Mária Schmidt is on the warpath again

Last summer I wrote at least five posts about Mária Schmidt, a historian of the Holocaust and director of the controversial House of Terror museum established during the first Orbán administration (1998-2002). Why is Mária Schmidt so important? Why is it necessary to spend time on a historian not held in high esteem by her colleagues? It is true that as a historian she would not deserve much attention, but as the chief adviser to Orbán Viktor on matters of modern Hungarian history her ideas cannot be ignored. I don’t think I exaggerate when I claim that Schmidt’s interpretation of German-Hungarian relations in the 1930s and the first half of the 1940s is crucial to understanding the Hungarian government’s reevaluation of the Hungarian Holocaust. The newly erected memorial to “all the victims” of the German occupation of Hungary on March 19, 1944 was a direct result of Mária Schmidt’s views on the period.

The other reason that I give her so much space is that every time she opens her mouth, or puts pen to paper, she says something outlandish. She begins radio and television interviews with syrupy sweetness and ends with shrill diatribes.

She has been lying low on Holocaust issues since last summer, most likely because it looks as if János Lázár, Viktor Orbán’s deputy, decided to remove her from the job of spearheading the creation of a new Holocaust museum, the House of Fates. The government realized that no compromise could be reached between the administration and the Jewish community as long as Schmidt was in charge of the project.

They are working on the building of the House of Fates but the concept is still missing

The construction of the House of Fates is proceeding apace

She refocused her attention on more recent events. Last month she wrote an essay on “geopolitical games” between Russia and the United States in which she didn’t spare the U.S. This was not a topic that excited too many people in Hungary.

But then came an exchange of letters between Schmidt and the office of the German chancellor that she made public on February 4. Since the publication of this exchange she has given two interviews, one to György Bolgár on Klubrádió and another to András Kovács of Origo.

Let’s start with a summary of Mária Schmidt’s letter, dated January 20, to Chancellor Angela Merkel. In it Schmidt invited Merkel while in Hungary to a reception in the House of Terror honoring “ordinary citizens who [in 1989] risked everything as opposed to the political leaders of the regime who were only following the lead of the heroic civilians.” Of course, she was talking about the East German refugees in Hungary. In addition, she expressed her hope that together they “could light a candle for the victims of communism.” The answer from Councilor Maximilian Spinner, on behalf of the chancellor, was brief and to the point: “Unfortunately, such a visit is impossible due the limited amount of time available.”

I have the feeling that even if Angela Merkel hadn’t had such a tight schedule she wouldn’t have wanted to be associated with the reception Mária Schmidt organized. The Germans ever since 1989 have repeatedly said how grateful they were to the Hungarian government at the time, and here is an event that belittles the role of the Németh government and Foreign Minister Gyula Horn, whom the Germans revere. And that government, whether Schmidt likes it or not, was the last government of the Kádár regime. By that time the dictatorship had mellowed to such an extent that it was not a brave, heroic act to help the East German refugees. Thousands and thousands of ordinary citizens lent a helping hand alongside the Hungarian government. Schmidt’s invitation was something of a trap, which I assume the Germans noticed and wanted to avoid.

Well, Schmidt was furious. She called Angela Merkel “the heartless chancellor.” She accused the Germans of never thanking these “brave civilians,” of thanking only the Hungarian government that existed “during the still functioning communist dictatorship.” Not only did Merkel not go but no “official representative” of Germany made an appearance when Schmidt gave memorial plaques to the few people she found worthy of the honor.

And then came the interview with Origo. She accused Merkel of “insolence,” which ought to “shock all well-meaning Germans.” According to Schmidt, “the chancellor obviously did not know what country she was visiting.” Otherwise, surely she would have wanted to meet ordinary citizens. She also found Merkel’s words about democracy, freedom of the press, and civic groups puzzling. In her opinion, Merkel talked like a “left-liberal” instead of a Christian Democrat.

Schmidt had a few not so kind words for the United States as well. According to her, M. André Goodfriend, the chargé d’affaires until the arrival of the new U.S. Ambassador Colleen Bell, “misunderstood his role and became enamored with his media appearances.” Everything has changed since the arrival of the ambassador, a claim that is most likely based on Colleen Bell’s frequent appearances at markets or social events, which of course may not indicate a policy change.

According to Schmidt, Hungary is a true ally of the United States and “it would be very sad if there were people in Washington who would like to disrupt that bond.” She is certain that Hungary would like to restore good relations between the two countries, but “we must not forget that the Hungarian nation is a proud one that does not like it if an American diplomat comes here and tells us how we should or should not remember our past,” a not too subtle reference to the memorial that on Viktor Orbán’s insistence was erected despite international protest, a memorial that falsifies the history of the Hungarian Holocaust.

Otherwise, at the moment Schmidt is organizing a conference, “Test of Bravery” (Bátorságpróba). The odd title seems to be lifted from a well-known picture book for children suffering from cancer. The conference will focus on the second Orbán government’s accomplishments between 2010 and 2014.

The House of Terror’s director is a tireless supporter of the government despite the recent slight she suffered when the much contested House of Fates projet was removed from her hands and taken over by the prime minister’s office. Her “concept” remained, however. It is, in the words of László Karsai, a Holocaust researcher, “two hundred pages of nothing.”

János Kornai: Hungary’s U-turn

János Kornai, the renowned Hungarian economist, Professor of Economics Emeritus at Harvard University and Corvinus University of Budapest, has written a new paper about the situation in Hungary. He notes that the main direction of the changes up to 2010 was progress toward democracy, the rule of law, and a market economy based on the dominance of private ownership. Hungary is the first, and so far the only, member of the group of 15 post-socialist EU member countries to execute a sharp U-turn and set off resolutely in the opposite direction. The country has shifted from democracy to autocracy. The final version of this paper will be published in the October issue of Journal of Democracy. I’m grateful to Professor Kornai for allowing me to share this prepublication working paper with the readers of Hungarian Spectrum.

 * * *

 

 

Hungary’s U-Turn

János Kornai

 Prepublication working paper

January, 2015

Do not quote without the author’s permission

Hungary is a small country, poor in raw materials, with a population of only 10 million. No civil wars are being waged on its territory, nor is there any popular uprising or terrorism. It has not got involved in any wars, and it is not threatened by immediate bankruptcy. So why is it still worth paying attention to what is going on here? Because Hungary – a country that belongs to NATO and the European Union – is turning away from the great achievements of the 1989-1990 change of regime – democracy, rule of law, free-working civil society, pluralism in intellectual life -, and is attacking private property and the mechanisms of the free market before the eyes of the whole world; and it is doing all this in the shadow of increasing geopolitical tensions.

 

1

Let us consider the ensemble of the following countries: Albania, Bosnia-Herzegovina, Bulgaria, the Czech Republic, Estonia, Croatia, Poland, Latvia, Lithuania, Macedonia, Hungary, Romania, Serbia, Slovakia and Slovenia. All of these now independent countries reached a crucial turning point in 1989-1990. Previously, they had functioned as independent states or as separate parts of states within the socialist system, ruled by the Communist party. Then the change of system started. The structure and pace of the transformations varied from country to country. Severe failures occurred in all of them, including Hungary; one step forward was often followed by a period of regression. However, despite the colorful variations, the main direction of the changes was common up to 2010: progress towards market economy based on the dominance of the rule of law and of private ownership.

Hungary is the first, and so far the only, member of this group of 15 countries which has performed a sharp U-turn and set off resolutely in the opposite direction. At the 2010 elections the coalition formed by Fidesz – Hungarian Civic Alliance with the Christian Democratic People’s Party (henceforth Fidesz for short), led by Viktor Orbán, won a landslide victory. That was when the turn began.[1]

  1. By 2010 the fundamental institutions of democracy had been established in Hungary – however, with the U-turn their systematic destruction started. It has already been completed to a significant degree.

In actual practice the executive and legislative branches are no longer separate, as they are both controlled by the energetic and heavy hand of the political leader who has positioned himself at the very pinnacle of power: Viktor Orbán. No worthwhile preparatory work on bills is being done either within or outside the walls of Parliament.  Parliament itself has turned into a law factory, and the production line is sometimes made to operate at unbelievable speed: between 2010 and 2014 no less than 88 bills made it from being introduced to being voted on within a week; in 13 cases it all happened on the same or the following day. Without exception, every single attempted investigation of the background of a scandal that has just broken, which would have been carried out objectively by a parliamentary committee with the effective involvement of the opposition, has been thwarted. ‘Reliable’ people close to the centre of power occupy decision-making positions even in organizations which are not under the legal control of the executive branch and which, in real democracies, should serve as a counter-balance to monitor the executive and legislative branches: in the constitutional court, the state audit office, the fiscal council, the competition authority (the office in charge of enforcing pro-competition laws), the ombudsman’s office and the central statistical office, as well as the national tax and customs office.

  1. The basic institutions of the rule of law had emerged by 2010; however, since the U-turn they have been abolished or significantly weakened. The new Hungarian constitution was drafted by a small group within Fidesz, and no wide public discussion ensued. All protests were completely ignored, and it was dragged through the defective filters of the law factory in very short order. The text abounds with shortcomings, which were pointed out immediately (and in vain) by outstanding Hungarian and foreign legal experts. It contained so many clauses which served the immediate political purposes of the people in power that the document, officially called ’Fundamental Law’, has had to be amended five times. In 2011-2013 the Fundamental Law was complemented by the passing of 32 so-called ‘cardinal laws’, which future parliaments will be able to modify only by a two thirds majority. This collection of laws almost completely covers every aspect of the country’s life.

One of the fundamental principles of the rule of law is that no-one, not even those who hold the most power, should be above the law. The law must be respected. In Hungary, the situation has changed: the holders of power are able to elevate any decision to the status of law quickly and without let or hindrance, at the push of a button. They pass retroactive laws, disregarding the prohibition of such legislation which goes back to Roman times. If they wish to arrange especially generous treatment for an individual or an organization, they pass laws using legal tricks which ensure de facto favoritism.

Moving on to the juridical branch of the state, the Prosecution Service is a centralized organization in Hungary. It is theoretically independent, not under the control of the government. In practice, however, and that is what is important, the chief prosecutor is chosen by the holder of supreme power, followed by a purely formalistic appointment by the parliament, which from then on is unable to effectively control him. The chief prosecutor executes the central will through the hierarchy that he heads. With a few insignificant exceptions, the investigation of all public scandals and cases of corruption involving individuals close to the present government party has got stuck in either the investigative or the prosecution phase of criminal proceedings. The Prosecution Service has, on the other hand, brought its full powers to bear on other economic scandals and cases of corruption in which people belonging to the current opposition are implicated. Dramatic, spectacular arrests are carried out for the benefit of the cameras, which arrive in droves. Compromising facts are often leaked while investigations are still in progress. No effort is spared to make sure that these cases come to court, though it is true that all too often charges have to be dropped in the prosecution phase, for lack of sufficient evidence; in other cases the charges are rejected by the court. And it is noticeable that the timing of a leak, of the bringing of charges or of a court hearing coincides frequently with some event on the political calendar: the mine which will destroy a rival’s reputation is detonated just before an election.

We seem to be witnessing a decided attempt by the ruling political group to take control over the courts as well. The President of the Supreme Court, who had been appointed before 2010, was dismissed early, before his mandate expired. A new institution emerged, the National Office for the Judiciary, which from the very start acquired exceptionally wide powers: not only to appoint judges, but also to decide which cases should be heard by which courts. Later, as a result of protests in Hungary and from abroad, the sphere of authority of Office was reduced, but its influence has remained significant. The retirement age fixed for judges was conspicuously different from average age limits and from the previous norms, with the result that the older generation was expelled. This affected several judges in leading positions within the judiciary system, who had been appointed before the present ruling group came to power, and although this measure was subsequently annulled by the relevant international court, so that the people involved obtained at least moral redress, most of them were not able to return to their previous leading positions.

