Month: February 2011

Hungary and the paradox of the charlatan. Part III by S.K.

Just as I was about to commit to paper this long planned last part of my essay, Ferenc Gyurcsány came to my aid two days ago with his summary of Viktor Orbán’s and Fidesz’s “invaluable” contributions to the dismal financial state of Hungary. We may also note that he is actually generous to Orbán by staying mum about the permanent division of society that was unimaginable before Fidesz forced it on the country.

In keeping with my earlier claim of lining Orbán up with his distasteful predecessors, I offer you the historical and economic evidence here to give him the hypothetical coup de grâce.

 * * *

After failing dismally in the election of 1919, Benito Mussolini united the right and formed the militias that helped to break a strike in Milan and infiltrated the industrial mainland of Italy, the Po Valley. In a short two years his tactics of general intimidation and the incorporating of his rivals into his own Fascist party finally netted him the result of getting his party elected to Parliament in 1921. He had only one rival left, the poet and nationalist firebrand Gabriele D’Annunzio, who was actually favoured by the government. But, wanting to avoid taking any chances, Mussolini decided to force his way into power. With the help of the ultra-right leaders, by then his deputies, he organized the March on Rome. While he didn’t actually march with his followers, he exhorted them to the task and goaded them from behind the lines.

Although extremely vague about his actual program, advocating mostly the betterment of conditions for the population, he insisted on “uniting the right,” and so, in Milan on October 24, 1922, he informed his followers about his program: “We want to rule Italy!”

Although the number of participants in the March was fewer then thirty thousand, the climate of fear and intimidation, spread over the country in the previous two years, was enough to convince the king that unless Mussolini is given the power of governing, the country would face civil war. The king and the government capitulated to Mussolini in four days and he was appointed prime minister of Italy on October 28, 1922.

The general dissatisfaction following the war permeating Italian society, combined with the disastrous economic situation of the country, was a ready-made circumstance for the fascists to succeed. The state was crackling under the burden of debt. Unemployment and inflation were staggering. By offering the suppression of worker’s rights and welfare, – already quite dismal – he garnered a great deal of financial support from the moneyed classes. Members of the military surreptitiously supplied him with arms in the increasingly bitter, open struggle against the socialists. Under these circumstances the social and economic state of the country could only plummet toward the abyss. Mussolini, after doing everything in his power to foment and increase the crisis, offered himself forcefully as the “strong man” able to fix all problems. And in case anyone would doubt his suitability, and there were many who did, he was threatening civil war by organizing the March to convince them. As an oft-confirmed opportunist, Mussolini hand-sculpted his programs to fit the needs of the month, the week, even the day, to suit it to the immediate demands of the moment.

He came into power by widening the constitutional framework far enough to turn it to his own advantage, applying one single provision that facilitated his take-over, and then from within that constitution he proceeded to overthrow it.

Mussolini’s policies aimed for national glory and admiration in foreign policy. Domestically a strong nation and universal cooperation were his goals: the State controlled all aspects of life and people’s value was determined by their usefulness to the state. All aspects of life were to be subjugated to the glory of the state and that of the Fascist Party.

After gaining power, he solidified his grip over the state by placing his cadre into most positions and introduced a growing personal cult glorifying his accomplishments. He was not ready to countenance any criticism: when in 1924 the socialist politician Giacomo Matteotti criticized fascism and him in parliament, he was murdered immediately. In Mussolini’s Italy there was no room for opposition.

Finally, in 1929 he finagled to himself all legislative authority, governed by decree from then on and made all decisions in personal appointments. Converted the economy into a corporate conglomerate under his own chairmanship. Total control and personal deification accomplished in less than ten years.

* * *

The Weimar republic, conceived under the most inauspicious circumstances, after a lost war, a punitive peace treaty and obligations to pay crippling war reparations, was not promising to be a successful first try in democracy to replace a most authoritative empire. However, it accomplished some success nevertheless, thanks to the ingenuity of its politicians and the fact that Germany actually hardly suffered any of the war destruction plaguing France and the surrounding countries where the war was actually fought.  The social and cultural ferment the Weimar Republic is so famous for propelled Germany to fast recovery until the arrival of the depression in 1929.

Adolf Hitler was first ignored and then jailed after his first forays into politics in Munich in 1923. The republic just was not ready for his kind of politics. But by 1930, when the rapidly changing governments were unable to hold on to power, society was too busy getting immersed in avant-garde art and saucy entertainment, amidst the ravages of the economic disintegration: hyperinflation first, and the depression soon after.

The Republic never recovered from the effects of hyperinflation and as it attempted to consolidate, the result was unprecedented indebtedness. All the Nazis had to do was get into the social breaches everywhere and spread the blame for those ills on everybody else, while claiming to have the panacea:  strong leadership. Their policies and activities hastened the widening of those breaches in order to increase demand for their panacea.

Applying, perhaps unintentionally, the tactical methods of General Helmuth von Moltke, small units of uniformed thugs were fighting on the streets of cities and intimidating the population, adding social insecurity to the economic uncertanties and general malaise Hitler’s party created. These tactics engendered in the minds of Germans the yearning for order, and his party, after having created it, offered to alleviate the malaise. In a short three years he managed to parlay a modest but surprising electoral success of 18% in 1930 to a gambit of persuading the parties in the paralyzed Reichstag and the wizened old president to support his chancellorship in order to end the chaos. Since this was the only offer they had not yet tried, they agreed.

The Nazi party and Hitler came into power by entirely constitutional means and with the acquiescence of the state institutions, using one single provision of the constitution as the base from which they set out to abolish it. Within a week after his appointment, the campaign against the opposition, the press, and the trappings of the Republic commenced.

* * *

There is scarcely any need to recount all the similarities easily detected in the techniques used by Viktor Orbán and Fidesz in their takeover of the Hungarian Republic.

Orbán–as Mussolini turned from socialist to corporatist–transformed his party from liberal to conservative. Then, according to the recipe, forced his way into the breaches of society to spread blame and offer a panacea. The country, first reeling under the effects of indebtedness and then the crisis of 2008, was open to hear the call of a strong leader. The marching and intimidation spread by uniformed “guards” and all the associated propaganda provided the background yearning for security. While insisting on a universal refusal for any modernization in the economy, he spread the myth of instant social justice in exchange for power. According to the tried out recipe, he courted the support of the churches and received unconditional support even at a cost to the taxpayers, as he is offering to increase the financial contributions of the state. Thus he is emulating the infamous concordats forged at the time by Italy and Germany with the Vatican.

