Month: June 2011

Hillary Clinton’s visit to Budapest

Although it was a very short visit, this article will be long.

Hillary Clinton arrived late at night on the 29th and thus didn't take part in the unveiling of the, in my opinion, very mediocre bronze statue of Ronald Reagan. The real reason for her visit was the official opening of the Lantos Institute, a think tank that is supposed to concentrate on human rights and minority issues.

I will concentrate here on what Hillary Clinton said at the opening of the Lantos Institute. Some reports, such as that of  AFP, emphasized that "Clinton … called for reinforcing democracy, speaking in front of Hungary's prime minister who has been slammed for restricting the rule of law." The reporter felt it necessary to mention that in reference to China, she castigated countries that gave priority to "national economic growth over freedom and human rights, as though the two are neither compatible nor mutually reinforcing." She didn't openly criticize the Hungarian government, but nevertheless she argued that "it's important for government and civil society alike to shine a light on why some young democracies flourish and others fail." And finally she reasserted that "it's vital that … our constitutions and institutions ensure strong checks and balances across party lines and from one government to the next." Under the circumstances and given the restraints of diplomatic protocol, that was about as much as she could say.

For his part, Viktor Orbán claimed that this gathering was supposed to strengthen "the alliance between the United States and Hungary." This alliance is based on solid foundations. A solid foundation can be built from stone or from steel, but the alliance between these two countries is based on "love of freedom." Unfortunately, freedom is threatened nowadays not by tanks but by indebtedness. According to him "indebtedness limits freedom while in legal terms the traditional rights of freedom are not attacked." So, if one loves freedom then first and foremost one must fight sovereign debt.

One must admit, Orbán has a one-track mind. Once he gets hung up on something, he will bring up his pet idea at every possible occasion.

He did admit that "there were times when he and Tom Lantos didn't see eye to eye." There were times when they argued. "In fact, [their] opinions differed on every possible domestic issue." And indeed, their last meeting didn't go well at all. In 2007 when Orbán visited Washington he eventually managed to have a meeting with Tom Lantos. After the talk they didn't hold a joint press conference. Orbán, however, gave an interview to Judit Járai, correspondent of Magyar Rádió, in which he noted that "the Democrats [in the United States] usually side with the European left" and made clear that the very idea of such a connection was distasteful to him. He added, "I don't believe that Mr. Lantos is keeping fingers crossed for the political success of the same forces in Hungary as I do."

Yes, Orbán was quite right and that's why it is so incongruous to see the Orbán government setting up an institution bearing Tom Lantos's name. The establishment of such an institute was Ferenc Gyurcsány's idea right after Lantos's death on February 11, 2008. Fidesz for two years opposed the project, referencing the economic crisis and the lack of money. Zsolt Németh in an interview that appeared in Népszabadság assured everybody that their opposition to the establishment of such an institute was based solely on financial considerations, but the reporter suspected that the Fidesz leadership was hoping that after winning the elections the Orbán government would be able to create the institute in its own image. And this is what happened. Crisis or no crisis, the war against sovereign debt didn't matter in this case. Suddenly there was money for the Lantos Institute.

Everybody suspected that the public speeches would not be terribly revealing. What was important was what Hillary Clinton would say to Viktor Orbán in private. The meeting between the two lasted almost an hour and according to all reports Hillary Clinton was very well prepared. She brought up sensitive issues: she expressed "concerns and particularly called for a real commitment to the independence of the judiciary, a free press, and governmental transparency." She showed a mastery of details of the Hungarian constitution, the media law, the attacks on the judiciary, and the impending "reform" of the electoral law. Hillary Clinton described the meeting as "an unusually frank talk with Prime Minister Viktor Orbán." During that "candid conversation" she encouraged her "Hungarian friends to ensure a broad, inclusive constitution that is consistent with its own democratic values and the European values as well." She "underscored the importance, in any government, to enshrine checks and balances." She mentioned that "throughout the process of implementing the constitution and the accompanying cardinal laws, it is important … to protect individual liberties, maintain freedom of the press and the judiciary, and ensure checks and balances." All in all, she was pretty blunt with the Hungarian prime minister. The question is whether Orbán will heed her advice. I wouldn't bet on it.

Naturally, Viktor Orbán also spoke. In this case a bit of what the French call "explication de texte," close reading, will be necessary. Here is one sentence that is telling: "Hungary would like to maintain cooperation with the United States that was deemed to be successful so far." Can that be interpreted as "we will oblige in order to keep the present good relations" or as "if you push us too hard we will not continue this successful cooperation"? As an example of Hungarian cooperation he brought up the country's participation in the war in Afghanistan.

He emphasized that Hungary is "a transatlantic country," but what followed is a bit puzzling. According to Orbán, "in all those areas and points where the European Union must [emphasis mine] cooperate with the United States of America, Hungary will always be a staunch supporter of such cooperation." It's not clear whether Orbán's cooperation with the United States will be only on issues of general European Union concern or whether he will consider bilateral cooperation.

