Tag Archives: Péter Medgyessy

The Orbán regime’s reaction to the scandal at the Hungarian National Bank

The Hungarian National Bank cagily released the documentation on its foundations’ grants and contracts Friday night after 5 p.m., but the timing didn’t help much. The outcry was immediate. And ever since, more and more revelations have been adding fuel to fire, from the grants given to relatives of György Matolcsy to the extra money that went to the wife of Chief Prosecutor Péter Polt. (In addition to her regular job as one of the department heads of the bank she also sits on the boards of several foundations.) The opposition, including Jobbik, is up in arms. All parties demand an investigation as well as the abolition of the six foundations which, by all accounts, were established illegally.

News travels fast, especially nowadays. The Financial Times carried the story of the resignation of the journalists at vs.hu on its front page. The New York Times and the Washington Post also covered the story.  Bloomberg had a complete rundown on Chairman Matolcsy’s machinations with the almost one billion U.S. dollars that was moved from the assets of the National Bank to private foundations. If something like this had happened in western Europe, it would undoubtedly have resulted in the resignation of the chairman of the central bank and perhaps even the whole government. In Hungary, however, nothing of the sort will happen. As Lajos Bokros, the former finance minister, put it when asked about the consequences, “I have no illusions. As long as we are saddled with the Orbán regime, nothing will change.”

Despite the many juicy stories surrounding this case, we shouldn’t get bogged down in details. The important thing to keep in mind is that the very establishment of these foundations was illegal. Bokros in a post on Facebook summarized the legal objections to Matolcsy’s “unorthodox” handling of the assets of the central bank. (1) All money that is accrued over the fiscal year by the bank must be put into the budget of the Hungarian state. Matolcsy, in office now for three years, has not been doing this. (2) The National Bank cannot establish foundations because by doing so it siphons public funds from the budget. (3) The Bank cannot utilize funds for public purposes because the utilization of public funds can be done only with the approval of parliament. (4) The Hungarian National Bank cannot get involved in the formulation of fiscal policy. Its only job is the formulation and execution of monetary policy. (5) The National Bank cannot attempt to transform public money into private funds because that is intentional theft and fraud.

Péter Róna, another economist and banking expert, in a conversation with György Bolgár on Klubrádió this afternoon added that the only assets Matolcsy could have used to buy works of art, musical instruments, or even to establish foundations were the bank’s private “income” from dues paid by banks and entrance fees to view the bank’s numismatic collection, which when Róna was a member of the board of directors a couple of years ago was no more than 4 billion forints a year. The foundations received 260 billion forints, more than 17 billion went for real estate, and an incredible amount of money was spent on artwork, including a picture by Titian for 4.5 billion forints.

From the general silence, it is apparent that members of the government and Fidesz-KDNP MPs find the whole scandal most unfortunate. When journalists asked questions of László Kövér and Viktor Orbán in the corridors of the parliament building, the politicians just kept going, eyes fixed on the floor. They refused to utter one word. Some of the lesser characters tried to act dumb. The excuse of one of the Fidesz deputy chairmen, Szilárd Németh, was that since he has only a simple cell phone, not like the journalists with their smart phones, he had heard nothing about the whole thing. I suspect that they were told to remain silent in the hope that eventually the whole scandal will just die down. However, I would like to remind Árpád Habony and Antal Rogán, head of the propaganda ministry, that this kind of strategy didn’t work in President Pál Schmitt’s plagiarism case.

Behind the stony silence I suspect fear because journalists of four independent organs were told yesterday that they will not be able to enter the parliament building for an unspecified duration. The four publications are Népszabadság, HVG, Index, and 24.hu. Letters notifying the editors-in-chief of the decision asked the editors to instruct their colleagues to obey the rules governing the presence of journalists in the parliamentary building “in order to maintain your publication’s parliamentary accreditation.”

