Hungarian Ministry of Foreign Affairs and Trade

The sorry state of Hungarian foreign policy

This morning I listened to lectures delivered at a conference,”Az elszigetelt Magyarország és a globális világ” (Isolated Hungary and the Global World), that took place on Friday. The conference was organized by Attila Ara-Kovács, who is currently heading the foreign policy “cabinet” of the Demokratikus Koalíció (DK) and who earlier worked in the foreign ministry under László Kovács. Ara-Kovács was joined by Charles Gati, professor of political science at Johns Hopkins University, for a conversation centering on U.S.-Hungarian relations. Mátyás Eörsi, who was undersecretary of foreign affairs between 1997 and 1999, assessed the Orbán government’s foreign policy and came to the conclusion that as such it doesn’t really exist. Ferenc Gyurcsány delivered a short speech in which he insisted that the whole political system built by Viktor Orbán must be dismantled. There is no possibility of changing the current foreign policy strategy because that would mean a denial of “the essence of the system.” Zoltán Sz. Biró, an expert on Russia, delivered a fascinating lecture on the state of the Russian economy. Finally, Zoltán Balázs, a political scientist whose sympathies lie with the right of center, offered a few critical remarks, saying among other things that the speakers had ignored the resilience of Orbán’s followers. Orbán may go but his devoted admirers remain, and for them Hungary’s martyr complex is very much a reality. I can strongly recommend these lectures to anyone who understands the language.

Zoltán Sz. Biró, while outlining the grave Russian economic situation, expressed his surprise at the ignorance of Hungarian policymakers about the real state of affairs in Russia. Don’t they ever look at the economic and financial data available online? Obviously not, because otherwise Viktor Orbán and Péter Szijjártó should have been more cautious in their approach toward Moscow. But behind their Russia policy is Viktor Orbán’s mistaken notion of “the decline of the West” and thus he put all his eggs in one basket. By now it looks as if even the enlargement of Paks will come to naught.

As for the diplomatic corps, according to Mátyás Eörsi fear is widespread because of the hundreds of “pink slips” handed out to old-timers with diplomatic experience at the foreign ministry in the wake of János Martonyi’s departure. One “bad” sentence and the person’s job is in jeopardy. Thus, nobody offers any opinion that might differ from that of the “diplomatic expert,” Viktor Orbán.

Ferenc Gyurcsány and M. André Goodfriend at the Conference on Hungary in Isolation and the Global World

Ferenc Gyurcsány and M. André Goodfriend at the Conference on Hungary in Isolation and the Global World

The housecleaning was so thorough that Szijjártó proudly announced that “we will lay the foundations of the new Hungarian foreign policy irreversibly, once and for all.” They will not retreat but forge ahead according to what they consider to be Hungary’s economic interest. Two weeks later it was announced that out of the staff of 900 at the ministry more than 200 will be fired, including some who were brought in by Tibor Navracsics a few months earlier. As a result there is total chaos in the ministry, whose new spokesman is a former sports reporter.

Not only is the ministry’s staff decimated but certain background institutions like the Magyar Külügyi Intézet (Hungarian Institute of Foreign Affairs) no longer exist since its entire research staff resigned en bloc. The administration is in the throes of “reorganization” of the institute. It’s no wonder that no one was prepared for the crisis in U.S.-Hungarian relations that came to the fore in mid-October.

By October and November there was such chaos in the ministry that some of the diplomats were certain that Szijjártó couldn’t possibly remain in his new position. Rumors circulated at the time that the ministry of foreign affairs and foreign trade would split into two ministries and that Szijjártó would be in charge of foreign trade only. This was probably a reflection of the long-suffering diplomats’ wishful thinking.

Others were convinced that Orbán will change his foreign policy orientation and will give up his anti-West rhetoric and policies. However, Attila Ara-Kovács in an article that appeared in Magyar Narancs outlined the impossibility of such a scenario. In the same article Ara-Kovács shed light on the atmosphere at the ministry of foreign affairs nowadays. An ambassador with close ties to Fidesz happened to be back in Hungary and wanted to talk to his superiors in the ministry. He was not allowed to enter the building because, as he was told by the security officer at the door, “you are on the list of those who are forbidden to wander around the corridors alone.”

Since then the situation has only gotten worse.  According to insiders, “in the last two months the chief preoccupation in the ministry is saving one’s job.” By October 34 ambassadors were sacked in addition to the hundreds who were fired earlier. János Martonyi, the previous foreign minister, because of his pro-trans-atlantic sentiments is considered to be a traitor and an American agent by those people who were brought in by Navracsics and Szijjártó from the ministry of justice and the prime minister’s office. Indicative of this new anti-American orientation, a recent order from the prime minister’s office required employees to report in writing all contacts with American diplomats over the last few years.

