Tag Archives: Levente Magyar

The European Parliament rapporteur on Hungary pays a visit to Budapest

The Hungarian right-wing press is buzzing with indignation. Judith Sargentini, a Greens/EFA member of the European Parliament from the Netherlands, arrived in Hungary yesterday as part of her work as rapporteur for the parliament’s investigation into whether Hungary is in breach of the values of the European Union. Her report will recommend what steps should be taken against Hungary for curbing freedom of the press, failing to uphold the rights of refugees and minorities, and taking steps against universities and NGOs.

After her appointment on July 11, 2017, Sargentini expressed her strong disapproval of the current Hungarian government. She believes that “time and time again, Orbán has gone against the norms and values of the European Union. When a country is no longer prepared to uphold our common values, it’s a logical step to take away its voting rights.” Indeed, at the end of the road, if Parliament approves her report, it may recommend that the European Commission invoke Article 7 of the EU Treaty, which can deprive the country in question of its voting rights.

After Judith Sargentini met Levente Magyar, political undersecretary and deputy minister of foreign affairs, MTI published a short statement in which Magyar, instead of addressing the issues of Hungary’s disregard of “the norms and values of the European Union,” dwelt on the “sharp conflict between certain Brussels institutions and politicians and Hungary with regard to immigration. The Hungarian people want to decide for themselves who they live with and have stated this on several occasions. This is what irritates certain Brussels politicians.” He added that the talks with the rapporteur were amicable but that the MEP had no knowledge of certain basic facts, in view of which her Hungarian negotiating partners offered Ms. Sargentini their assistance. What else is new? The Orbán government’s answer to criticism from the European Union is invariably a two-pronged charge of ignorance and bias. Magyar failed to inform the public about the specifics of Sargentini’s incompetence.

The right-wing media was on high alert and ready to discredit Sargentini ahead of her arrival. Pesti Srácok and several other news outlets portrayed her as “Soros’s man” who has been associated with Soros-financed NGOs for ten years. Recently, she had several meetings with the Hungarian Helsinki Committee and TASZ, the Hungarian equivalent of the American Civil Liberties Union. She is “one of the trusted allies of George Soros.” Fidesz also released a statement upon Sargentini’s arrival in Hungary, according to which “the real goal [of Sargentini’s report] is to force Hungary to carry out the Soros Plan.” Ahead of Sargentini’s arrival, Péter Szijjártó gave an interview to Kossuth Rádió’s morning program, 180 Minutes, in which he described LIBE, the committee which entrusted Sargentini to be the rapporteur on Hungary, as “nothing more than a theater” where the condemnatory report has already been written.

While Sargentini was in Budapest, in Brussels there was a book launch for a new work by NGOs from Hungary, Croatia, Poland, and Serbia on the “sick democracies” of Europe. At the gathering several MEPs spoke critically of the Orbán government’s hate campaigns and its disregard of the basic values of the European Union. Sophie in ‘t Veld, a Dutch Liberal member of parliament, brought up Orbán’s claim from an interview in Das Bild a few days ago that the Syrian refugees are part of a Muslim invasion of Europe. She suggested that the Hungarian prime minister refresh his memory on the basic values of the European Union, which he will find in Article II of the EU Constitution.

The reference to Article II was especially apt since in Budapest one of the “legal experts” of the Center for Basic Laws (Alapjogokért Központ), a government subsidized organization, announced today that it is unlikely that Judith Sargentini will get anywhere with her report on the absence of the rule of law in Hungary since there is no definition of the concept anywhere in the Union’s constitution. So, he continued, any assertion of a lack of constitutional order is arbitrary. In this particular case, the LIBE investigation is a purely political exercise. According to one of the many spokesmen of Fidesz, the conversation between Magyar and Sargentini is just part of the “compulsory rounds,” which in no way will influence the message of the report. It is one of those things diplomats in the ministry have to do now and again.

