Tag Archives: Brexit

Shrinking population, shrinking labor force, sluggish economy

Given the Hungarian government’s fierce opposition to accepting any refugees, I decided to take a look at the latest Hungarian population statistics.

Since Viktor Orbán became prime minister in 2010, the population of Hungary has shrunk from 10,014,324 to 9,830,485 (as of 2016). It has lost 183,939 persons, roughly the population of the second largest Hungarian city, Debrecen. If we break these figures down by age group, the situation is even more dire. Today there are fewer children between the ages of 1 and 14 (-62,408) and fewer adults between the ages of 15 and 64 (-264,527) than in 2010. What is more alarming is that the number of those over the age of 65 has grown substantially. To be precise, by 164,517, which is about the population of Szeged, Hungary’s third largest city.

Ever since the second half of the 1980s, the natural decrease of the population was around -3.5 per 1,000 annually. Last year was one of the worst, at -4.1. The Demographic Research Institute of the Central Statistical Office predicts that if the trend of the last 30 years continues, Hungary’s population will be under 8 million by 2060.

Current population statistics most likely overestimate the number of inhabitants residing in the country since many of those who moved abroad in the last few years never bothered to announce their departure to the authorities. Their number might be as high as 600,000, according to figures provided by Eurostat and assorted national statistical offices. Under these circumstances, a labor shortage in practically every sector of the economy is unavoidable.

Last summer I wrote two posts about the severe labor shortage in Hungary caused by the low birthrate and the massive exodus of Hungarians. I expressed my belief that without an infusion of foreign labor the situation cannot be remedied. A few days later the National Association of Employers and Manufacturers (MGYOSZ) suggested that Hungary would immediately need about 250,000 foreign workers, who should be enticed to come to Hungary from abroad. Mihály Varga, minister of national economy, agreed with MGYOSZ’s estimate of the situation, but in no time Fidesz published a statement saying that the Hungarian government provides work opportunities for Hungarians, not for immigrants. Both MGYOSZ and Varga got the message, but it turned out that the government “secretly” began the importation of foreign workers from so-called third countries, i.e., countries lying outside the European Union.

Hungary can hope for immigration only from countries with lower living standards than its own. Thus the government gave Samsung Magyarország, located in Jászfényszaru, a town of 5,000 in the northern portion of the Great Plain region of Central Hungary, permission to recruit workers from war-torn Ukraine. Of course, for Ukrainian speakers Poland or the Czech Republic might be more attractive given the easier linguistic communication there, so Samsung had to make its job offer especially enticing. By November of last year Samsung employed about 150 Ukrainians, and apparently their numbers are growing. In addition to their monthly pay of about 125,000 forints, they receive housing, some food, and travel expenses to return home once a month. About 100 of them live in nearby Jászberény in apartment houses; others are still in temporary housing on a camp site. The 125,000 forint salary isn’t much, but in comparison to what they would make in Ukraine it is considered to be quite good. Index interviewed a couple who are all set and ready to settle in Hungary. In a few years they will be able to save enough money to buy a house in one of the nearby villages. Another man with a Hungarian wife is learning Hungarian in order to become a Hungarian citizen.

The Ukrainians working on the Samsung assembly line were given on-the-job training. The same is most likely true of the six Indian guest workers who milk cows on a dairy farm in Sarud, close to Eger. Locals were either not interested in the job or, once hired, didn’t work out. The owner of the dairy farm heard about Indian workers at another farm who were highly praised. So he decided to follow suit. The first six have arrived. They are so hard working and reliable that the Hungarian dairy farmer has nothing but praise for them.

Sándor Csányi, head of Hungary’s largest bank, established a slaughterhouse in Mohács. He had a terrible time finding butchers because experienced Hungarian butchers had left for Germany a long time ago. Supermarkets also have a very hard time finding workers, and their management teams have been thinking of ways to fill these positions–one strategy is to retrain public workers. The few migrants who received permission to stay in Hungary quickly gain employment–mind you, mostly by foreign-owned firms.

The government is now trying to remedy the serious labor shortage by allowing retirees to accept tax-free part-time jobs. It was only a few years ago that the Orbán government insisted on a mandatory retirement age of 65. Now the government is trying to entice retirees to return to work.

Hungary, of course, is not alone in facing this problem. Germany’s labor shortage won’t easily be remedied with often unskilled migrants who don’t speak the language. But immigrants learn fast. With a well thought out plan, within a few years Germany might solve its labor shortfall. Great Britain, on the other hand, will be in trouble if Theresa May’s government succeeds in putting an end to or severely restricting immigration to the British Isles. For example, Brits show little interest in working in hotels and restaurants. In one chain, Pret a Manger, 65% of the employers are from countries outside the European Union. The hospitality industry would probably collapse without a steady flow of immigrants. Only recently Global Future, an employer-backed think tank, reported that the British economy needs an inward migration flow of 200,000 people a year “to avoid the catastrophic economic consequences” of Brexit. They warned that if the UK refuses to be flexible about labor inflow, the country could face decades of slow growth similar to that experienced by Japan. Just today The Guardian published an article that recounts the possible plight of Hall Hunter Partnership, a business that grows 10% of the UK’s strawberries, 19% of its raspberries, and 42% of its blueberries on thousands of acres. The company needs 3,000 pickers, who come from Bulgaria, Romania, and other East European countries. The opponents of EU membership talked about sovereignty and control, railed against the free movement of labor, but “what they didn’t mention is the way the British food supply chain has, over the past 30 years, become increasingly reliant on workers from elsewhere, both permanent residents and seasonal labor.” Around 20% of all employees in British agriculture come from abroad, mostly from Romania and Bulgaria, while 63% of the employees of members of the British Meat Processors Association come from outside the UK.

