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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 82,805 65,843 51,900 41
GNI per capita
 US $ 6,330 5,280 4,830 67
Ranking is given out of 208 nations - (data from the World Bank)

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Ferenc Madl

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Update No: 102 - (27/10/05)

Turkish EU issue paramount 
Turkey has long played a most important role in Hungarian history. Its accession talks with the EU, which started on October 3rd, are being closely watched by Budapest.
At such an historic moment it is worth recapitulating Hungary's long-standing links with Turkey. It was a brilliant Hungarian engineer, Orban by name (the same as the former recent premier, Viktor Orban), who gave invaluable assistance to the Ottoman Turks in their siege of Constantinople, which ended successfully for them in 1453, giving them a new capital of their empire in Istanbul. Orban provided them with state-of-the-art European military technology, notably siege artillery, with which to batter down the walls of the besieged city and bring down the thousand-year empire of Byzantium. 
The Turks have not forgotten their Hungarian helper, even if the Hungarians themselves by and large have. What the latter remember well is that the Ottomans proceeded to conquer much of Hungary itself in 1526 after the battle of Mohacs at which their king, Louis II was killed. The Hungarians were not to escape the Ottoman thrall until 1699, and then only at the price of falling under Hapsburg rule. This was at least Christian, although the Protestants of Transylvania, which was re-united with Hungary at this time by Leopold 1st, actually preferred the tolerant rule of the Moslem Ottomans to that of the Catholic Hapsburgs.
The Turks admire the Hungarians, who were the providers of many a modern innovation for them during the period of Ottoman rule. Orban had many a successor. But the Hungarians do not reciprocate this feeling; they have remained wary of the Turks ever since.
The Hungarian-Turkish relationship is still fraught. But Turkish entry into the EU is still being welcomed by official Budapest, a stark contrast to the position taken by Vienna, until a change of course in early October, under great pressure from the UK and others. Vienna narrowly escaped occupation by the Ottomans in 1683 when the Poles came to the relief of the city, an event which curiously took place on September 11th (which has led to speculation that the 9:11 masterminds chose that date for their act of terrorism in 2001 out of revenge). The Hungarians, who have far more to resent against the Turks than the Austrians, realize that it would be unwise for them as newcomers to the table, to be throwing their weight around in the Viennese manner.
It is a rather a frivolous Hungarian saying that if a power is unwise enough to absorb Hungary, its empire will fall apart within fifty years. Actually, this was not true of the Ottomans, whose empire survived until the end of the First World War. But that war also saw the collapse of the Austro-Hungarian Empire, half a century after the inception of the Dual Monarchy in 1867. It is also a fact that The Warsaw Pact zone collapsed in 1989 nearly fifty years after its creation, Hungary itself coming under the Soviet thrall in 1944. The events of 1956 certainly played a role in discrediting communism, both the secret speech by Khrushchev and the Soviet suppression of the Hungarian uprising in October of that year. Next year will see its fiftieth anniversary. 
Acting on the fifty-year rule of historical resonance, more thoughtful Hungarians are looking back to 1956 in ruminative mood. An instance is the following brilliant essay.

