government

Fair election? Not a chance

I think it’s time to talk again about the forthcoming election. Or, to be more precise, about the possibility that the current laws and rules and regulations will preclude a fair election. Senator John McCain might talk about international monitoring and Viktor Orbán might gladly agree: no observers will ever find anything wrong in and around the voting stations. The government prepared everything way ahead of time to ensure an almost certain victory for Fidesz. This election, as things now stand, cannot be fair.

One can start with the redrawing of the boundaries of the electoral districts which made sure that earlier socialist strongholds were diluted with areas that vote overwhelmingly for Fidesz. The new electoral system favors the monolithic, highly centralized Fidesz as opposed to the smaller parties of divergent political views that were forced to cooperate in order to have a chance. Then there is the generous government support for any candidate who collects a few hundred signatures to run in the next election. At last count there are 45 such parties already registered with the National Election Committee. Admittedly, these phony parties will take away only a few hundred votes, but in districts where the election is close between Fidesz and Összefogás (Unity) they may help the governing party.

And let’s not forget about the “foreign” vote, especially from Transylvania and Serbia. These new citizens can easily cast their ballots even by mail while the half a million Hungarian citizens by birth who are living abroad cannot do the same. The former are mostly Fidesz supporters while the recent emigrants are a more varied lot politically. Perhaps even the majority  of emigrants would vote against the current government because of their experiences at home which prompted them to leave. And let’s not forget about the Roma population which the government is planning to disenfranchise by urging them to register as members of a minority, an option that would allow them to vote only for the Országos Cigány Önkormányzat (National Gypsy Self-government), an arm of Fidesz.

But this list is nothing in comparison to some of the amendments and local ordinances that seem to be issued every time one turns around. From the start, campaigning was severely limited. For example, commercial television stations couldn’t  show political ads and on the public television stations they were greatly restricted. After pressure from the European Union, the Orbán government “generously” changed the rules: commercial stations could air ads but couldn’t charge for them. The European Union was satisfied. This is one of those occasions when one understands Victoria Nuland’s sentiments. How could they ever agree to this “compromise”? I don’t think that it will come as a great surprise that the commercial stations are not exactly rushing to offer their services. Why should they? Not only would they receive nothing for airing these ads but they would incur the wrath of a vengeful Fidesz.

Then came more restrictions on advertising on streets. In previous years smaller posters carrying the pictures and slogans of candidates could be affixed to electric poles, but now that practice is forbidden. Candidates can still put up huge billboards but again the number of surfaces has been greatly reduced, especially in Budapest where the Fidesz-dominated leadership approved a new ordinance regulating the posting of ads. Even if the opposition parties have the money they will have difficulty making themselves visible. As someone jokingly said, perhaps Összefogás (Unity) will put up posters in apartment staircases because the government and the Budapest city council haven’t yet thought about making them off limits.

And now comes the really clever move. While “political parties” find that their opportunities to advertise their program and their candidates are severely restricted, none of the restrictions apply to “civic organizations.” In reality, we should really talk about only one such organization: CÖF (Civil Összefogás Fóruma). Earlier I wrote about CÖF, an organization that came into prominence about a year ago when the first Peace March took place. The organization of these peace marches must have cost an incredible amount of money, which CÖF cannot account for. It is almost 100% certain that CÖF, through some intermediary, receives its entire budget of millions if not billions from the government. Civic organizations can advertise anywhere at any time. Even before the official election campaign begins, when theoretically at least no campaigning is permitted. In the last few months CÖF has launched two large campaigns. First, against Gordon Bajnai and Ferenc Gyurcsány and, second, against Unity. They put up huge display ads everywhere, including the sides of city buses. Their latest move is campaign literature mailed to every Hungarian household (4 million) in which CÖF tells the voters why the “Gyurcsány coalition” shouldn’t have a second chance.

CÖF is certainly not short of funds

CÖF is certainly not short of funds

The final straw in this series of discriminatory practices was the news yesterday that the government’s slogan “Magyarország jobban teljesít” (Hungary is performing better), with which they plastered the whole country, from here on will be the slogan of Fidesz. The Hungarian government generously allowed the governing party to use its own campaign slogan. Actually, by today the story changed somewhat. According to the latest information, the Fidesz parliamentary delegation paid 200,000 forints (650 euros) for the right to use the slogan in an agreement with the Prime Minister’s Office signed in August 2013. In October the Prime Minister’s Office made a similar deal with Fidesz as a party, but the party didn’t have to pay anything. “Unity” is planning to go to court over this arrangement.

