The Hungarian government under domestic and foreign pressure

As I’m writing this post thousands are again demonstrating against the government. The crowd gathered in front of the parliament, which one of the organizers called “the puppet show,” and then is heading toward the Castle District, where Viktor Orbán is planning to move. The move will cost an incredible amount of money but, as one of the undersecretaries in the prime minister’s office said, the citizens of Hungary will be really happy once the prime minister moves to quarters befitting his position. Given the mood of these crowds, I very much doubt that that will be the case. The good citizens of Hungary who are out on the street actually wish Orbán not to the Castle District but straight to hell.

The demonstration was organized against corruption but, as usually happens at these mass demonstrations, the crowd went beyond the limited goal of the organizers and demanded the resignation of Viktor Orbán and his government. Fidesz politicians, it seems, have been caught flat-footed. They surely believed that these demonstrations would peter out. Winter is approaching and Christmas will soon be upon us. It was hoped that people would be busy shopping and preparing for family gatherings. But this time they were wrong. Suddenly something inexplicable happened: the totally lethargic Hungarian public was awakened. What happened? After all, the misuse of power and the network of corruption have been features of the Orbán regime ever since 2010 and yet the public was not aroused against its unrelenting abuse of power. Most people knew that Fidesz politicians are corrupt and that they stuff their pockets with money stolen from the public, but they felt powerless to do anything about it.

I see a number of reasons for this change in the Hungarian political atmosphere. I would start with the influence of the book Hungarian Octopus: The Post-Communist Mafia State, edited by Bálint Magyar, in which dozens of political scientists, economists, sociologists, and media experts published articles that presented for the first time a comprehensive picture of the institutionalized corruption which is the hallmark of the Fidesz regime. Fairly quickly the terms “mafia state” and “mafia government” became part of everyday vocabulary, and the government’s dealings came to be understood within the context of The Godfather. The sinister nature of the enterprise was slowly grasped.

A second reason for the optimism and activism was the success of the first two mass demonstrations against the “internet tax.” Viktor Orbán had to retreat. If he retreated once, more demonstrations might force him to reverse earlier decisions. The success of the first demonstrations gave impetus to the others.

Last but not least was the Hungarian government’s own stupidity when it decided to leak the news about American dissatisfaction with the National Tax Authority and the corrupt officials who tried extract kickbacks from at least one American company. Hungarians expected their politicians to be corrupt, but the news that high officials at the Hungarian Tax Authority were also on the take was too much for them. Moreover, they felt that they now have an ally, the United States of America.

According to most observers, U.S.-Hungarian relations are at their lowest point since the post-1956 period. U.S. policy toward Hungary seems to me at least to be finely calibrated. At the beginning we were told about the six unnamed people who were barred from entering the United States. A few days later we learned that the president of the Tax Authority was definitely on the list. A few more days and we were told that the president is not the only person on the list, there are a couple more. Another week went by and André Goodfriend, U.S. chargé d’affaires, indicated that there might be more Hungarians who would face the same fate as the six already on the list. Another few days and we learned from the American chargé that he had given the Hungarian government all the information necessary for investigating the cases. And it was not the “useless scrap of paper” Viktor Orbán pointed to. In plain language, we found out once again that the Hungarian government lies. And yesterday we learned from an interview with Goodfriend that the sin of Tax Office Chief Ildikó Vida goes beyond not investigating obvious corruption cases within her office; she herself was an active participant in the corruption scheme at her office. Of course, Vida is outraged, but she cannot do more than write an open letter to Goodfriend claiming innocence. As time goes by the Hungarian government is increasingly embroiled in a web of lies and Orbán’s regime comes to resemble ever more closely the government of a third-rate banana republic.

The good old days: George W. Bush in Budapest, June 22, 2006

While the State Department is using the corruption cases as a club, Senator John McCain is pursuing his own individual crusade. The senator, who is no friend of Putin, has been keeping an eye on Viktor Orbán’s illiberal state and found it to be troubling. What we saw two days ago was his frustration that Hungary will again have a political appointee as an ambassador. As he emphasized over and over, Hungary is a very important country that deserves a professional diplomat. His outburst about Orbán as a “neo-fascist dictator” was a bit strong, although Orbán’s system does have features in common with some of the fascist regimes of the past. But the Hungarian charge that McCain is ignorant of the Hungarian political situation is entirely baseless. Once he calmed down, he put it into writing what he finds objectionable about Orbán’s illiberal state. At the time of the release of his statement on Hungary he wrote a brief tweet saying, “Deeply concerned by PM Orban eroding democracy, rule of law, civil society & free press in Hungary.”

Below I republish Senator McCain’s statement on Hungary because I find it important and because it proves that, regardless of what the Hungarian government says, McCain (undoubtedly with the help of his staff) knows what he is talking about.

Since Prime Minister Viktor Orban came to power in 2010, antidemocratic constitutional changes have been enacted, the independence of Hungary’s courts have been restricted, nongovernmental organizations raided and civil society prosecuted, the freedom of the press curtailed, and much more. These actions threaten the principles of institutional independence and checks and balances that are the hallmark of democratic governance and have left me deeply concerned about the erosion of democratic norms in Hungary.

These concerns are shared by many. A ruling by the Venice Commission in 2013 found that Prime Minister Orban’s constitutional changes threaten democracy and rule of law in Hungary, stating that the amendments ‘contradict principles of the Fundamental Law and European standards,’ and ‘leads to a risk that it may negatively affect all three pillars of the Council of Europe: the separation of powers as an essential tenet of democracy, the protection of human rights and the rule of law.’

The Organization for Security and Cooperation in Europe (OSCE) and the Committee to Protect Journalists have condemned Hungary’s media laws, saying that they create a climate of fear and media self-censorship, even after critical changes were made to account for previous complaints from the European Commission. ‘The changes to the Hungarian media law only add to the existing concerns over the curbing of critical or differing views in the country,’ said Dunja Mijatovic, OSCE’s representative on Freedom of the Media.

The European Central Bank has repeatedly warned that Prime Minister Orban’s government is encroaching on the independence of its central bank, calling for him to respect the independence of monetary policymakers and condemning attempts by the government to threaten central bankers with dismissal if they oppose government policy.

And just last month, six Hungarians were banned from entering the United States over alleged corruption. U.S. Chargé d’Affaires André Goodfriend reportedly called the ban a warning to reverse policies that threaten democratic values, citing ‘negative disappointing trends’ in Hungary and a ‘weakening of rule of law, attacks on civil society, [and] a lack of transparency.’

Democracy without respect for rule of law, separation of powers, and the protection of economic, civil, and religious liberties is not only inadequate, it is dangerous. It brings with it the erosion of liberty, the abuse of power, ethnic divisions, and economic restrictions – all of which we have witnessed in Hungary since Prime Minister Orban took power. Prime Minister Orban has justified his actions by calling for a new state model based on ‘illiberal democracy,’ but his vision defies the core values of the European Union and NATO. These alliances are founded not only on the principle of democracy, but also rule of law and the protection of individual liberty and fundamental freedoms. All members must remain committed to these values.

Meanwhile both Hungarian and foreign newspapers are full of stories about the demonstrations and about McCain’s characterization of Orbán as a “neo-fascist dictator.” As the Hungarian prime minister continues to come under attack, both from within and from without, it’s unclear how he will fight back and how effective his counterattack will be. If the proposed Sunday store closings are any indication of the government’s new game plan, the counterattack will be a colossal failure.

Rudolf Ungváry on the fascistoid mutation in today’s Hungary, Part I

The political system introduced by Viktor Orbán never ceases to fascinate analysts and observers. Earlier we spent a considerable amount of time discussing Bálint Magyar’s theory of the post-communist mafia state. Dozens of political scientists, sociologists, economists, media experts, and legal scholars wrote articles on different aspects of Viktor Orbán’s mafia state, describing the way it functions. Although in the last few years other analysts have offered views on the nature of the Orbán regime from various angles, legal and psychological, it was only Magyar’s mafia-state theory that stuck and became widely accepted.

The new book by Rudolf Ungváry will most likely be a serious challenge to The Hungarian Octopus: The Post Communist Mafia State. Ungváry contends that the two edited volumes on the mafia state provide merely “a sociological description” of the Orbán system. Only “the economic criminality of the system is captured, not its essence.”

