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HUNGARY


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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)

Books on Hungary

REPUBLICAN REFERENCE

Area (sq.km)
93,030

Population 
10,032,375

Capital 
Budapest

Currency 
Forint 

President 
Ferenc Madl

Private sector 
% of GDP
 
60%




Update No: 111 - (25/08/06)

Remembrance of things past
It is fifty years on from one of the major events of the twentieth century, the uprising of the Hungarians against the communist regime in October 1956, imposed on them in 1944-45 by Stalin.
It is certainly worth reflecting on this exceptional event.
It fatally coincided with the Suez misadventure, in which the British, the French and the Israelis appeared to want to topple Nasser, but of course failed to do so. They only succeeded in giving him an assignation and legitimacy for another decade in power.

The proto-Gorbachev
There is no doubt that Imre Nagy, the successor to the ghastly Matyas Rakosi, was a believer in communism with a human face. He was a Dubzek, indeed a Gorbachev, avant la lettre.
He tried to implement a humane communist regime. He was naturally stifled straight away by the Soviets; indeed, as was their wont, he was killed.
It is one of the curiosities of communism that his Hungarian excommunicator and executioner, Janos Kadar, became perhaps the most popular communist leader of all time in his own country. He initiated a new conciliatory policy in 1961 and allowed a free market economy to blossom. In 1968 he promulgated the New Economic Mechanism, formalizing the switch to a free enterprise economy, outside the commanding heights that is. A fledgling capitalism was born.

Hungary is benefiting from 'goulash communism,' as it came to be called, to the present day. There was a market economy already there for the liberated Hungarians to build upon in 1989.

The Euroland beckons
But of course Hungary had remained part of the Warsaw Pact zone and its economic equivalent, Comecon, an entity with scarcely a soft memory behind it. Indeed, its very name eerily evokes chicanery and ineptness in English if one splits it up, Come con. The USSR guaranteed the members cheap energy so long as they bought each other's shoddy goods, a weird parody of the Common Market, as the EU was then called.
Hungary is now a member of the EU. It has a more promising future in that it could become a new member of the EU euro-zone in 2013 or 2014, the Hungarian Portfolio financial newspaper said recently. 
It usually takes two years after a state reaches fiscal stability in line with the so-called Maastricht criteria and achieves a public deficit below 3 percent of gross domestic product to join the euro zone of the European Union. Prime Minister Ferenc Gyurcsany has said an earlier plan to introduce the euro in Hungary in 2010 was 'unrealistic.'

Hungary OTP submits binding bid for Montenegro's Crnogorska komercijalna banka
The Hungarians are becoming very interested in newly independent Montenegro, which has various assets it envies, a coastline giving access to the wider world, possible oil reserves and a new-found self confidence and elan.
Hungary's OTP Bank announced on August 18 that it has submitted a binding bid for the purchase of a majority, at least 80.0% shareholding in the Montenegrin Crnogorska komercijalna banka AD (CKB). 
Currently CKB is the most dominant player of the Montenegrin banking sector; its market share exceeds 43%, in line with its total assets reached 303.7 million Euro at the end of 2005. 
"OTP Bank's binding bid contains the price and the draft sale and purchase agreement, as well. The binding bid was submitted after OTP Bank's acquisition team, together with the legal advisor Berecz&Andrékó Linklaters and financial auditor Deloitte Touche Tomatsu carried out a due diligence on CKB," OTP said in a statement on the website of the Budapest Stock Exchange (BSE).

                                            ******
It may be a slack time of year when little is happening. But there is one event in August that fervent Hungarian nationalists celebrate world-wide. For those that like their politics and history laced with myth and religio- nationalistic nonsense, we offer the following: 