He certainly underemphasized direct relations with the United States by placing Hungary in the regional mini-alliance of Central Europe whose potential should be recognized by the great powers, including the United States. It is worth quoting the passage verbatim: "I stated to the Secretary that for us, the primary point of reference, framework of reference where we understand each other, where we define ourselves, the first dimension where we develop our strategies is the Central European dimension. And I’ve done my utmost and I will continue to do my utmost to have the interests and to call the interests of the major powers of the world, among them the United States of America, that Central Europe is an important area facing a wonderful future, where countries are closely knit, where countries have common objectives, and where countries would like to actually assert their interests in the European and international arena as Central Europe. Therefore, Central Europe would like for its own existence, military, logistics, energy, and trade security guarantees assured. And I asked the Secretary that–I asked the United States of America to treat this endeavor of ours with interest." So, Orbán took it upon himself to represent a "regional alliance" that exists only in his head. Typical megalomania of Viktor Orbán, especially since from what I read in the international press these countries don't want too much to do with Orbán's Hungary. Even Poland distanced itself from too close an embrace of Viktor Orbán.

Hillary Clinton had another meeting later in the day with Attila Mesterházy (MSZP), András Schiffer (LMP) and–in a highly unusual move–with leaders of various civic groups: Gordon Bajnai (Country and Progress Foundation), Antónia Mészáros (Foundation for Quality Journalism), Péter Molnár (media expert from the Central European University), Ádám Földes (Transparency International), and Kinga Réthy (Open Society Institute). According to Attila Mesterházy, whom I heard in an interview with György Bolgár, the meeting was friendly and informal. Clinton was accompanied by U.S. Ambassador to Hungary Eleni Tsakopoulos Kounalaki.

From what I gather, this meeting was a success. I think that the participants were impressed with her mastery of the issues in detail. A real dialogue developed among the participants. Clinton was especially interested in the situation of the Roma minority, intolerance in Hungary, the media law, the independence of the judiciary, and the new electoral law that the Orbán government will pass soon enough. Given what Hillary Clinton had to say at the press conference, most likely there was a meeting of the minds at that gathering. From what I heard, Clinton encouraged the participants to work hard in defense of democracy and to unite. I do hope they will listen. 

By way of a footnote. I just learned that Viktor Orbán was supposed to attend a gala dinner organized by the Ministry of Foreign Affairs in honor of the American delegation that came to Budapest for the unveiling of Ronald Reagan's statue. He was supposed to make an important announcement about the establishment of a prize awarded to people who further transatlantic understanding. He didn't show. That doesn't bode well for the future. And it further reinforces my suspicion that he's unlikely to pay much attention to Secretary Clinton's advice.


Orbán’s vision of the future: His speech at the Chinese-East European Economic and Business Forum

For a prime minister the lack of even a rudimentary knowledge of economics is a real handicap. Unfortunately, Viktor Orbán is totally unfamiliar with the world of economics and business. Most of his speeches on economic matters are full of misconceptions and wrong facts. I don't quite understand why he doesn't ask somebody to take a look at his texts before he delivers a speech. Perhaps because by now thinks of himself as the fountainhead of all knowledge.

His speech at the Chinese-East European Economic and Business Forum in Budapest (June 25) began with some unbecoming groveling before the Chinese prime minister and his entourage. The normal "esteemed Mr. Prime Minister" (tisztelt Miniszterelnök Úr) wasn't enough. It had to be "deeply honored (mélyen tisztelt) Mr. Prime Minister." The people present were greeted not with simple "respect" but with "great respect" (nagy tisztelettel). Sure, Hungary is a small country and China is big, but I have never heard a Hungarian prime minister speak in this manner with, let's say, the president of the United States.

Since Orbán was talking at an economic forum, he obviously felt compelled to say something about economic matters. It has become quite obvious in the last few years that Orbán is convinced that real economic value can be produced only through physical work. And as we found out from this speech, without "industrial production" there is no possibility of economic growth. Doesn't that hark back to the time of Mátyás Rákosi who wanted to make Hungary a country of iron and steel? 

He began with a brief history of the current world economic situation. He claims that "a new world came into being as a result of the western financial-economic crisis and the subsequent recession and stagnation. The strong became weak, the weak became strong." So, let's pause right here. If Orbán is referring to China and/or India, their economic growth is certainly not the result of the recent economic crisis. And to describe the crisis as a purely western phenomenon is also inaccurate. The crisis reached China as well, where many workers lost their jobs.

According to Orbán we will find out "in a very short time" who will be the winners and who will be the losers in this economic reshuffle. "The number one champion" certainly is China, and why? Not just because it is a big country with a large population but because "China remained true to some principles on which we in the West turned our backs." Among these principles is that one cannot consume more than one can produce. Globally, of course, Orbán is right. It is not true, however, that Hungarians cannot consume more than they produce; trade imbalances help to measure the disparity.