So, what is the essence of Orbán’s system according to Ungváry? As the subtitle of the book suggests, it is “a fascistoid mutation.” (Rudolf Ungváry: A láthatatlan valóság: A fasisztoid mutáció a mai Magyarországon/The Invisible Reality: Fascistoid Mutation in Today’s Hungary [Pozsony/Bratislava: Kalligram, 2014])

Before the appearance of this book, only two commentators called Fidesz a fascist party, pure and simple. One was the linguist László Kálmán, who wrote an article in October 2010 on a rarely visited internet site in which, after briefly describing the three or four essential elements of Italian fascism, he stated that “Fidesz in the past fifteen years has been a fascist party par excellence.” The other was László Bartus, editor-in-chief of Amerikai-Magyar Népszava. I might add here that in September 2010 I wrote an article for Galamus in which I compared the ideas of Viktor Orbán to those of Gyula Gömbös, prime minister of Hungary between 1933 and 1936, and talked about the similarities of the present Hungarian political system to that of Gömbös, which itself was a mutation of Italian fascism. But Ungváry is right, references to the fascist elements in Orbán’s system did not prompt serious debate.

Ungváry argues that without antecedents the present system could not have been developed. “The system is successful because the Hungarian political culture of the extreme right before World War II has been reborn in a different guise. It pretends to be something else. It uses the instruments of liberal democracy to mask itself.” Ungváry lists four “surface characteristics” of the Orbán regime that “are designed to hide the real nature of the system.” Then, following the research findings of Umberto Eco, the Italian philosopher, and Hans Mommsen, the German historian of Nazi Germany, he concentrates on the “eight essential characteristics of fascism.”

The most misleading characteristic of this mutation is the democratic “gloss” that covers the fascistoid structure. Democratic institutions have remained, although they have lost their function. The role of opposition parties is to ensure the appearance of democracy. Behind that gloss Ungváry sees the hidden structures of the system that make the regime a mutation of the original.

As for the essential characteristics of the system. (1) There is no declared “guiding principle.” The Leader is not named. There is no Hungarian Führer, Duce, Caudillo, not even Nemzetvédő. He is only “Viktor! Viktor!” Yet he is the supreme leader. With those who don’t question his leading role he is patient, but his political opponents are considered to be enemies and aliens. (2) Although the “cult of strength” is present, there are no brutal reprisals. Intimidation is indirect, but it is always present in Orbán’s speeches. (3) Loyalty is one of the guiding principles, but again it is not written down anywhere. The socialist system also demanded loyalty, in its case to the party. The Orbán system of loyalty is based on personal networks that are typical of fascistoid regimes. At the top of the pyramid stands the Leader himself. (4) Within the system there is seeming chaos but this chaos is actually organized. Those who are faithful to the leader have a fair amount of power, but for those who are suspect there is no mercy. For example, more than half of the civil servants were fired. There is no “class warfare”; the fight is with banks and multinationals. (5) Every important state institution is in the hands of “their own men.” (6) One of the most typical characteristics of the system is its “more neutral selection of those to be excluded.” In communism this ingredient of the system was pretty straightforward; it was based on class. In Nazi Germany it was “race.” In Orbán’s system the targets are those “who don’t belong to us.” They are the ones who are stripped of their banks, their pensions, their land, and so on. This is the third time in a century that wealth has been redistributed. In order to give to those who are “ours” they must take away from others. (7) The groups who are targeted can vary depending on the needs of the regime. It is flexible in this respect. (8) In order to ensure the followers’ loyalty and enthusiasm for the regime, it is necessary to stir up passion and conflicts. In Hungarian this is called the “politics of grievances”; it also entails the rewriting of history.

These essential characteristics of Orbán’s fascistoid mutation are critical to understanding the rest of Ungváry’s treatise, about which more tomorrow.

A few words about Rudolf Ungváry. He is a real polyhistor. He is a mechanical engineer by training but is known as a writer, journalist, film critic, and librarian. In 1956 he was an engineering student and because of his activities was interned in Kistarcsa. In 1958-59 he worked as an iron turner, after which he was allowed to return to university. Since 1983 he has been a research associate at the Széchényi (National) Library. He considers himself a conservative in the classical sense of the word.

Tomorrow I will turn to Ungváry’s thorough analysis of the present fascistoid system and how Hungary ended up here.

The future of MSZP: The Ferenc Deák Circle versus József Tóbiás

The municipal election results were barely tallied when Népszabadság published a proclamation in the  name of the Ferenc Deák Circle. This group was formed on July 15, a few days before MSZP held its congress in the wake of Attila Mesterházy’s resignation as chairman of the party. Who would succeed Mesterházy was never in question. There was only one candidate, József Tóbiás. But the members of the Ferenc Deák Circle–twenty-one prominent and less prominent, older and younger members of the socialist party–feared that under Tóbiás’s leadership the party would not choose the best path. The group hoped to influence the congress and thus the future of the party.

Who are the member of the Ferenc Deák Circle? First and foremost, Ildikó Lendvai, former chairman of the party. There are several former ministers: Ferenc Juhász, Mihály Kökény, János Veres, Ime Szekeres. The successful mayor of District XIII, József Tóth. Among the younger generation and newcomers, Kata Tüttő and Anna Lendvai from the Budapest MSZP, who have served as members of the city council in the last four years, and Róbert Braun, a newcomer who made a good impression on me in his television appearances. Ildikó Lendvai stressed that 14 of the 21 members of the Circle have no desire to hold any office. She herself, in fact, received several nominations but turned them all down.

The members of the Ferenc Deák Circle had fairly modest demands. They wanted greater transparency within the party; they also wanted to curtail the power of Mesterházy’s men. As it was, most of the people who were put forward as parliamentary candidates were close associates of the former chairman. The group suggested that the majority of the board members of the party not be members of parliament. Ildikó Lendvai was hopeful that their suggestions would be well received by the congress. The group hoped that the congress would vote in favor of a new program, new by-laws, and a new organizational structure. Well, none of these hopes of the group materialized.

Magyar Nemzet reported after the congress that “the members of the Ferenc Deák Kör who urged an opening toward the liberals failed.” The congress stood by József Tóbiás’s ideas of a move farther to the left and voted for the party’s total independence. Tóbiás, after being elected with 92% of the votes, gave a ten-minute speech in which, while not mentioning either DK or Együtt-PM by name, announced that “I will not measure on an apothecary scale how much liberalism, moderation or law and order are necessary for success.” He said he was building a left-wing party, not a “rainbow coalition.” As is evident from Tóbiás’s subsequent utterances, he hasn’t changed his mind on the subject.

Now, after a few months of hibernation, the Ferenc Deák Circle is back in the news. The text of its proclamation appeared in yesterday’s Népszabadság. Although it does not mention Tóbiás by name, it states that “we need a new political strategy; we have to do something else and that differently.” The ideas expressed in the proclamation echo to some extent those of Bálint Magyar and his study group, especially the claim that “one needs a party of the left that wants more than a change of government. We need regime change.” The new left should put an end to mafia methods. “We need new agreements, new concepts, new methods.” The proclamation calls for extensive discussions among the different groups “on the democratic side” to figure out together the practical and ideological bases of the opposition to the regime (rendszerellenesség). But it goes even further. It advocates “the coordination of the parliamentary and local presence of the democratic forces.” Surely, that means close cooperation among all democratic parties. It suggests the creation of “alternative legitimacy,” meaning an independent civil network of think tanks as well as scientific and cultural workshops. In connection with this “alternative legitimacy,” there is a reference to the necessity “to signal to our European and American friends the freedom loving voice of the Hungarian nation.” In my reading this means cooperation with European and American organizations in defense of Hungarian democracy. Finally, the proclamation states that “the concept of the leading party of the left” is over. In plain English, MSZP should give up the idea that it is the leading force of the opposition.

And, expanding on the proclamation, Ildikó Lendvai, one of the signatories of the proclamation, posted a letter on her Facebook page yesterday. I will focus here only on the passages that add to the contents of the proclamation. In her opinion, Budapest could have been won. Lajos Bokros’s 36% was a pleasant surprise despite the fact that he became a candidate only two weeks before the election. Budapest could have been won if MSZP had not sent conflicting messages about Bokros’s nomination and its support for his candidacy.

What are the lessons?

