Internet tax

No Internet tax but attacks on the United States continue

On Friday Viktor Orbán was still determined that after a national consultation the internet tax would be introduced sometime next year. Today he retreated from this position. He suggested that the internet providers’ unanimous opposition to the tax was the reason for removing the item from the government’s 2015 budget proposal. I very much doubt that the joint letter of the providers addressed to Mihály Varga had anything to do with the decision. Rather, Orbán recognized that his attempt to simply postpone the decision would not appease the multitudes of internet users. There was a very good possibility that the demonstrations would be repeated from time to time, further damaging the reputation of the government and Viktor Orbán personally. Despite this retreat, however, I have the feeling that in one way or the other curtailing internet access will be back on Viktor Orbán’s agenda. He is only too aware that almost all of the large demonstrations against his government were organized on Facebook. Social media is a danger to autocrats.

Now that this issue is behind us, I would like to return to the Orbán government’s relations with two of its adversaries at the moment: the United States and Norway. You may recall that János Lázár invited the “appropriate Norwegian minister” to meet with him either in Budapest or in Brussels. I predicted that Vidar Helgesen, the minister in question, would not oblige. And indeed, Tove Skarstein, Norwegian ambassador in Budapest, held a press conference today where she announced that Norway does not recognize the right of the Hungarian government to investigate the Ökotárs Foundation. Norway is in the middle of conducting its own probe, which will be ready by the end of November. Until then, the monies of the Norway Civic Fund will continue to be distributed through Ökotárs. It is unlikely that the Hungarian government will be the winner of this dispute. So far the Orbán government has been left holding the short end of the stick: the Norwegian Funds suspended payment of some 40 billion forints that the Hungarian government was supposed to distribute for various projects.

After the meeting of the Fidesz parliamentary caucus a journalist asked Viktor Orbán about the U.S. travel ban on the six Hungarian officials and businessmen. As we know, the reason for the ban is not just simple corruption but also American fear that the reported cases would not be investigated by the police and the prosecutor’s office. In plain English, there is a well-founded suspicion that the government is complicit in the crime itself.

Viktor Orbán does not like to talk about this sensitive topic, and apparently the subject did not come up at today’s meeting of the parliamentarians. Of course it didn’t because it was not on the agenda. When asked whether he knows the names of the six people in question, Orbán’s answer was: “if the Americans tell me, then I will be glad to tell.” The game Orbán is playing is rather simple-minded. He would gladly investigate and if necessary bring the culprits to justice, but the Americans with their stupid laws prevent him from doing so. One has to be very naive to think that Orbán does not know the names or that the prosecutor’s office could not investigate their cases.

It seems to me that there is still a huge confusion about how to deal with the frayed American-Hungarian relations. On the one hand, Viktor Orbán at least twice tried to discourage the far-right leaders of the Peace Marches from organizing an anti-American rally. On the other hand, members of his government are accusing Bunge, the American agribusiness corporation, of corruption. Bunge is most likely the company that reported the corrupt tax authority officials to the American embassy. A few days ago Magyar Nemzet accused Bunge of corruption in Argentina, and today András Tállai, undersecretary in the Ministry of National Economy, went further. According to him, “it is a very interesting situation that in the final analysis it is possible, nay it is certain, that the informer itself is involved with the fraud.” That is, Bunge is being accused of tax fraud. And that’s not all. Magyar Hírlap learned that Carol Browner, Barack Obama’s adviser on environmental matters, recently became a member of Bunge’s board of directors. And, the paper added, Browner was also a member of the Clinton administration. The headline reads: “The threads may lead all the way to Barack Obama.” Wow!  Magyar Hírlap is a big game hunter.

Bunge says it is not under VAT fraud investigation Source: www.bbj.hu

Bunge says it is not under VAT fraud investigation
Source: http://www.bbj.hu

János Lázár also made it clear how he feels about the United States’ role in shining a light on corruption in the Hungarian tax authority. When an MSZP member of parliament inquired about Ildikó Vida, the head of the office, Lázár retorted: “How do you know that she is involved? For an answer it would be enough to bring the flag of the United States and put it between the European and the Hungarian flags because then we would understand that behind the MSZP caucus there is the Budapest chargé of the United States.” He also suggested to Bernadett Szél (LMP) that she go to the United States embassy and ask them why they intimate that part of Hungarian officialdom is corrupt.

