Tag Archives: RTL Klub

George Soros’s messages and the Hungarian government’s reactions

George Soros, simultaneously with releasing his rebuttal of the Hungarian national consultation on the alleged Soros Plan, gave an interview to Andrew Byrne of The Financial Times, in which he explained his decision to break his silence. He cannot remain quiet any longer because the Hungarian government about a month ago announced its intention to investigate the so-called Soros network. Under these circumstances, he felt he had to “set the record straight in order to defend these groups and individuals who are going to great lengths to defend European values against persecution.” At the same time he urged EU countries to raise their voices against “Orbán’s treatment of civil society and address fears over the rule of law in Hungary.”

“It is a tragedy for Hungary”

It is hard to know for sure whether this interview and rebuttal by George Soros came as a surprise to the Orbán government or not, but I suspect that it did. After all, the campaign against Soros has been going on for almost two years, yet Hungary’s benefactor hasn’t publicly criticized the Orbán government’s treatment of him and hasn’t come out in defense of the NGOs he has been supporting. During these two years he spoke out only once, thanking the 20,000-30,000 people who demonstrated on behalf of the beleaguered Central European University he founded. The devilish idea of a national consultation on the Soros Plan was born months ago, the questionnaires were sent to eight million voters more than a month ago, yet Soros said nothing. So, I assume Orbán believed that Soros would not engage verbally but would simply take all of the abuse showered on him and the employees of the civic organizations that have been the beneficiaries of his largesse.

A relatively new internet news site called Független Hírügynökség collected all the early responses to the rebuttal and the interview from pro-government sources and came to the conclusion that most of these slavish organs of government propaganda needed a few hours to recover from the shock. As is normally the case, these so-called journalists wait for the word from above. Once the government mantra is handed down, the “parrot commando” takes over. This time the magic phrase is “frontal attack.” It was Gergely Gulyás, the new Fidesz parliamentary whip, who got the assignment of sounding the trumpet. We can be assured that from this time on we will encounter the same phrase in all pro-government publications. According to Gulyás, George Soros until now has attacked Hungary and its government only “through organizations he finances, the European Parliament, and his Brussels allies,” but now he has personally joined the fight. He is attacking the government’s nationwide public survey, “making accusations, threats, and slanders.”

Gulyás, who has shed his gentlemanly demeanor since he became the Fidesz whip, wasn’t satisfied with criticizing Soros’s interview. Obviously he was told that he must announce that the investigation of the NGOs George Soros is worried about might be extended to Soros himself. Here is exactly what he said: “Civic organizations function freely in Hungary within a constitutional framework, but if there is an organized attempt at discrediting Hungary from abroad, this activity must be investigated.”

Let’s step back briefly to the Hungarian government’s “investigation” of the partially Soros-funded civic organizations. It was about a month ago that Viktor Orbán called these NGOs a threat to national security. Last week János Lázár announced that the government had asked Sándor Pintér, minister of the interior, to report on the possible dangers these civic groups pose to Hungary. This afternoon Pintér was to report to the parliamentary committee on national security about these alleged dangers. Before the hearing took place, Magyar Idők published an editorial which hypothesized that George Soros had timed his attack on Hungary in order “to divert attention from Pintér’s report” and “ahead of time to discredit it.” That sounded like a plausible theory, but to the obvious chagrin of the Orbán government, Pintér was unable to come up with any national security threats these human rights organizations present to Hungary. According to information that reached Index.hu, Pintér sidestepped the question. Obviously, he cannot go against the government’s position, but at the same time professionally he couldn’t find any national security risks stemming from these organizations’ activities. He apparently simply repeated what he had told the media a few days ago: “I don’t know whether George Soros poses any danger, but ideas he promulgates do not conform to the Hungarian conceptions and to Hungarian law. An open society, a society without borders are not accepted at the moment. They are futuristic.”

Yes, Soros stood up and fought, not so much for himself as for the people who as human rights activists are being threatened by the regime. Once he broke his silence he decided to go all the way. When RTL Klub asked for an interview, he sent a video message in Hungarian which the network immediately put up on its own website. It is a very moving video that lasts maybe two minutes. “It is a tragedy for Hungary that its present government is trying to keep itself in power by distorting reality and by misleading the population…. I’m terribly worried about Hungary; I think a lot about Hungary, and I want the Hungarian people to know that I will continue to do everything to support them.” It’s good to know that there are still people like George Soros around. The RTL Klub’s segment on Soros on its news program can be viewed here.