Indeed, the example of Japan might be a good illustration of what could happen to Great Britain if it closes its doors to immigrants vital to maintaining its economy. Japan’s birth rate has been dropping since the 1970s. “One percent shrinkage in population will slow Japan’s economic growth by about half a percentage point each year. So 0.5 percent of GDP is about 2.5 trillion yen ($2.95 billion) every year that’s potentially lost economic revenue,” according to an economic expert on Japan. He thinks that Japanese society will finally have to decide that they must embrace the idea of immigration. This is not going to be easy in insular, quasi-racist Japan.

The same holds true in Hungary, given Viktor Orbán’s insistence on “cultural purity.” It is impossible to maintain a robust economy with a shrinking workforce and an aging population. Something must be done.

May 21, 2017

Viktor Orbán’s vision of a new world order is fading

I was all set to ignore Viktor Orbán’s nineteenth yearly “assessment,” to skip the whole rigmarole. After all, there is absolutely nothing new to be found in his ramblings sprinkled with archaic and pious phrases mixed with affected folksiness. We have heard him speak countless times about his clairvoyant powers, predicting the coming of a new illiberal world which is partly his own creation. And this latest speech is no different from any of the others he has delivered lately. But as I was going through my early morning perusal of news in the United States and Europe, I decided that in light of the latest developments in world affairs it might be useful to spend a little time on Orbán’s latest pronouncements.

Although critics complain that the speech, which was supposed to be about the government’s achievements in the past year, was mostly about foreign affairs, I found a fair amount of bragging about the great accomplishments, economic and otherwise, of the third Orbán government. Nonetheless, I was much more interested in his “vision” of the present and the future, not of Hungary but of the world.

According to Viktor Orbán, 2017 “promises to be an exhilarating year.” There will be “surprises, scratching of heads, raising of eyebrows, rubbing of eyes.” People will ask each other: “Is everything that is coming undone and taking shape in front of our eyes really possible?” The existing world order is coming to an end. History beckons the prophets of liberal politics, the beneficiaries and defenders of the present international order, the globalists, the liberals, the influential talking heads in their ivory towers and television studios. A new world is coming, a world where populists like Viktor Orbán , Vladimir Putin, Donald Trump, Recep Erdoğan, Marine Le Pen, and other right-wing populists elsewhere in Europe will decide the fate of the western world.

Perhaps I have been inattentive, but this is the first time that I noticed a recurring adjective in an Orbán speech: “open world, “open world order,” “open society.” Orbán is “paying homage” to his nemesis, George Soros. He very much hopes that with the “exhilarating” 2017 the “open world order” will come to an end. As far as he is concerned, the beginning of his new world looks promising: Brexit, the American presidential election, “booting out” the Italian government, the “successful” Hungarian referendum on the migrants, all of these take us closer to the promising new world.

Orbán’s next sentence can be fully understood only if I provide its poetic backdrop. Sándor Petőfi (1823-1849) was a political radical who, in December 1848, wrote a poem titled “Hang the Kings!” The poem begins “Knife in Lamberg’s heart and rope around the neck of Latour and after them perhaps others will follow. At last, you people are becoming great!” Lamberg and Latour were high government officials who were killed in Pest and Vienna by angry mobs. So, Orbán, of course without mentioning the two murdered gentlemen, sums up the happy events of late in Great Britain, Italy, the United States, and Hungary: “after them perhaps more will follow. At last, you people are becoming great.” So, Orbán is in a revolutionary mood, no doubt about it. And he is also full of hope, although given the fate of the 1848 revolutions in the Habsburg Empire, I wouldn’t be so sanguine in his place.

As I look around the world, however, Orbán’s dream world may not come into being as fast, if at all, as he thinks. Let’s start with Austria’s presidential election last year. Orbán and the government media kept fingers crossed for Norbert Hofer, the candidate of the far-right Freedom Party of Austria, yet Alexander Van der Bellen, a member of the Austrian Greens, won the election by a fairly large margin. The first effort of a self-described far-right party in Europe to win high office failed.

Orbán’s next hope is for a huge victory by Marine Le Pen in France. But the centrist Emmanuel Macron’s chances of beating Le Pen look good. At least the Elabe poll shows Le Pen losing the run-off 37% to 63%. Another poll, Ifop Fiducial, predicts 36% to 64%. Two different polls, very similar results.

Then there is Germany. Former foreign minister Frank-Walter Steinmeier, a social democrat, was elected Germany’s president. He won 931 of the 1,239 valid votes cast by members of the Bundestag and representatives of the 14 federal states. When the result was announced by Norbert Lammert, president of the Bundestag, there was a standing ovation. Even more importantly, Angela Merkel’s solid lead a few months ago is beginning to fade. The reason is the socialist Martin Schulz’s appearance on the German political scene. According to the latest polls, the two candidates are neck to neck. One also should mention the latest developments in the nationalist Alternative for Germany Party (AfD), which would certainly be Orbán’s choice. According to the German media, since Schulz announced his candidacy for the chancellorship, “the number of people who did not vote in 2013 and are now planning to vote for the SPD has risen by roughly 70 percent in the last 14 days.” And what is more important from Orbán’s point of view, “AfD—which brought the most non-voters to the polls in several state elections last year—also lost support dramatically. Forty percent fewer former non-voters expressed their support for the party.”

