Tag Archives: European Commission

A new crusade in Brussels over the price of electricity

It was evident already in 2010 that the Orbán government considers the nationalization of utility companies one of its priorities. Indeed, by now almost all such companies, including, believe it or not, those of chimney sweeps, have been nationalized.

In 2013 the government, in an effort to bolster its sagging popularity, slashed retail utility rates. With this move the government killed two birds with one stone. The much-advertised cut in utility prices made the government very popular practically overnight. It also resulted in serious losses for E.ON, a German-owned gas and electricity company, and practically forced the German owners of E.ON to bail and sell the company to the Hungarian state. As it turned out, the Hungarian government paid far too much, 260 billion forints, when the assessors claimed that E.ON was actually 600 billion forints in the hole. Obviously, price was no object. Orbán wanted utility companies to be in state hands.

Once this was done, the government set about to lower prices in three stages. Critics warned that producing gas and electricity at a loss would mean that these utilities would not be able to undertake the technical innovations necessary for improved service. Once again, however, Viktor Orbán was lucky, at least in the case of natural gas. In the last couple of years the price of gas on the free market has fallen around 40%, yet the state did not lower the price it charged consumers anywhere close to that amount. Given the state’s monopoly in the energy sector and the government-regulated price structure, the profit margin of the state utility companies must be considerable. According to some estimates, Hungarian families pay about 25% more for gas today than they would if there were no fixed prices and if true market conditions existed.

Independently from all this, the European Commission is working on a so-called “winter energy package,” which is a comprehensive plan for the creation of an “energy union.” One particular provision of this proposal caught the eye of the Hungarian government: the abolition of government-set prices for electricity retailers over a five-year period. If adopted by the European Council, the body consisting of the prime ministers of the member states, Hungary will no longer be able to keep electricity prices artificially low. Hungary has among the lowest electricity rates in the EU. In Denmark consumers pay 0.309 euros per kWh, in Germany 0.297. In Hungary the price is 0.111 euros per kWh. Only in Bulgaria is electricity less expensive than it is in Hungary. The European Council is convinced that artificially low prices discourage the conservation of energy and deter investors.

electricity

So, the Orbán government decided to launch a new “war against Brussels.” Viktor Orbán announced in his Friday morning radio interview that “the government will not allow Brussels to eliminate the government’s power to set prices.” Such a move, he emphasized, would put an end to the government’s ambitious plan to lower utility prices even further in the future. He promised to defend “utility decreases,” adding that “it will be a difficult struggle but we have a chance of success” because Hungary’s position in Brussels has been greatly strengthened. Naturally, due to his outstanding political success on the world stage.

Szilárd Németh, who was chosen to be the “utility tsar” back in 2013, was given a new mission. The result? He announced that the government had found the remedy. The government will endow the Hungarian Energy and Public Utility Regulatory Authority (MEKH) with legislative powers which, in his opinion, could derail Brussels’ intentions of abolishing fixed electricity prices.

Németh outlined the terrible state of affairs during the socialist-liberal governments (2002-2010) when electricity prices went up by 97% and the price of gas tripled while inflation was only 58%. The evil foreign owners “lugged out 1,200 billion forints of profits.” But then came the Fidesz government which froze prices in 2010, and in the next two years prices rose only very little.

This is not what the author of a very thorough article remembers about the course of natural gas pricing. According to her, in 2012 one MJ of natural gas up to 1,200 m³ use was 15% more expensive than before the Orbán government came into power. Her final estimate is that if the Orbán government hadn’t touched gas prices at all, the average consumer would pay significantly less than he does today.

In discussing the evil deeds of Brussels, Németh stressed that the European Union cannot constantly ignore Hungarian sovereignty. “Hungary didn’t join the European Union to give up everything it possesses.” The decrease in utility prices is a question of sovereignty and national security. It is up to the Hungarian government to decide how it wants to help Hungarian families. Obviously, the government doesn’t want to help only those families who need assistance. Otherwise, it could offer subsidies to people whose income is insufficient to pay the full price for utilities. No, the government wants all Hungarians to be grateful that they are getting a break on their utility bills thanks to Fidesz.

The most interesting twist in Németh’s story came at the end of his press conference. He admitted that in 2013 the Hungarian parliament had extended the right of legislative powers to MEKH but that the European Union considered the decision illegal and subsequently the Hungarian government had to annul the law. So, I don’t know why the Orbán government thinks that this time around they will be more successful than they were three years ago.