(1) One is that in modern large cities the dividing line is no longer between left and right. “Today in Hungary that line is between openness toward Europe and inwardness, between progress and boorish conservatism.” In plain language, Tóbiás is out of touch with reality.

(2) “It would be a huge mistake if MSZP kept an equal distance between Fidesz and the democratic parties. This is András Schiffer’s road and it does not lead to a governing position.”

(3) The left does not equal MSZP. “Gergő Karácsony is an impressive politician of the left. Whether we like it or not, Gyurcsány’s party will stay although it showed the limits of its growth.” In brief, MSZP must make peace with them and cooperate.

I think that in the next few months MSZP’s leadership must decide what road to take. I’m almost certain that Tobiás’s answer will lead nowhere. Moreover, if he and his friends insist on the present course, a fair number of the leading MSZP politicians and even the membership will leave the party to join perhaps a new formation composed of democratically-minded people, which should include members of the Ferenc Deák Circle.

Bálint Magyar’s post-communist mafia state: front men, transaction brokers, and gatekeepers

Yesterday we left off with a description of the kinds of oligarchs who play an important role in Viktor Orbán’s mafia state. Today we move on to the front men (stróman/Strohmann) and their function in the system. According to Bálint Magyar’s definition, they are people without formal position either in politics or in the economic sphere who “serve as bridges between legitimate and illegitimate realms.”

Magyar identifies two kinds of stróman, political and economic. The political front men are people who originally came from Fidesz itself and were put in important government and parliamentary positions–for instance, president of the parliament and president of the Hungarian Republic. Soon enough the leader extended the circle from which he could choose people for key positions. They were either relatives or close friends, or friends of friends. Such appointees can be found heading the prosecutor’s office and the National Office of Justice. Eventually, he drew from employees of companies owned by members of the political family–managers, accountants, lawyers–to fill posts in the ministries. These people are front men of the poligarchs, only instruments, not autonomous actors. In this mafia state the majority of government officials fall into the category of political front men.

An originally Fidesz-appointed stróman after a couple of years can be removed and replaced by another Fidesz-appointed individual, as we have observed recently. Magyar’s explanation is that some of the original appointees owed their allegiance to top poligarchs, for example, Lajos Simicska and his business partner, Zsolt Nyerges. Because of the internal power struggle that is currently going on between Simicska and Viktor Orbán, several of Simicska’s front men have been removed from important positions, like the Hungarian Development Bank and the Ministry of National Development. Perhaps the best example of such a personnel change occurred a few months ago in the Ministry of National Development which was considered to be the stronghold of the Simicska-Nyerges poligarchic duo. Here, after the election, Viktor Orbán replaced Mrs. László Németh, clearly a puppet of Simicska, with his own man, Miklós Seszták, a crooked lawyer. Seszták then fired 200 people from the staff of the ministry, which Magyar calls a bloodless decapitation.

The economic front men act like proxies of the poligarchs, although oligarchs can also have their own front men if for one reason or other they want to hide their presence in an enterprise. Some of the money accumulated by these people eventually ends up in the poligarchs’ secret bank accounts.

What are the characteristics of the economic ventures of strómans? (1) With practically no capital or expertise they receive large state orders. (2) The increase or decrease of their economic activities depends not on economic but on political cycles. They often receive tenders when they are the sole bidders. (3) They act as gateways to the state. They collect the profits generated by large bona fide companies which themselves would be able to do the job but which are are forced to work as subcontractors. (4) Profits of these companies are much larger than of companies not politically connected. (5) The managements of these companies pay themselves inordinately large dividends. Normally, especially in the case of a new company, most of the profit is reinvested in the firm. But these companies don’t have to worry about business expansion. It is the subcontractor’s headache. (6) While successful companies without political connections often encounter aggressive takeover attempts by the government, the companies of strómans never have to worry about such an eventuality.

In sum, the basic goal of the mafia state is the elimination of autonomous positions in the political, economic and societal spheres and their transformation into a patron-client relationship. The men whose names appear in the regularly published list of the most influential Hungarians are all dependent on the good will of Viktor Orbán, be they politicians, entrepreneurs or university professors.

In addition to oligarchs and front men, there is another group of people Magyar calls transaction brokers who are mediators between the actors in illegitimate transactions. These people are often lawyers who are involved in writing grant applications, for example. They are the ones who have the personal network that can facilitate the transaction between, let’s say, the government bureaucracy in charge of monies coming from Brussels and the applicants. Transaction brokers, mostly law firms and institutes attached to ministries, by now have taken over some of the functions of ministries. They are the ones who actually write legislative proposals submitted by individual members of parliament.

There are two types of transaction brokers. One is the so-called gatekeeper who works from inside the administration and who defends and legitimizes illegitimate businesses. The other is the representative broker who by the size of his business could in fact be an oligarch but who is only an economic stróman.

Finally, Magyar spends some time on the nature of the family’s guard and the secret services. One of the very first decisions of Viktor Orbán after he became prime minister was to create a large force of personal bodyguards misleadingly named the Anti-Terror Center (TEK). In addition, there are private security firms often owned by Fidesz oligarchs that have the support of the police or TEK. Magyar even includes in this category the infamous soccer fans of Fradi, a club headed by government functionaries. These football fans can be mobilized if necessary as they were in the fall of 2006. Fidesz again called them out in 2013 when a few students surrounded the Fidesz headquarters. TEK itself has practically limitless powers. Sándor Pintér, minister of the interior under whom the police force functions, is a stróman of Viktor Orbán.

Viktor Orbán and his old body guard, János Hajdu
From major to brigadier general overnight

Supervision of the secret services, since there are several of them, has always been close to Fidesz poligarchs’ hearts. Magyar recalls that in 1990 when Gábor Demszky became mayor of Budapest he resigned his seat in parliament. The chairmanship of the parliamentary committee overseeing the activities of the secret services thus became vacant. Fidesz insisted that the post should go to one of its own. László Kövér was chosen. Until 2005 Fidesz through this committee managed to keep the secret services under its influence. In 2006 the governing socialists closed the secret services’ avenues to Fidesz by firing a number of people known for their close ties to Kövér and others in Fidesz. These Fidesz loyalists who found themselves without a job established their own private concerns and continued their spying activities through old friends still employed by the government. As soon as Fidesz won the election, these people were immediately rehired. Earlier there was a minister whose sole job was the supervision of the activities of the secret services, but after 2010 Sándor Pintér took over this role. Thus both the police and the secret services report to him.

I still have covered only half of the introductory essay by Bálint Magyar. Time permitting, I will continue my summary sometime in the future. However, I think that today’s and yesterday’s posts give you an idea of how Orbán’s mafia state functions. Dismantling it will not be an easy task when the time comes.

Bálint Magyar’s “systemic characteristics of the post-communist mafia state”

Earlier I published several reports on Bálint Magyar’s theory of the mafia state. In fact, I devoted three consecutive posts, the first of which appeared on June 18, 2013, to his description of Orbán’s system of government as a new kind of autocratic regime. Magyar’s analysis of the current Hungarian political system elicited widespread attention in Hungary as well as hundreds of comments on Hungarian Spectrum.

A few months later (November 2013) Bálint Magyar and Júlia Vásárhelyi published an edited volume of essays written by twenty-two scholars from different disciplines who embrace the theoretical framework Bálint Magyar worked out in the first decade of the century. Its title was Hungarian Octopus: The Post-Communist Mafia State. The book became an instant bestseller. More than 11,000 copies were sold within a few months. It had to be reprinted four times. I wrote a review of it on Hungarian Spectrum. Again the review prompted a lively discussion, some people finding Magyar’s argument compelling while others disagreed with him. In any case, since the appearance of Hungarian Octopus, the concept has been widely accepted by scholars as well as by the left-leaning Hungarian public. Those who are familiar with the workings of the Orbán regime find Magyar’s description of it a perfect fit.

Book launch of volume 2 of Hungarian Octopus: The Post-Communist Mafia State
Source: Népszava

The second volume of Hungarian Octopus has just been published, and it is fascinating. In his introduction Magyar takes into consideration some of the criticisms and additional observations he received during discussions of the contents of the first volume. This introductory essay is so full of information and novel observations that I will most likely have to devote another post to it. But let’s start.