One ought to keep in mind that the Hungarian government propaganda has succeeded in making Angela Merkel generally despised by the Hungarian public. Vladimir Putin is more popular in Hungary than Merkel. But given the choice between Merkel and Schulz, Orbán should actually campaign for Merkel’s reelection because Schulz, who until now was the president of the European Parliament, is one of the loudest critics of Orbán and his illiberal populism.

Finally, let’s talk about the situation in the United States. What has been going in Washington since Donald Trump’s inauguration as president of the United States has surpassed people’s worst fears. Total chaos, a non-functioning government, and very strong suspicions about the Trump team’s questionable relations with Russian intelligence. Michael Flynn, Trump’s choice to be his national security adviser, was forced to resign because of his direct contact with the Russian ambassador to Washington. A few minutes ago, we learned that Andy Puzder withdrew as labor secretary nominee in order to avoid a pretty hopeless confirmation hearing.

Donald Trump on the phone with Vladimir Putin / Jonathan Ernst / Reuters

The list of incredible happenings in Washington is so long that one could spend days trying to cover them. What I would like to stress here is that I’m almost certain that Trump’s original friendly overtures to Putin’s Russia have been derailed. The Russians did their best to bolster Trump’s chances, but by now Putin must realize that the new American president cannot deliver.

Now let’s return to Viktor Orbán, who was an early admirer of Donald Trump. His admiration of Trump was based on the presidential hopeful’s anti-migration policies, his disregard of political correctness, and his anti-establishment rhetoric. Moreover, and perhaps most importantly, Orbán found Trump’s pro-Russian views and his promise to “make a deal” with Russia and lift the sanctions against Moscow especially appealing. In such an event, Orbán believed he would play a more important role than he as the prime minister of a small country could otherwise have expected.

Now these hopes are vanishing with the tough stand both Democrats and Republicans have taken on Russia’s military occupation of Crimea and its efforts to stoke a civil war in Eastern Ukraine. Moreover, given the investigation into Russia’s interference in the U.S. presidential election and the ties of members of the Trump team to Russian intelligence, Trump is not in a position to hand out favors to Russia. So Putin won’t be best friends with the American president. And Europe seems disinclined to follow the U.S. into political chaos. Orbán, if he has any sense, should tone down his rhetoric about a new, exhilarating future where the old establishment sinks into oblivion.

February 15, 2017

Hungarians torn apart by anti-refugee propaganda

The Publicus Institute has released the results of its poll, taken between July 1 and 6, on Hungarians’ attitude toward and assessment of the European Union. To put the results in perspective, the survey was taken a little over a week after the Brits voted to leave the European Union, the consequences of which seemed and still seem dramatic. The message Hungarians got from Brexit is that leaving the European Union can have grave consequences. If Great Britain, the fifth largest economy in the world prior to the vote, will have to endure severe financial and political dislocations, then regardless of what some Fidesz politicians say, Hungary’s place must be inside the European Union.

The last time the Publicus Institute conducted a survey on the population’s feelings toward the Union was a year ago, in June 2015, when 57% considered Hungary’s membership in the European Union advantageous to the country. Today that number is 70%. This is a dramatic change. While in 2009 only 48% and in 2015 57% of the population would have voted for EU membership if a referendum had been held on the issue, today this figure is 64%.

This recent Hungarian poll supports the conclusions of an opinion piece by George Soros that appeared in the July 8 issue of Project Syndicate. As opposed to his earlier pessimism on the fate of the European Union as a result of the refugee crisis, his spirit is now buoyed by “the grassroots involvement,” which he calls “regrexit,” that emerged in the U.K. in favor of the Union. “If this sentiment spreads to the rest of Europe, what seemed like the inevitable disintegration of the EU could be instead creating positive momentum for a stronger and better Europe,” Soros claims. The opportunity should be seized and the EU should be reformed. Soros urges a more closely integrated fiscal and monetary system for the Eurozone countries: the core EU “needs to have its own treasury and budget, to serve as a fiscal authority alongside the monetary authority, the European Central Bank.” He again urges the European Union to “put its excellent and largely untapped credit to use” not only to spend funds on the integration of freshly arrived immigrants but also, I assume, to revitalize the sagging European economy.

Almost simultaneously with the appearance of George Soros’s upbeat article on the future of the European Union, an article appeared in the Frankfurter Allgemeine Zeitung by Viktor Orbán. In sharp contrast to Soros, Orbán advocated a further loosening of the already weak bonds between member states. Orbán urged nation states to take back their sovereignty, which some Hungarian papers interpreted as a call to dismantle the European Union.

