposition. So it’s no wonder that Viktor Orbán began his interview with the teachers’ demand to undo the fundamental changes the government has made in the educational system since 2010.

Yet here I would like to talk about the amendment, because from the point of view of Hungarian democracy it is a potential threat to the very structure of governance as well as to human rights. I detailed its key provisions earlier.

So, let’s see where things stand with the amendment, whose passage seems to be of tremendous importance to the government. Its rigid insistence on the exclusive right of the government to declare a state of terror threat is frightening to those who are suspicious of the government’s intentions, especially since the word “terrorism” has been bandied about by government spokesmen without any justification. Yet Viktor Orbán refuses to yield any say in the matter to parliament. In the last few days various Fidesz politicians have declared that the government will submit the proposal unaltered.

At first it looked as if the opposition was united in opposing the measure, but two days ago Ádám Mirkóczki, Jobbik’s spokesman, casually remarked at a press conference that his party would agree to allow the government to declare a state of emergency for three days. After three days, he said, Jobbik would insist on parliamentary approval for its extension by a fourth-fifths majority of parliament.

Mirkóczki’s remarks must have sounded encouraging, so the Orbán government decided to pursue the possibility of shortening the duration of a state of emergency as a promising basis for negotiations. In an interview with Die Presse Gergely Gulyás, the Fidesz politician in charge of shepherding the amendment through parliament, stated that as far as the government is concerned even fifteen days may be enough. Or, if necessary, Jobbik and Fidesz could agree on something between these two lengths of time. Gulyás also revealed in the same interview that the government has most likely been having private conversations with András Schiffer, co-chair of LMP. In fact, he expressed his belief that if there is an agreement it will be between the government and LMP.

So I suspect that the government will have the necessary votes to pass the odious bill, not for a sixty-day duration but for a shorter length of time which, I assume, could be extended if necessary. This is very bad news for Hungarian democracy.

This morning the Hungarian media was in turmoil when MTVA’s Híradó and Magyar Idők, two government publications, came out with the following headline, accompanying their articles on Viktor Orbán’s interview this morning: “Orbán: Preparation is underway for an attack against the Hungarian people.” In no time dozens of publications asserted that Hungary is under a terror threat at this very moment. About an hour later the journalists discovered their mistake. What Orbán actually said was that the “state of terror threat” can be declared “if there is credible information about the preparation of a terror attack.” As Népszabadság rightly pointed out, this is the first time that anyone from the government had “attempted to define the state of terror threat.”

Magyar Idők misinforms public about alleged terror threat

Magyar Idők misinforms public about an alleged terror threat

As we know from opposition members of the parliamentary committee on national security, at no time did Terrorelhárítási Központ (TEK), the police, or the intelligence services ever report any terror threat. When asked, they always answered that they have no such information. Now, the MSZP chairman of the committee, Zsolt Molnár, will specifically ask the services whether the terror threat has grown lately or not. If it has, why didn’t they inform the members of the committee?

I think the question is a legitimate one: why does the Orbán government find this amendment so crucial? Rumors are flying in Budapest about possible reasons that have nothing to do with terrorism. One provision currently in the amendment might be of some importance to the government: “the prohibition of organizing events and demonstrations in public spaces.” Nothing could stop the government from declaring a state of terror threat if it was itself challenged by mass demonstrations or strikes. Imposing a curfew could also come in handy in case of disturbances. Closing the borders might be useful. Or contact with foreign journalists in case of trouble. I know some people might say that such a scenario is unlikely. Maybe, but this government is paranoid. So, I wouldn’t put it past Viktor Orbán and his minions to resort to extreme measures if they felt threatened. After all, we just heard that the chairman of the central bank, in addition to his protection by the ordinary police force, just created a new guard and ordered 112 weapons and 200,000 rounds of ammunition.

February 5, 2016

Lázár struggles to rationalize axing civil servants

Yesterday I wrote briefly about the changes the government is planning to introduce in the structure of the government bureaucracy by either eliminating or amalgamating 73 ancillary institutions that have served the ministries. I suspect that in this case the real reason for streamlining is not so much saving money or making the system more efficient but rather depriving these think tanks of their independence.