Reflecting on the revolt
By Esther Vécsey
With every anniversary on October 23rd, Hungarians who were involved in the 1956 Uprising say, "My God, has it already been that many years ago? How did we live through those horrible times?" 
Until 1990, thousands of '56-ers the world over observed the anniversary while in Hungary the subject of 1956 was still taboo. With the collapse of communism, the anniversary date of the Hungarian Revolt of 1956 was declared a national holiday. 
Now, 49 years after, preparations are already being made to mark next year's 50th anniversary. 
An estimated 300,000 Hungarians fled west during the Revolt and its cruel suppression. Leaving screening camps in Austria and Germany, the refugees settled in all parts of the world, including Western Europe, North and South America, Australia and South Africa. 
They have become proud, successful citizens in democracies where they, and their children's futures, were secure. Nearly all have returned to visit relatives in Hungary, especially since the change of régime and the fall of the Iron Curtain, which 1956 is now recognized as having precipitated. Following the revolt, the Hungarian Freedom Fighters were welcomed as heroes in the West. Not all of them had been as heroic as they claimed; it soon turned out that some of the dreaded Secret Police (ÁVH) had fled as well. Turning coat, and taking the opportunity to better themselves, they assimilated into new societies. Some continued their ignominious activities, reporting or collaborating from abroad. 
For those who stayed in Hungary and survived the cruel reprisals in which hundreds were killed and 12,000 were arrested, the Revolt of 1956 was officially supposed to be forgotten. 
It was a suppressed secret which, over the years, faded from memory, losing its impact in people's struggle for mere existence during the years of János Kádár's "gulyás communism." For more than 30 years, people behind the Iron Curtain lived in semi-conscious servility, under the ever-present watch of "Big Brother" and his occupying Soviet troops, until the Soviet Union too, miraculously, disintegrated in 1990. 
Newspaper and radio reports of the time prove fascinating reading, throwing new light on the events. Peter Fryer was the correspondent in Budapest for the British Communist Party's Daily Worker. 
His reports vividly re-evoke the tumultuous events and reflect the general shock which the cruel suppression of the revolt evoked in people around the world: "It began with a students' demonstration, partly to show the students' sympathy with the people of Poland…. First Gerô [Ernô Gerô, who became Prime Minister after hard-line Stalinist Mátyás Rákosi was ousted July 18, 1956] went on the wireless to make an address which, 'poured oil on the flames.' He had called the demonstrators (now joined by workers from the factories…) counter-revolutionaries - 'hostile elements' trying to disturb 'the present political order in Hungary." (The Hungarian Tragedy, by Peter Fryer, 1956)," excerpted from the Encyclopedia of Marxism. In February 1957, the British Labour Party sent a letter to Russian Premier Nikita Krushchev, published in Pravda: "We are deeply distressed at the use of Soviet armed forces in Hungary… and ask for this opportunity to express our views… to you and Soviet readers regarding the events in Hungary (which) your paper has portrayed as 'counterrevolutionary'… what do you understand by this expression? You said it was long-planned by the west and in particular you blame Radio Free Europe. Are you seriously suggesting that masses of Hungarian workers and peasants were led by these means into organizing mass strikes aimed at the restoration of the feudal landlords and aristocrats?" 
In spite of Russia's veto in the UN of an investigation into the events, and the general clamp-down on information at the source, a vast amount of literature about 1956 was generated in the west in the years following. Béla Lipták was a student at the Budapest Technical University in October, 1956, and participated in the events, escaping after the revolt was suppressed. 
Settled in Texas, USA, he subsequently published Testament of Revolution, (Texas A&M University Press), in which he recollects, "the early days of the revolt were like a scene from a romantic novel, with people placing roses in the mouths of cannons, stores open but not looted, collection boxes put out for the injured and their families, the peasants bringing food up from the countryside for the revolutionaries in Budapest, and turn-coats seemingly disappearing." He describes the lofty, euphoric atmosphere on Kossuth tér, where thousands gathered to demonstrate. 
"As night fell, people began lighting torches, and soon the entire square was alit with flickering lights. Then, someone in the back of the crowd started in a low voice to intone the National Anthem… a quarter - perhaps half a million people in this gigantic square stood to attention as the hymn spread, filled the square, and rose to the sky." 
Then came the cruel reality of the dawn of Nov 4, when Russian tanks and MiGS crushed the revolt, to the shock of the world. In Hungary the revolt was not officially recognized for 33 years, until June 16, 1989, when pressure for the decent burial of those executed in the reprisals following the revolt grew too strong to be ignored any longer. The revolt's Prime Minister, Imre Nagy, Defense Minister, Pál Maléter, and others had been secretly executed on June 16, 1958; their bodies were surreptitiously buried in unmarked graves in the "potter's field" of Rákoskeresztúr in Budapest's outlying District XVII. 
In 1989, with the help of writer Miklós Vásárhelyi, who had befriended one of the guards at the cemetery, families were able to locate where the bodies had been tossed into the mass graves which, over the next three decades, were covered by trees and brush in a wooded area in the most outlying corner of the cemetery. 
The ceremonial re-burial of the "Martyrs of '56" took place on June 16, 1989, on the 33rd anniversary of the executions. It was a spectacular, solemn event attended by hundreds of thousands of mourners and press, who broadcast the event throughout the world. 
Designed by the son of László Rajk - who had been executed in a show trial in 1949 - it was orchestrated as open-air theater against the dramatic setting of Heroes' Square. Strains of Beethoven's Ninth Symphony filled the air, the facades of the two Museums and the monumental central column were all draped in black. 
The coffins of the disinterred five "Martyrs" - Nagy, Maléter, Miklós Gimes, Géza Losonczy, and József Szilágyi - were displayed on the steps of the Műcsarnok, flanked by an honor guard of State officials. 
Thousands filed past, placing their wreaths and memorials. Intermittently during the ecumenical ceremony, the names and ages of those executed and identified - among them many minors, others in their early 20s - were read off in a continuous funeral dirge lasting well into the night. 
Finally, after the years of taboo, much of the previously classified material about the communist system and its insidious workings, is available to scholars in the Hungarian Historical Archives (Pest, District VI, Eötvös utca 7). Publications are available on such topics as the secret internment camps of Recsk, Inota, Kistarcsa, Kazincbarcika, and others where thousands of political prisoners were put to hard labor in mines, were sadistically punished, suffered inhumane conditions, starved, and often were not heard of again. Using a mass of documents, Barbara Bánk of the Archives has written her dissertation on the labor camps. "Recsk was kept a deep, dark secret, so much so that the people in the little town knew about the camp, but never, never talked about it." 
Bánk is now researching the organization and workings of the ÁVH guards who patrolled these prisons. "As I continue researching the documents, at times seemingly meaningless lists will fall into place, revealing details of the satanic system. 
"Divisions of the ÁVH guards were isolated from each other and from their prisoners, resulting in a case of an ÁVH officer not knowing that his own cousin was a prisoner at Recsk where he served as guard." With such in-depth studies, questions such as how and when did the communists actually take over Hungary are now being answered with a fair amount of accuracy. New facts are being revealed about the various key figures, their horrible methods, unknown details of the purges and show trials, the thousands exiled, executed or imprisoned for "dissidence" before and after 1956. 
The archives are also the source of recent revelations about the thousands who were insidiously coerced after 1956 into collaborating with the police state as "agents." These hapless people informed on their very family members, fellow workers, and friends, right up to the 1990s. However, the names of the key figures are still classified as "state secrets." 
The upcoming anniversary of 1956 next year gives us time to read, reflect, and prepare for the solemn commemoration of all who gave their lives and liberty, for a better Hungary, a united Europe, and a peaceful world to come.

