Tag Archives: Budapest

Explosion in Budapest: Skeptical Hungarians suspect foul play

Last night around 10:30 there was an explosion in front of an empty storefront at 2-4 Teréz körút. Two policemen, a man and a woman, both in their twenties, were seriously injured. According to early reports, the explosion took place inside the store, but eventually it was ascertained that the detonation of the anti-personnel nail bomb occurred outside. Hundreds of nails have been found nearby.

A few minutes after the explosion / Photo by László, a reader of Index

A few minutes after the explosion / Photo by László, a reader of Index

In no time, hundreds of policemen surrounded the area and evacuated the residents of the building. The police went from building to building, from apartment to apartment all night in the area, requesting information from the inhabitants. Some people near the scene of the crime reported a very powerful blast that did considerable damage to nearby buildings.

A demolition expert shared his knowledge of nail bombs with the public. On the basis of pictures of the crime scene he ascertained that this particular bomb was a small, most likely home-made device, adding that this was the kind of explosive device used in the Brussels airport and metro station that killed 31 people and wounded 250. Nail bombs are used mostly in the Middle East (including Israel), in the United States, and lately in Western Europe. In Hungary no such apparatus has ever been used. After this information, it was no surprise that people thought that whatever happened on Teréz kőrút was likely an act of terrorism.

Another expert, István Gyarmati, a Hungarian diplomat and political scientist specializing in national security issues, found it “odd that the victims were policemen and only policemen.” He found it equally strange that “they were only wounded” and not killed. So, it was inevitable that rumors began circulating on Facebook and in comments to newspaper articles about the possible perpetrators. This was especially the case since, until late tonight, the police refused to share any information with the public about the case.

This morning 24.hu neatly summarized the “facts,” which stoked public suspicion. The paper found it strange that only two policemen were hurt and that the first two people to arrive on the scene happened to be policemen in civilian clothes. Within minutes 100 policemen arrived in armored personnel carriers. Pieces of information coming from the policemen at the scene were contradictory and, most importantly, 12 hours after the explosion no official information was available.

Clearly, the reporter for 24.hu suspected that the explosion was an inside job. And he is not alone. No matter what the police investigation of the incident uncovers, a large segment of the Hungarian population will believe that the whole affair was staged by the Orbán government to make sure that the refugee referendum on October 2 succeeds. This shows the depth of suspicion that surrounds the Orbán government.

As the day went by more information was received from those who witnessed the bloody scene. MTV’s M1 station learned that a still unidentified man placed a package or brief case on the sidewalk seconds before the explosion. HVG learned that the two young policemen were actually the specific targets of the assailant. Employees of a restaurant selling gyros nearby claimed to see a white-skinned man around age 40 wearing a white hat. All sorts of stories were circulating, which only added to the suspicion of chicanery.

Around 2:00 DK demanded that the police and the government clear the air and tell the public by 6:00 p.m. what they have learned so far about the incident because “many people don’t find it impossible, in fact they believe it to be likely, that the Orbán government is behind” the alleged terrorist act. About the same time Bence Tuzson, undersecretary in charge of government communication at the prime minister’s office, told MTI, the Hungarian telegraphic agency, that by tonight the police will have enough information to inform the public of the details of the case. Népszabadság was pleased that Tuzson refrained from frightening people with terrorism. On the other hand, Georg Spöttle, another suspicious expert close to the Hungarian government who was apparently at one point a member of the German police force, announced that according to German law all crime using a detonating device is considered to be a terrorist act.

At last, around 9:00 p.m., Károly Papp, chief of the whole Hungarian police force, accompanied by the head of the Central Investigative Prosecutor’s Office (Központi Nyomozó Főügyészség) made an official announcement. Papp said that the assailant’s targets were the two policemen, adding an important sentence to the announcement: “he viewed the attack on these individuals as an assault on the whole police force.” A manhunt began for a 20- to 25-year-old man about 170 cm tall with a light-colored fisherman’s hat who wore a dark denim jacket, blue jeans, and white sneakers. The police are ready to pay 10 million forints to anyone who can provide information leading to the arrest of the suspect.

Although Police Chief Papp didn’t call the incident a terrorist act, there are a couple of sentences in his comments that are worrisome. He announced that tightened security measures have been introduced at the Ferenc Liszt International Airport, at border crossings, and on all international trains. A well-known journalist on Facebook found it troubling that Papp considers the attack on these two individuals to be an attack on the whole police force, which can be interpreted as a terrorist act. If that is the case, the government might introduce a state of emergency for the next two weeks, which would include the day the referendum is being held. That would mean a ban on demonstrations planned by opposition parties.

To these questions we have no answers at the moment. I’m pretty certain that a lone individual is responsible for the crime, but what this man’s motivation was only time will tell. Skeptical Hungarians on Facebook, however, are certain that we will never know the truth because whatever it is will be made a state secret for at least thirty years. That’s Orbán’s Hungary for you.

September 25, 2016

Two men who put up a fight: Lajos Simicska and Bachar Najari

Among the active members of Hungarian Spectrum there has been a long-standing debate about the most useful attitude toward the Orbán regime’s very existence and future. There are those who get upset when they encounter pessimism regarding the removal of the present Hungarian government. They think that defeatism is counterproductive and take every opportunity to raise their voices against naysayers. Among these people we find some who think that these pessimists are actually Fidesz propagandists whose job is to spread the dogma of Fidesz invincibility. But, to be fair, one doesn’t need to be a Fidesz troll to feel less than optimistic given the state of affairs in the country.