Meanwhile the right and far-right media are full of attacks on the stupid, ignorant and boorish Americans and their representative, M. André Goodfriend, as opposed to the Russians of Tolstoy, Chekhov, and Dostoevsky. Since we all know that a single word from Viktor Orbán would be enough to silence these hacks, we can safely assume that the rants from the staff of Magyar Nemzet and Magyar Hírlap are not against the wishes of the Orbán government.

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Viktor Orbán: The brave prime minister who is not a communist

On October 28 József Szájer, a Fidesz member of the European Parliament, gave an interview to Inforádió, a station close to the government party. To long-time readers of Hungarian Spectrum or those who have been following Hungarian politics in the last twenty-five years Szájer is a familiar figure. However, since we have a lot of new subscribers who might be less familiar with the leading figures of Hungarian political life, I should say a few words about this man.

Szájer is a real old-timer in Fidesz. He was there from the very beginning, living in the dormitory where Fidesz was born. He held important positions in parliament and in Fidesz between 1988 and 2004, when he was sent to Brussels as the leader of the Fidesz delegation. He is also one of  deputy chairmen of the European People’s Party. Since Hungarian politicians don’t consider the job of MEP a particularly important one, it is hard to fathom why the decision was made to remove Szájer from direct involvement in Hungarian politics. He is supposed to be brilliant although, at least in my opinion, he does not put his brain power to the best use.

Just because Szájer officially holds no position doesn’t mean that he plays no role in the party behind the scenes. For example, Szájer himself proudly announced that he wrote the text of the new Hungarian constitution on his iPad. When the Orbán government is criticized in the European Parliament, it is Szájer who leads the troops in defense of the Orbán regime. And when in March 2013 there was a U.S. Senate hearing on the state of democracy in Hungary it was József Szájer who was dispatched to explain the Hungarian position.

During the interview on Inforádió Szájer defended the introduction of the internet tax with his usual vehemence. A government that dares to tax internet usage is a brave one, he said. “There are times,” he claimed, “when one has to speak in the language of strength.” Such a tax is “no attack on the internet.” After all, we have to pay for our food, but that doesn’t mean that it is an attack against the freedom of eating. The very fact that I had a heck of a time translating this sentence means that the comparison is outright idiotic. I consider the example Olga Kálmán used more apt. Let’s say that we buy a book but we still have to pay extra for being able to read it. Indeed, that is exactly what the internet tax is. Internet subscribers pay for their service, which includes a 27% tax, but in addition the government wants to tax their right to use the material offered by the provider whom they’ve already paid.

The reason that I quoted Szájer’s belligerent words on the brave government that dares to tax the internet is because it took no more than three days for the government to decide not to be so brave. The reason? Apparently, a quick poll was ordered which showed that the people who were at the demonstrations had been apolitical until now. They seemed to have awakened from their long slumber, and that truly frightened Viktor Orbán. Many of the people chanting slogans never even bothered to vote and claimed that they are not interested in politics. Suddenly they became active. This is the last thing Viktor Orbán wants. Among them might be future political leaders who will force this authoritarian government to resign one day.

A typical Fidesz warrior: József Szájer in the European Parliament

A typical Fidesz warrior: József Szájer in the European Parliament

In Viktor Orbán’s interview last Friday there was one sentence that I found especially revealing. He decided to shelve the internet tax because his government listens to the people, and they certainly don’t want to do anything that is unacceptable to the people. After all, they are not “communists.” But the problem is that the governing style of the Orbán government closely resembles that of the Kádár regime. For all practical purposes there is a one-party system in Hungary today.

During the communist period it was the Politburo that made the decisions. The size of that body varied from eight to thirteen members. They met weekly and discussed the day-to-day running of the country. Today the situation is actually worse. As far as we know, there are no weekly meetings of the Fidesz executive board. Decisions are not made by the ministers either because cabinet meetings are exceedingly short and there are practically no discussions. Everything is decided by Viktor Orbán and until he speaks, as someone wittily remarked, no one knows what to think. The people started to see the strong resemblance between the two regimes.

I watched Henrik Havas’s Saturday political program on ATV where the older participants recalled that in the last parliament of the Kádár regime there was a discussion about the Czechoslovak-Hungarian dam to be built on the Danube. The population opposed it, but the government was determined that it be built. The president of parliament called on those who were against the dam to stand up. Twenty some people did. And that was during a communist regime. Today it would be unimaginable for Fidesz MPs to stand up in a similar situation. Or to dare vote against a bill they don’t agree with. This is illiberal democracy in action.