Wherefore art thou, Stephen
By Esther Vécsey
(Wherefore art thou, Stephen the King? Thou whom the Hungarian yearns for dressed in mourning, we stand before thee weeping.) 
Thus goes the heart-rending refrain of an ancient Moldvai Csángó chant intoned by the worn-out, straggling crowd as it winds its way around the procession route from the Basilica in the Inner City, following the religious ceremonies of August 20th on the Feast of King St. Stephen of Hungary. The afternoon religious ceremony, the procession, and the evening fireworks show are the events of the annual St. Stephen's Day observances. Over some 1206 years, since his coronation in 1000 A.D. with a crown which, according to tradition, was sent by Pope Sylvester, the figure of King St. Stephen/Vajk/István (977-1038) has been heaped with myth, in the effort to create strong national symbols for Hungarians struggling against adversities through the ages. 
Since the change of régime in 1990, from Communism/Socialism, St. Stephen's Day was re-instated as the National Holiday, another attempt to re-create tradition and the myth of the new, glorious Hungary. During the past 16 years the originally joyful events have lost much of their original zest and lustre. 
The chilling words of the Csángó dirge aptly transmit today's down-beat mood in Hungary. 
A scholastic version of the song is in the Döri Codex of 1763, one of the precious books returned in 2005 from Russia. But the simple, ancient chant of the autochthon Hungarian Moldvai Csángó distils the libretto into a cry of Hungarian pain and heartfelt loss. 
It explicitly expresses the age-old longing for a strong Father, personified by King Stephen, a romantic, chivalrous medieval figure whose myth the Bródy-Szörényi rock opera István a Király (1983) strongly questioned. In the sensational, daring musical reflecting the zeitgeist of the 1980's, Stephen is characterised as an improbable royal, a personage whose insecurity, vacillation, and ineptness causes chaos, the outcome of which is that Stephen dies without insuring a legitimate, strong heir. According to legend, Stephen's only surviving son, St. Emeric (1007-1031, canonized in 1083), died while out hunting. A wounded wild boar is said to have torn him to pieces. Has anyone in the pious crowd in the procession stopped to ask why Emeric/Imre was out hunting while chaos reigned in the land, and István would die in six years, without a legitimate heir? While Stephen was busy setting down his Intelmei (pious instructions, the paragon of medieval chivalrous moralizing, and some hard universal practical facts regarding governance) to Imre, the country was on the verge of anarchy. More anachronistic still is the story that Imre, as a youth, and on the instructions of his Italian Benedictine tutor, St. Gellért, took a vow of chastity thus negating his ever producing a legitimate heir to Hungary's first royal dynasty. Traditionalists dispute this, claiming that Attila the Hun was the first King of the Hungarians, albeit five centuries before the Magyars appeared in Europe. Moralists place great emphasis on Imre's virginity, when, in practical fact, he should have affirmed the Árpád dynasty's continuity, assuring a strong legitimate succession, the family's continuity and the country's stability. 
The lack of a legitimate successor to insure a Magyar on the throne, was a continuing problem in Hungarian history. It arises most blatantly 500 years later, in the case of the much-mythicised Renaissance King Mátyás Corvinus (1440-1490) who died at 50 years, again without producing a legitimate heir. 
In the finale of the musical, before he dies on August 15th, the Feast of the Assumption, Stephen dramatically offers the Holy Crown to the Blessed Virgin Mary (BVM). From that day on in Hungarian tradition, the Holy Crown and the BVM ruled the land of the Magyars. The government soon ended in chaos, and the country was constantly overrun by barbarians and Turks. By 1526, the country fell apart, a major part taken by the Turks and the throne fell into the hands of the Hapsburgs. 
The Hapsburgs are again here today, with the 90-some year-old Crown Prince Otto prominent with his ever-increasing family in the front row facing the Basilica, at the Mass, and at the procession of August 20. 
"Otto's father, the reticent (soon-to-be canonized Saint Charles IV), was crowned on December 31, 1916, in Buda and Pest while WWI raged. Progressive Hungarians and the World Powers looked on with a doleful eye. Otto was just a little boy at the pompous ceremony designed by such artists as Károly Kós, Gyula Benczur, etc. which is documented on early films "The grasp of the Hungarian crown and the coronation were spurred on by the political ambitions of Otto'smother Zita and her Bourbon-Parma kinfolk," states Prince Franz Joseph Hohenlohe, nearing age 90, of Paris. His uncle was the prince primate of Hungary, who placed the Holy Crown on the new Monarch's head. 
The Crown itself, held to be the symbol of state for centuries, was returned to Hungary in 1978 from some 34 years' safe-keeping in Fort Knox, Tennessee. Kept in the royal palace, it was spirited to Austria in 1944 to keep it from falling into Arrow Cross and Soviet hands. 
Following its return, historians and teams of experts have examined and unfrocked it. According to them, it is not the crown which, in the myth, Pope Sylvester sent to place on the head of Stephen as King of the Hungarians on New Years' Day 1000. 
Its origins and iconography are still being studied. 
It is probably a compilation of a Byzantine and a Latin crown, forged perhaps as late as the XVIth or XVIIth century to create a tangible symbol for a battered Hungary, overrun by Tartars, Turks, Hapsburgs, Germans, and Soviet Russians, and stuck between Pan-Slavic and Pan-Germanic powers ready to swallow it up. 
The 1983 musical István a Király, perpetuated the myth of the crown, which is repeatedly depicted in 19th and 20th century paintings. Lacking an heir, on his deathbed the King Stephen gives the crown away to the BVM Assumed in Heaven, a nice pious story, instead of having insured continuity, constancy, and safety for his people. 