All the talk about fighting Brussels on electricity prices is most likely just a political ploy. The Commission’s recommendations are just that, recommendations. The final nod comes from the European Council where Hungary is represented by Prime Minister Viktor Orbán. He can vote against the proposal.

My guess is that now that the migrant issue has lost its appeal, the government has decided to turn its attention to utility decreases which were so successful in gaining voter support before the last election. Fighting Brussels over a pocketbook issue can most likely be dragged out until 2018.

December 3, 2016

Brussels after the Hungarian referendum

Although the Hungarian media is full of the story that Antal Rogán lied about his extravagant helicopter ride to a wedding, I would rather talk about the Hungarian referendum’s reception in Brussels.

The initial reaction came from Margaritis Schinas, the first spokesman of the European Commission, who, in his October 3 press conference, tried to give the impression that the Commission takes an absolutely neutral position as far as the result of the referendum is concerned. As he put it: “If the referendum had been legally valid, we would have taken note of it; now that it is declared legally void, we also take note of it. We respect those who voted and those who didn’t vote.” A day later, in response to a question from a Hungarian journalist, the European Commission spokesman said: “The pertinent authorities declared the results of the referendum invalid. I leave it to you to draw the conclusion how this will influence the decision-making process of the European Union.”

We know that there was a sigh of relief in Brussels after the referendum failed. Martin Schulz, president of the European Parliament, indicated that Viktor Orbán’s failure to produce a valid referendum had weakened his position in any future negotiations with the officials of the European Union. As he put it, “Budapest should take it … seriously that it was not a majority and we have therefore a good chance for a dialogue.” This indicates that Viktor Orbán will most likely have a harder time in his negotiations in Brussels after the referendum fiasco.

On October 5 Jean-Claude Juncker made it clear in a speech to the European Parliament that he has no intention of lifting the quota of 1,294 refugees that Viktor Orbán himself approved already in February 2016. His remarks were interpreted by the anti-EU British Daily Express as a “brazen statement [that] is likely to cause consternation in Budapest.” Again today in Paris Juncker called on the member states to honor the decision on the distribution of refugees that was agreed upon in February. The Hungarian internet site Index seems to agree with the British paper when it predicts that Juncker’s hard-line attitude regarding compulsory quotas will only provide further ammunition for Viktor Orbán. However, Juncker’s steadfast, hard-hitting words of late don’t bode well for a friendly future encounter with the Hungarian prime minister, especially since Juncker looks upon referendums as the death knell of the European Union. Apparently, Juncker was specifically thinking of the Hungarian referendum when he talked about the problems of the European Union.

On October 6 Bertalan Havasi, head of the public relations department of the prime minister’s office, released the news that Viktor Orbán had sent a letter to Jean-Claude Juncker in which he gave details of the result, emphasizing that “3.33 million people expressed their will that without the approval of the Hungarian parliament no foreign nationals can be settled on the territory of the country” and therefore “he is initiating an amendment of the constitution.” He reassured Juncker that the proposed amendments will be in accord with European Union law as well as with Hungary’s international obligations. Copies of the letter went to Donald Tusk, Martin Schulz, and Robert Fico as the current president of the Visegrád 4 Group.

Jean Claude Juncker's door is always open Source: The Telegraph, credit AP

Jean-Claude Juncker’s door is always open / Source: The Telegraph, credit AP

At the October 3 press conference Margaritis Schinas, again in an answer to a question by a journalist, said that if Viktor Orbán would like to meet with the president of the European Union, “Mr. Juncker’s door is always open to all the heads of the member states.” Although Havasi made no mention of any such request, apparently Orbán did ask for an urgent meeting with Juncker in the same letter, as Népszabadság learned. But since Juncker already had a fixed schedule yesterday and today, “he could give Orbán only an impossible time that Orbán couldn’t accept.” As someone half-jokingly said, perhaps Juncker suggested meeting him late afternoon today, which certainly wouldn’t have suited the football-crazy Orbán who wanted to be present at the Hungarian-Swiss game held in Budapest. I suspect that the meeting between the two men will take place soon.

