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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




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 it:-

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 Budapest. 

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 Communism.'

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 compromised. 

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! 

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BANKING

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 Agency reported. 
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.

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ENERGY

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 Agency reported. 
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 Corporation.
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 percent.
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. 

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NUCLEAR WASTE

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. 

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TRANSPORT

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 group. 

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