November 21, 2017

The European Commission is cracking down on Hungarian infringements

Many critics of the Orbán government complain bitterly that the European Union is utterly helpless and perhaps even uncaring when it comes to Viktor Orbán’s leading the country toward a practically one-party system. And, yes, it is true that the European Union can do little, aside from talking to the prime minister of Hungary, when it comes to politics. But let’s not forget about the European Commission’s mighty sword: money.

Naturally, there can be no direct link between “political sins” and “monetary punishment.” EU subsidies can be withdrawn only if the Hungarian government transgresses EU laws. Luckily or unluckily, depending on one’s perspective, the Orbán government violates these laws left and right. During the Barosso presidency the Commission rarely if ever applied monetary pressure on the Orbán government, but lately things have changed. I don’t know whether the change is due to the election of a new commission under the presidency of Jean-Claude Juncker or whether the Commission has simply gotten tired of Hungary’s repeated infringements of EU laws, but lately the Commission has come down hard on the Hungarian administration.

Here I will list some of the recent decisions of the European Commission that will seriously affect the Hungarian budget, at least in the short run. They may even have further repercussions.

Advertisement tax

An “in-depth investigation” was opened on March 12, 2015 into Hungary’s new advertisement tax, under which companies are taxed at a rate depending on their advertisement turnover. Companies with a higher turnover are subject to a significantly higher tax rate. The tax was designed in such a way that RTL Klub, Hungary’s most successful commercial television station, would have to pay such an exorbitant advertisement tax that its very presence in Hungary would be jeopardized.

Commissioner Margrethe Vestager, in charge of competition policy, said: “It is very important that we ensure a level playing field on media markets throughout Europe. Many media today rely on advertisement income to finance their operations. I welcome the signals from the Hungarian government that they intend to make changes to the advertisement tax. Our state aid investigation will look in detail both at how the advertisement tax applies currently as well as how it is amended, to make sure there is no unfair discrimination against certain media companies.”

RTL Klub decided to fight and on May 27, 2015 the Orbán government had to retreat a bit. A much lower but still progressive tax structure remained in force, which didn’t satisfy the Commission. After all, it was the progressivity of the tax to which Brussels objected in the first place. And while the “in-depth investigation” is in progress, the Hungarian government is unable to collect the taxes it levied on the media companies.

Suspension of development funds

In April the European Commission suspended the payment of $2.6 billion in development funds. This money was earmarked for three areas: innovative projects, economic development, and commercial infrastructure development. The reason given for the suspension was that Hungary’s competition requirements benefited only bidders close to the government. All of the cases that the Commission investigated were from the post-2010 period, not between 2007 and 2014 as the government first wanted us to believe.

Suspension of food chain inspection fees and the tobacco tax

Then, on July 15, 2015, the European Commission opened separate in-depth investigations “to examine whether two recent Hungarian measures with steeply progressive rate structures are in line with EU state aid rules.” One is the food chain inspection fee and the other is a tax on turnover from the production and trade of tobacco products. While these investigations are in progress, the Hungarian government will be unable to collect these taxes, the first installment of which was to be paid at the end of the month.

The original Food Chain Act was amended in such a way that it became “a steeply progressive” tax. Stores with low turnover pay either nothing or 0.1%, while stores with a higher turnover pay up to 6% of their turnover. The amended law was designed to favor the smaller Hungarian chains and disadvantage larger ones. The problem is not, the Commission said, that this tax in its present form raises “state aid” issues. But the progressivity of the tax “selectively favors companies with low turnover and gives them an unfair competitive advantage over others.”

In fact, it is no exaggeration to say that the real aim of the Orbán government is to drive away multi-national food chains. This inspection fee and another recently passed law, according to which retailers are prohibited from operating if for two consecutive years they don’t produce a profit, may have the combined effect of forcing foreign-based chains to leave the country. As the Commission points out, “such losses can be the result of the high food chain inspection fees some retailers would need to pay.” (Supermarkets have notoriously low profit margins. The figure often cited is 1%.) Apparently, the Commission’s letter to the Hungarian government hinted that in their opinion the food chain inspection fee and other restrictions on retailers are not compatible with “Treaty rules on freedom of establishment.”

The second EU investigation focuses on the tax on the sale of tobacco products. This is a new tax disguised as a “health contribution.” Again, the rates are steeply progressive. Small companies pay a tax of 0.2%, while large ones are taxed up to 4.5% of their turnover. Although the Commission welcomes measures that reduce tobacco consumption, “it has doubts that the effects of tobacco products on public health increase progressively with the turnover of companies selling them.” Here too, the Commission asked the Hungarian government for an explanation, but “so far, Hungary has provided no objective reasons that would justify a differentiated treatment between companies with different turnovers.” Of course, we know the real reason. The Orbán government wants to give an undue advantage to his favorite Hungarian tobacco company, Continental Tobacco Group, whose CEO is János Sánta, a friend of János Lázár, and whose factory is in Hódmezővásárhely, where Lázár served as mayor.