Szijjártó seems to have a free hand when it comes to personnel decisions. He created a job for a friend of his from the futsal team Szijjártó played on until recently. Despite no degree or experience, the futsal player will coordinate the work of the “minister’s cabinet.” For Szijjártó, as for the prime minister, it is “loyalty” that matters. Among the five undersecretaries there is only one with any diplomatic experience and he is, of all things, responsible for cultural and scientific matters. The newcomers don’t understand the world of diplomacy, so they’re creating their own rules. They are introducing a “new language” for diplomatic correspondence. They tell the old-timers that they mustn’t be “too polite” in official letters. Also, apparently they don’t consider it important to put conversations or decisions into writing. They think that a telephone conversation or perhaps an e-mail is enough. Therefore it is impossible to know what transpired between Hungarian and foreign diplomats. All that writing is cumbersome and slow. It seems that they want to follow the well-known practice of the Orbán government. A decision is made without any discussion and the next day the two-thirds majority passes the new law. But diplomacy doesn’t work that way. It is a delicate business.

Currently, I’m reading a biography of Benjamin Franklin in which his efforts at securing an alliance with France are described in some detail. It took him a year and a half to achieve that feat, which was vital for the young United States at war with Great Britain. And he was a seasoned diplomat. The new staff at the foreign ministry is decidedly unseasoned. Some of them haven’t even been schooled in foreign affairs, history, or political science. Believe it or not, two of the five undersecretaries have medical degrees. A rather odd background, I would say, for conducting foreign policy.

Diplomacy is the antithesis of everything that characterizes the Orbán government. For Viktor Orbán the “peacock dance,” which is basically nothing more than deceiving your negotiating partners, passes for diplomacy. And the new, “irreversible” foreign policy has already led Hungary to the brink of diplomatic disaster.

By the way, U.S. Chargé d’Affaires M. André Goodfriend, as you can see from the photo accompanying this post, attended the conference.

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American-Hungarian relations are crumbling

Let me summarize what we know so far about the U.S. action against certain Hungarian businessmen and government employees.

Initially it was reported that ten people were banned from entering the United States, but by now that number has been reduced to six. We definitely know of one businessman who reported on his fate to ATV. It was he who mentioned three employees of the Office of Taxation and Customs (NAV). One of the three was allegedly the president of NAV, Anikó Vida. The spokesman for the tax office did not deny the charge. If the number six is correct, there are still two people about whom we know nothing.

Although the Hungarian government feigns total ignorance of the details and keeps repeating that it is unable to move against the corrupt officials, in fact they have known for two weeks about the American resolve to pursue those Hungarians who have been trying to blackmail American firms and extort kickbacks of billions of forints from them.

M. André Goodfriend, chargé d’affaires of the U.S. Embassy in Budapest, sketched the timeline of events this afternoon. According to him, on October 6 he had a talk with Levente Magyar, one of the undersecretaries in the Ministry of Foreign Affairs and Trade. During the meeting Goodfriend explained the significance of Proclamation 7750, which is an executive order signed by George W. Bush in 2004. The Proclamation gives the State Department power to ban corrupt individuals and their families from entering the United States. Such a ban can be imposed only by the undersecretary for political affairs–in our case by Wendy Sherman, who is the department’s fourth-ranking official. (Here is a handy chart of the structure of the State Department.)

Levente Magyar must have understood the gravity of the situation because a subsequent meeting was arranged at the request of the Hungarian foreign ministry between Péter Szijjártó and André Goodfriend. This meeting took place on October 13. The American chargé repeated everything he had already told Magyar. Szijjártó then insisted that he reveal the names of those would be affected by the ban. Goodfriend in turn explained that the American government never reveals names in cases connected to Proclamation 7750. What the U.S. expects is swift action against the culprits.

Let’s stop here for a minute. I assume that Viktor Orbán was notified immediately after the encounter between Magyar and Goodfriend on October 6, and I also suspect that the prime minister’s advice was to insist on “proof” from the Americans. When that failed, in typical Orbán fashion the decision was made to launch a counterattack. NAV leaked information to Napi Gazdaság, a financial paper owned by Századvég, a consulting firm and think tank close to Fidesz, that the United States is contemplating evoking Proclamation 7750 against certain Hungarian businessmen in retaliation for NAV’s tax probes against certain American firms. If the Hungarian government hadn’t decided on this counterattack, we perhaps would never have found out about the travel ban on the six, still unnamed individuals. Colossally stupid move, but I think it is typical. Viktor Orbán always has to have the last word.

