Home > Uncategorized > Another new Hungarian economic plan that will hit the dust

Another new Hungarian economic plan that will hit the dust

August 29, 2012

This time the plan is named after Sándor Wekerle (1848-1921) who was Hungary’s prime minister and finance minister three times. Whenever I hear his name two things come to mind. First, that he was the first Hungarian prime minister who was not titled, and second, that he was the brave man who forced through the Civil Marriage Bill of 1894. Mind you, he immediately lost his job afterward thanks to the opposition of the powerful Hungarian Catholic Church.

Sándor Wekerle, 1848-1921

An interesting footnote to this Civil Marriage Bill. It made a civil marriage ceremony compulsory for couples who could hold a church ceremony only after showing the certificate to the church authorities. This was the bill that Viktor Orbán during his premiership between 1998 and 2002 wanted to abolish. It seems that Wekerle’s sins have been forgotten by the Hungarian prime minister if he is willing to name one of his many plans after him.

What is the Wekerle Plan? “It is an outline for the growth of the Hungarian economy within the Carpathian Basin.”  The Plan recalls that the European Union is keen on closer integration and therefore the countries of the Carpathian Basin minus Austria and Ukraine east of the Carpathian Mountains should  at least match the development of integration that has taken place over the years in Western Europe. The Wekerle Plan is no less than “a document of the Hungarian government’s economic strategy for the whole region.” As one irreverent commentator said, this is the plan for “the export of Matolcsy’s fairy tale to the other countries of the Carpathian Basin.”

But I fear that it is much more than that. It seems to me a government attempt to subsidize Hungarian small and medium-sized companies to invest in the neighboring countries where a fair number of ethnic Hungarians live. Such a business expansion would naturally bring added benefits to the political goals of the Orbán government. “The tripe that was expanding beyond the pot” suddenly makes good (or at least better) sense. I’m just wondering what the neighbors will think of this grandiose plan that seems to be for the most part in the sole political and economic interests of Hungary. As far as I can figure out, the Hungarian government prepared this document without ever consulting with any of the other governments in question.

In order to accomplish the goal outlined in the Wekerle Plan “the Hungarian government considers the Hungarian communities in the neighboring countries as strategic allies.” It is, however, very possible that Romania and Slovakia, where the Hungarian minorities are substantial, might find this strategic alliance threatening.

Although the document goes on for 24 pages, the essence of the plan is that “the New Széchenyi Plan will be extended to the whole Carpathian Basin.” And since the document freely admits that the bulk of the money will be coming from the European Union, one must assume that the subsidies from the convergence program will be used to enable Hungarian economic penetration into these countries, thus strengthening the Hungarian areas in Romania, Slovakia, Ukraine’s territories south of the Carpathians, and parts of Serbia’s Voivodina region. According to the plan, “by 2020 the countries within the Carpathians should be an economic area whose integration is as well developed as in Western Europe.”

I was pleased to hear that the “Wekerle Plan is an organic part of the Hungarian Growth Plan and of the Great Reform Book that shows the Hungarian path to sustainable growth and employment.” Well, I heard something about the Hungarian Growth Plan about a year ago that came to naught, but I must admit that the Great Reform Book is entirely new to me. What could that be? Poor Mao had only his little red book; Orbán’s book, presumably tricolored, is “great.”

The plan outlines five areas of cooperation: the automotive and engineering industries, green economy, food industry, tourism and healthcare, and creative industries and info-communication technologies. The plan concentrates on small and mid-size companies. These firms must be “internationalized,” meaning they should be introduced to international competition. This would be made easier by their expansion into the neighboring countries where there are Hungarians and therefore the language barrier is not such a problem. There will be all sorts of benefits from the Wekerle strategy for Hungary: more exports to the neighboring countries and a greater economic influence in the countries of penetration.

