Barroso in Budapest

José Manuel Barroso, the outgoing president of the European Commission, spent a day and a night in Budapest on the way to Ukraine. During his stay he and Prime Minister Viktor Orbán signed a “partnership agreement” that seals the European Union’s 35 billion euro financial support for Hungary for the period between 2014 and 2020. In addition, he received an honorary doctorate from Corvinus University.

In the last few weeks a debate has been going on between the government and the opposition: is the amount Budapest will receive in the next six years more or less than it got in the previous six years, support that was procured by the Gyurcsány government? Of course, the current government claims that it is more while almost everybody else, including financial experts, claims that it is less. Whatever the case, it is an enormous amount of money which, according to the critics of both the Orbán government and the European Union, enables Viktor Orbán to build his “illiberal state.” In brief, the European Union is the one that is supporting the destruction of democracy in Hungary.

People who oppose the current regime were dismayed when they heard that the official signing of the document will take place in Budapest. They argued that Barroso should not sanction Orbán’s autocratic regime with his presence in the Hungarian capital. Deep dissatisfaction set in, not just in political circles but also among ordinary people who watched what they considered to be overly friendly gestures by Barroso toward Orbán. It is true that the president of the commission did make a quip indicating his awareness of the Orbán government’s untrustworthiness when he remarked that he hoped the content of the Hungarian version of the document is what he expects. In the past it happened several times that the Hungarian government falsified translations of official texts.

José Manuel Barroso and Viktor Orbán Source: Népszabadság / Photo Zsolt Reviczky

José Manuel Barroso and Viktor Orbán: We can feel equal financially
Source: Népszabadság / Photo Zsolt Reviczky

I don’t know whether Barroso was aware of what Orbán told journalists after the ceremony, but I hope that by now he is. Orbán explained to journalists why this enormous amount of money is not really extra help for Hungary. He claimed that foreign investors move approximately the same amount of money out of the country that Hungary receives from the European Union. If Hungary did not get these subsidies, the country’s financial equilibrium would be out of kilter. This reasoning is of course economically unsound, but his reference to equilibrium brought to mind a funny line from Nick Gogerty’s The Nature of Value: “The only economic systems found today that are truly at or close to equilibrium are nearly dead economies. A cow that achieves equilibrium is called a steak, and the economy closest to achieving equilibrium today is probably North Korea.”

Orbán proposed another equally unconvincing reason that Hungary needs these subsidies. They raise the self-esteem of Hungarians who can in this way feel like full-fledged members of the European community. It’s nice to know that Hungarians’ psychological well being depends on 34 billion euros. Considering that the mood of the Hungarian population is abysmal, perhaps the money is not so well spent.

Now that the Orbán government’s attacks on NGOs have been widely reported and almost all the articles compare the events of the last few months to what Vladimir Putin did in the last year and a half to Russia’s civic groups, a lot of people hoped that Barroso would have a few words to say about them. The COO of TASZ (Civil Liberties Union) told Der Spiegel that “Brussels no longer can be silent on the putinization of Hungary.” However, Barroso was silent on the issue until a question was addressed to him about whether the EU will get involved in the dispute between Norway and Hungary over the Norwegian Funds. Barroso expressed the opinion that this is “the business of Norway and Hungary, but they follow the developments.” The author of HVG‘s opinion piece seemed to be very unhappy with this answer, and I know many people who share his opinion. I, on the other hand, think this hands-off decision of the EU actually works in favor of those who would like to stop the Orbán government’s assault on democracy. From experience we know that the EU has not been a steadfast defender of Hungarian democracy, and in the past it overlooked Viktor Orbán’s transgressions more often than not. The Norwegians are less accommodating; ever since May they haven’t moved an inch in their insistence that the Hungarian government has no right to investigate the allocation of their civic funds. 140 million euros are at stake. If the EU agreed to arbitrate, most likely a compromise solution would be found that would again allow the Orbán government to play one of its tricks.