A couple of journalists from the state television’s M1 channel and from Pesti Srácok were on hand after Sargentini left the building of the Foreign Ministry, trying to have an interview with her. I don’t know what she thought of Hungarian journalists after this encounter, but I fear it couldn’t have been complimentary. M1’s reporter didn’t seem to understand that the MEP was in Budapest to ask questions and learn about the country and its government. She was not ready to give interviews. The fellow from Pesti Srácok entertained Sargentini with questions like “If it depended on you, what kind of a future would you wish for Hungary?” And when he got no answer, he wanted to know what she thought of Viktor Orbán as a person. The video of the encounter can be seen here. Pesti Srácok’s headline for the article describing the scene was “Soros’s man came to call Budapest to account and she left post-haste.”

The Hungarian government is not backing down in the face of more intense EU scrutiny. It looks as if the decision was already made to launch a new “action plan” to thwart the execution of the Soros Plan.

István Hollik (KDNP), who has become the fiercest and most extreme spokesman for the government, called Sargentini “one of the most important allies of George Soros.” The report she is working on is actually a “Soros Report.” While the Soros NGOs speak of “sick democracies,” what is really sick is the European Union’s attacks on Hungary.

So, the mood is belligerent and unyielding, though this may change as a consequence of the new Polish prime minister’s housecleaning that resulted in the departure of eight ministers from the far right and their replacement by centrists. The move is most likely in preparation for a reset of Polish-EU relations. In that case, Viktor Orbán would remain virtually alone with his “action plan,” something I don’t believe he would relish.

January 10, 2018

“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.


Viktor Orbán’s solution to the refugee crisis has been discarded

I really hate leaving the topic of the teachers’ revolt because I am convinced that this is an important event that may have lasting consequences in the political life of Hungary. Of course, we will return to the subject by Saturday at the latest. But, although Hungarians in the eighteenth century liked to think that “extra Hungariam non est vita, si est vita, non est ita” (there is no life outside of Hungary and if there is, it is not the same), the world is currently teeming with events that may have a substantial impact on Hungary, which Viktor Orbán is trying to insulate from the rest of the world.

I think it is patently obvious by now that the Hungarian prime minister imagines himself to be a key player on the world stage. In the last few weeks he has positioned himself as a counterweight to German Chancellor Angela Merkel, offering an alternative policy of how to handle the refugee issue.

Russian bombers are furiously attacking moderate opposition forces in Syria, driving tens of thousands more people into exile in Turkey and thereby swelling the number of refugees who are embarking on the dangerous voyage to Greece and from there to points farther north. In bombing Aleppo, Russia is wittingly or unwittingly exacerbating the crisis within the European Union, fueled in no small measure by Viktor Orbán himself. Clearly, Europe must find a solution to the crisis. It’s not that even two or three million people couldn’t be absorbed by a region of 500 million inhabitants, but such numbers, especially if the refugees swarm into only one or two countries, can become unmanageable.  So, the influx must be slowed and regulated.

Currently there are two very different concepts in circulation regarding the defense of the European Union’s external borders. One is an orderly resettlement of refugees, which involves slowing the influx of refugees by controlling the Aegean Sea. This idea is supported by Angela Merkel. The other is “the brainchild” of Viktor Orbán and is supported by some of the Central European politicians. The greatest supporter of Orbán’s scheme is Miro Cerar, prime minister of Slovenia. This involves constructing an insurmountable fence between Greece and her three neighbors:  Macedonia, Albania, and Bulgaria. Which of these two plans has the better chance of being approved at the end of the day? Most observers think that Orbán’s plan will fail because “it would needlessly and unfairly antagonize Greece, destabilize the Western Balkans, and create a huge demand for readily available smuggling services.” In addition, it would require a fence as long as and as sturdy as that between Israel and Egypt that took three years to build. It would also entail a willingness to use deadly force.

As the result of Orbán’s masterplan, Hungary’s relations with Greece are strained. How tense they are became public only very recently when Nikos Xydakis, the Greek deputy foreign minister for European affairs, paid a visit to Budapest. The Greek foreign ministry announced on February 8 that Xydakis, whom the Greeks call “alternate minister,” was to visit Austria, Slovakia, and Hungary. In Austria he had a meeting scheduled with Minister of the Interior Johanna Mikl-Leitner and the secretary-general of the Austrian foreign ministry, Michael Linhart. From Vienna he was to travel to Slovakia, where he was to have a meeting with Foreign Minister Miroslav Lajčák and Deputy Foreign Minister for European Affairs, Ivan Korčok. Finally, he was to meet with officials in Budapest.