Enter János Lázár

Hungary is not cowed, as was clear from János Lázár’s routine Thursday press conference, held a day after the press release announcing that the EU had placed a hold on the food inspection fee and the health contribution tax on tobacco companies. He was furious. Hungary will not back down. The government learned that it was the American Philip Morris tobacco company and the Dutch multinational retail chain Spar that were behind the EU’s action. Lázár vented his anger and threatened any company that dares to complain in Brussels:

We can say to Spar and to Philip Morris that if you’re not going to pay this tax, then you’ll pay another, but for sure you’ll pay. You can go complain to the EU, but then you’ll just pay more. And it’s going to be this way for every group that presses charges against a country where it wants to earn money.

Lazar Janos2

Some commentators considered Lázár’s outburst most unfortunate, feeling that it would not only hurt Hungary’s image but would also keep investors away from the country. Éva Várhegyi, a well-known economist, believes that the damage has already been done. It makes no difference what Lázár has to say. Foreign business leaders don’t even flinch any more. They are used to this kind of treatment. As it is, since the 2008 economic crisis more foreign businesses have been leaving Hungary than coming to set up shop. Those who are still in Hungary rarely decide to make additional investments.

So, the European Union has not been idle in the face of these latest infringements. Moreover, I don’t see how the Hungarian government will be able to convince the European Union that these taxes and fees conform to EU law. Yes, the Orbán government will undoubtedly respond with more tricks that they believe will work. But since the Hungarian administration’s policies are aimed at favoring Hungarian businesses and preferably ruining foreign ones, I don’t think they will succeed in convincing Brussels that their discriminatory policies are legal.

RTL Klub’s Híradó: The most popular evening news in Hungary

The Mérték Media Monitor, an institute founded by a group of young sociologists, together with Medián, a well-known polling company, has twice assessed the Hungarian public’s sources for political news. In both 2012 and this year the poll showed that the overwhelming majority (71% in 2015) of Hungarians learn about political events from the two commercial stations, RTL Klub and TV2. The internet followed with about 35%, radio with 21%, and only 5% from the print editions of dailies and weeklies.

The 71% would be an impressive figure if it meant that the respondents regularly tuned in to the evening news of these stations. Alas, this is not the case. Once a week viewing was enough to be included in the 71%.

RTL Klub’s evening news is the most popular (73%), with TV2 at 62%. RTL Klub’s change of programming last summer and fall, which included more political news, often critical of Fidesz and the government, was most likely one of the causes of the steady erosion of support for the government party and Viktor Orbán.

It is worth comparing the content of RTL Klub’s evening news in 2012 with the current coverage. For this comparison I’m fortunate to have detailed data on RTLKlub’s news in 2012 for a whole week from the popular vastagbor.blog.hu‘s “zero,” who felt like Morgan Spurlock who for a whole month ate only McDonald’s fast food for the sake of a documentary. Zero called the experiment “dangerous to your life.”

Of the 141 reports 98 were either about crime and or were human interest stories. But even the 24 so-called domestic political news stories often covered events of lesser importance. For example, during the week, zero heard once that Ferenc Gyurcsány began his hunger strike and again a couple of days later that he finished it. Zero might have been too generous when he came up with 19 reports on foreign affairs. I counted fewer, because some of the so-called foreign news items were in fact human interest stories, except that what happened occurred outside of Hungary. Reading the headlines by itself is a mind numbing experience.

RTC hirado

Well, since then quite a few things have changed around RTL Klub’s newsroom although the anchors remained the same. First of all, today the evening news is 45 minutes long, which is longer than most newscasts around the world. ATV’s “Híradó” is only 20 minutes long, although there are several newscasts during the day. The American PBS (Public Broadcasting Service) has a similarly long evening news “hour,” but they structure it differently: fewer reports but longer analyses and comments from both the left and the right.

RTL Klub’s programming is packed with news items. I counted 28 reports, including the weather, out of which only nine dealt with crime and accidents. Mind you, these stories came at the beginning of the program and lasted about 20 minutes. Interestingly enough, foreign news followed this first segment, with seven news stories, including the Greek situation and its possible effect on the Hungarian forint and the economy, Tunisia, the flood in China, the capture of the second fugitive in upper New York State, and the confrontation in Istanbul between marchers in the Gay Pride parade and the police.

