Books on Hungary
Update No: 122 - (26/07/07)
Gyurcsany still in the dumps
Public support for Hungary's prime minister remains particularly low. This may
in a curious way to be to his advantage. Expectations of his government are near
zero. But that means that there may be no way but up.
According to a poll by Gallup Hungary 26 per cent of respondents rate Ferenc
Gyurcsany's performance as good or very good, while 63 per cent deem it bad or
very bad. This is not exactly the news to brighten a leader's day. But nobody is
suggesting an alternative from within a cabinet he dominates. Meanwhile the
opposition seem quite happy for him to stay and clear up the mess he has made,
about which he is quite candid.
He came to power himself because of an internal revolution in his party. In
August 2004, Socialist prime minister Peter Medgyessy tendered his resignation
after a cabinet dispute. The Hungarian Socialist Party (MSZP) chose businessman
and sports minister Gyurcsany as the new head of government.
In April 2006, Hungarian voters renewed their National Assembly. The MSZP and
the Alliance of Free Democrats (SZDSZ) won 210 of the legislative branch's 386
seats, securing a full term for Gyurcsany. In June, Gyurcsany introduced a
fiscal "austerity package" of state subsidy reductions and tax
increases, aimed at lowering the country's fiscal deficit.
The great revelation
In September, Gyurcsany was criticized after Hungary's state radio aired
portions of an audiotape-which had been recorded in May-in which he told members
of the MSZP that his administration "lied throughout the past one and a
half or two years" about the state of the country's economy in order to win
re-election. The prime minister's words sparked a two-week riot that threatened
to end his government - again early this year.
In June, Gyurcsany took comfort in patriotism, the last refuge of the scoundrel
as Dr Johnson averred. He vowed to guarantee the independence of state-owned oil
firm MOL, declaring, "The stance of the Hungarian government has not
changed. We still consider the (Austrian oil firm) OMV's move a hostile takeover
attempt. I believe that they understand the position we are taking in this issue
and they will draw their conclusions. We will defend MOL."
The communist comeback?
There is a curious mood in Hungary at the moment, quite different from in the
Czech Republic and Poland. They are full of plans for lustration of the
communists, exposing their machinations and undoubted malignity in the past.
That goes along with hosting US missile defences in a nostalgia for the West
when it was winning the Cold War.
In Hungary by contrast there is almost a nostalgia for communism. It is not in
the least ideological. There is no illusion whatsoever about the system, but a
certain lingering regard for some of the people who ran it.
The following news item earlier this summer particularly shocked the public, for
many of whom Janos Kadar, the communist boss for decades, is a sort of
grandfather figure, associated with their own youth and vigour, when he wisely
gave the market economy of 'goulash communism' its head. The news item, which is
an historic document in its own right, has something decidedly ghoulish about
Janos Kadar's grave profaned in Budapest
The Hungarians are shocked by the latest act of vandalism: the profanation
of the grave of former Party Leader Janos Kadar in the central cemetery of
The thugs broke open the coffin and made off with Kadar's remains. They also dug
up the urn, containing the ashes of Maria Kadar, the party leader's wife.
The police are looking hard for the culprits. Investigators believe this was
done by a whole gang of hooligans, because it was impossible to move the marble
slabs single-handed. This was obviously a carefully planned action. The cemetery
and the tombs are closely guarded. The profaners got into the cemetery at night
when the car with watchmen was at its other end. They dug up the ground and
marred with black paint the walls of the Pantheon of the Labour Movement, where
distinguished party leaders are buried.
The Hungarian public is deeply shocked by this outrage. This is an inhuman form
of crime, committed against the society, and every civilised human being,
irrespective of political affiliation, should stigmatise the vandals, says a
statement, released by Hungarian Prime Minister Ferenc Gyurcsany.
The Hungarian Communists, the Union of Hungarian Resistance Fighters and
Anti-Fascists, as well as other associations of the country, had come out with
strong protests against this contemptible action.
They believe the campaign, lately unleashed by some political forces to
discredit the former Hungarian leadership, is directly linked with the actions
of the grave profaners.