As the Gyurcsány article recounts Fidesz’s progress in the last eight years, they strove to stampede the treasury into increasingly irresponsible fiscal adventures, but at the same time claimed that those very adventures, and their effects, can only be remedied by themselves. Their appeal to scapegoating and discrediting their opponents, but apart from claiming “secret weapons” against the ills of the country, never actually presented any plans and, even in power, they only have the same limited arsenal to offer: blaming the preceding government and improvised attempts at management. Their main overarching goal is the perpetuation of their reign and the annihilation of all possible alternatives.

Barely having completed their takeover by constitutional means they were immediately on the warpath against the constitution.

The listing of similarities alone doesn’t give a full picture, nor is it enough to provide a reasonable ground for predictions without considering also the differences. However, most of those differences are due to the international context, the presence and force of the European Union that makes Fidesz's job of becoming an unfettered dictatorship more difficult than it was in the 1930s in the climate of post-war disintegration. But this will not deter them from trying. The political pressure cooker they have created in Hungary, for the sole purpose of making their takeover possible and enduring, doesn’t function as airtight as it did in the Weimar Republic. The electorate is better educated and better connected to the world, communication and free movement of people are irrepressible now, and as a consequence the “system” is far from being airtight. And the “leakage” works both ways: inbound influences and outbound leaks and embarrassments weaken the grip of the Fidesz.

But the magnum default is that Fidesz, and even more so Orbán, seem to believe their own propaganda of their infallibility and their calling. They are hurtling along a path set blindly and without caution to first explode, and then reconstitute the country regardless of the consequences. This could have worked for Italy and Germany in the 30s, there was no alternative and no resistance at the time. Now, however, there is the alternative, the example of the entire Europe in clear view, and the resistance, increasing almost by the day, to the ham-fisted destruction wreaked by this crew. The country, as vulnerable as it is, won’t need much pressure from the market, the IMF, or the EU to buckle under, even if Orbán doubts that it would come about before his job is complete. But before any pressure should be applied from abroad, the internal weaknesses, the ecomomy’s declining ability to perform, the increasing social misery and inequality, the tensions between groups of all kinds within society and the brazen disregard shown by Fidesz to all that, will increase the internal pressures to a level that couldn’t be controlled by even a great statesman, never mind the limited technician that Orban is.

What is it then that can be expected to happen?

I expect that the accelerating pressure applied by Fidesz to society to transform by necessity must meet the familiar and inevitable resistance similar in magnitude, opposite in direction, and before the time for the next election rolls around in 2014 Fidesz and Orbán will be a spent force. They may attempt to run in the next election, but I wouldn’t be surprised if the hatred they introduced in Hungary would sweep them away even before that. He who lives by the sword must die by the sword and Orban and his creation will be pulverized by his own creation, the “unified” society united by its complete and inexorable repudiation of his failed and anachronistic system.



Viktor Orbán and the Sándor Palace

There’s no question, Viktor Orbán’s megalomania is for real. Power is not enough. He needs the trimmings as well. Very early in his first term as prime minister he fixated on moving his office and his whole apparatus into the Sándor Palace, the official residence and office of Hungarian prime ministers between 1881 and 1945. For anyone who’s interested in the history of the building there’s a short article on the website Múlt-kor. Accompanying the article is a picture taken right after the war which shows that practically nothing remained of the building after the siege of Budapest.

The building was never big enough for its appointed task. Soon after Kálmán Tisza moved in there were plans to raze the building and erect a new one more suitable for housing the prime minister’s residence and office. However, there was never enough money for such a project and therefore they fiddled with the interior, first in 1910 and later between 1929 and 1931.

Yet Orbán in his first term was adamant about moving into the Sándor Palace, whose reconstruction remained unfinished. Moreover, he wanted to fix up some of the other buildings in the old Castle area in order to create a “government district.” Eight and a half billion forints were allocated for the project. The Sándor Palace itself cost more than three billion forints.

This decision was made in spite of an earlier study done during the tenure of the Antall government which determined that the Castle District wasn’t a good place for the ministries. It is hard to approach; there would be congestion and too much traffic. Before the war the ministries were in the Castle district and thus close to the prime minister’s office, but today this is not the case. They are currently all on the Pest side of the Danube. Today the Castle District is a tourist attraction. Moreover, if the building was too small in 1910, surely it would be totally inadequate today. And, critics said, in a republic such opulence for the prime minister’s office is unseemly.

Viktor Orbán was undeterred. In the last days of the first Orbán administration the furnishings purchased by the prime minister’s office arrived in the Palace. Just to give you an idea about the lavishness of it all, here is a picture of the conference room. I assume Orbán was planning to hold the weekly cabinet meetings here.

But then came the elections that Orbán lost and with it he lost his cherished dream of moving into the just restored and refurbished Sándor Palace.

Eight years later the idea has resurfaced. I mentioned briefly that while the reconstruction of the Palace was taking place between 1999 and 2002 Orbán began refurbishing a small office in parliament that served originally as the study of the prime minister. Keep in mind that at that time the prime minister’s real office was in the Sándor Palace and his study in the parliament was used only when he participated in the parliamentary debates. Therefore a small office was adequate. But Orbán, the traditionalist, decided to recreate an exact replica of the original office and use it as his main study. It was expensive and totally useless. It also seems that the leather armchairs were so slippery that their occupants risked finding themselves on the floor. Here is a picture from 2000.

Today this sumptuous little office with the slippery armchairs most likely sits abandoned. Medgyessy found Orbán’s old-new office impractical and moved into the old larger office of the president who in turn moved into the Sándor Palace. All prime ministers since then have been satisfied with Medgyessy’s choice. Not so Viktor Orbán.

After the elections in 2010 he was shown the prime minister’s office. When he noticed a large oil painting of Lajos Kossuth above the desk, he remarked: “What is this poor Kossuth doing here?” For a while he changed only the desk chair because he believed that it was more fitting in the office of a CEO. But then for one reason or another, perhaps because Gyurcsány’s spirit haunted him, he decided to move into the Nándorfehérvári terem that had previously been used only for protocol purposes. The prime minister received foreign delegations there. It is considered to be one of the nicest rooms in the building.

I myself wouldn’t be thrilled with the Medgyessy-Gyurcsány-Bajnai study which with all the dark paneling is somewhat oppressive, but I understand that one cannot do much with a historical building.


But at least it was only 70mas opposed to 180m2. A couple of days ago a funny cartoon appeared in Népszava. The title of it: “The size is the essence.”


The caption reads: “Sir, in case you want to reach the desk, under no circumstances step off the red carpet.”

A final note. By way of office decoration Ferenc Gyurcsány chose three busts depicting Imre Nagy, Ferenc Deák, and Lajos Kossuth. On the chest of drawers he placed personal items and family photos. Orbán apparently had only a small bust of St. Stephen and, of all things, an angel! I must say that Orbán’s Calvinist ancestors must be turning in their graves: angels? Calvinists don’t believe in such things!

