More resolute foes of Orbán’s plans for Hungary come from unexpected quarters: Luxembourg and Norway

In the past four years most of the battles between Viktor Orbán and the European Union have ended with a victory for the Hungarian prime minister. Or, if the Budapest government was forced to make changes in some of its controversial laws, they usually smuggled in other equally controversial provisions while allegedly fixing the problems with the first version. Eventually, the “bureaucrats” of Brussels, worn down, were satisfied with superficial, inconsequential changes that did not matter as far as Viktor Orbán’s long-range plans were concerned. But now he is confronted with other kinds of foes: Norway, which does not belong to the European Union, and the Luxembourg-based RTL Group, Europe’s leading entertainment company which is majority-owned by the German media conglomerate Bertelsmann. Neither of them seems to be a pushover.

I was surprised to see that almost three weeks had passed since I first wrote about the war between the Hungarian government and RTL Klub, the Hungarian subsidiary of RTL Group. At that time I reported that the Hungarian government had proposed a bill that was designed to tax the advertising revenues of all media outlets on a sliding scale depending on profitability. RTL Klub is the most profitable television station in the country and hence would get hit the hardest. In fact, the proposed tax of 40% on its revenues could cripple it. Since more than half of all revenues from the advertising taxes would come from RTL, it became evident fairly early in the game that the whole bill was designed to target this particular television station.

The answer from RTL Klub was swift: the news editors decided to spend more time on political news than before, and they made sure that every day there was some story that reflected badly on the government. The government answered in kind. Mihály Varga, minister of national economy (basically the minister of finance), instructed the Nemzeti Adó- és Vámhivatal (NAV/National Office of Taxation and Customs) to examine the tax history of RTL Klub because, as he put it, “there is a suspicion that some of the transactions of Magyar RTL Klub in the past years are fictive; they don’t reflect actual business activity but are designed solely for tax write-offs.” It was at this point that an MSZP member of parliament charged that Hungary was no longer a country of law  (jogállam). The government was using the tax authorities to “punish” companies not to its liking.

The management of RTL didn’t cower. They told reporters that NAV has been after the company constantly. By now they have a department that deals only with tax matters. They have nothing to hide, and they invited NAV to come and investigate. It turned out that the “suspicious transaction” was a 2011 loss of 23 billion forints. The loss came about in the following way. RTL Klub purchased two cable companies which a year later were sold to its parent company. Apparently this transaction is a perfectly legitimate business practice. Because of this loss, RTL wouldn’t have to pay advertising tax this year. And that cannot be allowed.  Thus, the government had to come up with some other way to get to RTL.

Source: http://www.targetgdpi.com/

So came the old Orbán trick. If the law for one reason or another doesn’t have the desired result, let’s change the law. And indeed, as one newspaper put it, before the ink had even dried on the bill came an amendment according to which a company would be exempt from the tax this year only if its profits were either zero or negative in 2013. Clearly, this amended bill targets only RTL Klub. As László L. Simon, the man who presented both the original bill and its amendment, said, Hungarian newspapermen were the ones who called attention to this loophole. Since the government wants to make sure that everybody pays an equal share of the tax, they decided to change the bill.

Yesterday L. Simon for a solid 17 minutes tried to explain the intricacies of his amendment to the audience of ATV while a helpless young reporter sat and listened without interrupting him. He was less lucky when he made the mistake of giving an interview to RTL Klub. As a result of this interview it became evident that L. Simon doesn’t know what is in his “own” amendment. So much for law making in Hungary.

The RTL Group refuses to throw in the towel. Only yesterday a long interview appeared with Andreas Rudas, the director responsible for South-Eastern Europe, who as you might suspect from his name has a Hungarian background. He made it eminently clear that what is going on right now “is not a question of money” as far as the RTL Group is concerned. The firm is ready to stand by media freedom and to go to the highest courts to win against the Hungarian government.

During the course of the conversation we learned that Lis Mohn, the widow of Reinhard Mohn who was the owner of the media conglomerate Bertelsmann, serves on the supervisory board of the firm. And what is also important is that she is a good friend and supporter of Angela Merkel. Rudas revealed that he knows that the topic of what is going on with RTL Klub in Hungary is being discussed in Berlin as well as in other European capitals. RTL Klub is prepared to sue and they don’t care how much it will cost or how long it will drag on. It seems that Orbán has found his match in the business world.