Although, as the Publicus poll shows, Orbán’s anti-EU propaganda isn’t working, his incitement against migrants is a roaring success. The Pew Research Center conducted a survey in ten EU countries, Hungary among them, to measure  attitudes toward Muslim refugees. Anti-Muslim feelings are the highest in Hungary, at 72%. The lowest is in the UK (28%). In Hungary 76% of the respondents linked refugees with terrorism, and  Hungary leads the way on the question of whether there will be an increased likelihood of terrorism because of the arrival of the refugees (76%). Moreover, 82% of Hungarians surveyed are convinced that refugees will be a burden on the social system. Viktor Orbán can be proud of his propaganda.

moral panic2

Perhaps in response to these findings Népszabadság approached Endre Sik, a professor of sociology and CEO of Tárki, a polling company. In Sik’s opinion, what the Orbán government is doing is creating “moral panic,” a sociological term described by Stanley Cohen as a response to “a condition, episode, person or group of persons emerg[ing] to become defined as a threat to societal values and interests.” According to Sik, this moral panic normally arrives quickly but also disappears rapidly. What is different in Hungary is the sustained existence of moral panic due to “an innovative, extremely wide and very brutal campaign built on the migrant case” by the government. Sik is unaware of similar efforts by any other government.

Sik contends that at the beginning of 2015, after Fidesz’s popularity had hit a low point, the government devised a complex strategy, intended to have long-term effects on Hungarian society. The government didn’t simply push the “moral panic button” once or twice. It has done so practically constantly in the last year and a half. It is a “Hungaricum” like pálinka or Tokaj wine because of its centralized nature and the techniques used by the Orbán government. As Sik explains, Fidesz “institutionalized scare mongering.”

The other day I wrote about the shortage of employable workers and the case study of a company that had to import workers from Mexico. When the eight Mexicans arrived in Szügy in Nógrád County, close to the Slovak border, the village folks wouldn’t greet them. They thought they were “migrants.” But once they learned that the newcomers were Mexicans, the children enthusiastically waved at them and the adults smiled broadly. The government propaganda is that effective. Even in a small village everybody knows about the evil migrants who may be dangerous terrorists. And how can anyone forget the ridiculous scene of a group of public workers, who might actually have been Gypsies, who were scared to death by some surveyors–and vice versa. They suspected each other of being “migrants,” a word that, thanks to the government’s efforts, prompts alarm and apprehension.

We don’t know what kinds of effects this sustained fear mongering will have on the psyche of the Hungarian people. If this “moral panic” is different from the garden variety, no one can predict its potential damage to Hungarian society.

July 12, 2016

Viktor Orbán’s pointless but possibly dangerous referendum

Although the international media has been aware, for some months, of the Orbán government’s looming referendum on the “migration quota issue,” now that President János Áder has fixed its date for October 2 the Hungarian referendum is a hot topic. Stories abound about its unfortunate nature and timing.

Within Hungary its critics viewed it, at least initially, as a stunt designed to reinforce the population’s antagonism toward the “migrants” and bolster their support for the anti-refugee policies of the Orbán government. They thought, that is, that it was primarily a domestic issue.

The democratic opposition parties opposed holding such a referendum, but first the Kúria and later the Constitutional Court agreed to let voters answer the following question: “Do you want the European Union to be able to order the mandatory settlement of non-Hungarian citizens in Hungary without parliament’s consent?” There are so many things wrong with this question that it shouldn’t have been approved by the National Election Commission in the first place. Not only is it a leading question, but the Hungarian Parliament has nothing whatsoever to do with the government’s relationship with the European Union. It is a bad question on a nonexistent issue. As Leonid Bershidsky of Bloomberg pointed out, the Cameron government’s original question read: “Should the United Kingdom remain a member of the European Union,” but the country’s Election Commission recommended spelling out both options instead of only one. (Not that it helped.) Orbán’s illiberal state has very few independent institutions by now, and the National Election Commission is certainly not one of them.

After Brexit many people from the left-liberal opposition parties practically begged Orbán to scrap the whole idea. Their argument was that there are many countries where large and powerful anti-EU parties exist, which will try to stage referendums similar to that of the Cameron government. Such actions may fracture the very structure of the Union, already wounded by Brexit. I don’t understand the democratic opposition’s repeated appeals to reason when it comes to this government. By now they should know that once Viktor Orbán embarks on a course of action, he will go through with it no matter what.

Orbán’s goal is a valid referendum with the highest possible number of “no” votes. I have no doubt that those who take part in the referendum will overwhelmingly vote against any mandatory settlement of migrants. That’s a no brainer. The question is whether enough people will turn out to vote. To get four million voters to the polling stations out of the eight million eligible voters will not be easy. As voting patterns from earlier referendums have shown, Hungarians demonstrate a low level of awareness of the blessings of participatory democracy. In fact, the Horn government lowered the requirements for a valid referendum to 25% just before the July 1997 plebiscite on Hungary’s membership in NATO, which was a wise move because only 49% of eligible citizens voted. For the referendum on Hungary’s joining the European Union only 45.6% of eligible voters turned out. Viktor Orbán, who has a genuine fear of referendums, raised the threshold for validity to 50%. It is this hurdle the government has to overcome with a propaganda tsunami between now and October 2.

I have no doubt that nothing will be spared in the next few months to achieve the magic number. The government will use disinformation, lies, and “incentives” to convince as many people as possible to vote with a resounding “no.” Huge billboards have already appeared telling Hungarians that with their vote at the referendum “they are sending a message to Brussels.”