But Orbán goes much further: he indicates that debt is outright sinful. According to him, in the Lord's Prayer the word for debt and sin was the same in the original Greek. All was well so long as the West, the cradle of civilization, stuck to this equation. Let's stop right here. I did a little research on the Lord's Prayer and unfortunately Orbán got mixed up about "debt" and "sin." The Lord's Prayer appears in two versions, one in Matthew (6:9-13) and the other in Luke (11:2-4). In the Matthew version one can read about debts while in Luke about sins. But let's not quibble over word usage. As for the cradle of civilization, the Chinese visitors might have been offended. After all, Chinese civilization preceded that of the West by centuries.

But more important is a total misunderstanding of the engine of economic growth. In the good old days when in Europe capital accumulation was practically nonexistent and when credit was unknown, the economy progressed at a snail's pace. The Christian ban on charging interest surely didn't help matters. Although according to Orbán's retrograde quasi-Marxist view, no value comes from any activity other than labor, in fact the real economic take-off occurred when banking and financial markets began to appear, stimulating business investment and hence economic growth.

But Orbán seems to want to return to those "good old days" because according to him the troubles started when "we abandoned that sober thinking [about work] and the birth of new teachings and utopias caused the world to stumble from crisis to crisis in the last few decades." It is time, he argues, to re-embrace the idea of hard work and to abandon the sinful ways of debt. (In brief, to add to his economic pastiche the good old Protestant ethic.) There is a new world that requires adherence to new rules that reflect old values. The people in Central Europe, he contends, are flexible and understand the new rules.

I might be wrong, but flexibility is not exactly a trademark of the people in the region. I also doubt that "people know full well that well being will not come to them as a gift. They know that they have work very, very hard." This is doubtful, especially since the members of Orbán's government claim left and right that Hungarians are lazy, don't want to work, cheat in order to get disability payments and assistance in all forms. The government at the moment is in hot pursuit of those who allegedly cheat the state. Yet Orbán mentioned at least twice in his speech that "the Hungarian people understand the rules of this new world."

At this point Orbán said, talking about Central Europe as a whole: "It is an open secret today that the most substantial reserves can be found here, in Central Europe between the Baltic and the Adriatic." Is he talking about the exploration for shale gas, most notably in Poland?  He kept that "open secret" to himself.

And finally he indirectly praised the Chinese system by placing emphasis on the necessity of a strong state. According to Orbán, "the Hungarian people realize that after the 2008 economic crisis only those countries will be successful that build strong states." And he repeated that "one cannot build a robust economy and security by relying solely on the service economy and the financial sector. One needs a massive industrial sector." In the information age.

There were many other accolades about the greatness of China and about the sixty-two-year-old Chinese-Hungarian friendship. Well, the great Chinese-Hungarian friendship had a few bumps along the road. Mao Zedong was one of the most zealous communist leaders who insisted that the Soviets quell the Hungarian revolution. The long-standing Sino-Soviet dispute also left its mark on that great Chinese-Hungarian friendship.

Well, history is not Orbán's strong suit either.


Letter of the Democratic Opposition to Secretary of State Hillary Clinton

26 June 2011, Budapest

Dear Madame Secretary:

It is a great honor for Hungary that you will represent the United States on the occasion of the opening of the Tom Lantos Institute in Budapest.

For us, members of the erstwhile democratic opposition to the one-party communist regime, this is an occasion of utmost importance. Tom Lantos gave his whole-hearted support to the cause of freedom at a time when Hungary was still a dictatorship. We all held Representative Lantos in great esteem; many of us maintained bonds of friendship with him until his death.

Regretfully, however, Hungary is rapidly moving away from the standards upheld by Tom Lantos. While it is only to be commended that the Tom Lantos Institute was established with the consensus of the Hungarian government and the democratic parties, today our government refuses to seek accord concerning any issue crucial to democracy.

In the past year, the rule of law has been seriously damaged in our country. The Prime Minister, overwhelmingly elected in 2010 with a promise to strengthen civic liberties, is today openly distancing himself from the ideals of Western democracies, calling them obsolete. His ruling coalition systematically demolishes the constitutional guarantees of separation of powers, removing all checks and balances that restrain the executive.

An autocratic system is in the making in Hungary.

The first victim of these restrictions was freedom of the press. An omnipotent authority was created, composed solely of governing-party delegates, empowered to supervise not only broadcasting, but also the print and on-line media. The public-service media were renationalized, and obliged to only use news provided by the state press agency. This one-party authority arbitrarily imposes massive fines, and can deny to media outlets the renewal of their licenses. This in turn has already triggered media self-censorship.