The domestic scene was well covered, starting with the riot in the Debrecen refugee camp and followed by the arrest of a group of smugglers. Among the domestic news items there were at least three that might not have pleased the Fidesz activists monitoring the news. Today Lajos Kósa showed his total ignorance of the situation in countries where most of the refugees come from. He announced that in his opinion all those who illegally cross the borders of Hungary are in fact “economic migrants” because they obviously have enough money to pay the smugglers which, rumor has it, costs at least $3,000 per person. Anyone with that much money, said Kósa, could easily get on a plane and fly anywhere he wants. The only thing Kósa forgot is that one needs passports and visas for such a trip, which clearly the refugees don’t have.

Another story that might not be to the liking of the government party was the piece of news that DK (Demokratikus Koalíció of Ferenc Gyurcsány) will again demand an investigation into György Matolcsy’s failure to include two sources of income in the yearly compulsory declaration of his finances. The first time the prosecutor’s office refused to investigate because, in their opinion, that particular item “had not reached the consciousness” of the bank president for the simple reason that it was intended for and was actually given to charity. After some investigation, however, it turned out that in at least one of the two cases, he gave only part of his non-bank compensation to charity and therefore “the existence of his income must have reached his consciousness.” RTL Klub also found it worth mentioning that Origo is up for sale and that Árpád Habony’s new Modern Média Group is among those who were offered an opportunity to bid for it. By now, I’m sure that even the casual visitor to RTLKlub knows who Habony is and what it would mean if Habony managed to get hold of Origo.

All in all, if one has the patience to listen to the first 20 minutes or so, one can get a fair picture of what’s going on in the world. The foreign news is skimpy, but this is true of all Hungarian TV stations with the exception of ATV, which has a separate daily program devoted to foreign affairs called “Világhíradó,” in addition to a weekly program called “Külvilág,” which usually concentrates on one event in greater length and depth. But overall, RTL Klub is doing a good job, and I understand that their viewership has gone up since they decided to include more political items in their evening newscast.

Brussels suspends the current Hungarian advertisement law

Two days ago it was announced that Dirk Gerkens would step down as CEO of RTL Klub in Hungary. His departure had long been rumored since Gerkens’ fierce defense of the television station’s independence from government interference greatly irritated the officials of the Orbán government. Irritation was translated into action. On June 11, 2014, the Hungarian parliament passed the Advertisement Tax Act. It hit RTL Klub the hardest because the tax rate was progressive: small companies would pay nothing while the largest would pay a 50% tax, not on profits but on revenues. RTL Klub was the only company that had to pay half of its advertisement revenues to the government.

It was obvious from the very beginning that the European Union would not let this Hungarian action go unanswered. It was also clear that if the case was ever litigated the Hungarian government could only lose. So, after lengthy negotiations, the Hungarian government expressed its willingness to change the most objectionable part of the law, its progressivity. Viktor Orbán was adamant, however, that the budget couldn’t forgo the money the tax law would generate. He was ready to give up the progressive feature of the law in favor of levying the tax on all media organs, regardless of size. János Lázár, who has been handling the RTL Klub case, mentioned several possible figures but most often talked about a tax of between 5 and 10% across the board. I assume that this lower tax rate would also be levied on advertising revenues, not on profits. It seems that the price of the deal was the departure of Gerkens.

Meanwhile Brussels began to investigate the June 11, 2014 tax law and indicated that the progressive taxation system contained therein is in breach of European Union laws. Hungary was given until February 16 to offer an acceptable alternative version of the law on advertising. February 16 came and went. Eventually Margrethe Vestager, EU commissioner in charge of competition policy, seems to have had enough and today released a statement announcing the opening of an in-depth investigation into the Hungarian advertisement tax. The question is whether “Hungary’s advertisement tax introduced in June 2014 complies with EU state aid rules.” Investigations in the European Union usually last so long that countries not in compliance can sometimes achieve their objective before the final ruling is handed down. But in this case the statement Vestager released added the following “suspension injunction”: “The Commission has … taken a separate decision prohibiting Hungary from applying progressive rates until the Commission has finished its assessment.”

Margrethe Vestager, the new antitrust commissioner with a steely reputation

Margrethe Vestager, the new antitrust commissioner with a steely reputation

Let me say a few words about Margrethe Vestager who, according to a Financial Times article, “has a steely reputation.” She has been in politics ever since the age of 21 when she was appointed to the central board and executive committee of the Danish Social Liberal Party (Radikale Venstre). Since then she served as minister of education and later as deputy prime minister and minister for economic and interior affairs.

As Vestager sees the Hungarian situation, the problem lies not only with the progressive nature of the tax. She promised that “the investigation will look in detail both at how the advertisement tax applies currently as well as how it is amended, to make sure there is no unfair discrimination against certain media companies.