Kadar was leader of the Hungarian ruling party for more than thirty years
running. He was buried in July 1989. The attitude to him today differs among the
various sections of the Hungarian society.
Many people are criticising the former leader for the role he had played in the
suppression of the 1956 uprising. At the same time, there is certain nostalgia
in the Hungarian society for the past epoch, especially among those who are
painfully suffering from the reforms of the past few years and from the results
of the market economy.
Many people regard Kadar as an outstanding politician of the twentieth century.
A recently held public opinion poll showed that the leader of Socialist Hungary
is now regarded as the third most distinguished personality, who had played an
important role in the country's history.
It is a moment worth reflecting upon. Kadar did some unpleasant things, notably
participating in the Soviet repression of the Rising of 1956 brutally and
imprisoning thousands for years afterwards, who were the true patriots. He had
Imre Nagy, the leader of the Uprising, hanged, which Moscow was not demanding.
He was a nasty bit of work all right. But he was astute and began an economic
perestroika right away and later a measure of glasnost. He became the most
popular politician in Communist Europe by the late 1960s with his 'Goulash
The significance of that today is that there is nothing like the same hatred of
communism in Hungary as in Poland and the Baltic states. There is no campaign
for a lustration law, as in Poland. Moreover, there is a former communist as
prime minister, Ferenc Gyurscany, who made a fortune by selling the assets of
the Young Communist League he headed to himself and proxies for a song.
Again a rather unsavoury character, as he confirmed by a speech to his party
faithful last summer, when he admitted to having lied, 'morning, noon and
night,' to get his Socialist Party re-elected that spring. This led to riots in
the autumn and again earlier this year.
But what Hungarians are going to judge him on is whether he delivers the goods
and the goulash a la Kadar.
Hungary's economy is in a mess, with a huge budget deficit and public services
in a crisis. Maybe this shifty fellow can deliver on the public budget as Kadar
had already done nearly twenty years ago on his own.
Here is another reminder of that vanished epoch:-
Ghosts of the past continue to haunt communism's ageing comrades
On 5th of July Gyula Horn celebrated his 75th birthday. For most who don't
know who Gyula Horn is (and why should you), he was Hungary's second
post-communist prime minister. Previous to this, he was the foreign minister in
the last communist government before the regime change of 1989. Prior to that,
he was a member of the communist militia which, together with the Red Army,
brutally suppressed the 1956 revolution.
Despite this ignominious past, most European politicians - especially those from
Germany - tend to filter out anything which may have occurred prior to 1986, the
date many regard as when the edifice of communism began to irreparably crack.
Many within the EU regard Gyula Horn as a great statesman, even crediting him
with initiating the beginning of the end of communist rule in Central and
Eastern Europe, culminating in the fall of the Berlin Wall. In particular, they
pay homage to his decision to let the East Germans amassed in Hungary leave the
country via Austria.
It should come as no surprise, therefore, that Gyula Horn has been highly
regarded in the west. In Germany he was given many awards, and a special
"medal of freedom" was even created in his honour. In many ways, he
ranks second only to Mikhail Gorbachev as a great statesman from the east who
had helped end the cold war and change the course of history. Indeed, Gorbachev
himself paid tribute to Horn at the latter's birthday party.
Like Gorbachev, however, while Horn may be regarded by some in the west as a
"great man", his legacy is somewhat mixed in the former "East
Bloc", to the extent that he is regarded by many within his own country as
a scoundrel. This was made quite apparent when the President of Hungary, Laszlo
Solyom, refused to award a high state honour to Horn, despite being recommended
by the Prime Minister, Ferenc Gyurcsany. According to Solyom, giving the award
to a person like Horn is a contradiction to say the least, noting that Horn's
anti-revolutionary activities in 1956 and recent comments seeking to justify
those actions were contrary to the values of Hungary's Constitution. Being a
former constitutional judge himself, Solyom's views are considered by most as
being quite authoritative.
A Victimless Revolution?