There is another issue in connection with the referendum. Tibor Navracsics, once one of the highest office holders in Fidesz and the Orbán government, is currently an EU commissioner. On the very day of the referendum he gave an interview to pestisracok.hu, a far-right Fidesz internet news site. In the interview he disclosed that he had voted “no” on the referendum question because in his opinion the question has nothing to do with the European Union or the European Commission. It is a national issue and therefore, despite his position as one of the commissioners, he can freely express his opinion. Index’s “Eurologus” agreed with the commissioner and quoted the European Commission’s “Code of conduct for commissioners.” Csaba Molnár, DK European Parliamentary member, thinks otherwise and asked Juncker to investigate the case. The leader of the Alliance of Socialists and Democrats of the European parliament, Gianni Pittella, agrees with Molnár that European commissioners have a duty to promote the general interest of the EU, not the interests of their own national governments.

The comments by Commissioner Navracsics on the failed referendum in Hungary calls this into question. A legal decision was taken on the resettlement of refugees, and the question in the referendum went directly against this and against the proposal coming from the EU Commission, of which Navracsics is a member. If Commissioner Navracsics does not believe in what his own Commission put forward and on the contrary thinks that national governments should not follow decisions taken by the whole of the EU, then we have a problem. If this is how he feels, then why is he working for the European Commission? Commissioner Navracsics must clarify his comments immediately.

Alexander Winterstein, deputy chief spokesman for the Commission, when asked about Navracsics’s action by euroactive.com, was evasive, claiming ignorance of the case. By today, however, it looks as if Juncker’s office is looking into the matter, asking for translations of Navracsics’s interviews and statements. Népszabadság learned that the officials of the commission find Navracsics’s public statements ambiguous, from which it is not clear whether they side with the Hungarian government or the commission on the issue of “the compulsory settlements.” Winterstein announced today that Juncker will bring the topic up at the meeting of th commissioners.

It is possible that in purely legal terms Navracsics is correct when he claims that no conflict of interest exists in this case. But one thing is sure: as euronews.com reported a day after the vote, Brussels considers Orbán’s failure to be their victory.

October 7, 2016

The leaders of Visegrád 4 meet with Angela Merkel

The European Union has gone through some rough times in the last year and a half. The Brexit decision certainly shook an EU already battered by the influx of almost two million refugees and immigrants. But at least the British departure, whenever it actually happens, will not undermine the foundations of the European Union. Some commentators, in fact, think that further integration, which they consider a necessity for the long-term survival of the EU, can be more easily achieved in the absence of a reluctant United Kingdom, which in the past consistently opposed any changes to the already very loose structure of the Union.

Closer cooperation would have been necessary even without the refugee crisis, but the presence of so many asylum seekers–mostly in Greece, Italy, and Germany–makes a common policy and joint effort by the member states a must. Thus, Chancellor Angela Merkel decided to launch a series of consultations with European leaders. To date she has talked with 17 prime ministers.

Her first trip was to Italy where she, Matteo Renzi, and François Hollande met first on the Italian Aircraft Carrier Giuseppe Garibaldi and later visited the grave of Altiero Spinelli on the Island of Ventotene. There, while a prisoner of Benito Mussolini’s regime, he composed the Ventotene Manifesto “For a Free and United Europe,” which envisaged a European federation of states. After this trip Merkel continued to meet with leading politicians. From newspaper reports it looks as if they more or less agreed that greater cooperation and a common security apparatus are necessary to handle the refugee crisis. Just this past weekend she met with the prime ministers of Austria, Croatia, Slovenia, and Bulgaria. According to Miro Cerar, the Slovenian prime minister, “there was no great difference of opinion between the German chancellor and her visitors.”

Only the so-called Visegrád 4 countries are unmovable in their opposition to common action and sharing the refugee burden. Merkel traveled to Warsaw to meet the four recalcitrant prime ministers. Although Hungarians are apt to think that it is their prime minister, Viktor Orbán, who creates the most trouble within the European Union, this might not be the case. Orbán is belligerent mostly at home. Once he gets to Brussels or, in this case, to Warsaw, he remains rather subdued. His Slovak and Czech colleagues, on the other hand, were widely quoted in the western media, not in the best light. Fico, for example, said that he would “never bring even a single Muslim into his country.” Bohuslav Sobotka of the Czech Republic, although more tempered, announced that he doesn’t want a “large Muslim community—given the problems we are seeing.” Fico, just before his meeting with Merkel, had paid a visit to Moscow, after which he renewed his call for the European Union to end sanctions against Russia. The Polish foreign minister accused Germany of selfishness and an unwillingness to compromise. Poland’s deputy foreign minister, Konrad Szymański, after the meeting hit back at Angela Merkel for criticizing those member states that are refusing to give refugee protection to Muslims.