There has, however, been talk lately about large-scale dismissals of government employees. At the end of January Nándor Csepreghy, deputy to János Lázár in the prime minister’s office, threw out some wild numbers. In an interview on ATV he put forth the possibility of letting go 150,000 public employees when the time is ripe for such scaling down of the government bureaucracy. This is no more than irresponsible talk. Given the present centralized nature of the Hungarian labor force it is impossible to imagine a situation in which the state institutions can let 150,000 public employees go and still keep functioning.

Today János Lázár, during his usual Thursday press conference nicknamed “government info,” was less draconian. He talked about the dismissal of 6,000 civil servants. I don’t know who is being targeted. Only a week ago we heard that the “rationalization” of the ancillary institutions would involve 6,000 government officials. Does this mean that between now and the beginning of July 6,000 or 12,000 people will lose their jobs? The latter seems to be the case. Lázár talked about civil servants who currently work in the ministries and in the offices of the 175 “járás[ok],” smaller territorial units within the counties. He claimed that these government institutions employ altogether 30,000 people. If the government gets rid of 6,000 of them, this would mean a 20% personnel reduction. Considering that before 2013 there were neither “járások” nor “járási hivatalok” and that three years later serious job cuts have to take place, one wonders about the wisdom of setting up such offices in the first place.

kicked out

Before we try to make sense of Lázár’s figures we must distinguish among civil servants (köztisztviselők), public employees (közalkalmazottak), and government officials (kormánytisztviselők). I must admit that the distinction between civil servants and government officials is not very clear to me. But, judging from the official numbers provided by the Hungarian Central Statistical Office and the numbers mentioned by Lázár, I assume that he was talking about the civil service corps that last year had almost 35,000 members. The number of government officials is much larger than that. According to the last official statistics (September 2015) they numbered 78,600. So, if they axe 12,000 (and here I assume that employees of the ancillary institutions are considered to be government officials), this would be about a 10% reduction in the number of government officials and civil servants.

When Lázár tried to explain why it was necessary to reduce the number of civil servants and government officials and compared Hungarian figures to those of other countries in Europe, he managed to confuse matters–most likely intentionally. He spoke not about civil servants and government officials but about public employees. The largest group of people who receive their salaries from the government are the public employees, most of whom work in education and healthcare. They numbered 854,100 at the end of 2014. Healthcare and social services employed 302,000 people, and 227,400 people worked in educational institutions.

Lázár’s misleading explanation went as follows. The number of public employees is far too high in Hungary. They constitute 20% of the total workforce whereas, according to him, the European average is only 10%. That is too high a number, and the resultant bureaucracy decreases competitiveness. Every month the government pays the salaries of about 1 million people out of the 4.2 million wage earners.  According to him, there is a direct connection between these figures and Hungary’s lagging competitiveness.

Here Lázár was talking about public employees, who include doctors, nurses, social workers, schoolteachers, and university faculty members. Their ranks are not bloated. In fact, there are too few doctors and nurses in Hungary. Lázár was trying to justify the dismissal of civil servants and government officials by pointing to the number of public employees, some of whom only recently became state employees by government fiat.

But that’s not the only problem. Lázár’s claim that the percentage of public employees in the workforce is much higher in Hungary than in other European countries is simply not true, and the assertion that the European average is 10% is outright laughable. Here are some figures from the International Labor Organization: Belgium 21.9%, Bulgaria 24.5%, Croatia 31.7%, Czech Republic 34.0%, Denmark, 31.1%, Estonia 20.5%, Finland 24.4%, France 20.0%, Sweden 28.9%, Netherlands, 21.4%. Should I continue? Ten percent on average? Only according to the math of the prime minister’s office.