Xydakis got a mouthful from Johanna Mikl-Leitner, who severely criticized Greek measures taken in keeping the refugees at bay. She “wanted to know why the Greek leadership did not use its deployment-ready naval fleet for civilian purposes.” In Bratislava, where he met with the foreign minister himself, he had an easier time. Their meeting was described as friendly. Instead of criticizing Greece, the Slovak foreign minister wanted to hear about Greece’s refugee management.

In Hungary Xydakis had three meetings. One was with Interior Minister Sándor Pintér, the second with Levente Magyar, deputy to Péter Szijjártó, and the third with Szabolcs Ferenc Takács, undersecretary in charge of European affairs. We don’t know what transpired at these talks, but Xydakis wasn’t in a very good mood when Népszabadság asked him for an interview. He minced no words, calling Hungarian policy towards Greece “hostile.” Hungary hasn’t even sent one tent to Greece, and it contributed only five policemen to the staff of Frontex’s mission. At the same time Hungary sent 100 km of barbed wire and 31 soldiers and policemen to assist in the building of a fence along the Greek-Macedonian border. “This was a political decision, which we consider to be a hostile act from a NATO ally and an EU partner whom we considered our friend. The Macedonian and Bulgarian action is unfriendly, but it understandable that they want to defend their own borders. What, however, is unacceptable is that other EU countries send policemen and soldiers to the Macedonian-Greek and Bulgarian-Greek borders. Who is the enemy? We, the Greeks?”

From the interview we learned that both Vienna and Bratislava offered material aid to Greece, which has had an influx of almost a million refugees. In Budapest Pintér offered nothing. He said only that he will take a look at the list of items Greece desperately needs. Xydakis also reported during the interview that German-Greek relations, which during the Greek financial crisis were severely strained, have improved greatly. The refugee crisis has brought Germany and Greece closer, and today they work hand in hand because collaboration is an absolute necessity under the present circumstances.

In Xydakis the Hungarians found somebody who is not like the usual overly cautious and overly diplomatic West European politicians. Xydakis, who is relatively new to politics, used to be the editor-in-chief of Greece’s premier daily Kathimerini. Knowing the Orbán regime’s policy of immediate counterattack at the slightest criticism of its policies, you can imagine what Péter Szijjártó had to say after reading this interview. The diatribe against Greece was long, but one can summarize it easily: Greece has no right to give lessons on solidarity. It is entirely Greece’s fault that Europe is defenseless because Greece isn’t fulfilling its obligations. Hungary had the remedy from the very beginning: one needs soldiers, policemen, ships, helicopters, airplanes, not Frontex officials. If Europe is ready to defend the border by force, Hungary is ready to contribute to the effort.

Source: The Independent

Source: The Independent

I wonder what Szijjártó thinks now that a few hours ago the decision was made to deploy the NATO fleet to the Aegean Sea. The decision was made right after Greece declared Turkey a “safe third country,” which gives it the legal framework to turn back asylum-seekers arriving through Turkey. The fleet, which is currently under German command, “will be tasked to conduct reconnaissance, monitoring and surveillance of the illegal crossings in the Aegean sea.” It seems that the West, which has been so severely criticized by Orbán, is quite capable of acting without his assistance. The idea of keeping Greece under quarantine failed. I wonder what will happen to the 100 km of barbed wire Budapest sent to the Macedonian border.

February 11, 2016

No end to the saga of the Hungarian corruption scandal

The reverberations from the news that six Hungarian citizens are not welcome in the United States don’t seem to subside. The perpetuation of the verbal battle is fueled mostly by the Hungarian side. Some of the attacks come straight from politicians, others from the accused and from so-called “civil groups” that are strong supporters of the Orbán government and operate most likely with generous financial assistance from the public purse.