Neither was the Constitutional Court, the most potent safeguard of the rule of law during the past twenty years, able to avoid this fate. First, its scope of competence was curtailed, and now the Court is being expanded, with five new justices appointed by the ruling parties.

Despite appeals to find common denominators, the ruling parties drew up a new constitution on their own, cold-shouldering the opposition. The constitution has recently been met with fierce criticism by the Council of Europe's legal commission, both for curtailing fundamental rights and for arbitrarily requiring a super-majority for future revisions of the present government's economic policies.

In a similar vein, the ruling parties are intent on modifying the election law, a cornerstone of democracy, while disregarding the opinion of the opposition parties.

The independence of the judiciary is under grave assault as well. Despite judges having proven their integrity for the past twenty years, they are now being forced into retirement en masse; the National Council of Justice, the safeguard of the courts' autonomy, has been deprived of its constitutional protection; the process of appointing judges will hereafter be defined by the governing parties.

All independent public services are now being headed by functionaries loyal to the ruling party. It has become standard practice to strip citizens of their civil rights, mostly by passing retroactive laws.

Let us cite just two developments of the past week. Private entrepreneurs have been obliged to raise wages through a government decree. Habeas Corpus will be virtually repealed through a draft law soon to be passed by Parliament: the length of detention without judicial oversight would be raised from 72 to 120 hours, and the right of detainees to consult a lawyer would be denied during the first 48 hours of detention.

Madame Secretary:

The historic visit of President George Bush in 1989 helped us Hungarians to establish democracy in our country. Your visit may help us to prevent its demolition today.

We are certain that you will speak up for Hungary's once again endangered freedom.

Yours sincerely,

Attila Ara-Kovács, journalist

György Dalos, writer

Gábor Demszky, former Mayor of Budapest

Miklós Haraszti, former OSCE Representative on Freedom of the Media

Róza Hodosán, former MP

János Kenedi, historian

György Konrád, writer

Bálint Magyar, former Minister of Education

Imre Mécs, former MP

Sándor Radnóti, philosopher

László Rajk, architect

Sándor Szilágyi, writer on photography

Gáspár Miklós Tamás, philosopher

Charles Gati: Tom Lantos and Hungary


It was three decades ago that Joe Biden, then one of the youngest members of the U.S. Senate and today the vice president of the United States, was planning his honeymoon. His foreign policy advisor, Tom Lantos, came up with the idea that Biden and his brand new wife should spend their honeymoon in Hungary. The Bidens followed his advice. Lantos organized everything and to Biden’s surprise he announced that he and his wife Annette would accompany the newlyweds. And indeed they went. All four of them. Biden later recalled that Lantos presented Hungary as if he were the CEO of a tourist agency. The best fish can be found in Hungary. Lake Balaton is the nicest lake in the whole world. The bridges across the Danube are the most spectacular in the universe. The world’s most famous scientists, actors, mathematicians, composers, and poets were all Hungarians. Not only Biden but scores of American delegations went to Hungary since and they all heard the same accolades from him.

Even in his last years he visited Hungary, often twice a year, and when he had time he went to the theater. To Hungarian theater. Perhaps I don’t have to say how much he loved Hungarian food. His face lighted up when he talked about sausages from Csaba.  Visitors in his Washington office got Hungarian coffee. At home, even under the shower, he sang Hungarian songs. When I visited him the last time, he wanted to hear his favorite Hungarian song. His beloved grandchild was singing on CD selections from old, popular Hungarian operettas.

He became an outstanding orator of the U.S. Congress. He spoke in perfectly constructed paragraphs that could be printed without any editing.  However, he retained a slight Hungarian accent which, as it turned out, was rather similar to mine. Once, more than fifteen years ago, I suggested to him that before he embarks on a trip to the Near East he should ask for detailed information from the research department of the State Department that was headed at that time by my wife. He dialed the number I gave him and put the speaker phone on in order for me to hear the conversation. He was very proud of that phone which for him–someone who didn’t write on a computer, didn’t use a cell phone, and didn’t send e-mails—was the pinnacle of technical development. So, I heard the conversation that went something like this: “Hello, I’m Representative Tom Lantos. May I speak with The Honorable Toby Gati?” After a few seconds of silence my wife, who couldn’t imagine that this famous congressman would call her himself and thought that she recognized my Hungarian accent, answered, “Charles, I’m really sick and tired of your stupid little games. When are you going to grow up?” Actually my wife used stronger words …

Tom Lantos remained Hungarian not only in his accent. He loved Lajos Kossuth and could recite the poetry of Sándor Petőfi. He hummed the melodies of operettas from before the war. Both of his daughters spoke Hungarian as did some of his grandchildren. One of them studied music at the Franz Liszt Academy. Another wrote his doctoral dissertation on a Hungarian topic. Even when he became the chairman of the Committee on Foreign Affairs and thus was very busy, he always found time to spend long hours with his friend András Simonyi, Hungarian Ambassador to the United States, whom he liked as a person and respected for his views.  And perhaps this is the place to mention a little secret that very people know. Tom sometimes intimated that once he became tired of being a congressman and retired he would consider returning to Hungary for good.