Numerous members of the judiciary are unable to escape from the intimidating effect of the government’s measures. Some cases which come to court have political ramifications, and impartial experts in the field believe that some judgments are biased in ways that favor Fidesz policies. Nobody ventures to express an opinion about the number of cases involved. What is sure, however, (and encouraging) is that the ruling regime has not managed to subjugate the judiciary to the same extent as they have done in other spheres.

  1. By 2010 private rather than state ownership had become the dominant form of ownership. Since the U-turn, however, private property has become the target of frequent legal, economic and ideological attacks; the weight and influence of the state sector is rising again. The nationalization of private pension funds financed from the obligatory contributions of employers and employees, which was carried out using unique legal tricks, dealt a heavy blow to the principle of respect for private property. A similar form of indirect nationalization took place in the sector of saving and loan cooperatives. The state-owned sector has expanded significantly in the branches of banking, energy, public works, transportation, the media and advertising. In these areas the harsh means of disguised confiscation were not so often applied: property rights were bought instead. In many cases the previous owners were forced into a position where they felt they had no other option but to sell their property to the state, and at a price well below its market value.
  2. Up to 2010, decentralized mechanisms played an increasing role in the coordination of various activities. However, since the U-turn the tendency to centralize has become noticeably stronger.

This is primarily true of government administration. One of the major achievements of the change of regime was a significant increase in the powers of local government. The most obvious sign of regression is the fact that schools and hospitals no longer belong to local authorities, but are run from the bureaus of the central government. It is unprecedented – even on a world scale – that a misshapen bureaucratic giant has emerged, which decides over the heads of teachers, parents and local governments about staffing, curricular and financial matters in thousands of schools.

The obsession with centralization, which is intertwined in many ways with the aforementioned tendency to nationalize, affects almost all spheres of society: more and more  questions are decided at the highest level. A pyramid-like vertical hierarchy has emerged and solidified, with the supreme leader at its summit. Below him, ready to obey his every command, stand his hand-picked henchmen, who owe him unconditional loyalty.  Moving on down, we find the next level of the pyramid, and the next: for each position people are chosen for their loyalty to the regime. Commands which take obedience for granted tightly bind each subordinate to his or her superior. It is only the leader at the top who does not depend on his superior, only those at the very lowest level do not give orders to anyone. Everyone else incorporated into the levels in-between is servant and master at the same time. It is in their interests to hang on in there, to move further up in the pyramid. Their position is not decided at elections, but depends on winning the trust of their superior by services and flattery, or at least by uncritical obedience. Hundreds of thousands of public employees, including those who work in the state-run educational and health sectors, feel defenseless: few dare to speak up, to protest, because they fear for their jobs. The regime is robust, partly because it can surely count on the fear of the majority of people dependent on it, as well as on the ‘keep a low profile and obey’ mentality.

A very important decentralized mechanism is represented by civil society, a number of non-market based organizations and associations which are outside the control of state bureaucracy. In twenty years these have developed too, and have also become a means of scrutiny without which it would be impossible to expose and fight abuses of power. One manifestation of the U-turn is the methodical harassment of civil society. When parliamentary bills are being drafted trade unions and other relevant organizations are not consulted. Or if the people concerned express their point of view, in declarations or at demonstrations, their voices are disregarded. The indignant protest of the Norwegian government against the Hungarian government’s plans to interfere in their generous offer of assistance to Hungarian civil society is widely known.

While describing the processes of reversal I did not discuss the causes that induced   the U-turn. There were several important factors here: the grave mistakes made by the governments between 1990 and 2010 and the political parties functioning within and outside the parliament, the spread of corruption, the trauma caused by the appearance of mass unemployment, the increase of social inequality and the disappointment of a large proportion of the population after the high expectations brought by the change of system. It takes a long historical process for democracy to mature, and Hungary has just begun that learning process. It would be essential to complete a thorough causal analysis of the historical past; this, however, exceeds the limits of this paper. Therefore I will only deal with the new period starting with the 2010 elections.

2

When describing the coordinating mechanism of economic activities we cannot apply the metaphor of the U-turn: it would be more precise to call it a half-turn. Market mechanisms became dominant in Hungary in the first two decades after the change of system, and remained so even after 2010. Just as before, state and market continue to coexist in a symbiosis: there is no modern economy where these two social formations would not coexist and exert reciprocal effects.  The change that Viktor Orbán’s regime introduced is that now the state impinges on the economy in a much more aggressive fashion than the governments before 2010 did: it exerts more efforts to rule over it. This is done in many ways.

We are not talking about a case of ‘state capture’ carried out by a small group of oligarchs in order to establish regulations and pass measures in their own interests.  The direction of the process is the reverse. Orbán and the people who are close to him at the peak of political power decide who should become an oligarch, or who should remain an oligarch if he already is one, and how far his sphere of authority should extend.  Something similar takes place at lower levels too. The natural selection of market competition is overwritten by political considerations. “The important thing is that our man should win the public procurement tender, get permission to run a tobacconist’s or a casino, obtain tenure of that state-owned piece of land”. Tobacconists, casinos and land tenure all work on capitalist principles, but at the same time clientelism, a kind of feudal master-servant dependency, is asserted between the politician/bureaucrat and the capitalist entrepreneur.

A new term has been introduced into everyday Hungarian: ‘Fidesz-közeli cég’, meaning ‘a near-to-Fidesz company’.  Such firms do not belong to the party, but the sole or principal owner of the company is a crony of the political center. Maybe the association began a long time ago, at university or when the party was founded; or an individual’s career may have included a succession of political, bureaucratic and business activities. ‘Crony capitalism’ evolves. The intertwining of the worlds of business and politics is a global phenomenon, and provides fertile soil for corruption everywhere. What comes on top of this in Hungary is the social environment created by the aforementioned U-turn: the very organizations which should be fighting, with the authority of the state behind them, against the intertwining of business, politics and government and against corruption are not independent: they themselves are cogs in the same machinery. Just like any member of the Mafia, a corrupt politician or bureaucrat knows that the Mafia state will protect him – unlike the ‘whistleblowers’, who take personal risks to unveil corruption. The latter are not sufficiently protected, but often harassed, and even ‘character assassination’ campaigns are launched against them.

Viktor Orbán and those who implement his economic policies are swift to emphasize that if the state needs more income this will not be a burden for the people, and there will be no  ’austerities’. The new tax will be paid by companies, out of their profits. The word ‘profit’ itself has as bad an undertone as it did in the good old times when Marxist political economics was an obligatory subject for study. Above the usual forms of taxation special supertaxes have been used to pillage whole sectors, especially banking but also telecommunications, insurance, houehold energy supply, and a few other sectors. The effect of special taxes contributes to the fact that the volume of investments by private companies financed from their profits stagnates or barely increases. An unpredictable tax policy, legal uncertainty and anti-capitalist rhetoric discourage the ’animal spirit’; the propensity to private investment.[2] The extra-ordinary tax burdens ensure that the budget is balanced, which is reassuring for international organizations and credit rating agencies who are extra-sensitive to this indicator, but it does undermine an extremely important factor promoting growth and technological development. Moreover, it is not true that the extra burdens hit on the companies only, as they pass the extra costs, if possible, to the consumers.

While companies are held to ransom, the individual tax burden based on dividends has been significantly reduced. One of the first measures introduced by the Fidesz government was the abolition of progressive personal income tax, which was replaced by a flat rate of 16 percent, while at the same time value added tax was raised to an unprecedented 27 percent. It is known that in relation to the income of a given household, these tax rates impose a much greater burden on the living standards of people with low incomes than on those who earn more. Government propaganda proclaims as a great achievement the reduction of household expenditure on utilities through price-cap regulation. In reality, this price-capping policy is far more beneficial for the rich, as the bigger the flat, the more electricity, gas and water it uses, and the more rubbish it produces, the more it saves. We are all too familiar with the consequences of artificially depressing prices from the days of socialism. Companies make a loss, which in the end has to be scraped together by the community of tax-payers.

Restricting the functioning of the price mechanism is an important feature of the general phenomenon which has just been discussed: the state leans heavily on the private sector, using, among other means, administrative micro-interventions, fine-tuning of control and excessive regulation. Every economist who has studied the theory of market failure knows that appropriate regulation and well-aimed intervention can correct many problems caused by an uncontrolled market mechanism. This theory, however, at least tacitly, supposes that the state is at the service of public interests, and that regulation is carried out professionally and without bias. What happens if the levers of regulation are seized by incompetent or even corrupt people? What happens if a state whose masters use the state mechanism to preserve their own power interferes in the economy? Such interventions happen so frequently and affect the coordination process of the economy so deeply that sooner or later the half-turn can become a U-turn in this field as well.

The economic policy followed by Fidesz cannot win the approval of the conservative economist because of the upheaval that it causes to market mechanisms and the way it threatens private property. At the same time, it arouses rightful indignation in the liberal economist who is sensitive to the injustice in the distribution of income. It is not only the tax policy mentioned above, but various other measures must be disagreeable for them. The adherents of Keynesian economic policy must not let themselves be deceived by aggregate employment statistics. The revival following the depression is dragging its feet, the private sector is creating few new workplaces. The growing number of people in ’public work’ is supposed to make up for that. But they are employed for rock-bottom wages, 31-33 percent of the average salary, under degrading circumstances; they are not guided into the employment market this way, but kept permanently in their humiliating condition. Poverty and social exclusion are increasing at a dramatic rate. Enlightened societies would never tolerate the tone of voice that is used to stigmatize the poorest, or the way the homeless are chased out of cities by mayoral decree.

Any attempt to squeeze the classification of the Hungarian government’s economic policy into boxes labeled ’right wing’ or ’left wing’ is off-track. There is no question of the government intending to restore the socialist system, even though some phenomena are surprisingly reminiscent of the socialist era. The Orbán regime is not only compatible with capitalism, but each member of the power pyramid uses the opportunities offered by capitalism to their own advantage. When they launch an attack on banks or other sectors, they immediately conclude a special deal with this or that bank, sign ’strategic agreements’ with this or that large company in front of television cameras. ’Divide and rule!’ Instead of the left-right division, let us put the economy into another kind of spotlight: what best serves the survival of the existing power structure, the power of the central will, the interests of the higher levels of the power pyramid, including their financial interests? Suddenly it all falls into place and we know why this new institution or that new law emerged.

3

Hungary’s friends abroad, intellectuals, journalists, political and economic analysts, diplomats and politicians who take an interest in the happenings here, do unintentionally fall into various traps or misunderstandings. One of these is to overestimate the value of the letter of the law.  At first, the Fidesz government created a law which failed to guarantee the complete independence of the central bank. Not only the media, but also the competent international organizations exerted pressure on the Hungarian state to change the law. This finally happened. Those who had demanded the change felt they had achieved success. The propagandists in Budapest used it to illustrate how flexible and ready to compromise the Hungarian government is. In reality, what happened to the law was irrelevant. Having resigned from his position as minister of finance György Matolcsy, who the prime minister publicly dubbed “his right hand”, stepped out of the ministry, walked a few hundred yards and entered the doors of the Hungarian National Bank, as its theoretically independent governor. Without exception, every single member of the highest body of the central bank, the Monetary Council, was hand-picked by the supreme leader and his advisers; they are all loyal members of the consolidated machinery of power.

According to the letter of the law, every single selection process conforms to various seemingly neutral legal regulations. For example, for one position the current Prime Minister nominates a candidate, the competent parliamentary committee expresses an opinion, and he is appointed by the President of the Republic. For another position the parliament not only expresses an opinion about the candidate, but also makes the final choice. Does this matter? The parliamentary committee, the majority of the complete session of parliament (a two thirds’ majority, at that), and even the President of the Republic are all cog-wheels in the same machinery of power.