The internet tax is only postponed: it most likely will be called something else

The first act of the drama is over, but I’m almost sure that more will follow since the participants in the recent massive demonstrations know Viktor Orbán only too well. Moreover, in his interview today on Magyar Rádió, he was quite blunt about his resolve to reintroduce the tax. The tax will be adopted “but not this way,” “not in this form.” That’s pretty straightforward, isn’t it?

The problem, according to the prime minister, is that once again the people “misunderstood” the original proposal because there was never any talk about an “internet tax.” The proposed tax was simply an extension of the already existing “telecommunication tax.” Again the same old story: all controversial pieces of legislation are misunderstood by the domestic opposition. And naturally they are misconstrued by the antagonistic domestic and foreign media.

People who know Viktor Orbán are only too aware of his absolute intolerance of contrary opinions. We were reminded of this character trait only today when Tamás Mellár, the conservative economist who worked at Századvég for a year until he resigned in disgust, told the following story to a Népszabadság reporter. One day, when four or five economic experts gathered for a meeting with Orbán, he dared say to the prime minister: “Forgive me, but you are wrong in that.” A deathly silence followed, during which Mihály Varga, minister of national economy, “pulled” Mellár’s hand under the table, signaling to him that such a thing is simply not done.

So, you can imagine the scene when the normally servile reporter who conducts Orbán’s Friday morning radio interviews had the audacity to say that it doesn’t matter whether we call the disputed tax an “internet tax” or a “telecommunication tax”–it is only “playing with words.” A brief silence followed, and one could feel the stunned surprise and wrath of the prime minister. It was a frightening moment. But that was not the only awkward exchange in the conversation. The reporter mistakenly thought that Orbán had exhausted the topic of the internet aka telecommunication tax and wanted to switch over to foreign criticism of Hungarian policies, which he thought was somewhat connected to the upheaval over the internet tax. Orbán snapped at him again. First of all, these two things don’t have anything to do with one another, he claimed, and, second, he does not want to talk about this now. What he wants to bring up and what is very important is that the Hungarian government has an understanding with internet providers to make the whole country internet ready by 2020. This is what is important.

As for the criticisms, Orbán had a very simple answer. Naturally, the accusations of Hungarian wrongdoing have nothing to do with the facts. It is noticeable that criticisms multiply when the government stands up for the Hungarian people which in turn hurts foreign business interests. Right now, for example, after the parliament passed a piece of legislation that forces mostly foreign banks to lighten the burden on Forex borrowers, foreign governments are trying to put pressure on Budapest. Falling into the same category are the mostly foreign internet providers who don’t carry their fair share of the tax burden. They make enormous “extra profits” that they take out of the country. These extra profits disappear into thin air. He leveled this charge despite the fact that earlier in the interview he praised the same foreign internet providers for continuing to pour enormous sums of money into the development of broadband service.

Finally, Orbán announced a “national consultation” on the subject of the non-“internet tax.” Tamás Deutsch, a member of the European Parliament who hangs out on Twitter all day long entertaining people with his obscenities, will be in charge of this grand consultation. Although Deutsch thinks that the tax is “stupid,” he called the protesters “ragamuffins” and “stink bugs.” As for the so-called “national consultation,” we have witnessed a few of these in the past and we know that they are a farce. Viktor Orbán sends out millions of questionnaires to voters containing questions that beg for affirmative answers that justify the government’s position. For example, “internet dependency is a serious psychological illness” or “the internet is dangerous to young people because of pedophiles roaming the Net.”

As for the mysterious “extra profit,” I get annoyed every time I hear someone use the term. And unfortunately one hears it far too often. It stirs up old memories of a compulsory university course called “political economy.” In it one learned the Leninist definition of extra profit. According to Lenin, extra profit derives from the exploitation of workers in the colonies. These extra profits are then distributed at home to raise the living standard of the working class in order to keep them quiet. According to Marxist-Leninist theory, all profit is based on exploitation of the workers but the extra profit is achieved by taking exploitation beyond the normal level. The notion of extra profit in today’s public discourse makes not the slightest sense. Viktor Orbán is taking advantage of the Hungarian people’s discomfort with capitalism and what it entails–including competition and profit–and invoking concepts from the very same communism he wants to banish once and for all from the country. And, by the way, the profit these providers earn is apparently rather low.