Another religious dirge sung in the August 20th procession, addresses the BVM: "…ne feletkezzél el, szegény Magyarokról" (do not forget your poor Hungarian people) repeatedly, plaintively supplicating the BVM's intercession in stabilizing Hungary. "All that is humbug," declares Józsi Bácsi, an habitué of the tiny watch-repair shop in Városház utca in the Inner City. "Magyars today couldn't give a fig about Szent István, we don't need his second coming, nor the turn-coat commie neocapitalists pocketing everything again! 
"What we need today is a real, strong, charismatic leader to get us out of this mess - something like a combination of a Horthy and Kádár elvtárs," he exclaims as he bangs his palm on the counter. 
The official and religious St. Stephen's Day ceremonies are full of ironic contrasts and improbabilities. On October 23rd 1990, the first "democratic" Hungarian government following nearly 50 years of Communist rule re-instated the Feast of King St. Stephen as the National Day of Hungary. Observant, pious Catholics (Hungary was traditionally a Catholic country) celebrate the Ides of August (Feast of the Assumption) with August devotion, in a much more fervent and organized manner than the straggling crowds in the procession (a form of pilgrimage) on August 20th, going on solemn pilgrimages to Marian sites, similar to pilgrims to this day, journeying to Santiago de Compostela in Spain. Today, the St. Stephen's National Day is a strange, ambiguous construct. The day begins in front of Parliament with a listless show of military might that the heads of state watch, stiffly lined up in front of the venerable house. 
After halting, stuttering official phrases there is a highly private reception inside the House, where the VIP's shuffle past the rather pitiful display of what is left of the symbols of state - the orb and sceptre and the "Holy Crown of King St. Stephen" squeezed into a claustrophobic glass case, dimly dwarfed in darkness under the huge, looming Baroque dome. 
The Hapsburg Maria Terézia affirmed the myth of Stephen and the "Holy Crown of Hungary" in the 18th century and it became the national symbol in the early 19th century to demonstrate the tangibility of the shadowy King St. Stephen to appease the Hungarians. 
Well before the 5pm Mass, the area around the Basilica was strictly roped off, and security guards let in only those with written passes. Since the change of regime the Habsburgs are prominently present, sitting with heads of state (not all participate) in the front row seats, facing the Basilica, on whose huge upper terrace, high atop flights of stairs, the solemn high mass and ceremonies take place. The Relic of the Holy Right Hand of St. Stephen, also under great scrutiny today, is on the stairs in front of the altar. Strict hierarchic order presides, with the Maltese and Johannites Knights, and Order of St. Stephen sit comfortably in seats on the dais, while the poor, devout pilgrims bussed in from the countryside stood behind the VIP seats on the Square. 
The Mass over, the procession filed out in hierarchic order. The priests in front intoned the sad refrain of the Csángó chant and other religious hymns which those at the end of the procession could not hear. Then the tall, patrician-looking cape-clad members of the knightly orders marched in their tight-knit group, followed by Otto Hapsburg and his family. 
The simple people were last and they were not, sadly, given a glass of water, nor were they invited to the highly private reception in the Basilica for VIP's after the procession. 
Where indeed is St Stephen, the king who is supposed to bring his people together in love and harmony? 
He is an intangible figure, buried in the far distant past, and his relics are scattered far and wide in Europe, as are his people, scattered to the four corners of the world. 

THE MOLDVAI CSÁNGÓ 
Part of the original Magyars of the Carpathian Basin, many of the Csángó people of Moldova are now dispersed around the world, as are Hungarians from the first great exodus at the turn of the last century, and since WWII and 1956. 
Claiming pre-Árpádian origins, the Csángó settled in the territory between the Siret and Prut in the outer reaches of the Eastern Carpathians. 
The capital today is Iasi - Jászvásár in Hungarian. A Principate in the XIVth century, it was overrun repeatedly by Turks, then Russians and Austrians (Hapsburgs), and from 1861 it is part of Romania. The constantly battered Csángó's plaintive song has been adopted as a kind of alternative national anthem that supports the idea of Stephen as a strong, great king of the Hungarians. Wherefore art thou, Stephen?