Photo by Rafal Gruz MTI/PAP

Photo by Rafal Gruz MTI/PAP

Viktor Orbán’s views didn’t receive much coverage, but at least one of the four propositions he arrived with in Warsaw–the creation of a common European army–has enjoyed some limited support. Whether the creation of a European army is his idea or not is debatable. Orbán did talk about such an army in July in Tusnádfürdő/Băile Tușnad, but apparently already in May The Financial Times reported a German plan to set up such an army. And Zsolt Gréczy of Demokratikus Koalíció claims that the idea was actually stolen from Ferenc Gyurcsány, who suggested the creation of such an army a year ago.

The reception of the other three suggestions remains unknown. Let’s start with the most weighty one which would, if accepted, reinvent the European Union by practically annulling the European Commission. To quote it verbatim, first in the original Hungarian: “az Európai Tanács vezesse és csak ő vezesse az Európai Uniót. Az Európai Bizottság a politikai szerepjátszást fejezze be.” (The European Council should lead, and it should be the only one that leads the European Union. The European Commission should end its political pretensions.) I suspect that Viktor Orbán never presented this idea in such stark terms to Angela Merkel during their talks because, as an eagle-eyed friend of mine discovered, the English translation of the above passage on the official government website reads as follows: Viktor Orbán “went on to say that institutions such as the European Council and the European Commission should go back to fulfilling their ‘original roles’.” The first one for Hungarian consumption, the second for foreigners.

His next suggestion was economic in nature. Orbán suddenly discovered the benefits of austerity. This is quite a switch from his position six years ago, when as the new prime minister he visited Brussels in the hope of getting permission to continue running a 7% deficit instead of having to bring the deficit down below 3%. Now he is a firm believer in a tight budget, which made Hungary, in his opinion, an economic success. I’m not quite sure why Orbán felt the need to lobby for the continuation of this economic policy which, according to many economists, is responsible for Europe’s sluggish economic growth. I suspect that he might be responding to a perceived movement toward an economic policy that would loosen the current restrictions for the sake of more robust economic growth. Merkel has been talking a lot lately about higher living standards that would make the European Union more attractive to Europeans.

Finally, Orbán insists that the European Union should keep pouring money into the East European countries as part of the cohesion program, which in his estimation “has been a well-proven policy.” Sure thing. Hungary’s questionable economic success is due largely to the billions of euros Budapest receives from Brussels. Naturally, he wants to keep the present agrarian subsidies as well, a program severely criticized by many experts.

Whatever the prime ministers of the Visegrád 4 countries told Angela Merkel, it didn’t sway her from her original plans for solving the crisis. It doesn’t matter what Fico said, Merkel thinks “it is wrong that some say we generally don’t want Muslims in our country, regardless of whether there’s a humanitarian need or not.” She keeps insisting that “everyone must do their part” and that “a common solution must be found.”

Meanwhile Russian propaganda against Merkel is growing. Just today sputniknews.com portrayed her as the chief obstacle to an understanding between Moscow and the European Union. According to Russian political analysts, “Merkel is a supporter of the idea that it is Germany’s natural role to become the leader of Eastern Europe … and to drive the economic development of these countries,” naturally in line with German interests. According to these political scientists, Washington is actively working to turn Germany into a stronghold of anti-Russian influence, which “means that we will have to encounter a Germany that is strengthened not only in economic and political terms but perhaps militarily as well.”

In adopting an anti-German policy, the Visegrád 4 countries are implicitly allying themselves with Russia. I think they are playing with fire.

August 29, 2016

Another EU project: Renovation of fortified castles and luxury mansions

It was about a year ago that I first encountered two new programs launched by the Orbán government: the “National Castle Program” and the “National Mansion Program.”