All in all, Fidesz will not have to pay much for its election campaign this year. The taxpayers will foot the bill for CÖF as well as for the slogan by which the Orbán government advertised its own fantastic accomplishments. The slogan, logo, and poster cost the taxpayers 150 million. This figure doesn’t include the fees the government paid for placing the self-congratulatory ad in newspapers and on Internet sites.

So, this is the situation at the moment. The reader can decide how fair an election we can expect on April 6.

Attila Mesterházy and Gordon Bajnai on the campaign trail

I noted yesterday that the election campaign has begun. I should have added that Fidesz has been campaigning from the very moment its government took office in May 2010. With election comes what Hungarians call “the spreading of the goodies,” at least temporarily making the electorate happy so they will support the government at the next election. This practice, which cuts across parties, has been largely responsible for Hungary’s chronic indebtedness and its large budgets deficits. Very often this largesse was financed with borrowed money.

Prime Minister Viktor Orbán swore that it would never happen under his watch that Hungary would borrow money to pay for social benefits. In fact, he was so serious about national indebtedness, which he considers the source of all the ills of the Hungarian economy, that it was written into the constitution that “the Central Budget … will have to ensure that the level of the state debt does not exceed half of the value of the gross domestic product of the previous calendar year.” Right now the national debt is larger than ever and only yesterday the government announced that Hungary had submitted a registration statement to the SEC for the issuance of up to $5 billion in debt securities. This will be the second such bond issue in US dollars this year. I wonder what Viktor Orbán will do if his government is unable to fulfill its constitutional duty with respect to the level of the national debt? It’s not that I fear for Orbán’s political well-being. This government is very inventive, so I’m sure they would come up with something to avoid the resignation of the government.

While the government has the means to distribute money and other perks, the opposition must be satisfied with promises. As has happened in Hungary time and again, these promises turn out to be empty. The 2010 promises of Fidesz, including one million new jobs in ten years, couldn’t be fulfilled. In fact, it was just announced that fewer people have jobs today than a year ago. The Balatonőszöd speech was partly about putting an end to this practice and stop deceiving the electorate. For a while the opposition parties seemed to have paid heed and refrained from falling back on their bad habits. Their politicians kept emphasizing the difficult economic situation and the long road ahead. But as the election gets closer they seem unable to resist the temptation.

So, let’s see who is promising what. MSZP held a huge meeting in Miskolc, a town that was once an MSZP stronghold. The crowd responded enthusiastically when Attila Mesterházy announced that if the MSZP, hand in hand with Együtt 2014-PM, wins the election “the winners will be the children, the youth, the women, the employees, the small- and medium size entrepreneurs, and the pensioners.” In brief, everybody.

Fair enough. Almost everybody would indeed win if Fidesz were sent back into opposition. But what specifically did Mesterházy promise? From September 2014 on students will receive a free education at Hungarian colleges and universities. A year ago the socialists were talking only about a tuition-free first year, after which tuition would be charged based on academic achievement and social needs. But now, it seems, there is no qualification. We know from past experience that the Hungarian budget cannot possibly afford the luxury of totally free higher education.

The socialists also plan to create a situation in which at least one person in each family is employed with a decent salary. I assume that he does not consider the current salary of workers employed in public works projects, which is not enough to keep body and soul together, decent. According to Mesterházy, the desired level of employment can be achieved by abandoning “this idiotic economic policy.”

He promised more money for education and promised to build gyms instead of football stadiums. They will spend more money on healthcare. Unemployment insurance, which was truncated by the Orbán government, will once again be available for nine months. The socialists will make sure that public transportation for people over the age of 65 will be “truly” free. Mesterházy admitted that to achieve all these things one must have robust economic development, but he added that “yes, we will achieve this too.” MSZP wants to modify the across-the-board lowering of utility prices, which currently threatens the industry with bankruptcy. The socialists suggest lowering prices only for those in need. MSZP would also change the tax system and get rid of the flat tax, which has done a lot of damage to the economy.

As you can see, there are plenty of expensive promises here. The healthcare system is in ruins, and it seems that the same is true of education. Even with higher taxation on the “rich,” as Mesterházy called those whose incomes are above average, healthcare and education cannot be salvaged. As currently configured, healthcare is a bottomless pit. Throwing more money into it is no remedy. It’s time for some fresh thinking.