Equally resolute is the Norwegian government. On June 25 a letter was sent to the Prime Minister’s Office which was brief and to the point concerning the suspension of the Norwegian Grants. No lifting of the suspension can take place until the demands of the Norwegians are met, which include the immediate cancellation of “the on-going audit by the Government Control Office.” The letter added that the “audit of the Hungarian NGO program is the responsibility of the Financial Mechanism Office in Brussels.” Well, that is clear enough. No answer has come yet from János Lázár’s office. As Népszabadság commented on the situation: “Lázár and Co. ran into a cement wall.”

In both cases we will see who will break his head first on that cement wall.

Plans to destroy independent Hungarian civil society: The Norway Fund

A few days ago I wrote a post about János Lázár’s attack on the commercial television stations, especially on RTL Klub. I discussed how the station retaliated by including news that until now it had avoided broadcasting, perhaps not wanting to raise the hackles of the Orbán government. They were hoping, I assume, that by avoiding risky topics the station might be left alone. The strategy didn’t work. It has become obvious that the Orbán government wants to destroy RTL Klub because it is owned by a foreign company.

Just today György Barcza, the new pro-government editor-in-chief of Napi Gazdaság, attacked the CEO of RTL Klub, demanding “more humility and less arrogance from someone who is eating the bread of Hungarians and who at times must fall back on the assistance of Hungarians.” What caused the outburst? Napi Gazdaság, a paper allegedly dealing with economics and finance, accused RTL of spending 1,650,000,000 forints on honoraria, thereby demonstrating the vast riches accumulated by the firm. The correct number was 1,650,000. The very idea that a private firm is accused of living off of Hungarians is pretty outrageous, and that this was said by a so-called economist is truly outlandish.

Now let’s move on to the NGOs that the government finds objectionable. 444 got hold of the government’s list of thirteen NGOs which are, so to speak, black-listed.  The government objects to organizations involved in civil and human rights, like TASZ (Társaság a Szabadságjogokért), and organizations dealing with women’s issues, like Nők a Nőkért Együtt az Erőszak Ellen Egyesület (Nane), the feminist Magyar Női Érdekérvényesítő Alapítvány, and Patriarchátust Ellenzők Társasága (Patent). Orbán and Co. have a real aversion to transparency, so it is not surprising that Transparency International Magyarország Alapítvány is on the list together with K-Monitor Közhasznú Egyesület and the Asimov Alapítvány that is connected to Átlátszó, a site dealing with investigative journalism. Anything that has either “liberal” or “democracy” in its name is out, and finally there are the gays and lesbians who have been attacked lately by Imre Kerényi, a close adviser of Viktor Orbán, and by Zsolt Semjén, head of the Christian Democratic party and between 2010 and 2014 deputy prime minister. So, both Labrisz Leszbikus Egyesület and Szivárvány (Rainbow) Misszió Alapítvány are on the list. And let’s not forget the Roma Sajtóközpont (a press agency on Roma affairs).

On June 19 KEHI (Kormányzati Ellenőrző Hivatal = State Audit) sent out letters to these organizations and gave them one week to release all documents having anything to do with the Norway Fund. Most of them have already refused to “cooperate” because they claim, as does the management of the Norway Fund in Brussels, that KEHI has no legal right to audit; the funds these NGOs received are not under the jurisdiction of the Hungarian state. Of course, the Hungarian government has a different opinion on the matter.

Átlátszó and the Asimov Alapítvány announced that they “would not even open the door” to the officials of KEHI if they show up. Krétakör, a theater group, also refused to cooperate and for good measure posted a video on Facebook depicting the head of the group leaving a brief message to the appropriate official of KEHI refusing to allow KEHI to investigate. Szivárvány Misszió also sent a letter to the official in charge in which they said that they “don’t handle state funds” and therefore they don’t know on what basis they are included in the investigation of state funds.

The sad fate of Hungarian NGOs has already received international publicity. Huffington Post published an article by Jon Van Til, professor emeritus of Urban Studies and Community Planning at Rutgers University, who spent some time teaching in Hungary. The title of the article is “Even the ruler of Hungary needs an independent third sector.” Van Til realizes, as by now most people who follow Hungarian politics do, that in Hungary “a duly elected government seems bent on creating a one-party state that controls nearly every aspect of the country’s life–public, civic, voluntary and even religious.”  Van Til considers the conflict between the Norwegian and Hungarian governments “bizarre” because the Hungarian government’s position is that “grants may be received from sources outside the government, but only if they are managed by the government and are directed to organizations it approves.”

