Books on Hungary
% of GDP
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.
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
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
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
"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?
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
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
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.
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.
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
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
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
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.
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.
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.