There was a small demonstration in front of Corvinus University. Népszabadság noted that Barroso as a seasoned politician knows how to handle situations like that. He acted as if he did not see them at all and marched straight into the building. Whether he read a letter addressed to him by the Oktatási Hálózat (Net of University Lecturers) or not I have no idea. It is an excellent description of what has been going on in Hungary in the field of education. To sum up: In the last five years government spending on higher education decreased by half. Hungary currently spends only 0.43% of GDP on it as opposed to the 1% that is recommended by the European Union. The autonomy of the universities will be curtailed when state appointed supervisors are placed above the presidents. It is now the fifth year that the government has no clearly stated higher-education strategy. Financial resources are distributed in an ad hoc manner, mostly to institutions preferred by the government. For example, 90% of the money received as part of the Horizon 2020 program subsidized by the European Union went to the newly established National Civil Service University. Just lately it became known that the Hungarian National Bank is spending 200 billion forints, which is one and a half times more than the government spends a year in higher education, to train people in “unorthodox economics.” Because of the high tuition fees the number of students entering college or university has decreased by 30%.  Moving away from higher education, the letter mentions the lowering of the compulsory school age to 16 from 18 and the government’s endorsement of segregated Roma schools.

It is too bad that this was the only letter addressed to Barroso. Where were the other groups? Where were the members of the opposition? Not that these letters achieve that much, but when only one group protests in front of Corvinus University and only one letter is written by a small group of university lecturers, it is difficult to stir the European Union.

After ten years Barroso is leaving his post and Jean-Claude Juncker is taking over. Hopes are high that a new era will begin, but for that to happen the Hungarian opposition must lend him a helping hand.

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31 comments

  1. Let’s forget this EU bashing. I don’t think we’re privy to what’s really going on; or who’s ‘playing’ who.

    I don’t think the EU is ready to deal with until two greater issues are hammered out: one, Greece’s economic state; and whether Scotland remains a part of Britain. Those two issues
    are plenty on the EU plate, as well as the state of the EU economy. Once they’re dealt with
    and economic growth of the area returns, I think we can expect a large pair of shears to be applied to Mr. O’s tender parts….

  2. Eva S. Balogh: It is true that the president of the commission did make a quip indicating his awareness of the Orbán government’s untrustworthiness when he remarked that he hoped the content of the Hungarian version of the document is what he expects. If I’m not mistaken, the translation process of individual members’ Partnership Agreements goes the other way round. Since each member State submits the document in their own language, it’s probably the EU that provides the English (and/or German or French) translations.

  3. Sorry, re-post

    Eva S. Balogh: It is true that the president of the commission did make a quip indicating his awareness of the Orbán government’s untrustworthiness when he remarked that he hoped the content of the Hungarian version of the document is what he expects.

    If I’m not mistaken, the translation process of individual members’ Partnership Agreements goes the other way round. Since each member State submits the document in their own language, it’s probably the EU that provides the English (and/or German or French) translations.

  4. Good point: if the EU would get involved in the Norwegian-Swiss NGO issue the EU would actually support Orban by promoting some kind of a “compromise”.

    These “compromises” promoted by the EU are nothing more than hush monies, which always allow the blackmailer to keep his gains so that life could be peaceful again — which is the main and almost only the objective of the EU itself.

    Free markets are the basis of the EU but the objective of the EU is to keep “peace” so that the markets can continue to function, corporations can continue to produce stuff.

    The EU (as all Western European politicians like Barroso or Merkel) just detests and is fundamentally incapable of handling conflicts, its only method to solve them is to pay off problematic people like Orban. In the case of Western politicians of individual countries this only method is trying to do nothing and hoping things will get better because, hey, they have to, Sakrozy, Hollande, Renzi even Merkel — too bad an Orban or a Putin can eat this smartasses for breakfast.

    This method of the EU of course involves the smallest amount of energy, to pay off people. Conflicts are messy, complicated, involve too much work, coordinating all those various interests is hard, and the coffee break is sacrosanct in Brussels.

    Paying off blackmailers, trolls never ever works but it does not matter, because meanwhile life goes on and the Germans or the French or the Belgians can continue to export their stuff, so thing are OK, mission accomplished. While people change in Brussels and need a time to learn about Hungary etc. Orban and Putin stay in their positions for decades, so they know their (fre)enemies much better than vica versa.

    This EUR 35bn amount is also just a hush money for Hungary’s opening of its markets and allowing the concomitant destruction of its uncompetitive industries (jobs).

    It does not work, most of Hungary openly dislike the EU, it is the butt of jokes among working class people (now without exception Jobbik and Fidesz voters), I hear it every day. No day goes without hearing some snide comment about the stupidity of the EU.