The castles we are talking about here are actually late medieval fortified structures, built for the defense of the country. They were especially numerous along the border between Royal Hungary and the Turkish occupied center of the country. The structures in Szigetvár and Eger are perhaps the most famous. It was in Szigetvár that Suleiman the Magnificent died in 1566, as did the captain of the fort, Miklós Zrínyi/Nikola Zrinski, the Croat-Hungarian military leader who led his troops to their death instead of capitulating. Eger, the scene of a Turkish-Hungarian encounter in 1552, was memorialized in the popular novel by Géza Gárdonyi, Eclipse of the Crescent Moon. Both are tourist attractions, so it made sense to put them at the top of the reconstruction list.

The government will salvage 35 fortified castles and renovate 34 mansions. All told, 93 billion forints will be spent on these two projects, “mostly from money coming from the European Union.”

The justification for these two projects is that they will boost tourism. The government estimates that the renovated mansions will attract an extra 800,000 visitors, and an additional 600,000 visitors are expected at the fortified castles. Fifteen billion forints will have to be spent on hotels and services near the structures which, the government hopes, will come from private entrepreneurs. Viktor Orbán assigned János Lázár to supervise these projects. He, in turn, entrusted Undersecretary László L. Simon with the task, but Simon was fired a couple of weeks ago for incompetence.

Most of the fortresses are in terrible shape. Once Hungary reclaimed the Turkish-occupied part of the country at the end of the seventeenth century, the structures no longer had any purpose. They could conceivably have been turned into estates since each of these fortified castles had a so-called “residence tower” (lakótorony), which at one point was occupied by the lord of the castle himself. But these uncomfortable old buildings were eventually abandoned in favor of mansions in the countryside or residences in the capital. And after the soldiers left, the locals pilfered the stones and bricks of the castle to build houses nearby. (This is how most city walls have disappeared over the centuries.)

To what extent should these structures be reconstructed? This question has been the subject of furious debate for a long time between those who consider extensive reconstruction a falsification of history and those who argue for complete reconstruction. The government’s emphasis is on tourism, not the sanctity of architectural history. And visitors are not going to flock to see piles of stones. Therefore, most of these fortresses will be more or less rebuilt. This is certainly true of the fortified castle of Diósgyőr.

Readers who want more information about this government initiative should take a look at an article titled “National Castle Program: Removal of ruins or falsification of history.” Here we learn that at least two of these fortresses will be completely reconstructed and that six will be partially reconstructed. In 17 cases only a section of the former structure will be reconstructed. Nine, most likely buildings too far gone, will receive some treatment to stop further deterioration.

And before

The Diósgyőr Castle after the rebuilding and before Diósgyőr Castle before and after

The reconstruction of the fortified castles may make some sense commercially, but the renovation of the mansions is questionable for several reasons. At the moment these fairly decrepit structures, most of them built in the nineteenth century, are not architectural masterpieces. Most eventually were used as schools or were even cut up into apartments or offices. Something ought to be done with them, but should they be completely renovated on mostly EU money? What does the state intend to do with 34 mansions? I fear that the plan is to sell them at a favorable price to domestic and foreign friends of the Orbán government. We mustn’t forget that István Tiborcz, Orbán’s son-in-law, is now in the real estate business and is involved in the sale of the Schossberger Mansion to a billionaire Turkish businessman.

There is another suspicious aspect of the National Mansion Project. In the last few months the number of officially recognized historic buildings has ballooned. The reason for adding more mansions to the list is simple. A construction company who wins a bid to renovate a historic building can charge up to 400,000 forints per m² both for alteration and construction, while for a non-historic building a company can charge only 320,000 for construction and 220,000 for alteration. In brief, more money can be squeezed out of Brussels if the mansion is of some historic significance or is deemed an architectural masterpiece.

The latest outrage is the government’s change in the payment schedule for construction work on these projects. The original understanding was that for projects designed to stimulate the tourist industry 30% of the amount bid could be received in advance. In April the government changed the regulation. Companies involved in these projects could get 50% of their money up front. On Monday the government decided that, without replacing a single brick, the construction companies could be paid in full. As far as Magyar Nemzet knows, “the European Commission is taking a dim view of this practice,” although at the moment the cost is being borne by the Hungarian taxpayers since Brussels will pay only when all work is finished, which in some cases may be only in 2022.