Lázár claimed this afternoon that there is a direct correlation between the size of the public workforce and the country’s competitiveness. Again, the Orbán government is making decisions based on faulty data and mistaken notions. It is worth taking a look at a short piece on the Becker-Posner blog from 2011. Gary Becker is a Nobel laureate in economics and Richard Posner, a judge and professor of law and economics, both at the University of Chicago. The article, written by Posner, was titled “Too many government workers?” After examining the size of the public sector in relation to GDP per capita, he came to the conclusion that there “does not appear to be a relation between a country’s prosperity and the number of public employees it has.”  So, if the Orbán government thinks that reducing the number of civil servants (not the number of public employees) will boost the productivity and competitiveness of the country, producing higher GDP figures, it is sadly mistaken. Yet another hasty decision without a firm grasp of facts and figures. And without the benefit of the most elementary logic.

February 4, 2016

Viktor Orbán’s education system “carries serious political risks”

If Zoltán Balog, minister in charge of education, thought that the teachers, who have had enough of Viktor Orbán’s educational experiments, would be appeased by promises to lift some of the administrative burdens that make the lives of both teachers and students a living hell, he was sorely mistaken. The government is now groping in the dark for some kind of solution. I have the feeling that they still haven’t realized that the government will have to offer substantial concessions to avoid a major confrontation.

The administration is promising to call together representatives of teachers and students to find a common solution to the problems. But how can they trust Balog and his undersecretary, Mrs. Czunyi, when the meeting is supposed to take place at the same time as the demonstration organized by the teachers’ unions? Or when the ministry instructed schools to hold parent-teacher conferences today, when demonstrations were scheduled in several cities? Surely, under these circumstances the good faith of the government can be seriously questioned. Or, adding to their sins, when Pesti Srácok, which 444.hu calls “the revolver newspaper of the Fidesz caucus,” suspects that it is György Soros and Ferenc Gyurcsány who are behind the “teachers’ revolt.” How? One of the organizers was once a member of a group that in 2012 received a grant from the Open Society Foundation. Gyurcsány is implicated, according Pesti Srácok, because one of the members of Oktatói Hálózat (Faculty Net) of university professors that supports the teachers is Zsuzsa Ferge, the “favorite sociologist” of Ferenc Gyurcsány. Incredible, isn’t it?

And if that weren’t enough, András Bencsik, editor of the far-right weekly Demokrata and one of the chief organizers of the Peace Marches that allegedly saved Viktor Orbán from being ousted by foreign powers, accused Piroska Galló, head of the Pedagógusok Szakszervezete (PSZ), of being the daughter of the notorious security chief of the Rákosi era, Gábor Péter (1906-1993). Bencsik didn’t bother to check the most basic facts before he spread this lie all over the Facebook. In reality, Ms Galló’s father was Ferenc Péter, a university professor, and not Gábor Péter, who together with his wife was serving a life sentence at the time of Galló’s birth.

While I was focusing on the brewing teachers’ revolt and the government’s attack on the judiciary, I neglected to talk about another rash announcement by János Lázár. For the sake of efficiency and economy he wants to eliminate thirteen and amalgamate another sixty ancillary institutions. These institutions are a mixed bag, but many of them are important independent organizations supporting the various ministries. The researchers of these institutes are supposed to give objective, honest, professional advice to the civil servants and politicians working in the ministries. If most of these institutions are placed under the direct supervision of the ministries, their independence will no longer be assured.

Let’s take the Oktatáskutató és Fejlesztő Intézet (Educational Research and Development Institute / OFI), which is one of the think tanks destined to be shut down. One wonders whether the decision has anything to do with a report OFI released last year, which can be read in its entirety here. In early January Undersecretary Czunyi talked only about reorganizing OFI. On January 5 she announced that great changes will take place in the ancillary institutions dealing with educational matters. For example, OFI’s role will be limited to the development of textbooks. A month later Lázár was already talking about the elimination of the entire institute.

What prompted this decision? I wouldn’t be surprised if it was the criticism that can be read on practically every page of the study. The researchers wanted to assess the results of the nationalization of schools and the creation of the Klebelsberg Intézményfenntartó Központ (KLIK), which is supposed to run 4,000 some schools across the country. The authors’ conclusion is devastating. Those who know the language should take a look at the whole report. Here I don’t want to go into the details, which are pretty similar to the complaints of the teachers and students, but I will call attention to one warning: “The passive-aggressive overcentralized system carries serious political risks.” The researchers of this ancillary institution seemed to have the well-being of the government in mind. They warned the ministry of the political dangers inherent in the system Viktor Orbán and Rózsa Hoffmann created in the last five or six years. What was the government’s answer? Let’s just close the whole institute.