A real dip in Fidesz support: Medián

Medián has the reputation of being one of the more reliable pollsters in Hungary. If poor Mark were still with us he would immediately retort that they are all lousy. OK, let’s say that Medián is the least unreliable. It acquired its good reputation when its prediction was close to the real results of the 2002 elections when most pollsters were sure of a Fidesz landslide victory instead of a narrow loss.

In any case, Medián conducts polls for HVG every month. Medián and other more reputable pollsters have been showing a slow but steady decline in the governing party’s popularity. One or two percent every month which is indeed not significant until one adds it up and it turns out Fidesz has lost about 10% of its support since the elections. That is a sizable number of voters, about 600,000 between June 2010 and February 2011. A brave political commentator, László Kéri, predicted that in the next few months another 400,000 will turn away from Fidesz. How he comes up with such a number I have no idea, but we know that people are disappointed. Viktor Orbán’s popularity is still over 50%, but since last May he has lost 15% of his admirers.

People are fed up with politics in general, and only 41% of the representative sample say that they would definitely vote if elections were held this Sunday. A few months after the elections low participation is the rule, but according to Medián it has never been that low in the month of January after an election. Just to give you an example, in 2003 that number was 68% and even in 2007 it was still 50%.

There is also a huge group of people who today have no idea for whom they would vote. Last June it was 25% of the sample; this month it is 35%. The drop of support for Fidesz that has been slow and steady suddenly became dramatic. In one month Fidesz lost 7% of its support in the voting-age population–that is, about half a million people. These people didn’t flock to MSZP, which still stands at only 12%. The number of those who categorically say that they wouldn’t vote for Fidesz has also grown to 35%. On the other hand, Attila Mesterházy cannot be very happy when he hears that in the case of MSZP that figure is 60%!

Although as far as Fidesz’s popularity is concerned it is only now that there is a significant change for the worse, as far as general dissatisfaction with the state of affairs is concerned it has been noticeable for months. Between November and February more and more people, some 15%, have been feeling that the affairs of state are going in the wrong direction. By now more than 50% of the adult population are pessimistic concerning the future.

As far as the accomplishments of the government are concerned the news is bad for Viktor Orbán. Within three months 13% more people are dissatisfied with the Orbán government’s performance than before. Currently 56% of the people are dissatisfied.

I copied two graphs. The first one shows party preferences over time:


And the one below shows the people’s opinion of the Orbán government’s performance:

A cursory look of the first graph shows that MSZP support has been languishing at an anemic level. Not even dissatisfaction with the Orbán government is providing an uptick. The current leadership is trying to convince us that after such a huge defeat such a state of affairs is not unusual. In fact, they are happy that their support hasn’t shrunk further. By now, however, this excuse is sounding increasingly lame. I’m sure that Attila Mesterházy is a decent man who works very hard at keeping the fractious socialist party together, but the people I talked to all claim that with the current leadership the party will not be able to move out of its slump.

Today’s news is that Gyurcsány’s Democratic Coalition was admitted as one of the “platforms” of MSZP. The decision was unanimous. Mesterházy at last seems to have come around to Gyurcsány’s position that MSZP alone cannot fight this fight. Thus László Puch and most likely Tibor Szanyi lost. Mesterházy also said after the meeting of the board that internal squabbling is killing MSZP. The question now is how they can stop Szanyi from talking. A very difficult task because the man doesn’t know when to shut up. Moreover, he is one of the two MSZP MP’s who managed to get into parliament on their own. That gives him a certain amount of clout within the party.

As for Viktor Orbán and Fidesz I often wonder whether they have all their marbles. The world is crumbling around them while they are dreaming of moving the government to the Royal Castle, developing a museum district, and Orbán again is talking about moving himself into the Sándor Palace where Pál Schmitt currently has his offices. Almost like Nero fiddling while Rome burns.

Verbal encounter on Facebook about the national debt

Viktor Orbán declared war on the national debt and it seems that Ferenc Gyurcsány declared war on Viktor Orbán. Orbán has been on Facebook for almost a year, and I was surprised that Gyurcsány didn't show up on Facebook, which is becoming a national pastime in Hungary.

It looks as if Gyurcsány has thrown himself into politics again. Today it will be decided whether MSZP's leadership is ready to accept his Democratic Coalition platform (with over 4,000 members including non-party members) and thus accept the challenge of reforming MSZP. According to all accounts there will be no question about the embrace although I have no idea what the party will do with the anti-Gyurcsány forces headed by László Puch and Tibor Szanyi.

In any case, once Gyurcsány makes up his mind about something he tackles the task head on with incredible energy. Once he discovered that Viktor Orbán had "declared war on the sovereign debt" on Facebook he decided to write a letter to him on the same subject, also on Facebook.

The tone of the letter is ironic and scathing. Gyurcsány gathers that Orbán would like to understand why the national debt has grown in the last ten years and also wants to know who is responsible for that growth. He would like to help Orbán. "If you answer the questions below, I promise you that you will get closer to the truth. Within a few minutes an entirely new world will open before your eyes. Believe me!"

Here is a rough translation of the text.

(1) Is it true that your government raised the salaries of government employees by 70%?

(2) Is it true that you initiated a subsidy program for the purchase of apartments and houses that cost the budget more than 300 billion forints a year?

(3) Is it true that money spent by your government on infrastructure was not calculated into the budget in order to hide the real deficit?

(4) Did you ever figure out that the Orbán government during 2001 and 2002 left behind a deficit of about 450 billion forints which in eight years would have amounted to a deficit of 12% if your successors hadn't trimmed the budget?

(5) Did Fidesz vote for the thirteenth-month pension for pensioners which cost 300 billion forints every year?

(6) Did Fidesz support the government's proposal in 2005 to introduce built-in guarantees that would have made the growth of sovereign debt impossible once and for all?

(7) Did Fidesz support the 50% raise in state employees' salaries?

(8) Did Fidesz object to giving an extra month of child support?

(9) Did Fidesz raise its voice against the largest and thus the most expensive road construction in the history of Hungary?

(10) Did Fidesz vote against the tax reduction program in 2006?

(11) Did Fidesz support the steps taken between 2006 and 2010 aimed at reducing the deficit and putting an end to the growth of the national debt?

(12) Were you the ones who initiated a referendum that deprived the state of a sizable income and at the same time put an end to reforms designed to create public and individual responsibility?

(13) Did you personally raise your voice against those Fidesz politicians who with their stupid statements weakened the forint and thus increased the sovereign debt?

(14) Did the new government use the past nine months for bettering the national economy or, following the worst traditions of the country, try to figure out how you could possibly further increase the national debt?

But no need to continue. However, to assist your understanding of the issue I summarize here what has happened since 2001.

(1) You, Mr. Prime Minister, in 2001 and 2002 decided to irresponsibly spend an extra 450 billion forints.