First, Magyar describes the key actors of the mafia state. He begins with the economic-political actors whom Magyar calls “poligarchs” whose ranks include several subcategories: the oligarchs, the front men (in Hungarian stróman/ok), corruption brokers, the family guard/the secret service, and the family privatization of databases. Let me go into some of the details.

Who belong to the class of poligarchs? These are people who attained illegitimate wealth by being members of the political family. Their political power is known but their economic power, their wealth is hidden. They use front men; their money is often hidden in foundations. The chief poligarch is the Godfather–in our case, the prime minister.

Beneath the poligarchs comes the class of oligarchs who began their careers with legitimate business activities and who, as a result of their economic power, acquired political might. In ordinary post-communist states their economic activities are legal, but the way in which they acquire business opportunities often is not. They acquire advantages over their competitors by illegal means. They are, however, more or less autonomous actors. But in Hungary, Magyar argues, the mafia state makes these oligarchs’ autonomy impossible or very limited. As he puts it, “it domesticates” them. They are partly or wholly dependent on the good will of the state.

Magyar distinguishes several type of oligarchs. There are the inner circle oligarchs. They have been close to Fidesz from the early 1990s on, and in part they have accumulated their wealth through their political connections. Currently, they don’t have any political roles but they belong to the small circle of people who are able to formulate policy. A good example of this sub-type is Lajos Simicska. Of course, any of these oligarchs can lose their positions if the Godfather finds their activities objectionable. A couple of the original oligarchs actually ended up in jail when they got involved in illicit activities.

Another sub-category of the oligarchic class is the adopted oligarchs. These people made their wealth during the early murky days of mass privatization, and it was only later that they were adopted by the political family. Their connection to politics now enhances their financial position. Examples of this type are Gábor Széles, owner of the extreme right-wing Magyar Hírlap and Echo TV, and László Baldauf, owner of the CBA chain of supermarkets. These people only serve the policies of the Family;  they can’t influence them.

The next category is the capitulated oligarchs who earlier were quite independent; some were even associated with the other political side. Their capitulation is due to their dependence on state orders. Since they were not considered to be affiliated with the Family in any way, they fell on hard times after 2010. In addition to the lack of orders, the state has all sorts of instruments to make them surrender: the internal revenue service, prosecutor’s office, police. A typical representative of this group is Tamás Leisztinger, who suffered economic hardship already during the first Orbán administration and who by now is the willing or unwilling financier of the prime minister’s hobby, football.

Then there are the fellow traveler oligarchs. These men were the greatest economic beneficiaries of the first twenty-year period after the change of regime. They were sought after by both the left and the right, and they kept an equal distance or equal friendship with both groups. After 2006 the equilibrium between the two political sides shifted toward Fidesz, which forced them to be fellow travelers unless they wanted to lose their preeminent economic positions. Sándor Csányi of OTP and Sandor Demján of Trigánit are perfect examples of this category.

The last two sub-categories are the autonomous and the rival oligarchs. Their numbers are rapidly decreasing. Some of these people are so afraid of the chief poligarch that they dare not support liberal causes at all.

Although I thought I would be able to describe the other key actors of the mafia state today, the story is so intriguing that I don’t want to shortchange you by not covering the details properly. We will continue tomorrow.

Mária Vásárhelyi on the “media octopus” in Hungary

Yesterday I talked about the state of the Hungarian media. In today’s Galamus, Zsófia Mihancsik, who is a very good journalist, suggested to her colleagues that it would be a good idea if they learned to read. But, as some of you suggested, the slanted reporting on certain “sensitive” topics might be the result not so much of careless reading or writing but of a willful distortion of the facts. This is definitely true about media under the direct or indirect control of the governing party.

So, I think it’s time to look around a little in the world of the Hungarian media. Here I’m relying heavily on Mária Vásárhelyi’s essay “The Workings of the Media Octopus–Brain and Money Laundering” that appeared in the Bálint Magyar-edited volume, The Hungarian Octopus.

According to Vásárhelyi, Viktor Orbán’s psyche was crushed in 1994 when he  managed to lead his party with a 40% chance of winning the election into almost total ruin with 7.7% of the votes. Before that fiasco Orbán was the darling of the press, but subsequently he became the pariah of the then still mostly liberal Hungarian media. He decided right then and there that the goal is not to be liked by the existing media; rather, a smart politician should strive for a loyal media he can easily influence. In Vásárhelyi’s estimate Fidesz had the lion’s share of responsibility for the 1996 media law that turned out to be neither liberal nor democratic.

Once Fidesz won the election in 1998 Viktor Orbán made a concerted effort to build a media empire with the use of private and public money. Billions of public money were spent on establishing Heti Válasz and on the “rescue” of the heavily indebted Magyar Nemzet. And right-wing oligarchs like Gábor Széles, Tamás Vitézy (Orbán’s uncle by marriage), Zoltán Spéder, István Töröcskei, and Lajos Simicska put large sums of their own money into media outlets that were anything but profitable. They were hopeful that their investments would serve them well one day when Viktor Orbán again returned to power.

Between 2002 and 2010 the preponderance of media outlets shifted to the right. Moreover, by 2008 the liberal media’s financial situation was dire. Companies strapped for funds cut their advertising budgets, and the liberal media outlets had no rich oligarchs who could ensure their continued existence during the hard times. Since 2010 the lopsidedness between right and left in the field of media has only become worse. According to Mária Vásárhelyi, “only those messages which the government party wants to deliver reach 80% of the country’s population.”

Studying the changes in the political orientation of radio stations is perhaps the most fruitful and most telling because it is here that the Media Council, made up entirely of Fidesz appointees, can directly influence the media. It is in charge of allocating radio frequencies. As the result, in the last five years the radio market became unrecognizable. Every time existing radio stations had to reapply for frequencies, the frequencies were given to someone else. The new stations were owned by companies or non-profits preferred by the government party, and in consequence government advertisements immediately poured in. Between 2010 and 2012 some 50 local and regional radio frequencies changed hands. Of these Mária Rádió (Catholic Church) got seven frequencies all over the country and Lánchíd Rádió (also close to the Catholic Church) got five. Európa Rádió, which is close to the Calvinist Church, by now can broadcast on three frequencies. Magyar Katolikus Rádió has two local and two regional frequencies. All these stations are considered to be non-profit and therefore they don’t pay for the use of the frequencies.

Zsolt Nyerges has built a veritable media empire: he is behind “the three most valuable radio frequencies in the country.” During the same time the liberal stations have been disappearing one by one. Radio Café, very popular among Budapest liberals, lost its frequency in 2011. So did another popular liberal station called Radio1. Of course, Klubrádió is the best known victim of Viktor Orbán’s ruthless suppression of media freedom. Klubrádió began broadcasting in 2001 and could be heard in a radius of 70-80 km around Budapest. By 2007 the station had acquired eleven frequencies and could be heard in and around 11 cities. Soon enough Klubrádió was the second most popular radio station in Budapest. Today, Klubrádió after years of litigation moved over to a free but weaker frequency that it already had won before the change of government in 2010. Out of its 11 provincial stations there is only one left, in Debrecen, and we can be pretty sure that as soon as its contract expires Klubrádió will no longer be able to broadcast there either.

As for the public radio and television stations, let’s just call them what they are: state radio and television stations as they were during socialist times. But then at least the communist leaders of Hungary didn’t pretend that these media outlets were in any way independent: the institution was called Hungarian State Television and Radio. They were at least honest. The only difference was that in those days state television and radio aired excellent programs, especially high quality theatrical productions and mini-series, all produced in-house. Now I understand the programming is terrible and only about 10% of the population even bothers to watch MTV, and most likely even fewer watch Duna TV. Their news is government propaganda: on MTV more than 70% of the news is about government politicians and the situation is even worse at Magyar Rádió.

These state radios and television stations have a budget of over 70 billion forints, a good portion of which ends up in the hands of Lajos Simicska. How? MTV and Duna TV no longer produce shows in-house but hire outside production companies. Thus, public money is being systematically siphoned through MTV and Duna TV to Fidesz oligarchs. The programs are usually of very low quality and complete flops.

Most Hungarians watch one of the two commercial stations: RTL Klub and TV2. Both are foreign owned but as Orbán said not long ago, “this will not be so for long.” And indeed, a couple of weeks ago TV2 was sold, allegedly to the director of the company. Surely, he is only a front man. An MSZP politician has been trying to find out who the real owner is. Everybody suspects the men behind the deal are Lajos Simicska and Zsolt Nyerges.

