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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: 121 - (27/06/07)

The French Hungarian
The Hungarians are intrigued, as well they might be, by the triumph of Nicholas Sarkozy in France. His father was Hungarian, an exile in 1945, his mother French. That there is a Magyar corner in his heart is very probable. French is his mother tongue all right and English his second language; but there is a part of him that shall be forever Hungarian and Central European. 

He is of course first and foremost French. He has shown himself to be a true heir of his hero, General Charles de Gaulle. His extreme flexibility has led him to victory over a decidedly more prepossessing opponent in the presidential elections, Segolene Royale. But de Gaulle was no beauty either. What impresses the French is to be clever, strong and decisive. That Sarkozy has proved to be - as the French have acknowledged by giving the right a comfortable victory in legislative elections in June too.

His assumption of power in the Elysee is an important event for Europe and a fortiori for Hungary. He is likely to follow a foreign policy far more attuned to Central European susceptibilities than Chirac, who famously told the Romanians, traditional allies of the French, in 2003, when they backed the Iraq War, that they had "missed a fine opportunity to shut up." Sarkozy will eschew such crudities. Indeed, although an opponent of the war himself, he has chosen a humanitarian advocate of it in Bernand Kouchner, the founder of Medicins Sans Frontieres,as his foreign minister.

He is very likely to follow a traditional Gaullist path of integrating Central Europe into world affairs, that today means the inner counsels of the EU, of which he is now the ex officio chairman, albeit sharing power and the limelight with a chairwoman in German Chancellor Angela Merkel, with whom his personal relations are excellent. The British under Tony Blair hardly count in the EU these days for obvious reasons; nothing much is expected of Gordon Brown either. The British lion of yore is now seen as a Yankee poodle. 

The Magyar memories and shared past
The Hungarian prime minister, Ferenc Gyurscany, and Sarkozy have yet to meet. When they do it is likely to be a poignant moment. They will scarcely fail to recall why the one is installed in Budapest, the other in the Elysee Palace in Paris, the extraordinary fractious past of their common ancestry.

History is haunting the Hungarians right now, just as it is the Poles with their new lustration law and the Estonians with their falling-out with Russia over a World War Two memorial and reburial of Soviet soldiers. 

The following news item 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 Communist 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 CP leaders are buried. 

The Hungarian public is deeply shocked by this outrage. This is an inhuman form of crime, committed against 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. Attitudes to him today, differ among the various sections of the Hungarian society. 

Many people reasonably enough, criticise the former CP leader for the role he 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. 

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It is a moment worth reflecting upon. Kadar did some unpleasant things, notably participating in the brutal Soviet repression of the Rising of 1956 and imprisoning thousands for years afterwards, who were the true patriots. He unforgivably, to establish his Moscow's lapdog credentials, had Imre Nagy, the leader of the Uprising, hanged, which Moscow was not even 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 he had already done nearly twenty years ago on his own behalf. 

Hungary moves closer to ending healthcare dispute
Gyurcsany has brought down the deficit from around 10% of GDP to a current 6.7% this year. He has pledged to end a long-running political dispute over controversial plans to reform healthcare financing and negotiate an acceptable package by the end of the year.

"I would like to reach a policy agreement in the first half of the year and finalise negotiations in the second half of the year," said Mr Gyurcsany in a meeting with journalists in London in early May.

The Hungarian prime minister's difficulties mirror those faced by health reformers elsewhere in ex-Communist central Europe, where people are loathe to lose the free health services they enjoyed before 1989.

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AVIATION

Hochtief to invest 261m Euro in airport 


German Hochtief AirPort's consortium recently promised to invest 261 million Euro into Hungary's main airport over the next five years, Deutsche Presse-Agentur (dpa) reported. 
This comes as it announced it had finalised the purchase of Budapest Airport, the company that runs the facility. Budapest Airport spokesman, Domokos Szollar, said in a statement that the new management would focus on "the further development, expansion and modernisation of the airport." 
Budapest Airport was privatised in December 2005, when Britain's BAA bought the airport. However, Spain's Ferrioval took over the British company and sold Budapest Airport to the consortium for 1.9 billion Euro. "We are very proud of acquiring Hungary's unique national asset," company CEO, Dr Reinhard Kalenda, was quoted as saying, adding: "We have long sought to acquire a stake in this airport because there is great potential." The airport is one of the busiest in Central and Eastern Europe, and recently announced it had handled over 700,000 passengers in April, a 4.6 per cent increase on the previous year. 

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BANKING

MFB sells 49% stake in Grafika Press

Hungarian state-owned development bank MFB recently announced in a statement that it has sold its 49 per cent stake in printing house Grafika Press Nyomdaipari Zrt to KBC Private Equity NV (KBC PE), Interfax News Agency reported. 
"After two years of ownership, MFB has successfully exited its investment in Grafika Press," the statement said. Belgium-based KBC PE, which has private equity investments in six countries in the Central and Eastern European region, received the green light from Hungarian competition authority GVH on May 17th to gain a controlling stake in Grafika in cooperation with current shareholders, it was reported. 
With the financial backing of KBC PE, Grafika bought the printing business - including printing capacities and related machinery - of Szikra Lapnyomda Zrt, then Hungary's leading printing firm, in March. The transaction, which was KBC PE's first private equity transaction in Hungary, made Grafika the largest printing firm in Hungary. Grafika, which generated revenues of three billion forints in 2006, had received a 323 million forints equity injection from MFB to increase its printing capacity, in January 2005.