Delete Viktor

So, will Viktor Orbán’s announcement this morning quiet the protesters? It looks as if Viktor Orbán’s interview, widely reported in the foreign press as announcing a withdrawal of the tax–a capitulation by the prime minister, did not impress Hungarians. Tonight József nádor tér was still full of demonstrators, and the slogans and posters highlighted various “sins” of the government. For example: “Viktor, you will find the extra profit in Felcsút.” Norwegian and EU flags were seen everywhere. The speakers announced that there is no need for “national consultation” because that already took place in the last  few days on the streets of Budapest and other Hungarian cities. The speakers argued that the government needs extra taxes because of the corrupt tax authorities.

In Szeged a very large crowd gathered tonight. Here the speakers covered several topics, including corruption and the lack of media freedom. The internet is the only “free island which the government hasn’t occupied yet.” It is, one speaker claimed, the most significant invention since the discovery of fire and the wheel and the symbol of Hungarians’ tie to Europe. “We cannot stop at the internet tax, let’s demolish the walls while they are not yet plastered and painted. … Long live freedom and the fatherland!”

A watershed? Did Hungarian society awaken as some people think?

Most analysts agree that Viktor Orbán made a terrible political mistake when he consented to the idea of taxing Internet usage. Yet for the time being it looks as if the government will not take the proposal off the table. Observers are pretty well convinced that if the government had retreated at the first sign of serious opposition, the opportunity wouldn’t have arisen to forge a wide coalition of forces that by now can be viewed as a serious political opposition not only to the Internet tax but to the whole regime.

Perhaps one of the best descriptions of the feeling after yesterday’s enormous demonstration came from András Jámbor, a blogger and a participant in the demonstration, who said: “The Orbán regime did not fall last night and it is possible that it won’t for some time, but something very important happened yesterday: we conquered the cynicism and apathy around us, and the feeling that ‘it can’t be otherwise.’ We stood up for our own affairs…. Yesterday we won.” I think these words should be taken seriously.

I’d bet that this young man, after yesterday’s demonstration, felt something like the students did in October 1956 after they returned home from Kossuth tér–a distinct sense that from here on nothing will be the same. Even if the revolution failed, the events of that autumn day showed the participants that they were no longer powerless. I’m also sure that participants in the reburial of Imre Nagy and his fellow martyrs felt the same way: they were witnesses to the beginning of a new era. Yes, something changed yesterday, but it looks that members of the Hungarian government haven’t taken notice yet. Otherwise they wouldn’t insist on going ahead with the tax.

The man who announced the government’s resolve was Szilárd Németh, a long-time Fidesz member of parliament and, more recently, commissioner in charge of the successful campaign for utility price decreases. Németh began his career as a school librarian, although I can better imagine him as a bouncer in front of a nightclub in some less than reputable district of Budapest. I assume that he got the job of selling the Internet tax because of his great success with the utility rate campaign, which increased public support for the government from 17% to over 40%.

Some people are puzzled about Viktor Orbán’s absence and why he picked this particular time to visit his oldest daughter in Switzerland. After all, it was during his absence that the somewhat belated budget proposal was introduced in parliament. Even before we learned about the numerous new taxes included in the proposed budget, there was widespread fear that  a new austerity program was waiting for the no longer unsuspecting Hungarian public. Did he want to run away from the upcoming storm? Perhaps. However, those who naively think that the chaos in Budapest is due to the prime minister’s absence are wrong. Németh this morning spoke in Orbán’s name.

The two massive demonstrations in three days are hard to ignore or explain away. However, the delusional members of the administration convinced themselves that the demonstrations were actually organized by the opposition parties who misled 100,000 people into staging a political attack against the government. Government politicians by now really seem to believe their own propaganda about the unity of the nation and support for the government by every true Hungarian. The people out on the streets had to be misled, pure and simple. By the end of his interview Németh accused Ferenc Gyurcsány of being behind the plot. As critics of the opposition parties were quick  to note: wouldn’t it be nice if these parties could actually organize such huge crowds.