And finally, the print media is also dying, which is not surprising given the worldwide trend. But right-wing papers are doing a great deal better than liberal and socialist ones for the simple reason that public money is being funneled into them through advertisements by the government and by state-owned companies. Even free newspapers are being brought into the right-wing fold. There was a very popular free paper called Metro owned by a Swedish company. But Orbán obviously wasn’t satisfied with its content. So, the government severely limited the locations where Metro could be stacked up, free for the taking. Thus squeezed, the Swedish owner decided to sell. And who bought it? A certain Károly Fonyó, who is a business partner of Lajos Simicska. The paper is now called Metropol and, in case you’re wondering, is doing quite well financially.

Napi Gazdaság was sold to Századvég, the think tank that was established by László Kövér and Viktor Orbán when they were still students. As I mentioned earlier, Népszabadság was sold recently to somebody who might be a front man for Tamás Fellegi, former minister of national development who had financial interests in the world of the media before he embarked on a political career. The paper was owned by Ringier, a Swiss company that wanted to merge with the German Axel Springer, which owns a large number of provincial papers in Hungary. Although in many European countries the merger was approved with no strings attached, the Hungarian government set up an obstacle to the merger. The merger could be approved only if Ringier first sells its stake in Népszabadság.

Fidesz hasn’t been so active online. Most of the online newspapers are relatively independent. What keeps the party away from the Internet? Vásárhelyi suspects that it is too free a medium and that it doesn’t comport with Fidesz’s ideas of control. Surely, they don’t want to risk being attacked by hundreds and hundreds of commenters. Index, however, is owned by Zoltán Spéder, a billionaire with Fidesz sympathies. After 2006 it was Index that led the attack on Ferenc Gyurcsány and the government. Vásárhelyi predicts that Index will turn openly right sometime before the election.

The scene is depressing. There is no way to turn things around without the departure of this government. And even then it will require very strong resolve on the part of the new government to stop the flow of public money to Fidesz media oligarchs. The task seems enormous to me.

Bálint Magyar: The Hungarian post-communist mafia state (from a critique of the government to a critique of the system)*

After the collapse of the Soviet Empire, many of us lived under the illusion that communist dictatorships were going to be replaced by liberal democracies. Although the road ahead appeared to be bumpy, there was consensus that we were going through a process of a linear progression. Deviances from the norms of liberal democracies seemed to be children’s diseases rather than characteristics of adulthood. However, the chronic symptoms of such deviances caused analysts to interpret the political processes of certain post-communist states and describe their systems, which got stalled and even turned back on the road, along the liberal democracy-autocracy axis.

Having gained entry into the European Union, certain countries of Central and Eastern Europe passed the entrance test, albeit the exam requirements of the crash courses had been relaxed owing to geopolitical considerations. Those responsible for the enlargement believed that the new member states were inspired not only by the compulsion to pass the test, which entitled them to join the rank of consumer societies, but also by the desire to belong to a network with shared values. As the frustration of old member states grew, so did the literature of transitology become richer and richer. There was disagreement among transitologists, however, as to the extent post-communist countries differed from one another in terms of their deviation from liberal democracies.They sometimes added an adjective to restrict the meaning of democracy, such as illiberal, directed or pseudo, along different institutional indicators, and endeavored to produce a measure of “composite” deviation, which was supposed to assess whether the system under investigation was to be found democratic or not. Others characterized these systems as variants of autocracy by using softening labels, such as semi-autocratic, soft dictatorship or electoral authoritarianism. Still others attached the label “hybrid” to denote such systems.

When reference was made to the subjects of the regime, the phrase “majority democracy” or “dominant party system” was used. When the concept of power concentration cum wealth accumulation was mentioned, “clientalist regime,” “crony capitalism” or “post-accession hooliganism” were the terms suited to stress the illegitimate beneficiaries of power.

Transitional systems or terminal station?

Perceiving the conceptual framework of deviations, Hungarian analysts searched for historical analogies. The process of centralization and nationalization were suggestive of the soft-communist stages of the Kádár regime until 1989. The reincarnation of the ideology, cultural models and language of the Horthy regime between the two world wars gave way to fascist and corporative interpretations whereas the loss of personal integrity in administration and governance was reminiscent of feudal systems.

After 2010, Fidesz annihilated the system of liberal democracy and created an entirely new system. In his speech at Kötcse before the 2010 election, Orbán declared that he would not simply change the government but create a new model of governance, which would be completely different from “the messy period of the past two decades.” This new model was based on an ideology of “national war of independence,” which he called “The System of National Cooperation,” and, true to his promise, he established this system as a “central field.”

Meanwhile, his critics from the opposition – in self-disarmament, as it were – got stuck in a paradigm of mere government criticism, instead of finding a conceptual framework capable of interpreting this novel type of political predator.

The post-communist mafia state

The mafia state, the organised overworld is far removed from the world of anomalies of party funding and the organised underworld’s attempts to influence political decisions – the relationships have now been reversed: it is no longer the case that private wealth is acquired to help a party’s need for financial support to be gained from illegitimate sources; rather a political party’s decision-making potential is used here to requisition private property. It is no longer the case that a hidden underworld seeks to corrupt decision-making processes; rather inherently purposeful illegitimate special interests are aligned here with legislative measures and governance. There are hardly any areas where activities would not be subject to power and wealth accumulation considerations of the adopted political family. The mafia state is a privatized form of a parasite state.

The authoritarianism of the post-communist mafia state as established after 2010 has particular characteristics, and cannot be classified as being any form seen up to now. Although it may share a few characteristic similarities with other autocratic forms, its unique traits define a unique type. It is nothing else than a sub-type of autocratic regimes, and the conceptual framework into which it is cached describes not only the techniques of power concentration but the nature of the elite in power.

The epithet post-communist not merely refers to a historical period, but also to that it came into being from the carcass of communist dictatorship, what was characterized by the state monopoly of ownership. The designation “mafia state” is by no means emotional or journalistic in nature, but rather refers to the new power elite’s essential trait: to its organisational nature and to its order. Here, in considering the characteristics of the relatively narrow authoritarian new elite, the mafia state differs greatly from the various analogies referred to in elites in authoritarian regimes. Above all that it is made up of – as is usual in the mafia – joint businesses founded principally by the family, as well as by sworn adopted political family members through the family’s network of relationships. The organization’s kinship and loyalty are connected by threads linking ever more families, which radiate from the family patriarch in strongly hierarchical divisions of pyramid-like order of obedience.

The traditional mafia, the organized underworld is no more than a violent, illegitimate attempt by a head of the premodern patriarchal family to exercise its power of enforcement within a society based on the equal rights of citizens and the rule of law. An attempt that the state’s public authority agencies are attempting to thwart. The mafia is an adopted family in which “relatives without any blood ties make a strict and solemn commitment to provide unconditional mutual assistance to all parties” (Eric Hobsbawm). The mafia is an illegitimate neo-archaism.

In the mafia state, in the organized overworld the patriarch’s  powers of enforcement works at a national level under the disguise of the institutions of democracy by occupying state power and acquiring the tools to achieve it. It can be considered as a kind of political enterprise. For the head of the adopted political family, reigning in terms of the patterns of leadership, the patriarchal family, the home, one’s estate and one’s country are isomorphic concepts. The same culture follows the same pattern for the exercise of power at each level: the nation is his household’s members. Just like the patriarch, who once had the right to decide in personal and wealth-related matters, as well as in any issue concerning the individual roles and competencies of his “household,” this new type of patriarch reigns supreme in a country where the nation becomes his “household.” He does not expropriate – he merely disposes. It is his due to serve justice according to status and alleged merit.