While the row over awarding a high state honour to Horn may seem a little
trivial and merely a local issue, it in fact represents another episode in
Hungary's attempt at coming to terms with the past. In fact, with the overall
shift in the region's demographic balance (i.e., generations are coming of age
who don't have a personal experience of communism) coupled with the failed
promises and dreams of the future (namely economic prosperity and democratic
governance), this form of soul-searching can be found throughout the former
communist states of Central and Eastern Europe.
What all former members of the East Bloc have in common is the lingering legacy
of resilient and adaptable servants of the former regime. In retrospect, Havel's
concept of a "Velvet Revolution", although desirable and laudable is
to the theorists at any rate, at the same time naive and impractical. Those same
theorists would say that a bloodless - or more precisely, a victimless -
revolution can't be considered a vehicle of progressive change. As Jefferson had
pointed out, "the tree of liberty must be refreshed from time to time, with
the blood of patriots and tyrants. It is its natural manure."
This doesn't mean death and destruction is a pre-requisite. Just because someone
is killed doesn't make them a martyr. The Romanian communist dictator Nicholae
Ceausescu and his wife Elena were the most prominent causalities of the 1989
regime changes, but their removal from power was managed by former communists
who had once served under them.
Instead of this, what is required is justice. There was a need for all those in
positions of power and influence within the former communist regimes of Central
and Eastern Europe to be tried and held to account for their deeds, akin to the
Nazis at the end of the Second World War. Rather than this, however, former
communist party loyalists, as present-day managers and executives, have become
the main beneficiaries of reform.
Communist apparatchiks revamped
It's this failure at social justice which accounts for the underlying social
and economic problems of the present. The fact that former communists such as
Horn and Gyurcsany continue to play a key part in politics and economics in
Hungary has created a schism within society. This was best exemplified last year
during the riots in Budapest.
Throughout the region, communist apparatchiks revamped themselves as socialist
or social democrats. In some cases, as in Hungary, they are also within the
ranks of the opposition. Along these lines, since Hungary can be considered a
two-party dictatorship of sorts, the fact that these individuals now reside on
both "the left" and "the right" means there is little
difference between the past and present; one Party rules, the only difference
now being is this Party has a left-wing faction and a right-wing faction.
As a result, notions of "reform" have become simply another (albeit
sophisticated) form of repression. This can not only be seen in the processes of
the present which emphasize a policy of "economic naturalism", but
also in the past as exemplified by the relative absence of justice after four
decades of misrule and police terror.
Attempts are underway to try and rewrite history
To make matters worse, attempts are underway to try and rewrite history, or
at least people's perception of it. For example, Horn has repeatedly justified
his paramilitary activities claiming that he was upholding "law and
order" because many criminals had been released or escaped from prison
during the revolution. What he failed to mention was that the vast majority of
these so-called "criminals" weren't common criminals but political
prisoners who had been wrongly imprisoned by the Stalinist regime simply because
they represented a democratic opposition to the dictatorship -- an illegitimate
dictatorship he regarded as "lawful" and which he helped to uphold.
In conjunction with this, as former communists such as Horn get older and
consider the prospect of becoming nothing more than dust in the wind, attention
is now increasingly focused on their personal legacies. One way in which they
attempt to rehabilitate themselves is through state awards and recognition.
Prime Minister Gyurcsany has been quite adept at quickly handing out awards to
former cronies. For his part, Solyom has done his best to put a brake on the
process. However, he can't always refuse to give someone an award, as he was
able to do with Horn. Nonetheless, he has shown his displeasure at some of these
state awards by refusing to shake hands with a recipient he felt was
Aside from state recognition, many former communists have also sought the route
of international politics and diplomacy as way to legitimise themselves and
their past. The European Commission (EC) and other like institutions have been a
haven for such political refugees. Such is the case of Laszlo Kovacs, presently
the Tax and Excise commissioner within the EC.
In many respects, the west has helped in all of this. As already mentioned,
Germany has gone out of its way to shower praise and recognition on Horn. This
is despite the fact that Horn wasn't in control of events in 1989; he simply
went along with the tide. Like most Hungarian "leaders" of the 20th
and 21st centuries, including Imre Nagy in 1956, he was a leader who led from
the behind, not from the front.