The suspicion is of long standing: Rózsa Hoffmann and Piroska Galló in October 2011

The suspicion is of long standing: Rózsa Hoffmann and Piroska Galló in October 2011

As I said at the beginning, we don’t know how the government will handle this problem. Of course, a lot will depend on the strength of the movement, which local Fidesz authorities are trying to dampen. For example, where Fidesz is very strong, like in Debrecen, the teachers either don’t want or don’t dare to join their colleagues elsewhere.

Piroska Galló, the leader of PSZ who was severely criticized in Magyar Narancs for being far too malleable, is showing her radical side at the moment. PSZ prepared a list of 25 demands, which basically call for dismantling the entire edifice built in accord with Viktor Orbán’s educational vision. Right now she insists that the government accept the package in toto, a demand that most likely will have to be trimmed down. The question is by how much? Given Viktor Orbán’s personality, I suspect that his first reaction will be to reject most of these demands because he finds it very difficult to admit his mistakes. But if I were in his shoes, I would keep in mind what the researchers of OFI predicted already last year–that his educational system carries huge political risks. And after all, for him, staying in power is priority number one.

February 3, 2016

Jobbik’s new centrist strategy

It’s time to turn our attention to the right-radical Jobbik party, the bogeyman of some naïve West European observers who are convinced that it is the real threat to Hungarian democracy and not Viktor Orbán’s government. Some of us who are more familiar with the workings of Fidesz know better. While Fidesz was rapidly moving to the right, Jobbik, in order to distinguish itself from the government party, moved toward the center. This change of strategy, however, hasn’t paid off. Jobbik, which in March 2015 had almost caught up with Fidesz in popularity (18% versus 21% in the electorate as a whole), is today a shadow of its former self. It has lost about half of its supporters.

So, one would have thought that Gábor Vona, chairman of Jobbik, recognizing the failure of the policy, would change course and go back to the far-right ideology that made Jobbik popular in the past. Yet, judging from his speech delivered last Saturday in front of approximately 2,000 people, there seems to be no change of strategy in sight. On the contrary, if possible, the party chairman sounded even more moderate than at any time before.

I have to admit that this was the first time I had the patience to listen to a Vona speech in its entirety. He is actually a very good speaker. That was surprise number one. The other surprise was the well-dressed audience and the absence of the nationalistic garb Jobbik politicians and followers have been infamous for. Apparently there were a few of the old extremist types present, but they were in the great minority. Gone were the old historical flags, including the red-and-white striped so-called Árpád flag, named after the first Hungarian ruling house, which was once favored by the extreme-right Arrow Cross Party of the 1930s. In fact, this Jobbik gathering didn’t even have the dozens of red, white, and green flags that we are accustomed to from Fidesz’s mass meetings. Instead, in the background were red and green bridges that will allow Jobbik supporters to visit the “other side” of the Hungarian political divide. Instead of political warfare, Vona wants to build bridges and unite all those who believe themselves to be the victims of Hungary’s twentieth-century history. Those who still bemoan the injustices of Trianon, the sins of communism, and the lost security of János Kádár’s regime.

The caption says: "The real people's party

The caption reads: “The real people’s party”

Those present reported that the Jobbik audience can’t really be roused by this new moderate program. The people who were originally fired up by Jobbik anti-Semitic, anti-Roma rhetoric are not enamored with the idea of building bridges to leftist voters. As Origo’s journalist reported, an older man at the end of Vona’s speech said: “It was a good speech, but I don’t agree with many of his points.”