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Audi opens tool factory 

Hungarian Prime Minister, Ferenc Gyurcsany, and Audi AG CEO, Martin Winterkorn, inaugurated a new factory for the production of tools and car body parts in Gyor, the Budapest Business Journal reported. 
Audi's new factory, an investment of around 40 million Euro and the third in Hungary, is built on an area of 18,000 sq metres. The factory employs 170 workers at present, a number that will increase to 320 in the future, the paper said. Gyurcsany said an agreement had been signed with Winterkorn in line with which Audi's Hungarian unit would also build a road connecting its plant with the nearby M1 motorway.

GM luxury cars enter Hungary 

US automotive industry giant General Motors recently expanded its luxury car portfolio in Hungary with the opening of the first Corvette and Cadillac dealership in the new European Union state. "Hungary and other central European countries that have recently joined the EU will contribute significantly to our success," said Roland Gerber, managing director of Cadillac and Corvette Central Europe. The sporty Cadillac XLR is selling for 98,400 Euro (US$122,000) in Hungary, compared to the recommended retail price of 61,800 Euro (US$76,650) on the Cadillac website, New Europe reported.

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Malev, Bangkok sign transfer pact 

Hungarian airline group Malev Rt recently announced it has signed an agreement with Thai airliner Bangkok Airways allowing Malev passengers transferring to Bangkok Airways flights to other destinations in Thailand and Cambodia to travel with a single ticket, Budapest Business Journal reported recently.
The new arrangement, which is valid until September 30th, 2006, but may be extended, will apply to Malev's scheduled Bangkok flights, which it will re-launch, three times a week, from December 2nd. The agreement will halve the transfer time that Malev passengers have to wait in Bangkok to one-and-a-half hours. Passengers will also save about HUF 20,000 on airport tax.

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Semmelrock invests 7.5m Euro 

Semmelrock Kft, a 75 per cent owned Hungarian subsidiary of Austrian construction material manufacturer Wienerberger AG, completed its second decorative concrete stone factory, Budapest Business Journal reported. 
Realised in nine months with an investment of 7.5 million Euro in the industrial park of Felsozsolca, northeastern Hungary, the new plant will churn out 750,000 sq m of concrete stones for use in the household or in public areas. The choice of location was motivated by the proximity of the M30 highway and the promising Romanian and Slovakian markets, Semmelrock CEO, Robert F. Holzer, said.