Zoltán Lakner, one of the few talented political analysts in Hungary, pointed out that by virtue of the government itself admitting that the demonstrations were political in nature, it created a huge political conflict out of a simple tax question. Another observer, Zoltán Somogyi, reminded us that “one prime minister had to resign because of a 300-forint co-pay, another will soon follow him because of a 700-forint” Internet tax. Of course, he was referrring to Ferenc Gyurcsány. Other political scientists are also convinced that if Fidesz does not change tactics, a political avalanche will follow. Even Ágoston Sámuel Mráz, a fierce defender of the Orbán government and CEO of Nézőpont Intézet, admitted that the demonstrations are serious warnings to the government and that even the stability created by the three victorious elections may not be enough to combat the political problem Viktor Orbán is facing.

Finally, I would like to say a few words about the opposition parties’ position vis-à-vis this civic Facebook-organized movement. Before the Sunday demonstration, DK was planning a demonstration in front of NAV headquarters, the tax office, for Monday. Of course, this demonstration had nothing to do with the Internet tax but rather with the alleged corruption charges leveled against the office. Once the demonstration took place on Sunday, DK cancelled the event because they did not want to interfere in any way with a most likely much larger and more important demonstration on Tuesday. The party urged its members and supporters to join the planned demonstration. Együtt-PM and LMP did the same. MSZP said nothing.

Last night, after the official demonstration was over, about 2,000 people went to Kossuth tér in front of Parliament where they demanded that the EU flag be displayed. In the past both the Hungarian and the EU flags were displayed until László Kövér ordered that the EU flag be removed. He discovered that it is not compulsory to fly the EU flag on member states’ parliament buildings. That had to be a joyful discovery for the man who obviously hates the European Union through and through.

So, there was the crowd demanding the flag, but there was no way to force the people inside to oblige. At that point three women appeared in one of the windows with two EU flags. The reaction was stupendous. Cheers went up and most people recognized that one of the women was Ágnes Kunhalmi, an MSZP member of parliament and chair of MSZP in Budapest. The other two were also members of MSZP, Anita Heriges, and Ildikó Borbély. They waved the flags to the cheering crowd. It was a gesture that was highly appreciated. Party members and demonstrating civilians worked together for a brief moment to the satisfaction of both.

Source: Népszabadság / Photo Simon Móricz-Sabján

Source: Népszabadság / Photo Simon Móricz-Sabján

What was the official MSZP reaction to this gesture? Zoltán Gőgös, a member of parliament and an expert on agricultural matters, announced today at a press conference that although MSZP sympathizes with the organizers of the demonstrations, the party as such will not support them in any way.  He singled out  Ágnes Kunhalmi, who according to him did not wave the EU flag as a campaign gesture but simply responded to the request of the demonstrators. Of course, the opposition parties must be very careful not to give the impression that they in any way want to influence or lead the civilians, but it is the greatest folly to distance themselves officially.

“This is just the beginning”: An even larger demonstration against the regime today

Today an enormous crowd gathered on József nádor tér. It eventually swelled to the point that the beginning of the demonstration was already at the Clark Ádám tér on the Buda side at the Lánchíd while the last demonstrators were still at the Astoria Hotel, a good mile away from the Pest side of the Erzsébet híd. And while on Sunday only a handful of people gathered in Pécs, Miskolc, and Veszprém, this time there were much larger demonstrations, including one in Szeged. In Pécs the speaker was Tamás Mellár, a conservative economist at the University of Pécs who has been a harsh critic of the Orbán government’s economic policies. It is not a coincidence that larger crowds gathered in university towns. After all, young people and students would be most affected by the proposed internet tax.

Apparently the original proposal was so poorly prepared that, had it become law, an average computer user would have had to pay 65,000 forints a month just in taxes. Surely, this was total nonsense, but if the government does not consult with the leaders of the industry such a result is predictable. Then came the inevitable amendments when the Fidesz lawmakers try to fix the botched up proposals. At the end most people who went through the amended proposal still didn’t know how big a burden this new tax will be if it’s introduced. According to calculations, an average user will have to pay 10,000 forints in taxes–and that’s over and above  the 27% VAT they already pay, the highest in the world. Ten thousand forints or $42.00 is a lot of money even for an American internet subscriber, but it is a serious financial burden for most middle-class Hungarians. Also, it is not clear whether this tax would be levied per household, per subscription to a service provider (internet and smart phone), or per electronic device.