The list of the thirteen organizations tells us a lot about the Orbán government. All that talk about the democracy that the Orbán government allegedly established between 2010 and 2014 is hogwash. Instead, Viktor Orbán is striving to establish a one-party system. Whoever doesn’t see this is blind. All those who stand in his way, be they RTL Klub or TASZ, will be crushed one way or the other.

One final word on the possibility that the attack on the gay and lesbian organizations that received funds from the NorwayFund might be part of a general governmental campaign against homosexuals. I already wrote about Imre Kerényi’s outburst, but now we have another high government official and politician, Zsolt Semjén, bringing up the subject. I should mention that Semjén is not the sharpest knife in the drawer and there is good reason to believe that he, just like former President Pál Schmitt, plagiarized his dissertation.

Semjén had a long interview on HírTV’s P8, a program that can be seen on Friday (péntek) at 8:oo p.m. During the interview he talked about the composition of the new Orbán government, the role of the Christian Democratic party, the preponderance of Protestants in the government, and, of all things, homosexuality. According to Semjén, “a small, yet loud interest group that wants to force this deviant behavior receives serious assistance from Brussels.” Actually, he used the word “brutális támogatás” instead of “serious assistance” where “brutális” nowadays is used to indicate something large and concentrated. As for same-sex marriage, Semjén opined that if two men can get married, “why not three?” A rather odd idea that popped into his head which he, I’m sure, finds hilarious. I assume the huge assistance from Brussels refers to the Norway Fund’s two recipients, the Labrisz Leszbikus Egyesület which received €62,436 and Szivárvány Misszió Alapítvány, a mere €4,163.

The Hungarian Liberal Party’s youth organization wrote an open letter to Zsolt Semjén in which they accused him of discrimination, which is unacceptable in a real democracy. But the problem is that we have to face the fact that Hungary is no longer a democracy and if the Norway Fund gives in on this score, it will acquiesce in Hungarian democracy’s systematic dismemberment.

János Lázár’s fight with Budapest and Norway

Until now I don’t think too many people ever heard of Nándor Csepreghy, who originally hails from Cluj/Kolozsvár, Romania. In 2002 he moved to Hungary to enroll as a student at the University of Szeged, where he majored in history. A year after his arrival he was already heavily involved in Fidesz politics. His political career began in Fidelitas, the youth organization of Fidesz. As a party activist he was full of rather innovative ideas, some of which, like a video called Gyurcsány Twister, did in fact manage to twist the truth quite a bit. In 2008 he was sent to the United States to study campaign strategies, where he obviously learned something. In 2010 he was the campaign manager for a Fidesz candidate for parliament who easily defeated the MSZP mayor of Szeged, László Botka. In 2012 he was at last rewarded with an important government position. He became undersecretary in charge of government investments “of special importance.” It is in this capacity that Csepreghy has been in the limelight recently.

He has two uncomfortable tasks to deal with. He is negotiating in Brussels with the office handling the Norwegian funds, and he has the unpleasant job of telling the citizens of Budapest that the government will not award the city funds to upgrade the metro. Without these funds metro line #3 may have to be closed because it so old and technologically behind the times that it has become outright dangerous.

In addition to his degree in history Csepreghy also majored in communication, “concentrating on public relations.” Again, he learned well. He talks in full sentences and usually has ready answers to uncomfortable questions. It is perhaps not his fault that he has to deliver messages from his boss, János Lázár, that turn out to be politically unwise, which later he is obliged to cover up.

This is what happened in the case of the Budapest convergence funds. He explained that Budapest cannot receive anything from these funds because they are meant primarily for underdeveloped regions. And, of course, everybody knows that Budapest and Pest County are the most developed regions in Hungary. The inhabitants are  better educated and average salaries are the highest in the country. There was only one problem with this explanation: there are no such regional restrictions on funds in the convergence program. In an interview he helpfully suggested that perhaps the city of Budapest could take out a loan, which the government would guarantee.

Surely, Csepreghy is too low on the totem pole to make announcements of this sort on his own. I’m certain that he was just a messenger of János Lázár, who a couple of days later sent another message to Mayor István Tarlós through Csepreghy: he should lobby in Brussels for more money just as his predecessor Gábor Demszky did.

János Lázár and István Tarlós

Once Olga Kálmán of Egyenes Beszéd (ATV) pointed out to Csepreghy that the allocation of funds is entirely up to the government, he had to take a different tack. So, he continued this way: It is true that one-fifth of Hungarians live in the capital, but the government has an equal obligation to areas outside of Budapest. Therefore, the government decided to allocate the money to needier areas, which is only fair.