The distinctiveness of the mafia state as a subtype of autocracy

The post-communist mafia state is not merely a deviant form of liberal democracy, nor is it a transient formation, rather it is an independent subtype of autocracy. The specific features of the regime can be summarized as follows:

1. The concentration of political power and the accumulation of personal/family wealth occur in unison.
2. The alternation of the political elites’ systematic replacement takes place in parallel with that of the economic elite, driving such change not with the instruments of democracy and market economy. This elite replacement is centrally organised into a hierarchy dependent on the adopted political family. This cannot be called a traditional form of primitive accumulation of capital, because herein there is no flow of capital between the premodern and modern sectors or between the agrarian and industrial sectors, accompanied by a change of ownership. What happens is merely the implementation of the  change of owners of accumulated capital. Due to their socialization, however, the new body of owners do not become real entrepreneurs, but merely tax collectors in an entrepreneurial disguise, fortified by the head of the adopted political family with political monopolies.
3. It is not incidental that public interest is subverted to private interest; it occurs systematically and relentlessly. Public policy objectives, such as the motives for policy decisions, remain in the background, unaccounted for. Decisions are tainted with power and wealth motivations. Every decision concerns power and wealth at the same time: “brainwash and money laundering” (Mária Vásárhelyi).
4. The organised underworld’s illegal physical coercion, characteristic of the mafia, is replaced by legalized public authority/state sponsored coercion. The intention of this is to serve not only to maintain power, but also to further extend the wealth of the adopted political family.
5. With the legalized instruments of state monopoly of coercion, the mafia state coercively extracts personal fortunes – sometimes indirectly through (transit)nationalization – to serve its own interests and redistributes this amongst the adopted political family members. In this respect, too, such corruption differs from “established” forms, in which merely the illegitimate diversion of revenues takes place. Just as private banditry is abolished by classical mafia, the mafia state eliminates individual and anarchic forms of corruption, and replaces them with ransom levied from above, in a centralized and largely legalized form.
6. The personal wealth, resulting from the accumulation of political power of the adopted political family’s fortune, and public/state property inevitably overlap with each other. This is in contrast to, for example, constitutional monarchies, where the two are clearly distinct from one another.
7. Key players in the authoritarian mafia state:
   • the poligarch (Tamás Frei) is someone who uses legitimate political power to secure illegitimate economic wealth – their political power is visible, whilst the economic power remains hidden;
   • the oligarch is someone who from legitimate economic wealth builds political power for themselves – their economic power is visible, whilst the political power, if any, remains hidden;
   • the strawman is someone who has no real power – whether in politics, or in the economic sphere. In the gap between the legitimate and illegitimate spheres, they formally serve as go-between for the public. In fact, the majority of those in different posts of governance are strawmen, and so are those in the economic sphere, especially if they are dependent on the state.

8. Decisions are taken outside the competence of formalized and legitimate organizations. It is not the model of the communist parties’ “politburo.” but the “polipburo” (Sándor Révész) run by the adopted political family. (The phrase polip is the Hungarian equivalent of the phrase octopus.) However, the polipburo does not possess the legitimacy demanded by the nature of its operation. It is not Fidesz that has a transmission belt to enforce its decisions, but it is the party itself that has become the major transmission belt of the adopted political family.
9. In place of the class structures, a patron-client chain of vassal relationships comes into being. The adopted political family is built around the patriarch, the head of the family. It is centralised and hierarchically made up of personal and family relationships structured in an authoritarian formation. Under the protection of institutional guarantees, a strong democratic society with a wide range of weak ties is replaced, alongside the abolition of institutional guarantees, by a weak society with limited but strong ties. There is no free entry into the adopted political family; one may enter only if  accepted, admitted and ready to give up one’s integrity. Nor is there a free exit – one may only be expelled.
10. Formalized and legal procedures give way to material and arbitrary actions. The head of the government does not govern, but illegitimately disposes of   the country as if he owned it. State institutions, including the Parliament, the government, the tax offices and the Chief Prosecutor’s Office, do no more than rubberstamp and do the bookkeeping. The “law of rule” substitutes for the “the rule of law.” Proper jurisdiction is replaced by an arbitrary practice of justice.
11. The topdown destruction of bureaucracy a la Max Weber implies the takeover of the leading positions of administration by “party commissars,” who they are loyal not to the party, but to the head of the adopted political family directly or through personal links. These commissars play various roles in the legitimate spheres of bureaucracy: strawmen, governors, commissars, supervisors, cashiers – labels that give a more precise sociological definition of their actual functions than the official designations of management positions.
12. This new form of vassal dependency should not be called feudal, because the sociological/material nature of power and its legal/formal legitimacy do not converge. The gap between them is bridged by state coercion and hypocrisy. The mafia state is compelled to bridge the gap between the sociological nature and legitimacy of autocratic rule with quasi-democratic procedures by restricting civil rights and electoral democracy. It is neither a liberal democracy, nor a dictatorship based purely on coercion.

Pyramid scheme

In the wake of the massive and aggressive transformation of wealth structure, the expenses incurred by the power restructuring of the mafia state impose a heavy strain on the economy and at a time of crisis the mafia state resembles an oil dictatorship without oil revenues. New sources are needed to generate revenues that reinforce the power and wealth of the adopted political family. These include flat rate tax, reduction of social expenditure, ransom levied on banks and public utility providers, and above all channelling European Union sources into the coffers of the adopted political family.  This, in some sense, is an economic pyramid scheme, because there are three losers per one winner (Balázs Krémer); it is moot point how long taxpayers of West Europe are willing to directly finance the enrichment of the Hungarian mafia, the adopted political family.

However, in addition to the economic pyramid scheme, there is a political pyramid scheme as well, which in foreign policy may be characterized as a strategy of “drifting in a Western boat propelled by an Eastern wind” (Miklós Haraszti). The policy that runs in the face of our European Union and Transatlantic commitments goes hand in hand with begging for alms in terms of legitimacy and finances, at autocrats in the East. In domestic policy some form of cold civil war and the subjection of citizens are under way. Alternate periods of mobilization and demobilization under the slogan of a national war of independence are part of an ideological pyramid scheme, which serves as a tool of suspending moral and legal justice.

The nationalism of the mafia state is not targeted at other nations, but rather the expulsion of all from their own nation who are not part of the adopted political family, or are not built into the order of vassals. Since they are not part of the “patriarch’s household,” they must face all the consequences of being outsiders. For Orbán the nation consists of the adopted political family and their in-laws, from the head of the family down to the servants. The Hungarian octopus creates a collectivist, nationalistic ideology under the pretext of the so-called national and social justice, which is just a tool to justify their egotistic aspirations for concentrating power and wealth. Short of assets, the losers are offered a feeling of belonging, as well as the right to pass positive and negative judgments: the right to cherish “true patriotism” on the one hand, and to contempt the enemies (“aliens” and “traitors”) and parasites (Gypsies, homeless, jobless) of the motherland on the other. Whereas the leaders of Fidesz are not anti-Semites and their target is not “the Jew,” they pander to anti-Semites. They hate the bank sector not because it is run by “the Jew,” but rather because it is not theirs. Nor are they racists – but their target audience is. However, it is their inexcusable sin that they have legitimized feelings of antisemitism and racism as well as allowed to use the language that expresses such feelings. In a campaign to reach out to extremist voters they reproduce them in expanded numbers and occasionally build the representatives of radical right-wing ideology into state institutions. One wonders if the escalation of this economic, political and ideological pyramid scheme can be curbed and what tragedy may befall the society should the pyramid implode one day.

This being the case, it boggles the mind that the main dilemma of the opposition still is whether to regard Viktor Orbán’s reign as a legitimate government or an illegitimate system. Although the manipulative and one-sided transformation of the election law urged the coalition of the democratic opposition to unite, but this unity exists only in a technical sense. They are still between the devil and the deep blue sea: should they be the opposition of only the government or rather of the whole system?

——

*This is an edited version of a talk delivered on February 2, 2014 at a conference of the István Bibó Public Society (Népszabadság, February 15, 2014).

A new political coalition in Hungary? Let’s hope so!

As I sit here to write about the latest and perhaps the most important political development of 2013, the situation is still far too fluid to be able report on the final outcome of this new round of negotiations among the democratic opposition forces.

Yesterday Gordon Bajnai on ATV and Attila Mesterházy on Magyar Rádió practically simultaneously announced that the negotiations that resulted in the ill-fated bilateral agreement between E14-PM and MSZP proved inadequate to strengthen the anti-Fidesz forces and therefore a renegotiation of the terms is necessary. MSZP has been languishing while E14-PM has been losing support. At the same time Ferenc Gyurcsány’s Demokratikus Koalíció (DK) has been gaining ground. According to some polls, it has garnered more potential voters than E14-PM which, in its agreement with MSZP, received 31 electoral districts out the available 106 in which the party could name its own candidates. At one point MSZP offered only two losing districts to DK and told the DK negotiating team that several of the party’s top politicians, including the party chairman Ferenc Gyurcsány, were not welcome on the MSZP list. Not surprisingly, DK refused these offers and demands.