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AVIATION

Airline in Hungary on sale for 7th time 


Malev, Hungary's unprofitable national airline, is going back on the auction block as the government tries to rid itself of the debt- laden carrier for the seventh time since the end of communism, the International Herald Tribune reported.
Malev's chief executive, Janos Gonci, said the airline was leaner and more attractive than before after cutting 50 per cent of its work force.
In addition, Malev is preparing to join the Oneworld alliance, headed by British Airways and American Airlines.
"Everyone expected Malev to go into bankruptcy and they were all surprised when that didn't happen," Gonci said during an interview at Malev's headquarters in Budapest. "A professional and well-capitalized majority shareholder would be our future."
Hungary spent 16.2 billion forint, or US$76 million, strengthening the airline over the past six years, yet Malev is still 30 billion forint in debt and has not posted a profit since the 1990s. The airline is struggling because of surging fuel and labour costs and, since Hungary joined the European Union in 2004, competition from low-cost carriers like EasyJet and Ryanair.
The government hopes its sale in December of Ferihegy Airport in Budapest to BAA of London for Ł1.26 billion, or US$2.3 billion, will help lure a buyer for Malev, the airport's biggest customer.
The newspaper Nepszabadsag reported that Malev would be put back up for sale in early September. The asset sales agency, whose management met recently to discuss plans, declined to comment on the probable timing.
Alitalia, the Italian carrier, bought 35 per cent of Malev from the government for US$77 million in 1992, only to sell the stake to two Hungarian banks for US$65 million five years later.
Hungary's most recent attempt to sell Malev, a year ago, was cancelled after the government failed to reach an agreement with KrasAir, a Russian carrier. Labour unions and politicians complained that Malev was being sold for too little.
"The previous sale processes were politically charged," said Anita Mosner, executive vice president at GCW Consulting, an aviation adviser in Arlington, Virginia.
Politicians during earlier auctions "have not consistently supported the tough decisions," she said.
Malev's future owner will be saddled with debt, the challenge of streamlining the airline's fleet, now made up of four different types of aircraft, and competition from low-cost carriers.
Discount carriers have whittled Malev's market share from 59 per cent in 2003, before Hungary joined the EU, to 40 per cent now, Mosner said.
Gonci said the numbers were looking better, with Malev's passenger count up 14 per cent so far this year. Malev reduced ticket prices by 4 per cent last year to compete and expects another 3 per cent cut next year.

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BANKING

Crompton to buy Transelektro for 35m Euro 

The Belgian unit of India's Crompton Greaves has agreed to buy troubled Hungarian holding company Transelektro for 35 million Euro, India's Business Standard reported on its website.
Crompton Greaves would buy Ganz Transelektro Villamossagi Zrt (GTV), which exercises ownership rights over the assets of the holding company, as well as Ganz-Transverticum Kft, which are active in design and commercial activities, the paper said. Officials at Transelektro declined to comment on the report, but said an announcement would be made. GTV's majority owners, Vegyepszer Zrt, Kozgep Rt and Resonator Kft, were forced to seek a buyer for the company after they failed to reach an agreement with GTV's creditors. The state-owned Hungarian Development Bank Rt (MFB) may also sell its 42 percent stake in GTV, although this would require a government decision. MFB obtained the stake for a 4.9 billion forint capital injection in 2001. In this regard, GTV had revenue of just 1.5 billion forints in the first half of 2006, making the earlier target for a year-end 14 billion forint untenable.

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CONSTRUCTION

Vegyepszer buys Romanian peer 

Vegyepszer Zrt, the Hungarian construction company, has purchased Romanian peer Road and Bridge in a privatisation transaction, Hungarian-language Romanian daily Kronika reported.
Vegyepszer paid 140,000 Euro for the company and agreed to take over almost as much in debts, Vegyepszer deputy CEO Laszlo Farkas told Kronika. Farkas said Vegyepszer planned to invest 1.2 million Euro at Road and Bridge in the long run. Road and Bridge is not expected to generate a profit from road building for another three or four years, but in the meantime, Vegyepszer plans to bring its experience building homes and environmental projects to the market in Transylvania, where Road and Bridge is based, it was reported. Some Hungarian managers and engineers would be required at the start, but their positions will soon be taken over by locals.