These latter two sources cannot be taken terribly seriously, and in fact as time goes by their originally very loud voices have quieted down somewhat. The most spectacular retreat came from Ildikó Vida, the president of NAV, the Hungarian tax authority, and her lawyer, Barnabás Futó. As one blogger noted, when Barnabás Futó stands next to someone close to Fidesz, that person is in trouble. Futó seems to be rather good at pettifoggery at home, but he is at sea when it comes to international law. Initially he had ambitious plans for getting satisfaction for his client. Since Vida was told by M. André Goodfriend that she can ask for a visa and, if her request is rejected, she might be able to get information about the nature of the charges against her, Futó decided to do just that. Moreover, while he was at it, he contemplated suing the American chargé. Soon enough someone must have told him that members of the diplomatic corps have immunity and that his dreams of his client having her day in court were illusory. He gave up on his plan to sue. And, upon reflection, Vida decided that, after all, she did not want to know any of the details of her alleged wrongdoing and that therefore she will not apply for an American visa.

The other thread in the continuing saga is the Civil Összefogás Fórum (CÖF), an unofficial arm of the government that has helped bolster the popularity of the government. They were the ones who organized the first Békement (Peace March), which was supposed to defend the beleaguered Viktor Orbán against a dark international conspiracy that wanted to remove him from his post during the winter of 2011-12. Ever since the American revelations, the leaders of CÖF, people belonging to the extreme right wing of Fidesz, have been itching to march out again, this time against the United States. However, their beloved leader, to their great regret, held them back.

CÖF’s spokesman, Zoltán Lomnici, Jr, son of the former chief justice of the Supreme Court and a lawyer himself, shows such ignorance of the law that it is simply staggering. He and “Futó Barnabás,” to whom I gave the nickname “futóbolond” (lunatic at large), bring shame to the Hungarian legal profession. Here is Lomnici’s argument: the American chargé is a foreign national who, as can be attested by pictures and videos taken of him, left the embassy of the United States and therefore stepped on Hungarian soil. According to Hungarian law, if he knew of corruption he was supposed to press charges and provide proof of corruption. Since he neglected to do so, he could be sentenced to three years in jail. Obviously our star lawyer hasn’t heard of the Vienna Convention on Diplomatic Relations (1961). I suggest that Futó and Lomnici study the document, which clearly states that “Diplomats must not be liable to any form of arrest or detention. They are immune from civil or criminal prosecution.” Let’s hope that the text is available in Hungarian because Futó at least does not know any English. Today the organizers of the Peace Marches officially announced that for the time being they will not gather the troops.

Politicians have not shown the same restraint. A few days ago Antal Rogán, the whip of the Fidesz parliamentary caucus, called Goodfriend a liar and announced that Hungary is a country of law, unlike the United States. “We all must declare that Hungary is not Guantánamo, here nobody can be accused without proof.” Rogán’s attack on the United States is most likely part of the game plan dictated from above because not long before Róbert Répássy, undersecretary of the ministry of justice, said exactly the same thing.

Calling everybody a liar who criticizes the Hungarian government is a Fidesz specialty. Diplomats, on the whole, at least in civilized countries, don’t call their foreign colleagues liars. But Hungary’s new foreign minister has no such compunctions. In an interview with Magyar Nemzet he said that “to accuse us of not conforming to the European legal system is a gross lie (orbitális hazugság).” In response to Szijjártó’s charge, the U.S. Embassy in Budapest released a statement today that included the following sentences: “As Charge d’affaires Goodfriend has said, the United States has consistently conveyed our concerns to the Hungarian government about developments that harm the health of democratic institutions, civil society, and media freedom in Hungary – including concerns about corruption,” and “the Embassy remains in close contact with the Ministry of Foreign Affairs and Trade. We will continue to conduct a constructive, diplomatic dialogue with Hungary on all issues across the broad spectrum of U.S.-Hungarian engagement.” In brief, the United States will not stop its current policy of defending civil society, media freedom, and civil liberties. It will also pursue its fight against corruption.

In addition, today new information reached the public concerning the background of the American ban. The Demokratikus Koalíció, the party that seems to have good connections with the Hungarian foreign ministry where there are many disgruntled employees, learned that a week ago the American embassy did give some information to the Hungarians. Today Szabolcs Kerék-Bárczy, a DK politician, made that information public at a press conference. At this point the foreign ministry decided to fess up: yes, they received something, but it was only a “scrap of paper” (fecni) that cannot be taken seriously. However, a few hours later the ministry made the document public.