Tom Lantos also became an American patriot. In brief: he loved the United States. If I want to be more expansive: he loved the United States very much. Let me quote what he said once about America: “It is only in the United States that a penniless survivor of the Holocaust and a fighter in the anti-Nazi underground could have received an education, raised a family, and had the privilege of serving the last three decades of his life as a Member of Congress.”

The recurring motif in Tom’s speeches and even in his private conversations was that the United States saved Europe three times from the claws of totalitarianism. First, in World War I; second, in World War II; and third, at the time of the Cold War. He was aware of the fact that gratitude is not a political category.  After all, Tom Lantos was an idealist but not naïve. Yet he was still hurt when he noticed that someone didn’t acknowledge America’s positive contribution. He was equally offended by the appeasement of the Nazis in Munich and by the belittling of the Soviet danger. One must take steps against extremists before it is too late—this is what he learned from the history of the twentieth century. In one of his last speeches before his death he lashed out at the former German chancellor who, so to speak, sold himself to Gazprom, which was under the authority of an ever more aggressive Russian government. He said it jokingly but he meant it seriously: “If the hookers in my district didn’t take offense at the association, I would call the former German chancellor a prostitute.”

What Tom Lantos valued in the United States was not only that the U.S. opposed dictatorships but that it stood for the proposition that even the least effective democracy is worth more than the most effective dictatorship.


He was especially interested in political values. Respect for human rights. The situation of the Hungarian minorities in the neighboring countries. The fight against overt or covert anti-Semitism.

Lantos was always his own man. When in the United States many people think that China shouldn’t be criticized because it is an important commercial partner, Tom was a demonstrative supporter of the Dalai Lama. When in the United States many people believe that one ought to treat Russia with care because we might need her today or tomorrow, Tom didn’t hesitate: he condemned the Russian government for its severe violation of freedom of the press, for the annihilation of an independent judiciary, and for its insensitivity toward the most basic human rights. In 2005 he flew to Moscow where he demonstrated for the release of Mikhail Khodorkovsky in front of a courthouse there.

It was this value system that motivated him when in the early 1990s he spoke about István Csurka’s anti-Semitism on the floor of the House of Representatives.  He paid no attention to those who warned him that it is not proper diplomatic form to meddle in another country’s internal affairs. His answer was that nations matter and sovereignty is an essential part of an orderly world, but what is most important is the defense of universal human rights. After all, Tom experienced himself what it means when the world doesn’t act in time against Nazis, Fascists, Arrow Cross hooligans — or their successors.


What would he say today? Surely he would severely criticize President Barack Obama, a member of his own party, because during his negotiations in Moscow he neglected to bring up the question of human rights. He would criticize Secretary of State Hillary Clinton because when she visited Beijing she didn’t talk publicly about the issue of human rights. Lantos didn’t believe that an American politician should criticize the anti-democratic actions of another country only in private.

This week, if he were to go to the opening of the Lantos Institute in Budapest at all, what would he say? What would he say about today’s Hungary? After two decades of friendship I don’t find it difficult to imagine that speech. But I will not attend the opening. Relating here the contents of that imagined speech would only ruin the celebration.

Charles Gati is Senior Adjunct Professor of Russian and Eurasian Studies at the School of Advanced International Studies/Johns Hopkins University.

The Hungarian original appeared in today's Népszabadság.

How qualified will the new judges in the Hungarian Constitutional Court be?:The cases of Péter Szalay andEgon Dienes-Oehm

Péter Szalay is a lawyer who has worked in an attorney-client relationship with the top brass of the Fidesz leadership for over ten years. This relationship might cause some eyebrows to be raised about Szalay's suitability for the post.

Although Szalay published a few short articles on the constitution, he is first and foremost a practicing lawyer and as such it is almost impossible to gain an accurate picture of his legal philosophy. There is, for example, the issue of the freedom of speech. He represented Viktor Orbán in a case in which Orbán sued former minister of finance János Veres who told a reporter that if it depended on Viktor Orbán he would steal the entire IMF loan Hungary just received. Orbán lost. Szalay also represented the Fidesz politicians who dismantled the barrier on Kossuth tér. In this instance Szalay won the case. However, from the two cases we can't draw any conclusion about Szalay's views on the freedom of speech because in the first instance he argued on the basis of a very narrow definition while in the second instance he defined freedom of speech so broadly that it would also include removing legally erected barriers.

As far as his writings are concerned, in 2005 in Élet és Irodalom he wrote in defense of the 1989 Constitution against a legal scholar who was advocating the creation of a new one. In this article he argued that Hungary's "constitutional problems wouldn't be solved by coming up 'quickly' with a new constitution…. Most likely no new constitution will be born until there is societal demand for one because only in such a case will there be the desired consensus within parliament…. In the near future there is not much hope for the birth of a new constitution–and perhaps it is best this way."