Another important example is how the regime leans on the press, television, radio and other means of telecommunication. This is about nothing less than the independence of the ‘fourth branch of power’, the liberty of one of the most important checks and balances which function in real democracies. The competent bodies of the European Union and the international press dwelled at length upon the question of whether the rights allocated  to the centrally appointed media authority were excessive or not. Finally, a few regulations of the law on the media were amended. The critics considered this a victory. Viktor Orbán and his colleagues, however, knew perfectly well that it was irrelevant. What really mattered was the fact that they had put their own people in charge of all television channels and radio stations owned, controlled and financed by the state, who then purged their staffs and turned all of them into the collective mouth-piece of government propaganda. The government or near-to-Fidesz entrepreneurs seized the freely distributed and very popular advertising broadsheets and other free local media products. The state media are obliged to use material provided by the news agency controlled by the government. This is not obligatory for the country’s privately owned media, but the latter are offered new state-produced material free of charge, while purchasing news from independent international agencies or trawling the foreign press is expensive. It is hardly surprising that they are reduced to using the free material. Self-censorship, a form of behavior all too familiar from the communist era, is becoming widespread.

There are newspapers, television channels and radio stations which are independent of the government, and critical of it. This is very important; it is part of the impartial description of the present Hungarian situation. However, many obstacles are raised to their functioning, for example during the distribution of broadcasting frequencies, when licenses are granted. Their main source of revenue is advertising. Not only the government’s own agencies, but also private companies which wish to maintain friendly relations with the political masters refrain from advertising with them. Discrimination manifested in the advertising market has been compounded by an advertising tax piled on top of the existing corporation tax. The relevant decrees were worded in such a way that 81 percent of the advertising tax was to be paid by one broadcaster, RTL, even though its share of the advertising market is only 15 percent. This is how one company has been punished for its dogged independence and regular criticism of Fidesz politicians.

No matter how hard the authorities try to subdue the organizations which form public opinion, the IT revolution has made their task more difficult. Stalin was able to surround his empire with almost impenetrable barriers, but nowadays this is impossible: computers, tablets and mobile phones connect the individual with the world through the internet, hundreds of thousands can express their opinions and organize themselves on social networking sites. The Fidesz government would love to find a way to prevent this too.  Not long ago it proposed the introduction of an internet tax. Each gigabyte data transfer would have been taxed to the tune of 150 forints (roughly 55 USD cents). Within a few days, mass demonstrations had been organized; images of the protesters circulated in the international press. Viktor Orbán retreated – half-way: as I write these lines it is not yet clear if the plan has been abandoned for good or merely postponed. Whatever may happen, the image of tens of thousands of demonstrators raising their mobile phones to the sky has become a symbol. The light from the tiny screens might even have illuminated the clouds of the internet – today no regime is able to raise impassable barriers to the flow of free speech.

 4

Here is another frequent intellectual fallacy: certain recently established Hungarian institutions, or new procedures that have been introduced lately, are similar or even identical to the parallel institutions of a traditional Western democracy – at first sight. Many changes have been made in the Hungarian judicial system. What is wrong with that? After all, even after these recent changes, in many ways it still resembles the systems of some European countries. The tobacco trade used to consist of small shops competing with each other. Now  only the government is allowed to issue a license for the sale of tobacco. What is wrong with that? After all, in Sweden a state monopoly with similar or even greater powers covers the trade in alcoholic beverages.

What we have is a mosaic, many pieces of which are original Hungarian products, while others have indeed been imported from democracies abroad. However, if we look at the mosaic as a whole, the outlines of Viktor Orbán’s Hungary emerge. It is actually better to move away from the static image of a mosaic to represent the relationship between ‘part’ and ’whole’. It is not a fixed state that we have to interpret, but a dynamic process. What we have to recognize is the direction that has been followed by each small component of the machinery since the starting point in 2010. From then on, at every new change, we, the observers, must notice which direction the change has taken. In the US, the mandate of the members of the Supreme Court lasts for the rest of their lifetime. There, this regulation has emerged within the framework of a stable democratic order, with many checks and balances in operation. In Hungary, on the other hand, for the first time now the vast majority of members of the Constitutional Court were chosen by the current prime minister – and in a few years all the members, without exception, will be Viktor Orbán’s nominees. If their mandate, is being extended right now, this move, along with other similar moves, will shift the legal status of the country towards irreversible power relations. Thousands (yes, the number is no exaggeration) of discrete changes, all moving together in the same direction, create a new system. Understandably, the Budapest correspondent of a foreign newspaper might write about only one outrageous measure without putting the event into the whole context of Orban’s system. An international organization or a foreign government might be justified in protesting against a specific measure taken by the Hungarian government, and in trying to exert its influence to have this measure modified or withdrawn. This article is intended to help those who form public opinion abroad and those who plan and implement measures taken in the world outside that concern Hungary to a better understanding that more is at stake than a momentary event:  this is now a strongly forged system, whose essential properties cannot be altered by partial modifications.

Another intellectual fallacy is the faulty evaluation of the legitimacy of the Orbán government. “Although I don’t like what is taking place in Hungary, it seems to be what the Hungarians want.” This opinion is further reinforced by the official propaganda, which is busy announcing that the regime won a two-thirds majority for two successive parliamentary cycles; there is no other government in Europe that enjoys such strong support.  Yet let us take a closer look at the facts.

Kornai table
At the last election only every fourth person entitled to vote expressed the wish that Viktor Orbán and his party should govern the country. The others either voted for another political faction or expressed their weariness and disappointment in politics by abstaining. By staying away perhaps some people wished to indicate that they found the regime repellent, but they did not believe that their vote would bring about any change. Political legitimacy is not a binary variable: no government is simply either legitimate or not – but measured against the continuous scale of legitimacy, support for the Hungarian government is low. The election system itself, introduced after the change of regime, has offered the opportunity for a considerable difference between actual political support and the proportions among the representatives.[3] That gap has further widened as since the 2010 elections the electoral laws have been modified seven times; while Fidesz lost more than half a million votes, and the fraction of all eligible voters who voted for Fidesz dropped from one third to a quarter, the regime used legal tricks to maintain a proportion of deputies which is higher than the critical minimum needed to pass laws requiring a two-thirds majority.[4]

There is another intellectual trap connected to the misinterpretations that I have just mentioned; those who have fallen into it may see the Hungarian state of affairs thus: “It is true that the Fidesz regime has abolished many democratic achievements. However, the present form of government must still be considered a democracy.” At this point the debate about what we call ‘democracy’ begins. There is no consensus between academic political philosophers and political scientists. The terminology used by people who are actively engaged in politics is interwoven with elements of political rhetoric. Where the term ‘democracy’ is an honor, the status of democracy is awarded or denied to the Hungarian form of government by the journalist, political analyst, politician or diplomat according to whether they hold a favorable or an unfavorable opinion of the present Hungarian system.  The terminological confusion remains even when ‘democracy’ receives a defining attributive. The expression ‘illiberal democracy’ was originally introduced to political science with pejorative connotations, while Viktor Orbán uses the term ‘illiberal state’ with self-assured pride to describe his own system.

An apt description of the present Hungarian political system / Source 168 Óra

An apt portrait of the present Hungarian political system / Source 168 Óra

Let us look at the set of previous and present historical forms of government that have characterized recent history. In one group we find democracies. Members of the European Union before its expansion, the US, Canada, Australia, New Zealand, Switzerland and Israel surely belong to this group, and as far as this article is concerned the question of which other countries might also belong can be left open for the time being. What is sure is that the essential common features do not exist only in theoretical texts, but can actually be experienced.  ‘Checks and balances’ are not merely requirements supported by arguments put forward by political philosophers – they really do exist, and their functioning can be experienced by observation. We can say the same about respect for minority rights; there are written and unwritten limits to what the majority, however large it may be, can do against the will of the minority. We could go on listing other important common features.

In the other group we have dictatorships.  For me, and for several hundred million other people, this is no abstract theoretical concept: it is a cruel, personally experienced reality.  Thirty years ago 28 countries belonged to one kind of dictatorship: totalitarian communism.

In between the two extremes, the set of all kinds of governments includes a subset; countries which belong here are neither democracies nor dictatorships, though they bear characteristic features of both. In my own work I have joined other authors in calling them autocracies.[5] This class is made up of a colorful multitude: I would place in it the pre-war regimes of the Hungarian regent Miklós Horthy and the Polish statesman Jozef Pilsudsky, or that of the Argentinean president Juan Domingo Peron in the post-war era. In our own time, besides the Russian president Vladimir Putin, the leaders of Belarus and many Central Asian post-soviet states rule over countries which belong to this subset.

I believe that under Viktor Orbán Hungary has moved from the subset of democracies  into the subset of autocracies. I am not talking in the future tense, about the danger of the country becoming an autocracy. The move has already taken place: the change has happened.

To consider Orbán a dictator would be to misunderstand the present Hungarian situation. Hungary today has a multi-party system, opposition parties function legally, newspapers opposing the government can be published. Political opponents are not imprisoned en masse; nor are they liquidated. We know all too well what real dictatorship is; we have experienced it, and what we are experiencing now is not that. However, to believe that Orbán is the leader of a democracy, and that although he breaks the rules of democracy from time to time, in the end he still behaves like a democrat, would also be a misunderstanding.  I do not even want to raise the question of whether Orbán, in the depths of his heart, is a true democrat or not. This may be an important question for his future biographer, but it is irrelevant for our analysis. We have to investigate what has actually already happened. And what has already happened is enough for us to say that Hungary now belongs to the wide subset of autocratic countries that are “neither democracies nor dictatorships”.

It would be a mistake to believe that Orbán is copying Putin. All autocracies are built on different historical traditions; they have emerged in different domestic and international environments, and the personalities and aspirations of their highest leaders differ. Orbán is not an imitator of others, he is a self-determining personality. This does not alter the fact that both the Putin and the Orbán regimes belong to the same subset of autocracies.

Hungary is the first of the post-socialist democracies that has joined the autocracies, but there is no guarantee that it will be the only one.  The balance of power might shift in other countries in such a way as to turn them into autocracies. There are foreign politicians who see Orbán as a model; there is a real danger that this contagion, leading to the loss of democracy and of the rule of law, will spread.

5

One of the sources of Viktor Orbán’s support is the fact that many see him as the staunch defender of the sovereignty of the Hungarian state, and of Hungary’s independence.  However, anyone who wishes to understand the Hungarian situation must realize that the problem cannot be shrugged off by simply labeling Orbán as a nationalist.

Worldwide, we can see two opposing tendencies. Globalization, the internet, the technical ease with which we travel, the emergence of transnational integration are all making the world more international. At the same time, national sentiments within the boundaries of a nation-state or in communities which reach beyond national frontiers but use a common language, and share common historical traditions, still persist; indeed, they are growing ever-stronger.

The change of regime not only brought about internal revival, but also coincided with the restoration of Hungarian sovereignty. “Russians go home!” was the first slogan; a happy separation from the East, an expectant turn towards the West. Western exports and imports were becoming more and more significant. Plenty of foreign capital was flowing into the country. Hungary joined NATO in 1999, and became a member of the European Union in 2004. In both cases, the intention to join was confirmed by a referendum, and in the campaigns leading up to these all the parliamentary parties, Fidesz among them, encouraged their followers to support the move. Although counter-opinions have always been present and voiced, for twenty years the direction of changes in foreign policy remained unambiguous. Hungary must be an organic part of Europe: it must unambiguously belong to the Western world; it must further strengthen the links binding it politically, economically and culturally to the West.

The year 2010 saw a peculiar U-turn in this area as well: unambiguity has been replaced by ambiguity. This emerges mostly in the rhetoric of official statements. Leading politicians grieve at public meetings about the crisis of world-wide capitalism and Western civilization. The leaders of the regime make use of the anti-EU, anti-American atmosphere; sometimes they go as far as to compare directives from Brussels with the pre-1989 dictates of Moscow. But if yesterday there was talk of the emasculation of the West and of the great things to be expected from the East, today’s discourse will be just the opposite. Orbán is proud of his Janus-face, and considers it the sign of his political shrewdness.[6] The content and tone of the words change, depending on whether they are intended for the Party faithful or spoken in Munich or Vienna at a conference for businessmen.[7] It is hardly surprising that both followers and opponents, both Hungarian and foreign observers, are mightily confused.