I for one agree that the proverbial Hungarian pessimism can become a self-fulfilling prophecy, which should be avoided at all costs. But, at the same time, we must admit that overcoming the obstacles that Orbán and his minions have placed in front of those desiring change is a formidable task.

Today I would like to hearten those who are worried about Hungary’s future by writing about two men who decided to stand up to the government. The first is Lajos Simicska, Orbán’s friend from high school, who reaped all the benefits of the mafia state until his falling out with the prime minister about a year and a half ago. The other is Bachar Najari, a Syrian-Hungarian-Swiss businessman, the new owner of the famed Zsolnay Porcelain Factory in Pécs. Although for different reasons, both were targeted for financial annihilation by a corrupt regime. It looks as if the powers that be are finding it difficult to destroy them.

Some people believe that Lajos Simicska’s contribution to the creation, development, and final accomplishment of Fidesz was even greater than Viktor Orbán’s. After all, it was Simicska who brought home the bacon. Of course, in the process he himself became immensely rich. But then came the falling out. Orbán, being a vindictive man, decided to ruin his old friend financially.

Simicska’s most important business venture is Közgép, a construction company that specializes in building highways and railways. As such, it is heavily dependent on government orders. Thus, Simicska looked like an easy target. Indeed, right after the blow-up between the two men, the government suspended midstream the highway that was to be built by Közgép. The second move was that the Public Procurement Authority (Közbeszerzési Hatóság), which handles government tenders, “discovered” that Simicska’s firm had cheated on one of its tenders. It was decided that as punishment Közgép would not be able to compete for any government jobs for three years. Simicska went to court and won, both in the lower court and also on appeal.

Trying to ruin Simicska through Közgép was not enough. Orbán instructed István Tarlós, mayor of Budapest, to break a long-term contract with Simicska’s firm, Mahir Cityposter. In 2006 the firm acquired the right to provide the city with 761 large cylindrical kiosks. The contract was to be good for 25 years. Ten years later the city suddenly “discovered” that the contract was not fair. When Simicska didn’t remove the kiosks by a specified date, the city ordered them to be forcibly removed despite a court order to stop the vandalism. Simicska promptly hired György Magyar, a very able lawyer, who said from the beginning that the case was absolutely clear-cut. And indeed, he was right. A few days ago the court agreed with the argument Simicska’s lawyer presented and forbade the removal of the kiosks while the case is pending before the court of appeal. The city will also have to pay 6.8 million forints in court costs. If the city loses, it will have to pay Simicska 600 million forints in damages.

Perhaps Simicska’s savviest move to date has been to form a consortium with the Italian company Itinera, which has been described in the Hungarian media as “a big gun.” Itinera has been “active in large-scale infrastructure projects and civil construction for more than 75 years in Italy and around the world.” Közgép together with Itinera presented a bid for a 27 km-long section of the M4 highway between Berettyóújfalu and the Romanian border. Their bid was 58 billion forints or approximately 188 million euros. Two other consortiums were also eyeing the job: (1) a consortium of three Hungarian companies whose bid was 84 billion forints or approximately 268 million euros and (2) a French-Slovak-Czech consortium that bid 87 billion forints or 272 million euros.

The difference in price is staggering. It seems that Simicska with this offer wanted to show the fair (admittedly, probably on the low end of fair) price of road construction and to highlight the graft that is normally built into these bids. In the case of the Hungarian consortium it was as much as 26 billion forints or 80 million euros. In this particular case almost 3 million euros per km would end up in someone else’s pocket. Of course, it is still possible to find fault with the Közgép-Itinera tender if Viktor Orbán so desires, saying that price is not everything, but apparently the Közgép-Itinera bid is also best in every other category, including environmental considerations. The consensus is that it will be very difficult to award the project to anyone else.

 

Now we can turn to the case of Bachar Najari, the Syrian-Swiss businessman with a Hungarian wife who also speaks fluent Hungarian. How Najari ended up owning the Zsolnay porcelain factory is a long story, which I pretty well told in a post titled “How to ruin a businessman with government help.” The upshot of the story is that one of Viktor Orbán’s oligarchs, Attila Paár, decided that he would like to own the factory because many of the vintage buildings in Budapest that will be restored or even rebuilt will need the famed terracotta tiles Zsolnay was famous for in the last decades of the nineteenth century. Najari had managed to put the formerly city-owned factory on solid financial footing, and it looked as if from here on it would be a profitable enterprise, especially with the impending sale of roof tiles. There was a fairly large loan which had been taken out by the city earlier from the Hungarian Development Bank for which Najari offered a certain amount of money to settle the account. The bank declined the offer and instead sold the debt for half of what Najari had offered to Attila Paár. Meanwhile, the city of Pécs decided to help Paár along by setting up a bogus company to which it recruited more than half of the workforce of Zsolnay. These workers are actually on paid vacation and no one knows who pays them. The situation was compared by one of the workers of the factory to a gangster film from the 1930s.

gangsters

Najari decided to fight. First he managed to get back his stock, which had been placed under sequestration. He used his own money and made good on the debt he inherited when he bought the factory from Pécs and also paid 90 million in local taxes, although it was a disputed item. Therefore there was no more reason for the city, which owns 19% of the stock, to take over the factory. Then the Kaposvár court refused to register Pécs’s new porcelain manufacturer, called Ledina Kerámia. Finally, the court in Zalaegerszeg turned down the request for a liquidation of the Zsolnay factory. A few days ago the city of Pécs “sold” the nonexistent Ledina Kerámia to an unnamed off-shore company. The city claims that the sale, for 3 million forints, “will ensure the jobs of those workers who were enticed to leave Zsolnay because it was to fold soon.”