    Kudos to Norway, the Norwegians have the historic opportunity to show to Orban that the West contains more than just castrated but well-fed kindergarteners.

  5. Thanks to Markovic @ September 13, 2014 at 5:19 am, we can read a smart summary on Norway.
    Norway must KO the anti-intellectual, anti-Hungarian, illiberal regime around the mini-tyrant, which holds Hungary as a hostage.
    Norway could wake up the sleeping Hungary, to build a liberal future.

  6. IT IS still correct to say, especially by a politician, that an economy must aim for equilibrium. It is the basis of classical economics, akin to the pursuit of happiness, an American concept. Of course with overspending, the industrial-military complex, etc., things got somewhat skewed.

  7. “Barroso as a seasoned politician…”

    My foot! That this dimwit reached that post is Merkel’s doing which I will always hold against her. And doling out money before Juncker’s commission takes over is similar to Fidesz leaving empty coffers and handing out huge contracts after they lost the 2002 elections.

    It seems fishy and is a disgrace to the EU. But I guess that Barroso’s longing for harmony and sense of vanity once again got the better of him.

  8. London Calling!

    “….And doling out money before Juncker’s commission takes over………”

    Minusio – when you talk about Junker – you have stars in your eyes.

    Whenever a retiring President knows who his successor is he will consult him on the bigger initiatives – in order not to give any cause for embarrassment so early in the new incumbent’s term.

    As a common courtesy – it is almost certain that Barosso would have consulted Junker about his ‘Largesse – Budapest Junket’. – and the Billions of Euros.

    Of course – the decision will have been made ‘Pre-Juncker’ (in case you insist again on pointing out the bleedin’ obvious).

    But Junker will have had the opportunity to delay, postpone – or just be dilatory in carrying out the mission.

    Not a good omen I’m afraid.

    Regards

    Charlie

  9. re Euros: 35 billion

    Perhaps Barosso’s mission was to say–more to all Hungarians than the leadership–here’s what you can expect from us in the future. Now, the hammer may fall in the form of NATO insisting
    on placing 3,000+ soldiers on Hungarian ground…

  10. Ukraine

    Something smells. It was the language law that precipitated the Russian actions–at least, it gave them the perfect excuse. It was so out of whack, that it raises suspicions..

    Now the whole scenario seems like a setup for the next presidential elections in the US: certainly, under present conditions, the American electorate will vote Republican.
    A nice trick by the secret services, I’d say…

  11. petofi: I think Fidesz would happily allow 3,000 soldiers. It’s actually good money, these people would spend in the local economy, just like they did in Taszár. The missile shield which the Polish and the Czech wanted would be out of the question, but troops, why not?

  12. Eva writes: “I don’t know whether Barroso was aware of what Orbán told journalists after the ceremony, but I hope that by now he is. Orbán explained to journalists why this enormous amount of money is not really extra help for Hungary. He claimed that foreign investors move approximately the same amount of money out of the country that Hungary receives from the European Union. If Hungary did not get these subsidies, the country’s financial equilibrium would be out of kilter. This reasoning is of course economically unsound,” I have not looked lately at profit transfers out of Hungary by foreign owned companies, but it could well be 35 billion euros over a six year period of time.

    This of course does not take into consideration the investments of a firm like Audi/VW in production technologies within Hungary nor does it take into consideration the incredible added profit a firm like Audi makes on mark ups on cars produced in Gyor for example.

    In June Forbes magazine ran a story about the VW group and other European owned firms production in Central Europe. This article stated: ” According to a June 2014 article in Forbes. Central and eastern Europe constituted 37% of overall vehicle sales in Europe in 2013, by our estimates. Eastern Europe accounts for around 20% of all vehicles produced in Europe presently. With central and eastern Europe most hit by the double-dip recession, vehicle sales in the region also fell. However, as economic activity begins to pick up in the region, coupled with lower vehicle ownership rates, vehicle sales could grow in the next couple of years. Motorization rates in countries such as Hungary and Romania stand at 342 and 240 vehicles per 1,000 inhabitants, respectively, lower than the 550+ vehicles per 1,000 people for most western European countries. Even though vehicle demand in central and eastern Europe doesn’t grow significantly, increasing production capacity in the region provides the incentive of lower labor costs. According to the CEO of Audi, while hourly labor costs in Germany range from €40-€52, the costs decrease to €13 per hour in Hungary, and to below €5 per hour in Romania and Bulgaria.”