The democratic opposition’s fear is that, although the overwhelming majority of Hungarians view the European Union favorably, such an intensive propaganda campaign might turn a large number of Hungarians against the Union. As it stands, the EU’s strongest supporters are the Poles (72%) and the Hungarians (61%). Is it possible that Viktor Orbán would like to temper this high level of enthusiasm for the EU? Is this why we heard from the government’s second highest official, János Lázár, that he “wouldn’t be able to vote to remain in the European Union in good conscience”? Or is this outrageous remark from the man who is in charge of the dispersion of EU convergence funds merely a come-on to encourage high participation in this very questionable referendum?

Source: András Stumpf's article "It was a mistake to hold a referendum, mandiner.hu

Source: mandiner.hu

Whatever the case, anyone who doesn’t want to be a pawn in Viktor Orbán’s game should stay away from this referendum to make sure it is not valid. The lower the participation the better. The alternative of going and voting “yes” as a sign of support for the European Union is the most bizarre idea I can imagine. Who will consider a “yes” vote an endorsement of the European Union as the Magyar Liberális Párt suggests? Luckily, Gabor Fodor’s Liberal Party is a practically nonexistent entity. Otherwise all the opposition parties, excluding Jobbik of course, will be campaigning for a boycott of the referendum.

To my great surprise even András Stumpf, a journalist currently working for Mandiner.hu, a right-of-center, pro-government internet site, also considers the referendum “pointless” and Orbán’s insistence on holding it “unfortunate.” He more or less decided to join those who will stay home. According to Stumpf, the question should have been phrased this way: “Do you object to the mandatory settlement of non-Hungarian citizens in Hungary without parliament’s consent even at the possible cost of leaving the European Union?” Well put. But as long as the question voters will see on October 2 is what it is, the only answer is to boycott the referendum. Bershidsky is right in describing it as “manipulative” and the whole affair as a “farce.” But it’s a dangerous farce.

July 6, 2016

George Soros before the European Parliament and the Hungarian government’s reaction

Every time George Soros makes a public statement, which he does frequently, the Hungarian political right launches a frenzied attack against him. Interestingly, the Hungarian media didn’t spend much time on an article that appeared in The New York Review of Books (April 9, 2016). In it he explained that European Commission Vice President Frans Timmermans had invited an open debate on the refugee crisis, to which he was responding in his article. The solution, according to Soros, is “at least €30 billion ($34 billion) a year [which] will be needed for the EU to carry out a comprehensive plan.” He suggested that “Europe has the financial and economic capacity to raise €30 billion a year, [which] is less than one-quarter of one percent of the EU’s combined annual GDP of €14.9 trillion, and less than one-half of one percent of total spending by its twenty-eight member governments.”

Soros, however, realized that some members would vehemently object, especially Germany. So, instead, he offered all sorts of financial arrangements that would yield the necessary money without triggering the opposition of Germany and others. The task is urgent because “the refugee crisis poses an existential threat to Europe.”

On June 30 Soros delivered a speech to the European Parliament in Brussels, which was a revised version of the ideas he had spelled out in his New York Review of Books article. The result of the British referendum had a shocking effect on Soros who, upon hearing of the calamitous vote for Brexit, was certain that the disintegration of the European Union was “practically inevitable.” And since, in his opinion, “the refugee crisis … played a crucial role” in the British decision, the EU must act in one way or the other to raise money to solve the crisis and at the same time save the European Union.

I believe he is wrong in thinking that the refugee crisis per se had a substantial influence on the outcome of the referendum. In fact, a quick poll conducted after June 23 showed that “the question of sovereignty was the determining factor for the majority that voted for exit from the European Union.” Unlimited immigration from EU countries was also an important consideration.

George Soros in the European Parliament. Left of him Péter Niedermüller, DK EP MP

George Soros in the European Parliament. To his left, Péter Niedermüller, DK EP MP / Photo: European Parliament

But Soros’s linkage of the refugee crisis and Brexit strengthened his argument that the refugee crisis must be solved as soon as possible. In his fairly lengthy speech he talked about the necessity of “profound restructuring” and “fundamental reform of the EU.” He lashed out at “the orthodoxy of the German policymakers,” specifically Angela Merkel, who “ignored the pull factor” created by her initial acceptance of the refugees. Soros also severely criticized her for “her ill-fated deal with Erdoğan” and for her “imposed quotas that many member states opposed and [that] required refugees to take up residence in countries where they were not welcome.”

One would think that Viktor Orbán would have been happy to find an ally in George Soros, but it seems that there is nothing Soros can say or do that would please the Hungarian governing coalition. In fact, they launched a new campaign against him after he addressed the European Parliament. The reason for the government outcry was three sentences he uttered in the course of outlining ways in which the EU could raise the requisite €30 billion yearly. He said,“Finally, I come to the legacy expenditures that have crippled the EU budget. Two items stand out: cohesion policy, with 32% of expenditures, and agriculture with 38%. These will need to be sharply reduced in the next budget cycle starting in 2021.”