Massive free-for-all privatisation
One reason for western help in the legitimisation of former communist
apparatchiks is not because of ignorance of who these people were. Rather,
individuals such as Gorbachev, Horn, and other "reformers" from the
region had given western democracies their cold war "victory" at a
time when many western democracies were struggling with what Norman Mailer
dubbed the "Battle of the Banks". Thus, as a form of gratitude, these
people were put on a pedestal and forever admired in the west, but shunned and
despised in the east.
In addition to this, these individuals had made possible the massive
free-for-all privatisation that followed the demise of communism, thereby
driving the economies of western democracies with the introduction of new
investments and new markets. In contrast, what this amounted to in the east was
the looting of state assets. For instance, in Hungary annual statistics on state
assets suddenly stopped after 1989. No reason has been given why such statistics
are no longer kept. Nevertheless, the General Accounting Office has calculated
that over one-third of state assets have simply disappeared since 1989.
It should come as no surprise, therefore, why so-called "great
statesmen" like Horn and Gorbachev are not liked in their own country; most
state assets were simply sold off at bargain prices. Indeed, those who bought up
these state assets not only included former apparchiks (such as Hungary's
current Prime Minister, Ferenc Gyurcsany) or western multinational companies,
but western governments (i.e., France and Germany) as well.
Ironically these same countries, some of whom refused to "liberalize"
certain industries (such as France, which benefited from liberalization abroad
while keeping its own market closed) had made liberalization a key condition for
Central and Eastern countries to join the EU. Likewise, as many western EU
countries are reluctant to depart with state property (for example, Germany and
its railway), key infrastructure and state property in countries of the former
East Bloc are expected to be sold.
"You Who Wronged"
From all this, it's easy to understand why western democracies think so
highly of politicians like Gyula Horn. It's a simple deal: legitimisation in
return for collusion in the theft of state assets. Yet legitimisation and stolen
property are fleeting, as the late Polish poet Czeslaw Milosz clearly
illustrates in his poem "You Who Wronged" (1988):
You who wronged a simple man
Bursting into laughter at the crime,
And kept a pack of fools around you
To mix good and evil, to blur the line,
Though everyone bowed down before you,
Saying virtue and wisdom lit your way,
Striking gold medals in your honour,
Glad to have survived another day,
Do not feel safe. The poet remembers.
You can kill one, but another is born.
The words are written down, the deed, the date.
And you'd have done better with a winter dawn,
A rope, and a branch bowed beneath your weight.
Happy Birthday Gyula!
OTP Bank remains top pick in CEE region
Hungary's leading bank OTP was again named among their top picks for the Central
and Eastern Europe (CEE) region by Erste Bank analysts, citing a 25 per cent
upside potential in the stock, which thus drew a reiterated "buy"
rating from the Austrian trading house, Interfax News Agency reported.
"OTP Bank did well in (the) first-quarter (of) 2007, with its figures
basically in line with our guidance," Erste was quoted by Interfax as
saying in its equity monthly report for June, adding: "We therefore stick
to our 'buy' recommendation and a target price of 11,600 forints." The
target price implies 25 per cent upside potential for the stock, thus making it
one of the best bets among CEE stocks, according to Erste, who thus reiterated
their opinion on the stock from a month ago. OTP is the only Hungarian stock
among Erste's 12 regional top picks, with Polish IT firm Sygnity at the top of
the list, with upside potential of close to 90 per cent.
CIB Bank shareholders approve IEB merger
CIB Bank shareholders approved at a recent meeting the plan to merge the bank
with Inter-Europa Bank (IEB), another Intesa unit, CIB announced, Interfax News
CIB Bank is a unit of Italy's Intesa Sanpaolo. "The general meeting agreed
with the intent to merge the company with IEB," CIB was quoted by Interfax
as saying in its statement on the shareholders' meeting. Earlier, CIB officials
said they expect the merger to be completed by the end of this year. The two
banks came under the same ownership when their Italian parents, Intesa and
Sanpaolo, merged to create the Intesa Sanpaolo banking group in January. The
merger is set to create the second-largest financial institution in Hungary
after OTP Bank in terms of total assets, with the joint market share of the two
banks standing at 10.5 percent at the end of 2006 and total assets at 2.2
trillion forints, it was reported. Shareholders agreed that the merger should
take place by IEB merging into CIB, with the latter to remain a closely-held
company. IEB is a public company, but its shares were de-listed from the stock
exchange earlier this year.