Meanwhile work is being done at Zsolnay. Najari refused to be intimidated, and it seems that he managed to foil the attempt to rob him blind.

Although it is not easy, these two cases show that a person can win as long as he has the means and the determination to stop the Orbán regime’s unscrupulous, illegal activities.

September 19, 2016

Holding the Olympic Games in Budapest: Viktor Orbán’s obsession

In the last week or so we have been learning more about the cost of Viktor Orbán’s dream project: to host the Olympic Games in 2024.

It’s hard to know exactly when he first entertained the idea. We know that by the time he became prime minister in 1998 he was already plotting to hold the 2012 Olympics in Budapest. Luckily Orbán lost the election in 2002, and the following year the Medgyessy government had the good sense to withdraw Hungary’s bid. But a lot of money had already been spent on the project, which was unrealistic from the start. What a disappointing year it had to have been for Orbán. No fancy palace for the first family in the Castle District and no chance of hosting Olympic Games in Budapest. But Orbán never gives up on his pet projects. He just may live in the Sándor Palace one day. And he is still working hard on his Olympic dream.

MTI / Photo: Tibor Illyés

MTI / Photo: Tibor Illyés

Over the course of the last two years, in great secrecy, a team prepared Hungary’s bid. Until recently no one managed to get any information out of the government concerning the amount of money that has been spent so far. A few figures have been known for some time. For example, $36 million was spent just on the bidding process, which included feasibility studies and projected estimates. The total cost of $2.8 billion that PricewaterhouseCoopers came out with is considered by Andrew Zimbalist of Smith College, who is an expert on the economics of the Olympic Games, simply “fanciful.” For recent Olympics “the cost runs from about $15 billion to $30 billion.” He carefully calculated the costs and the possible benefits of holding the Games and came to the conclusion that they were financial suicide for most cities.

Holding the games in Budapest has many opponents, mostly of course from the ranks of the opposition. They even tried to hold a referendum on the question, which was rejected by both the government and the Fidesz-majority City of Budapest. The Kúria followed suit. If the government is at all worried about the outcome of a possible referendum, it makes sure that it will never be held.

In early August Publicus Research published a poll which found that the majority of respondents didn’t want to have the Olympics held in Hungary. Seventy-five percent of them considered the cost too high and 64% thought that the country is too poor for such an extravagance. Almost 60% believed that the money spent on the Olympics would only enrich entrepreneurs close to Viktor Orbán. Two-thirds would spend the money on healthcare and education instead.

After quite a few months and a lot of effort, journalists finally got some information about the money that has been spent already, which is staggering. As 444.hu aptly declared, those figures should convince the government that “it would be time right now to abandon the whole affair.” The money flows through an office which began functioning in 2015 called Budapest 2024 Nonprofit Zrt., owned jointly by the Magyar Olimpiai Bizottság (MOB) and the City of Budapest. The office is well endowed by the government. This year alone it has a budget of close to $36 million. Next year Budapest 2024 will most likely receive the same amount. The nonprofit spends a lot of money on itself. For example, it moved into the Eiffel Palace, one of the notorious purchases of the Hungarian National Bank, which is perhaps the most expensive piece of real estate in the whole city.

The estimate of $2.8 billion, which Zimbalist considered to be “fanciful,” doesn’t include such items as new bridges across the Danube, new streetcar lines, and a new railroad bridge. These items, according to estimates, add an additional $7.2 billion. So, we have already reached the lowest possible figure of $10 billion that Zimbalist was talking about. This figure is 8% of Hungary’s current annual GDP. Moreover, if this is their own estimate, we can be sure that the final figure will be at least twice as much.

Zimbalist published an article, “An Economic Myth of Olympic Proportions,” just about the time the Olympic Games began. He described the Games as boondoggles in the majority of the cases. He called the International Olympic Committee (IOC) “an unregulated global monopoly” which conducts a biannual auction in which cities compete against one another to prove their suitability. “The outcome of this process is predictable: winning cities usually overbid.” Recent Olympic Games have cost $15-20 billion and the total revenue for the host city was about $3.5-4.5 billion, including TV contracts. Why is the figure so low? Because 75% of the revenue from the TV contracts goes to the IOC and only 25% to the host city.

People who are keen on hosting the Olympics argue that holding the games boosts tourism, but this is not always the case. In fact, tourism in London during July and August 2012 decreased by 5% because ordinary tourists don’t want to encounter huge crowds, transportation delays, inflated prices, and possible security threats. And the argument that the country as a result of a successful Olympics will be more attractive to investors is hollow. Why should it be?

Péter Zentai, a Hungarian journalist, interviewed Zimbalist at the end of August, in the course of which he elaborated on his assessment of the economic aspects of the Games. According to his estimate, the Olympics in Rio de Janeiro has lost about $10 billion. The Hungarian organizers argue that the so-called Agenda 2020 of the IOC puts a lid on the enormous expenses associated with the Games. But, according to Zimbalist, Agenda 2020 “doesn’t contain anything new.” The International Olympic Committee has always talked about “flexibility, sustainability, reuse” but at the end there was “always the same megalomania.” It’s no wonder that smaller cities like Cracow, Oslo, Stockholm, and San Moritz changed their minds. And there is talk about the possibility of Rome withdrawing its bid. The sad fact is that a mere 20% of the money spent benefits the economy and society of the city and the country.