But it is not really the size of the tax, although of course that is part of it. For the demonstrators it is a question of principle: the net is free. This is their lifeline to the larger world. It is part of a social network that, for example, made these last two demonstrations possible. It is there where within a few days the organizers received 210,000 likes, more than Fidesz has collected in who knows how many years. It’s not known whose brainchild this tax was, but it was a colossal political mistake. Rumor has it that it was the Great Leader himself who came up with the idea. But, people argue, how could Viktor Orbán make such a mistake? After all, his political instincts are impeccable, at least as far as knowing what moves the Hungarian Everyman.

Source:Reuters/László Balogh

Source:Reuters/László Balogh

What could have accounted for this political misstep, whoever made it? I talked about one possible explanation already yesterday: the Fidesz boys got old too fast. I think they aged prematurely because they are basically an intolerant, opinionated bunch. They lack an openness to anything new or different. They are bound by tradition. All that stuff about folk costumes, folk dances, folk motifs, the virtues of the Hungarian peasantry. They are a backward looking lot. I saw an interview with a man who most likely never sat in front of a computer who announced that he is in favor of the tax because “these people use it too much. The internet should be restricted. Above a prescribed  level, it should not be accessible because it is not good for them.”

The tax is controversial even in Fidesz circles, but I doubt that anyone will dare tell Orbán that he is making a huge mistake. According to rumors, he is currently in Switzerland, insulated from the tense atmosphere in Hungary. These demonstrations will not stop. As the crowds chanted: “This is just the beginning!” This is not just against the tax but against the whole rotten system. They called the prime minister a traitor who sold his country to Putin and said that they don’t want anything to do with the Russians. They chanted: “Filthy Fidesz, filthy Fidesz!” They demanded democracy, a free country, and a free internet. And they want to belong to the European Union, from which László Kövér wouldn’t mind backing out slowly.

But this is only the political side of the controversy. What about the economic impact of the move? According to a recent article that appeared in The New York Times, only so-called developing countries impose damagingly high taxes on top of VAT or sales tax. As a report by the Information Technology and Innovation Foundation pointed out, “increasing taxes on information and communication technologies provides a significant drag on economic growth, and the losses accrue quickly over time.” Perhaps sanity will return and Viktor Orbán will see the light. Mind you, not too many people believe that. Klub Radio asked whether Orbán will retreat on the issue or not: only 20% of the callers answered in the affirmative. By now Hungarians know their prime minister.

Viktor Orbán picks another fight with the West, this time over the Southern Stream

I know that everybody is intensely interested in the Hungarian government’s latest brainstorm, the introduction of an internet tax, but I would rather wait with an analysis of this latest scandal until it becomes clear what the fate of the proposal will be. So far the reaction to this new tax has been so vehement that the government most likely will have to retreat. When an article in the right-wing Válasz predicts that “if we had an election today Fidesz would lose big,” I think it’s time to order a quick turnabout. I would like to add just one observation on a related topic: the Hungarian budget must be in a sorry state if an additional tax must be levied on soap and detergent, allegedly because they are harmful to the environment. Let’s not contemplate the detrimental effect of curtailing the use of soap because this would take us too far afield.

So, instead of dealing with the effects of an internet tax, I will look at other recent governmental decisions that have been detrimental to Hungary’s relations with the United States and the European Union. What I have in mind is Viktor Orbán’s flirtation with Putin’s Russia, which is being watched with growing concern in Washington and Brussels. Already there have been a couple of moves indicating close cooperation with Russia that raised eyebrows in the democratic world: the building of a nuclear power plant by a Russian firm on Russian money, Hungary’s refusal to support the common European position on the Russian sanctions, a tête-à-tête between Gazprom and the Hungarian prime minister followed by the Hungarian decision to stop supplying gas to Ukraine, and the government’s decision to let Gazprom use Hungarian facilities to store gas in case Russia cuts off the flow of gas through Ukraine.

These moves worried and irritated the United States and the European Union, only compounding their concerns about all the transgressions of the rules of democracy committed by the Fidesz government against the Hungarian people. Years have gone by; at last western politicians are slowly, ever so slowly deciding that they have had enough. After Norway it was the United States that openly showed its dissatisfaction with the domestic and foreign policies of the Orbán government. Yet, as the last few days have demonstrated, Viktor Orbán is not changing tactics. On the contrary, as I wrote yesterday, he is strengthening ties with countries whose relations with the United States and the European Union are strained. Almost as if Viktor Orbán purposefully wanted to have an open break with Hungary’s western allies.