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ENERGY

Emfesz suffers 87% decrease in 2006 net profit 

Hungarian energy trader, Emfesz, officials said on May 31st that as tight competition prevented the company from passing on rising natural gas prices to its costumers, it recorded a net profit of 1.33 billion forints in 2006, down 87 per cent year-on-year (y/y). The company is indirectly controlled by Ukrainian investor Dmitry Firtash, Interfax News Agency reported.
"We could not pass on higher prices, in fact we had to cut our prices due to strong competition, hence the decline in profit," Emfesz Managing Director, Istvan Goczi, was quoted by Interfax as telling reporters. Emfesz, the dominant player on the liberalised segment of Hungary's natural gas market and an aspirant for a similar future role on the country's electricity market, recorded sales revenues of 144.6 billion forints last year, up 55 per cent y/y.
At the same time, rising gas import prices resulted in a 78 per cent y/y increase in raw material costs to 144.5 billion forints, leaving Emfesz with operating income of just 130 million forints for the year, a fraction of the previous year's 10.7 billion forints. Financial profits of 1.3 billion forints, up five percent on the year, somewhat improved the bottom line.
Emfesz imports and sells more than 2.5 billion cubic metres of natural gas every year, from Central Asian (mainly Turkmen) sources. The company now serves more than 350 customers in Hungary, including large segments of the country's chemical, construction material and sugar refinery industries.
However, the gradual liberalisation of Hungary's natural gas market has also seen a rise in the number of natural gas traders active in Hungary. While Emfesz all but ruled the market when it debuted in 2004, it now has about a dozen competitors, and may get even more as the country moves toward the full liberalisation of its natural gas market early next year. "We expect these trends to continue this year," Goczi was quoted as saying, adding: "We will remain profitable (in 2007), but our profits will be modest."

MOL joins up with ExxonMobil to search for gas fields 

Hungarian energy firm MOL on May 17th said it had agreed to team up with ExxonMobil to research basins in Hungary for "unconventional" potential gas resources. 
"MOL signed a Heads of Agreement with ExxonMobil subsidiary Esso Exploration International Limited to undertake a joint technical study of certain basins in Hungary that present significant unconventional hydrocarbon gas resource potential," the company said in a statement on the Budapest Stock Exchange's website, cited by Deutsche-Presse-Agentur (dpa). 
MOL said such explorations usually needed heavy financial commitment and presented production risks, adding that ExxonMobil had extensive experience and know-how. 
Hungary is currently trying to diversify its gas sources. The nation currently gets some 80 per cent of all its natural gas from Russia and as a result suffered during a break in the Russian gas supply in 2006. 
MOL and the Hungarian government are looking at the Russian-backed Blue Stream pipeline, the EU-backed Nabucco pipeline and also a potential LNG pipeline from the Adriatic coastline in Croatia.

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INFORMATION TECHNOLOGY

Synergon wins 236m forint public contract for data

Listed Hungarian IT group, Synergon, announced in a statement on May 30th that it has secured a 236-million-forint public contract to build out broadband data networks and access points in Southern Hungary's Kalocsa, Interfax News Agency reported. 
"Synergon will establish the broadband Internet network in the municipality of Kalocsa," company spokesperson, Gergely Schutz, told Interfax, adding: "The project is expected to be completed by the end of 2007." Under the project, Synergon will provide Internet access for a total of 5,000 families, while the project also includes an optical backbone network with a coaxial network and access points.
The project is sponsored by the EU-assisted Economic Competitiveness Operative Program (GVOP), which is managed by the Hungarian Economy Ministry and is aimed at closing the gap between the less-developed regions of the country and the more-developed cities.

Magyar Telekom invests 1.5bn forints to upgrade

Hungary's largest telecom firm Magyar Telekom's Internet protocol (IP) backbone network revealed on May 22nd that it has invested 1.5 billion forints to install two high-performance Cisco routers to fulfil future capacity demand as part of an upgrading process, Interfax News Agency reported. 
"Hungary has taken the lead in the region in terms of broadband Internet access use with over one million broadband Internet connections registered," Cisco Systems CEE Managing Director Kaan Terzioglu was quoted as saying in the statement, adding: "So it is not by chance that such a milestone technological development is first implemented in Hungary." Magyar Telekom, a member of German telecom group Deutsche Telekom, is the first to use the router and transport technology in Hungary. The new structure provides a platform for integrated media services, video, IPTV (Internet television) and VoIP (Voice over Internet). In addition, corporate users will be able to use virtual private networks offering higher availability (IP VPN), which can only be built using devices like the Cisco CRS-1 router, which can be upgraded and maintained without shutting down, the statement said. Magyar Telekom had more than 628,000 registered broadband Internet connections at the end of March 2007, the company's statement said.

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TRANSPORT

MAV Cargo to be fully privatised 

MAV announced recently that it has called a two-round public tender for the full privatisation of its freight division MAV Cargo, Interfax News Agency reported. 
The deadline for submitting indicative bids is July 23rd, while binding offers are to be submitted by October 30th. According to the announcement, the goal of the tender is to maximise the price of the sale, to increase the company's efficiency and competitiveness, to develop the rail freight division in Hungary and to improve working conditions of employees. The company, whose registered capital is 29.6 billion forints, has been expected to be privatised since its spin-off from Hungarian state railways MAV in 2005. MAV will hold to its option of offering some 1.5bn worth of MAV shares on a reduced price to the employers of MAV Cargo, as the law on privatisation grants this right. According to earlier reports, the company's assets are worth some 70-80 billion forints, the bulk of which is made up of the company's 13,000-strong rolling stock. Unlike the state rail company's passenger division, which generates losses amounting to tens of billions of forints each year and is heavily subsidised, MAV Cargo closed 2006 with pre-tax profit of 2.8 billion forints, a loss in 2005. MAV Cargo's sales revenues reached 93.1 billion forints last year, up from 86.5 billion forints in the previous year. 

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