In practical terms this means that from this moment on the Hungarian government will be unable to collect any advertisement tax from any media outlet. The 7 billion HUF Orbán needs so desperately for his 2015 budget and that was supposed to come from taxing the Hungarian media outlets is in jeopardy.

The Orbán government had tried to postpone making any legislative changes to the current law as long as possible. With this “suspension injunction,” however, dragging out the procedure actually works against the interests of the government. The longer they do nothing the longer the suspension will remain in force. Moreover, even the speedy enactment of a new law will make no difference as far as this “suspension injunction” is concerned. It will remain in force while Brussels conducts an “in-depth” investigation into any unfair discrimination in the new version of the law. It seems that Brussels no longer trusts the Hungarian government because, as Ricardo Cardoso, spokesman of the European Commission, indicated, they will not only have to study the new or amended tax law but will also investigate whether “possible illegal state aid has distorted the market already.”

What is the Orbán government’s reaction? The Kormányzati Információs Központ (KIK/Governmental Information Center) announced that the cabinet will discuss the matter next week. The spokesman stressed, however, that “the government seeks dialogue but will defend the interests of Hungary.” The question is whether the normally belligerent Hungarian government will eventually cave or will simply ignore the verdict of Brussels. If the prime minister is foolish enough to launch another “war of independence,” Brussels would most likely take the case to the Court of Justice of the European Union, the body that interprets EU law to make sure it is applied uniformly in all EU countries. The Court has 28 members from the 28 EU countries. I have no doubt that if the case ended up before this court the verdict would go against Hungary. The only remedy, however, would be a hefty fine. The question is whether it would be hefty enough to make it economically unwise for the Hungarian government to ignore the EU and collect the tax money it needs to plug the hole in the 2015 budget.

P.S. Breaking news: “The EU has blocked Hungary’s €12bn nuclear deal with Russia.” See http://www.ft.com/intl/cms/s/0/9a6467e2-c8c1-11e4-8617-00144feab7de.html?siteedition=intl#axzz3UCd1Ux7S

Viktor Orbán and the Fidesz parliamentary delegation show the way

After spending quite a bit of time on foreign affairs, we have to return to domestic policies because soon enough parliament will reconvene, and the Fidesz and KDNP caucuses are preparing for the new session. Members of the caucuses get together, normally at some resort, and are sequestered for a few days. Their agenda is to set the tone of politics for the next five or six months. This time the Fidesz caucus met at the Balneo Wellness Hotel near Mezőkövesd, the center of an area known for its distinctive folk embroidery. Obviously, there is no shortage of funds in the Fidesz coffers. The caucus has 115 members, and several ministers and undersecretaries also attend these retreats.

Balneo Wellness Hotel

Balneo Wellness Hotel

I find these gatherings amusing, especially when I hear from Antal Rogán, the whip of the caucus, “we request and authorize the government” to do this or that. Naturally, the situation is the reverse, Viktor Orbán tells Antal Rogán what he expects them to do. If they come up with an idea of their own, which doesn’t happen too often, Orbán usually decides against it. Or if they want information from the prime minister, they don’t always get it. This time, for example, apparently the MPs wanted to know more about the visits of Angela Merkel and Vladimir Putin, but they heard nothing about either. It also seems they were hoping to hear more about the deal between the government and the RTL Group. They should have known better. When Viktor Orbán loses a fight, he doesn’t like to talk about it. Or, if an encounter, like the one with Merkel, is not exactly a success, he changes the subject.

So, let’s see what Viktor Orbán actually wanted to talk about. His greatest concern seems to be the immigration of “economic refugees.” In the last two years their numbers have grown substantially, and recently they’ve spiked. While last year 42,000 requests for immigrant status were received, this year, just in January, 14,000 such requests were filed. Orbán’s solution to the problem is draconian. He wants “to bolt the door to Hungary” to all “economic immigrants because we don’t need any of them.” Hungarian economic emigrants leave in droves while Hungary is bolted tight to anyone coming from “another culture.” He will not wait for the European Union, which is far too slow. Hungary will act on its own. I wonder how they will deport all those people who are currently in Hungary and what will they do with those who are on their way. An Irish proverb says “Never bolt the door with a boiled carrot.” What will the Hungarians use?

The government must have realized that the so-called school reform initiated by the second Orbán government was a failure. All schools were nationalized except for a few private schools and were put under one huge umbrella organization that turned out to be totally incapable of supervising about 120,000 employees and thousands of schools. We don’t know how the government is planning to undo the chaos created by Rózsa Hoffmann (KDNP), but it looks as if another “reform” is underway. Every time I hear of a new school reform I just shudder. So far the government hasn’t talked to educational experts or teachers’ unions, and it hasn’t spelled out the details of its plan. It has simply resurrected an old idea of Zoltán Pokorny, former minister of education in the first Orbán government (1998-2002), to extend the eight grades of compulsory education by one year. Apparently, it was inspired by the “Polish model,” which introduced a ninth year of elementary education–along with an entirely new educational philosophy. It seems, however, that Viktor Orbán doesn’t like the idea, so most likely it will be dropped.