Source: publisherdatabase.com

Source: publisherdatabase.com

Együtt 2014-PM also began its campaign, and it looks as if the party is concentrating, at least for the time being, on the under-35 generation. The party’s slogan is “Come home, stay home!” According to E14, the flight of young Hungarians is “one of the most serious problems today.” If they win the election they will open offices in each embassy and consulate where they would offer jobs in Hungary for those currently abroad. They would also assist those Hungarians who just finished their studies abroad and would like to return to Hungary. In addition, he promised that “he would guarantee a job or training that would lead to a decent job for all those under the age of 30 who hadn’t had a job in the last six months.”

Bajnai offered up a few numbers. He would spend at least 1% of the GDP on higher education and would again open the doors of colleges and universities to anyone who has the ability. Bajnai also promised 250,000 new jobs in four years. Well, that number is more modest than Orbán’s one million in ten years, but as we know governments cannot create jobs.

It’s not clear whether people actually believe these promises or whether, after all the unfulfilled and unfulfillable promises, they are jaded. Hungarians say they don’t believe politicians, but perhaps their belief is selective. Perhaps they believe promises from which they themselves will benefit and disregard the rest. Perhaps they believe some of the promises of their favorite candidate and none of the promises of the other candidates. Who knows? I doubt they would be honest with pollsters.

At any event, it’s tough to campaign with the message that people should prepare themselves for more lean years when opponents are promising a host of goodies in a “rising tide” economy. People want hope and change and a “yes we can” attitude.  (And a few more forints in their pockets one way or another.)  Disappointment that the government hasn’t delivered sets in only later.  Just ask Barack Obama.

What does the Demokratikus Koalíció stand for?

On September 3, I wrote about an opinion piece by Tamás Bauer, vice-chairman of the Demokratikus Koalíció. Its title was “Electoral mathematics: The Demokratikus Koalíció’s position.” Bauer argued for DK’s right, based on its numerical support, to receive at least 8 or 9 electoral districts. He added that DK’s positions on many issues differ from those of both MSZP and Együtt2014-PM and therefore it deserves a parliamentary caucus.

At the end of that post I indicated that I would like to return to DK’s political program because relatively few people are familiar with it. I had to postpone that piece due to DK’s very prompt answer to MSZP. On the next day, September 4, I posted an article entitled “The current state of the Hungarian opposition: Negotiations between MSZP and DK.”

Over the last few days it has become obvious to me that Ferenc Gyurcsány has already begun his election campaign.  Zsolt Gréczy’s appointment as DK spokesman signaled the beginning of the campaign, which was then followed by several personal appearances by Ferenc Gyurcsány where he began to outline his program. Surely, the amusing video on being a tour guide in Felcsút, “the capital of Orbanistan,” was part of this campaign. So, it’s time to talk about the party program of the Demokratikus Koalíció, especially since only yesterday Attila Mesterházy answered Ferenc Gyurcsány’s letter to him. I elaborated on that letter in my September 4 post.

You may remember that one of the sticking points between the two parties was whether DK is ready to have “an electoral alliance” as opposed to “a political alliance.” Gyurcsány in his letter to Mesterházy made light of the difference between the two, but as far as the socialists are concerned this is an important distinction. Yesterday Attila Mesterházy made that crystal clear in his answer to  Gyurcsány which he posted on his own webpage. According to him, a “political alliance” means the complete subordination of individual parties’ political creeds to the agreed upon policies.  In plain language, DK “will have to agree not to represent its own political ideas during the campaign.”

Since DK’s program thus became one of the central issues in the negotiations it is time to see in what way DK’s vision of the future differs from that of MSZP and Együtt 2014-PM. Here I’m relying on Tamás Bauer’s list of the main differences.

(1) An MSZP and Együtt 2014-PM alliance following an electoral victory will only amend the new constitution and the cardinal laws that are based on this new constitution. The Demokratikus Koalíció, on the other hand, holds that the new constitution is illegitimate because it was enacted without the participation of the opposition. Therefore, according to DK, the new constitution must be repealed and the constitution of the Republic must take its place.

(2) MSZP-E14 by and large accepts the policy of Viktor Orbán on national matters and would allow people living outside of the borders to vote in national elections. The Demokratikus Koalíció rejects this new law and would put an end to these new citizens’ voting rights.

(3) MSZP-E14 does not seem to concern itself with the relation of church and state or the Orbán government’s law on churches. DK would restore the religious neutrality of the state and would initiate a re-examination of the agreement that was concluded between Hungary and the Vatican or, if the Church does not agree to such a re-examination, DK would abrogate the agreement altogether.

(4) MSZP-E14 talks in generalities about the re-establishment of predictable economic conditions and policies that would be investment friendly but it doesn’t dare to reject such populist moves as a decrease in utility prices or the nationalization of companies. Only DK is ready to openly reject all these.