The first Hungarian politician to respond to Soros’s suggestion was György Hölvényi, KDNP member of the European People’s Party, followed by György Schöpflin, Fidesz EP member, who accused Soros of trying to make money on his financial advice to the European Union. Magyar Hírlap announced the news of Soros’s speech with this headline: “There are already signs of Soros’s latest speculations.” Naturally, János Lázár also had a few words to say about Soros’s speech in Brussels. He described him as someone who “presents himself as the voluntary savior of Europe” and who “wants to implement wholesale immigration.” Soros has no mandate from the European voters to offer any kinds of proposals, and it is not at all clear who invited him to the European Parliament. An editorial in Magyar Idők portrayed Soros as an emissary of the Clintons: “the face of Washington shows a striking similarity to that of George Soros.” The author added that if Hillary Clinton wins the election, this unfortunate situation will remain in place. Soros’s disapproval of compulsory quotas was dismissed as nothing more than a queen’s gambit.

The spokesman of Fidesz-KDNP on the issue was István Hollik, a member of parliament who was practically unknown until recently. He expressed the governing party’s strong objections to all of Soros’s suggestions, especially cutting back the cohesion funds and the agricultural subsidies “in the interest of the immigrants.” Fidesz-KDNP “expressly calls on the European Union to reject the proposals of the financial Forex speculator.” Naturally, Foreign Minister Péter Szijjártó also commented on Soros’s “totally astonishing ideas.”

None of the Hungarian politicians, or for that matter commentators, spent any time on Soros’s other suggestions, some of which merit consideration. They were fixated on the two items–cohesion funds and agricultural subsidies–that would really hurt the Hungarian government and its coterie of oligarchs. Can you imagine the plight of those who are the beneficiaries of the money pouring in from the European Union? And what will happen to the new landed gentry who purchased agricultural property for the express purpose of getting free money for every hectare from Brussels? Indeed, that would be a calamity.

And then there was the reaction of László Csizmadia, president of Civil Összefogás Fórum (CÖF), a phony NGO most likely financed by the government. In his scenario Hillary Clinton sent her number one scout to the European Union to test her future policies and their reception. Behind global capitalism there is “the financial hidden power,” without which no one can overthrow a political system. Soros has been banned in many countries, and Csizmadia knows that “some kind of Hungarian measure is under consideration that would be similar to a ban.” I do hope that Csizmadia’s information is only a figment of his imagination.

July 5, 2016

Viktor Orbán in the wake of Brexit

As I’m following commentaries on “life after Brexit,” I’m struck by the huge divergence of opinions. There are those who are certain that one Euroskeptic country after the other will hold a referendum on membership and that the entire European edifice that has been built slowly and methodically since the 1950s will simply collapse. One Hungarian commentator, former SZDSZ chairman Mátyás Eörsi, thinks a European war is almost inevitable. At the other end of the spectrum are those who believe that the British exit is actually a blessing in disguise. At last the countries of the Continent will be free to deepen integration which, in their opinion, will strengthen the European Union and ensure its political and economic importance in world affairs.

Opinions on the effect of Brexit on the political fortunes of Viktor Orbán also differ widely. A few think the event will be a useful tool in the Hungarian prime minister’s hand, which he can use to force the powerful core states to make concessions to the Visegrád 4 countries and a couple of other Euroskeptic nations in Eastern Europe and elsewhere. The reasoning is that without concessions, the contagion may spread through other member states at a time of right radical ascendancy. After all, these commentators point out, several right-wing groups have already announced plans to force through similar referendums.

I don’t believe in this scenario. The result of the British referendum is having such devastating consequences in both political and economic terms that I doubt too many countries would willingly sign up for such a suicidal undertaking. After all, it seems that the pro-exit Conservatives themselves were not quite prepared for a pro-leave majority and have no idea of what to do next. There are signs that they wouldn’t mind undoing the awful mess they created. Moreover, the first attempt at holding a similar referendum, the Dutch Geert Wilders’ Nexit initiative, has already failed. Yesterday, out of the 75 MPs present Nexit received only 14 votes.

Since the spread of anti-EU referendums is unlikely, Brexit didn’t strengthen Orbán’s position in Brussels. On the contrary. He lost a powerful ally in David Cameron, on whom he relied time and again in resisting every move that, as he saw it, trampled on the sovereignty of the nation states. Now he can only hope that the Visegrád 4 countries, if they remain united, will be strong enough to stand up against likely pressure in the direction of integration. There is a good possibility that Orbán and his fellow prime ministers of the former Soviet bloc countries will have to choose between cooperation and some kind of inferior status that would place them outside “an ever closer union.” That second-tier status would mean turning off the spigot from which billions of euros have flowed to these countries.

Until now one had the impression that Orbán was the leader of the Visegrád 4 group, but this impression might be misleading because news about V4 meetings arrives through the filter of Hungarian government propaganda. A couple of days ago the Polish government announced that it wants to hold “an alternative meeting of EU foreign ministers,” those who weren’t invited to the meeting of the six founding members of the European Union on Saturday. Yesterday, according to the Polish public television, eight foreign ministers–from the Czech Republic, Slovakia, Hungary, Greece, Spain, Romania, Bulgaria, and Slovenia–had accepted the invitation. The United Kingdom will be represented by an undersecretary.

Poland is taking the lead among countries that have issues with the European Union. The Polish initiative is perfectly understandable. Poland is a large country with almost 40 million inhabitants, and therefore its government feels that it should spearhead the movement of those who resist EU “encroachment.” How Orbán feels about this Polish initiative one can only guess. In any case, if this Polish invitation to 22 countries yielded such a small gathering, the prospect of the Poles forging a strong counterweight to the pro-integration forces looks slim to me.