It seems that in order to serve on the Constitutional Court Szalay no longer feels the way he did in 2005.

Egon DienesOehm is the candidate of the Christian Democrats. The party nominated him earlier when parliament elected István Stumpf and Mihály Bihari. Then the Christian Democrats' faithful partner, Fidesz, refused to oblige. Now they agreed to consider him but the gesture is rather insignificant. DienesOehm is almost 67 years old and thus in three years he will have to retire.

Dienes-Oehm spent more than ten years in public administration and since 1997 he has also been teaching at the Catholic University. He has published profusely–mostly on European integration, institutions of the European Union, and European commercial law. He has not published anything on constitutional law. Therefore we cannot even guess his philosophy on constitutional matters.

Because of his knowledge of international law one could ask him about the slight change of wording in the passage that deals with not being able to hold referendums on "valid international obligations" in the current constitution and the absence of the adjective "valid" in the new one. Could it be that in the future no referendum can be held even on the confirmation of international agreements? For example, in the case of Hungary's adherence to NATO. Another possible question is whether the interpretation of the freedom of speech of the Hungarian Constitutional Court is in agreement with Hungary's international obligations. And finally it would be interesting to know what he thinks about the passage in the preamble about the historical constitution and how it might affect the interpretation of basic rights. 

I am leaving the most outrageous nominee, István Balsai, for another day. Stay tuned.


Viktor Orbán in the limelight: Wen Jiabao in Budapest

Politicians from the European Union might be talking among themselves about placing Viktor Orbán’s Hungary under quarantine, but it is unlikely that the Hungarian prime minister lost too many sleepless night over this leaked piece of news. Even less is he worried about Adam Michnik, the famous Polish dissident, who frets about Orbán’s dismantling of the democratic institutions in Hungary. Most likely he feels on the top of the world at the moment. Hungary’s courtship of China that started in 2002, after Orbán’s defeat at the polls, and continued all through the socialist-liberal period, at last bore fruit.

Viktor Orbán, who during 1998-2002 refused to do business with Russia or China, changed his mind by 2009-2010. One heard more and more about those “eastern winds” that will move Hungary’s sail in the right direction. In fact, Orbán repeatedly asserted that the “decline of the West” is at hand and therefore he–as he made clear several times–will look around outside of Europe for economic opportunities.

The courtship of China has been intense in the last year. Tamás Fellegi, minister of economic resources, was made special commissioner in charge of the economic negotiations with China. He visited the country in December 2010 and again in March 2011, and bits and pieces of information were leaked about possible Chinese projects in Hungary. It was apparent almost from the beginning that Hungary was especially keen on China’s buying Hungarian government bonds. Then there were rumors about Chinese companies being involved in a complete rebuilding of the Hungarian railway system, including a new super fast line from the Franz Liszt Airport to downtown Budapest. Perhaps, the rumors continued, China will be involved in the enlargement of the airport itself. There were also talks about a Chinese company buying the ailing Hungarian airline, Malév.

The intensive Hungarian efforts bore fruit. On June 6 it was announced that Prime Minister Wen Jiabao will include Hungary in his five-day European trip. It will be from Budapest that he will fly to London and then to Berlin. The Financial Times called the inclusion of Hungary in the itinerary “a big coup.” But just as Fu Jing, deputy foreign minister of China, said in Budapest on June 17, “positive signals should be followed by a positive response.” And there were many positive signals coming from Budapest. The details of these negotiations were not released, but we know that Chinese businessmen are very shrewd so the offers from the Hungarian side had to be quite attractive.

Let’s see what we definitely know about Chinese investments in Hungary in the last year or so. On August 23, China’s second biggest telecommunication company, ZTE Corp., signed an agreement to supply second, third, and fourth generation LTE cell phone systems to Telenor Magyarország. On September 13, a Chinese-Hungarian law office opened its doors to offer legal assistance to Chinese firms doing business in Hungary and Hungarian firms operating in China. A few days later, on September 20, Chinese investors purchased the Tisza Szálló in Szolnok. On January 31, 2011, the Chinese Wanhua Industrial Group bought BorsodChem Zrt. and now holds a 96% stake. On March 23, the Chinese invested two billion forints to build a factory (Chinese-Hungarian Orient Solar Kft.) in Berettyóújfalu that will produce solar collectors. The Chinese partners have the majority share in the business. Another Chinese company is setting up a pharmaceutical company in Gyula. The investment is worth 10 billion forints. In the same month another Chinese company signed a contract with the City of Szolnok to produce tricarballylic acid. The city is providing a 20-hectare site for the factory. In May Zsolt Páva, mayor of Pécs, visited Beijing and came home with a promise from Huawei, a leading telecom provider, that the company will establish its second largest distribution center in the southern Transdanubian city badly in need of foreign investment.