In addition to the silence, the decision must have made somewhere high up, most likely in Fidesz, to leak a ten-year-old story according to which Péter Medgyessy, prime minister of Hungary (2002-2004), received 597,000 euros from the French company Alstom while he was serving as “traveling ambassador” for the country. After Medgyessy resigned, his successor Ferenc Gyurcsány named him to the post as a kind of consolation price. At the same time, however, Medgyessy returned to his old consulting business. Magyar Idők claims that the money Medgyessy received from Alstom was not compensation for his consulting services but a bribe in connection with Alstom’s bid for the metro cars for the new M4 metro line negotiated in and around 2006. Alstom was found guilty of paying more than $750 million in bribes to government officials around the world in December 2014. To make sure that the story sticks, a few hours later Magyar Idők also published a tabloid-like editorial.

Lajos Kósa, leader of the Fidesz parliamentary caucus, announced that “no prime minister in the 25 years of our democracy was accused of such a crime. Péter Medgyessy must give an account of that sum.” The prime minister’s office immediately joined the chorus, and its spokesman promised an investigation into how “this money is connected to the governance of the left.” They will investigate not only the affairs of the former prime minister but also those of former Budapest mayor Gábor Demszky. As for Medgyessy, he admits that he received almost 600,000 euros from Alstom through a Danish and Austrian company but claims it was all on the up and up.

Of course, at this stage we have no idea what transpired, but I must admit that 600,000 euros for a consulting fee is pretty steep. I heard Csaba Molnár (DK) contemplate the possibility that the reason for Medgyessy’s rather sympathetic attitude toward the Orbán government of late might have something to do with Fidesz’s holding this information over his head. Of course, this is just speculation, but it was rather embarrassing when a few months ago Medgyessy claimed in a radio interview that the Orbán government’s corruption is no different from corruption during the socialist-liberal period. I guess this also included his own two years as prime minister.

I’m sure that the pro-government media, including state TV, will keep this issue alive while an investigation will immediately begin into the bribery charge against Medgyessy and perhaps even against Demszky. Meanwhile, of course, nothing will happen on the Matolcsy front.

April 26, 2016

Is Viktor Orbán a coward?

As I was writing yesterday’s post on Viktor Orbán’s March 15th speech and came to the part where he talked about bravery as an essential ingredient of a nation’s success, my mind wandered to one manifestation of his own lack of bravery (admittedly, most likely wise risk management on his part). It was in 2006 that he made the mistake of agreeing to have a television debate with Prime Minister Ferenc Gyurcsány, who headed the MSZP ticket. Score (being charitable): Gyurcsány 1, Orbán 0. Since then he has systematically avoided head-to-head encounters with his opponents.

Prior to 2006 Orbán had two public debates, one in 1998 with Gyula Horn and another with Péter Medgyessy in 2002. The first debate was a clear win for Orbán, who at that point, following U.S. practice, thought pre-election debates were a capital idea. Gyula Horn, who had had a long political and diplomatic career in the Kádár regime, was no match for the young and more dynamic Viktor Orbán. Although Horn is considered by many the best prime minister of Hungary since 1990, on that occasion he looked unprepared and tired. In a major miscalculation, I don’t think he took the debate seriously.

After the first debate, I’m sure Viktor Orbán was looking forward to taking on Péter Medgyessy in 2002. Medgyessy was not known for his eloquence; in fact, people made jokes about his difficulty with long Hungarian tongue twisters. Orbán was dynamic, Medgyessy very low-key. Moreover, according to all the polls, it looked like easy sailing for Fidesz at the election. Orbán had nothing to lose. But in the debate Orbán looked and sounded like a bully while Medgyessy came across as a modest everyman with whom people could sympathize. As it was, the Hungarian electorate had had enough of the incessant government attacks on everyone who didn’t support them. Orbán lost the election, a result he never quite accepted.