A day later Csepreghy came up with another story. No decision was made that “all financial resources would be taken away from the capital.” But the amount will be less than would be necessary for the modernization of Budapest’s transport system.

Meanwhile  news reached the public that János Lázár has a fairly grandiose plan of his own for his birthplace, Hódmezővásárhely, where he was mayor between 2002 and 2012. He would like to build a tram-train between Hódmezővásárhely and Szeged (23 km). Tram-train is a light-rail public transport system where the train functions as a streetcar in urban centers but between cities uses railway lines. Whether this is the best way to spend billions, I am not sure. I read that currently very few people use the train between Hódmezővásárhely and Szeged; most of the people use the bus. Apparently daily there are only about 8,000 trips between the two cities. Some people pointed out that no town exists anywhere in the world with a population as low as 40,000 that has its own streetcar system.

After about three days of silence Tarlós decided to say something about the grim news. He tried to be conciliatory, stressing that he and Viktor Orbán would find the necessary funds for the #3 metro line. Up to now Budapest has received 635 million forints, but the renovation would cost about 200 billion. The city sent detailed plans and financial estimates to the government. János Lázár, however, claimed in a public forum in his home town that they had received nothing from Tarlós’s office. Who is telling the truth? I’m almost certain that Lázár isn’t.

The question is why the government would want to pick a fight with Tarlós and why they would strip Budapest of all the money promised in 2013. It makes no sense to alienate the population of the city a few months before the municipal election. Well, perhaps Viktor Orbán and his minions think that, thanks to the new electoral law that was dutifully signed by President János Áder today, the election results are sewn up. With the new provisions the opposition won’t have a chance. Or it might be that the government is trying to curry favor with the rural population who are hurting and who think the inhabitants of Budapest get far too big a slice of the common pie. In any case, Brussels favors upgrading Budapest’s transportation system.

As for Csepreghy’s other unpleasant task, negotiations with the Norwegians are not going very well. The government had to accede to the demand of the Norwegian government and abandon the idea of outsourcing the distribution of the funds to a private firm. According to Csepreghy, there was an understanding between the two sides concerning the fate of the larger amount handled by the Hungarian government. However, Csepreghy continued, no agreement was reached about the funds distributed by the NGO Ökotárs Alapítvány (Hungarian Environmental Partnership Foundation).

I am not at all sure that Csepreghy is telling the whole truth. Let me quote a Norwegian source, which I trust more. Here is the Norwegian government’s position: “Norway and Hungary have still not reached an agreement on lifting the suspension of the EEA and Norway Grants to the country…. Hungarian authorities have initiated an audit of the EEA Grants-funded NGO program strengthening civil society in Hungary. Responsibility for the program and any potential audits lies with the donor states. … Hungary must meet the requirements stipulated in the agreements, which means that the audit must be halted. At the same time, a solution must be found on the issue of the transfer of the implementation and monitoring of the Grants scheme out of the central government administration. Norwegian authorities have as a precondition that these outstanding issues must be resolved before the suspension of the EEA and Norway Grants is lifted. The Norwegian Ministry of Foreign Affairs is waiting for a response from Hungarian authorities before deciding if and how further meetings will take place. ” According to this summary, nothing has been resolved. Both the EEA Grants handled by the government and the Norway Grants handled by the NGO program are still suspended, waiting for a satisfactory response from the Hungarians.

The latest scandal: The Orbán government and the Norway Fund

On May 9 we learned that Norway had suspended €140 million of aid funds to Hungary. Most Hungarians, I’d wager to say, have no idea that, in addition to funds coming from the European Union, Hungary receives aid from Norway, Iceland, and Lichtenstein. In fact, Hungary is the second largest beneficiary, after Poland, of the so-called EEA and Norwegian Grants. The money that Hungary receives is the result of an agreement that Norway, Iceland, and Lichtenstein signed in 1994, the “Agreement on the European Economic Area,” which allowed these three non-EU states to join the common market of the European Union. Joining the large EU market was financially advantageous to these countries because within the EU their products were no longer subject to tariffs. In return, the three countries agreed to extend aid to less developed countries of the Union. After 2004, a large portion of the funds went to former Soviet-bloc countries. Under the arrangement Hungary will receive €153.3 million over the next few years. A large portion of the money that has already been received was under the supervision of the Hungarian government, while a smaller amount, the Norwegian Civic Fund, was handled by an NGO called Ökotárs Alapítvány (Hungarian Environmental Partnership Foundation). This organization was chosen by a Brussels-based office to be the lead NGO in disbursing funds within Hungary.