(2) Péter Medgyessy's "one hundred day program" created a deficit of 850 billion forints.

(3) My own decrease in the value added tax in 2006 cost the budget an additional 200 billion forints. 

(4) Your own tax cuts this year cost us another 600 billion forints every year.

If I recall properly, then you and your party enthusiasically supported all these expenses or, even worse, some of them were actually initiated by you.

When we tried to correct our own stupidities your reactions were the following:

(1) When Péter Medgyessy suggested cutting expenses at the end of 2003 and 2004 you cried "the death of the nation" (nemzethalál).

(2) I was radically decreasing the deficit from 2006 on, and by 2008 we reached 3.8%. During the fall of 2008 I proposed further legislation in order to cut the deficit further. You and your party rejected all my steps.

(3) Gordon Bajnai from the spring of 2009 on announced further reductions to handle the crisis. You and your colleagues didn't support the prime minister in his endeavors.

Mr. Prime Minister,

You are an irresponsible and cowardly man. Always at the forefront of spending or lending your support to spending but never daring to assist or initiate unpopular cuts in expenses. But now you're in trouble. You know that there is no way of avoiding some hard decisions. You don't have the courage to look the situation squarely in the face and admit that you have made wrong decisions…. 

Since you rejected the reform package of Lajos Bokros in 1995 you have been behaving in a most primitive and most irresponsible way. You promise all sorts of things to the people, you inflame their passions and desires, but shirk from real governing. In my opinion there is the need for self-examination. I suggest that as a first step go into the bathroom next to the study of the prime minister; there is a nice mirror there and please look into it. Then think! Finally judge! But not just others, yourself as well. That could be the most promising day of Hungarian democracy, the beginning of the closing of the last twenty years. Not with revolution. … With sobriety.

Ferenc Gyurcsány, February 25, 2011, Kötcse



A new subcommittee: criminal politicians and the sovereign debt?

First I would like to call attention to a video available on YouTube. Klára Ungár (formerly SZDSZ) organized a conversation with Ágnes Heller. The reason for my mentioning this is because Kata was inquiring whether Heller was ever critical of the socialist governments and my answer was that I remember that in fact she was. On this video Heller repeats some of her objections, among them her conviction that Ferenc Gyurcsány should have resigned after the Balatonőszöd speech became public. The video has five parts. The last two segments are devoted to questions and answers. I found it interesting. Here is the link to the video:

I mentioned earlier that I began a database of political events almost a year ago and one of my topics was "political retribution." That category turned out to be far too wide and therefore lately I made several subcategories by type of case. Yesterday I had to add a new one: "Political retribution–Sovereign debt."

It has become clear to everybody who is following events in Hungary that the present government is bent on sending politicians active in the last eight years to jail. They began with a subcommittee on the events of September and October 2006 which was supposed to prove that Ferenc Gyurcsány, the prime minister at the time, intervened with the work of the police for political reasons. That attempt failed. At the same time Gyula Budai, the chief inquisitor, was sent to look into the case of a land swap between an Israeli-Hungarian businessman and the Hungarian state. Again, they wanted to prove that in this case not only Gyurcsány but also his successor Gordon Bajnai and Bajnai's minister of finance Péter Oszkó were guilty of fraud. But from the Orbán government's point of view this case is not going well. Therefore they came out with a new scheme.

Yesterday it was announced that a press conference would be held this morning dealing with this topic: "an investigation of the greatest political sin will begin." Naturally, an unusually large number of journalists gathered to hear Péter Szijjártó, who didn't disappoint them. He announced that a parliamentary subcommittee has been formed under the aegis of the finance committee that is supposed to investigate  "whether private interests played any role in making the country debt ridden." Szijjártó emphasized that this time he was speaking not in the name of Viktor Orbán but as the vice-chairman of the parliamentary committee on state audit (számvevőszéki bizottság). Surely, Orbán doesn't want to look like the initiator of a new witch hunt against his predecessor and greatest political foe. Because there is no question that the creation of a subcommittee on indebtedness in the last eight years–which Szijjártó generously labelled as eight years of the Gyurcsány era although Gyurcsány was prime minister for only five years out of the eight–aims at finding Gyurcsány criminally liable for the country's indebtedness.

Interestingly enough Péter Medgyessy's name wasn't mentioned although he was really the chief culprit in this indebtedness story when in 2002 and 2003 he raised the salaries of state employees (including those of teachers and doctors) by fifty percent, a move that could be financed only by borrowing. Perhaps in view of Medgyessy's unseemly attacks on his successor his sins have been forgiven by Orbán. However, Ferenc Gyurcsány, János Veres, his minister of finance, and Tibor Draskovics, who served both Medgyessy and for a while Gyurcsány as minister of finance, were mentioned by name.

The chairman of the subcommittee will be József Dancsó, a member of of parliament since 1998, but until now unknown to me. And who will be the vice-chairman? Surprise! Péter Szijjártó himself. And since Szijjártó is Orbán's alter ego it is as if Orbán himself sat on the committee. Szijjártó announced that if the subcommittee finds that any of the socialist politicians were guilty of fraud in connection with the country's indebtedness they will have to face criminal charges. If the current laws don't allow this, they will consider a change in the laws. Sounds familiar, doesn't it?

From MSZP it was Ildikó Lendvai who answered Péter Szijjártó. Yes, the socialist governments are mostly responsible for the large national debt, but the borrowed money was spent on social services and infrastructure, especially superhighways. However, she added that the indebtedness of the country kept growing in the last nine months mostly because of the weakening of the Hungarian currency caused by irresponsible utterances of government officials and by the dubious economic policies of the Matolcsy-Orbán team. In any case, Lendvai said that she could write the script of the future proceedings of the subcommittee although the Fidesz politicians know very well where the borrowed money went.

One more piece of news from today that says a lot about the personality of Hungary's prime minister. Viktor Orbán loves changing offices. During his first term he got it into his head that he would use a room that was originally created to be the prime minister's office at the turn of the twentieth century. Millions and millions were spent on total reconstruction and furnishings. Of course, what was once a fine office is no longer functional in the twenty-first century. Among other things, it was so small that only four people could fit in at any one time.

Medgyessy immediately moved out of Orbán's reconstructed office and as far as I know all his successors were quite satisfied with the room he picked. Not so Orbán. He decided that he needed a bigger office and he picked one all right, the Nándorfehérvári Terem, a huge conference room that is 180m² or 1937 ft². Just to give you an idea of the size of the room, the American president's Oval Office is only 75m² or 816 ft²! I have a vague recollection that this room was often used for state dinners. Szijjártó refused to reveal how much it cost to make this conference room suitable to serve as the office of the prime minister.