In the world of foreign policy and diplomacy official or semi-official statements can carry a lot of weight. Hungary is still member of NATO and the European Union; there has never been the slightest hint of any intention to leave either body.[8] The Hungarian government is happy to receive the plentiful financial support that flows from the EU; the only thing it insists on is full control over its distribution. (We have already mentioned the real motivating forces and intentions which govern state allocations.) At the same time the representatives of the ruling political regime regularly support Euroskeptic declarations.

The Hungarian diplomatic corps resolutely attempts (without much success) to establish business relations with various Asian autocracies and dictatorships, from Azerbaijan, Kazakhstan, Uzbekistan and the Arab Sheikdoms to Vietnam and China, pointing out that other countries do the same. This is purely about business; taking a stand for democracy and human rights is another issue. But they sometimes ’rise above’ this point: recently Orbán called Azerbaijan a “model state” when its dictator was on an official visit to Budapest.

Understandably, other countries take the keenest interest in Hungarian-Russian relations. As we noted earlier, the present Hungarian and Russian forms of government share several features; in this respect both regimes belong to the same subset of autocracies. But now we are not focusing on this similarity, but on the economic connections and relations in foreign affairs between tiny Hungary and huge Russia. In this relationship, how far can the sovereignty of Hungary be maintained; to what degree is it committed now and for the future to its Russian partner? The corollary is another question: how far do these present tendencies endanger Hungary’s commitment to the European Union, to NATO, to the Western world?

In order to be able to answer the question, we would need, for example, to know more of the conditions under which in January 2014 the Hungarian and Russian governments reached an agreement over the expansion of the largest Hungarian power plant, the Paks nuclear power station. I am not in a position to judge whether this large-scale expansion of Hungarian nuclear power capacity is justified, and if it is, whether the Russian proposal was the most advantageous in technical, financial and geopolitical terms of the possible alternatives.  What many people in Hungary and abroad object to, and with good reason, is the way in which the decision was brought. It was not preceded by public debate among experts; the government’s plans were pushed through the parliamentary law factory without the least publicity.  In this crucial issue, which will have a deep impact on the lives of many future generations, on European integration, on the foreign affairs of the country, on its commitments to its allies, the government confronted the public with a fait accompli.

Reflecting on the relationship between Hungary and other countries, the following question must be considered: what can Hungarians who worry about the U-turn, who fear for democracy, for the rule of law and for human rights expect from their foreign friends? A new development may be followed by cries of: “the West won’t put up with any more of this”. I am afraid many people nourish false hopes. The learning process is painfully slow; it takes years for foreign observers to realize there is anything wrong, and even longer before they put the different elements of the phenomenon into the right context.  And comprehension is only the beginning, what else is also needed if recognition is to be followed by some kind of action? This is a task that international organizations are not used to; they are at loss as to how an allied state can be forced to abide by the rules of democracy. Not many means are available. The European Union is unprepared for a situation where one of its members keeps turning against the value system and formal and informal norms of its community. And let us not forget that Hungary is only one small point on the map of the world; conflicting interests influence the motion of political forces. The special interests of countries, political groups, social classes and professions pull the main actors in many different directions. Threatening situations more important than the Hungarian one have proved impossible to solve reassuringly by peaceful agreements.

6

I have left the survey of the changes which have taken place in the ’ideological sphere’ to the end. A fundamental characteristic of communist dictatorship is the existence of an ‘official ideology’. The roots of its ideological history go back to Marx and Lenin, its terminology comes from the language of Marxist-Leninist party seminars. The communist party kept it up-to-date, and adapted it to the propaganda needs of whichever party line prevailed at the time. The citizen, especially the ‘cadre’ with a role in the system, was obliged to accept the ideology; he had to articulate it both verbally and in writing.

Following the fall of the old regime, the same main direction of change unfolded in this sphere too: the dominance of ‘official ideology’ was replaced by pluralism in the ideological world. Compared to this main tendency, we can observe a U-turn here too. The government strives to limit and discredit the principle of pluralism. It tries to force on society those theories, beliefs and norms of behavior that it considers the only acceptable dogma.

First of all, it vigorously established institutions which promote the execution of the central will. For the world of artists, pluralism and diversity are essential elements. Accordingly, in free societies many kinds of associations and unions, schools and groups coexist side by side, competing or even fighting with each other. The regime which seized power in 2010 selected a small group and invested it with powers that would be unimaginable in the West. Their main organization is the Hungarian Academy of Arts (Magyar Művészeti Akadémia). Other organizations and groups do still exist, but the name of this privileged body appears even in the constitution. It was given one of the most beautiful palaces in the capital as its headquarters, and made responsible for distributing the majority of publicly-funded cultural grants, as well as most awards and marks of recognition which come with financial rewards.

In the scientific world, the situation is similar. The Hungarian Academy of Sciences boasts a long history, and though its independence was severely curtailed by the party state under communism, its autonomy strengthened after the change of regime. It used to exercise considerable influence over decisions about which research projects should be funded by the state, through an institution which, like the American National Science Foundation, relied on expert opinion. Now, however, centralization has taken place here too. The National Innovation Office (Nemzeti Kutatási, Fejlesztési és Innovációs Hivatal), a leading state organization, was established. The Academy and other scientific organizations might try to express their opinion before final decisions are taken, but the days of a decentralized, professional and civil approach to funding allocations are over – the president of the office has sovereign decision-making powers. And who is that president? None other than the minister of education from the first Orbán government.

Turning to the sphere of education: the change of regime made the emergence of a real text-book market possible. The writers and publishers of school books could compete with each other; schools, or even individual teachers, could decide which books to use. Right now, competition is being abolished here too: a mammoth state text-book publishing house has been set up and granted what is effectively a near-monopoly.

What ideas is this increasingly centralized, nationalized, standardized machinery trying to promote? A return to the past is perceptible here too; not to the previous regime with its Marxist-Leninist ideology, but to an earlier ideological past. The official ideas of the pre-1945 Horthy period are being revived in various forms, with increasing strength. It is impossible to describe these with a handful of concise expressions such as nationalism, chauvinism, ethnic or religious prejudice or a conservative view of the family, because they appear in a variety of shades. Official politicians never make open and extreme declarations that would offend the ears of the civilized world; there are, rather, many covert hints and indirect expressions. But in that muted music, the marching tune for boots tramping out the same rhythm can be heard. To the ears of my generation the sound is familiar and frightening.

The images of cultural and academic life and of the world of ideas that I have highlighted here dovetail with the general description of the present-day Hungarian system, which was summarized in an earlier section of this article.  This sphere too bears the mark of an in-between state that is ‘neither democracy nor dictatorship’. The regime is trying to encroach in an increasingly aggressive fashion. Luckily there are large numbers of writers, poets, musicians, film-makers, artists, scientists, teachers and free-thinking intellectuals who will not allow themselves either to be intimidated or to be bought by money and rewards, and who protect their intellectual autonomy. Any visitor to Hungary can testify that intellectual life is thriving: great artistic works are born and significant scientific advances are made.

7

When I was giving lectures in the USA on a delicate and complicated situation, during the post-socialist transition, I was always asked the question: what should be done? What can we do? I admire and respect this readiness to act, but it is not my task to answer the question. My paper solely aims at revealing the situation; I wished to contribute to our American and other foreign friends’ better understanding of the Hungarian scenario.

What does the future hold for Hungary? One of the theories of democracy, linked mainly to the name of Joseph Schumpeter, deserves close attention. It does not dwell on how far a certain form of government expresses the ‘will of the people’, or at least of the majority. It considers democracy primarily as a procedure which enables the people to get rid of a government, not through the murder of a tyrant, not through conspiracy, military coup d’etat or a bloody popular uprising, but in a peaceful and civilized way, through elections which are well defined in legal terms, with many competing parties. The feasibility of dismissal is not a sufficient condition for a viable democracy, but it is a necessary one: it is the minimum condition.

It will be some time before we can say for sure whether this minimum condition is met or not. In Sweden it took forty years before the social-democratic government was dismissed at the 1976 elections. In Britain the conservative party ruled for eighteen years, from 1979 to 1997, before it was voted out of office. The historians of the future will give a final answer to the question of whether the minimum conditions of democracy are met in Hungary or not. However, many things are already clear.

Viktor Orbán and his party have ‘cemented themselves in’  – to translate an expression which has become commonplace in Hungary. The repeated modifications made to election laws were intended to favor a Fidesz victory, or rather, to make it an absolute certainty.  Should the need arise, the laws can be further modified without any hindrance. Fidesz was prepared for the unlikely but not impossible event of its failing to win a parliamentary majority at the elections. The mandates of many key positions, most importantly that of the chief prosecutor, the president of the republic, the head of the central bank, of the audit office and of the judicial office, extend beyond the current parliamentary cycle; they can all sit tight , even if the opposition wins. The Fiscal Council, a body appointed by the present government, but which would remain in office even in case of an election defeat, has not only an advisory role but also the right of veto over the budget submitted by a new government, and if that veto is used, the president of the republic may dissolve the parliament and call for new elections. In other words a few hand-picked men loyal to the present government would be able to overturn the next government.

All of this leads to the logical conclusion that it would probably be extremely difficult to effectively dismiss the government at parliamentary elections. In this sense, the situation that has emerged is nearly irreversible. Historical experience shows that an autocracy can only be brought down by an ‘earthquake’ that rocks the very foundations of the system.

Other future scenarios are also possible. The great events of history cannot be predicted on the basis of mathematical probabilities; every constellation is unique and unrepeatable. The situation could turn out a lot worse than today. The present Fidesz autocracy could react to the growing protests by hardening the repression. Or another way of events is also possible. Jobbik, the party of the extreme right, already represents a significant force; in more than one city its candidates have been elected as mayors. They speak undisturbed in parliament and in the street. What would happen if in a future election Fidesz did not manage to win a parliamentary majority? Would they be prepared to make a coalition with the extreme right? There is a historical precedent: towards the end of the Weimar republic the moderate right-wing conservative party entered into a coalition with Hitler’s party; together they constituted a parliamentary majority.

At the same time, favorable scenarios are not impossible either. What if more moderate groups within the ruling party are getting the upper hand, who are ready to stop on  the wrong track and turn back, in the direction to democracy and the rule of law? What if the opposition pulls itself together? What if new political movements emerge and win over millions? What if somehow, in spite of an electoral system which almost guarantees the defeat of future democratic forces, the tables turn?

Let us not give up hope.

—–

The printed text here contains very few footnotes. Further footnotes as well as a list of sources on the topic, in both English and Hungarian, will be available in a Web version of this article, available on the authors website: http://www.kornai-janos.hu.

[1] A few months after Fidesz took over the government I wrote an article entitled “Taking Stock”(“Számvetés”), which gave a summative overview of the main characteristics of the changes that had already taken place and which could be expected. Two volumes in Hungarian, edited by Bálint Magyar, were published under the title The Hungarian Polyp – The Post-Communist Mafia State.

The text here contains very few footnotes. Further footnotes as well as a list of sources on the topic, in both English and Hungarian, will be available in a later Web version of this article.

[2] The spectacular new projects inaugurated with pompous ceremonies by political leaders are mostly financed by European Union funds or are established by multinational companies.

[3] About half of the seats are divided among the parties in direct relation to the proportion of the votes. The other half are allocated in every constituency following the ‘winner takes all’ or ‘first past the post’ principle best known in the British system. That secures a large number of seats for a party which has even a small relative advantage over their rivals in several districts.

[4] Compare these figures with German data from 2013. The CDU/CSU received 29.7 per cent of the vote (41.5 per cent of those eligible actually voted). This is only slightly lower than the Fidesz results. But the actual proportions of votes are represented by parliamentary proportions in the Bundestag. Thus, Merkel did not have a majority, and a coalition with the Social Democrats is governing that country.

