How did less money become more? Viktor Orbán’s historic success in Brussels

This afternoon the new session of parliament began with a brief “victory speech” by Viktor Orbán. He described the “historic success” he managed to achieve for Hungary during the European Union’s summit that hammered out the new 2014-20 budget.

Considering that initially Hungary was going to receive about 30% less in European subsidies than in the previous seven years, one can be grateful that the actual monetary loss was only 20%–from 26 billion euros to 20 billion. However, for Viktor Orbán it is never enough to say: “We are very happy that the cuts were less substantial than we had feared.” He has to come up with a mathematical trick that can make less more. The trick lies in the fact that when the Hungarian prime minister announced his phony figures he was calculating in forints per capita. According to him, while between 2007 and 2013 660,000 forints per capita arrived, between 2014 and 2020 that sum will be 712,000 per capita. Sure, but when Hungary received that money in 2007 one euro was worth 252 forints while today the exchange rate is to 1:292. And then there’s the very high Hungarian inflation rate that further reduces the purchasing power of the allocated funds.

While collecting material for today’s post I realized that Ferenc Kumin, a fairly recent acquisition in the Office of the Prime Minister from Századvég, the Fidesz think tank, has changed his focus in the last few months. As assistant undersecretary for international communication he was first entrusted with making propaganda in the United States. Among other things, he paid a visit to the Democratic Convention, acting as if he were an important guest there. But now Kumin seems to be a spokesman for the government in connection with Hungary’s position vis-à-vis the European Union. In this capacity he extolled the virtues of international cooperation. Hungary, together with Poland, Romania, and France, lobbied hard for high agricultural subsidies. He naturally didn’t mention that Poland, Romania, and Slovakia received more money than in the previous seven years. Hungary was also pleased that the share of EU monies remained 85% instead of 75% of the total cost of projects, as had been talked about earlier. As it  is, the Hungarian side has difficulties coming up with its 15% share, and thus a lot of available money is never used.

But there is another way of looking at the “historic success” that is much less encouraging. While the overall EU budget was reduced by only 2%, Hungary lost 20% of its subsidies. In fact, Hungary could have done much worse because the sums allotted were based on a percentage of the countries’ GDP, and Hungary’s GDP actually shrank in the last few years. If the EU had adhered to this principle Hungary would have been deprived of a huge amount of money, a move that Brussels considered too extreme.

And now let’s see how wisely successive Hungarian governments have used these subsidies in the past. Not wisely at all. A great deal of the money was spent on swimming pools, wellness centers, and repaving and redoing the central squares of practically all mid-size towns in the country. And no one should think that there is any major change being contemplated for the future use of cohesion funds.

The latest brainchild of the Orbán government is a “museum quarter” around the present Szépművészeti Múzeum (Museum of Fine Arts). Only yesterday Zoltán Balog announced this huge project, which will be completed in five years. It will involve the complete renewal of Budapest’s City Park (Városliget) and the construction of several new buildings to bring practically all important galleries and museums currently scattered around the city into one “Museum Quarter” (Múzeum Negyed). The government is planning to spend 120 billion forints on the project, which will make it “the biggest cultural development in a hundred years in Budapest.” The area will look like at last “what the city planners dreamed of in 1898 at the time of the millennial celebrations.”

Indeed, it will be a big project: new buildings will be needed for the Museum of Ethnography, the Hungarian Museum of Photography, a new National Gallery, the Museum of Hungarian Music, and the Hungarian Museum of Architecture. In addition they plan to restore a wing of the Museum of Fine Arts that was badly damaged during World War II. This time the government promises an international competition given the importance of the project.

For the buildings of the Museum Quarter the government is planning to spend 70 billion forints. But, don’t fret: 90% of this sum will be “financed from EU sources.” Another 50 billion will be spent on the City Park where they will enlarge the zoo. In addition they will redo the Petőfi Csarnok (Petőfi Hall) which in the future will be a kind of Disneyland, Hungarian style, for youngsters.

This project, like practically all others, will undoubtedly be carried out by Hungarian companies favored by Fidesz. How much of the EU monies will actually end up in the coffers of the party no one knows. Yes, the project will employ people in the building industry, which has been badly hit in the last five years. But, beyond this, it is hard to justify spending EU monies for such an undertaking. The man who is in charge of the project claims that the very existence of the City Park and the Museum Quarter will bring 1-1.5 million tourists to Hungary. I very much doubt that claim.

Meanwhile the towns cannot keep up their new stadiums and swimming pools, the fancy stone pavers in the main town squares are becoming loose and starting to look shabby. These projects might make town centers a little more attractive, but they do not facilitate Hungary’s cohesion to the more developed parts of the European Union.