Tag Archives: Hungarian businesses abroad

“Observer”: 150 billion Ft. support for ethnic Hungarian businesses abroad. Really?

The Hungarian government has been funding various activities of ethnic Hungarians in the neighboring countries for many years, but the big news here was the unprecedented amount heralded as well as the broad circle of recipients. There are many other Hungarian government projects in the neighboring countries, but this exceptionally large flagship project so vigorously advertised by the government deserves our special attention.

For information, as it came out, I had to rely on the few available government sources. As we know, in Hungary today commitments, decrees, and even laws are altered or annulled at the drop of a word (e.g. dropped at a press conference on Thursday or radio talk on Friday), and since there are only a couple of reports on the actual implementation, significant variances may be revealed later. Our readers may certainly contribute with more information.

On the subject of Hungarian government relations with the Hungarians living in the neighboring countries (hereinafter “ethnic Hungarians”), a bit of background would help understanding. The Orbán/Fidesz attempts of the 2000-2008 period to install puppet (ethnic) political parties in the neighboring countries largely failed, so Orbán resorted to the proven Simicska method of diverting billions of Hungarian taxpayer forints for the purchase of ethnic Hungarian parties/votes and managed 180,000 votes in the 2014 elections.

With popularity slipping, Orbán opened the tap more and now is promising the ethnic Hungarians a real cornucopia, albeit for the future, i.e. for the March 2018 elections. According to the statements of undersecretary Levente Magyar of the Ministry for Foreign and Economic Affairs made in the beginning of 2017, the government was planning to spend 150 billion Ft. (EUR 500 million) in support of ethnic Hungarians’ small businesses. An extensive road show was undertaken to popularize the initiative, as if the businesses addressed wouldn’t be flocking to inquire about the free money. There are no figures on how much was spent on this propaganda and hoopla, but here are some examples of full day programs organized in a college in the Ukraine, in Slovakia, and in a hotel at Balaton – as Levente Magyar informed us, they “reached every Hungarian and every settlement inhabited by Hungarians in Voivodina,” for example.

The undersecretary also announced that the Ministry’s Trading Houses network was creating 22 offices by way of which, together with other (unspecified) local organizations, the funds would be distributed. More sunk costs.

To put things in prospective, the same TH network now designated to process tens of thousands of tender applications in several countries was considered incapable of selling 2-3 thousand residency bonds, as a result of which the state was deprived of 200 billion forints, which went into private pockets.

Two undersecretaries and the government controlled media repeatedly stated that “research found that 40,000 ethnic Hungarian businesses are operating in the neighboring countries,” implying an extremely large circle of beneficiaries. In fact, only start-up businesses founded after January 1, 2016 or “family businesses” are eligible in three of the four programs, so the 40,000 figure is misleading.

Eight months into 2017 we could reasonably expect to see some reports about the implementation of the grand 150 billion Ft. project. Well, not surprisingly, my search found dozens of new items about the tender opportunities, but very little about the implementation.

In the beginning of August the same Levente Magyar stated that “up to now the Hungarian government has placed 9 billion Ft. through its economic development program in Voivodina.” However, the same website refers to the following four programs of the Gábor Bethlen Fund, with total funding of 0.83 billion Ft. for 2017:

  • Tender for Support of start-up ethnic Hungarians’ businesses registered and operating in the neighboring countries–0.12 billion Ft.
  • Tender for Support, cooperation with start-up ethnic Hungarian’s businesses–0.11 billion Ft.
  • Tender for Support of ethnic Hungarian family businesses registered and operating in the neighboring countries–0.6 billion Ft.

At the end of July undersecretary in the Prime Minister’s Office János Potápi stated that “the government supported … ethnic Hungarian entrepreneurs in the Carpathian Basin by 0.83 billion Ft.,” confirming the above total.

Trying to broaden the picture, I added the “Egán Ede Kárpátalja Economic Development Center” charity foundation, which also runs business support programs for:

  • Support for private entrepreneurs and micro and small enterprises’ capacity-building and innovation business development – funding 1 billion Ft.
  • Support for private entrepreneurs and micro and small enterprises’ capacity-building and innovation business development in the agricultural sector – funding 1 billion Ft. Report*
  • Support for large investments (min 50 million forint projects) – no funding information or report.
  • Support for large agricultural investments (min 50 million forint projects) – no funding information or report.

The Bethlen Gabor Fund also runs some non-business support programs:

All the above programs for the support of ethnic Hungarians’ businesses, culture and education, etc. put together do not total even 10% of the 150 billion hyped by the government.

In a confusing mixture of promises, cross references, and multiple announcements, the e-media is awash with all sorts of figures, mostly based on the statements made by the two undersecretaries.

The full statement of Levente Magyar, mentioned above, reveals that of the “9 billion ft. … placed in Voivodina … the amount distributed so far is less than a quarter of the whole, and they will try to distribute the remaining during the next year.” This means that more than 2 billion ft. were distributed, contradicting the Potápi figure of 0.83 billion. Confused? Me too.

According to another statement of János Potápi, “the Hungarian government supported the creation of 104 workshops and training farms in the Carpathian Basin, spending more than 738 million forints” in 2015 and 2016, the “2015 – Year of vocational training for ethnic Hungarians” program included. This amount is similar to the 0.83 billion reported for 2017.

I’m certain more funds are being spent in the neighboring countries, but after the boisterous heralding of the 150 billion forint programs, few if any reports about their implementation were available. I wonder where the road show costs were accounted for, as the amounts spent on propaganda and hoopla are probably commensurate with the 0.83 billion distributed.

Moreover, these support funds pale in comparison to many propaganda items like the many billions for US lobbying, the almost 10 billion of Századvég funding, the never ending multibillion poster campaigns, or, say, a single 8+ billion soccer item.

After all, if even a fraction of the unprecedented amounts hyped were spent for the support of ethnic Hungarians, it would have been a commendable act, but from the “coincidence” of this initiative with the forthcoming parliamentary elections in April 2018 emanates the familiar stench of corruption in the form of vote buying (and eventually awards to cronies and supporters, if the long domestic record is any guide).

The initiative is questionable in light of the negative or downright appalling trends in the Hungarian economic and business areas – the government should fund remedies to the domestic problems before those in the neighboring countries. And problems we have: almost all Hungarian indicators have deteriorated since 2010 according to the World Economic Forum, OECD, and EU: business environment, legal framework, competitiveness, productivity, capitalization (small and medium companies), and vocational skills.

There is also the all-pervasive and all-corroding corruption, the huge bureaucracy, e.g. 18% of the workforce employed by the state, the five-layer administration, e.g. ministerial rank departments have almost doubled since 2010, etc. etc.

To answer to the question in the title – no, not really, nothing like 150 billion is being spent. The much hyped initiative is just another case of propaganda, deception, and trickery, Orbán style. The danger to the ethnic Hungarian businesses is that they may become infected if they operate close to the corrupt Hungarian regime.

* The report of the results in the micro and small agricultural businesses tender contains no actual payout figures. The awards are noted as either “maximum funding” or “depending on availability of funds.” Notably all awards were made to individuals, which raises the specter of political corruption.