For all this one needs cheap financing. Financial institutions must be set up; they will get funding from the European Union (New Széchenyi Plan) and the Hungarian government. For example, the plan specifically mentions the Magyar Export-Import Bank (Eximbank). But the Hungarian government is also contemplating establishing think-tanks specifically for the study of issues related to Hungarian economic expansion beyond the borders. For example, a brand new Kelet-Közép-európai Növekedéskutató Intézet (East-Central European Research Institute for Economic Growth) will be established. Another institute specifically mentioned is the Kelet-Közép-európai Közlekedéstudományi Intézet (East-Central European Research Institute for the Study of Infrastructure).

An important aspect of the Wekerle Plan is the creation of a unified labor force that would be able to move freely from country to country within the region. The training of the labor force should be “uniform in all the countries involved.” Is Hungary supposed to export the Orbán government’s zany educational ideas for skilled workers? That is, minimal intellectual content provided for trade schools that might not be enough to fulfill the needs of today’s computer-directed economy. And what about the rather low mobility of the Hungarian workforce? Would a Hungarian company whose headquarters are in Hungary be able to convince its some of its workers to move to Slovakia, Romania or Ukraine? Although here and there one can hear about Hungarians living close to the Romanian border being employed in factories on the Romanian side, I have the feeling that this is rare occurrence. On the other hand, one hears a lot about Slovaks working in German-owned automobile plants. Lately most Hungarians are moving to Germany or England, and not necessarily because they don’t have a job. They are fed up with the Hungarian situation that they consider hopeless.

It seems to me that the Hungarian government, after failing to create the north-south axis that Viktor Orbán envisioned among the countries from the Baltic to the Adriatic, has lowered its sights to the Carpathian Basin. But any reference to this particular geographical area raises suspicions. What is behind this plan?

One could look upon the scheme as an attempt to extend political influence over the Hungarian minorities in the neighboring countries. As the Slovak and Romanian examples show, however, the Hungarians there are an independent-minded lot and don’t want to take orders from Budapest. But if the political maneuver didn’t work, perhaps through economic penetration the Orbán government could have more influence on the Hungarian localities.

The other possibility is that Hungarian government through economic penetration is trying to extend its political influence in the region. In brief, through the back door of economic expansion the Orbán govenment is trying to accomplish its long-standing nationalistic agenda. All that on European Union and Hungarian taxpayers’ money.

My feeling is that nothing will come of it, but I hope that the European Union’s politicians will keep an eye on the situation. And if they don’t, I’ll bet that the governments of the neighboring countries will.

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  1. GW
    August 29, 2012 at 6:12 pm | #1

    Once again the “young democratics” are showing off the source of their ideology. This government loves central economic planning even more than the Communists did. back in the day. the Communist-led countries were satisfied with making a new plan only every five years.

  2. Minusio
    August 29, 2012 at 6:15 pm | #2

    As Orbán hasn’t managed to make the domestic Hungarian economy grow (in fact it shrank the second consecutive year), I doubt he will do much in terms of competitive, border-crossing expansion of SMEs.

    Of the Mercedeses that will be produced in Kecskemét only 7% of the components will be supplied by bona fide Hungarian companies. Daimler looked around for more suppliers within Hungary, but technical standards and quality were too shoddy.

  3. petofi
    August 29, 2012 at 7:00 pm | #3

    More and more, Orban makes me think of a Marx Brothers’ picture–Duck Soup–with Orban as Rufus
    T. Firefly. It’s probably how neighboring countries
    view the increasingly erratic and bizarre speculations
    of Viktor. These plans of his have no ingredient of cooperation with the neighboring countries, as if
    borders did not exist. Certainly, it seems to be all
    political. I think Hungarians in other countries know
    the native tricks and see Orban/Fidesz power
    grab with ex-country voters as their ladder. Won’t
    work. Just the usual imaginings of a sick, Hungarian
    mind.

    Orban’s mind may soon explode from inner contradictions: he wants to leave the EU yet every
    developmental plan depends on EU money.

    Somebody ought to stick a thermometer into this boy and check his temperature…

  4. August 29, 2012 at 7:22 pm | #4

    There is a place in Budapest called Wekerletelep (Wekerle district or estates). At the beginning of the 20th century Wekerle was instrumental in building cheap comfortable houses with gardens for government employees.