The Nádasdy Mansion is also the part of the program

The Nádasdy Mansion is also the part of the program

The mansion project may seem lavish, but in fact it is seriously underfunded. It costs an average of 400,000 forints per m² to build an ordinary house in a fashionable section of Budapest. To renovate these residences is extraordinarily expensive. According to the former chief of the office that used to handle issues connected with the country’s cultural heritage, the only sensible move would be to sell these state-owned mansions, as is, to domestic and foreign buyers who would undertake their renovation under strict guidelines. The money allocated for these houses, 1.5 billion per structure, might be enough to guarantee that the roofs don’t leak or perhaps it will cover the cost of an assessment of the physical state of the structures. But if that is the case, what will happen to the money the Hungarian government is giving from its own resources to the construction companies for the renovation of these buildings? A good question.

July 20, 2016

Furious denial of any wrongdoing and rejection of a European solution to the refugee crisis

I would like to continue with yesterday’s theme for at least two reasons. One is that the report of Human Rights Watch on the brutal treatment of refugees along the Serb-Hungarian border has been confirmed by Nick Thorpe, Budapest correspondent of BBC, who paid a visit to two camps at Horgos and Kelebia where the conditions are, he said, appalling. Apparently, the Hungarian authorities could easily handle the registration of 100 people a day instead of the 15 they do now, so it is obvious that the aim is to slow the process to discourage people from crossing into the European Union through Hungary. A physician from Doctors Without Borders also confirmed “cases of intentional trauma that can be related to excessive use of force.” And Thorpe reported cases where refugees were already as far as 25 km from Budapest and yet were forcibly moved back to beyond the fence hundreds of kilometers away.

As for some of the most brutal acts of violence, they may have been committed by far-right members of paramilitary organizations patrolling the border on their own. This is speculation because the activity of such groups along the border is not officially acknowledged. And yet, although the Serb-Hungarian border is 175 km long, it is hard to believe that if such groups do indeed patrol the border and beat up refugees who cross illegally, officials are unaware of this fact.

The second reason for continuing this theme is that today the parliamentary undersecretary of the Ministry of Interior, Károly Konrát, denied any and all wrongdoing. Human Rights Watch’s accusations are baseless. In fact, Hungary should be praised for its vigorous defense of the borders of the European Union. As for the humane treatment of migrants, again Hungary can only be praised. The government spends 140,000 forints a month on each refugee, more than the average Hungarian worker makes. Refugees receive three meals a day, a hygienic package, and medical treatment and medicine if needed. Of more than 17,000 illegal migrants, only eight filed complaints, and all eight cases turned out to be bogus.

As for the refugees whom Hungary doesn’t want, according to Nick Thorpe “the unofficial leader of the camp” at the border is a 25-year-old Afghan doctor who negotiates with the Hungarian Office of Immigration and Nationality. Then there is the 23-year-old Syrian refugee who, after spending five days in a Hungarian jail, is now studying computer programming in Berlin in a program called ReDi. But it seems that the Hungarian government finds the idea of admitting desirable immigrants “inhumane and contrary to the European ideal.” János Lázár, for example, described such a practice as a “market place for human beings” where each country picks the “desirable” ones. He fears that Germany and other western countries will pick the best, leaving “the rejects” for the East Europeans.

As expected, the Hungarian government is both denouncing and falsifying the European Commission’s proposed reform of the asylum system, released yesterday. In the interest of truth, I think I should summarize its main points.

The overall procedure will be shortened and streamlined, and decisions will be made in a maximum of six months. Asylum seekers will be guaranteed the right to a personal interview as well as free legal assistance and representation during the administrative procedure. A guardian will be assigned to unaccompanied minors. New obligations to cooperate with the authorities will be introduced. All asylum seekers must have the same protection regardless of the member state in which they make their applications. In order to achieve this harmonization, the member states will be obliged to take into account guidance coming from the European Agency for Asylum. As bruxinfo.hu, a Hungarian internet site reporting on the affairs of the EU, pointed out, there is no talk here of compulsory quotas or punishment for non-compliance. Each year member states would announce the number of refugees they could accommodate. They would receive 10,000 euros for each refugee accepted.

rejection

So, let’s see how this was translated into Orbanite Hungarian by János Lázár this afternoon at his regular Government Info. In his reading, according to Dimitris Avramopoulos’s suggestion “Hungary would have to undertake the complete integration of immigrants forcibly brought into the country.” This is a preposterous idea, which “goes beyond the notion of compulsory settlement quotas.” While he was at it, he reminded his audience that the European Parliament accepted a proposal that would include heavy financial penalties if refugees were not accepted. Moreover, George Soros’s scheme of imposing extra taxes and/or other financial punishment on countries that refuse to participate in the program is “still on the table of the European Commission.” Lázár is referring to Soros’s speech, discussed here earlier.