One can only hope that Budapest will not win against Paris or Los Angeles, assuming Rome is no longer in the running. Even if the Hungarian government doesn’t have any sense and refuses to realize that the country doesn’t have the financial strength and the infrastructure in place to host the usual summer extravagance, perhaps those who decide the issue will.

September 5, 2016

Antal Rogán’s decision to sue might have backfired

In April of 2015 Antal Rogán, today one of the most important members of the Orbán government, sued Péter Juhász of Együtt because Juhász had called him a criminal in connection with his real estate dealings while he was mayor of District V in Budapest. District V constitutes the heart of Budapest, where perhaps the most valuable pieces of real estate can be found. The opportunities for corruption in city halls are numerous, especially when a great number of buildings are still owned by the municipality. That was the case in District V. Over Rogán’s eight years in office, 800 units–apartments as well as storefronts–were sold to private individuals.

According to a city ordinance, the tenant of a property owned by the municipality has the right to purchase the rented property at a reduced price if the city decides to sell. Rogán and his fellow city politicians apparently devised a scheme to jack up the rents so high that the tenants, who had the right of first refusal, were forced to leave the premises for financial reasons. Then came a “friend” who rented the place for a couple of months, after which he could buy the property at a 30% discount to the market value. Often Rogán allowed further illegal cuts in the purchase price, with some individuals acquiring valuable pieces of property at half price. A few months later the new owner sold the property for twice his purchase price. The assumption is that all these “good offices” on the part of the mayor and other district officials cost money, which went straight into the pockets of the facilitators, including Rogán himself, whose visible enrichment has been the talk of the country for a number of years.

One case especially aroused interest because it involved a well-known criminal, Tamás Portik, who is currently serving a 15-year sentence for his role in instigating several murders. In 2014 it came to light that Portik’s common-law-wife or girlfriend, Marianne Pápa, who also happened to be the aunt-by-marriage of Árpád Habony, the mysterious advisor of Viktor Orbán, with the help of Portik managed to get a 212 m² storefront for 52 million forints, which they subsequently sold for 102 million, its fair market value. It was at this point that Juhász, who was by then a member of the city council of District V and therefore had access to the relevant documents, called Rogán a criminal who received kickbacks from well-known underworld characters.

A month after Juhász’s accusation, in January 2015, Rogán sued Juhász for 1 million forints by way of compensation and demanded a statement from him admitting that he had “falsely stated that during the mayoralty of Antal Rogán the municipality had any business dealings with Tamás Portik or with any person or company connected with him.” The court case got underway on April 16, but Antal Rogán didn’t show. I should add that by that time Juhász had filed several complaints in connection with the real estate deals and an investigation was underway. Juhász’s lawyer asked the judge to summon Portik to give evidence because Portik, on several occasions during his own trial, had testified that he knew Rogán and that Rogán was lying when he claimed otherwise. Not surprisingly, Rogán’s lawyer objected, but to no avail. The judge decided to call Portik to testify.

The court appearance was scheduled for yesterday, June 17. Rogán and his lawyer were not happy. They wanted to disqualify the judge because “the case is dragging on too long.” Moreover, Rogán expressed his dissatisfaction that the judge had set the date of the next court appearance without consulting him first and that, as a result, he cannot face his accuser. Once it became known that Rogán was refusing to appear in court, now for the second time, the opposition media indicated that Rogán for one reason or another doesn’t want to face Portik. As it turned out, he had every reason to avoid him. Even the restrained and cautious Népszabadság wrote in an editorial that Portik’s description of his relationship with Rogán was realistic. Yes, we can doubt the veracity of Portik, but can we believe Rogán? What about Rogán’s inexplicable enrichment? Portik’s testimony was devastating, the paper claimed.

The rules and regulations concerning the testimony of a witness are roughly the same as in the United States. If a witness is later found to have lied under oath, he can be charged with the crime of perjury. Therefore, Juhász argues, Portik’s testimony should be taken seriously.

From the testimony it became clear that Portik was well acquainted with the way Rogán’s scheme worked. He was familiar with the property Árpád Habony’s aunt acquired, and he said he was involved in the transaction as a kind of go-between. Allegedly, Rogán urgently needed 10 million forints, and because both “Árpi and Marianne” understood that Portik knew Rogán, they asked him to deliver the amount in euros. Portik described the exact location of the Fidesz office where he handed the money to Rogán. Apparently, Rogán later complained that the money he received wasn’t quite enough, at which point “Marianne remarked that, as it is, Tóni is far too expensive.” That apparently wasn’t the only encounter between Rogán and Portik. They were both guests of honor at the opening of Nobu, Andy Vajna’s restaurant in the Kempinsky Hotel in Budapest.

Péter Juhász with his lawyer and Portik in the courtroom

Péter Juhász with his lawyer and Portik in the courtroom

Rogán’s lawyer was in trouble, and his only strategy was to rely on a 2008 conversation between Sándor Laborc, head of the National Security Office, and Portik. Portik had approached him to complain about right-wing elements in the police force who were badgering him to hand over incriminating information about leading members of MSZP. Portik at this point was very worried about a Fidesz win in the 2010 election and therefore offered to find dirt on men in the service of Fidesz, stressing during the conversation his allegiance to MSZP. Rogán’s lawyer kept returning to this conversation, trying to prove that Portik’s story had to be sheer fabrication because, given his strong commitment to the left, he couldn’t have had highly-placed Fidesz friends. A feeble argument.

The government mouthpiece Magyar Idők was also in trouble when it came to discrediting Portik’s testimony. It claimed that Portik didn’t remember the details of his meeting with Rogán, which was simply not true. The paper also maintained that Portik contradicted himself because he testified that he had never given any money to a Fidesz politician when, in fact, he had. But was that a contradiction? Of course not. Surely, there is a difference between giving your own money to a person and delivering somebody else’s money.