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Moody's confirms ratings for FHB

International credit rating agency Moody's Investors Service recently confirmed it's A2 long-term and Prime-1 short-term foreign currency deposit and debt ratings and A1 covered bond rating for Hungary's Land Credit and Mortgage Bank Rt (FHB). Applying the rating agency's methodology for government-related issuers (GRIs) to FHB, Moody's also upgraded FHB's financial strength rating from D to D+. The outlook on all ratings is stable.
Moody's said the rating action concludes its review of a possible downgrade of FHB's deposit, debt and covered bond ratings, initiated in May 2005 following the announcement by Hungary's State Privatisation and Holding Rt (APV) of the privatisation tender for FHB. The review focused on the stability of FHB's ownership structure, expected government support in case of need, and the long-term viability of FHB's business model, the rating agency said.
In assigning the A2 long-term and Prime-1 short term ratings, rating components considered included FHB's baseline credit risk: the local currency rating of the Hungarian government; the high credit dependence between FHB and the government; and the high level of expected support from the government, both directly and through the APV, FHB's direct majority owner.
Concluding, Moody's said the Hungarian state should continue to play an important role in ensuring FHB's long-term viability.
Headquartered in Budapest, FHB reported IAS-audited total assets of Ft 451bn (1.8bn Euro), and net profits of Ft 4.5bn in the first half of 2005.

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Hungary, China in cooperation deal 

Hungary and China have signed a three-year cultural cooperation agreement that will focus on the exchange of films, the Hungarian Minister for Cultural Heritage, Andras Bozoki, told MTI News Agency recently. 
A Hungarian film week was recently held in Beijing and a Chinese film week followed later in Budapest, with cultural days in both countries foreseen for the future. An official delegation that included Prime Minister Ferenc Gyurcsany and other ministers travelled to China to promote links between the two countries.

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Spanish firm set for Szentgotthard

Spanish metal processor Metasint-Fersint is to establish a new production hall in the industrial park of the Western Hungarian town of Szentgotthard, Budapest Business Journal reported.
According to town mayor, Tibor Biniczay, the international company is to spend HUF 2 billion on the development of the car-part production facility in the first 5 years of operation. The first phase of the construction is expected to start this year, and production is to start next summer with the first 20 employees.

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Icelandic buyer for local pharma firm

Iceland's Actavis Group, a generic pharmaceutical company, has acquired the generic business of Hungarian pharmaceutical concern Keri Pharma Kft, the Reykjavik-based firm announced recently. Financial details of the deal were not disclosed, the Budapest Business Journal reported.
"In recent months, Actavis has been strengthening its presence in Central and Eastern Europe through strategic acquisitions," President CEO, Robert Wessman, said of the acquisition. The Icelandic firm already has 12 marketing licences on the Hungarian market.
Keri Pharma was founded in 1991, employs around 80 people, and has over 20 products on the market, and a further 23 in the pipeline. The Hungarian firm specialises in the development, sale and marketing of generic pharmaceuticals in Central and Eastern Europe. The majority of Keri Pharma's products are cardiovascular and rheumatological drugs, as well as those treating the central nervous system.
Keri Pharma has a strong business development unit, while production is outsourced to third parties. Most of its products are sold in Hungary, the firm also exports to Poland, Slovenia, Slovakia, the Czech Republic and the Baltic States, and is now seen likely to launch some of its products on other Actavis markets, which include Turkey, Germany, Bulgaria, Serbia and Montenegro, Russia and the Nordic countries. Following the acquisition, Keri will launch the first two Actavis products this year.

Drugmakers to pay HUF 20bn

Hungary's drugmakers and drug distributors agreed at a meeting with government officials on September 23rd to pay HUF 20bn this year and HUF 22.5bn next year into the state's social insurance fund in order to make up for a shortfall in the National Health Fund (ORT), the Budapest Business Journal reported on September 26th. 
The drugmakers and distributors could decide to divide the amount among them based on increases in turnover or the number of products each company has in the market, Health Minister, Jeno Racz, said after the meeting.