(5) MSZP-E14 accepts the tax credits that depend on the number of children and therefore supports an unjust system. DK, on the other hand, wants to put an end to this system and to introduce a system that treats all children alike.

(6) Együtt2014-PM opposes the concentration of land that is necessary for the creation of  a modern and effective agriculture. The policy of small landholdings was the brainchild of the Smallholders Party, which was largely responsible for the collapse of Hungarian agriculture after the change of regime. MSZP is against foreign investment in Hungarian agriculture. The Demokratikus Koalíció intends to liberalize the agricultural market. DK thinks that agricultural cooperatives should be able to purchase the land they currently cultivate. It also maintains that foreign capital should be able to come into Hungary in order to make Hungarian agriculture competitive again.

(7) The attitude of MSZP and Együtt 2014-PM toward the conflicts between the European Union and the Orbán government is ambiguous, while the Demokratikus Koalíció unequivocally takes the side of the institutions of the Union against the Orbán government.

These are the points that Tamás Bauer mentions. But as the Gyurcsány campaign unfolds more and more differences will be visible. For example, only yesterday Gyurcsány talked about his ideas to abolish the compulsory retirement age and to financially encourage people to demand higher wages in order to maximize their pensions after retirement. During this talk in Nyíregyháza Gyurcsány made no secret of the fact that his party is working on its election program.

So, it seems to me that the Gyurcsány campaign has already begun. Maybe I’m wrong and Gyurcsány will give up all his ideas and will line up behind MSZP-E14, but somehow I doubt it. Even if he tried, he couldn’t. Temperamentally he is not suited for it.

Meanwhile, an interesting but naturally not representative voting has been taking place in Magyar Narancs. Readers of the publication are asked to vote for party and for leader of the list. DK leads (52%) over Együtt 2014 (29%) and Gyurcsány (54%) over Bajnai (32%). Of course, this vote in no way reflects reality. What it does tell us is that the majority of readers of Magyar Narancs are DK supporters. Something that surprised me. If I had had to guess, I would have picked Együtt2014.

As for Ferenc Gyurcsány’s visit to Felcsút, I wrote about it a couple of days ago. The video is now out. This morning I decided to take a look at it because from Zsolt Gréczy’s description on ATV’s Egyenes beszéd the whole scene of Fidesz cameras following them everywhere sounded hilarious . At that time the video had been viewed by about 5,000 people. Right now the number of visitors is over 53,000.

Clips from The Godfather are juxtaposed with scenes from Felcsút. The video ends with the wedding of Vito Corleone’s daughter. While Gyurcsány is narrating the enrichment of the Orbán family, two people, one of whom is the Fidesz regional secretary and the other perhaps the cameraman of the Puskás Academy, follow him everywhere and record his every move and word. Definitely worth seven minutes of your time.

Since I am no fortune teller I have no idea what will happen. A couple of things, though, I’m pretty sure of. DK will never agree to drop Gyurcsány as their party leader. And Mesterházy indicated that this might be one of the MSZP demands for an agreement. Or at least that Gyurcsány not be DK’s top candidate, or possibly any candidate. Otherwise why would he have asked: “Are those media predictions that the Demokratikus Koalíció plans to nominate the chairman of the party, Ferenc Gyurcsány, for the second slot on the list true?”

At first reading I didn’t notice this linguistic oddity. The letter is addressed to “Dear Mr. Party Chairman, dear Feri” and continues in the second-person singular: “te.” Now that I returned to the sentence in order to translate it, suddenly I noticed that Mesterházy switched from “te,” which in a personal letter would have been normal, to “Ferenc Gyurcsány” in a letter addressed to Ferenc Gyurcsány.

What will the final result be? I have no idea. Let’s put it this way, it’s much easier to predict the outcome of Hungarian soccer matches than the outcome of opposition politics.

Another Friday morning “non-threat” from Viktor Orbán

According to some analysts, Viktor Orbán’s latest Friday morning interview was perhaps one of the most revealing and most frightening. On such occasions the prime minister sometimes unwittingly reveals facts about himself and the country that would perhaps best remain hidden.