Then came the debate of 2006 with Ferenc Gurcsány. It is something Orbán will never forget or forgive. I’m convinced that his hatred of Gyurcsány dates from that day. I watched the debate and immediately proclaimed it a rout. (The debate is available on YouTube.) Orbán was demolished. Interestingly enough, some people in our group who were exchanging e-mails during the debate were not as sure as I was. Later polls confirmed my first impression. Even Fidesz supporters had to admit that Orbán had lost the debate. Since then Orbán has been trying to pay Gyurcsány back for his humiliation. If it depended on him, he would send Gyurcsány to jail for life. Orbán may be on top of the world right now, but he still considers Ferenc Gyurcsány a threat. Moreover, it seems that after 2006 he got permanently cold feet when it comes to public debates.

He refused to debate Attila Mesterházy in 2010 and it looks as if he has no intention of debating this year either. There are different excuses each time. Four years ago he claimed that there were too many candidates. This year he listed several reasons for refusing to debate. First was that “to this day we don’t know who the real leader of the opposition is: Ferenc Gyurcsány, Attila Mesterházy, or Gordon Bajnai.” Well, this sounds like a lame excuse to me. After all, the united opposition’s candidate for premiership is Attila Mesterházy. Mesterházy called on Orbán to debate several times; in his blog he even dubbed Orbán a coward for refusing to measure the Fidesz program against the opposition’s. Of course, the fact is that Fidesz has no party program unless one considers the decrease in utility prices a program. That is why the following “manifesto” that appeared on the Internet is so apt. In 1848 Sándor Petőfi and his young friends had a list of twelve demands, including freedom of the press, an annual national assembly in Pest, national army, civil and religious equality before the law, equal distribution of tax burdens, and abolition of socage. Viktor Orbán had the gall to compare his lowering of utility prices to the abolition of socage and serjeanty, feudal dues. As you can see, Orbán’s 12 points in this “Orbán” version of the twelve demands are all the same: “utility decreases, utility decreases” twelve times over. Thus it would be rather difficult to have a debate on party programs.

rezsicsokkentes

A take-off on the Hungarian nation’s demands in 1848

It would be uncomfortable to answer questions about the Putin-Orbán agreement on Paks or the incredible corruption. If Mesterházy were well prepared, he could demolish Orbán’s economic figures. And what about the ever larger national debt? All in all, Orbán will not debate because it is not to his advantage. Moreover, his admirers don’t even demand any program. They seem to be perfectly happy with the government’s performance in the last four years and look forward to four or even eight more years of the same.

Another reason that Orbán gave for his refusal to debate is that in his opinion there is no political formation today outside of Fidesz-KDNP that is fit to govern (kormányzóképes). Such labeling in a democracy is unacceptable. It just shows what kind of democracy we are talking about in Hungary.

András Schiffer of LMP would like to have a debate with Orbán, Mesterházy, and Vona (Jobbik). As you know, Schiffer is not one of my favorites, but he is a good debater and could score extra points if given the opportunity. I’m sure that Orbán will not be game, and I understand that Mesterházy will agree only if Orbán also participates. So, we can be pretty sure that there will be no debate in 2014. The opposition will remain invisible.

An analysis of Russian-Hungarian relations in perspective

I’m sticking with Russian-Hungarian relations, although today I won’t write about the Hungarian opposition’s reactions to the Putin-Orbán meeting as promised. The reason for this change of plans is that I read an in-depth interview with Zoltán Sz. Bíró on the relationship between the two countries over the last ten years or so. I would like to share it with those of you who are not in a position to read it in the original.

Although I’m quite familiar with Russian history and Soviet politics, I haven’t been following what’s going on in Russia. I know as much as one can learn from the media. A couple of years ago, however, Tamás Mészáros hosted a show on ATV that dealt with foreign affairs. Every time the discussion touched on Russia Zoltán Sz. Bíró, a research fellow in the Historical Institute of the Research Center attached to the Hungarian Academy’s Section of the Humanities, was among the participants. He always impressed me with his learning and his analytical skill.