Nonetheless, in Budapest there is hope that with the departure of the United Kingdom the Visegrád countries “will gain much more influence within the European Union.” At least this is what Gergely Prőhle, former Hungarian ambassador to Berlin, believes. He expressed his hope to Boris Kálnoky, Budapest correspondent of Die Welt, that Austria and the Netherlands may also support the program of a Visegrád 4 coalition. But Prőhle is far too optimistic and, as Kálnoky points out, the Hungarian government is nervous about the prospect of a more integrated Europe and “a sharper attack on the Euroskeptic and nationalist governments.”

David Cameron arrives today in Brussels / Reuters / Photo: Francois Lenoir

David Cameron arrives in Brussels / Reuters / Photo: Francois Lenoir

Of course, Viktor Orbán would never acknowledge that Great Britain’s likely exit from the European Union may decrease his effectiveness in Brussels. But László Kövér, president of the Hungarian parliament, freely admitted that with Great Britain inside the European Union Hungary would have had an easier time of it in Brussels. Moreover, he acknowledged that “the political strength of those who oppose the formation of some kind of united states of Europe has diminished.”

Many Hungarian commentators actually rejoice over Brexit for the very reason Kálnoky and others point out. The absence of Great Britain from the negotiating table will weaken Viktor Orbán. Moreover, these people are strong believers in a federated Europe and look upon Great Britain as an impediment to that ideal. These commentators argue that the United Kingdom from the very beginning was a reluctant member and that, being an island nation, it is a very different place from the countries of the Continent. The strongest Hungarian criticism I read appeared in Index. Its author, M.T., accused Britain of blackmailing the European Union for years.

Viktor Orbán, who is by now in Brussels, has been talking about “the lessons” to be learned from Brexit. Of course, for him the lessons are that the politicians of the EU must listen to the “voice of the people” who are fed up with Brussels’ handling of the “migrant crisis.” From the moment the results of the British referendum became known, Orbán has been trying to convince his voters that the reason for Brexit was the 1.5 million migrants who have arrived in Europe in the last year and a half. But I wonder how long this myth can be maintained once Hungarians learn that, since last Thursday, more than 100 incidents have taken place in the United Kingdom, mostly against Poles.

The defense of “the rights of Hungarians working and studying in the United Kingdom” is Orbán’s self-stated top priority during the negotiations over Brexit. Of course, these negotiations are still far away, but Orbán can show that he is concerned about the fate of his people. It’s too bad that when it came to allowing Hungarian citizens living in Western European countries to have the same voting rights as Hungarians living in the neighboring countries he was not such a staunch supporter of them.

In Brussels this afternoon Orbán gave a press conference in which he placed the “migrant crisis” at the epicenter of all the current ills of the European Union. If it isn’t solved along the lines he suggested, the crisis the EU is experiencing now will only deepen. He emphasized the necessity of holding a Hungarian referendum on the “compulsory quotas,” which we know don’t even exist. This referendum “is necessary in order to represent the Hungarian position clearly and forcefully.” Of course, the Hungarian referendum is totally off topic. The negotiations in Brussels are not about the refugees, but about Great Britain’s likely exit and the future of the European Union.

June 28, 2016

ONE OF THE FIRST STEPS AFTER BREXIT MUST BE THE REFORM OF THE EU BUDGET

As always, Hungarian Spectrum welcomes democratic voices from and about Hungary. Today András Lukács, President of the Hungarian NGO Clean Air Action Group (Levegő Munkacsoport) and Board Member of Green Budget Europe, presents his opinion, in the wake of the Brexit referendum, of the role of EU funds in the rise of Eurosceptism. He also offers some possible solutions.

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 The results of the Brexit referendum strengthened the conviction of all those who think that profound changes in the European Union are necessary to stop and reverse the rise of populist parties with Eurosceptic and, in some cases, even Europhobic agendas. It is hardly an unfounded opinion that if the governance of the EU is not changed radically, then even the mere existence of the EU is put at risk.

One of the main drivers of Eurosceptism is the way EU money has been used. It is telling that, according to a recent representative opinion poll, 61 percent of those surveyed in the Czech Republic, a net recipient of European funds, believe that the EU member countries should get along financially by their own means, i.e. wealthy member countries should not support poorer ones. I know of no similar survey in Hungary, but I do know that there is a widespread opinion here that EU money has led to serious problems. Many are even convinced that EU funds cause more harm to the country than good. For example, speaking at a conference in May this year, Zsombor Essősy, CEO of MAPI Hungarian Development Agency Corp., “The Expert of EU and Domestic Funds” (as it is described on MAPI’s website), stated the following: “If our country spends EU money following the present trends and framework, this might cause the biggest tragedy of Hungary.”

According to a detailed study on the topic by Hétfa Alapítvány, the use of EU money in other countries does not seem to be more efficient than in Hungary. Having spoken to quite a few people dealing with the issue in other net recepient countries, I am not surprised by this conclusion.

Along with others, our organization, the Clean Air Action Group (Levegő Munkacsoport), analyzed the reasons for such a perverse use of EU money. Here I will summarize just a few of these reasons, described in detail in our report.