A run-down building in Moscow and Russian-Hungarian relations

I'm usually at a loss when I have to deal with legal terms in Hungarian. Here is this "hűtlen kezelés" (unfaithful handling) business. Everywhere you turn you hear about former politicians or businessmen heading state firms committing "hűtlen kezelés." The old and largely useless Országh dictionary lists at least five or six English equivalents which mean obviously different things: fraudulent misuse of funds, fraudulence, malpractice, malfeasance, peculation. Surely it cannot be malpractice. It cannot be fraudulent misuse of funds either because I heard from a lawyer that "hűtlen kezelés" doesn't involve the misappropriation of funds. Eventually I turned to the Hungarian criminal code [§319(1)] and there I found a definition. Someone can be accused of "hűtlen kezelés" if he is entrusted with handling the property of others and he does not follow the rules and regulations. In reality one can read about scores of people who were in one way or the other involved in state property transactions, who didn't demonstrate the necessary caution, and who agreed to a sale disadvantageous to the Hungarian state. This accusation is usually based on some assessor's  decision about the value of the property.

The latest case is a building in Moscow owned by the Hungarian government and used by the commercial arm of the Hungarian Foreign Ministry. The building, erected sometime in the 1980s, was built in the typical shoddy Soviet style of the day. Half of the building couldn't really be used for offices. And there was another drawback: either the City of Moscow or the Soviet government owned the land on which the building stood. In the last twenty years or so the size of Russian-Hungarian trade didn't warrant the upkeep of a large building and thus for a number of years the building stood empty. For years the Hungarian government wanted to sell the property but it couldn't be done without the agreement of the Russian government.

Let me state at the very beginning that the "seller" wasn't the Foreign Ministry because any transaction involving state properties is handled by the Magyar Nemzeti Vagyonkezelő (MNV). Until recently the head of MNV was Miklós Tátrai, about whom I wrote already last December in connection with the Surokó entertainment center. He was accused of "hűtlen kezelés" in connection with that land transaction. Tátrai was barely out of jail when he was arrested again, this time in connection with the sale of the Moscow office building. But Miklós Tátrai wasn't the only alleged culprit. Also cited in the case were Márta Fekszi, earlier undersecretary for foreign affairs, Árpád Székely, former ambassador to Russia, and today the prosecutors even questioned Kinga Göncz, foreign minister at the time. Magyar Nemzet was delighted to hear that they questioned her for three hours.

According to people who know something about the case there is the strong suspicion that this criminal investigation is once again no more than a political witch hunt. One way to direct attention away from current problems (for instance, the ill conceived tax code) is to point to the alleged corruption of former politicians. We are still in the middle of the Moscow affair, but today there was a new "hűtlen kezelés" involving the sale of the post office headquarters. The charge is always the same: they sold under value.

As the former Hungarian ambassador to Moscow explained in Népszabdság, the Russian government pretty well insisted that the Hungarians sell the building to Air Diamond registered in Luxembourg. (The Russian oligarch Viktor Vekselberg, who has close ties to the Kremlin, is in some way involved with Air Diamond.) Earlier the Hungarians tried to negotiate with the Russian government about buying the land on which the building is situated, but to no avail. The Russians weren't selling although they own the land in Budapest on which the Russian embassy stands. As for the choice of the assessor the Hungarians made sure that it was neither a Russian nor a Hungarian firm. Eventually the American (with a huge global presence) Cushman & Wakefield did the assessment; it assessed the property's value at $20 million. In the end Air Diamond paid $23.3 million for the building.

So far so good, one could say. Ah, but here comes the Orbán government's desire to find criminals. The Kormányzati Ellenörzési Hivatal (Government Audit Office) found a Hungarian assessor who was sent to Moscow in the last few months. He announced that the building was sold way below its true market value of $52 million.

Meanwhile Russian newspapers unearthed the fact that if there was corruption it wasn't on the Hungarian side but on the Russian. Viktor Vekselberg in no time sold the building to the Russian government for seven times what he paid for it., an online paper close to President Dmitry Medvedev, a few days ago accused the Orbán government of creating the case against the Hungarian foreign ministry officials in order to put pressure on the Russian government just before Viktor Orbán's visit to Moscow.

Perhaps exaggerates and the current investigation has no foreign policy implications, but the very fact that several Russian papers accuse the Hungarian government of creating a case in order to pressure the Russian government tells us something about the current state of Russian-Hungarian relations.


I'm back with an entirely different topic. Something that we might call the orbanite Kulturkampf. Nothing is being spared. First came the philosophers, then the historians, and now the artists–sculptors, an orchestra, and filmmakers.

Gyula Budai is "investigating" seventy-eight contemporary artists who received grants under the Universitas Program. It was Bálint Magyar, liberal minister of education, who came up with the idea. Crumbling university buildings were being renovated on a large scale. Magyar thought that perhaps the presidents and the senates of the universities would also like to decorate the campuses with contemporary fine arts. Mostly modern statues. I already wrote about the Hungarian right's detestation of modern art. There is a certain pressure from Fidesz supporters to return to the kind of art done in the nineteenth century. Therefore I'm not at all surprised that Budai's attention turned to this, according to him, totally useless project. 

In the world of music there are two famous Hungarian orchestras: the Budapest Festival Orchestra and the National Philharmonic. The conductor of the former is Iván Fischer and Zoltán Kocsis, also a renowned pianist, conducts the National Philharmonic. Kocsis is a favorite of the right. Already during the first Orbán government he received an incredible amount of money to "redo" the orchestra. And when I say "redo" I mean it literally. Apparently before he became the music director and conductor of the orchestra the Philharmonic had worked on a seniority system. Once you got a job there as a young man you stayed and stayed. Kocsis got rid of about half of the orchestra and hired new talent. I'm sure that this was a necessary move and that Kocsis's reforms made the orchestra much better. The problem was that while the Philharmonic got a great deal more money the Budapest Festival Orchestra got less than before. Now that Orbán is back in power, Kocsis is again the favorite. The Philharmonic will receive 300 million forints more than before while the Budapest Festival Orchestra will receive 170 million forints less than last year. Whether the Fischer brothers' outspoken criticism of the government has anything to do with it I don't know, but I have my suspicions.

The Hungarian film industry is highly regarded, but obviously the work of the Hungarian filmmakers is not to the liking of those who are conducting the Kulturkampf. They would like to return to the kinds of films that are entertaining and patriotic. Historical blockbusters are especially to their liking. During the first Orbán government they put an awful lot of money into a film version of István Széchenyi's life and because the actor playing Széchenyi is a bigoted Catholic for his sake even history was falsified. The actor refused to play the role if the truth that Széchenyi committed suicide was revealed in the film. It was at that point that Domokos Kosáry, the doyen of Hungarian history and an expert on Széchenyi who was supposed to be the watchdog over the film's historical accuracy, quit in disgust. The second Orbán government's historical blockbuster will be another very expensive and most likely easily forgettable film on the life of Ferenc Liszt.