His track record continues. I learned more from the interview that appeared in today’s Népszava on the state of Russian-Hungarian affairs than from all the other articles I read on Viktor Orbán’s visit to Moscow. The main thrust of Bíró’s analysis is that, despite Vladimir Putin’s warm welcome, there is a great deal of dissatisfaction with the Orbán government’s Russia policy. Putin’s Russia doesn’t hide its true feelings toward Viktor Orbán, which in this case translated into a short audience, no scheduled press conference, and no lunch or dinner after the official appointment. In November 2010 when Viktor Orbán first visited Russia as prime minister these niceties were planned, but in the end they were dispensed with. By contrast, each time Péter Medgyessy or Ferenc Gyurcsány paid a visit to Moscow there was always a press conference and a dinner meeting.

the Kremlin

The Kremlin

Russia has reason to be dissatisfied with trade relations and mutual investments between the two countries. In the last three years the rate of investment has slowed. To quote from Putin’s welcoming speech: “The level of investment until recently was well balanced between the two countries. However, for the last three years it hasn’t grown or has grown very slowly.”

Before December 2002, when Medgyessy visited Moscow, Hungarian exports to Russia were less than half a million U.S. dollars while imports were around 2.2 billion dollars. By 2008 both exports and imports peaked: Hungarian imports reached 10 billion and exports 4 billion dollars. That is, while Hungarian imports grew fourfold, exports expanded by a factor of eight. Not even in the old Soviet days was the volume of trade between Russia and Hungary that great.

This spectacular growth was due in part to the change of government in Poland when under the Kaczynski brothers’ rule Russian-Polish relations soured. In addition, in 2007 Russia finally decided to build the Southern Stream that would supply Hungary with natural gas. Negotiations over the pipeline necessitated frequent contact between the two countries.

Viktor Orbán is in a difficult position when it comes to friendly relations with Russia because of the heavy political baggage he carries from his days in opposition. In those days he made irresponsible comments about Russia. A responsible politician should think ahead: what will happen if he wins the election? How hard is it going to be to mend fences? The Russian leaders are pragmatic, but in 2005 there was a spectacular change in the official Russian stance on its role in World War II. In order to give emotional content to the regime, Putin’s government stands ready to do battle with any country that tries to minimize or question Russia’s sacrifice. The Orbán government’s frequent anti-Soviet rhetoric certainly doesn’t endear it to the Russians.

Earlier I wrote about Viktor Orbán’s resolve to purchase E.On’s Hungarian subsidiary from the German company. At the moment the Hungarian media is full of extended debates about whether the 800 million euros the Hungarian government is paying is too much. According to some, it is not worth more than 400 million. I can’t take sides because I have no idea of the value of E.On. But presumably E.On could purchase Russian gas at a cheaper rate than a Hungarian state-owned company could. Russia’s largest natural gas customer in Europe is Germany at 35-36 billion cubic meters a year. Hungary in the last three or four years decreased its natural gas purchases to about 6 billion cubic meters. This difference in purchasing power most likely influences the price of Russian natural gas. That’s why “the Hungarian government’s anti-E.On policies are incomprehensible.”

According to Sz. Bíró, a half-hour meeting on the highest level simply cannot replace the day-to day work necessary to develop a good relationship between countries. János Martonyi’s absence was glaring. Péter Szijjártó was there, but in Sz. Bíró’s opinion the young upstart lacks a thorough knowledge of the areas he is supposed to deal with. Here is one example. Szijjártó announced that Russian-Hungarian economic relations are especially promising because the Russian economy last year grew by 3%. But this is not a great accomplishment for Russia. On the contrary, “it is a serious set-back.” After all, in 2010 and 2011 the Russian economy grew by more than 4% while during the prior decade the Russian GDP grew by 7-8% every year.

Sz. Biró is not at all sure whether Hungary should enlarge the Paks Nuclear Power Plant, not just because of its enormous cost (2-4 trillion Hungarian forints) but because the country might not need a larger facility in the first place. Second, this enormous investment would have to be financed by new loans. Sz. Bíró also fears that “if a political group is able to get even a small portion of this money it will be able to eliminate the possibility of open and democratic political competition.”  In brief, Hungary will be stuck with a Fidesz government for a very long time to come.