I already mentioned his inappropriate quip about the unwelcome German tanks in 1944. He went on to make a “non-threatening” remark about those who do not embrace Fidesz. In connection with the clearly fraudulent tobacconist shop concessions, he said: “I am a mild-mannered person, so I am not saying this to threaten anyone, but if we wanted to enforce political considerations in such a tender, there would not be a single left-wing winner.” As Erik D’Amato wrote on politics.hu,  “if Viktor Orbán wanted to he could crush you like an ant, but he won’t, because he’s chill.”

threat commons.wikimedia.org

Threat / commons.wikimedia.org

Orbán again beat the drum about his government’s accomplishments, starting with the country’s fantastic economic achievement that by now “the whole world recognizes.” Please, anyone who’s heard such praise, stand up! I also learned from this interview that Hungary’s economic growth was respectable in 2011 but then came a “second wave of economic crisis in Europe” that caused all the trouble in Hungary. Thus, the Hungarian government’s unorthodox policies had nothing to do with the recession that followed two years of small economic growth.

Orbán actually boasted about his illegal seizure of private pension accounts from millions of citizens when he described how “we reorganized the system of pensions and took away the money from the financial markets,  taxed the banks, forced the multinationals to pay taxes.” He admitted that he could do all that because of his party’s super majority. The truth? The pensions were taken away from the people and not the markets. Both the banks and the multinationals had paid taxes before; what he and his right hand, György Matolcsy, did was to levy crippling additional taxes on them.

The untrue statements didn’t end here. Orbán claimed that the European Union wants to force the Hungarian government to “take away from ordinary people … lower pensions … lower social welfare, decrease child support.” Orbán categorically stated that he will never satisfy such demands from the European Union because they amount  to an austerity program, a concept whose very mention is forbidden by Fidesz.  But the fact is that every time the chips were down Orbán gave in to the demands of the European Union concerning the budget deficit. Except the Orbán government refuses to use the word “austerity” (megszorítás). All sorts of other words are substituted for the austerity packages that followed each other in rapid succession throughout 2011 and 2012. One of these synonyms is “zárolás” (sequestration, freezing of funds), which according to Orbán “doesn’t take money away from people.” So, if the Ministry of Human Resources must spend less on education or healthcare it does not affect, according the economic wizardry of the Hungarian prime minister, the well being of the country’s citizens.

It is also clear that Orbán is unwilling to begin serious structural reforms. If Hungarians don’t like to hear about austerity they are equally leery about “reforms.” Their experience in the past has been that reform means a diminishment of their income or their access to social welfare benefits. Instead, Orbán is ready to contemplate such suggestions as spending less on government bureaucracy, further raising taxes on banks and the multinationals, and even increasing the transaction tax rate “if the European Union insists on a lower deficit.”

And finally, a few words about Viktor Orbán’s attitude toward his own role as prime minister of the country. Ever since 2002  Orbán has often repeated that “the nation cannot be the opposition.” He equates his own political side with the nation. Those who have a different set of political views are outside of the nation. At the end of the interview this interpretation of his own role became clear: he considers himself the prime minister of those who are Fidesz supporters.

I already mentioned this gentle soul’s words about his limitless power to grant tobacconist licenses based on political considerations. Orbán explained further: “I would like to make it perfectly clear that I will never turn my back on our supporters. Why is it wrong if entrepreneurs who share our values and otherwise fulfill the requirements win these tenders?… To turn our backs on our own voters, our followers (hiveink), our supporters just because we politicians will receive less criticism  this way, that I will never accept. We have to endure these criticisms because if our followers cannot count on us, who can?”

It’s no wonder that last night Ágnes Vadai (DK) in an interview on Egyenes beszéd kept referring to Viktor Orbán as “the man who calls himself Hungary’s prime minister.”

Greed might be the undoing of Viktor Orbán and his regime

Today I’m going to look at two corruption cases that might have serious consequences for the Fidesz empire in Hungary. The first is the “seizure” of the profitable retail tobacco market and its redistribution among friends and families of Fidesz politicians. It seems that the government may have gone too far here; there are signs of internal party opposition. We know only about small fry at the moment, but that doesn’t mean that dissatisfaction isn’t present in the highest circles of the Fidesz leadership.

The other scandal is not new at all. For years Közgép, a company owned by Lajos Simicska, a childhood friend of Viktor Orbán, has won practically all government projects financed by European Union subsidies. But it came to light only now that Brussels suspended payments on two very important “operative programs,” one dealing with the environment and energy and the other with transportation.

First, the response of  two party faithfuls to the tobacco shop scandal. On April 26 HVG received a letter from a Fidesz city council member in which he said that in his town the Fidesz members of the council decided who would get the tobacco concessions. At that point the informer didn’t want to reveal his identity, but two days later he was ready to give an interview, name and all. It is a long interview from which I will quote the key sentences.