EU funds are distributed to companies in a way that seriously distorts the market. Many companies make an enormous effort to receive as much EU money as possible in order to gain a competitive advantage, instead of improving their products or services. This situation is also a serious threat to democracy because practically no business group would be willing to criticize the government for fear of not receiving public money.

A substantial amount of EU money has been spent to support the construction of new hotels. Even the Hungarian Hotel Association expressed strong criticism of state subsidies for hotel construction, emphasizing that existing hotels often struggle for survival. Such results of EU funding are characteristic not only of the hotel industry but practically all sectors of the Hungarian economy. Photo by András Lukács

A substantial amount of EU money has been spent to support the construction of new hotels. Even the Hungarian Hotel Association expressed strong criticism of state subsidies for hotel construction, emphasizing that existing hotels often struggle for survival. Such results of EU funding are characteristic not only of the hotel industry but practically all sectors of the Hungarian economy. Photo by András Lukács

The present system of distributing EU funds is also a hotbed of corruption. Free money irresistibly attracts all those looking to get rich (or much richer) within a short time by illegal or semi-legal means. These circles do everything they can to capture the national and local governments, and, as practice proves, they often succeed. (This has been described in detail, for example, in studies by Transparency International Hungary.)

Another driving force behind the ill use of EU money is the endeavor of the government to spend every last cent, rendering the efficiency of spending much less important. Coupled with corruption and other factors, this leads—among others—to investments that are not really necessary, or do not represent the most efficient way to spend public money in a given period of time. Furthermore, even if the investment can be justified and even if there is no corruption behind it, it is often implemented in a very wasteful manner because it is financed with “free money.”

A new brandy distillery built with EU money. A World Health Organisation report (as summarized by 247wallst.com) states: “No country had a higher rate of alcohol use disorders than Hungary, where 19.3% of the population abused alcohol in some form. As many as 32.2% of Hungarian men and 6.8% of women suffered from alcohol use disorders, the highest among countries reviewed.” Photo by András Lukács

A new brandy distillery built with EU money. A World Health Organisation report (as summarized by 247wallst.com) states: “No country had a higher rate of alcohol use disorders than Hungary, where 19.3% of the population abused alcohol in some form. As many as 32.2% of Hungarian men and 6.8% of women suffered from alcohol use disorders, the highest among countries reviewed.” Photo by András Lukács

In our report, besides describing the situation, we also made concrete proposals to the European Commission and governments of EU member states to remedy the situation. The main points are the following.

In the Treaty of Accession, all EU member states declared: “Our common wish is to make Europe a continent of democracy, freedom, peace and progress. The Union will remain determined to avoid new dividing lines in Europe and to promote stability and prosperity within and beyond the new borders of the Union. We are looking forward to working together in our joint endeavor to accomplish these goals.” In our understanding, this means that all member states will improve their legislative and institutional systems as much as possible in order to achieve these goals, but at least they will refrain from any backward measures. Therefore, it must be stipulated that member states repeal all legislative and institutional measures that have been adopted by the given member state since its accession to the EU that contradict the principle of non-retrogression as far as “working together in our joint endeavor to accomplish these goals” is concerned.

The European Commission must demand that the Hungarian government implement all possible best practice measures within a reasonable time to reduce corruption and other malfeasances. In our opinion, this is a measure that would fully comply with EU legislation. The European Parliament also called for measures “to be implemented right across the spectrum of EU policies, and for action not just in response to cases of fraud but also to prevent them.”

The Commission should require strict implementation of the European code of conduct on partnership in the framework of the European Structural and Investment Fund. According to the code, the governments of the member states must closely cooperate with “bodies representing civil society at national, regional and local levels throughout the whole program cycle consisting of preparation, implementation, monitoring and evaluation.” However, the Hungarian government has been doing just the opposite.

The fulfilment of the National Reform Program (NRP) and of the Country-Specific Recommendations (CSRs) should be the main criteria for the assessment of the efficiency of the use of EU funds, and not the success or failure of individual projects or groups of projects. The European Commission should strictly control the former, and not the latter. (The NRP is a document that presents the policies of the member country, which aim to achive the targets set forth in the EU’s Europe 2020 Strategy. The CSRs are the yearly assessments by the Commission on the progress of each member state towards achieving these targets, and they include recommendations for improving the country’s performance.) The NRPs and CSRs are approved by the governments of the member countries as well, thus they are binding commitments for these governments. In spite of this, the Hungarian government is generally doing just the opposite of what it committed itself to in these documents. This is well known to the European institutions concerned; for example, an assessment by the Economic Governance Support Unit of the European Parliament came to the conclusion that in 2014 only Bulgaria and Hungary made no meaningful progress in implementing any of the recommendations.

The EU should give all EU funds, destined for national purposes, directly to the national governments, without any requirements for the precise use of these funds, i.e. each national government should decide that for itself. On the other hand, in the event that a country does not comply with the above requirements, EU funding must be partly or completely suspended until it comes into full compliance. We believe that this is not only legally possible even today, but it is an explicit duty of the European Commission: according to EU legislation it is the Commission’s task to protect the EU’s financial interests.

I strongly believe that it is absolutely necessary to provide EU funds to the less developed member states with the goal of improving their economic well-being as well as their political stability in order to strengthen the EU as a whole and to make it more competitive globally. But EU taxpayers’ money must be used for this purpose, not against it.

June 27, 2016