György Barcza

Plans to destroy independent Hungarian civil society: The Norway Fund

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

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

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

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

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

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

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

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

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

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

IMF delegation’s report on the economic health of Hungary in 2012

The IMF delegation was back in Budapest, but the visit was not part of the non-existent official negotiations between the International Monetary Fund and the Hungarian government. It was simply a routine examination of the Hungarian economy. Every six months, according to an agreement signed after Hungary received a substantial loan from the IMF, the officials of the Fund have the right to assess the financial well-being of the country.

The delegation arrived on January 16 to look over the balance sheet of 2012 and to suggest steps to correct perceived mistakes in the economic governance of Hungary. Mihály Varga, the man in charge of the non-existent negotiations, told the press that “all talks with the IMF are after all about the loan guarantee Hungary would like to receive.” The Orbán government wants to have a financial arrangement that would allow them to pursue their uniquely Hungarian economic policies without anyone looking over their shoulder. They sure don’t want to have those pesky IMF officials poking around.

IMF-Hungarian government negotiations, January 16, 2012Photo László Beliczy / MTI

IMF-Hungarian government negotiations, January 16, 2012
Photo László Beliczy / MTI

Mihály Varga simply doesn’t understand why the IMF is reluctant to extend a loan guarantee to Hungary without no strings attached when, according to him, everything is swinging. The deficit is low, the government bonds sell well, the price of their credit default swaps is reasonable, and the Hungarian economy is stable. But, it seems, the IMF sees all this very differently.

The unofficial negotiations continued off and on throughout the two weeks the delegation spent in Hungary. For Varga the question was “whether the IMF is willing to accept Hungary’s current model of economic policy as the basis of negotiations or it insists that we change the structure of our economic governance.” The answer came on January 28. The IMF does not accept György Matolcsy’s unorthodox economic model, and it insists on a different course of action. If Hungary does not comply, there can be no question of a loan. Forget about a guarantee.

It is unnecessary to summarize the contents of the fairly lengthy IMF report here. It can be found on the IMF website. The gist of  the report is that “a new policy course is needed to deliver the required medium-term fiscal adjustment in a sustainable way to support growth and confidence, repair the financial sector, and promote structural reforms to boost the potential of the Hungarian economy.”

The weak performance of the Hungarian economy is due both to structural factors and to specific domestic policies. The IMF doesn’t share the Hungarian government’s claim that Hungary’s problems are due solely to the weak performance of the European Union as a whole. The report argues that the “increased state interference in the economy and frequent and unpredictable tax policy changes, particularly on the corporate sector, undermined private sector activity. This contributed to a negative feedback loop between slow growth, weak investment, bank disintermediation, and high public debt.”

If the current policies are continued, the IMF report predicts, the general government deficit will increase in 2013-15. The IMF, like most Hungarian economists, predicts that there will be revenue shortfalls. As a result, the deficit will be above the maximum 3% necessary to exit the European Union’s Excessive Deficit Procedure.

In addition, the IMF delegation was deeply concerned about Hungary’s potential growth. They predicted that growth, if there is any at all, will be in the 1.0-1.5% range in the next two years. In order to foster growth the IMF would like to see “increased policy predictability, a level playing field for all businesses, and structural reforms.”

The Ministry of National Economy immediately reacted to the IMF, but it was as brief as possible. It simply stated that according to the government the “Hungarian economy in fact is in a much better situation than is portrayed in the IMF’s report.” Moreover, “the steps taken by the government are not ad hoc but will remain permanent features of the system.” Well, if this is true, the Hungarian economy will be unlikely to recover in the medium term.

The government’s take on the country’s economy is optimistic, and the ministry of national economy contradicts the IMF assessment on several points. For example, they do not admit that government policies contributed to the recession. In a report of its own, the ministry blames the problems on outside factors: recession in the euro-zone, the drought that produced a poor harvest, and the economic decline of several foreign businesses (Nokia, Flextronics, for example). Otherwise, they list a number of reforms the ministry considers “structural.” Among them, taxation, changes in education, healthcare, pensions, public transportation, and solving the problem of municipal indebtedness. The document can be read in its entirety on the government’s website.

Mihály Varga tried to shift the blame for the sluggish Hungarian economy to the European Union. After all, Hungary was forced by the EU to lower the deficit and to put into place austerity measures that resulted in economic contraction. He also insists on continuing the exorbitant tax levies on banks that has further stifled economic growth because of the lack of credit from banks that can barely keep their heads above water.

In contrast, most of the media described the IMF report as “devastating.” HVG emphasized the real possibility that because the IMF-EU delegation predicts a higher than 3% deficit  Hungary might remain under Excessive Deficit Procedure. That would be very bad news for Hungary. I assume that one of the topics José Manuel Barroso and Viktor Orbán will discuss in Brussels tomorrow will be the delegation’s critical remarks about Hungary’s economic policies.

On the right, the economist György Barcza, who used to work for ING Bank (2001-2012) but moved over to the pro-Fidesz Századvég last November, was the first one to raise his voice against the IMF’s critical report. He claimed that “the IMF didn’t dare tell the truth.” The members of the delegation criticized but did not say what remedies the Hungarian government should implement.  Barcza claimed that if the tax levies on banks and on international companies were lifted the budget would lose about 800 billion forints. In order to make up this sum the government would have to take drastic measures. It would have to introduce a 0.5% property tax. The tax rate for those who earn more than 4 million forints per year would be 50%. In addition, the government would have to stop the generous tax rebate to which families with three or more children are entitled.

Well, I’m no economist but I have other ideas that might solve the problem of the missing 800 billion. For example, the government could sell its MOL stock for which they spent billions, not in forints but in euros. I would suggest getting rid of the recently purchased shares in Rába. They shouldn’t have spent billions on a Hungarian-language university in Romania.  They shouldn’t have spent 13-14 billion forints on TEK (Terror Elhárítási Központ). It was really not necessary to spend 2-3 billion on a 400-member guard for the parliament. They shouldn’t be spending billions on recruiting voters abroad. Hungary doesn’t need several new football stadiums, each costing 10-20 billion forints.  And what about taking over the loans of municipalities that under Fidesz leadership piled up debts they can’t pay? I’ll bet that one could easily make up those missing 800 billion forints.