Another concern of Viktor Orbán is the state of Hungarian healthcare, which is rapidly deteriorating instead of improving. Orbán seems to be frustrated. At the meeting he complained that 500 billion extra forints had been sunk into healthcare and yet the hospitals are still in the red. Their current debt is 70 billion forints, which must be paid out of the central budget. Their suppliers, mostly Hungarian middle-size companies, are also hurting. For the time being, the newly appointed undersecretary will remain, but I have feeling that his days are numbered. The government’s solution is simple: forbid the hospitals from accumulating any new debts. If a hospital director doesn’t follow this order he will be fired. It is hard to fathom how such a strategy will help the situation. By the way, there’s an apparent contradiction worth mentioning here. On the one hand, the government wants to reduce the number of hospitals and most likely cut back on the number of employees, while on the other hand Antal Rogán “requested and authorized” the government to make money available for a brand new hospital in Budapest. It turns out that money for this new hospital will come from the European Union while maintaining the existing hospitals must come from Hungarian government resources.

Although the Hungarian media is full of the news that Viktor Orbán had to give in to the demands of RTL Klub without the television station toning down its news coverage of government corruption, we learned today that “Fidesz authorized the government to negotiate further with Brussels” concerning the advertising levy. What can that mean exactly? Well, nothing good, I fear. Viktor Orbán will take his sweet time thinking about the deal between János Lázár and the top management of the RTL Group. Moreover, Orbán made it clear that the amount of money he was hoping to get from the advertising levies cannot be reduced as a result of the compromise with RTL Klub. So, we can all use our imaginations trying to figure out what Viktor Orbán has in mind when he talks about further negotiations with Brussels.

If I properly interpret the leaks from the meeting of the Fidesz delegation, Orbán will not back down on government supervision of non-governmental organizations. In his opinion the Hungarian government is entitled to know what kinds of foreign subsidies are given to Hungarian civic groups. So, I assume the harassment of these groups will continue. So will the “national freedom fight.” Rogán revealed that “the Hungarian people expect that the government will always stand for the national interests” and that as a result of the government’s policies “national self-esteem” has grown during the last five years. Orbán also has no intention of changing his “independent” foreign policy because “Hungary has become a strong country” thanks to his leadership. He repeated that cheap gas means inexpensive utility prices, which he considers critical to his political longevity. Only Putin can give him what he needs. What Orbán will give in return is as yet unknown.

Thoughts in advance of the German and Russian visits to Budapest

Yesterday the Neue Zürcher Zeitung published an article about the forthcoming visits of Angela Merkel and Vladimir Putin to Budapest titled “Orbans Tanz auf zwei Hochzeiten,” indicating that Viktor Orbán will be able to have his cake and eat it too. He will remain a member in good standing of the European Union and will be a close friend of Russia at the same time. I, on the other hand, maintain that he will not be able to pull off that extraordinary feat. There are many signs that the Hungarian prime minister is already in retreat.

Let’s start with the Merkel visit. Hungarian and foreign observers have come up with all sorts of explanations for her trip, starting with the simplest one–that she could no longer postpone it. After all, she has not visited the Hungarian capital in the last five years, ever since Viktor Orbán’s Fidesz, which professes to be a Christian Democratic party, won a stunning victory in 2010. Her last trip took place in 2009, on the twentieth anniversary of the Hungarian opening of the Austro-Hungarian border for East German refugees, when the socialist-liberal government of Gordon Bajnai was still in power. If the purpose of the trip was to have a serious discussion about the Russian-Ukrainian crisis and Hungary’s role in it, Merkel’s five-hour stay, with very little face time with Viktor Orbán, would not suffice. She is coming because she promised to and because, according to a 1992 agreement between Hungary and Germany, she has to.

There are analysts who are convinced that Angela Merkel will not even mention the erosion of Hungarian democracy under Viktor Orbán’s regime, the systematic transformation of a fledgling democracy into an autocratic regime akin to the political setup that existed in Hungary between the two world wars. She has more pressing issues on her agenda: Greece, the sanctions against Russia, and the growth of the German anti-immigration movement–PEGIDA (Patriotische Europäer gegen die Islamisierung des Abendlandes / Patriotic Europeans Against the Islamization of the West), especially popular in the former East Germany. It is unlikely that Merkel will waste any time on the woes of Hungarian democracy. Her only aim is to make sure that Viktor Orbán stands by the extension of the sanctions. This hypothesis, in part at least, is outdated: Hungary obediently voted for the extension on January 29.