888.hu invoked the specter of communism. Portik, an ordinary criminal, is for them “one of the last undercover agents” of the Kádár regime, who has been engaged in dirty political work against Fidesz ever since 1990. Liberal journalists hate the leading Fidesz politicians so much that they are ready to use a feared criminal to discredit the government.

On the other hand, Magyar Nemzet, nowadays a conservative opposition paper, took Portik’s testimony seriously. “If one tenth of what we have heard from Portik is true, Rogán must go,” László Szemán wrote in an editorial. As the title of the piece indicates, Orbán has no choice. He must let him go. The dominoes are falling.

June 18, 2016

Business ethics is not the strong suit of Russians and Hungarians

Almost a year after the City of Budapest decided that the Russian company Metrovagonmash would refurbish the old trains of the Metro 3 line, the first reconditioned train arrived from Russia via Poland.

Originally, the city had wanted to purchase new cars, especially since the old Soviet-made trains on Metro 2 had already been replaced by new modern Alstom trains and the brand new Metro 4 line also uses Alstom cars. In the final minutes of the negotiations, however, the government announced that they would guarantee the 60 billion forint loan the city needed only if the money was used to recondition its cars, not for the purchase of new cars. Once that was decided, the choice was between Metrovagonmash and Skinest Rail, an Estonian company. Skinest’s offer was lower by 9 billion forints, it offered a 30-year guarantee instead of 25, and its motor design would have ensured savings in energy use. But Skinest was excluded from the bidding process because it had eight “formal” mistakes in its bid. These so-called “formal” mistakes always come in handy when Hungarian authorities want to bar someone from the bidding process.

Already at that point Erzsébet Gy. Németh, the only DK member of the city council who alone voted against the Metrovagonmash contract, suspected a connection between the Russian loan to build the Paks II Nuclear Power Plant and the Russian firm’s winning tender. Antal Csárdi, the only LMP member of the body, said at the time that “all signs point to the likelihood that Viktor Orbán during this trip to Moscow in February 2015 promised Putin that the Russian company would get the job.” He told Magyar Nemzet that Alstom sold new metro trains to Paris for less money than Budapest was paying the Russians for refurbished ones.

So, the first train arrived and with it the great surprise. There is a good likelihood that the train, consisting of six cars, is not the one sent to Russia to be reconditioned but a product that Metrovagonmash began manufacturing in 2009. Since the train’s arrival, experts who have examined it are coming to the conclusion that the Russians didn’t touch any of the old trains, described by many as wrecks. Instead, they got rid of some of their older, unsold trains sitting in their warehouses.

The first reburbished/new metro cars / MTI / Photo: Zoltán Máthé

The first refurbished/new metro cars / MTI / Photo: Zoltán Máthé

But why would the Russians resort to such deception? According to those who are convinced of the deceit, the Russians couldn’t possibly compete with manufacturers like Alstom with their less modern, technologically less advanced trains and therefore would most likely have lost in an open bid. But if that is the case, the Hungarian government is also implicated. After all, it was the Orbán government’s decision about the loan guarantee that forced BKV to sign a deal for reconditioned trains and thus enabled Metrovagonmash to get rid of 37 trains with 222 cars. It is likely that BKV, the city’s transit authority, was also complicit in the deception because immediately after signing the contract, the Hungarian side came up with new requirements, possibly to match the model the Russians were planning to send to Hungary.

Mayor István Tarlós doesn’t find anything wrong with this fraud concocted between the Russian and Hungarian governments, Metrovagonmash and BKV. His first reaction was that the opposition’s favorite pastime is hairsplitting. “Let’s suppose for the sake of argument that these cars are new. Then when did the city get a better deal? When for its money it gets refurbished ones or completely new ones?” He has no problem with the Russian and Hungarian governments’ trickery as long as, in his opinion, the city ended up on the winning side.

But did the city do well on the deal? Figures provided by media outlets differ greatly. Origo states that the city paid 69 billion forints for reconditioning the old cars while brand new trains would have cost 90 billion forints. However, according to Origo’s calculation, the cost of refurbishing the cars in Russia actually cost 84 billion forints because the city had to borrow 9 billion forints in foreign currency and the interest for the 15-year loan is 15 billion forints. Portfolio, disregarding any added costs, comes up with €1.33 million per Alstom car as opposed to €0.98 million for the Russian ones. But even if these cars are new, Portfolio adds, their technology is obsolete.

What are the technological deficiencies? What most people will miss will be air-conditioning. The Russians installed some kind of ventilation, but it is hard to tell whether this solution will do the trick. Also, the train uses an outmoded spring instead of modern air suspension and has an antiquated ATO (automatic train operation) which, according to Index, is as if we filled a modern office with Commodore 64s. And Budapest is stuck with these trains for 30 years.

Shortly after the appearance of the Népszabadság article BKV released a lengthy statement in which it “rejects the criticism of the high-quality reconditioning” of the metro cars. It touts the “most modern components,” the “extension of the guarantee without any additional cost,” and “the early delivery of the prototype.” The statement complains about the negative attitude of some people and expresses BKV’s joy at receiving the first six-car unit. And it goes on and on. Only one thing is missing: an outright denial that these cars are new. Attila Gulyás, the head of one of the unions of BKV workers, is taking BKV’s side. He claimed in a radio interview that BKV’s representatives visited Metrovagonmash during the reconditioning phase, and therefore “there are eyewitnesses to the reconstruction.” Otherwise, Gulyás finds these cars much more attractive than the Alstom ones. I guess he likes the Russian-style design, to which he is more accustomed.