In the last couple of months those voters who would like to get rid of Viktor Orbán and his corrupt and incompetent government have become discouraged and dispirited. By mid-December it seemed that at least four democratic opposition parties would run with separate lists and their own candidates, which would make a Fidesz victory in the coming election inevitable. Saner observers pointed out that as long as the anti-Fidesz voters don’t see a united and hence strong opposition, they will not be inspired to either work for the cause or vote for opposition candidates. After all, their efforts and votes would be wasted.

Yet both the Bajnai and the Mesterházy camps remained adamant. They not only refused to listen to “the voice of the people” but also attacked Ferenc Gyurcsány with such vehemence that at one point it looked as if any understanding with DK was impossible. Tibor Szanyi (MSZP), for example, called Gyurcsány “a mentally disturbed Bolshevik billionaire with whom one cannot build a future.” Bajnai accused him of betraying the aspirations of the democratic opposition. László Puch, the powerful MSZP politician who handled the party’s shady finances, said that “Gyurcsány all his life uttered only stupidities.” Gyurcsány stood fast. He has good political instincts and knew that these would not be the final words if events dictate otherwise. Moreover, he claims to be impervious to insults. He considers them part and parcel of politics.

Some people might complain that opposition politicians could have saved themselves a lot of headaches if they had realized the force of Gyurcsány’s opinion on the issue at the very beginning: given the new electoral rules, one can win against Fidesz only if there is a common list and one candidate for the post of prime minister. Mesterházy claimed yesterday with some justification that MSZP’s original idea was indeed to have a common platform, and negotiations to that end even began about a year ago. At that time it was Gordon Bajnai’s team that decided not to attend these meetings. And so the idea withered away.

In fact, E14-PM kept postponing negotiations with MSZP in the hope of making the party stronger and thus having a stronger negotiating position. Mesterházy also indicated yesterday that it was E14-PM that was dead set against the participation of DK and Ferenc Gyurcsány in the negotiations. Apparently, it was not so much Gordon Bajnai who felt so strongly against his former friend and political ally but the few former LMP politicians who had left their party and joined Együtt 2014. This antagonism was understandable because, after all, LMP was a political formation that came into being in direct opposition to Ferenc Gyurcsány and his policies.

But finger pointing doesn’t lead anywhere. It is possible that originally it was E14-PM that was the obstacle to wider cooperation, but MSZP’s Mesterházy and some politicians around him were quick to follow the lead of Bajnai’s party. In fact, in the last few weeks one gained the distinct impression that E14-PM had had a change of heart and instead of the earlier harsh talk against Gyurcsány, E14-PM politicians were carefully leaving the door open for a renegotiation of the terms of the agreement signed by the two parties.

According to yesterday’s Népszava there were a number of influential liberal intellectuals who helped Gordon Bajnai make up his mind. Népszava mentioned by name László Bitó, formerly professor of ocular physiology at Columbia University and writer of fiction since his retirement in Hungary; Ágnes Heller, philosopher; Bálint Magyar, SZDSZ politician and former minister of education; Sándor Radnóti, literary historian; and Iván Fischer, conductor and music director of the renowned Budapest Festival Orchestra. These people have argued passionately for some time that the opposition’s ticket should include all parties and individuals who could contribute to an electoral victory in April.

Gordon Bajnai announced his willingness to abandon the idea of becoming the next prime minister of Hungary. Actually, if the old agreement between E14-PM and MSZP had remained in force, even then it would have been unlikely that Bajnai would have become prime minister given the large difference in size between the two parties.

Mesterházy in theory also showed his willingness to talk about all possible issues, even including giving up his candidacy for the post of prime minister. Lately there has been a lot of talk about both men stepping back and finding a third attractive and inspiring candidate. What we heard this afternoon, however, after a three-hour meeting between the negotiating teams of Bajnai and Mesterházy belies the latter’s openness to giving up his claim to the leading position on the common ticket.

MSZP seems to be rather inflexible in other respects as well. According to some socialist sources, the party doesn’t want to give a place on the common ticket to Ferenc Gyurcsány. We know enough about the membership of DK to realize that neither the membership nor the party’s other leaders would ever agree to his exclusion. I can’t believe that MSZP will be able to maintain that position. People are sick and tired of politicians in general and are especially tired of those politicians whose political ambitions seem to override the needs of the country. Too much insistence on the premiership may backfire. Moreover, Fidesz’s spokesman concentrated her criticism of the announcement on the selfishness of the politicians involved, whose only concern is personal gain.

We don’t know what the final result will  be. After three hours of negotiations this afternoon the two teams decided to continue talks this evening. We will see what tomorrow brings. And the next day. And the day after that….

PISA 2012: No gold star for Hungarian education

For those of you who have heard only of the Pisa with its leaning tower, this PISA stands for Programme for International Student Assessment. It operates under the aegis of the Organization for Economic Co-operation and Development (OECD). Every three years tests are given to fifteen-year-old students across the globe in reading, mathematics, and science. The news is not good for Hungary and consequently for Rózsa Hoffmann, who is responsible for public education. Népszabadság couldn’t resist the temptation and ran the headline: “‘Here is Rózsa Hoffmann’s report card: Hungarian students’ results declined.”

Three years ago there was some excitement when the PISA results came out since Hungarian students improved considerably in reading. While in 2006 they scored 482, in 2009 they got 494. In math and science, however, there was no appreciable difference between 2006 and 2009.

Of course, when the PISA results came out in 2010 Rózsa Hoffmann deplored the dreadful damage that was done to Hungarian education under the ultra-liberal educational policies of Bálint Magyar and his socialist successor, István Hiller. At that time Hoffmann explained the improvement in reading scores by noting Hungarian teachers’ recognition that understanding written texts must continue through all twelve grades. She also noted that the quality differences between schools were still much greater than in most OECD countries and added that “it is very important to improve the material well being of families, without which the educational results will not get better.” I don’t think I have to remind readers of Hungarian Spectrum that living standards, especially for the poorer strata of society, have in fact dropped markedly since. Most of the families of those children who are having problems in school are poorer and more miserable than ever before.

Zoltán Pokorni, minister of education in the first Orbán government, decided to go further and claim that the 2009 results were due solely to his educational policies. After all, those fifteen-year-old teenagers who took the test began first grade in 2000!  Total nonsense, of course but I guess it was difficult to swallow that, after years of stagnation, the newly introduced educational reforms were slowly showing some results.

The 2012 results are really bad. Hungarian children did worse in all three categories than three years earlier. In reading they dropped by 6 points, in math 13 points, and in science 9 points. By contrast, most of Hungary’s neighbors, with the notable exception of Slovakia, improved in all categories. Austria led the way (up 20 points in reading), and Czech students also showed great progress.

I have no idea what happened in the Slovak school system that may have caused such a steep decline, and I’m not sure how much the present Hungarian administration is responsible for the drop in the Hungarian performance. But the havoc that was wreaked in the field of education–the administrative chaos and constant changes in the curriculum–most likely had a negative effect on the quality of education in general. Also, studies I read on the subject claim that certain programs that were designed with a view to “competence development” were discontinued since Rózsa Hoffmann doesn’t believe in such newfangled ideas.

So, how did Hoffmann handle this situation? Her office placed an announcement on the  website of the Ministry of Human Resources stating that the 2012 PISA results “support the urgent necessity of the renewal of public education.” She naturally tried to minimize the positive changes in 2009, saying that reading skills “improved somewhat” then but in math and science there was no change. (Of course, one could say that at least there was no drop as is the situation now.)

And what is the reason for this bad performance according to Hoffmann? “The majority of the students who took the test began attending school in 2003: the worsening results are the critical consequences of the beginnings of their schooling.” Didn’t we hear that earlier? Of course, we did. Zoltán Pokorni proudly claimed in December 2010 that the good 2009 results were due to the beneficial educational policies of the Orbán government. After all, the students who took the test started grade one in 2000. As if the amount of knowledge at age of fifteen was solely determined by the first two years of school attendance. After the Orbán government lost the elections, in May 2002 Bálint Magyar (SZDSZ) took over the ministry of education. So, in fact, little Pisti or Marika spent only one school year under the watchful eye of Orbán’s ministry of education by then led by József Pálinkás, today president of the Hungarian Academy of Sciences. Politicians can say the darndest things. Otherwise, in the rest of the announcement she dwells not so much on the 2012 results as on the 2009 ones, which she considers very poor. I might add that 2009 was the only year that Hungary was not under the OECD average.