    The issue of global trade is far more complex than the cash balance between exports and imports in a developing economy like Hungary’s. It also has to do with being a provider of low cost labor, Audi for example exports some of the models made in Hungary all the way to the USA, VW’s plant in Tennessee does not make Audi’s, some of this production will be shifted to
    its North American production with a new plant in San Jose Chiapa, a town located close to Puebla Mexico where wages are even less than in Hungary and transportation to the US market is far cheaper. If consumption of autos increases in Europe Gyor will be fine, if not who knows.

    The primary purpose of EU cohesion funds is for funding and improving Hungary’s infrastructure even though it is used inefficiently and corruptly by Fidesz. These funds are overall not designed to somehow magically pull Hungary out of its low wage trap, there is no free lunch in capitalism. It is therefore not a surprise in the least that the flow of EU cohesion funds will continue unabated despite all the hand wringing in Europe over Orban’s illiberal regime. It’s not about the promotion of democracy it’s about trade and profit in today’s world market.

  13. Orban can play the EU and Barroso because behind the lofty principles it is the various political interests that actually move politics in the EU (as everywhere, btw). Orban is a master of feeling out political divisions and interests and then playing them so that they work in his favor. The EU needs Orban’s support against Putin, so they don’t want to alienate him further. Right now Orban is trying to please and play both Putin and the EU, a shuttlecock policy (hintapolitika – I wonder if there is a better English phrase for this word). So far, it seems to work.

  14. @Istvan, I partially agree, but I was wondering why the West needs the Hungarian infrastructure so badly.. I think what may be important from an economic point of view (other than cheap labor) are the roads that are going down to the countries in the Balkan. If Hungary’s infrastructure is better then those countries are more easily accessible from Western Europe. But, is there no way to go around Hungary, if the West finally had enough of Orban’s peacock dance? Does it all come down to geography (building highways that do not go through Hungary is not possible or economically feasible because of the mountains)?

    On another note, a lot of the EU money is earmarked for social programs, education and the like… if we take the EU as a “colonizer” perspective, it is hard to see what is the EU’s interest in giving money for these things. I think looking at the EU as an entity that simply follows its largest corporations’ (or member states’) economic interests is a simplification. Just as much of a simplification as looking at the EU as kind of neutral, international organization that works for the common good without any self-serving economic interests influencing its operation.

  15. I had to learn that apart from trolls there are also mind readers and omniscient preceptors on this blog who abuse it for personal attacks or spreading their stereotype, prejudiced views. I don’t need this.

    So, as long as this silly and pompous “London Calling!” is commenting, I quit participating.

    It’s been a nice and very instructive couple of years.

    Sorry, Éva, but thank you!

  16. An, other than for environmental grants EU cohesion funds are largely based on the priority areas as identified in the Trans-European Transport Network (TEN) guidelines. This policy aims to close the gaps between Member States’ transport networks, remove bottlenecks that still hamper the smooth functioning of the internal market and overcome technical barriers such as incompatible standards for railway traffic. It promotes and strengthens seamless transport chains for passenger and freight, while keeping up with future technological trends.

    The money An is discussing from the Commission comes from the European Social Fund But the total amount for education and other social related issues is far smaller than for infrastructure. The total social funding to Hungary from the Commission from 2007 to 2013 was about 3.6 billion euros. For example in education over this period 22 million Euros were provided for foreign language and IT. Priority was given to unemployed mothers, Roma people and disadvantaged job-seekers. There is a whole list of things the social fund paid for in Hungary, there is no question they were good things that benefited people, but also helped to provide somewhat higher skilled workers for firms like Audi who still are paid far less than comparable workers in Germany.

  17. “A cow that achieves equilibrium is called a steak, and the economy closest to achieving equilibrium today is probably North Korea.”

    – And the political opposition that achieved equilibrium called …………?

    Any idea?

    Anybody?

    That’s why there was no more letters, that’s why only a handful protester against the abuse of civil rights – and the list grows by the minute. A narcoleptic slug looks so much more agile that nearly ruining the otherwise striking similarities, like the lack of vertebrae.
    (There is more of it, btw.)

  18. London Calling!

    Minusio’s taking his ball away.

    Minusioyour bare-faced brass-neck hypocrisy has been a breathtaking character of your posts on here – not to mention the supercilious tone and pomposity of your contributions.