Lázár is convinced that the “leftist delegations” of the European Parliament, together with the European Commission, work daily on their settlement schemes and keep coming up with new suggestions. That is why there is a need for the quota referendum, to be held on October 2. Lázár finds it impossible to believe that the European Commission will simply ignore the results of “direct democracy.” The referendum, instead of decreasing European integration, will actually strengthen it. It will be “a stabilizing factor.” Unfortunately, he didn’t elaborate on this claim. I would have been curious to see how our maverick Fidesz double-talker could possibly make his case.

Lázár, in talking about fines, repeated a piece of disinformation that the Hungarian government has spread far and wide in the last few days. Fidesz accused MSZP, DK, and LMP members of the European Parliament of voting in favor of a motion to fine states that refuse to participate in the migrant quota scheme. In fact, the report the European Parliament adopted says only that “a European approach is needed based on solidarity and a just distribution of the burden to resolve the migration and refugee crisis.” And, as it turned out, not only “leftist” members but also the vast majority of the European People’s Party, to which Fidesz belongs, voted for it.

You may recall János Lázár’s statement last week that he wouldn’t vote for Hungarian membership in the European Union today because of its migration policies. Of course, he said, this is his “personal opinion,” but a high government official, especially the man who is in charge of the disbursement of billions of euros received from the European Union, should not publicly share a “personal opinion.” Today he followed up, saying that “we didn’t secede from the Soviet Union in order to become a member of another union, but we left the Soviet Union so at least we can be independent and sovereign.”

Well, I don’t want to sound like a schoolmarm, but Hungary was never part of the Soviet Union. That, of course, is the least of the difficulties here. Hungarians desperately wanted to belong to the European Union, and at a referendum well over 80% of them voted for membership. Today, 75% still want to remain in the Union. With their vote at that referendum the Hungarian people authorized their government to give up some of the country’s independence and sovereignty. If Lázár, the second most important man in the Orbán government, insists on full independence and sovereignty, he should discuss it with his boss, and they should start making preparations for a Hungxit. And, while they’re at it, for their retirement from politics.

July 14, 2016

Viktor Orbán’s first day in Brussels without his British prop

Today, after a meeting of the European Council sans David Cameron, several European leaders gave press conferences, starting with President Jean-Claude Juncker. From his brief summary of the meeting, we learned that there had been unanimity on two important issues.

First, there will be no internal à la carte market. “Those who have access have to implement all four freedoms without exceptions and nuances”: the free movement of goods, the free movement of services and freedom of establishment, the free movement of persons (and citizenship), including free movement of workers, and the free movement of capital.

The second point was that while the European Union does need reforms, they can be neither additional nor contrary to what has already been decided. What he has in mind is the strategic agenda of the European Council and the ten priorities the European Commission declared earlier. Here I will mention only four of these priorities that are not at all to the liking of the Visegrád 4 or countries that sympathize with the group: (1) a deeper and fairer internal market, (2) a deeper and fairer economic and monetary union, (3) an energy union, and (4) a common European agenda on migration. From the Hungarian point of view, perhaps the most significant announcement by Juncker was that “it is about speeding up reforms, not about adding reforms to already existing reforms.”

Viktor Orbán also gave an “international press conference,” as the Hungarian media reported the event. Normally, after an ordinary summit, there are only a couple of Hungarian media outlets that are interested in Orbán’s reactions, but this time the prime minister’s press conference was conducted in English and with a larger group of journalists.

