Books on Hungary
Update No: 115 - (21/12/06)
The record to date
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 Ferenc Gyurcsany as the new head of government.
Hungarian voters renewed their National Assembly on Apr. 9 and Apr. 23. The MSZP
and the Alliance of Free Democrats (SZDSZ) secured 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 from a projected 10.1 per cent this year, to 3.2 per cent in 2009. The
prime minister has said Hungary might adopt the single European currency between
2010 and 2012.
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. He had also
said that the government now had to get to grips with the economy and the people
would have to face the realities.
Gyurcsany is an advocate of including all of the Western Balkan nations in the
European Union (EU). On Nov. 27, he expressed his views on the topic, declaring,
"Hungary acts properly if it uses all possible sources and takes all
chances to help and speed up EU integration in the western Balkan region."
Gyurcsany 's poll rating improves to 30% in December
Public support for Gyurcsany is slowly growing in Hungary, according to a poll
by Gallup Hungary. Some 30 per cent of respondents rate the prime minister's
performance as good or very good, up six points since October.
How would you rate the performance of prime minister Ferenc Gyurcsany?
Nov. 2006 Oct. 2006 Aug. 2006
Good / Very Good 30%
Bad / Very Bad 59%
Source: Gallup Hungary
Methodology: Telephone interviews with 1,020 Hungarian voters, conducted from
Nov. 8 to Nov. 14, 2006. Margin of error is 3.2 per cent.
Nevertheless public unrest mounts
Yet this means that there are still many more who disapprove of the premier than
approve him and his government. There is indeed something amiss in the state of
the country. In mid-December demonstrators set up partial roadblocks across
Hungary and teachers staged a two-hour strike on Friday in unlinked protests
aimed at the government.
Anti-government protestors set up partial roadblocks to demand that "those
responsible for the current moral and economic crisis in Hungary leave their
The protests continue to be aimed at Prime Minister Gyurcsany, the man whose
admission that he lied to the nation about the state of the economy before
April's general elections sparked riots and widespread protests in September and
However, Laszlo Garamvolgyi, spokesman for the national police, told MTI news
agency that the roadblocks were causing no major delays. The roadblocks were
expected to remain in operation until early evening.
Meanwhile, thousands of teachers staged a two-hour strike in the morning in
protest at a new law that means they can be forced to work extra hours without
The strike was supported only by the smaller of the teachers unions, while the
largest union said that it would call a strike in February if wage negotiations
do not bring about results.
The following from a local analyst puts a positive spin on the situation. After
all Thatcher had plenty of experience of demos and riots right until the end of
her period in office:-
Britain's Thatcher Is Example for Hungary's Economy Minister
By Balazs PenzDec
Britain's Margaret Thatcher provides the inspiration Hungary needs to tackle the
European Union's largest budget deficit, Economy Minister Janos Koka told a
meeting of employers and industrialists. The UK's prime minister from 1979 to
1990 ''made difficult and unpopular decisions which set Great Britain on a new
course of development,'' Koka said at a meeting with the businessmen in Budapest
today. ''She broke away from the false idea of the omnipotent state and let the
private economy carry the country forward. As a liberal politician, I believe in
the same thing.''
Prime Minister Gyurcsany already has raised Hungary's taxes and cut subsidies,
aiming to shrink the country's budget deficit to 3.2 percent of gross domestic
product in 2009 from an estimated 10.1 percent this year. He also plans to
overhaul health care, pensions, education, transportation and public
administration in his effort to reduce the shortfall. Thatcher led a list of
Britain's best premiers in the past 100 years compiled in August for the BBC by
historian Francis Beckett. Her policies included laws to erode the power of
trade unions in favour of businesses and a shift in control of state- owned
industries to investors through share sales of companies including BP Plc, BT
Group Plc and British Airways Plc. Hungary has sold most of its state assets,
from refiner Mol Nyrt. to phone provider Magyar Telekom Nyrt. since the early
1990s. An austerity package adopted in 1995 averted a fiscal crisis, and
successive governments have used the proceeds of economic growth averaging 4.2
percent over the past decade to increase social spending.
'Help Corporations Recover'
''We have to do everything to help large corporations recover,'' Koka said.
''That way we can spend more money to help the elderly, the sick and the
disabled. Profit will lead to the right way. Profit today will lead to higher
investment, better pay and a better living standard tomorrow.'' Koka said his
Free Democrats' Alliance, the junior partner in a ruling coalition led by
Gyurcsany's Socialist Party, will tie its support of the government to how well
it executes the economic overhaul in Hungary. ''I support conservative-liberal
policies,'' he said. ''The role of the Free Democrats in the coalition is to be
a sentry over the execution of these reforms.''