What is the essence of this new course? If I understand it correctly, Vona envisages a party in the center of the political spectrum that wants to attract not only disappointed Fidesz voters but also those who are currently uncommitted, most of whom, as we know from public opinion polls, sympathize with the left. But can that kind of approach, especially the party’s decision to court potential leftist voters, possibly succeed? I personally doubt it. I am also not at all sure whether a strategy based on extolling the virtues of “civic” Hungary, a society based on middle class values, which Vona announced, can succeed. This formula was tried back in the 1990s by Fidesz, only to be abandoned and forgotten. It was brought back to life recently by Gábor G. Fodor’s revelation that “civic Hungary” was simply a “political product” to be sold to the naïve electorate. It was also useless, I believe, for Vona to talk about “real national consultation” as opposed to the kind the Orbán government offered to the electorate. Why would Hungarians be more excited by “national consultations” conducted by Jobbik than they have been by the ones offered by Fidesz?

Vona spent a fair amount of time on the two sectors, education and healthcare, that are in serious trouble. Jobbik sees opportunities here, especially since, as last year’s by-election in Tapolca showed, a healthcare issue can mobilize the locals. Since the Fidesz mayor of Tapolca supported closing the hospital and the Jobbik deputy-mayor stood against it, Jobbik’s candidate won. It was a lesson to be learned on both sides. It further strengthened the view in government circles that “reforming” healthcare is deadly and that it should be left undisturbed. In the last year, however, it has become obvious that the problems in the sector are too great to be ignored. Although in the last few days the revolt brewing among teachers in the country’s elementary and high schools has dwarfed complaints from the doctors and nurses, both areas are potentially dangerous for Fidesz.

For the problems in education Fidesz alone is responsible. Most people were convinced that it would be a cinch to pacify the teachers, but they turned out to be wrong. The teachers are threatening a strike. Any party worth its salt should keep a very close eye on developments in both the healthcare and the education sectors. If Jobbik could make headway here, it would get a much-needed lift. I suspect that Jobbik party activists are already hard at work contacting dissatisfied teachers in their neighborhoods. Whether other parties are paying enough attention to the ever-growing dissatisfaction of educators and healthcare workers is not at all clear.

February 2, 2016

The ideal new republic?

A few days ago I heard a man who lives in Austria complain bitterly that although he asked the left-of-center parties for their programs, none of them could produce one. How can anyone pick among the four or five democratic parties, he asked, if the electorate has no idea what they stand for.

This situation is going to change, at least in the case of the Demokratikus Koalíció (DK), which will officially release its program on February 13 when the party has its next congress. Two days ago Origo got hold of the 107-page document, which describes the party’s program in an “ideal situation.” The emphasis is on “ideal.”

The program assumes a political constellation in 2018 that would allow a future democratic government to undo all the harm Viktor Orbán’s illiberal policies have inflicted on the country. For that, an individual party or a coalition of several parties would need a two-thirds majority in parliament, something that at the moment no sane person could possibly fathom. So it is not surprising that the far-right site Pesti Srácok, commenting on the DK program, titled its article “DK is dreaming of two-thirds.” Indeed, but one could argue that for a party to present its political vision, it has to assume an absolutely free hand. And it should be noted that the present document is not the party’s electoral program. That program will undoubtedly be much more limited in scope.

First of all, let me say a few words about the latest opinion polls. In the last few days four different polls were released: those of Nézőpont, Tárki, Századvég, and Publicus. According to Nézőpont and Publicus, Fidesz’s rapid gain in support came to a halt between November and January. But Tárki and Századvég found that Fidesz had recovered its earlier voters and is now back to where it was more than a year ago. Both Publicus and Nézőpont registered considerable losses for Jobbik and gains for MSZP. When the results of these four opinion polls are combined, in the electorate as a whole Fidesz has 32%, Jobbik 11%, MSZP 9%, DK 5.5%, LMP 3.2%, and Együtt 1%. The undecided make up 39%.

Thus, at the moment the opposition is in very bad shape. Yet opposition politicians can’t conclude that since the situation seems hopeless, the only realistic option is to do nothing. They have to act. Since a coalition of the smaller democratic parties is outside the realm of possibility at the moment, I believe the only sensible course of action is for each party to work assiduously to build itself up and see whether in the next couple of years one of them can get the lion’s share of opposition support, preferably with more than 20%.

The sad reality

The sad reality

Origo didn’t write the DK program off as pie in the sky. Instead, it praised “its good assessment of the situation and its accurate pinpointing of problems.” I can’t cover all of the political, legal, economic, financial, and social aspects of the document. I will offer as material for discussion only DK’s view of the most important legal underpinnings of the “New Hungarian Republic.”