The Associated Press’s short summary concentrated on “personnel changes,” which without additional background information didn’t make much sense. In order to have a better understanding of what Orbán was talking about, we must interpret his words in light of Jarosław Kaczyński’s demand for the resignation of Jean-Claude Juncker and other EU officials a few days ago. Orbán, who talks so much about the unity of the Visegrád 4 countries, doesn’t seem to be ready to support the Polish leader’s attack on Juncker and the Commission, at least at this time. The Hungarian prime minister thinks that “time, analysis, thought and proposals are needed” before such changes are discussed. In his opinion, “it would be cheap and not at all gallant in these circumstances to suddenly attack any leader of the Commission or any EU institution.” In addition, Orbán doesn’t stand by Kaczyński on at least two other issues. Kaczyński severely criticized Donald Tusk, the president of the European Council, while Orbán praised him. Orbán also rejected, for the time being, the Polish politician’s call for a rewriting of the EU constitution.

Viktor Orbán at his press conference / AP Photo

Viktor Orbán at his press conference / AP Photo

Hungarian summaries of the same press conference are naturally a great deal more detailed and therefore more enlightening when it comes to an analysis of Viktor Orbán’s current thinking on the situation in which he finds himself. Here I will concentrate on two of Orbán’s priorities.

The first is his hope that future negotiations between the European Union and the United Kingdom will be conducted not by the European Commission but by the European Council. Even if the European Parliament and the Commission were willing to agree to such an arrangement, which I very much doubt, the complexity of these negotiations precludes such an arrangement.

Orbán’s second priority is the introduction of an entirely new set of what he calls “reforms.” He, as opposed to most European politicians, has a different notion of what constitutes “reform.” Instead of the European agenda that aims at deepening integration, he would like to see a loosening of ties among member states. During the press conference, Orbán repeated several times a Hungarian saying, allegedly first uttered by Ferenc Deák, the architect of the 1867 Compromise with the Crown who was famous for his figures of speech. Deák, after the 1848-1849 revolution, likened the absolutist administration to a hussar’s dolman which was buttoned incorrectly and which could be fixed only if the hussar unbuttoned all the buttons and started anew. In plain language, the whole structure of the European Union is wrong and it is time to undo everything and begin again from scratch. But, as we learned from Juncker, this is not what the majority of the European Council has in mind. In sum, I don’t believe that either of Orbán’s two important goals has the slightest chance of being accepted.

There is one issue, however, on which he fully supports Juncker’s position. As far as he is concerned, there can be no question of Great Britain limiting the immigration of citizens of the European Union. In his opinion, the East European countries went beyond what would have been a reasonable compromise when in February they accepted Cameron’s very tough demands on European citizens working in the United Kingdom. But now there can be no concession on this issue. If Great Britain wants to enjoy certain trading privileges with the European Union, its government must allow EU citizens to live and work there.

Restricting immigration from Europe, especially from its eastern part, has been a topic of long-standing political debate in the United Kingdom. Theresa May, the home secretary who has a chance of becoming David Cameron’s successor, has been talking about limitations for a number of years. Both Boris Johnson and Theresa May want to close the door on unskilled labor from Europe without Britain’s losing access to the single market. They interpret the EU’s free-movement principle as the freedom to move to a specific job rather than to cross borders to look for work. And there is no question, the pro-exit Conservatives are not talking about Middle Eastern refugees here. They decry the fact that “a third of Portugal’s qualified nurses had migrated, 20% of Czech medical graduates were leaving once qualified, and nearly 500 doctors were leaving Bulgaria every year.” The Brexit leaders could talk about Hungary as well, which saw about 500,000 people leave for Great Britain, Germany, Sweden, and other countries in the West.

Viktor Orbán did touch on immigration to the British Isles as one of the causes of the anti-European sentiment that has spread across England and Wales, but he maintained that “in British thinking migrants coming from outside of Europe and the employees arriving from the European Union are conflated, the result of which the voters felt that they didn’t get satisfactory answers from the European Union for their questions.” British Conservative politicians’ opinions on the subject, going back at least a year if not longer, leave no doubt that they were not been concerned with the refugees but with those EU citizens already in the country. The person who does conflate the two is Viktor Orbán. Last Friday he, who only a few days earlier had campaigned for David Cameron, manifested a certain glee in blaming EU’s refugee crisis for Brexit. I wonder how he will feel when one of the key sticking points in the U.K.-EU negotiations turns out to be East European immigration to Great Britain.

Meanwhile, I understand that the number of Hungarians planning to make the journey to the United Kingdom has grown enormously since the British exit vote. The hope is that anybody who arrives in Great Britain while the country is still part of the EU will be safe, but who knows what will happen later.

June 29, 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