[5] In the related debates in Hungary, referring mostly to international sources, diverse terms have been in use, for example, ’managed democracy’, ’Führer-democracy’, or ‘elected despotism’.

[6] Viktor Orbán said the following in 2012: “There is a dance routine in international diplomacy. This dance, this peacock dance … has to be performed as if we wanted to be friendly. These are, let’s say, exercises in the art of diplomacy. … So we accept two or three out of seven proposals, those two or three that we have followed already, except they didn’t notice, and we reject the remaining two we didn’t want, saying ‘C’mon, we have accepted the other ones.’ This is a complicated game. Unless you insist, I’d rather refrain from entertaining you with the beauty of the details.”

[7] A characteristic scene of the ’peacock dance’ is the duplicity shown by Fidesz and the government towards Jews. More than once the government has emphatically  declared that it will not tolerate anti-semitism, and if necessary it will defend its Jewish citizens against any kind of attack. At the same time several government measures gravely profane the painful historical memories of Hungarian Jews. For example, it is falsely suggested in various ways that the deportation of hundreds of thousands of Hungarian Jews was forcibly imposed by Nazi Germany, while in fact Horthy’s state machinery was actively involved in it.

[8] A noteworthy exception: the Speaker of the parliament, a Fidesz member, at one point publicly referred to the possibility of ”backing out” of the EU.

The Hungarian mafia war

As I reread yesterday’s post, I realized that I failed to capture both the tone and the importance of what happened yesterday in Hungary. Many commentators consider the “media war” between Viktor Orbán and Lajos Simicska to be the most serious political crisis of the last twenty-five years, a crisis that may cost Viktor Orbán his political career. I agree. February 6, 2015 was a critically important day.

Simicska’s outburst offered us an opportunity to peek behind the curtain of Viktor Orbán’s regime. What we see there is devastating. Hungary is being governed by a crime syndicate, something outsiders had told us, but until yesterday we had no inside confirmation. Now we know. If you try to leave, if you fall from grace, you can easily imagine that your life might be in danger. The members of this mafia family are immoral and dangerous thieves, ready to do anything. In fact, they are more dangerous than an ordinary mafia family because in their hands is the entire state apparatus–the power of legislation, the judiciary system, the police, the army. As Ildikó Lendvai said on Facebook, “Media war? Oh no, mafia war… War of gangsters broke out.”

Viktor Orbán in nice company Source: Die Welt / Photo Getty

Viktor Orbán among his friends and comrades
Source: Die Welt / Photo Getty

Yesterday I couldn’t quote Simicska’s exchanges with reporters at any length because of all his obscenities, some of which I simply didn’t know how to translate. The Budapest Beacon, however, took up the challenge and translated the interview between Simicska and József Nagy of Hír24 in its entirety. You might want to take a look.

Simicska seems determined to go all the way with his fight. He doesn’t hide the fact that he knows all the dirt behind the rise of the Young Democrats, the crew from the István Bibó College. If he decided to tell all, Viktor Orbán would immediately fall from grace. But can Simicska reveal everything he knows about the old crew–Viktor Orbán, László Kövér, János Áder, József Szájer, just to mention the top leadership that gathered in the second half of the 1980s? Simicska might be terribly upset at the moment, but once he has calmed down he should realize that he cannot reveal the criminal activities in which these men have been involved over the years without implicating himself. He must also have figured out long before he decided on an open attack that his decision will have severe financial consequences. He can say goodbye to his lucrative business ventures, which have been conducted exclusively with the government. Of course, it is possible that Simicska decided that he is rich enough and therefore no longer needs the prime minister’s help. Perhaps he stashed away his billions somewhere outside of Hungary. In any event, Viktor Orbán seems to have the upper hand here because behind him is the power of the state. But we shouldn’t underestimate Simicska, who is an exceedingly capable fellow and a skilled manipulator. Even his former friend Viktor Orbán had to admit that “Lajos is the cleverest among us.”

For the time being the top leaders of Fidesz decided to act as if nothing happened. They made sure that the state television’s evening news buried the “news of the day.” First they talked about the excellent performance of Hungarian industry. This was followed by a story on the government’s efforts to create more jobs. Next they announced that the government decided to have a “national consultation” to determine whether Hungarians want illegal immigrants or not. Only then came the news that the editors of Magyar Nemzet, HírTV, and Lánchíd Rádió had resigned and that Simicska gave several interviews, but what he said was not reported, allegedly because of the obscenities. Not a word about his disapproval of Orbán’s pro-Russian policies or his accusation that Hungary today is building another dictatorship.

In my opinion, those people, including the Fidesz leadership, who think that this whole thing will blow over are wrong. Their argument is that very few people will even hear about the incident. I disagree. Both Origo and HVG have close to a million readers a day, and the news about the Simicska-Orbán affair has been all over the internet. Those who don’t use the internet will hear the story from colleagues at work, from neighbors, or on the streets. Even a right-wing blog, Jobbegyenes (Straight right), argued that Orbán made a mistake in turning against the right-wing media developed and financed by Simicska. Both the Antall government and the first Orbán government tried to rely exclusively on state television and radio but both had to realize that this was not enough. Once Fidesz loses power, it will also lose MTV and MR and then what? It was Simicska who between 2002 and 2010 created the pro-Fidesz media empire that made the 2010 Fidesz victory possible.

I gather from an interview with Sándor Csintalan, who currently works for Lánchíd Rádió, that a certain percentage of Lajos Simicska’s business profits has been turned over to Fidesz for at least the last fifteen years. It was Simicska’s money that kept Fidesz financially comfortable. A great deal of that money, of course, came from the European Union. The EU not only kept the country afloat economically; it also unwittingly poured money into Fidesz coffers. But now, it seems, Viktor Orbán believes he no longer needs Simicska’s financial help, especially if that assistance comes at a price, meaning political influence.

At the moment Simicska is spending a week abroad while his new editors are working hard to reshape the political messages of his television station and Magyar Nemzet. I watched HírTV ‘s newscast last night, and it seemed balanced and factual. In Magyar Nemzet an editorial appeared written by Attila Kristóf entitled “Whose responsibility?” in which he is critical of the Orbán government’s most recent unfortunate decisions. According to him, “some Fidesz politicians have a lifestyle that alienates some Fidesz loyalists.” There is already disappointment, a sentiment that might change into antipathy. Of course, at the moment there is no alternative to Fidesz. The author pessimistically remarks at the end that “we don’t know what kind of future is awaiting us.”

Neither does Lajos Simicska or, for that matter, Viktor Orbán.

A different kind of media war: Lajos Simicska versus Viktor Orbán

What a day! A shakeup–no, an earthquake–at Magyar Nemzet, Magyar Nemzet Online, HírTV, and Lánchíd Rádió, all part of Lajos Simicska’s media empire.

For those who have been following Hungarian politics over the last few years Lajos Simicska needs no introduction. He was the favorite oligarch of the Hungarian prime minister. His companies won about 40% of all government contracts financed by the European Union. What fewer Hungarians remember about him is that in the early 1990s it was Lajos Simicska who saved Fidesz from financial collapse. As Zsolt Bayer, a friend of both Simicska and Orbán, admitted, “without [Simicska] there would be no Fidesz today.”

This is not the place to go into all the gory details of this financial rescue operation. Suffice it to say that the young democrats received a piece of property from the Hungarian state for a party headquarters, which they subsequently sold. They invested the proceeds in all sorts of business ventures that failed, one after the other, leaving behind millions in company debt and unpaid value added taxes. It was Simicska and a lawyer friend of his, Csaba Schlecht, who came up with the master plan. They “sold” the failed companies to bogus individuals who couldn’t be traced. Among them were homeless people who for a few forints agreed to go to a notary and sign anything that was put in front of them. Two of these people became especially infamous. Simicska and Schlecht got hold of the passports of a Turkish guest worker in Germany, Ibrahim Kaya or, as he is known in Hungary, Kaya Ibrahim, and a Croat named Josip Tot. The scandal broke during the first Orbán government, and naturally the police made no serious effort to find the culprits. One could say that Fidesz was born in sin.

For the better part of a year rumor had it that the relationship between Orbán and Simicska had soured. All sorts of hypotheses were put forth about the reason for their fallout. The most prevalent was that Orbán no longer wants to be beholden to one person and would like to widen the financial circle around Fidesz. Soon enough there were signs of Orbán’s efforts to loosen the ties with Simicska, and of Simicska’s response. By last fall a number of journalists who were absolutely devoted to Viktor Orbán were sacked at Magyar Nemzet. In early January we learned that Orbán no longer wants to help the Simicska media empire with advertisements by state companies. These media outlets have to stand on their own feet; he will throw his financial support behind the state television and radio. It was clear that something was brewing, but what really brought matters to a head was the announcement yesterday that the Hungarian government will substantially lower the advertisement tax on RTL Klub and, instead, every media outlet, even the smallest ones, will have to pay a 5% tax on their advertising revenues. That was the last straw for Simicska, who went on a rampage today.

Source: Magyar Narancs / Photo: Dániel Németh

Source: Magyar Narancs Photo: Dániel Németh

First, Simicska got in touch with Népszava last night and told the social democratic paper that “the media war will most likely become total” from here on. He told them that he considers the government’s proposed tax on advertisements “the latest attack against democracy.” In an interview with Origo he claimed that it is not money that is his first consideration, but “what will happen if one day Viktor Orbán scratches his head and decides that he will double the tax?” In brief, he is complaining about the same thing the German businessmen did to Angela Merkel.

When Simicska really lost his cool was early afternoon after he learned from his own paper, Magyar Nemzet, that Gábor Liszkay, editor-in-chief of Magyar Nemzet and CEO of HírTV; Ottó Gajdics, editor-in-chief of Lánchíd Rádió; Gábor Élő, editor of Magyar Nemzet On Line; Péter Szikszai, deputy CEO of HírTV; Péter Csermely, deputy editor-in-chief of Magyar Nemzet; and Szabolcs Szerető, deputy editor-in-chief of Magyar Nemzet, had resigned. Their conscience, they said, does not allow them to work for a paper not in the service of Viktor Orbán.

Well, at that point Simicska went berserk. The man who in the last twenty years hardly ever appeared in public and who never gave an interview suddenly gave interviews to everybody who phoned him. He answered the phone himself and, in response to questions, spewed an array of four-letter words. First he talked to József Nagy of Hír24 and allowed him to publish their recorded conversation. He accused Viktor Orbán, whom he repeatedly called “a prick,” of being behind the resignation of his top management. He also talked about a war between two men, one of whom will fall and that fall can be “physical,” which may mean death, but he is ready even for that. “They can kill me! They can shoot me or there will be a hit-and-run accident.” From an interview with Origo we learned that Simicska and Orbán haven’t talked to each other since last April.

Perhaps the most revealing interview with Simicska was conducted by Magyar Narancs. Here he insisted that he “maximally disapproves of the government media policy” which in another interview he explained involves dividing media outlets into three categories: those who are absolutely loyal to Viktor Orbán and the government; those who here and there are critical; and the enemies. Of these three Orbán can tolerate only the absolute loyal ones and will systematically eliminate all the others.

Apparently Simicska doesn’t like Viktor Orbán’s pro-Russian foreign policy either. And let me quote him verbatim on the topic. “No, I don’t like it at all. I grew up at the time when the Soviet Union was still here and I don’t have pleasant memories of the activities of the Russians in Hungary. I can’t really see any difference between the behavior of the former Soviets and the political behavior of today’s Russians.”

At this point the interviewing journalist interrupted and reminded Simicska that, according to rumors, his disagreement with Orbán has more to do with business than anything else. For example, he was left out of very profitable business transactions connected to Russian natural gas. But Simicska insisted that “there are more important things in life than money.” He and Orbán initially got together “to dismantle a dictatorship and the post-communist regime. It turned out that this is not an easy task. One must work at it. But I did not join Orbán to build another dictatorship to replace the old one. I’m no partner in such an enterprise.”