Undersecretary Levente Magyar waving "the scrap of paper" from the U.S. Embassy

Undersecretary Levente Magyar waving “the scrap of paper” from the U.S. Embassy

The two-page note describes the history of the numerous encounters between the embassy and the government of Hungary since February 2012. From October 2013 on, the American complaints multiplied. They had meetings with the “criminal directorate of the tax and customs office (NAV) on specific concerns about agricultural VAT fraud and tobacco nationalization.” A few months later the Americans were back at the “criminal directorate” but noticed “no evidence of action” on the part of NAV. In January 2014 the Americans had a meeting with the ministry of justice and public administration and they raised issues of VAT fraud, “institutionalized corruption, whistleblower protections, and Foreign Corrupt Practices Act (FCPA).” The whole list of complaints can be found on the foreign ministry’s website as well as in an article published on the subject by Index.

In brief, there were numerous complaints, and the Hungarian authorities refused to investigate. It is also clear from the document that the American authorities were fully aware that corruption is “institutionalized” in Hungary, yet the last word from NAV was that there were “no auditing complaints” and therefore the “Criminal Directorate … was unable to act.” Goodfriend  noted that “NAV’s specialized auditing unit created expressly to investigate trans-border VAT fraud … was systematically undermined and then disbanded.”

It looks to me, and obviously it was evident to the head of the American mission, that not only was no effort made to investigate but that the top leaders at NAV were doing everything in their power to make sure that corrupt activities could be continued undetected.

According to Levente Magyar, undersecretary of the ministry of foreign affairs and trade, this “scrap of paper” cannot be taken seriously. Why not? Because there is no date, no authentication, and above all, no seal. “Missing formal requirement” is a favorite excuse of Hungarian authorities.

American-Hungarian relations are crumbling

Let me summarize what we know so far about the U.S. action against certain Hungarian businessmen and government employees.

Initially it was reported that ten people were banned from entering the United States, but by now that number has been reduced to six. We definitely know of one businessman who reported on his fate to ATV. It was he who mentioned three employees of the Office of Taxation and Customs (NAV). One of the three was allegedly the president of NAV, Anikó Vida. The spokesman for the tax office did not deny the charge. If the number six is correct, there are still two people about whom we know nothing.

Although the Hungarian government feigns total ignorance of the details and keeps repeating that it is unable to move against the corrupt officials, in fact they have known for two weeks about the American resolve to pursue those Hungarians who have been trying to blackmail American firms and extort kickbacks of billions of forints from them.

M. André Goodfriend, chargé d’affaires of the U.S. Embassy in Budapest, sketched the timeline of events this afternoon. According to him, on October 6 he had a talk with Levente Magyar, one of the undersecretaries in the Ministry of Foreign Affairs and Trade. During the meeting Goodfriend explained the significance of Proclamation 7750, which is an executive order signed by George W. Bush in 2004. The Proclamation gives the State Department power to ban corrupt individuals and their families from entering the United States. Such a ban can be imposed only by the undersecretary for political affairs–in our case by Wendy Sherman, who is the department’s fourth-ranking official. (Here is a handy chart of the structure of the State Department.)

Levente Magyar must have understood the gravity of the situation because a subsequent meeting was arranged at the request of the Hungarian foreign ministry between Péter Szijjártó and André Goodfriend. This meeting took place on October 13. The American chargé repeated everything he had already told Magyar. Szijjártó then insisted that he reveal the names of those would be affected by the ban. Goodfriend in turn explained that the American government never reveals names in cases connected to Proclamation 7750. What the U.S. expects is swift action against the culprits.

Let’s stop here for a minute. I assume that Viktor Orbán was notified immediately after the encounter between Magyar and Goodfriend on October 6, and I also suspect that the prime minister’s advice was to insist on “proof” from the Americans. When that failed, in typical Orbán fashion the decision was made to launch a counterattack. NAV leaked information to Napi Gazdaság, a financial paper owned by Századvég, a consulting firm and think tank close to Fidesz, that the United States is contemplating evoking Proclamation 7750 against certain Hungarian businessmen in retaliation for NAV’s tax probes against certain American firms. If the Hungarian government hadn’t decided on this counterattack, we perhaps would never have found out about the travel ban on the six, still unnamed individuals. Colossally stupid move, but I think it is typical. Viktor Orbán always has to have the last word.