Richter invests in Ukraine

Gedeon Richter Rt, Hungary's biggest drugmaker, has invested US$6m into a packaging facility in Kiev, in the Ukraine, which will start production next year, Budapest Business Journal reported.
Drugs produced in Hungary will be packaged in the Ukrainian factory, CEO, Erik Bogsch, said. The facility is considered a long-term investment by the drug-maker, according to the CEO. Richter's fourth largest export market is the Ukraine; during the first half of this year, the company sold drugs worth US$11m in the neighbouring country.

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Bundled offers to emerge from MT/T-mobile merger

The proposal by the board of leading Hungarian telco Magyar Telekom Rt to merge the company with its fully owned subsidiary T-Mobile Hungary Rt, the country's number one mobile operator, is expected to lead to better synergies, cost savings, and the offering of bundled services, executives stated recently, The Budapest Business Journal reported.
"This proposal is in line with the medium-term strategy announced in 2004, with the use of group-level synergies as one of the key pillars," Magyar Telekom said in a press release dated Oct 6th. The proposal is to be put forward for acceptance at the next shareholders' meeting, with the board of directors of Magyar Telekom, which is majority owned by Deutsche Telekom.
Monika Tabanyi, an analyst at Concorde Securities Rt, observed that little new information has emerged beyond previous rumours of an imminent merger that were spawned recently, when T-mobile Hungary CEO, Andras Sugar, resigned over differences in future strategy.
"The announcement has only confirmed the previous speculation of the merger, and thus the potential benefits are hardly easy to quantify," said Tabanyi. "It doesn't only mean cost synergies, but it's also likely to see bundled products of fixed-line and mobile offered. Magyar Telekom will be the only company that can offer all telecom services bundled; other telecoms are unlikely to compete like this for the next three to five years."
On the internet front, Magyar Telekom also owns Hungary's largest ISSP, T-Online Hungary Rt (formerly Axelero).
"The merger of Magyar Telekom and T-Mobile will further intensify competition both on the fixed-line and mobile markets through combined fixed-line/mobile value propositions," said a press statement from Magyar Telekom.
If the merger comes to fruition, T-Mobile Hungary will continue to exist as an independent brand, operating as an independent line of business within the Magyar Telekom Group, said the statement.
"But the group expects that the merger would bring tangible advantages to customers, and have a positive impact on the market and competition," it added.
Additionally, the press release noted that the merger will contribute to the creation of a framework for long-term service-based competition.
Other benefits for Magyar Telekom include the common usage of a CRM (customer relationship management) system that makes billing and customer relations potentially less problematic, noted Tabanyi.
Magyar Telekom itself also said that the merger will facilitate capitalising on the group's value creation possibilities that can be sustained in the long term, with special regard to maintaining and extending its customer base, optimising efficiency and cost levels, and using the advantages offered by new innovative technologies. As a result, the combined annual financial benefit is expected to reach several tens of billions of forints within a few years, claimed Magyar Telekom.
Overall however, it's difficult to predict whether the merger will have a positive effect on group revenues, Tabanyi opined.
"I expect low-digit revenue growth for the combined company, though at the moment it's hard to say that revenue will grow thanks to the merger," she observed. "I see that it will utilise group synergies, so there will be some efficiency improvement and cost savings."
The idea of aiming at harmonisation of the fixed-line and mobile areas is not unique, claimed Magyar Telekom.
"Numerous European national operators with both fixed-line and mobile lines of business have realised the strategic advantages and possibilities resulting from convergence," said the firm's press release.
For their part, rival fixed-line operators, Invitel Rt, HTCC Rt and Tele2 Hungary Kft are all looking to add mobile telephony to their portfolios. The latter two unsuccessfully bid for 3G licences last year that would have also allowed them to provide standard GSM services; however, all three firms continue to look for the opportunity, whether it be through the creation of an MVNO (mobile virtual network operator), or through a commercial agreement with the existing operators.
Dora Somlyai, communications director at Hungary's number two mobile provider, Pannon GSM Rt, said her firm will follow closely how the different divisions in the new merged Magyar Telekom/T-Mobile will work in everyday activities.
"We do expect the authorities to ensure through a proper rule system that the T-Group's market dominance should not grow further due to the merger," she observed, referring to the group of companies within the Magyar Telekom Group that use the various T-brands of their German parent.
Meanwhile, Vodafone Hungary Rt, the country's smallest but fastest-growing mobile provider, recently brought a new phone out on the market for calling from home which, though resembling a fixed-line handset, does in fact use mobile technology.

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