After the journalist reminded him that he and Orbán have been close friends for thirty-give years and therefore it must be hard to part in this way, Simicska said, “I must admit that it is a great disappointment. I thought he was a statesman, but I had to come to the conclusion that he is not.”

Simicska didn’t have much time to waste. As he said, Magyar Nemzet must be published tomorrow and he has to appoint a completely new top management. Moreover, Gábor Liszkay, editor-in-chief of Magyar Nemzet and CEO of HírTV, was a shareholder in these companies. Simicska had to buy him out. Within a couple of hours the deal was completed. Simicska apparently paid Liszkay 100 million forints or “thereabouts.” Gábor D. Horváth, the only top journalist who didn’t quit, became the editor-in-chief of Magyar Nemzet, and Simicska himself took on the role of CEO of HírTV. And who became the editor-in-chief of Lánchíd Rádió? You won’t believe it. The same old Csaba Schlecht who managed to “sell” the bankrupt Fidesz companies to Ibrahim Kaya and Josip Tot.

I’m looking forward to seeing the articles published in the “new” Magyar Nemzet tomorrow and the days after. Will the pro-Russian and anti-American articles still appear, or will there be a noticeable change in the coverage of Hungary’s relations with Russia, the European Union, and the United States? If yes, then Simicska’s claim to having serious disagreements with Viktor Orbán’s foreign policy can be taken seriously. Otherwise, it is just a lot of hot air.

Viktor Orbán and the Fidesz parliamentary delegation show the way

After spending quite a bit of time on foreign affairs, we have to return to domestic policies because soon enough parliament will reconvene, and the Fidesz and KDNP caucuses are preparing for the new session. Members of the caucuses get together, normally at some resort, and are sequestered for a few days. Their agenda is to set the tone of politics for the next five or six months. This time the Fidesz caucus met at the Balneo Wellness Hotel near Mezőkövesd, the center of an area known for its distinctive folk embroidery. Obviously, there is no shortage of funds in the Fidesz coffers. The caucus has 115 members, and several ministers and undersecretaries also attend these retreats.

Balneo Wellness Hotel

Balneo Wellness Hotel

I find these gatherings amusing, especially when I hear from Antal Rogán, the whip of the caucus, “we request and authorize the government” to do this or that. Naturally, the situation is the reverse, Viktor Orbán tells Antal Rogán what he expects them to do. If they come up with an idea of their own, which doesn’t happen too often, Orbán usually decides against it. Or if they want information from the prime minister, they don’t always get it. This time, for example, apparently the MPs wanted to know more about the visits of Angela Merkel and Vladimir Putin, but they heard nothing about either. It also seems they were hoping to hear more about the deal between the government and the RTL Group. They should have known better. When Viktor Orbán loses a fight, he doesn’t like to talk about it. Or, if an encounter, like the one with Merkel, is not exactly a success, he changes the subject.

So, let’s see what Viktor Orbán actually wanted to talk about. His greatest concern seems to be the immigration of “economic refugees.” In the last two years their numbers have grown substantially, and recently they’ve spiked. While last year 42,000 requests for immigrant status were received, this year, just in January, 14,000 such requests were filed. Orbán’s solution to the problem is draconian. He wants “to bolt the door to Hungary” to all “economic immigrants because we don’t need any of them.” Hungarian economic emigrants leave in droves while Hungary is bolted tight to anyone coming from “another culture.” He will not wait for the European Union, which is far too slow. Hungary will act on its own. I wonder how they will deport all those people who are currently in Hungary and what will they do with those who are on their way. An Irish proverb says “Never bolt the door with a boiled carrot.” What will the Hungarians use?

The government must have realized that the so-called school reform initiated by the second Orbán government was a failure. All schools were nationalized except for a few private schools and were put under one huge umbrella organization that turned out to be totally incapable of supervising about 120,000 employees and thousands of schools. We don’t know how the government is planning to undo the chaos created by Rózsa Hoffmann (KDNP), but it looks as if another “reform” is underway. Every time I hear of a new school reform I just shudder. So far the government hasn’t talked to educational experts or teachers’ unions, and it hasn’t spelled out the details of its plan. It has simply resurrected an old idea of Zoltán Pokorny, former minister of education in the first Orbán government (1998-2002), to extend the eight grades of compulsory education by one year. Apparently, it was inspired by the “Polish model,” which introduced a ninth year of elementary education–along with an entirely new educational philosophy. It seems, however, that Viktor Orbán doesn’t like the idea, so most likely it will be dropped.

Another concern of Viktor Orbán is the state of Hungarian healthcare, which is rapidly deteriorating instead of improving. Orbán seems to be frustrated. At the meeting he complained that 500 billion extra forints had been sunk into healthcare and yet the hospitals are still in the red. Their current debt is 70 billion forints, which must be paid out of the central budget. Their suppliers, mostly Hungarian middle-size companies, are also hurting. For the time being, the newly appointed undersecretary will remain, but I have feeling that his days are numbered. The government’s solution is simple: forbid the hospitals from accumulating any new debts. If a hospital director doesn’t follow this order he will be fired. It is hard to fathom how such a strategy will help the situation. By the way, there’s an apparent contradiction worth mentioning here. On the one hand, the government wants to reduce the number of hospitals and most likely cut back on the number of employees, while on the other hand Antal Rogán “requested and authorized” the government to make money available for a brand new hospital in Budapest. It turns out that money for this new hospital will come from the European Union while maintaining the existing hospitals must come from Hungarian government resources.

Although the Hungarian media is full of the news that Viktor Orbán had to give in to the demands of RTL Klub without the television station toning down its news coverage of government corruption, we learned today that “Fidesz authorized the government to negotiate further with Brussels” concerning the advertising levy. What can that mean exactly? Well, nothing good, I fear. Viktor Orbán will take his sweet time thinking about the deal between János Lázár and the top management of the RTL Group. Moreover, Orbán made it clear that the amount of money he was hoping to get from the advertising levies cannot be reduced as a result of the compromise with RTL Klub. So, we can all use our imaginations trying to figure out what Viktor Orbán has in mind when he talks about further negotiations with Brussels.

If I properly interpret the leaks from the meeting of the Fidesz delegation, Orbán will not back down on government supervision of non-governmental organizations. In his opinion the Hungarian government is entitled to know what kinds of foreign subsidies are given to Hungarian civic groups. So, I assume the harassment of these groups will continue. So will the “national freedom fight.” Rogán revealed that “the Hungarian people expect that the government will always stand for the national interests” and that as a result of the government’s policies “national self-esteem” has grown during the last five years. Orbán also has no intention of changing his “independent” foreign policy because “Hungary has become a strong country” thanks to his leadership. He repeated that cheap gas means inexpensive utility prices, which he considers critical to his political longevity. Only Putin can give him what he needs. What Orbán will give in return is as yet unknown.

The Orbán government is at a loss: Which way to turn?

Today even Válasz had to admit that the Hungarian government’s PR stunt that followed the less than successful Merkel-Orbán meeting was a mistake. Referring to the false news about mega-investment,” Valóság, after an earlier glowing report, had to retreat and acknowledge that “there is no BMW, there is no new Mercedes factory and Fidesz doesn’t seem to be successful in the RTL Klub affair either. This wouldn’t be drama if the government had the guts to deny Vs.hu‘s news. But now we do have a small drama.”

I don’t know whether we can call it a drama, but that the Hungarian government’s already tarnished reputation now has an ugly rusty spot as well, that’s for sure. AFP picked up the news about the gigantic German investments that were agreed on during the meeting between the German chancellor and the Hungarian prime minister, but unlike András Kósa, the author of the Vs.hu article, AFP, before publishing the article, did go to the “spokesman for the Hungarian government [who] declined to comment.” Not did the spokesman not deny the story, as Válasz would have suggested, but he purposely spread the disinformation. That leaves me to believe that this PR stunt was concocted by the large communication team around the prime minister’s office.

What can one say about a government that engages in such cheap tricks? Keep in mind that the team around Viktor Orbán was handpicked by the prime minister himself. The members of this team are the ones who manage “communication,” which seems to be the most important aspect of politics for Viktor Orbán. He is like a salesman who has only one goal: to sell his wares regardless of their value or even utility.

What were these communication wizards thinking? Surely they had to realize that sooner or later reporters will ask these companies about their alleged plans and the truth will be revealed. Indeed, Mercedes and BMW have already denied the leaked information about their plans to build factories in Hungary, and this morning we learned from the Siemens spokesman that Siemens is no longer active in industries connected to nuclear energy and therefore the news about their involvement with the Paks Nuclear Power Plant is untrue. As far as the helicopters are concerned, apparently no decision has been made. It is possible that after the meeting Airbus, the French-German company reported to have won the contract, might not be the favorite.

I can only hope that the story of this ruse will reach Angela Merkel’s office, not that I have any doubt about her assessment of the Hungarian prime minister’s character. In any case, the Orbán government’s courting of Germany as a counterbalance to the United States did not work out to Orbán’s satisfaction. Of course, he himself is partly to blame for the fiasco with his public defense of “illiberal democracy.” Even Gábor G. Fodor, a right-wing “strategic director” of Századvég, a Fidesz think tank, said that Viktor Orbán made a mistake when he openly defended his vision of “illiberal democracy.” In fact, he went so far as to say that “this debate cannot be won,” especially not before a western audience. If this absolutely devoted Orbán fan considers the prime minister’s defense of his ideology to have been a mistake, then, believe me, the mistake was a big one.

So, here we are. After all the effort the government put into good relations with Germany, it looks as if Angela Merkel was not convinced. So, where to go from here? There seems to be a serious attempt at improving U.S.-Hungarian relations. This effort was prompted by the long-awaited arrival of the new U.S. ambassador, Colleen Bell, who shortly after her arrival began a round of visits and attended to a number of official duties. Her first trip was to Csaba Hende, minister of defense, which was reported by Hungary Today, a  newly launched, thinly disguised government propaganda internet site. The news of her visit was coupled with the announcement of Hungary’s plans to purchase a new helicopter fleet. The fleet will consist of 30 helicopters that will cost 551 million euros. Discussing the helicopters and Colleen Bell’s visit in the same article was no coincidence. Most likely, the Hungarian government wants to give the impression that there is a possibility that the helicopters will be purchased from the United States.

Even more telling is the paean on the Hungarian government’s website to “successful Hungarian-U.S. economic cooperation.” The occasion was the opening of Alcoa’s “expanded wheels manufacturing plant in Hungary.” It is, if I understand it correctly, an expansion of facilities that have been in place ever since 1996. The construction cost $13 million, and it will create 35 new permanent jobs. The facility was officially opened by Colleen Bell and Péter Szijjártó. Szijjártó was effusive: “with Alcoa’s new investment, a new chapter has opened in the success story of Hungarian-U.S. economic cooperation.” We also learned that the Hungarian government “granted one billon forints for the project.”

Photo by Márton Kovács

Photo by Márton Kovács

Bell, for her part, appealed to Hungarian pride by reminding her hosts that, although Alcoa has existed for 125 years, “this is not very long in terms of Hungary’s 1000-year-old history, but for the United States, a 125-year period covers half of its existence.” Music to Hungarian ears. Of course, she also promised that in the future she will work hard to create new opportunities for both U.S. and Hungarian businesses and to further improve their cooperation. The mayor of Székesfehérvár, the city where the Alcoa factory is located, announced that the wheels of buses in the city will gradually be replaced with Alcoa products.

I somehow doubt that courting the United States in this manner will make Washington forget about the anti-American rhetoric of  pro-government papers or the incredible performance of the Orbán government in connection with the U.S. banning of Hungarian nationals because of corruption charges. Somehow I have the feeling that courting the United States without changing government policies will be just as unsuccessful as Orbán’s earlier efforts in Germany.