Erzsébet Gy. Németh (DK) has already decided to file a complaint based on the suspicion of corruption, fraud, and deceit. LMP is contemplating the same unless BKV within a week can come up with creditable proof that the cars that arrived from Russia are refurbished and not new. As long as the chassis is new, a vehicle is considered to be new, and it is not difficult to determine whether the chassis is forty years old or brand new. LMP’s Antal Csárdi claimed that the Russians accompanying the cars encountered some difficulties with the custom officials, who had their doubts about the identity of the cars. If true, this is an unprecedented case in the business world.

June 3, 2016

A Hungarian guide to ruining an economy, one bus at a time

Today I will regale you with the story of the planned bus purchase by the Budapest Közlekedési Vállalat (BKV), owned by the City of Budapest. One hundred and fifty extra buses must be in service by November, when the long postponed but urgently needed reconstruction of the M3 metro line will begin. Those who are unfamiliar with the way business is done in Hungary will undoubtedly think that the purchase of buses doesn’t merit a whole post. But, as we all know, nothing is so simple in Hungary, especially with Viktor Orbán as prime minister.

By now all Hungarian municipalities, including the capital, have been stripped of most of their assets. They have lost their schools and hospitals, and they receive less and less money from the central budget. They are unable to apply for a loan without government approval. Even the Hungarian government, however, realized that the M3 line was in such a state that a tragedy could easily occur at any time, and therefore, as a necessary adjunct to the line’s reconstruction, it agreed to guarantee the loan necessary to purchase buses to carry the displaced metro traffic. And yet, from day one, the hands of Mayor István Tarlós and the members of the city council were tied. The government stipulated that only 75 buses could be in “ready-to-run” condition. The other 75 would be delivered in a half-finished state, and the purchaser would have to finish their assembly. IKEA buses, I guess. The government’s insistence on two different providers, one of whom would by default be a specific Hungarian company, I’m sure raised the Budapest city council’s hackles.

Nonetheless, following government orders, in 2015 the city asked for tenders for two different kinds of buses. For the “ready-to-run” kind, they received four bids. The winning bid came from the Polish company Solaris Bus and Coach S.A. The company, which was established 20 years ago, produces about 1,000-1,200 buses a year. In the other category, there was only one company that turned in a bid, the Hungarian MABI-BUS Kft. which is known primarily for its development of an electric bus called Modulo. The Polish “ready-to-run” Solaris cost €277,000 while the one that still required assembly cost €278,800.

According to the company’s website, so far only 63 complete buses have been manufactured, which have been purchased by Hungarian cities. Most of the company’s work has focused on making bodies for buses, which were sold to the United States. According to MABI-BUS’s very modest website, buses with their bodies can be found in several American cities, including Los Angeles, Washington, and Boston.

Photo: solarisbus.com

Photo: solarisbus.com

MABI-BUS has a history of being favored and unfairly rewarded by the government. Until recently, the head of the company was involved exclusively in the field of information technology. In 2010, however, he decided to build trolley buses. In 2011 the company received a grant to develop an electric bus. The government decided that it would prefer electric buses to streetcars in the key tourist district of Budapest. BKV also wanted to buy 20 electric buses and accepted a bid from Siemens-Rampini, the company that supplied Vienna. The city, however, couldn’t finalize its contract with Siemens-Rampini because government approval came too late. Most likely intentionally. In a second round of bidding MABI-BUS got the job, although it was the Chinese BYD, the best known electric bus manufacturer, that won the tender.

A few days ago it was time for the maiden run of the Modulo electric buses, but “the premier wasn’t exactly a success.” After three hours Modulo ran out of juice. Moreover, the bodies of the buses are too wide for the Castle District, where they are to be used. They are unable to turn around at the end of their run. A little earlier, while on a trial run, a bus lost one of its wheels, injuring a passerby. These electric buses cost €560,000 each.

The 150 buses the city of Budapest now needs are ordinary gasoline-powered buses. Given the gap between the Solaris and MABI-BUS bids (taking into account the cost of making MABI-BUS’s vehicles whole and usable) and the latter’s lack of experience in manufacturing gasoline-powered buses, the city council decided to simply ignore the dictate from the government and buy all 150 buses from Solaris, especially since delivery was guaranteed by the time the work begins on M3. As you can well imagine, the Orbán government was anything but happy with the city council’s “disobedience.” After all, the government had made it crystal clear which company it prefers. So, a week ago, the government reduced the size of the guaranteed loan. Suddenly there wasn’t enough money to buy 150 buses.

And what was the response from Budapest? As of three days ago, Tarlós claimed that in this case the city will buy only 110 buses and the rest will come from other routes. Tarlós in his blunt manner, in an interview on HírTV, said that he understands the decision to opt for the Hungarian-made buses because of national interest, but “at the moment there is no such thing as the manufacturing of buses in Hungary.”

Of course, this cannot be the end of the story because Viktor Orbán has to have the last word on every issue. On Wednesday, during a recess of the cabinet meeting, Zoltán Kovács, government spokesman, told MTI that the cabinet had decided “on a three-year strategy of bus manufacturing which would ensure the competitiveness of Hungary in the extremely intense international competition.” He added that already during the negotiations concerning the purchase of the Budapest buses the government asked the city to keep in mind national economic interests. Perhaps the best reaction to the announcement was portfolio.hu’s sarcastic headline: “The long-awaited national bus manufacturing is coming.”

