Tag Archives: road construction

Viktor Orbán’s new infatuation with modernity

The Orbán government fell in love with the word “modern.” As we just learned today, the leadership of Fidesz has been dissatisfied with the media portfolio of Lajos Simicska for some time. They considered it old-fashioned and hence ineffective. Therefore, quite independently of the quarrel between Orbán and Simicska, the party’s leadership was thinking of pro-government media that can have a greater impact, especially on the younger generation. They have been working on a new media portfolio under the supervision of Árpád Habony, who will also be part owner of the new enterprise. The name of the company will be Modern Média Group (MMG). It looks to me as if Fidesz is no longer capable of coming up with anything new because, as HVG discovered, there used to be a company called Modern Média. It was one of those bankrupt companies around Fidesz that was sold to Josip Tot, the penniless Croatian guest worker, in 1998.

MMG’s plans are ambitious. They will have an internet site called via.hu that will publish opinion pieces and political analyses. The new owners are also planning to launch a free paper to replace Helyi Téma, which ceased to exist a few weeks ago due to the financial troubles of its owner, Tamás Vitézy. In addition, their plans include a financial paper. There is also talk about a possible radio station. All of this requires a lot of money. Where do Árpád Habony and his business partner, Tibor Győri, who used to be undersecretary in the Prime Minister’s Office, get the money for such a media empire? We pretty well know where Lajos Simicska got his money, but what about Habony, who as far as we know doesn’t have a job? Before 2010 Győri was CEO of Mahír, one of Simicska’s companies, but I can’t believe that he is a billionaire.

I’m rather skeptical of the prospects for this new Fidesz-Orbán media empire simply because government-created propaganda is almost never financially successful. As for modernity, it is the last word one would associate with the Orbán government, which has been doing nothing else in the last five years but trying to turn back the clock.

But that’s not all. The Orbán government has a new project called the Modern Városok Program (Modern Cities Program), which Viktor Orbán launched in Sopron on March 25. Unfortunately for Orbán, his speech on that occasion was totally overshadowed by his revelation in the question and answer period that he was the person who ordered his ministers to withdraw all government money deposited at the Quaestor Group.

His visit to Sopron signaled the beginning of a road show that includes visits to all 23 cities labeled as “megyei jogú városok,” which simply means that these cities also take care of the business of the county in which they are situated although not all of them are county seats. According to plans, about 1,000-1,200 billion forints, coming largely from Brussels, will be spent on “modernizing” the infrastructure. Originally, the government planned to finish all the expressways that would connect these cities to “motorways” or superhighways only by 2020, but given the sorry state of Fidesz and the Orbán government, the decision was made to speed up the process and finish the work by 2018, i.e., before the next election. In addition to an expressway between Sopron and Győr (M1), money would go for renovations of “church and government buildings” in Sopron and for the development of a tourist center at Lake Fertő. The expressway itself would cost more than 100 billion forints.

This “modernization” for Orbán means that “anyone crossing the border between Austria and Hungary wouldn’t notice any difference in quality.” But, of course, we know that not everything depends on new paint on buildings and an expressway leading into the city. What is missing on the Hungarian side cannot be remedied by road building and renovation. What is lacking is a forward-looking government and population.

On April 10 Orbán visited Eger, where the goodies coming from Brussels were more modest than in Sopron–only 30 billion forints. In addition to another expressway, Eger would receive a “national swimming and waterpolo centrum” to the tune of six billion forints. This center will be grandiose: several pools, “not just one or two.” After all, “let’s dream of great things, and do it right,” he said. I guess after the stadiums we can expect many, many swimming centers, which actually makes more sense than the stadium building mania for the nonexistent Hungarian football players. At least Hungarian swimmers and water polo players are world famous. Another six billion will be spent on the famous castle where in 1552 the Hungarian forces successfully defended the town from the Turkish invaders. Mind you, in 1596 Eger fell anyway and became part of the Ottoman Empire. An industrial center will be built, waiting for investors who will be able to reach Eger more easily after the expressway is built to M3.

The next stop was Zalaegerszeg. Another expressway by 2018 and another swimming pool with a recreation center. The city will also build a pilgrimage center devoted to József Mindszenty, the last Prince Primate of Hungary. Mindszenty became a parish priest in the Church of Mária Magdolna in Zalaegerszeg in 1919 and spent almost twenty years there. Although his beatification has been pending since 1996, it looks as if the city fathers of Zalaegerszeg are optimistic about the final outcome. I have no idea how popular such a pilgrimage center will be, but it looks as if the mayor and the city council consider it a good business opportunity.

Of course, the roadshow is not over. There are twenty more cities to visit.

I find the Orbán government’s sudden interest in modernity curious. If anything, Viktor Orbán is a man of the past. Even before he became prime minister in 2010, he fought tooth and nail against modern shopping habits. It’s enough to think of his crusade against the government’s plans to allow over-the-counter medications to be sold outside of pharmacies. And the government’s newly introduced Sunday store closings are supposed to favor small business owners and punish the large supermarket chains.

modernityYes, in the last fifty years or so small business owners have been pushed out of the market. It is sad. Where are the small bookstores? Few of them survive. The small pharmacy I used to visit even in the 1980s is gone. Pharmacies have been replaced by chains. Some large retail outlets, like Walmart, have their own pharmacies. There are fewer and fewer flower shops because every supermarket sells flowers. Certain professions have completely disappeared. For example, typesetting. But there is nothing new about that. After all, when Gutenberg introduced movable type, within a few years scribes lost their jobs. To try to stop these developments by government edict is more than foolhardy. Such an attempt can bring only disaster–backwardness and poverty. Moreover, it is hopeless. Anyone who attempts to stop the clock, unless it is Kim Jong-un in isolated North Korea, is doomed to failure.