And one final note. Today Orbán announced that the fate of cheaper utility costs depends on his successful negotiation with Vladimir Putin on the price of gas and oil to Hungary. If he is unsuccessful, the current low utility rates cannot be maintained. The message? The Hungarian people should support his Russia policy. If not, their utility bills will rise again. Let me add that the team that came up with the idea of reducing utility prices hit a gold mine. The Orbán government’s popularity in 2012 was even lower than it is now. Yet a year and a half later the popularity of the party and the government soared. For Orbán utility rates are terribly important, and therefore I suspect that he will do everything in his power to strike a deal with Putin. The question is at what price.

Merkel-Orbán conversations: Serious differences of opinion

Yesterday, right after Angela Merkel’s plane left the runway at the Budapest Airport, I jotted down my first impressions. It was a busy day for the German chancellor, so I had to be very selective in my post. I concentrated on Merkel’s comments, largely because they were the most unexpected elements in the exchange. Moreover, I talked mostly about her reactions to Hungarian domestic issues and spent a great deal less time on the disagreements between the two leaders over foreign affairs.

Let’s start with their attitudes toward Putin’s Russia. According to Orbán, Ukraine is important for Hungary because it is a neighbor of Hungary, because there is a Hungarian minority across the border, and because the gas that Hungary needs badly travels through this country. Therefore, he said, Hungary “can stand only on the side of peace. We can imagine only a solution that will take us toward peace.” But let’s see what Merkel had to say. According to her, the Germans would also like to have a ceasefire and political stability in Ukraine that “can guarantee the territorial integrity of the country.” Something Orbán didn’t talk about. Merkel also gently reminded Orbán that Hungary is not the only country that is dependent on Russian gas, indicating that it is unacceptable for Hungary to have a different viewpoint on the question of Russian sanctions.

That last remark from Merkel prompted Orbán to open a discussion with his guest on Hungary’s unique position in this respect. Germany’s situation cannot be compared to that of Hungary; “one must take Hungary’s situation vis-à-vis Russia very seriously.” Hungary has to renew her long-term agreement on the price of gas for the next fifteen years, and therefore “it is difficult to fully support the Russian sanctions.”

Although yesterday I talked about their disagreements over the meaning of democracy, I said nothing about how the topic came up during the press conference. Orbán naturally did not bring it up; it was Merkel who announced that during her conversation with Orbán she “indicated that although the Hungarian government has a large majority, in a democracy the role of the opposition, the civil society, and the media is very important.” She added that later she will find time to have a conversation with the leaders of Hungarian civil society. From Orbán’s reaction it was clear that the Hungarian prime minister did not expect such direct involvement by Merkel in a matter he considers a domestic issue. It was after these points of disagreement that Merkel and Orbán had their rather sharp exchange on the nature of “illiberal democracy.” As the Frankfurter Rundschau pointed out, Merkel can at times be quite “undiplomatic,” as she was this time, and therefore “she annoyed Orbán.” You can see the prime minister’s annoyance and his determination to follow his own path on the picture below, taken during their debate on “illiberalism.”

Source: MTI / Photo Tibor Illyés

Source: MTI / Photo Tibor Illyés

Csaba Molnár,  the number two man in the Demokratikus Koalíció, thought that Orbán was cowed and “behaved like a scared little boy standing by his teacher’s side.” I disagree. I saw exactly the opposite: a combative Viktor Orbán who will not be swayed by any argument and who will continue to build his illiberal state. I’m afraid the same might be true when it comes to negotiations with Vladimir Putin. Even though he might sign on to further sanctions, he will try to make a deal with Putin regardless of EU disapproval. It is another matter whether Putin will swallow a big one and give preferential treatment to Orbán despite the meager returns he can expect from Budapest.

As even the right-wing media had to admit, the visit was not a great success, although it was designed to be a showcase of German-Hungarian friendship and a stamp of approval by the German chancellor of the Orbán regime. What does Fidesz do in such an awkward situation? After all, they cannot admit that Merkel and Orbán disagreed on almost everything, starting with Russia and ending with the nature of democracy. The simplest and the usual Fidesz response in such cases is to resort to outright lying. This is exactly what happened today.

Vs.hu is a relatively new internet news site that came out with the startling news that the real significance of the conversation was in the realm of new German investments in the Hungarian economy. András Kósa, a well-respected journalist who used to be on the staff of HVG, just joined Vs.hu. He was told by unnamed members of the government and local German businessmen that although on the surface there was visible friction between Merkel and Orbán, in fact “concrete important industrial agreements came into being on Monday.” Siemens will be involved in the construction of the Paks Nuclear Power Plant. In addition, Hungary will buy thirty helicopters from Airbus, not from the American Sikorsky or the Italian-British AgustaWestland. Kósa was told that “BMW is contemplating opening a factory in Hungary.” Only the exact location remains to be settled. And, on top of everything else, Mercedes will build a new factory to manufacture a new model.

Well, that was quite a scoop. The Hungarian media went crazy. Dozens and dozens of articles appeared within minutes, and every time the story was retold it became grander and grander. While the original article emphasized that all these favorable developments “might happen,” by the time the story got to Magyar Nemzet it became “Gigantic German investments are forthcoming as a result of the Merkel-Orbán meeting.” Válasz discovered that the real significance of the meeting was that new “gigantic German investments are coming to Hungary,” obviously all that taken care of during a short luncheon. Even such a reputable site as Portfolio.hu fell for the story.

The first word of warning came from a specialized internet site that deals with the car industry, Autopro.hu. It is possible that economic relations were discussed, but it is impossible that there could be negotiations between Merkel and Orbán regarding concrete projects, the author of the article remarked. This is not the first time that the possibility of a BMW factory is being heralded by the Hungarian media, but nothing ever came of it. Moreover, if there are such plans or decisions, they would not be discussed by Merkel and Orbán but by the top management of BMW and Hungarian economic experts. Autopro.hu didn’t manage to get in touch with BMW, but they were told by Mercedes that at the moment they have no intention of building another factory. Later the pro-government Napi Gazdaság  learned from BMW headquarters that “the BMW Group has no plans to build a factory in Hungary.” I don’t know whether the rest of the story, about Siemens and Airbus, is true or is also a figment of the imagination of certain government officials.

I consider Kósa a reliable and serious journalist who would not make up such a story. But why would government sources leak information about nonexistent projects? What do these so-called high government officials think when they concoct stories that are bound to be discovered to be false? Perhaps they think that the false news will spread like wildfire, as it did in this case, and that the correction will be reported by only very few media outlets. Therefore, it can be considered a successful communication stunt. Fidesz is good at that.

Angela Merkel in Budapest

Yesterday I sketched out a number of hypotheses about Angela Merkel’s objective in visiting Budapest. Almost all Hungarian foreign policy experts were certain that Merkel would not touch on Hungarian domestic issues. Her only concerns would be Viktor Orbán’s compliance with the common EU policy regarding Russia and his treatment of German businesses in Hungary. Since the Hungarian prime minister accommodated on both fronts just prior to her visit, she would have little to complain about. The consensus was that she would remain silent on the state of democracy in Hungary.

I, on the other hand, couldn’t imagine that Merkel could ignore this issue. The German press has been full of stories about Orbán’s authoritarian regime. It has given extensive coverage to Hungary’s anti-government, pro-democracy demonstrations. So there was some homegrown pressure on the German chancellor to stick her neck out and talk openly about the issue. Many people comment on Merkel’s low-key, sometimes vapid style. Those who know her better, however, assure us that in private she can be a tiger. Well, today, we caught a glimpse of that side of her character.

This morning Gregor Peter Schmitz in Der Spiegel demanded “plain talk” from Merkel in Budapest. “The whole of Europe is terrified of extremists, Angela Merkel is meeting one,” he said. It is time to speak out. If Schmitz watched the press conference after a short luncheon meeting between Angela Merkel and the Hungarian prime minister, he was most likely disappointed, at least initially. She did talk about issues that democrats at home and abroad find important: the role of civil society and the importance of the opposition, but her critique was pretty bland. She said, for instance, that “even if you have a broad majority, as the Hungarian prime minister does, it’s very important in a democracy to appreciate the role of the opposition, civil society, and the media.” Merkel had said the same thing many times before.

The real surprise, “the plain talk” Schmitz demanded, came at the end when Stephan Löweinstein of the Frankfurter Allgemeine Zeitung asked Merkel her opinion about Orbán’s “illiberal democracy.” After explaining that liberalism is part and parcel of the ideology of her own party, she added: “I personally don’t know what to do with the term.” In her opinion there is no such animal. Orbán did not back down. He repeated his belief that not all democracies are liberal and that liberalism cannot have a privileged position in the political landscape. I should add that the Hungarian state television station omitted this exchange in its broadcast of the press conference.

Source: HVG / Photo: Gergely Túry

Source: HVG / Photo: Gergely Túry

Viktor Orbán was not a happy man. I’m certain that he expected concessions from Merkel after he was so “generous” on the RTL Klub case. It seems that Merkel did not appreciate his efforts to the extent hoped for in Budapest.

During the press conference Orbán talked mostly about German-Hungarian economic relations and thanked Germany for its investment, which resulted in 300,000 jobs in Hungary. But he became more insistent and strident as time went on, especially when Merkel began talking about a common European energy policy. He indicated that in his opinion the European Union doesn’t appreciate Hungary’s utter dependence on Russian gas. He stressed, in a raised voice, that the Russian-Hungarian long-term gas supply contract will be expiring soon and that Hungary must have a new agreement with the Russians. Hence the forthcoming Putin-Orbán meeting in Budapest.

An opposition politician called my attention to the fact that Merkel referred to Orbán as “ein Kollege” instead of the customary designation “friend.” An American acquaintance noted that the new American ambassador also talks about Hungary as an “ally” and no longer as a friend.

The German papers are already full of articles about the trip, and I’m sure that in the next few days there will be dozens of articles and op/ed pieces analyzing Merkel’s day in Budapest. I’m also certain that I will spend more than one post on this visit. Here are a few initial observations.

Merkel spent very little time with Viktor Orbán. Just a little over an hour, including a meal. With János Áder no more than 15-20 minutes. On the other hand, the event at the German-language Andrássy University was quite long where differences of opinion between the two politicians became evident. The introductory remarks by the president of Andrássy University were lengthy as was the speech by the president of the University of Szeged, which bestowed an honorary degree on Angela Merkel. Her own speech was not short either. What was most surprising was the number of questions allowed. Some of the questions were not political but personal. Perhaps the students didn’t have the guts to ask politically risky questions. Her answers showed her to be quite an open person, very different from what I expected. One brave soul did bring up the topic of terrorism and immigration, indicating that Orbán inflames prejudice against people from different cultural backgrounds. Merkel stood by her guns, stressing the need for tolerance, openness, and diversity. Another question was about Russian aggression. Here she used strong words against aggression and condemned Putin’s use of force.

Finally, a few words about Merkel’s final destination, the synagogue on Dohány utca, where she talked to Hungarian Jewish religious leaders. Apparently, the Hungarians first suggested that Viktor Orbán accompany Merkel. The Germans turned that kind offer down. I find it significant that Merkel’s visit to the synagogue was longer than planned. Her plane left Budapest half an hour later than scheduled.

All in all, those people who were afraid that by going to Budapest Angela Merkel would give her stamp of approval to Viktor Orbán’s “illiberal democracy” can breathe a sigh of relief. Nothing of the sort happened.

Thoughts in advance of the German and Russian visits to Budapest

Yesterday the Neue Zürcher Zeitung published an article about the forthcoming visits of Angela Merkel and Vladimir Putin to Budapest titled “Orbans Tanz auf zwei Hochzeiten,” indicating that Viktor Orbán will be able to have his cake and eat it too. He will remain a member in good standing of the European Union and will be a close friend of Russia at the same time. I, on the other hand, maintain that he will not be able to pull off that extraordinary feat. There are many signs that the Hungarian prime minister is already in retreat.