Another most likely economically disastrous decision was made just because Viktor Orbán would like to help a Hungarian oligarch. The manufacture of buses is indeed a very competitive business. It is true that during the Kádár regime Ikarus did well, but then the Hungarian company had a ready market in the Soviet bloc and in some of the less developed countries. Once that market was opened to international competition, Ikarus’s sales collapsed. To develop a competitive international bus manufacturing business from scratch doesn’t seem promising. The six largest producers of buses in unit terms — Zhengzhou Yutong Bus (China), Daimler (Germany), Xiamen King Long Motor (China), Volkswagen (Germany), Marcopolo (Brazil), and Toyota (Japan) — accounted for two-fifths of all sales worldwide in 2013. There are more than a hundred larger and smaller manufacturers of buses. I highly doubt that serious feasibility studies have been undertaken, but MABI-BUS has already received grants worth billions of forints for the design and manufacture of its buses.

Of course, foisting the largely untried products of this company on Budapest is an absolutely foolish economic decision, but it seems that such considerations are immaterial to the Orbán government. I guess promoting MABI-BUS by all means possible, even those bordering on the illegal, is part and parcel of this regime’s unorthodox methods of running, and ruining, the country’s economy.

May 13, 2016

Iván Fischer and the City of Budapest: Music and politics

The Budapest Festival Orchestra and its founder and conductor, Iván Fischer, need no introduction. BFO is one of the top orchestras in the world. It proudly carries the name of the Hungarian capital and is thus one of the cultural trademarks of the city. There are naturally other orchestras in Hungary, but none has such an international presence as the Budapest Festival Orchestra, due largely to the energetic and imaginative Iván Fischer.

A quick look at the orchestra’s program will give you an idea of BFO’s busy schedule. In the next few months they will perform in London, Bruges, Baden-Baden, Amsterdam, and San Sebastián. In October they will be going to China and South Korea. In between their international performances and concerts in Budapest they make time to give “cocoa concerts” for youngsters, free of charge, to introduce them to classical music. They keep in close touch with Hungarian elementary and high schools, and the orchestra regularly invites school children to attend rehearsals. They visit facilities for older citizens, and they go to very poor villages where they give concerts for people who most likely have never in their lives heard a live orchestra or classical music. Every year they give a large outdoor concert free of charge on Heroes’ Square in Budapest. In brief, Iván Fischer’s orchestra is a jewel of Hungarian musical culture.

Why am I writing about the Budapest Festival Orchestra today? Because Iván Fischer and his orchestra are being threatened by the bellicose mayor of Budapest, István Tarlós. What began, at least on the surface, as a financial dispute over the sum the City of Budapest contributes to the orchestra has by now, a week later, become a full-fledged political attack on Fischer. The reason? He made it clear on several occasions that he is not fond of Viktor Orbán’s regime.

Photo: Marco Borggreve / Washington Post

Photo: Marco Borggreve / Washington Post

Iván Fischer is well known in classical music circles (and beyond), but István Tarlós needs an introduction, although I’ve written about him a few times over the years. My first recollection of him goes back to 2006 when as mayor of Óbuda he got into a lengthy argument with an MDF member of the council, called him all sorts of names, and finally told him “Don’t play games because I will knock your glasses off and will even stomp on them.” Once he became mayor of Budapest he chose a politically extreme actor and an anti-Semitic politician-writer to transform the city’s New Theater into a stronghold of far-right and often anti-Semitic productions. This decision, which prompted several demonstrations, was reported in most major newspapers in Germany and the United States.

Tarlós is also a homophobe, who last summer wanted to expel the Pride Parade from Andrássy Street and move it to a wholesale marketplace in the outskirts of the city. During an interview he shared his “private opinion” that he finds homosexuality “unnatural” and gays “repulsive.” He has a real “soft” spot for the homeless. Led by Tarlós, the Fidesz majority of the city council passed a local ordinance that banned the homeless from public places. Offenders could be jailed or fined up to $650.

And finally, I think we may safely say that Tarlós is not free of anti-Semitic prejudices. In 2013 he gave an interview on HírTV where he complained that Erzsébet Gy. Nagy of the Demokratikus Koalíció “made a statement and began her declaration with ‘Blessed is he who considers the poor! The Lord delivers him in the day of trouble.’ She quoted from the Book of Psalms. Now it is one thing that when they open the Bible on such occasions it always opens to the Old Testament, but I don’t want to say anything about this here.” And a little later: “I believe in the Lord, although it is true that I read the New Testament more often.” In brief, we are dealing here with a real charmer.

Going back to the current controversy. On April 27 István Tarlós announced that the City of Budapest will give only 60 million forints (€191,000) instead of 260 million forints (€827,000) to the Budapest Festival Orchestra. The announcement came without any prior warning in the middle of the season when the orchestra’s schedule was already set. The immediate explanation from the deputy mayor in charge of culture was that the orchestra gets a large yearly contribution from the central government and therefore is not in need of such major support from the city. Iván Fischer’s answer was a video on which he explained the effect this reduced contribution will have on the offerings of the Budapest Festival Orchestra. They will have to cancel 30 school visits, ten children’s opera performances, three concerts in the Palace of Arts in Budapest, and there will be no free midnight concert in December. In addition, three Bach church concerts and three others in abandoned provincial synagogues will have to be dispensed with. A foreign trip to Ravenna, Vilnius, Riga, and Saint Petersburg must be scrapped.