The Hungarian government is apparently putting money into a production of the country's national opera, Ferenc Erkel's Bánk bán, that will be staged in Los Angeles. Bánk bán is another hobbyhorse of Fidesz. Besides the movie about Széchenyi, they made a huge financial commitment to a screen version of the opera. Another flop. And now the Hungarian government is footing the bill for a U.S. premier of Bánk bán. One must wonder why no American opera company performed this opera in the last one hundred and fifty years and why the Hungarian government thinks it is necessary to help finance the Los Angeles production.

But back to the Hungarian film industry. A government commissioner in the person of Andrew Vajna, the American film producer who has been an ardent supporter of Viktor Orbán and his party, was named to oversee the industry. Hungarian filmmakers are outraged. While the financing of Hungarian filmmaking was on fairly equitable and solid professional basis in the last four or five years, the industry is in total limbo at the moment. I assume the chaos is not only in the ministries but also in all facets of cultural life.

On February 9th a number of Hungarian filmmakers, including Béla Tarr who just won the Silver Bear at the Berlinale, wrote an open letter in which they rejected the appointment of Vajna as an overseer of Hungarian cinema. After all, they are different filmmakers with different ideas, but now the government wants to "direct" Hungarian filmmaking. After receiving the prize Tarr gave an interview to Der Tagesspiegel. In the interview he made a few very critical remarks about Viktor Orbán's Hungary. For example, that "he lives in a country that is no longer free."The government hates the intellectuals and harrasses them. He brought up the example of the eighty-one-year-old Ágnes Heller. 

Then he went on about the woes of the Hungarian film industry. He himself has three approved projects and although the Hungarian government in writing promised a certain amount of money to support them, everything "was put on ice." In any case, for this government "signed contracts are no more than toilet paper." Without mentioning Vajna's name he called him "a kind a censor who can single handedly make decisions." When the interviewer asked him whether he is considering leaving Hungary and continuing his work abroad, Tarr answered: "I am a Hungarian. This government is changing the constitution and is settling down for twenty years in office. But it is the government that must go–not me."

I guess I don't have to detail the reaction at home. One official after another immediately attacked Tarr. The head of MOKÉP, distributor of Hungarian films, announced that he was very distraught by Tarr's thoughtless remarks. Next came the head of the association of Hungarian movie producers, Gábor Kálomista, who has strong ties to Fidesz. And finally Géza Szőcs, the undersecretary for cultural affairs, announced that when he phoned Tarr to congratulate him the film director told him that what appeared in Der Tagesspiegel was not quite what he said. In fact, it was exactly the opposite.

Apparently Der Tagesspiegel's journalist has the tape of the conversation and the paper has no intention of publishing the correction demanded by Tarr. I'm certain that the filmmaker said exactly what appeared in print. Why is he retreating? I guess because he truly doesn't want to leave Hungary. Orbán doesn't easily forgive or forget. Moreover, criticism of him and his regime has serious consequences. Even so, I regret that Tarr didn't have the guts to stand up and remaining standing.


Hungary and the paradox of the charlatan. Part II by S.K.

Today I enter somewhat obscure territory. My guide, or perhaps my lure and mirage, is the little-known “science” of psychohistory. I am not entirely convinced that psychohistory is really a true science, nor am I fully satisfied by its methods and claims; however, some of the articles I have read in the journal of psychohistory and many of the conclusions expostulated there have given me a good deal of ideas to ponder.

Most of those articles and those claims are based on the understanding, they may even be only assumptions, that a full responsibility is to be attributed to childhood experiences and upbringing of entire nations, or historical personages, for how their history is eventually formed. There are, of course, creditable claims, proofs and evidence provided, psychological and historical in all cases, and if one is willing to accept the thought process and the logic, the theory makes a great deal of sense. The problem is chiefly that there are a lot more factors contributing to the events of history than just the personal, or mass characteristics of the actors. Nevertheless, as I hope to show, there is certainly a fascinating additional dimension to the history and a possible opportunity for forecasting, by deploying the analysis offered by psychohistory.

I intend to examine here the personality of Viktor Orbán with the application and the benefits of psychohistory.

We don’t need too many reminders to describe Viktor Orbán. He is a consummate competitor, sensitive to criticism, and notoriously short on convictions. He is the political personification of a street fighter, constantly looking for the fight where he can win and shying away from any challenge too risky. Orbán is a quick study, but lacks the thoroughness necessary for intellectual credibility and uses superficial rhetoric, often rude and ill-considerate, instead of convincing arguments befitting a true politician or the statesman he purports to be. All this, however, is far from giving a complete description of the man, but may be enough to support an examination for an analysis. Can it be that all the complaints, the derision and sometimes even disgust towards him personally are justified on the grounds of his upbringing? Can it be that looking at him we see a budding tyrant in the making, who, like a few before him, is pitting his will against the circumstances, and with the self-serving help of an increasing number of toadies and sycophants, is bending history to his own purposes?

Benito Mussolini was the son of an ill-tempered blacksmith who was frequently drunk and always violent. Young Mussolini was often beaten and was sent away from home to school quite early. Soon after he knifed a schoolmate and he was expelled.  In the secondary school he had three more knifing incidents, but although expelled again every time, he was allowed back to the school on account of his brilliance in languages and literature. The early maltreatment at his father’s hands, however, marked him for life as a brute, and a merciless egoist.

Adolf Hitler’s father was a customs officer, completely devoid of any empathy. Although he lost numerous children shortly after their birth, he was disinterested in parenting; at the time of Adolf’s birth he was also nearly fifty, a violent drunkard. He was considered even by his friends to be “awfully rough” with his wife and children and relieved his distemper by picking on them. Adolf was also moved out of the family quite young.

Joseph Stalin was also the son of a violent, hard drinking man, a shoemaker, who wanted to prevent him from studying. Stalin was sent away to school at age fifteen.

Győző Orbán (Gyõzõ name is the Hungarian equivalent of Victor or Viktor), Viktor Orbán’s father, was a narcissistic, authoritarian father, so solipsistic that he gave his own name to not one, but two of his sons. Viktor's younger brother is also called Győző. He was a local secretary in the Communist Party and was also known to be violent with his children. He was a follower of the nineteenth-century mostly German child rearing methods, perhaps unwittingly, raising children so rough, so as to harden them for life. Viktor was often beaten by his father.This is not at all unusual in Hungary.