Let’s start with the Merkel visit. Hungarian and foreign observers have come up with all sorts of explanations for her trip, starting with the simplest one–that she could no longer postpone it. After all, she has not visited the Hungarian capital in the last five years, ever since Viktor Orbán’s Fidesz, which professes to be a Christian Democratic party, won a stunning victory in 2010. Her last trip took place in 2009, on the twentieth anniversary of the Hungarian opening of the Austro-Hungarian border for East German refugees, when the socialist-liberal government of Gordon Bajnai was still in power. If the purpose of the trip was to have a serious discussion about the Russian-Ukrainian crisis and Hungary’s role in it, Merkel’s five-hour stay, with very little face time with Viktor Orbán, would not suffice. She is coming because she promised to and because, according to a 1992 agreement between Hungary and Germany, she has to.

There are analysts who are convinced that Angela Merkel will not even mention the erosion of Hungarian democracy under Viktor Orbán’s regime, the systematic transformation of a fledgling democracy into an autocratic regime akin to the political setup that existed in Hungary between the two world wars. She has more pressing issues on her agenda: Greece, the sanctions against Russia, and the growth of the German anti-immigration movement–PEGIDA (Patriotische Europäer gegen die Islamisierung des Abendlandes / Patriotic Europeans Against the Islamization of the West), especially popular in the former East Germany. It is unlikely that Merkel will waste any time on the woes of Hungarian democracy. Her only aim is to make sure that Viktor Orbán stands by the extension of the sanctions. This hypothesis, in part at least, is outdated: Hungary obediently voted for the extension on January 29.

Others are more optimistic. They maintain that the trouble with Angela Merkel’s visit is that it seems to put a stamp of approval on the illiberal regime of Viktor Orbán. This is certainly how the Orbán government is portraying it. If Merkel says nothing about the state of democracy in Hungary, Orbán’s regime scores a victory. There is pressure on Merkel at home, however, to do something about the Hungarian situation. She has to give the appearance that her visit is something of a warning to Viktor Orbán.

There is some truth in this interpretation. In fact, there are signs that behind the scenes some “disciplinary measures” have already taken place. The successful negotiations with the leaders of  the RTL Group indicate that Orbán got the message: there will be consequences if the Hungarian government blatantly and illegally discriminates against a media outlet just because it doesn’t like RTL’s news broadcast. Orbán caved, and I for one am certain that he didn’t get much in return. I find it interesting that the official announcement of Merkel’s visit occurred very late, on January 28, the day when according to Népszava‘s information the Hungarian government agreed to a substantial reduction in the enormous tax it had levied on RTL Klub. Was this agreement the price, or part of the price, of Merkel’s visit?

Because that’s not all. In his regular Friday morning interview Orbán announced that the exorbitant tax levies on the banking sector will most likely be gradually reduced because the Hungarian economy has greatly improved. “If possible, the interests of the country and the businessmen must be reconciled,” said the man who until now had laid all the financial burdens of his erroneous economic policies on businesses, especially foreign ones.

There might be several reasons for Orbán’s cooperation in addition to German negotiations. One is that the Americans undoubtedly know more about the Hungarian mafia state and Viktor Orbán’s role in it than they let on, but the Hungarian prime minister doesn’t know how much they know. That must be a powerful incentive to stick with the countries that provide Hungary with economic aid and military shelter. Another consideration might be the effect of the sanctions and the sinking price of oil on the Russian economy, which makes close ties with Putin’s Russia a less desirable option than, let’s say, a year ago.

And that leads us to the Putin visit on February 17. It was almost a year ago, in March of 2014, that the United States and the European Union began applying sanctions against Russia. Although Hungary agreed to support the move, in August Viktor Orbán declared that “Europe shot itself in the foot,” meaning that the sanctions actually hurt only the West and did nothing to weaken the Russian economy. Just about this time, however, oil prices began falling. The combination of sanctions and falling energy prices has made the Russian economic situation close to desperate by now.

Orbán was initially very proud of what he considered to be the crowning achievements of his Russia policy: the Southern Stream, which would have brought gas to Hungary circumventing Ukraine, and the Russian loan for the extension of the Paks Nuclear Power Plant. Since then, Russia abandoned the Southern Stream project because of lack of funds, and many people think that the much heralded Paks deal is also in trouble. Thus, the rationale for close relations with Russia has more or less evaporated, which leaves Viktor Orbán in the unenviable position of suffering the ill effects of his overly cozy relation with Putin while reaping practically no benefits.

Depiction of the Trojan Horse at the Schlilemann Museum in Akershagen, Germany

Depiction of the Trojan Horse at the Schliemann Museum in Akershagen, Germany

Under these circumstances I doubt that the initiative for the Putin visit came from Budapest. It is no longer to Orbán’s benefit to make a lavish display of friendship with Russia. And indeed, the government is trying to downplay the importance of Putin’s visit, noting that it is only a working trip and not a state visit with the usual fanfare. For Putin, by contrast, it is an important trip at a time when nobody wants to have anything to do with him. Just think of the humiliation he suffered in Brisbane, Australia. He wants to demonstrate that he has at least one good friend  in the European Union.

Putin’s second reason for the trip, I suspect along with others, is to find out how much he can rely on Viktor Orbán. Will he deliver as promised? Or it was just talk? Perhaps Orbán oversold his usefulness to Putin and is turning out to be a useless ally from the Russian point of view. Last August Jan-Werner Müller wrote an article in Foreign Affairs titled “Moscow’s Trojan Horse: In Europe’s Ideological War, Hungary Picks Putinism.” Well, the Trojan Horse may be just an empty shell and the damage it can cause within the European Union little to none.

Sándor Kerekes: Letter to Angela Merkel

Dear Chancellor Merkel:

I am impelled to write to you on the occasion of your impending visit to Prime Minister Viktor Orbán of Hungary in February. I have no doubt that your able staff is more than adequately preparing your visit; however, I wish to add to that a point of view representing the Hungarian perspective.

Surely, you are aware that the government of PM Orbán and his Fidesz Party have relentlessly attacked and emasculated most institutions of the democratic state ever since their election in May 2010. But, just to keep up appearances, they have maintained them as a façade, populating them with their own appointees, often for nine and twelve-year terms, thus rendering them unable and unwilling to carry out their original, constitutional functions, since the appointees only follow Fidesz instructions. From the outside they look like checks and balances to the unsuspecting viewer. However, nothing could be further from the facts. All those institutions are interconnected through the invisible network of personal and party connections, all serving to promote the political and financial interests of a selected few of Viktor Orbán’s friends. In fact, those institutions are only there to serve as a disguise, hiding the actual operations of a government whose single and concentrated aim is to siphon as much of the country’s resources to the hands of this small coterie, as possible.

The street demonstrations of recent days mobilizing tens of thousands of people almost every other day, demanding democracy and fair government, are largely concerned with the ever-increasing corruption of the government. Those thousands are in dire need of help that could surely come from you Madame Chancellor. This monumental, institutional corruption is seemingly unassailable by the people, because Parliament, as the Prime Minister’s voting machine, legislates and legalizes the constant, obvious thievery. And as it so often happens, if a superficially constructed piece of legislation should prove insufficient to cover up the crime, either a subsequent retroactive law will bend the rules after the fact, or all complaints will be rejected or ignored by the Prosecutor’s Office. Since the election in 2010, not one single corruption case was launched against any corrupt government official, despite the numerous cases submitted. It is not surprising; therefore, if many consider the government of Viktor Orbán as a well-functioning Mafia operation.

The presently concluded contract with Vladimir Putin’s Russia for the building and financing of the Paks 2 nuclear power plant is hugely disadvantageous to Hungary and yet a most rational pact in view of the rapacious corruption system. The contract includes a 20% Hungarian share in the financing – 2.5 billion Euros – that is available for stealing. Since the Hungarian state otherwise has run out of sources for available money to steal, this gigantic project will provide a copious source of corruption money for the coterie. At the same time, it may bankrupt the country, but by the time that will become clear, this Mafia will be long gone.

Under these circumstances, even the government of the United States raised a strenuous complaint and took the unprecedented step of banning certain government officials from its territory for reasons of corruption. At the same time, the United States government made it clear that it will not shirk from the confrontation, and insists that the Hungarian government must address the systemic corruption. So far, Viktor Orbán has resorted to lies, denial, and communications trickery, but taken no action.

Apart from some prestige projects, such as football stadiums and municipal beautifications, public investments ground to a halt years ago. Private capital is fleeing the country. If there is any investment at all in Hungary today, it is funded by European Union transfer money. In fact, over 90% of all public investment projects are financed by the European Union. But invariably, those projects are “one-off” short term ones that create neither lasting effect, nor permanent jobs for people. In fact, all that European Union financing is squandered on useless, short-term veneer, merely creating appearances and an opportunity for kickbacks. Presently, any government public bidding process is tailor-made for the single, Orbán-friendly bidder, and the general consensus is that the “usual” kickback is between 20 and 40%. Despite all this, the Orbán government is conducting an unrelenting verbal and political campaign against the European Union, the United States and most of all the ideals of liberal democracy.

The barren Hungarian puszta

The barren Hungarian puszta

When the European Parliament commissioned the Tavares Report, it was assumed in good faith that the problems of the Orbán Government were mere mistakes and with the help of the Report itself, with some good advice, and genteel prodding, the system could be corrected. Today it is clear that the Orbán government is by no means acting in good faith. In fact, the Tavares Report failed to recognize that Hungary is rapidly and intentionally sliding towards a one-party, single-ruler, authoritarian, illiberal regime. The Report was to no avail; the Hungarian government not only ignored it, but also legislated its rejection. All this was done in front of the uncaring eyes of the European Union.

While the officials and friends of the Orbán government are getting obviously and obscenely rich, the population of the country is sliding into deep poverty. Today, four million people are living under the poverty level, hundreds of thousands are starving and tens of thousands of children cannot get enough to eat. Poverty today is endemic in Hungary and it is increasing. Over the last four years, 500,000 of the mobile, enterprising people of Hungary have emigrated to other countries in the European Union, Germany amongst them.

Not wanting to extend needlessly the list of reasons for writing this letter, I wish to come to the obvious implications.

Hungary today is a disturbing foreign object in the very middle of the European Union. But because its transformation, running counter to everything European, is far from complete, it is likely that in the future she will be a cause for much more, and much more painful headaches within the European Union. The process of transformation is accelerating unbridled, and Hungary will be a source of an unhealthy inspiration, inviting any self-appointed tin-pot dictator to repeat the exercise: build an illiberal, single-ruler dictatorship and do it at the expense of the European Union. Why not? Nobody is raising any objections and the money keeps flowing to finance the process.

Madame Chancellor:

The interest of the European Union, the people of Hungary, and basic common sense dictate to submit to you the humble request that you, a dominant person in the European Union and in the World, give an unmistakable expression of disapproval to Mr. Orbán about what is happening in Hungary. It is inconceivable, and yet a strange fact of life, that the European Union and its citizenry should generously finance Hungary’s corruption, its war against Western Values and Mr. Orbán’s campaign against the people of his own country. Why should the European Union pour billions of Euros into a few people’s pockets, just to enable them to steal even more?

The suspension or denial of the transfer payments would bring the insane policies of the Orbán government to a screeching halt since nothing but these payments keeps it going.

The European Union, on the other hand, would greatly benefit from saving those billions by using them for more worthy purposes than stuffing the pockets of a corrupt regime that uses them as an opportunity to conduct a surreptitious anti-European, anti-liberal, people-busting war in peace time.

Dear Madame Chancellor:

I fervently hope that my suggestions coincide with your own intentions, and that your highly anticipated visit to Hungary will bring the beneficial results most of us are hoping for. It would be a bitter disappointment for the entire country if Prime Minister Orbán could in any way interpret your visit as a public relations success and a stamp of approval on his policies.

Very truly yours,

Sándor Kerekes

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Sándor Kerekes is a freelance journalist whose articles regularly appear in Kanadai Magyar Hírlap. He also wrote several articles in the past for Hungarian Spectrum.