It was against this backdrop that the Chinese prime minister visited Budapest yesterday and today. The Hungarian authorities didn’t leave anything to chance. A few weeks ago an e-mail was circulating on the Internet from the Department of Chinese Language and Literature at ELTE written to the students who study Chinese saying that they should all be present when Wen Jiabao meets with the students. The more the merrier, so if the students have friends who look like students, bring them along. The goal was to convince the Chinese prime minister to offer scholarships to Hungarian students, and a large group is certainly more impressive than a puny one.

Another problem was the presence of a fair number of Tibetan refugees in Hungary. They tried to demonstrate, but the police announced that they would interfere with traffic. To be on the safe side, all Tibetans were called into the Office of Immigration and Citizenship to have their IDs checked. And who can do anything about a long wait? Nobody. They couldn’t leave and thus spent their time in the corridors of the office. The authorities didn’t have to worry about an illegal demonstration. On the other hand, the Chinese inhabitants of the city were thrilled and greeted the prime minister with Chinese flags.

The meeting between the two prime ministers was exceedingly friendly. Both Wen and Orbán talked about the long-standing and close friendship between the two countries going back sixty years. Indeed, Mao Tse-tung’s communist regime was established in 1949 and shortly afterwards there were yearly student exchanges between China and Hungary. According to Wen, “”friendship is always more important than business.” The Chinese and the Hungarian prime minister walked along the bank of the Danube after a meeting lasting an hour and a half, after which Wen remarked that “the beautiful Danube River is flowing exactly the same way as it did twenty-four years ago when we first visited Hungary although great changes have taken place. But the friendship between the two countries remained the same.”


If possible, Orbán was even more expansive. During the press conference Orbán was overflowing with compliments. For example: “Hungary is glad that it could welcome the prime minister of a state who not only contributed so much to the development of his own country but also splendidly benefitted the global well being of the world. We don’t know of any such other instance in history when during such a short time so many people were lifted out of poverty and brought to levels worthy of human beings.”

Orbán proudly looks on

Or here is another example: “China’s progress is not a short-lived phenomenon. In the future China will play an ever-growing role in the world. We want to have a long-lasting alliance [emphasis by ESB], longer than the time I will spend in politics, although that will not be short either.”

As for Wen, he was not too specific about the details of this strategic alliance. He did mention that the Chinese Development Bank will give a loan of one billion dollars for Hungarian investors in China. China also wants to double trade between the two countries that will be, according to plans, 20 billion dollars by 2015. Wen confirmed that China will purchase Hungarian government bonds but no amounts were mentioned.

It was known already yesterday that the two countries will sign twelve different bilateral agreements. Here they are: (1) an agreement on cooperation in matters of air- and water-transport between Foreign Minister Yang Jiechi and Tamás Fellegi; (2) a general agreement on cooperation between the Chinese Ministry of Commerce and the Hungarian Ministry of National Development signed by the two ministers; (3) an agreement on the development of the railway system signed by Gao Jian, the Chinese ambassador to Hungary, and Tamás Fellegi; (4) an agreement on the establishment of a Huawei European Supply Center signed by Peng Zhiping, vice president of Huawei, and Tamás Fellegi; (5) an agreement on the mutual establishment of cultural centers signed by Miklós Réthelyi, minister of national resources, and Gao Jian, Chinese ambassador in Budapest ; (6) an agreement on the establishment of a bilateral business council signed by Wan Jifei, the president of the Chinese Chamber of Commerce, and Sándor Demján, president of the National Association of Entrepreneurs and Employers; (7) an agreement on the establishment of the Chinese East-Central European logistical and commercial platform signed by government officials reponsible for Hungarian-Chinese relations; (8) an agreement between BorsodChem Zrt. and the Bank of China concerning the use of a 1.1 billion euro loan for the development of the company; (9) an agreement for strategic cooperation between the HNA Group and the Magyar Tőketársaság signed by Chen Feng, president of HNA, and Sándor Demján; (10) an agreement concerning the establishment of a Central European Hungarian-Chinese Commercial Logistic and Development Cooperation Zone signed by Li Fangrul, president of Shandong Imperial International Investment, and Ernő Takács, owner and president of Talentis Group; (11) an agreement about the establishment of the Szolnoki Citromsav Gyár to produce 60,000 tons of tricarballylic acid a year signed by Imre Andrási, the president of the Szolnok Industrial Park, and Chen Liping, financial director of BBCA, and finally (12) an agreement to establish a European base of Shenzhen Canyi Technology Co., Ltd. producing energy-saving lighting equipment signed by Du Wei, president of Wujiang CANYI New Lighting, and András Szollár, head of DML Europa Vállalat.