    You can read about it in the Wikipedia: http://en.wikipedia.org/wiki/Wekerle_estate

    This plan is like a mini EU within the EU lead by Hungary. The impertinence of our cross eyed genius is just mind-blowing. We are dead last in everything you can imagine and he thinks that the neighboring countries can’t wait to get into something with us.

    The world is screaming at him “you are a moron” but he just doesn’t get it. Comparing Matolcsy to movies Austin Powers comes to mind:

    What’s your point, Vanessa? Don’t like my economic plan?

  5. Some1
    August 29, 2012 at 10:34 pm | #5

    I am sorry but I am very busy tonight, so I just want to bring into the attention to those who understand Hungarian the following article:
    http://www.stop.hu/belfold/megfurtak-mar-nem-kiemelt-gazdasagi-projekt-a-vati-repter/1075061/
    WHat is important for Orban and his busy buddies in the newer economical exercises? To gain some new market to build their own little economical empires. The article is about a cancelled airport that Orban originally agreed to build to service some Chinese distribution centre, but suddenly got cancelled….

  6. wolfi
    August 30, 2012 at 4:08 am | #6

    Just read the wiki article on the Wekerle estate – this makes me really proud (Being a Schwab myself) of the Schwabs like Wekerle in Hungary. Such a wise man, especially his ideas of civil marriage in those days …

    What a pity that they use his name for crappy plans!

    BTW the name (originally Weckerle, which is common in southern Germany and Switzerland) is rather sweet:: -le means “little” (in high German it’s -lein) – it might be connected to “Weckle”, i e zsemle.

  7. CharlieH
    August 30, 2012 at 6:11 am | #7

    London Calling!

    “…… It made a civil marriage ceremony compulsory for couples who could hold a church ceremony only after showing the certificate to the church authorities.”

    Eva – I can’t understand what the ramifications of this sentence means? You you clarify please?

    Regards

    Charlie

  8. CharlieH
    August 30, 2012 at 6:11 am | #8

    …would you clarify please!

  9. August 30, 2012 at 6:20 am | #9

    CharlieH :

    London Calling!

    “…… It made a civil marriage ceremony compulsory for couples who could hold a church ceremony only after showing the certificate to the church authorities.”

    Eva – I can’t understand what the ramifications of this sentence means? You you clarify please?

    Regards

    Charlie

    It meant that one didn’t have to have a church wedding in order to be legally married. If a couple also wanted to have a church wedding it was their business but the state recognized only the civil marriage.

  10. konga hunga
    August 30, 2012 at 6:52 am | #10

    Petofi is right: – “I think Hungarians in other countries know the native tricks and see Orban/Fidesz power grab with ex-country voters as their ladder. Won’t work. Just the usual imaginings of a sick, Hungarian mind.”

    Some1 is even more right: – “WHat is important for Orban and his busy buddies in the newer economical exercises? To gain some new market to build their own little economical empires.”

    Eva is also right: -”It seems to me that the Hungarian government, after failing to create the north-south axis that Viktor Orbán envisioned among the countries from the Baltic to the Adriatic, has lowered its sights to the Carpathian Basin. But any reference to this particular geographical area raises suspicions. What is behind this plan?”

    Conclusion: Orban clique must go.

  11. CharlieH
    August 30, 2012 at 7:42 am | #11

    London Calling!

    Thank you Eva.

    Yes – presumably even now, Hungary only recognises ‘civil’ marriage?

    In a fiercely ‘Orban’-converted, Roman Catholic non-secular society?

    Strange indeed!

    Regards

    Charlie

  12. Cherry17
    August 30, 2012 at 7:51 am | #12

    ‘ For example, a brand new Kelet-Közép-európai Növekedéskutató Intézet (East-Central European Research Institute for Economic Growth) will be established. Another institute specifically mentioned is the Kelet-Közép-európai Közlekedéstudományi Intézet (East-Central European Research Institute for the Study of Infrastructure).’
    Wow, there are going to be some new opportunities to channel the money to the cronies.
    I don’t think the EU will be happy about it.