Since October 16, the day that Napi Gazdaság published its article containing the disinformation concocted by the Hungarian government, the controversy between the United States and Hungary has been escalating rapidly. The Hungarians kept insisting on “creditable proof” while the Americans steadfastly refused to fall into the trap. Moreover, while at the beginning the controversy seemed to be connected only to widespread corruption in Hungary, as time went by it became obvious that the United States might also take action against the Orbán government’s increasingly anti-democratic behavior. A day after the appearance of the accusations against American businesses in Napi Gazdaság, an article was published in Foreign Policy magazine from which we learned that “at a meeting last month, the Community [of Democracies] set in motion a process that could result in Hungary’s removal from the council and withdrawal from the Community. If Hungary leaves, it will be an international acknowledgment  that the nation has ceased to be a democracy.”

What is the Community of Democracies? It is a global intergovernmental coalition of states founded in 2000 at the common initiative of Madeleine Albright and Polish foreign minister Bronislaw Geremek. The organization is headed by a Governing Council consisting of 26 countries, among them Hungary. Apparently it was the United States that suggested that Hungary be removed from the Council and perhaps even from the organization. Or perhaps Hungary might consider a voluntary withdrawal from the Community in order to avoid embarrassment. The likelihood of an American initiative in this case was reinforced by André Goodfriend’s observation that such a move might be warranted under the circumstances.

M. André Goodfriend at one of his press conferences

M. André Goodfriend at one of his press conferences

While the Hungarian government is stonewalling, the U.S. chargé d’affaires in Budapest, most likely following instructions from the State Department, is delivering tougher and tougher messages to the Hungarian government during fairly frequent press conferences at the embassy. Perhaps the strongest language could be heard this afternoon when Goodfriend explained the reason for American action. In Hungary prior to 2010 the level of democracy and transparency, especially in comparison to some other post-socialist countries, was high. But while in other countries the trend is toward greater democracy and transparency, in Hungary the opposite is true. “If that trend continues it may reach a level where the United States can no longer cooperate with Hungary as an ally.” Clearly, the United States is not joking–as Antal Rogán assumed only yesterday during an interview.

Let’s return briefly to the three high officials of the Hungarian tax office who most likely are implicated in the case. In what way can they engage in fraud and corruption? Here is an explanation offered by Dávid Jancsics, who is currently conducting research at the City University of New York. His expertise is corruption. He learned from two independent sources that the NAV employees demanded kickbacks from two American companies in exchange for tax breaks and a lower VAT. Apparently they demanded 2 billion forints in exchange for these favors, money that the American companies were supposed to pay to a foundation associated with Fidesz for purposes of “research and analysis.” In addition, the NAV officials promised heavy fines on the American firms’ competitors. When the Americans didn’t bite, the NAV officials began threatening them with tax probes. It was at this point that the firms turned to the American embassy and reported the bribery attempts. The implication of this analysis, if it is accurate, is frightening because in this case the tax office is part and parcel of a corruption scheme that appears to be centrally organized.

This takes us back to an old story about a whistleblower at NAV who claimed that high NAV officials refused to investigate obvious fraud cases. András Horváth, the whistleblower, said that he was mostly involved in investigating companies that dealt in agricultural products. Index came to the conclusion that one of the two American companies in question was Bunge, a leading agribusiness and food company. It is a global firm with 35,000 employees in forty countries, including Hungary. They produce among many other things cooking oil sold in Hungary under the label Vénusz. It was well known that the management of Bunge was very unhappy about the VAT fraud and that their efforts to enlist the help of NAV were fruitless. It is possible that after a lot of complaints from the Bunge management NAV officials offered to do something about the competition’s fraudulent business practices but only at a price.

Hungarian journalists in the last few days have asked several business groups, like the German-Hungarian Chamber of Commerce, about the extent of corruption in Hungary. The answer is that foreign companies have known for years about corruption involving billions. “Hungary is a part of the Balkans” by now, and the situation is only becoming worse. According to foreign business leaders, Hungarian business life is corrupt through and through. Healthy competition is impossible under such circumstances.

Péter Szijjártó is leaving Budapest for Washington tomorrow to meet Victoria Nuland. I wouldn’t like to be in his shoes.