Viktor Orbán early on recognized the necessity of education beyond regular schooling. He spent considerable time being tutored by János Kis, Gábor Fodor and others who prepared him for his role as an opposition to the communist regime of the time. But being the pragmatist that he is, when he realized that in the shadow of the true professionals, such as his earlier mentors and the actual real opposition to József Antall’s failed conservative government, the liberals, his party wouldn’t have any prospects of forming the government any time soon, he decided in 1994 to turn his small but noisy party into the replacement of that conservative formation: MDF. He managed to do so in record time, in two years. During this forced march from the left to the right, he discovered the various ways of the street fighting techniques he has been using ever since: nationalism, clericalism, Jew baiting, and irredentism. He also learned the ways of the Hungarian political reality: corruption.

With every move he made since the turnaround in 1994 he was aiming to establish his authoritarian position, first within his party, then with the establishment of the nationwide network of “civic circles” he injected the venom of authoritarianism into society at large. All the while duplicitously claiming to appeal only to the authority of the “people.” This is how he lured the demonstrators to the streets of Budapest in 2006, enticing them to riots, and fomenting a coup d’état, as it turned out unsuccessfully.

All along the way Orbán solidified his absolute power in his party and as a result gradually believed, as he believes today like his inglorious predecessors, that he is anointed to be the saviour of the nation, but what is more, because of his exalted calling he is entitled to do almost anything for the goal; be that legal, or illegal, popular, or not, useful, or harmful, doesn’t matter, he has a calling and he is only willing to follow that. This is why he is not ready to commit himself to any course or program. It must be taken on faith that he will always do the right thing and no evidence to the contrary can dissuade him. That would be deleterious to his nimbus, therefore, he would rather risk any mistake and deny it, than correct the mistake or admit it.

Just like the dictatorial forebears, and in full compliance with the expected outcome of his conditioning, Orbán is fighting the eternal fight of good against evil: he is the Good and everybody else is evil. His statements and declarations of this ceaseless war are couched in the customary religious terminology, to dispel any doubt about its divine nature. Evil is the opposition, the EU, the Americans, the Jews, capitalists and communists, employers and employees, the liberals etc. all of them conspiring against him and his own Nation; his vigilance and fighting spirit cannot rest for a moment. But that is not all. Actually, he is demanding and getting absolute submission from his followers, no differences of opinions are allowed, let alone considered, based on the mutual understanding that he and he alone is called to conduct and win this glorious fight.

Well, what can we expect from the Street Fighter of the Nation, the dear and irreplaceable leader? Where will he lead his docile flock?

I shall attempt to answer that question next time.






Still about Ferenc Gyurcsány

Although some people claim that Ferenc Gyurcsány is a man of the past who has no political future, his speech on February 18 created quite a storm. According to Ádám Mirkóczki (Jobbik) if the Fidesz government took its job seriously and did what it promised, Gyurcsány would have made his speech from inside a jail cell.

The spokesman for Fidesz was Lajos Kósa, one of the vice presidents of the party, who claimed that "Ferenc Gyurcsány proved again that he is a huge burden for Hungary." Considering the latest fiascos Hungary has been facing because of Viktor Orbán, I would have been quiet if I had been Kósa. Of course, as they say, the best defense is a good offense, and Fidesz runs an excellent offense.

Kósa then listed all of Gyurcsány's sins, including ordering the police to "blind ordinary pedestrians' eyes" on October 23, 2006. Although Gyurcsány in the speech made it quite clear that he doesn't want to establish a new party but to renew MSZP as a modern social democratic party, Kósa's reading of this particular part of the speech was different. Most likely it was wishful thinking on his part: he figured that Gyurcsány wants to split the left and remarked with considerable glee that "even his own comrades think that he has no place in MSZP." Although I'm sure that certain people within the party would be very glad if Gyurcsány left MSZP, I don't think that this is true about the majority of the more important politicians in the party.

Ágnes Seszták of Magyar Nemzet wrote an editorial entitled "Ninety minutes of hatred." Any normal person who read the text distributed by Demokratikus Koalició, the platform Gyurcsány created within MSZP, knows that in fact it isn't "hatred" that motivates Gyurcsány but his belief that Orbán is abandoning the democratic regime that functioned reasonably well in the last twenty years. Nine years ago Gyurcsány was ready to have a political dialogue with Fidesz, but since then he has come to the conclusion that Orbán wants to "annihilate the left" and thus establish a one-party system. This is not a "pathological hatred" of the man but simply a recognition of the nature of Orbán's politics. Seszták sweeps aside all of Gyurcsány's criticisms of Orbán's undemocratic governance of late by saying, "too bad but Fidesz has a two-thirds majority." So, long live the dictatorship of the majority, which never was really two-thirds of the voters, and soon enough it may not be even a simple majority if the dissatisfaction with Fidesz spreads further.

Gábor Török also disagrees with Kósa. He read Gyurcsány's speech the way I did. Gyurcsány "will not give his rivals the satisfaction of seeing him create a new party." Török rightly points out that it is difficult to analyze Gyurcsány calmly and in a measured way because he has been "demonized and heroized" to death in the last four or five years. Török found his speech middle-of-the-road and his messages not terribly different from those of most of the MSZP leaders. And indeed both Péter Kiss and Attila Mesterházy agreed with practically everything Gyurcsány had to say.

From Török's blog the right-wing media quoted one sentence with great satisfaction: "While acknowledging Gyurcsány's unquestionable political talents, I must say that in my opinion there are only two things that keep him alive, make him really important: on the one hand Viktor Orbán, on the other, MSZP." I might add here that those who quote him usually leave out the phrase that refers to Gyurcsány's political skill. But Török continues: "(1) As long as Orbán is leading Fidesz (and specifically the country) the more than half a decade of single combat between the two of them might be exciting and interesting; and (2) there is no other politician in MSZP with the charisma, ability to convince, strategic thinking, and other qualities necessary to be considered an unquestionable leader."

Gyurcsány in his speech mentioned "betrayal" in connection with the speech at Balatonőszöd that was made public. As things stand now, Gyurcsány claims that he doesn't know who the betrayer was, something that is difficult to believe. My feeling is that he didn't want to have a huge internal upheaval that would split the party. We know who were and are Gyurcsány's sworn enemies in MSZP: Katalin Szili who left the party and now is creating a constitution hand in hand with Fidesz, Tibor Szanyi who makes no secret of his feelings, Imre Szekeres, and László Puch.

Here is an excellent cartoon published in One must know that "to screw" someone in Hungarian actually means "to put a knife in his back." The implication is clear: Gyurcsány was betrayed by his own comrades.

Gyurcsanyt furjak I left Puch to the end because he just gave a very lengthy interview to József Nagy in Puch is the éminence grise of MSZP. He is the treasurer of the party. He holds the purse strings and, since all the parties have more money in reality than on paper, he is a powerful man of many secrets. As became known a few months ago there has been bad blood between Gyurcsány and Puch for a long time, and it seems that Gyurcsány lost that battle. Gyurcsány complained that it was an untenable situation that the president of the party is powerless because he cannot learn the financial situation of the party and, an even more serious problem, he has no say over how to spend the funds. Instead of Gyurcsány, Puch was actually running the party as he is running it now. The purse strings of Fidesz are held by Lajos Simicska, an old friend of Orbán from high school days, but Simicska's activities are supervised by Orbán. Simicska works for Orbán. In MSZP that wasn't the case. On the contrary, Puch worked against Gyurcsány.