DK would insist on the removal of Fidesz party cadres from all responsible and allegedly independent positions. They should be called to account for any alleged criminal activities. In addition, all concessions of tobacco shops, casinos, and land sales must be examined for their legality.

A new constitution should be written, which should then be accepted or rejected by popular referendum. The Orbán government’s restrictions on holding referendums are so strict that at the moment practically none can take place. DK suggests a formula that would change this situation.

DK would return to the former right of “actio popularis,” the option for any citizen to turn to the constitutional court claiming that a law, legal provision, or regulation is contrary to the constitution. One of the first acts of the Orbán government was the abolition of this right. The party would also like to remove those judges of the constitutional court who were appointed by the government parties alone. DK plans the complete elimination of the National Judiciary Office, currently headed by the wife of József Szájer, Fidesz MEP. (Earlier, Professor Kim Scheppele wrote several articles touching on the importance of “actio popularis” as well as on the National Judiciary Office’s negative impact on the judiciary.)

DK would get rid of the new law on churches and would restore the status of churches as it was prior to 2012. DK never hid the fact that it has serious reservations about an agreement with the Vatican signed by Gyula Horn that gave the Hungarian Catholic Church special privileges. The party would demand a re-examination and possible revision of that 1997 treaty. DK would also abolish compulsory religious and/or ethical education in schools, which in the party leaders’ opinion should be ideologically neutral. DK would declare equal rights for LGBT people, including their right to marry.

The present electoral system is so unfair that it must be replaced by a so-called mixed system of individual electoral districts and party lists. Moreover, the borders of the present gerrymandered districts must be refashioned in a more equitable way. In addition, the totally unfair electoral system introduced in Budapest should be replaced by a city council whose composition would be determined by the relative strength of the parties, as it was prior to 2014.

Not everything that Fidesz introduced will be thrown out. For example, DK supports Fidesz’s decision on the incompatibility of being a member of parliament and a mayor at the same time. But close relatives of politicians would be forbidden to compete for government tenders, something the government found perfectly acceptable only a few months ago.

Another Fidesz idea of long standing that DK accepts is the subordination of the prosecutor’s office to the ministry of justice. It was something Ibolya Dávid (MDF), minister of justice between 1998 and 2002, supported, but at that time the opposition strongly opposed it. In 2010 Fidesz tried bringing up the topic again, but it was once more met with an outcry. As it stands now, the whole prosecutorial system is “independent,” even though we know only too well that this is not the case. Subordinating the prosecutor’s office to the government would have the benefit of supervision from above, which at the moment is impossible. Finally, DK would recognize the validity of dual citizenship, though the document says nothing about the right to vote. I suspect that in DK’s ideal world that right wouldn’t have a place.

As you can see, I’ve said nothing about taxation, the economy, energy, or social policy. Perhaps in a few days we can return to these topics.

Guide book to embezzlement of European Union subsidies. Part I

Today and tomorrow I will look at three recent corruption cases in Hungary, all of which involve money received from the European Union.

Two Hungarian politicians are currently spending a lot of energy uncovering corruption cases. One, Benedek Jávor (PM-Együtt), is a member of the European Parliament who sits with the Greens. The other is Ákos Hadházy, a veterinarian from Szekszárd who began his political career as a Fidesz member of the city council. Once the corruption of the Fidesz members of the council became apparent, he resigned his post and quit the party as well. He is now a member of LMP.

Both men are doing a splendid job. Jávor is in an infinitely better position than Hadházy because he receives information from the EU and its anti-corruption arm, OLAF. Jávor has made a real impact, especially concerning the Paks II nuclear power plant and its most likely illegal financing. Hadházy, on the other hand, is at the mercy of the Hungarian authorities or the police who simply ignore his inquiries and/or criminal complaints. Although he has been working tirelessly on dozens of cases, he is unable to show any results. Hadházy is now hoping that if he and his fellow LMP politicians regularly make corruption cases public, they will be more difficult to ignore. Thus, every Thursday he will reveal one case. He claims that he has enough cases to keep “Corruption Info” going for at least a year.