Yesterday one could still hope that Viktor Orbán would  come to his senses and would at least make some gestures, but as yesterday’s meeting between Péter Szijjártó and Victoria Nuland indicated, the new Hungarian foreign minister was sent to Washington without a Plan B. By today, however, most likely in his absence, the government came out with a new idea. What if the Hungarian office of taxation and customs (NAV) announces that in the last several years they have been diligently pursuing their investigation of those criminal elements who through tax fraud unfairly competed against the American company Bunge? Maybe it will work. Mihály Varga, minister of national economy, announced this morning that four of the culprits are already in jail. Very nice, but there is a fly in the ointment. Most likely the U.S. State Department remembers, as I do, that András Horváth, the whistleblower at NAV, months ago gave a detailed description of the ways in which these criminals operated. He asked NAV to investigate and disclose their findings, but the managers of the tax office first fired Horváth and a couple of days later announced that after an internal investigation found everything in perfect order. So I doubt that the Americans will fall for that bogus story.

Yesterday Portfólió asked “how to make the USA more angry with Hungary,” but they “did not have the faintest idea that the government has been holding the best answer to that and it beats every idea [the Portfólió] have ever had.” So, what is it? In order to understand the situation we have to go back to the controversy over Russia’s new pipeline already under construction–the Southern Stream–that would supply Russian gas to Bulgaria, Serbia, Hungary, Austria, Slovenia, Greece, and Italy. The United States and the European Union were never too happy about the project and now, in the middle of the Russian-Ukrainian crisis, they are especially leery of Putin’s plans. In fact, the European Commission asked the Bulgarians to stop the construction of the pipeline in their country. They obliged. The European Union also warned Serbia that they can forget about future membership in the European Union if they agree to support the project right now.

southern stream

In Hungary construction has not yet begun, but the Orbán government seemed to be afraid that something similar would happen to them what happened to the Bulgarians. They decided to act. Changing the law by now has become a Fidesz pastime. Today Antal Rogán proposed an amendment to a 2008 law on natural gas that will allow any gas company to construct a pipeline. The original law, in harmony with laws of a similar nature in other countries, specified that the company in charge of the construction has to be a certified transmission system operator who must conform to international rules. Since pipelines are transnational projects, the countries involved must coordinate their individual projects. What the Hungarians hope is that as a result of this amendment Hungary will not be bound by any international constraint. Starting the project will depend only on the Hungarian Energy Office, which could give permission to any company it chooses to construct the pipeline. Portfólió suspects that both the European Union and the United States will be “furious” upon hearing this latest Hungarian ruse.

Clever Hungarian lawyers, who seem to specialize in circumventing the letter of the law, might think that this scheme is foolproof, but I suspect that EU lawyers will find the legislation full of holes. Hungarian papers suggest that the Orbán government is playing for time. But the case is settled, they argue; the pipeline will be built. Surely no one will force Hungary to destroy it.

Let’s contemplate another scenario. What if the European Union and the United States in joint action put such pressure on the Hungarian government that the plan must be abandoned? As it is, according to analysts, Budapest is already between a rock and a hard place. When political scientist Gábor Török, who has the annoying habit of sitting on the fence, says that “the Orbán government is in big trouble. It was before but now it is different. It will not fall, surely not now…. But if it does not recognize the fork in the road or if it chooses the wrong road, we will mark the events of today as a definite turning point.” And in an interview this afternoon Ferenc Gyurcsány twice repeated his belief that Hungary is at the verge of leaving the Union and, when it happens, it will not be Viktor Orbán’s choice.

I wouldn’t go that far, but I do predict that the screws will be tightened. Among those who will apply pressure will be Norway since the Hungarian government audit office just came out with its report claiming that Ökotárs, the organization in charge of distributing the Norwegian Civil Funds, has used the money inappropriately. A criminal investigation will be launched.

We know that Barack Obama said that the American government supports NGOs in countries where they are under fire. Today we learned that Veronika Móra, chairman of Ökotárs, was a member of a delegation that visited Washington in late September. During that trip the NGO leaders were received by President Obama in the White House. By contrast, Péter Szijjártó did not get any higher than one of the assistant undersecretaries of the State Department. If I were Viktor Orbán, I would take that as a warning.