László Puch makes no secret of his hatred of Gyurcsány and of his desire to see him outside the party. In fact, he predicted that "soon it will be clear whether Gyurcsány submits to the majority of the party or he leaves." He also admitted that Attila Mesterházy is his man and that he helped him to be elected president of the party. When József Nagy, the journalist, kept probing about Puch's allegedly good relations with some Fidesz politicians, including his counterpart in Fidesz, Lajos Simicska, Puch was evasive but emphasized that he was "always ready to compromise." Gyurcsány in his speech said that there are some people in the party who think that there is room for negotiation with Fidesz, but he thinks that as long as Viktor Orbán is leading Fidesz it is worthless even to try to create some kind of modus vivendi. Orbán will consider it a sign of weakness.

So, some people inside of the party, like Puch, Szanyi, and Szekeres could do Fidesz a favor and get rid of Gyurcsány, but I don't think that it would help the left-liberal cause. But not only the right and the left think in terms of an MSZP without Gyurcsány. There are also many liberals who think that Gyurcsány is wasting his time on his old party. He should make a clean break and establish a liberal party of his own.

One journalist who advocates that road is László Bartus, editor of Amerikai-Magyar Népszava. His argument rests on the betrayal of Gyurcsány in the summer of 2006 when someone handed over the text of his speech at Őszöd. If Gyurcsány stays in the party, he must reveal to the public the name of the person who was responsible for this dastardly deed. The country has the right to know who caused the catastrophe that occurred in Hungary. "The handing over the text of the speech paralyzed the functioning of the government, created a domestic crisis of earlier unknown magnitude, made a battlefield out of Budapest, almost caused a Fidesz-backed coup d'état, and finally led the way to the 'revolution' of the two-thirds majority. Who was capable of betraying his party, sacrificing the future of the country, throwing his own prime minister to the enemy to weaken his position and cause his downfall?" If Gyurcsány remains in the party he will have to face the same man or men, says Bartus. The question is whether Gyurcsány would be willing to go that far.







A glimpse into the inner workings of a Hungarian ministry

It doesn't happen too often that one reads an interesting story in a newspaper (Origo) about the total chaos that reigns in an important  government office and one can say: "Oh, yes, I know all about this." But this is what happened to me yesterday.

I have a friend who has a friend who has been telling my friend incredible stories about what's going on in an important agency she is working for. According to her, the office's 230 employees have absolutely nothing to do because the government decided to "reorganize" it, and the new undersecretary in charge of this office didn't have enough time to figure out what to do with either the office or the employees. For almost two months now–the reorganization took place on January 1, 2011–the highly qualified economists receive their salaries but because of lack of work spend their time surfing the net, chit-chatting, and worrying about their futures. According to the people who were willing to talk, they wouldn't be missed even if they didn't show up, but they are too conscientious to skip work entirely.

That would be bad enough in any office, but this particular agency is a very important one. Or at least it was very important until the Orbán government decided to "reorganize" it. It is the former Hungarian Investment and Trade Development Agency (ITD Hungary) that was founded in 1993 by the Hungarian Ministry of Economy and Transport (today György Matolcsy's Ministry of National Economy) to help implement the government's investment and trade promotion policies. It functioned as an independent corporation and was not part of the state apparatus.

This is a large organization with eighteen regional offices, and through the embassies' commercial attachés it is present in forty-three different countries. Its job is to entice foreign investors to Hungary. Until December 31, 2010, ITD Hungary Zrt. operated as the Hungarian government's investment and trade development agency. But then they decided to "nationalize" it. On paper the agency's functions have been taken over by a new department, Nemzeti Külgazdasági Hivatal (NKH; National Foreign Economy Office). The reality is something else.

The agency's former "owner" through the Magyar Fejlesztési Bank (Hungarian Development Bank) became the new National Development Ministry of Tamás Fellegi. But with the reorganization of ITD, the new National Foreign Economy Office ended up in György Matolcsy's ministry. ITD is gone and the new NKH has nothing to do. That is the upshot of it. It also means, of course, that Hungary's efforts at promoting foreign trade have come to a halt. ITD at the time of the changeover was busy with fifty different projects which cannot move forward. I can well imagine what the foreign partners think of all this.

If I understand it right, the problem is that the National Development Ministry didn't do anything about moving ITD's assets and employees over to Matolcsy's ministry. The only thing that has happened up to date is that 150 employees received a letter in which they were informed that NKH is ready to take them over. On what basis these 150 people were chosen no one knows. It is also not at all clear what will happen to the rest of the employees. But even those who received an offer are not exactly eager. As government employees their pay will be considerably lower than before when they were not in the civil service. In any case, everybody is looking for a job. Even the higher-ups are doing the same, even the ones the Fidesz government appointed to head the new "phantom" agency.

During the long days when they are not surfing or looking for jobs the employees are trying to figure out what exactly is going on. According to rumors Zsolt Becsey, undersecretary in charge of foreign trade in Matolcsy's ministry, is too busy to bother with such trivial matters as the fate of the agency. He also has something to do with the EU presidency and hence has no time to take care of the "ex lex" status of ITD/NKH.

The situation is no better in the regional offices. When Origo's journalist tried to inquire from the spokesmen of these regional agencies, he was told that "they are strictly forbidden to give out any information" to the media. One of them laconically said: "The only thing I can say is that the situation is the same as in Budapest." These regional centers didn't receive any information about their fate. But apparently there is a document signed by György Matolcsy at the end of January stating that instead of eighteen regional offices there will be only six: in Győr, Szeged, Debrecen, Miskolc, Pécs, and Székesfehérvár.

Origo talked to the president of the agency, but she knew nothing. The reporter visited Fellegi's ministry and learned that it is Matolcsy's ministry who is in charge and therefore all questions should be addressed to that ministry. At the time the article was written no answer had come from Matolcsy's ministry to Origo's questions concerning ITD/NKH.

This is a very serious situation. Hungary needs foreign investment, and the office that is supposed to deal with foreign trade is not even set up yet. Foreign investors already had a cold shower or two with the Orbán government's decision to levy extra taxes on them. You may recall that the CEO of Deutsche Telekom was especially upset. He was in fact so upset that Deutsche Telekom's new financial service center that will employ 500 people will be established in Bratislava and not in Hungary.

Between the total chaos in the foreign trade department and the extra taxes on foreign companies there is likely to be a negative effect on foreign investment in Hungary. It will be interesting to watch the statistics.