Today I’ll focus on Hadházy’s first case, presented at the launch of “Corruption Info.” I will devote tomorrow’s post to Benedek Jávor’s successful efforts in Brussels.

Ákos Hadházy arrived at the press conference with a recording of a conversation between Rezső Ács, the mayor of Szekszárd, and Péter Máté, a Fidesz member of the city council. The conversation took place in 2012. It was about the decision of the city council to entrust a particular job to a company that charged considerably more than its competitors. Here is a portion of the conversation:

-Eighty-five percent support!

-Yes, yes, but this is a good offer. The price is high, but it can be done in such a way that the person who does it will finance the whole thing and therefore it will not cost us anything.

-Is it overpriced?

-Yes. This is how the tendering procedure works today in Hungary. He comes and tells me that he will do everything. He will win the tender, but he will bring everything. And if not, then he will go to the city next door. Because he has a quota which he can divide. This is how it is behind closed doors.

I’m sure that we all need an explanation of this cryptic description of the process. First of all, the ministry responsible for the tender has a certain number of businesses that have a chance of receiving these EU jobs. Each of them is allotted a quota, so if Szekszárd doesn’t grab the opportunity, the owner of the company will go to the next town. And if Szekszárd makes the mistake of awarding the tender to someone else, they most likely will either get no funding or they will have to put down 15% before the work begins. But one of the privileged companies will promise “to do everything”:  the application as well as the work itself. Only large, well-off companies are able to participate in this game because they have enough capital to wait for payment until the very end of the project, when the money from Brussels arrives. In the case of the project discussed on the tape, the company who did the project charged 115 million forints as opposed to 60 million, which would have been the price without the ruse devised by the Hungarian ministry officials and their corrupt business associates. By the end, with overruns, the cost turned out to be 130 million, paid in full by the European Union.

Ákos Hadházy at his first "Corruption Info"

Ákos Hadházy at his first “Corruption Info”

According to Hadházy, what’s going on are criminal acts of a mafia-like network that reaches and is perhaps even orchestrated by the ministries. He mentioned the prime minister’s office and the ministry of human resources as the main sources of this criminal activity. Apparently, 12 trillion forints worth of tenders subsidized by the European Union are offered by these two ministries.

The reaction of the prime minister’s office was typical. The real culprit is Ákos Hadházy, who sat through this discussion and kept the recording secret instead of going to the police immediately after the discussion took place. Thus, Hadházy is an accessory to a criminal act. According to the spokesman of the prime minister’s office, LMP, instead of holding weekly press conferences, should go to the police immediately and report all suspicious cases they know about.

The prime minister’s office underestimated András Schiffer, co-chair of LMP, who although not my favorite is a very good lawyer. Naturally LMP made sure that everything was professionally prepared. First of all, as soon as the project was finished and paid for, Hadházy filed a criminal complaint concerning the case. That was two months ago. Since then he received a letter from the police saying that they could not find any reason to investigate the Szekszárd case because they found nothing that would indicate abuse of office or misappropriation. However, the police sent the case over to the National Office of Taxation and Customs (NAV). The case bounced back from NAV, which stated that the case has nothing to do with budgetary fraud. It is a case for the police.

Rezső Ács, the Szekszárd mayor, went further. He blamed the socialist-liberal administration for the city council’s decision to offer the job to a company in 2012, two years after Viktor Orbán’s Fidesz won the election.

Tomorrow I will relate stories of criminal activities committed by the Hungarian government in its direct dealings with the European Union.

To be continued

January 29, 2016

Corruption and the Hungarian economy

Frigyes Solymosi, a professor of chemistry and member of the Hungarian Academy of Sciences, has been a longstanding conservative critic of Viktor Orbán’s undemocratic regime. For years he has been writing op/ed pieces in Népszabadság because Magyar Nemzet, when it was still a government mouthpiece, refused to publish his articles. His latest is titled “Where is the hot spot?” The current behavior of Hungarian society reminds him of something that happened in his lab years ago. They were studying some explosives that for a long time remained dormant. At some point, however, a “hot spot” developed within the explosive tablet, and boom! It made quite a mess of their lab.