Ákos Hadházy is a veterinarian in Szekszárd, the county seat of Tolna. He considers himself to be a conservative, but “this tobacconist shop-affair broke something in [him].” The Fidesz members of the council looked at all the applicants and suggested who should get favorable treatment.” Mostly friends and relatives. Hadházy struggled with his conscience. He felt that the way the selection was made was wrong, but at the same time he realized that “many would consider revealing his doubts a betrayal” of his party. Finally he decided that although “perhaps in the short run the party might lose a few percentage points, in the long run these revelations might actually be good for this party.”

In his opinion “the 2010 landslide victory was a fantastic opportunity, but at the same time such a large victory is harmful for a party.” A well functioning opposition is “a basic necessity…. If there is no opposition, sooner or later [the party leadership] will be unable to control [its] own decisions. There will be no reaction when [they] make wrong decisions.” Unfortunately this is what happened in Fidesz’s case.

Hadházy even went further and announced that the problem is that there is no opposition within the party either. The members of parliament are no more than voting machines because after 2014 there will be fewer seats available and naturally everybody would like to keep his job. “One can’t expect negative opinions from them…. If there are no debates within a party … then there are only two possibilities: either [the party] does something fantastically well or something is not right.” Most often decisions are unanimous. Ordinary party members are not consulted. Maybe once a year there is a meeting of the local party members, but that’s all.

corruption2Fidesz is indeed a very disciplined party, but he thinks they “went too far.” Such discipline was fine when Fidesz was in opposition. Then “the para-military structure was acceptable, but when in power the party should have moved in a more democratic direction.” Hadházy believes–I think wrongly–that Fidesz has fantastic “intellectual capital” but doesn’t try to use this capacity and doesn’t listen to them. “This in the long run is a suicidal strategy because the members of the intelligentsia  are the ones who can influence public opinion.”

As far as he is concerned there are two possibilities: the party will not take kindly to his going public and then his political career will be over. If, on the other hand, he is spared he “will be very glad to know that Fidesz is full of real democrats, even if this is not always evident given how decisions are made now.”

The other rebel is András Stumpf of the pro-government Heti Válasz.  Don’t think that András Stumpf is a “soft” Fidesz supporter. He is no Bálint Ablonczy, another reporter for the same weekly, who is a moderate right-winger. Stumpf is pretty hard-core. He aggressively defends the government at every opportunity–for instance, when he appears on ATV’s Start. Even in this critical article he expresses his belief that Sándor Laborc of the Office of National Security hired Tamás Portik to spy on the opposition, meaning Fidesz. Yet it seems that the tobacconist concessions and the amendment to the Freedom of Information Act were too much for him. Not even he believes that the quickly amended piece of legislation has nothing to do with the concessions and the government’s attempt to hide the truth from the public. In Stumpf’s opinion, the amendment is most likely unconstitutional and what the government is doing is “frightening.” If they have nothing to hide, make the documents public.

Moving on to the withheld EU payments, a new internet website, 444.hu, published an article entitled “Secret war between Budapest and Brussels” on April 30. According to the article, last summer the European Union suspended payment for cohesion fund projects. The apparent reason was that Brussels discovered that there is discrimination against foreign engineers. Only engineers who belong to the Hungarian Society of Engineers can be hired.

With due respect to the journalist of 444.hu, I can’t believe that this is the real reason for the suspension of billions of euros. Instead, I recall that about a year ago Ferenc Gyurcsány’s Demokratikus Koalíció turned to the European Anti-Fraud Office (OLAF) to call attention to the fact that Közgép, Simicska’s company, had received an incredible number of government contracts, all financed by the European Union. The suspicion is that Közgép through Lajos Simicska is actually owned by Fidesz. Or at least a substantial percentage of  its profits ends up in party coffers. I remember that sometime during the summer of 2012 OLAF’s investigators took possession of Közgép’s computers. I suspect that the suspension of funds has more to do with Fidesz government corruption than with discrimination against foreign engineers.

By now opposition politicians are openly accusing Közgép of being a front for Fidesz. Gábor Scheiring (PM) said that “the essence of Lajos Simicska’s firm … is financing Fidesz from its profits.” Gyurcsány considers “Lajos Simicska  the most notorious and most influential person in Fidesz and the business establishment built around it.” László Varju, the party director of DK, in one of his press conferences talked about the need to investigate the possible “role of [Közgép] in the financing of the government party.” If it could be proven that Közgép and Simicska are just a front for Fidesz, Orbán might find himself and his party a lot poorer.