I think that I more or less managed to summarize Zoltán Sz. Bíró’s opinions on the current status of Hungarian-Russian relations. Let me finish with something that I hope Viktor Orbán said in jest Friday morning during his weekly interview on MR1 (Kossuth Rádió) when asked about his trip to Moscow. He described his trip thus: “Hungarian history is a great teacher. That’s why the first success is that we not only went to Moscow but we also came home. We should start here!” What on earth did he want to say? If it was a joke, it was a very bad one. Not exactly how to make friends and influence people!

Otherwise, Orbán said nothing specific about his accomplishments in Moscow. When asked about Russian participation in the building of additional facilities at the Paks Nuclear Power Plant, he acted as if he didn’t hear the question. Instead, he went on and on about Russia’s contribution to the fields of music and literature. According to him, “We can’t even imagine European music and literature without Russia.”  He quickly added that Hungary is a “kultúrnemzet” which also contributed greatly to European culture. “We can therefore speak of Russia with appreciation.” Why? Otherwise we couldn’t?

A quick look at Facebook reveals that jokes about Viktor Orbán’s appreciation of music and literature number  in the hundreds. We know from Gábor Fodor’s description of Viktor Orbán in his college days that “Viktor moved in the world of culture like an elephant in a porcelain shop,” meaning he didn’t feel at home there. He was interested in football and politics almost exclusively. It is highly unlikely that in his spare time the Hungarian prime minister reads Dostoevsky or Tolstoy. But I guess if you don’t want to acknowledge Russia’s importance in today’s world, it is always safe to praise its cultural heritage. A nationalistic prime minister also has to point out, however, that Hungary is no less cultured and that its contribution is just that great as that of other nations.

Viktor Orbán in Moscow: “Putin’s new little kitten”?

Earlier I mentioned that after his return from Brussels Viktor Orbán was flying to Moscow. Ahead of yesterday’s meeting no one knew exactly what the negotiations would be about. The Hungarian press mentioned possible several topics: the further development of the Paks Nuclear Power Plant; the building of the Southern Stream that will go through Hungary; the sale of Russian natural gas; transportation, especially the country’s rail system; and bilateral trade. I suspect that all of these items have been under discussion between the two countries for the past few months. Obviously no detailed discussion of these topics took place during the fifteen-minute audience Vladimir Putin granted the Hungarian prime minister.

The Hungarian media poked fun at the brevity of the visit and complained that Viktor Orbán’s visit didn’t make banner headlines in the Russian press. Yes, the meeting was short, but presumably all the groundwork had been laid for it.  Orbán had only to show his face to endorse the negotiations of his underlings. Moreover, one must keep in mind that for Hungary Russia is a much more important partner than vice versa. In trade relations the Hungarian share of Russian imports is only 2%. On the other hand, Hungary because of its dependence on natural gas and oil is heavily dependent on Russian goodwill.

Hungarian foreign policy experts pointed out that the Russians are pragmatic negotiating partners who will not be bothered by Viktor Orbán’s earlier attitude toward Russia. Because, in case anyone has forgotten, Viktor Orbán’s relations with Russia were outright antagonistic during his first four years in office. And, while in opposition, he fiercely attacked both Péter Medgyessy and especially Ferenc Gyurcsány for trying to mend fences with Russia. He was especially critical of Gyurcsány’s efforts to make a deal with Russia on the Southern Stream. He managed to blacken Ferenc Gyurcsány’s name in Washington where the Bush administration was certain that Gyurcsány was not only interested in obtaining natural gas but that somehow he was ideologically attracted to the semi-dictatorial Vladimir Putin. The same Vladimir Putin to whom western newspapermen compare Viktor Orbán nowadays.

So, let’s look at the long process that eventually led to Viktor Orbán’s conversion. In January of 2007 he announced that “we don’t want to be the happiest barracks of Gazprom.” In November of the same year he called the Gyurcsány government’s policies in connection with Russian-Hungarian relations incomprehensible. How can Hungary be “a bridge between the West and Russia”? Hungary’s place is squarely in the West. This is the same man who now finds his country’s destiny in the East.