    When you say:

    “Your other utterances are disqualified as ignorant. Sorry.”

    when you say:

    “But that seems to be the average staple in Britain
    (I said: average, not to offend other Britons on this blog”

    when you say:

    “However, you seem to know as little about the EU and what it does and why….”

    when you say:

    “Perhaps you got out of the wrong side of bed today.
    But at least you know something about Monty Python. I hold that in your favour.”

    when you say: ………… that’s enough….the litany’s long enough but will do…

    …….you are: being pompous, stereotypical, patronising and ad hominem attacking all at once- the very qualities you complain others of doing.

    However I don’t mind! It’s all in the cut and thrust of debate.

    And others have had fun on here too.

    I’m sorry you can’t take the heat in the kitchen and you are so precious that you must go.

    You were pretty lousy at British stereotyping.

    Take a leaf out of Henning Wehn’s book – the German Comedy Ambassador to Great Britain:

    Adieu

    Charlie

  19. Was it necessary to sign this agreement now and with a visit of Barroso? I have not yet heard of the signing of any such agreement in the other countries, so why now Hungary? I wonder what kind of deal that is.

  20. @Kirsten. That’s it. I actually wrote yesterday to Barroso’s office and asked them to give me the list of other countries Barroso visited to sign the document.

    I have not heard from them yet. I have the feeling that they will not be able to provide me with a list because this visit was unique.

    I think that it was a very bad mistake on Barroso’s part. And once I know more I will write a post in which I will express my feelings about this move of his.

  21. @Charlie, I have a very high opinion of Minusio whom I consider a friend. If he actually leaves the blog on account of you I will be very unhappy, More than unhappy, I will be very mad. Please make amends.

  22. London Calling!

    Eva – this is your blog – and I wish it no harm.

    I have reconciled myself to Minusio’s strange ways.

    I will not be the cause of any further trouble.

    Adieu

  23. But Charlie, I believe that we can prove that communication is possible even if the approaches are very different. (Just as an example for the Hungarians who might follow this blog.) And as a very personal observation from someone who is very familiar with German “impartial opinions” about other nations: never take them personally. In most cases Germans will be quite interested if you talk to them about these ideas because they believe it so firmly that you need to supply arguments that make them think about it. I understand this sounds strange but trust my 40 years in experience (and a lot of frustration at times) with it.

  24. Eva, it will indeed be very interesting to learn more about why this visit on Barroso’s way to the Ukraine was so imperative.

  25. Minusio & Charlie

    I’m sorry, Eva, but you cannot admonish Charlie for defending himself in the cut-and-thrust of opposing views.

    You are out of line in taking one side because ‘he’s your friend’.

    I haven’t minded Minusio’s offerings and I have enjoyed many of Charlie’s, but Charlie’s penultimate note was exact: he was being attacked and he defended himself elegantly.

    This whole thing reminds me of Some1’s delusional attitude toward me. Luckily–I guess–you didn’t bar me for ‘inspiring’ her lunacies.

    Eva, you as moderator cannot take sides–it’s damaging to the equilibrium of the blog.

    Charlie H is owed an apology.

  26. Dear Minusio, are you still reading this?

    I could give you a few thoughts on “Charlie”, Eva can probably give you my email address if you are at all interested.
    I would be very very sad if you left.

    Cheshire Cat

  27. Dear Cheshire Cat,

    Thanks for your kind lines. As is I’m now only communicating through Éva – whom I have asked to give you my direct email address, let’s see what happens.

    I’d like to exchange views with people who don’t feel the need to attack me on a personal or stereotypical level for any reason I can see. I don’t need that. But perhaps I don’t see well enough anymore.

    Greetings from Minusio

  28. Please, people, peace – stay calm!

    Every one of the “oldtimers” aka regular contributors here is a valuable addition to Eva’s blog – I find all your contributions very valuable, even if I often don’t agree (totally) with them.

    I know that we stand in different camps politically but still all of us wish the best, especially for poor Hungary!

    To give you an example:

    Istvan and I probably disagree on many things – he’s a real conservative and I’m a”green liberal” or liberal green – if you prefer. But I value his insights very much!

    And so I read (sometimes in wonder) his contributions, which often start me thinking, maybe in a different way ….
    But that doesn’t mean I have to always agree with him – or any other person here

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