The tobacco concessions and their aftermath: Further restrictions on transparency

The tobacco concessions scandal is growing. By now there is even a Google Earth map of the country with a guide to all those places where Fidesz politicians, their close relatives, or known sympathizers received permission to open tobacconist shops. That there were political grounds for these awards is not speculation. János Lázár and Antal Rogán explained to the local Fidesz politicians on what basis the concessions should be awarded. Apparently, anyone with either MSZP or Jobbik ties was out of luck.

When the government first announced the so-called competition for concessions, applicants had to draw up their business plans assuming a 4-5% profit margin. Not exactly a potential goldmine. Yet there were a great number of people who seemed to be interested in this business opportunity. Among them were several who applied for concessions for several stores. The suspicion is that the insiders most likely knew that the government would do something to sweeten the deal. And indeed, after the winners were announced an amendment was tacked on to the bill that suggests a profit margin of at least 10%. A day later Viktor Orbán talked about the desirability of a 12% profit margin. If the amendment is approved, the price of cigarettes will go up.

In one of my earlier posts I mentioned that between the two world wars these concessions were normally given to war widows. This was also the case after World War II. Naturally, even then one had to have “connections” in higher places. Endre Aczél, one of the best journalists of the older generation, recalls that his mother was lucky to be granted one of these concessions in 1948 but only because she was the childhood friend of Júlia Földi, better known as Mrs. László Rajk. As we know, Rajk, after being accused of all sorts of treasonous activities, was executed on October 15, 1949. In 1950 someone discovered that a Rajk-protege still had a tobacconist shop, and she was summarily booted out. But at least, as Aczél says in the article, his mother was a war widow. Fidesz rulers don’t even worry about the stated aims of the legislation. They feel they can do anything. And they are right. They can.

However, now that everybody is up in arms and the media will undoubtedly demand information on the details of the concessions, the government decided in a great hurry to amend a law on data privacy. Here is a quick report from Budapest:

The amendment prevents the FOA (Freedom of Information Act Provisions on Data Privacy) from applying to material that is reviewed by the state audit office and the government accountability office.  The reasoning behind the law is that government agencies are already overburdened and fulfilling data requests would be too strenuous. The amendment also states that if another law already regulates the right to information and to accessing, reviewing or copying the documents then the data privacy law does not apply. [The law seems to] exempt some requests from judicial review by the courts.  Furthermore, the law requests that entities that use public money to provide information to the public. However, the amendment now requires that people turn to the body with legal oversight over the entity with complaints if a data request is rejected. The problem here is that in some cases the legal oversight is practiced by courts specializing in business litigation, which are not equipped to judge matters pertaining to FOA.

For one reason or another this tobacco concession business must be very important to Fidesz and Viktor Orbán himself. But I wonder whether the party and the government might be paying too high a political price for material gain. The number of smokers in Hungary is among the highest in Europe. The statistics I checked mentioned 38% in the population as a whole. That is being translated by others as close to 50% of the adult population. The sharply reduced opportunities to buy cigarettes will inconvenience this large group of people who might not care much about democracy and the constitution but will be mighty upset when in the middle of the night they will not be able to buy a pack of cigarettes at the next gas station. And what about those 1,400 small hamlets where most likely there will be no permanent tobacconist shop? And let’s say that the price of cigarettes also goes up as a result of making the sale of tobacco products a state monopoly. All in all, I suspect that Fidesz will lose voters as a result of this move.

Although the Hungarian government inquired in Brussels about the reaction of the European Union to the concession scheme, I consider it possible that, after seeing that currently functioning tobacconists are being deprived of their livelihood, the lawyers of the Union might not find the concession scheme as innocent as it looked a couple of years ago.

It is also possible that the way Fidesz as a party got involved with awarding the concessions might be unconstitutional. I wouldn’t be at all surprised if Máté Szabó, the ombudsman, turned to the Constitutional Court.

In addition, there are signs of possible cracks in Fidesz’s armor. At least one rebel raised his naive voice about the state of the party. He even went so far as to question the benefits of unlimited power. We will see what happens to the good veterinarian who is worried about his party. In the past he would have been dropped immediately, but today he may be left alone. Perhaps Viktor Orbán will decide that chastising him would only add oil to the fire.

Hungary’s “national tobacco shops.” Who are the happy recipients of the concessions?