  13. oneill
    August 30, 2012 at 7:52 am | #13

    “It seems to me a government attempt to subsidize Hungarian small and medium-sized companies to invest in the neighboring countries where a fair number of ethnic Hungarians live.”

    I am presently employed by a company. I would love eventually to set up my own small enterprise and would definitely need at least 3 employees to reach a market which I know for sure is there both in Hungary and in certain parts of Transylvania.

    What stops me:

    1. Cost. Despite the superficial attempts to bring this down running a small business is expensive in terms of taxation and other byzantine government contributions.
    2. Bureaucracy. It has never been easy to deal with the incompetent and uncaring morons who populate Hungarian bureacracia. Despite, again superficial attempts to remedy this, those morons remain and indeed flourish in Orbanistan 2012.
    3. Uncertainty. OK, there is always uncertainty in branching out in your own at the best of times, even more so in the present economic climate. But not knowing what crazy scheme the government might introduce today afternoon never mind in the next year and half is one element of uncertainty too much.
    4. Corrupt state tendering practises and lack of transparency. If I compete for a contract even at local government level I know I won’t get it- I ‘m not Fidesz and I am a foreigner.

    It is within Orban’s power to remedy all of these points but he won’t. His clique would lose their economic power and more importantly, a class of independent-minded business-folk would start to pop up. And whatever else Orban might tolerate, folks with independent minds are defo non-kosher.

  14. CharlieH
    August 30, 2012 at 8:49 am | #14

    London Calling!

    Cherry17: There will be more ‘regional’ offices set up – 12 in total by end of this year.

    There are four already in Romania – and one in Serbia.

    Jobs for ‘Hungarians’ abroad! And trouble from the natives too no doubt!

    I am surprised that Romania has allowed them considering what Hungary has been up to – and their irredentist plans.

    Regards

    Charlie

  15. August 30, 2012 at 9:33 am | #15

    CharlieH :

    London Calling!

    Thank you Eva.

    Yes – presumably even now, Hungary only recognises ‘civil’ marriage?

    In a fiercely ‘Orban’-converted, Roman Catholic non-secular society?

    Strange indeed!

    Regards

    Charlie

    Yes, the 1894 Civil Marriage Act still stands. I don’t think that Orbán wants to take up the issue again. There was an outcry during his first try.

  16. gdfxx
    August 30, 2012 at 12:24 pm | #16

    wolfi :
    Just read the wiki article on the Wekerle estate – this makes me really proud (Being a Schwab myself) of the Schwabs like Wekerle in Hungary. Such a wise man, especially his ideas of civil marriage in those days …
    What a pity that they use his name for crappy plans!
    BTW the name (originally Weckerle, which is common in southern Germany and Switzerland) is rather sweet:: -le means “little” (in high German it’s -lein) – it might be connected to “Weckle”, i e zsemle.

    Maybe it’s connected to the little alarm clock (vekker) ;-)

  17. petofi
    August 30, 2012 at 12:32 pm | #17

    konga hunga :
    Petofi is right: – “I think Hungarians in other countries know the native tricks and see Orban/Fidesz power grab with ex-country voters as their ladder. Won’t work. Just the usual imaginings of a sick, Hungarian mind.”
    Some1 is even more right: – “WHat is important for Orban and his busy buddies in the newer economical exercises? To gain some new market to build their own little economical empires.”
    Eva is also right: -”It seems to me that the Hungarian government, after failing to create the north-south axis that Viktor Orbán envisioned among the countries from the Baltic to the Adriatic, has lowered its sights to the Carpathian Basin. But any reference to this particular geographical area raises suspicions. What is behind this plan?”
    Conclusion: Orban clique must go.

    Nobody has yet tackled the question why Orban is, knowingly, ruining the country.