Since October 16, the day that Napi Gazdaság published its article containing the disinformation concocted by the Hungarian government, the controversy between the United States and Hungary has been escalating rapidly. The Hungarians kept insisting on “creditable proof” while the Americans steadfastly refused to fall into the trap. Moreover, while at the beginning the controversy seemed to be connected only to widespread corruption in Hungary, as time went by it became obvious that the United States might also take action against the Orbán government’s increasingly anti-democratic behavior. A day after the appearance of the accusations against American businesses in Napi Gazdaság, an article was published in Foreign Policy magazine from which we learned that “at a meeting last month, the Community [of Democracies] set in motion a process that could result in Hungary’s removal from the council and withdrawal from the Community. If Hungary leaves, it will be an international acknowledgment  that the nation has ceased to be a democracy.”

What is the Community of Democracies? It is a global intergovernmental coalition of states founded in 2000 at the common initiative of Madeleine Albright and Polish foreign minister Bronislaw Geremek. The organization is headed by a Governing Council consisting of 26 countries, among them Hungary. Apparently it was the United States that suggested that Hungary be removed from the Council and perhaps even from the organization. Or perhaps Hungary might consider a voluntary withdrawal from the Community in order to avoid embarrassment. The likelihood of an American initiative in this case was reinforced by André Goodfriend’s observation that such a move might be warranted under the circumstances.

M. André Goodfriend at one of his press conferences

M. André Goodfriend at one of his press conferences

While the Hungarian government is stonewalling, the U.S. chargé d’affaires in Budapest, most likely following instructions from the State Department, is delivering tougher and tougher messages to the Hungarian government during fairly frequent press conferences at the embassy. Perhaps the strongest language could be heard this afternoon when Goodfriend explained the reason for American action. In Hungary prior to 2010 the level of democracy and transparency, especially in comparison to some other post-socialist countries, was high. But while in other countries the trend is toward greater democracy and transparency, in Hungary the opposite is true. “If that trend continues it may reach a level where the United States can no longer cooperate with Hungary as an ally.” Clearly, the United States is not joking–as Antal Rogán assumed only yesterday during an interview.

Let’s return briefly to the three high officials of the Hungarian tax office who most likely are implicated in the case. In what way can they engage in fraud and corruption? Here is an explanation offered by Dávid Jancsics, who is currently conducting research at the City University of New York. His expertise is corruption. He learned from two independent sources that the NAV employees demanded kickbacks from two American companies in exchange for tax breaks and a lower VAT. Apparently they demanded 2 billion forints in exchange for these favors, money that the American companies were supposed to pay to a foundation associated with Fidesz for purposes of “research and analysis.” In addition, the NAV officials promised heavy fines on the American firms’ competitors. When the Americans didn’t bite, the NAV officials began threatening them with tax probes. It was at this point that the firms turned to the American embassy and reported the bribery attempts. The implication of this analysis, if it is accurate, is frightening because in this case the tax office is part and parcel of a corruption scheme that appears to be centrally organized.

This takes us back to an old story about a whistleblower at NAV who claimed that high NAV officials refused to investigate obvious fraud cases. András Horváth, the whistleblower, said that he was mostly involved in investigating companies that dealt in agricultural products. Index came to the conclusion that one of the two American companies in question was Bunge, a leading agribusiness and food company. It is a global firm with 35,000 employees in forty countries, including Hungary. They produce among many other things cooking oil sold in Hungary under the label Vénusz. It was well known that the management of Bunge was very unhappy about the VAT fraud and that their efforts to enlist the help of NAV were fruitless. It is possible that after a lot of complaints from the Bunge management NAV officials offered to do something about the competition’s fraudulent business practices but only at a price.

Hungarian journalists in the last few days have asked several business groups, like the German-Hungarian Chamber of Commerce, about the extent of corruption in Hungary. The answer is that foreign companies have known for years about corruption involving billions. “Hungary is a part of the Balkans” by now, and the situation is only becoming worse. According to foreign business leaders, Hungarian business life is corrupt through and through. Healthy competition is impossible under such circumstances.

Péter Szijjártó is leaving Budapest for Washington tomorrow to meet Victoria Nuland. I wouldn’t like to be in his shoes.