Others are more optimistic. They maintain that the trouble with Angela Merkel’s visit is that it seems to put a stamp of approval on the illiberal regime of Viktor Orbán. This is certainly how the Orbán government is portraying it. If Merkel says nothing about the state of democracy in Hungary, Orbán’s regime scores a victory. There is pressure on Merkel at home, however, to do something about the Hungarian situation. She has to give the appearance that her visit is something of a warning to Viktor Orbán.

There is some truth in this interpretation. In fact, there are signs that behind the scenes some “disciplinary measures” have already taken place. The successful negotiations with the leaders of  the RTL Group indicate that Orbán got the message: there will be consequences if the Hungarian government blatantly and illegally discriminates against a media outlet just because it doesn’t like RTL’s news broadcast. Orbán caved, and I for one am certain that he didn’t get much in return. I find it interesting that the official announcement of Merkel’s visit occurred very late, on January 28, the day when according to Népszava‘s information the Hungarian government agreed to a substantial reduction in the enormous tax it had levied on RTL Klub. Was this agreement the price, or part of the price, of Merkel’s visit?

Because that’s not all. In his regular Friday morning interview Orbán announced that the exorbitant tax levies on the banking sector will most likely be gradually reduced because the Hungarian economy has greatly improved. “If possible, the interests of the country and the businessmen must be reconciled,” said the man who until now had laid all the financial burdens of his erroneous economic policies on businesses, especially foreign ones.

There might be several reasons for Orbán’s cooperation in addition to German negotiations. One is that the Americans undoubtedly know more about the Hungarian mafia state and Viktor Orbán’s role in it than they let on, but the Hungarian prime minister doesn’t know how much they know. That must be a powerful incentive to stick with the countries that provide Hungary with economic aid and military shelter. Another consideration might be the effect of the sanctions and the sinking price of oil on the Russian economy, which makes close ties with Putin’s Russia a less desirable option than, let’s say, a year ago.

And that leads us to the Putin visit on February 17. It was almost a year ago, in March of 2014, that the United States and the European Union began applying sanctions against Russia. Although Hungary agreed to support the move, in August Viktor Orbán declared that “Europe shot itself in the foot,” meaning that the sanctions actually hurt only the West and did nothing to weaken the Russian economy. Just about this time, however, oil prices began falling. The combination of sanctions and falling energy prices has made the Russian economic situation close to desperate by now.

Orbán was initially very proud of what he considered to be the crowning achievements of his Russia policy: the Southern Stream, which would have brought gas to Hungary circumventing Ukraine, and the Russian loan for the extension of the Paks Nuclear Power Plant. Since then, Russia abandoned the Southern Stream project because of lack of funds, and many people think that the much heralded Paks deal is also in trouble. Thus, the rationale for close relations with Russia has more or less evaporated, which leaves Viktor Orbán in the unenviable position of suffering the ill effects of his overly cozy relation with Putin while reaping practically no benefits.

Depiction of the Trojan Horse at the Schlilemann Museum in Akershagen, Germany

Depiction of the Trojan Horse at the Schliemann Museum in Akershagen, Germany

Under these circumstances I doubt that the initiative for the Putin visit came from Budapest. It is no longer to Orbán’s benefit to make a lavish display of friendship with Russia. And indeed, the government is trying to downplay the importance of Putin’s visit, noting that it is only a working trip and not a state visit with the usual fanfare. For Putin, by contrast, it is an important trip at a time when nobody wants to have anything to do with him. Just think of the humiliation he suffered in Brisbane, Australia. He wants to demonstrate that he has at least one good friend  in the European Union.

Putin’s second reason for the trip, I suspect along with others, is to find out how much he can rely on Viktor Orbán. Will he deliver as promised? Or it was just talk? Perhaps Orbán oversold his usefulness to Putin and is turning out to be a useless ally from the Russian point of view. Last August Jan-Werner Müller wrote an article in Foreign Affairs titled “Moscow’s Trojan Horse: In Europe’s Ideological War, Hungary Picks Putinism.” Well, the Trojan Horse may be just an empty shell and the damage it can cause within the European Union little to none.

The Orbán government and RTL Group: a cease-fire?

