concentration of power

Bálint Magyar: Viktor Orbán’s post-communist mafia state, Part II

We left off yesterday at the point that the concentration of political power and organized corruption cannot be divided because they are both part of the very essence of the system. The mafia state has a distinct advantage over traditional mafias. Whereas the latter must reach their goals either by blackmail or by intimidation, a mafia state by definition has the power of the state behind it. Therefore it can “adjust” laws according to its needs. In brief, the “organized upperworld” makes its own illegal activities quasi-legal. Acquiring ill-gotten riches no longer must be hidden.

The new mafia state is different in this respect from both the Horthy regime and the Soviet system. The Hungarian ruling elite between the two world wars didn’t want to change the “economic elite”–with the notable exception of the expropriation of Jewish property in its last phase; it only wanted to enrich the already existing Christian middle class. In the Soviet Union the communists nationalized all private property. Both decisions were merely political decisions fairly uniformly applied. The situation is different in a mafia state. Instead of a uniform political will, decisions are individual and random. “What they like they take.”

An old picture of the Fidesz family, 1999 / cover page of HVG

An old picture of the Fidesz family, 1999 / cover of HVG

As for the comparisons between Hungary’s mafia state and that of the former Soviet Union and its successor states, although the final result is the same, the road to it is different. In Russia and elsewhere east of Hungary the members of the former party elite managed to “privatize” state property. In Hungary economic power ended up for the most part in the hands of technocrats. In Russia the few non-apparatchiks who managed to get into the select circle of economic moguls were eventually sent packing or ended up in jail.

In Hungary, when Fidesz appeared, “the field” was already taken. In order to change the current state of affairs Fidesz either has to get rid of members of the economic elite or make them part of the “family”  or “service nobility”.  Fidesz’s misfortune is that in Hungary, as opposed to Russia and its satellites, a true democratic process had already begun. In order for Viktor Orbán to reach his final goal, the very institutions of Hungary’s fragile democracy must be eliminated. We are not at this point yet and it depends on the Hungarian voters whether Orbán can succeed or not. In Poland there was a similar attempt by the Kaczynski brothers but their attempt failed.

How is Hungary’s current political elite handling this takeover of economic power? The ideology behind the process is a “national war of independence.”  The first step is trying to achieve a certain percentage of Hungarian ownership in the various business sectors. Next, the government begins to force out legitimate owners of enterprises by levying extra taxes, forbidding the construction of new malls, imposing impossible requirements to obtain a building permit, or as in the case of the French firm Suez in Pécs, by simply taking over the company by force. Often the state itself buys the foreign-owned company and after a short while the company is sold to a friend of “the family.” There have been cases (notably MOL and E.ON) where the elite at public expense purchased large blocks of stock  or buy entire companies at prices way above their market value.

One of the most brazen takeovers of a business sector is the tobacconist shop tenders. This time the mafia elite decided to change the law in order to create a state monopoly by which it impoverished forty or fifty thousand small businessmen. Why did they have to deprive relatively poor mom and pop store owners of their livelihood? Because the “the family” must be continually extended outward, giving gifts to the small fry in the organized “upperworld.” By making tobacco products a monopoly, additional revenues will reach the treasury while those relatively few shops that can sell cigarettes will be owned by “clients” who will have a guaranteed income. Killing two birds with one stone.

Although it is becoming crystal clear that the selection of the future tobacconists was fraudulent, there will be no legal consequences. By now both the police and the prosecutor’s office are part of the organized “upperworld.” We already know that these cases will never reach the courts because the prosecutors announced that there is nothing to investigate.

Analysts often talk about certain Fidesz moves as irrational and self-defeating. The tobacconist shop scandal is one of the examples. Magyar thinks that, according to Fidesz logic, the creation of a monopoly and its distribution to clients is a perfectly rational move. “I can do what I want and therefore I go ahead.” Of course, not all Fidesz moves work out, and we will see whether the tobacco affair does or doesn’t hurt the party and Viktor Orbán personally. For the time being it has not. According to the latest polls Fidesz’s lead is assured. What helps the Orbán government survive these scandals are the limits the central power puts on information flow through its stranglehold on public television and radio and other media outlets.

According to Magyar, the mafia state is waging a national war of independence against its own citizens by taking away their wealth and freedom. It is eliminating the sanctity of private property. It is introducing the right to collect taxes before anyone else. It talks about Christianity but takes care of only its “adopted family”; it is cruel to those outside the charmed circle. It preaches about family but what it actually means is the family adopted by the organized “upperworld.” It heralds a society based on work when it receives its income from “protection money” taken from others. “The mafia state is a privatized form of a parasite polity which preaches work but ‘drinks’ dues. But it is no speculator. It goes for the sure thing.”

To be continued