For reasons unknown, the Orbán government unilaterally decided to change the way it handled the aid received from the EEA and Norwegian Funds. As of January 1, the office that had been in charge of the distribution of the grants closed its doors and a private non-profit organization took over its duties.  This new organization has strong ties to Századvég, a Fidesz-related think tank.

The Norwegian government considered the move a breach of  the agreement the Hungarians signed with the Norwegian government, which supplies 97% of the funds. The Norwegians did not mince words. Vidar Helgesen, minister of EEA and EU Affairs who is also the chief-of-staff of the prime minister’s office, said that “Hungary’s actions in this matter are unacceptable” and added that “the Hungarian government has shown little willingness to find solutions that comply with the agreements entered into. We have therefore decided to suspend payments until this matter has been resolved.” He insisted that “the monitoring and implementation tasks in connection with the programs and funds under the EEA and Norway Grants scheme must be transferred back to the central government administration in Hungary, in line with the practice used in all the other beneficiary countries.” Up to now there is no sign that the Hungarian government is ready to oblige.

And that is not the only issue in dispute between Norway and Hungary. The Hungarians are also unhappy about Ökotárs Alapítvány’s administration of the Norwegian Civic Fund. According to Origo, friction between the Orbán government and Norway over the Civic Fund goes back to 2012 when Tibor Navracsics complained to the Norwegian foreign minister about Ökotárs Alapítvány. He alleged that  this so-called independent organization has strong ties to LMP, the Hungarian green party, and therefore its distribution of funds favors the opposition forces.

The Hungarian government also complained about the process that selected Ökotárs as the lead NGO. Indeed, Ökotárs was the only organization that was found to be acceptable by the members of the jury, although originally there were seven applicants. Some of the groups had close ties to the government, while others were brand new creations with neither history nor reputation. Two were actually owned by the Hungarian state. The owners of two others were involved with CÖF, the government-created Civic Forum, the organization of the peace marches and sponsors of the pro-government election campaign. In any case, Navracsics’s complaint fell on deaf ears. The Norwegians were satisfied with Ökotárs.

Then, sometime after January 1, János Lázár again tried to convince the Norwegians to “renegotiate” the agreement on the basis of the new status quo. In addition, he wanted to take the Norwegian Civic Fund out of the hands of Ökotárs. The Norwegian government wasn’t impressed. So, Lázár began harassing Ökotárs Alapítvány. First, the government released nine names from the 50-60-member staff who, according to them, had had some kind of relationship with LMP, MSZP, or an anti-government university organization that was active for a short while in 2012. What they neglected to mention was that several employees had had close relations with Fidesz. Second, the government compiled a list of recipients who, in their opinion, should not have received any financial support from the Norwegian Fund, including the Roma Press Center, the Association of Liberal Youth, Women for Women against Violence, Transparency International, TASZ, the investigative journalism portal atlatszo.hu, Foundation for Democratic Youth, and two gay organizations that received small sums of money, Labris Lesbian Association and  the Rainbow Mission. Obviously, for the Orbán government, grants should go only to pro-government organizations. Critics should not get a penny as far as they are concerned.

Since neither Ökotárs Alapítvány nor the Norwegian government was intimidated, this morning the Hungarian government ratcheted up its campaign against the four NGOs that have helped Norway disburse the grants. It said that it would audit Ökotárs, the lead NGO. And today employees of the state audit department appeared at two partner organizations. At Autonómia Alapítvány, employees cooperated with the auditors but announced that they found the procedure illegal. The Hungarian State Audit Department does not have the right to investigate non-state funds, and clearly whatever small amounts of money these organizations received came from Norway. At the second organization, Demnet, the two men who showed up claimed that the investigation might take weeks. Demnet also put its objections in writing, claiming that the State Audit Department lacks jurisdiction.

Already on Friday Bernadett Szél, co-chair of LMP, wrote: “To János Lázár, the non-government sector is just another area to occupy. LMP rejects the charges.” And atlatszo.hu board member Attila Mong told Reuters that the government had set out to “cut that lifeline from the organizations it considers unfriendly, adding there were almost no other financial sources to replace these grants. Orbán’s message is clear: he wants his hands to be the only ones to feed NGOs. If you don’t want it, you will starve.”

This is where we stand now. Another unfinished chapter in the endless war of independence. Shameful, utterly shameful. Viktor Orbán and his henchmen have been systematically ruining what little remains of the reputation of Hungary.