Construction sector output falls 8.5% 

According to unadjusted figures published by the Central Statistics Office (KSH) on July 19th, the output volume of Hungary's construction sector fell 8.5 per cent in May compared to the same period a year earlier, news agency BBJ reported. 
KSH attributed the decline to a high base, as well as a fall in road construction and home-building orders. Construction sector output fell a workday-adjusted 9.5 per cent during the same period. Compared to April, output fell a seasonally and workday-adjusted 3.7 per cent. Construction sector output was 153.7 billion forints in May at current prices. The sector was worth 635.5 billion forints in January-May, 0.5 per cent more than in the same period of 2005. In May 2005, the construction sector expanded an unadjusted 10.9 per cent and grew a workday-adjusted 9.6 per cent. According to seasonally and workday-adjusted figures, output during the month fell, however, by 3.1 per cent from April 2005. The biggest branch of the construction sector, completed constructions and other civil engineering contracted 12.2 per cent in May compared to the same month a year earlier. However, the branch expanded 1.8 per cent year-on-year in January-May. 
Output of the building installation branch fell 2.4 per cent year-on-year in May and was down 2.9 per cent year-on-year in January-May. Output of the building completion branch fell 10.7 per cent year-on-year in May. 
The building construction branch contracted 8.6 per cent year-on-year in May, with output declining 3.8 per cent year-on-year in January-May. Output of the civil engineering branch fell 8.3 per cent year-on-year in May, albeit from a high base. Output of this branch rose, however, by 6.5 per cent year-on-year in January-May. 
Regionally, five-month construction sector output rose 36.1 per cent in central Transdanubia and 19.8 per cent in northern Hungary, but output fell in western Transdanubia and in the southern Great Plain region. The sector's stock of orders was 0.4 per cent higher at the end of May than in the twelve months earlier. Stock of orders for construction of buildings was up 33.7 per cent, but stock of civil engineering orders fell 10.8 per cent. Stock of new orders in May fell 21.2 per cent from the same month a year earlier. Stock of new orders for buildings fell 20.7 per cent and stock of new orders for civil engineering fell 21.8 per cent. The volume of contracts was 17.2 per cent higher than in May 2005.

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ENERGY

Remaining 1.7 per cent stake in Mol to be sold 

Hungary said it has plans to sell its remaining 1.7 per cent stake, worth about 43.8 billion forints, in Mol Nyrt, the country's largest energy company, in a public offering by the end of this year to boost state revenue from state asset sales, news agency bbj.hu reported. 
Peter Oravecz, a spokesman at the State Privatisation and Holding Rt (APV), said the country wants to sell its 1.89 million Mol shares to investors through the Budapest bourse while retaining a "golden share" in the company, which gives it the right to veto company decisions. The assets sales agency, which scheduled Mol's sale for this year in its business plan, has yet to decide on exact timing, Oravecz said. Kornel Sarkadi Szabo, an analyst with Raiffeisen Securities in Budapest, said: "This is not that large a package which would move the market." He further added that investors' interest would depend on when and how the stake is sold. APV will name the winner and other companies that bid to manage the transaction shortly. Napi Gazdasag reported that Hungary selected HVB Group to manage the sale of its remaining stake in Mol.

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FOREIGN INVESTMENT

South Korean Hankook to open 533m Euro plant

South Korean tyre maker Hankook is due to lay the foundation stone of its 533m Euro plant at Dunaujvaros, central Hungary, www.bbj.hu reported recently.
The new facility would create 2,250 jobs and would include a research and development centre at the factory with a staff of 30 people. Production is to be launched in the summer of 2007 and Hankook plans to roll out 10 million tyres in 2010, business daily Vilaggazdasag reported.
South Korea has already started training 20 employees for the R&D unit. The European Commission late June authorised - under EC Treaty state aid rules - 92.6 million Euro in aid, which the Hungarian government intends to grant to the Hankook Tyre Company for its new passenger and light truck tyre plant.

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TELECOMMUNICATIONS

Vodafone Hungary revenue 128bn forints

Vodafone announced recently that the revenues of its mobile company Vodafone Hungary were close to 128bn forints (464 million Euro) in 2005. The company also said Vodafone had two million subscribers in December 2005, and its average revenue per user was above 5,000 forints (18 Euro) a month, www.bbj.hu reported.
Vodafone had a 21.8 per cent share in the Hungarian mobile phone market in April, ranking the company third after T-Mobile at 44.95 per cent and Pannon at 33.25 per cent.

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