During the Russian-Georgian conflict he sided with Georgia. In October 2008 he claimed that “in Hungary today one-sided and unbalanced pro-Russian policies are being pursued.” In 2009 he considered a potential Russian threat to Europe a serious matter. Even after he won the elections, in November 2010, he said that any kind of partnership with Russia was dangerous. He complained that more and more EU countries were initiating economic cooperation with Russia and that this would lead to a dangerous economic and political penetration of Russia into the West.  He declared that “even NATO  doesn’t consider Moscow an opponent anymore but a partner” and expressed his fear that “the western world will eventually forge a historic alliance that will be dangerous for Central Europe.”

This fear of Russia led Viktor Orbán to come up with the idea of a cordon sanitaire or an axis as he called it. The former socialist countries should band together from the Baltic to the Adriatic to make sure that Russian political and economic ambitions are checked. One “political analyst” went so far as to write in Heti Válasz (December 2009) that he believed that Russia would be genuinely fearful if Viktor Orbán were to become prime minister of Hungary. The mouse that roared!

After his election Orbán visited Poland where he most likely tried to convince Donald Tusk to join this axis. Orbán failed in this attempt, however, and from there on the government made little mention of this grand alliance forged by the Hungarian prime minister. But as the speech he gave in November 2010 indicates, he didn’t abandon his anti-Russian sentiments and his fear of Moscow.

Although his meeting with Putin was very short, Orbán arrived in Moscow with a large delegation. He was accompanied by György Matolcsy, minister of national economy; Mrs. László Németh, the mystery minister of national development; Mihály Varga who at last is free from his duties as chief negotiator with the IMF; Péter Szijjártó who lately behaves as if he were the foreign minister (as he is except in name); and Csaba Baji, the CEO of the Magyar Villamos Művek Zrt. (Hungarian Electric Power Co.) On the Russian side, besides Putin, the Russian minister of agriculture and the CEOs of Gazprom, Rosatom, and Vnesheconombank were present.  Vnesheconombank is commonly called the Russian Development Bank. The institution is used by the Russian government to support and develop the Russian economy.

Vladimir Putin and Viktor OrbánMTI / Photo  Szilárd Koszticsák

Vladimir Putin and Viktor Orbán, January 31, 2013
MTI / Photo Szilárd Koszticsák

Putin turned out to be a gracious host, at least on the protocol level.  He was “very glad that [Viktor Orbán]  finally took advantage of this invitation to come to Moscow.” He announced that he considered Hungary a priority partner in Central Europe, especially on economic matters, “because, after all, after Germany, Russia is the most important trading partner of Hungary.” Putin noted that an avenue in Budapest was named after Lev Nikolaevich Tolstoy. He naturally neglected to mention that Moszkva tér in Buda lost its name at almost the same time. He ended his speech with “We have been waiting for you in Moscow. … Welcome back!”

Orbán was equally expansive. He talked about Hungarian admiration for Russian culture and praised Russian achievements profusely. He made sure that Putin understands that he is aware of Russia’s economic and political importance:  “We believe that Russia is a great power. It has not only a great past, but also a great future. So it is obvious that  Hungary has a keen interest in maintaining a fruitful and close cooperation with Russia.” He also welcomed Russian investment in Hungary.

Putin added a little dig. Or at least I interpret it this way. Picking up on Orbán’s reference to Russian culture, Putin in his brief answer noted the multinational nature of the Russian Federation. Among the components of this ethnic mix are the Finno-Ugric people to whom the Hungarians related. He indicated that there will also be Russian-Hungarian cooperation in that field. So, forget about Kazakhstan!

Véleményvezér, one of the leading Hungarian-language blogs, entitled its post “Viktor Orbán, Putin’s new little kitten.” As for the Hungarian opposition’s response, I will deal with that topic tomorrow.