Tarlós didn’t wait long to answer. He accused Fischer of “losing his self-control” and announced that if “Fischer doesn’t stop his peremptory hysterics, threats, and perturbation we will have to re-think the grant.” He added that “we can use this money on any of the equally internationally famous Hungarian orchestras that don’t kick into our extended hand.” (And no, this is not a mistranslation.) I for one don’t know of another Hungarian orchestra that is as internationally famous. On another occasion Tarlós accused the orchestra of not fulfilling its obligation to the city because “just three or four people visit the pensioners, and there they do a little music making [zenélgetnek]. This is a nice mission, but it is not a performance.”

To make the real motivation behind his action even more transparent Tarlós added that if the orchestra doesn’t get any money from the city then “[Herr] Conductor [actually karnagy úr] will use it as a pretext to talk about political motivation, to disparage the city’s leadership, and to provoke the public.”

That political considerations are at the root of the action of the Fidesz-controlled city council was noticed by The Times, which yesterday compared Tarlós’s attack on Fischer to Pravda’s denunciation of Shostakovich in the 1930s. The same article suggests, not without reason, that “there may be a more sinister reason than austerity” behind Tarlós’s action. “The outspoken Fischer has enemies in Hungarian circles.” The New York Times also came to the same conclusion. “Mr. Fischer has emerged as an outspoken figure in Hungary as the country has drifted rightward in recent years.” Indeed, Fischer has made no secret of his condemnation of Viktor Orbán’s “illiberal democracy” and the country’s dangerous slide toward autocratic rule. In several interviews he expressed his worries about the direction in which the country’s leadership is taking the country.

I assume that what especially upset the Fidesz higher-ups was an e-mail that was found among Secretary State Hillary Clinton’s released documents. It referenced a letter that Iván Fischer had written to Vernon Jordan, former adviser to President Bill Clinton and a close friend of the Clintons. The letter was written on June 28, 2011, just before Hillary Clinton’s visit to Budapest. In it Fischer told Jordan that Mrs. Clinton “should be aware that Mr. Orban’s government is demolishing democracy in Hungary and is introducing a harsh system with disregard of human rights and freedom of speech.”

The Hungarian government would, of course, be much happier with a world-class orchestra whose music director’s political views are closer to its own, but they are stuck with Iván Fischer. Back in 2000 Viktor Orbán did try to promote another national orchestra, but it failed to come close to the stature of the Budapest Festival Orchestra. So he had to accept and reward the success of Fischer’s orchestra, however grudgingly. Currently the BFO receives 4.52 million euros from two sources: the central government and the city of Budapest. This amount is considered to be large by Hungarian standards, but in comparison to other world-class orchestras it is quite small. Well-known European orchestras are generously funded by their cities: Berlin 16.7 million, Munich 19.7 million, Zurich 18 million, etc.

After the initial upheaval there was a lull, but in the last two days the Fidesz media launched an attack against Iván Fischer personally as well as the business model of the BFO. The journalist who led the way was András Stumpf of mandiner.hu, who displayed complete ignorance about how modern, western-type orchestras survive financially. It is certainly not from ticket sales.

In Hungary, with the exception of the BFO, all orchestras are totally dependent on government grants, and they live from hand to mouth. Even a more generous, culturally conscious Hungarian government couldn’t properly fund its symphony orchestras. And so, the Budapest Festival Orchestra, in an act of self-preservation, opted for a mixed financial structure, one closer to the American model though without the benefit of a robust tradition of philanthropy.

The Budapest Festival Orchestra is structured as a foundation, with a board of directors and an endowment. The orchestra’s endowment, as is usual in western countries, is invested in stocks and bonds. This very idea baffled András Stumpf, who came to  the conclusion that if an orchestra has money stashed away, its music director shouldn’t complain about not receiving €827,000. Moreover, he added, in 2014 the orchestra actually made money. So, what do they want? I guess, for Stumpf and others in Hungary, BFO would deserve funding only if its coffers were completely empty. Fischer, on the other hand, knows full well that an endowment is not a checking account. Moreover, he thinks that the benefits that Hungary and Budapest derive from the very existence of the orchestra should be appreciated, and that this appreciation should be expressed, at least in part, in monetary terms.

It took about a couple of hours for the government mouthpiece, Magyar Idők, to list all of the orchestra’s “riches,” as well as Iván Fischer’s own, that András Stumpf had collected. A day later Ottó Gajdics, one of the worst examples of the right-wing media characters hovering around Viktor Orbán, wrote a vicious editorial “Ne dirigálj, vezényelj, Iván!” which is a play on words, indicating that Iván Fischer shouldn’t order people around but should stick with conducting. This particular editorial is a perfect example of the confusion rampant in certain Hungarian circles. Gajdics would like to force Fischer to resign. As if anyone, outside of the board of directors, had any right to remove the music director from his post. I guess Gajdics still lives in the Kádár regime, when the party leadership could decide who could or who couldn’t be the conductor of the Hungarian State Orchestra. The whole editorial is such a base and ugly piece that it is not worth dwelling on. But there are a couple of words at the end of the piece that merit comment. According to Gajdics, Fischer should stick with music. “But it looks as if instead he wants to meddle in politics. Or, what is possibly even worse, he is being used by sly characters working in the background for their own left-liberal political objectives. These are people who rattle on about the mafia state while they laugh up their sleeves that the regime after all paid [the orchestra] a billion.”

Iván Fischer organized a musical demonstration this afternoon, which was attended by thousands. In his speech he talked about a Budapest where there is more music, more joy, more love, and less hatred. He called attention to those who belong to minorities. Many in the audience brought their own instruments and played together with orchestra members. It was a moving scene.

May 7, 2016