    I think that proposition ought to be examined…

  18. August 30, 2012 at 1:10 pm | #18

    Good folks…this is already going on see:http://www.huro-cbc.eu/en/

  19. August 30, 2012 at 1:16 pm | #19

    “The Romania – Hungary cross border cooperation program, which started in 2007, includes almost 400 projects so far, with EUR 150 million EU funding. The two countries already agreed on the program and priorities for the next similar program, from 2014 to 2020.”

    and the Romanians obviously know about it!

    http://www.romania-insider.com/eur-68-mln-worth-of-projects-in-romania-hungary-cross-border-cooperation-project/63480/

  20. Ron
    August 30, 2012 at 1:33 pm | #20

    Louis Kovach :
    Good folks…this is already going on see:http://www.huro-cbc.eu/en/

    This website is talking about “Hungary-Romania Cross-Border Co-operation Programme 2007-2013″

    The Wekerle Plan is only an Hungarian case. “The Ministry pointed out: one of the most important elements of the institutional system of the Wekerle Plan is the Carpathian Region Business Network, which will be built up within the cooperation between the Hungarian Investment and Trade Agency and the Hungarian Chamber of Commerce and Industry.” http://www.autopro.hu/news-in-english/Wekerle-Plan-new-opportunities-for-supplier-networks/4321/#top

  21. GW
    August 30, 2012 at 2:52 pm | #21

    Yes, Louis Kovach, there has been a successful and non-ethnic-discriminatory program in place, organized under the previous government with the opposition of the Fidesz caucus. Rather than build honestly on that success, the new program has been packaged as a “plan”, Soviet-style, given a name intended to create a nationalist veneer, and is being sold to the public for its focus on cross-border ethnic Hungarians.

  22. Kuner
    August 30, 2012 at 3:04 pm | #22

    Dear Mr. Kovach. The diffrence between EU funding mentioned in your link and funding assumed by Hungarian goverment is – motivation:-)
    To me as Slovakian citizen is clear motivation of Hungarian government (nationalistic dreaming)However if Hungarian government is willing to spent taxpayer money in Romania or Slovakia – Why not?:-)

  23. GW
    August 30, 2012 at 3:15 pm | #23

    Petofi wrote:

    “Nobody has yet tackled the question why Orban is, knowingly, ruining the country.

    I think that proposition ought to be examined…”

    A very serious question. There are three possible answers, and I’m not certain which is worse:

    The first is that he honestly believes he is doing the right thing and, in his admixture of self-deception, reckless improvisation, and plain incompetence, is unintentionally bringing down the whole country.

    The second is that he knows that his policies will fail the Hungarian state and the general public over the next generation, but they can be sustained long enough to ensure that a small circle of cronies enrich themselves in the meantime with enough state assets to recreate the ownership class that existed before the Socialist era. The “theory” behind this is that these neo-aristocrats, in place of foreigner investors, will then provide the capital to rebuild a productive Hungary and, eventually, there will be some trickle-down phenomenon. Putting aside any opinion on the likelihood that there will be adequate and appropriately placed investment capital from this route and that such a trickle-down will be successful, it is clear that the government has implicitly accepted the brutal fact of the impoverishment of a majority of the population — from landless agrarians now reduced to sharecropping to urban populations with no educated middle class — for at least the next generation. This is drastic, but entirely consistent with the Fidesz obsession with a romanticized view of life in Hungary before the first world war, the profound inequality included.

    The third is that he is still so embittered by electoral defeat in 2002 and 2006, that he has decided to extract as many assets as possible from the state and leave office only when there’s nothing left to take.

  24. Kirsten
    August 30, 2012 at 3:25 pm | #24

    GW, I actually think that the first and the second point both apply because in OV’s logic they are the same: he is doing the right thing in that he tries to establish the “traditional” Hungarian order of a landed aristocracy = the magyars (he and his cronies) and a poor rest. In my impression he tries to believe that there is no need to be “modern”.

  25. Minusio
    August 30, 2012 at 3:34 pm | #25

    I think there is truth and plausibility in all three explanations. The crucial point is probably: How intelligent is this man really? What is certain is that he took an oath that what happened to him in 2002 will never, ever happen again. And he pretty much made sure it won’t.

  26. petofi
    August 30, 2012 at 3:39 pm | #26

    @ GW:

    “trickle-down”….I remember many years ago, as I sat in my Diamond cab before the Toronto Star building when a nubile young reporter asked me whether ‘the new economic
    boom had trickled down to me in increased income. Yes, I said, but let me tell you how it
    works. If I want extra income, I stay out and work the 13th hour.