All this is very impressive, and I’m sure in the short run it will be useful to Hungary since the Chinese infusion of money and investment will offer great opportunities. But the devil is in the details, and I’m not sure whether such a close embrace of China may not have some unintended consequences.

The Hungarian plan to reduce unemployment

First, a little background on what emerged yesterday as "Magyar Munka Terv" (Hungarian Work Plan). The name of the program is awkward not only in English but also in Hungarian. The Orbán government with its love of the word "nemzeti" (national) originally wanted to call it Nemzeti Munka Terv, but most likely because the politicos' historical knowledge is spotty at best they didn't realize that Prime Minister Gyula Gömbös's program for solving the unemployment problem in the first half of the 1930s bore that name. And those who are somewhat familiar with that era know that Gömbös was a great admirer of Mussolini and fascism in general. In fact, he was planning to introduce a system in Hungary very similar to that of Mussolini's corporate state.

Viktor Orbán has been repeatedly compared to Gyula Gömbös and not without reason. However, being likened to the anti-semitic admirer of fascism and nazism is not exactly a compliment, and when the media called attention to this unfortunate choice of names, the government quickly changed it to Magyarország Munka Terv. That sounded really bad. It seems that the program's name is now settled. It is called Magyar Munka Terv.

The first time there was any mention of a plan for remedying the low employment rate in the country was on March 15 in Viktor Orbán's speech on the national holiday. He announced that in addition to the New Széchenyi Plan and the Kálmán Széll Plan there will be a national work plan. When some newspapermen inquired from György Matolcsy's ministry what this work plan was all about, everybody looked baffled. Perhaps they just feigned ignorance, perhaps they were not yet informed about the plans that were being hatched in the prime minister's office. Because only a few days later Mihály Varga, undersecretary in Orbán's office, talked about a public works program that will start on July 1. The program, he said, may potentially result in work for 800,000 people.

As of yesterday the text of the program appeared on the website of the Nemzeti Gazdasági Minisztérium (National Economic Ministry). We may recall that originally Viktor Orbán promised one million new jobs in the next ten years. Jobs for taxpaying citizens. In the text of Magyar Munka Terv we learn that in the next year and a half there will be 300,000 new jobs and by 2015 another 100,000. The document refrains from talking about the situation in 2020, but it seems that the original one million figure is still the Orbán government's goal. The question is whether these jobs will be occupied by people who also pay taxes. From the look of things it seems doubtful.

The primary elements of the plan to reduce unemployment include: (1) genuine new jobs created as a result of economic growth. In order to facilitate the creation of such jobs, the government will make employers' lives easier by reducing bureaucracy and payroll taxes; (2) temporary jobs created by local governments and non-profit organizations with some help from the government that would serve as a transition to employment in the open labor market; and (3) the public works projects that will replace welfare payments.

Naturally the plan's text doesn't mention that about 80% of these new jobs will be very low-paying part-time jobs on public projects as we outlined yesterday. Sándor Pintér's bill (T/3500) on the organization of the gigantic public works program is available on the parliament's website. The retired policemen's information was quite accurate.

According to Magyar Munka Terv, the labor code must be changed in order to facilitate the creation of new jobs. The changes will be such that there will be less protection for the employees and more power given to the employers. The details have not been released, but apparently by July 1 we will know more about the changes the government plans to introduce.

In any case, it seems that from here on trade unions will not be able to negotiate with management about decisions concerning the running of the business. For example, currently the unions at BKV (Budapest Transit) can make demands over business decisions. I remember quite well that they threatened to strike unless BKV changed some very old buses for new ones. From here on, trade unions can negotiate only about salaries and benefits.

Then there is another labor-related organization that most people are not familiar with called "üzemi tanácsok" (factory councils). In theory every business that has employees is supposed to have such a council whose job it is to represent the interests of the employees. But it seems that these councils barely function or simply don't exist. Perhaps the government's aim is to shift "power" to the practically non-existent councils and at the same time limit the competence of the trade unions.

According to the plan, by changing welfare to workfare the country will save 67 billion forints a year. Economists who were asked their opinion of Magyar Munka Terv by MTI cautiously announced that the direction is good but they raised several concerns. Judit Adler (GKI Gazdaságkutató Zrt.) questioned the feasibility of creating one million real jobs in ten years. Employing people in public works projects for a short time and for little money may help the statistics, but behind such a policy there is only "misery and an absolute drop in living standards." Adler found the limitations planned on the functioning of trade unions "distasteful." Ágnes Hárs (Kopint-Tárki) pointed out that there are too many assumptions concerning economic growth in the plan. The most common complaint is that the plan is too vague and that no background studies have been conducted about the effects of the plan.

I'm no economist, but I think that the present economic climate is such that we are unlikely to see the level of economic growth that would translate into employment figures of the magnitude outlined in the Magyar Munka Terv. I'm talking about real jobs.