Soon enough it will be a year since the Orbán government decided to levy an exorbitant tax on the largest and most profitable commercial television station in the country, RTL Klub. I wrote extensively about the tug of war between the Hungarian government and the German-owned station. According to rumors, the government plan was to squeeze the station’s owners into selling and then have the station be purchased by some “well-deserving,” meaning pro-government, individual or individuals whose newscasts would be as lopsided as those of HírTV and the state-owned MTV. Apparently, RTL was not ready to sell, so the government had to settle for the second largest commercial station, TV2, which was eventually sold to a shadowy group of people. The special levy that specifically targeted RTL Klub was intended as a form of punishment. Knowing Viktor Orbán’s warped psyche, I’m sure that this story is more than mere rumor.

So, the war began. RTL Klub coughed up the money. What else could they do?  But they paid the government back many times over. Their newscast, which used to consist of short, mostly tabloid items and police reports, was extended to an hour with a heavy emphasis on political news. Suddenly the dirt that emerges daily around this government could be seen on a commercial station’s evening news, watched by 1 million people as opposed to the state television’s propaganda news with its 400,000 viewers. The people who in the past had watched RTL Klub for its “entertainment lite” programming suddenly were confronted with the kind of news that earlier had never reached them. The result was stupendous. Although some commentators wondered whether RTL Klub’s viewers would be turned off and would switch to TV2, exactly the opposite happened. RTL Klub’s viewership grew substantially. Political analysts are convinced that Fidesz’s tremendous loss of popularity is due, at least in part, to RTL Klub’s newscasts.

From the beginning RTL Klub planned to take its case to Brussels because, while RTL Klub’s share of the Hungarian advertising market is 13.5%, it is obliged to pay 90% of all revenues received from taxes on advertising. Indeed, last October RTL Klub lawyers turned in an official complaint to the European Commission. Yet for months we heard nothing. Then, on January 19, Népszava reported that some Fidesz politicians would be very happpy if Viktor Orbán “made peace” with RTL Klub. The paper added that “according to some sources, the Orbán government is counting on ‘a cease-fire’ before the arrival of Angela Merkel” in Budapest on Monday.

RTL Group headquarters in Luxembourg

RTL Group headquarters in Luxembourg

A week later 444.hu learned that János Lázár had already had several conversations, not with the Hungarian CEO of RTL Klub but with Andreas Rudas, director of East European operations, and Guillaume de Posch, CEO of the international RTL Group. Earlier they met in Munich and last week in Budapest. 444.hu claimed to know that they will meet again in Berlin sometime this week. The government allegedly wants to end the war with the German firm, which complained about its treatment in Hungary to Angela Merkel herself. The paper also seemed to know that the top management of RTL Group was ready to make a deal but that Dirk Gerkens, the man who is heading the Hungarian RTL Klub, refuses to compromise. Gerkens was indeed outspoken and combative, which raised the ire of some true believers. Gerkens told Bloomberg that he received threats of violence, delivered via friends and e-mails. He added that he moved his family out of the country, left his apartment for a hotel in central Budapest, and hired bodyguards.

After the report of 444.hu about the ongoing negotiations, rumors began to circulate in the media, especially after Népszava yesterday came out with the alleged details of the deal. According to the paper, the 50% tax on RTL Klub will be reduced to 5-10% but only if the station “tones down” its newscasts and fires Dirk Gerkens. Not surprisingly, journalists are up in arms. FSP (Péter Földes), whose blog regularly appears on Népszabadság On Line (NOL), summarized the sentiment. If what 444.hu and Népszava reported is true, then “RTL is preparing to commit public suicide combined with betrayal.” I agree, and that’s why I think such an outcome is unlikely. It would not only be ruinous for the RTL Group’s reputation but would also make the Hungarian government’s interference in the media, which they steadfastly deny, blatantly obvious. I don’t think it is in the interest of either party to cut such a “dirty deal.”

Meanwhile, in the last few hours HVG learned that the Orbán government’s decision to retreat on the 50% levy on RTL Klub resulted from diplomatic pressure: both the German chancellor and the prime minister of Luxembourg, where RTL Group is headquartered, strongly suggested to Viktor Orbán that he settle his dispute with Europe’s largest media firm.

Apparently, contrary to Népszava‘s claim, negotiations have not yet ended and the deal has not been sealed. Lázár, who is negotiating for the Hungarian side, admitted that his job as negotiator has been very difficult because “the prime minister insists on upholding the advertising tax.” For Orbán “this is a question of principle.” But it looks as if principle will have to be sacrificed in the face of diplomatic pressure and the hopelessness of Hungary’s case if the RTL Group actually sues. It seems that the prime minister will sketch out changes in the advertising tax tomorrow morning during his regularly scheduled radio interview, with details about the exact figures to be revealed later.

So, another defeat, another retreat. These are hard times for Viktor Orbán. Moreover, I suspect that the newscasts of the Hungarian RTL Klub will not change substantially in the future. RTL Group cannot afford it. Neither can Viktor Orbán.