    Forget about ‘trickle down’ and increased investment from the rich. The wealthy take their
    cash and spend it elsewhere. Why would they invest in a broken down country? Haven’t you seen the nature of business investment in Hungary? Take one of the standard cases: opening a little eatery. The place runs impeccably for 6 months. The customers pile in. But then something happens: the owner starts to cut corners, makes smaller portions, uses
    different, cheaper, ingredients. Of course, he’s trying to cash in. He’s not interested in
    long term success. He wants to hit and run. This is the business reality in Hungary.

    And the situation will get worse because what Orban is doing behind all the habla-babla
    is systematically creating instability and insecurity. Note the education fiasco. No one
    seems to know what’s going on or what’s next. Now, long term, what you will get is a
    docile, unquestioning work force who will keep their head down and do as ordered, no
    questions tendered.

    Hello, Mr. Kafka, is this what you had in mind?

  27. CharlieH
    August 30, 2012 at 3:58 pm | #27

    London Calling!

    This is O/T because ‘planning’ is a word with doubtful meaning when Matolcsy is involved in his fairytale world.

    A strange mindset at the moment – possibly siege mentality?

    Apparently as far as Eurozone entry is concerned Hungary is at war with the EU?

    “Hungarian policy can follow a multi-step strategy which strengthens the economy without the euro in the next two wartime decades and enters the euro zone following a new peace.”

    I think Matolcsy is a sandwich short of a picnic.

    What in heavens does he mean?

    The Hungarian government has signed up to promises that they have no intention of keeping. I am sure that cohesion funds will be reduced by the EU – and step by step, salami slice by salami slice, Orban is ensuring that integration with the EU is impossible.

    Some on here believe he doesn’t want the IMF assistance – just as well, the IMF won’t offer him anything.

    “Just a minute Rishaaaard – there are two sides to every coin – and it’s no-sense no-sense Rishaaard”

    Step by step, salami slice by salami slice the EU will realise that it will be better to cut Hungary adrift – as they will with Greece. Their patience must be wearing thin.

    “But the EU are not democratic” goes the argument. But you signed up to it? Democracy is irrelevant in this context.

    The EU will dread having a ‘Majoritarian’ regime if not a full-blown Totalitarian regime in the ‘Democratic Club’. Ditto Romania, Ditto ……..etc

    There are just too many problems for the EU to put right – and they don’t have the mechanisms to cope.

    In the western world we are used to the sanctity of a signed agreement. The EU must be shocked by the reneging and plain dissembling of some Central European governments.

    In the west – the truth is an immovable entity – in the East moving goal posts.

    Here’s the link:

    http://www.reuters.com/article/2012/08/30/us-hungary-euro-idUSBRE87T0AC20120830

    Regards

    Charlie

  28. Sackhoes Contributor
    September 1, 2012 at 7:26 am | #28

    Actually, I like the US model of civil marriage/religious ceremony. The state authorities issue a marriage license, which certifies that the parties are eligible to marry. (Years ago this also meant a required blood test.) With that license the couple can approach any number of authorized officials to perform the ceremony, after which the official submits the signed and witnessed completed license to the state registrar, who records the marriage.

    The “official” performing the ceremony can be a village clerk, a mayor, a judge,a governors, etc, etc – just about any elected official. It can also be a member of the clergy of any church (inluding a large number of churches that exist of the internet only). A minister or priest has, in fact, no more power or right than a village clerk. Without state license and state registration no marriage is legal.

    Looking at it from America, I do find the Hungarian practice of having a separate civil and in some cases a religious ceremony another example of needless bureocracy.

  29. Minusio
    September 1, 2012 at 7:47 am | #29

    This “bureaucratic” procedure of having a civil marriage first and having a church wedding – or just a big feast – afterwards seems to be the most common in Europe. As getting married carries all sorts of state-related responsibilities and decisions with it (name of spouses, wealth and tax situation, etc.) I see nothing wrong with civil marriage taking precedence. In fact, our offices of births, marriages and deaths serve a useful purpose.

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