The European Union has had enough: No money for a 110 billion project already underway

Not only does Quaestor’s collapse and the government’s involvement in this scandal weigh heavily on the third Orbán government. Viktor Orbán just heard officially that the European Union is refusing to finance a 30 km section of a new Hungarian superhighway, the M4, that would be 230 km long and would lead all the way to the Romanian border just north of Oradea/Nagyvárad. This is a first. And this time there is no possibility of any further negotiations. The project must either be abandoned or be built from purely Hungarian sources. Trying to resubmit the same project based on another, lower bid seems pretty hopeless since the European Union considers the whole project a “luxury item.”

I would be hard pressed to recall all the dates that were mentioned in the press about the imminent beginning of work on the project. It was in 2003 that civil engineers and experts on transportation came up with a 15- and a 30-year plan which included two much-needed superhighways, M8 and M4, that would transverse the country from the Austrian border to Romania. The point was to avoid Budapest, which has for far too long been the epicenter of the Hungarian transportation system. By 2005 it looked as if both M8 and M4 would be built.

In December 2012 Index reported that work on the planned 30 km section of M4 between Abony and Fegyvernek would begin in 2013. At that time people familiar with the price structure of Hungarian highways predicted that it would cost “tens of billions of forints,” but by the end of 2014, when all the bids were in, the cost was 110 billion or almost 4 billion per kilometer. That is four times the price of similar road construction in Western Europe where wages are considerably higher. Such a blatantly overpriced project was too much for the European Union. Moreover, they suspected price fixing. But what is really devastating for the Hungarian government is that the EU didn’t just stop this particular section of M4 but refused to finance the entire 230 km of M4 during the 2014-20 budget period.

An unfulfilled dream: "M4's construction began at Abony / szolnoknaplo.hu

An unfulfilled dream: “M4’s construction began at Abony” / szolnoknaplo.hu

The European Union’s decision about the Abony-Fegyvernek section of M4 couldn’t have come as a surprise to the government. Although by January 2014 all necessary permits were obtained and therefore work could begin, the green light from Brussels wasn’t forthcoming. In December 444.hu learned that in general there are problems with the Hungarian projects waiting for approval in Brussels. “Among other reasons, the European Commission did not pay because the officials consider the prices submitted too high.”

Benedek Jávor (PM MEP) turned to OLAF (European Anti-Fraud Office) to initiate an investigation into the M4 highway project. He wanted to know whether there were any signs of corruption, specifically any possibility of kickbacks to parties by the five firms involved in the construction of the project. Colas USA and the Austrian Swietelsky were to build 13.4 km for 46.76 billion forints. Lajos Simicska’s Közgép together with another Hungarian company, Híd, was entrusted with a short 2.4 km section, but it had three bridges, including a new 756 meter-long bridge across the Tisza River. For this work they signed a contract for 32.5 billion. For the rest Strabag International was to receive 31.5 billion.

The Hungarian government was so eager to launch the project that in January they began construction, which means that about 30% of the project has already started. It is not at all clear what the government will do in light of the EU decision. After all, it is not the fault of the companies involved that the Hungarians decided to begin construction without the final okay of Brussels. If, however, price fixing can be proven, Nándor Csepreghy, assistant undersecretary in charge of communication on matters related to the European Union, said, the construction companies will be responsible to the Hungarian taxpayers for the loss of 110 billion forints.

Although the Hungarian government now echoes the EU and says that the construction costs are too high, back in 2013 when Benedek Jávor first began his investigation of the case neither Mrs. László Németh, then minister of national development, nor János Lázár found anything wrong with the winning bids. In fact, both insisted that they “were not irrationally high.” But now, suddenly they’re talking about price fixing. It is hard to escape the conclusion that Benedek Jávor’s suspicions about possible kickbacks to individuals and perhaps also to Fidesz’s coffers are well founded.

As far as I know, up to this point it was only Simicska’s Közgép that reacted to Csepreghy’s threat of passing the lost EU money on to the companies involved. Közgép published a statement in which they explained that it was Közgép that offered the lowest price in a proper bidding process and that their job was not simple road building but the construction of three bridges. The new Tisza bridge will require 8,500 tons of steel. In addition, two smaller bridges, on either side of the Tisza, must be built over wetlands. Közgép called attention to the fact that the January issue of the Official Gazette announced that the government would finance from domestic sources a road that “connects M5 with M4.”

Indeed, János Lázár only recently reiterated the “government’s long-standing desire to have at least a four-lane highway between M5 and Szolnok.” Apparently, it is for political reasons that the Orbán government wants to make this road a priority. It was in Szolnok last September that Viktor Orbán announced his ambitious plan for building four-lane highways that would connect each county seat to the larger superhighway system of the country. Moreover, he planned this expansion of the roads not from EU money but from domestic resources. Such a road would “bring spectacular economic development to the city,” said Ildikó Bene, a Fidesz member of parliament. Budapest could be reached from Szolnok in less than an hour, she promised.

As for the charge of cartel activities and price fixing, I’m not sure that this is the real reason for the extraordinarily high prices asked for the job. Colas-Swietelsky bid 3.49 billion/km and Strabag 2 billion/km. Közgép is a different story because their work consists mostly of building bridges. I’m almost sure, however, that officials demanded kickbacks. A conversation between Nándor Csepreghy and Egon Rónay of ATV on Friday morning supports this supposition. When Csepreghy went on and on about the cartel activities of the firms involved, Rónay asked him why Hungary had to wait for the European Union to suggest that price fixing might be behind the high prices. Why didn’t they investigate these suspiciously high prices themselves? Csepreghy refused to answer. He tried every which way to bypass the question until Rónay said, “Well, you just refuse to answer my question.” Probably a wise decision.