Wind power capacity reaches nearly 62 MW
The total wind power capacity in Hungary has reached 61.675 megawatts (MW),
Hungarian Wind Energy Association (MSZET) Chairman, Peter Toth said, Interfax
news Agency reported.
"Currently, 40 wind towers generate electricity in Hungary, with combined
capacity of almost 62 MW," Toth said, according to state news agency MTI,
adding: "Wind power plants are located at 17 separate sites in Hungary,
with the largest wind park having 12 turbines, in Northwest Hungary's
Level." The total capacity of wind power plants in Hungary has increased
dynamically during the last year, as the total capacity was around 17 MW at the
end of 2005, while it barely reached 37 MW in September last year. The recent
boom in the number of wind parks in Hungary is mainly due to the modified
Electricity Act, which sets the mandatory purchase price for renewable and other
alternative energy at 23 forints per kilowatt hours (kWh), around twice the
price paid to most other conventional fossil-fuel power plants.
MOL still fighting OMV's takeover plans
Hungary's MOL wants to raise a new two-billion Euro loan to stop OMV's takeover
attempt, Reuters cited banking sources as saying on July 11th, Interfax News
The new loan, which would be additional debt for MOL, would partly finance MOL's
share buyback defence against Austria's OMV and would also finance acquisitions
and capital expenditure, sources close to the deal told Reuters Loan Pricing
Lenders have been given until July 16 to respond to the company's request for
proposals, sources added. OMV upped its stake in MOL to 18.6 percent from 10 per
cent recently and proposed "friendly talks" to create closer ties. MOL
worked to up its percentage of shares on the exchange and now has some 33-34
An Austrian paper reported early in July that JPMorgan and Barclays were
preparing a 13.5 billion Euro line of credit to aid OMV in its efforts to buy
MOL. Following OMV's increase of its stake in MOL, the Hungarian group was quick
to rebuff speculation on a possible merger with the Austrian company, saying it
would continue to pursue its own strategy. Hungary's top government officials
have also vowed to defend MOL from a takeover.
Nuclear waste deposit site to open next year
The Hungarian government's planned nuclear waste deposit site is set to be ready
to receive nuclear waste by the first quarter of 2008, in line with original
plans, Interfax News Agency reported.
This comes after the project was recently granted an environmental permit and
the necessary tenders have been invited, Hungarian officials said on June 13.
The project is set to cost a total of 26 billion forints, including 16 billion
forints in preliminary research that went into finding and developing the site.
Magyar Posta acquires trucks from Fiat's Iveco
Magyar Posta acquired a fleet of 65 five-tonne Iveco Daily trucks, Iveco
announced in a statement on July 12th, cited by Interfax News Agency.
Magyar Posta is Hungary's state-owned postal company. "The current
acquisition is part of Magyar Posta's total Iveco procurements within the past
five years, worth a total 1.5 billion forints," Iveco spokesperson Lilla
Kovacs told Interfax. Iveco has supplied the Hungarian Post with trucks from
five to 18 tonnes within the past five years, while the current procurement
involved the acquisition of 65 trucks. The new trucks will be delivered to
Magyar Posta by the end of November 2007, increasing the total number of Iveco
vehicles in the Magyar Posta fleet to 164, it was reported. Iveco, which employs
a combined workforce of 24,500 at its 27 assembly plants and five research
centres in 16 countries worldwide, sold 851 vehicles in the first half of 2007
in Hungary, up 43 per cent on the year, while in the category of 3.51 to five
tonnes, which includes the five-tonne Iveco Dailies in the current procurement,
the company sold ten vehicles during the same period. Iveco is part of the Fiat