In February 2012 I wrote a post on “Fidesz, the tobacco monopoly, and the tobacco industry’s lobby.” That was when the Hungarian parliament voted to make tobacco a state monopoly. Since then there have been several amendments to the bill, which originally stipulated that the newly established National Tobacco Shops could sell only tobacco products. The changes were necessary because it soon became evident that, since the profit margin on tobacco products is thin, the people who successfully bid to open such a store couldn’t make a living solely from selling cigarettes. Bit by bit other products were added to the list: alcoholic and non-alcoholic beverages, energy drinks, lottery tickets, and newspapers. But even with the added product lines there were not too many takers, especially in smaller villages.

According to the law one tobacco shop is supposed to serve 2,000 inhabitants. Currently around 40,000 stores sell cigarettes, but because of the above restriction there will only be about 7,000 stores where people can buy tobacco products. Last February I wrote that when I first heard about this scheme “I envisaged 7,000 pro-Fidesz Hungarians as the lucky recipients of these concessions.” Well, not quite. Second-tier party members and their families will be able to establish a number of stores in areas where the financial benefits of the concessions are more or less guaranteed. Meanwhile, in 1,400 smaller communities there were no applicants. Come July, there might not be a single tobacco shop in places like Herend (pop. 520).

by ur1336 / Flickr

by ur1336 / Flickr

The original justification for the establishment of these tobacco shops was that they would assist large families, would give young mothers just returning from maternity leave some extra income, and would provide a living for some of the otherwise unemployed. The final list of recipients tells a very different story.

Doctors who are supposed to tell people about the deadly results of smoking are eagerly participating in this new business opportunity. On paper one person can have only five stores, but there are many cases in which members of the same family applied for and won concessions. In Esztergom, out of the possible sixteen tobacco shops, ten went to one family, judging from the family name that is not exactly common, Sóron. Ádám Sóron received four, Tibor Sóron one, Mrs. Tibor György Sóron five! For the time being we don’t know what the connection is between Fidesz and the Sórons, but I think it is only a question of time before all will be clear.

Another alleged reason for establishing these tobacco shops was the government’s desire to decrease the number of smokers in Hungary. The bill that was passed last year stipulates that no tobacco product can be sold to a customer as long as there is an underage (18 years) child  in the shop. (Let’s not go into how stupid that idea is!) But then, what do I read? The nineteen-year-old Bence Hídvégi, son of the Fidesz mayor of Fonyód, received permission to operate three tobacco shops, two in Fonyód and one in Balatonfegyves. One day his presence in a tobacco shop would have brought business to a screeching halt; the next day he can run the show.

And while we are on the topic of teenage smoking and the number of retailers, it seems that there is no direct correlation between the two. Austria is a prime example. The highest number of teenage smokers in all of Europe can be found there, and the owners of Austria’s 8,000 tobacco shops are the leading lobbyists against any kind of anti-smoking legislation. Moreover, Austria’s overall standing in Europe as far as tobacco consumption is concerned doesn’t support the notion that fewer tobacco shops will result in lower figures. In Hungary the percentage of smokers in the population as a whole is 38%;  in Austria, 34%. Not a huge difference. Moreover, in both countries the numbers are growing.

The real reason for making tobacco a state monopoly was to help domestic tobacco companies. János Lázár, who came up with the idea of national tobacco shops, relied heavily on the “advice” of Continental Zrt. Continental has only about a 10-15% share of the very large tobacco market. The legislation was most likely written with a view to giving an advantage to Continental and discriminating against foreign companies like Philip Morris, British American Tobacco, and Imperial Tobacco. With tobacco as a state monopoly the Hungarian state could decide which products it would stock, and presumably the price of these products, in the tobacco shops.

The Orbán government used Austria as its model, but the Austrian model was flawed–not only in terms of public policy but also with respect to the state monopoly issue. Austria had its own troubles when European Union requirements changed in 1998 and Austria was forced to partially privatize Austria Tabak, the state monopoly that had dominated the Austrian tobacco industry until then. Something quite similar could befall Hungary.

And what has happened to the owners of Hungary’s private tobacco specialty shops? I read about a place, “Ági trafik” in Budakalász, whose owner has had his shop since 1972. His grandfather’s tobacco shop was nationalized in 1950, but twenty-two years later he began anew. He has a sister who is paralyzed. Now he is ruined. He put in an application but didn’t receive a concession. According to some estimates, practically all of the private tobacco shop owners were dispossessed. One owner was approached by two different men who asked him to rent his shop to them. You can imagine how he feels.

Fidesz managed to kill two birds with one stone. They are helping the Hungarian-owned Continental Zrt. carve out a larger share of a lucrative market and, by setting up tobacco shops as state concessions, they are spreading government largess among their followers. Multinational companies and Hungarian private enterprise will once again suffer; Orbán will further extend his economic reach.