Scores in reading, math, and science are important indicators of a country’s educational well being, but the percentage of functional illiterates is also a crucial consideration, especially since the European Union’s goal is to reduce their numbers significantly by 2020.  Functional illiteracy in this case means a score below a certain number. The desired percentage would be 15 in all three categories. Right now only four countries in Europe have reached this goal: Finland, Poland, the Netherlands, and Estonia. In Hungary functional illiterates grew by 2.1% in reading, 5.8% in math, and 3.9% in science between 2009 and 2012. Currently Hungary has a functional illiteracy rate of 19.7% in reading, 27.1% in math, and 18% in science. Among the Visegrád countries Poland is doing the best in this respect: in reading 10.6%, in math 14.4%, and in science 13.8%. The whole report can be read here.

Anyone who’s interested in comparisons between individual countries should visit OECD’s website. Countries that scored very poorly in Eastern Europe are Bulgaria, Romania, and Serbia, but even those that did better, like Hungary, still underperformed globally. Hungarians who have such a low opinion of the educational attainment of American students may find it disturbing that American students actually did a little better in all categories than their Hungarian counterparts. Naturally, American commentators are unhappy. They consider the results disappointing and bemoan the fact that “the U.S. scores were below the average of other countries in all three subject areas.” Yes, and that’s where Hungary is as well. It is useless to deny the fact that Hungarian kids are undereducated and that undereducated kids become undereducated adults. The kind who can easily be duped by unscrupulous populist politicians like Viktor Orbán and his coterie.

The Fidesz robber barons. Part I

I think that among the comments there was already mention of a new book by József Debreczeni, A fideszes rablógazdaság (The Fidesz robber barons). In a way it is a companion volume to the book edited by Bálint Magyar entitled Magyar polip: A posztkommunista maffia állam (Hungarian octopus: The post-communist mafia state). In fact, Debreczeni borrows Magyar’s description, “the upperworld,” to describe the modus operandi of the Orbán government between 1998 and 2002. Debreczeni’s book is an account of the illegal activities of Viktor Orbán’s closest associates and provides critical background for understanding the current functioning of the mafia state.

Debreczeni combed through the findings of two decades of Hungarian investigative journalism, which unearthed some of the shady dealings of the Fidesz empire. There is no question that in a truly democratic country some of the actors in this story would have long been retired to lengthy stays in prison. The reason this didn’t happen in Hungary was that the cast of characters was extremely cunning. They made sure that there would be no legal consequences of their criminal activities.

How was this achieved? Most likely, at least in part, through blackmail. The highly respected chief prosecutor, Kálmán Györgyi (1990-2000), after having a conversation with János Áder, in those days president of the Hungarian parliament, suddenly resigned in March 2000 although his tenure expired only in 2002. The Fidesz government thus had a free hand to nominate a man, Péter Polt, a Fidesz party member and an older friend from the early 90s, who in the following years became the incarnation of the Chinese wall between justice and the thoroughly corrupt Fidesz leaders, including Viktor Orbán.

From the earliest days of Fidesz, only a handful of people–Viktor Orbán, László Kövér, Lajos Simicska, and Tamás Varga–dealt with financial matters. Of these four only Tamás Varga ended up in jail.

Once Fidesz became a parliamentary party and thus received a certain amount of money from the central budget, it became patently obvious that “the boys” had little notion of or even inclination toward keeping their finances in order. The party’s steering committee eventually became curious about what was going on with the money at the disposal of the parliamentary delegation. The members who were supposed to take a look at the books were faced with assorted slips of paper stuffed into plastic bags. Bookkeeping Fidesz style, I guess. After some scrutiny, it was determined that there were serious questions about how the money had been spent. The committee entrusted with checking the nonexistent books came to the conclusion that “responsibility for the party’s financial disarray should be the subject of a criminal investigation.”

In the end nothing happened because Viktor Orbán convinced the party membership that the report was the work of people who wanted to ruin the party. He asked for, and received, their vote of confidence. At the same time he threatened members of the steering committee with legal action.

Viktor Orbán survived this early investigation as he has survived all subsequent ones as well. The few million forints spent on who knows what at the launch of Fidesz were peanuts in comparison to the close to 700 million forints Fidesz received in September 1992 as a result of the sale of a very valuable building in downtown Budapest. The building was given to MDF and Fidesz by the Hungarian state. The two parties had every right to sell the building and use the proceeds to cover their own expenses. That was not the problem. The problem lay with where the money went.

Out of the 700 million, Simicska, who by then was in charge of the party’s finances, immediately transferred 574 million forints to FICO Kft., which had acted as a Fidesz foundation since 1990. For two years there was little movement of money in or out of FICO, but in 1992-93 everything changed. Simicska began establishing assorted businesses: Quality Invest Rt., Millennium Rt., Quality Party Service Kft., Terra Negra Ingatlanértékesítő és Hasznosító Bt., Quality Profit Kft, Taxorg Kft., Best Lízing Kft., Auto Classic Kft., etc. Moreover, as it turned out, a few million forints also ended up in the hands of Viktor Orbán’s father who didn’t have enough money to buy the state stone quarry he had managed during the Kádár years.

These were not Fidesz owned companies. They were owned by a network of old friends around Viktor Orbán and László Kövér: Lajos Simicska and Tamás Varga were old high school friends; Szilárd Kövér was László’s younger brother; Zsuzsanna Pusztai, Simicska’s wife; Sándor Varga, father of Tamás; István Bakos, Szilárd Kövér’s brother-in-law; Gyula Gansperger, high school friend; Katalin Horváth, Gansperger’s wife, and so on. So, the state property became party property and then the party property became private property. Surely, the argument goes, Simicska must have convinced Orbán and Kövér that these companies would ensure Fidesz’s financial well-being, which at this juncture looked as if it would win the 1994 election.

What happened to the money that ended up in these private companies? Very little is known of its fate. We know that after a while these companies did not pay taxes, VAT, or social security. Eventually they were sold, twenty-two of them on the same day, allegedly to a Turkish guest worker in Germany, Ibrahim Kaya, and a Croatian called Josip Tot. They, of course, were not the real buyers. As it turned out, the passports belonging to these two men had been stolen, and allegedly they knew nothing of the transaction. Of course, the companies that went bankrupt and were sold for pennies to unknown individuals had also taken out substantial bank loans, on which the banks were unable to collect.

All this came to light in 1999 when two investigative journalists unraveled the complicated story in Élet és Irodalom. Unfortunately, it was too late. By that time Viktor Orbán was prime minister of Hungary. Immediately after the formation of his government he made Lajos Simicska head of APEH (Adó- és Pénzügyi Ellenőrzési Hivatal), the Hungarian equivalent of the U.S. Internal Revenue Service. All documentation on these companies disappeared from the computers of APEH. After all, Simicska was put there for the sole purpose of covering the tracks of their illegal financial activities. Simicska stayed at the head of APEH only as long as was necessary to accomplish his task. A few months later, in the summer of 1999, claiming that attacks on his person ruined his health and caused his father’s death, Simicska resigned. By that time, the APEH files were most likely clean as a whistle. When later during the socialist-liberal period a government commissioner wanted to reopen the case, Péter Polt, the chief prosecutor, blocked his way.

According to an article that appeared in Magyar Narancs in 1999, at least 60 Fidesz-related companies were established between 1990 and 1998. Simicska’s name appeared on 24, of which 14 were “purchased” by Ibrahim Kaya and Josip Tot.

After reading the details of the relationship between Orbán and Simicska, some people came to the conclusion that Orbán had been dragged into the morass of financial wrongdoing concocted by Simicska. He was in so deep that he was unable to extricate himself without landing in jail. He was the good guy under the thumb of the bad Simicska. But, as Debreczeni sums it up: “At the beginning one could perhaps think that Fidesz was led by a democratic Dr. Jekyll and a mafioso Mr. Hyde, but in the end it turned out that in reality a politician Hyde and a financier Hyde ruled the party, and by now, rule the country.”

To be continued