Solymosi’s article lists some troubling signs in the Hungarian economy, the lack of technological advancement, the neglect of education and healthcare, and the growing exodus of the best and the brightest. They all point to a further deterioration of conditions in the country.

Along these lines today I’m focusing on a conference organized by Világgazdaság to deal with the question: “Is this sustained growth?” The Hungarian financial paper invited several finance or economic ministers from earlier years. Two of the participants served in the Antall government (1990-1993). Antall changed finance ministers three times. The first one lasted only a few months (May 24-December 19, 1990). Kupa lasted longer (December 20, 1990-February 11, 1993). I always enjoy listening to him when he is invited for an interview. He strikes me as knowledgeable and level-headed, and he has a wonderful sense of humor. The other participant from the Antall era was Péter Ákos Bod, who served as minister in charge of industry and trade for a short time, after which he became the chairman of the Hungarian National Bank. Attila Chikán represented the first Orbán government, in which he served as minister in charge of the economy (July 8, 1998-December 31, 1999). He was replaced by György Matolcsy, who has since become Viktor Orbán’s right hand. The only “liberal” economist present was István Csillag. He was minister in charge of the economy and transportation during the Medgyessy government.

From left to right: Mihály Kupa, Péter Ákos Bod, István Csillag, and Attila Chickán

From left to right: Mihály Kupa, Péter Ákos Bod, István Csillag, and Attila Chickán

All of the participants agreed that the government propaganda about the robust economy that will not only be sustained but steadily grow is just that. Propaganda. Whatever growth there is is due only to the subsidies received from the European Union. The growth the Hungarian economy is capable of producing on its own is about 1% per year.

The Orbán government likes to compare Hungarian economic growth to the EU average and boast, as he did recently in Mongolia, that Hungary, along with other East European countries, is the engine of the Union’s economic growth. But this is not really relevant. What one has to concentrate on is Hungary’s standing within the region. It should be compared to the neighboring countries: Poland, Slovakia, the Czech Republic, all of whose economies are growing faster than Hungary’s. Romania’s economic development still lags behind her western neighbor, but it is catching up.

According to István Csillag, “Hungary exists only as long as there is the European Union. If the EU ceases to exist, there will be no Hungary.” Of course, this statement is overly dramatic, but we know what Csillag has in mind. He said that even 2014, which was hailed as an unusually successful year with a 3.7% economic growth, still pales in comparison to 2004 when the Hungarian economy grew by 5% with a 7% additional expenditure compared to 2014’s 3.7% growth with an 8% additional expenditure.

György Matolcsy’s efforts at stimulating the economy met with general disapproval by all participants. Such stimulants look promising initially, but their end is usually “painful,” creating economic bubbles.

I left Attila Chickán’s contribution to last because his field of expertise is “competitiveness” and “productivity.” Hungarian productivity is half that of the European average, due primarily to the inefficiency of the institutional structure. For sustained growth a country needs stable institutions, investment in human capital, and a competitive market without corruption. The problem with the present Hungarian economy is that none of these conditions exists at the moment, and there are no signs that the government is making any attempt to remedy the situation.

And that leads us to Transparency International’s “Corruption Perceptions Index 2015,” published yesterday. While a number of countries in the region have improved significantly in the last few years–for example, Austria, the Czech Republic, and Slovakia, in 2015 Hungary’s standing dropped to 50th place out of 168 countries. In 2014 Hungary stood in 47th place among 175 countries, which means that corruption in the country has increased relative to the other countries studied.

The Hungarian government makes no effort to combat corruption, which ensures the further deterioration of the Hungarian economy. Fidesz and the government blithely ignore the problem and accuse Transparency International of bias because—hard to believe but true—George Soros has been supporting this global anti-corruption non-governmental body. The terse reaction of Fidesz to the news of Hungary’s poor performance was: “Transparency International, which is financed from Soros’s money, serves the immigration policy of George Soros. Transparency International’s goal is to exert political pressure on Hungary.”

Alas, that’s not the end of the bad news. More will come tomorrow.

January 28, 2016