Audi may build A3 Cabrio in Gyor
German car manufacturer Audi is due to build its new A3 Cabrio models in Hungary
only weeks after threatening to withdraw all investment from the country, an
online financial publication claimed on November 24. Portfolio.hu said that
despite the best efforts of certain Audi officials to promote building the car
in Germany, the company would set up production in the Hungarian plant in Gyor,
Audi would not officially confirm or deny the report. Audi, which has been
granted tax breaks until 2011, had in October said it would suspend further
investment in Hungary over the introduction of a new four per cent tax, dubbed
the "solidarity" tax.
However, after negotiations, the government provided a loophole that will allow
companies to reduce the amount of income to which the solidarity tax can be
applied, deducting research and development costs. Audi employs 5,200 people at
its plant in Gyor, and has invested billions of dollars in Hungary since it set
up the operation in 1993.
OTP Bank gets Serbia's Kulska Banka
Hungary's leading bank OTP said it had bought 26 per cent of Kulska banka and
asked to buy an additional 67 per cent in the bank, website portfolio.hu
reported on December 6th.
The bank agreed in July to buy Kulska Banka for 119 million. Jiri Stanik of Wood
& Co commented on December 6th: "Following the failure to acquire a
large bank (such as Vojvodanska or Jubanka), OTP had to build up its critical
mass through purchasing and merging a number of small banks such as Kulska."
Together with Niska Banka and Zepter Banka, OTP has already created a presence
with a three per cent share on the Serbian banking market. Stanik further added:
"With assets at 43 per cent and loans at 24 per cent of GDP only, Serbia
offers plenty of growth. However, OTP operations are, and will be small relative
to its overall size; therefore domestic, Bulgarian, Ukrainian and Russian
businesses are the ones to matter and to watch for closely."
E.On planning US$ billion investment
German energy company E.On is planning to invest up to 200 billion forints
(US$1.02 billion) in a gas-fuelled electricity plant in Hungary, business daily
Napi Gazdasag reported on November 28th.
E.On's local subsidiary declined to comment on the report, but Napi Gazdasag
said that concrete plans had been filed to the Hungarian Energy Office (MEH) and
that E.On raised the capital of its subsidiary by 1.2 billion forints as a first
step. The newspaper said that the MEH were reportedly prepared to give
permission for the 400-MW plant within the next 120 days.
Cisco to expand further investments
Investments in Hungary are generally on the rise and the latest contributor
became Cisco, the leading supplier of networking equipment and network
management for the Internet, website portfolio.hu reported.
In a statement published on November 29th, the company divulged its plans of
further expansion of its services in Hungary. The company opened its Technical
Assistance Centre (TAC) in Budapest in April 2005. Now it has announced plans
for setting up a new services centre in Szombathely to offer technical services
linked to hardware repair and development works, the website reported.
The new facility would be jointly established with the local unit of electronics
solutions company, according to the Cisco statement. However, the financial
details involved with the pan were kept undisclosed. Jabil, which provides
comprehensive electronics design, production and product management services to
global electronics and technology companies, has been in cooperation with Cisco
for more than eight years. The statement revealed that the Szombathely unit
would handle repair and testing and offer quality and process and supply
management services. The facility will also be a base for clients in Europe,
Russia, the Commonwealth of Independent States (CIS), the Middle East and
Africa. Jabil started producing Cisco products at its Tiszaujvaros plant in
2002. The Szombathely-based Jabil centre employs 600 people and the
collaboration with Cisco plans to add 50 more heads to the payroll, the website
Hungarian premier visits western Balkan leaders
Hungarian Prime Minister, Ferenc Gyurcsany, recently visited the western Balkan
region, meeting the leaders of Macedonia, Bosnia and Albania, an official told
AENews on November 20th.
Gyurcsany made his first stop in Bosnia-Herzegovina for talks with government
leaders and the chairman of the House of Peoples and the House of
Representatives, government spokeswoman Emese Danks said. In Macedonia,
Gyurcsany met with his counterpart and other leaders. According to Maxfax news
agency, the Hungarian premier said that a realistic timeframe for inviting
Macedonia to join NATO is 2008, whereas for accession to the European Union,
difficult work lies ahead for the country. He also said that Hungary would back
Macedonia at the Riga Summit, Maxfax reported.
On the third and final day of his Balkan tour, Gyurcsany visited the Albanian
capital, Tirana to attend a Central European conference and meet with Albanian
Prime Minister Sali Berisha, President Alfred Moisiu and the parliament