János Lázár

The Orbán government and RTL Group: a cease-fire?

Soon enough it will be a year since the Orbán government decided to levy an exorbitant tax on the largest and most profitable commercial television station in the country, RTL Klub. I wrote extensively about the tug of war between the Hungarian government and the German-owned station. According to rumors, the government plan was to squeeze the station’s owners into selling and then have the station be purchased by some “well-deserving,” meaning pro-government, individual or individuals whose newscasts would be as lopsided as those of HírTV and the state-owned MTV. Apparently, RTL was not ready to sell, so the government had to settle for the second largest commercial station, TV2, which was eventually sold to a shadowy group of people. The special levy that specifically targeted RTL Klub was intended as a form of punishment. Knowing Viktor Orbán’s warped psyche, I’m sure that this story is more than mere rumor.

So, the war began. RTL Klub coughed up the money. What else could they do?  But they paid the government back many times over. Their newscast, which used to consist of short, mostly tabloid items and police reports, was extended to an hour with a heavy emphasis on political news. Suddenly the dirt that emerges daily around this government could be seen on a commercial station’s evening news, watched by 1 million people as opposed to the state television’s propaganda news with its 400,000 viewers. The people who in the past had watched RTL Klub for its “entertainment lite” programming suddenly were confronted with the kind of news that earlier had never reached them. The result was stupendous. Although some commentators wondered whether RTL Klub’s viewers would be turned off and would switch to TV2, exactly the opposite happened. RTL Klub’s viewership grew substantially. Political analysts are convinced that Fidesz’s tremendous loss of popularity is due, at least in part, to RTL Klub’s newscasts.

From the beginning RTL Klub planned to take its case to Brussels because, while RTL Klub’s share of the Hungarian advertising market is 13.5%, it is obliged to pay 90% of all revenues received from taxes on advertising. Indeed, last October RTL Klub lawyers turned in an official complaint to the European Commission. Yet for months we heard nothing. Then, on January 19, Népszava reported that some Fidesz politicians would be very happpy if Viktor Orbán “made peace” with RTL Klub. The paper added that “according to some sources, the Orbán government is counting on ‘a cease-fire’ before the arrival of Angela Merkel” in Budapest on Monday.

RTL Group headquarters in Luxembourg

RTL Group headquarters in Luxembourg

A week later 444.hu learned that János Lázár had already had several conversations, not with the Hungarian CEO of RTL Klub but with Andreas Rudas, director of East European operations, and Guillaume de Posch, CEO of the international RTL Group. Earlier they met in Munich and last week in Budapest. 444.hu claimed to know that they will meet again in Berlin sometime this week. The government allegedly wants to end the war with the German firm, which complained about its treatment in Hungary to Angela Merkel herself. The paper also seemed to know that the top management of RTL Group was ready to make a deal but that Dirk Gerkens, the man who is heading the Hungarian RTL Klub, refuses to compromise. Gerkens was indeed outspoken and combative, which raised the ire of some true believers. Gerkens told Bloomberg that he received threats of violence, delivered via friends and e-mails. He added that he moved his family out of the country, left his apartment for a hotel in central Budapest, and hired bodyguards.

After the report of 444.hu about the ongoing negotiations, rumors began to circulate in the media, especially after Népszava yesterday came out with the alleged details of the deal. According to the paper, the 50% tax on RTL Klub will be reduced to 5-10% but only if the station “tones down” its newscasts and fires Dirk Gerkens. Not surprisingly, journalists are up in arms. FSP (Péter Földes), whose blog regularly appears on Népszabadság On Line (NOL), summarized the sentiment. If what 444.hu and Népszava reported is true, then “RTL is preparing to commit public suicide combined with betrayal.” I agree, and that’s why I think such an outcome is unlikely. It would not only be ruinous for the RTL Group’s reputation but would also make the Hungarian government’s interference in the media, which they steadfastly deny, blatantly obvious. I don’t think it is in the interest of either party to cut such a “dirty deal.”

Meanwhile, in the last few hours HVG learned that the Orbán government’s decision to retreat on the 50% levy on RTL Klub resulted from diplomatic pressure: both the German chancellor and the prime minister of Luxembourg, where RTL Group is headquartered, strongly suggested to Viktor Orbán that he settle his dispute with Europe’s largest media firm.

Apparently, contrary to Népszava‘s claim, negotiations have not yet ended and the deal has not been sealed. Lázár, who is negotiating for the Hungarian side, admitted that his job as negotiator has been very difficult because “the prime minister insists on upholding the advertising tax.” For Orbán “this is a question of principle.” But it looks as if principle will have to be sacrificed in the face of diplomatic pressure and the hopelessness of Hungary’s case if the RTL Group actually sues. It seems that the prime minister will sketch out changes in the advertising tax tomorrow morning during his regularly scheduled radio interview, with details about the exact figures to be revealed later.

So, another defeat, another retreat. These are hard times for Viktor Orbán. Moreover, I suspect that the newscasts of the Hungarian RTL Klub will not change substantially in the future. RTL Group cannot afford it. Neither can Viktor Orbán.

Signs of internal divisions within the Hungarian governing party

In the last few months, as the popularity of Fidesz has been steadily declining, signs of serious internal divisions within the party have been proliferating. Ever since November one opinion poll after the other has reported serious losses in popularity for both Viktor Orbán and his party. Fidesz still leads, but the parties on the left are gaining ground. In fact, for the first time, the number of voters favoring all the democratic opposition parties combined is slightly higher than that favoring Fidesz.

It was almost inevitable that Fidesz’s political leadership would start looking for explanations for the waning popularity. Of course, the most obvious target should be Viktor Orbán himself. After all, Fidesz is a monolithic party where, according to grumbling party leaders, all decisions are made by the prime minister, who is also the head of the party.

His confidants nowadays are not the grand old men of Fidesz but upstarts like Antal Rogán, János Lázár, or the mysterious Árpád Habony who allegedly has no position either in the party or in the government yet is privy to the most confidential information if not state secrets. The old Fidesz leaders who joined the party twenty-five years ago either left a long time ago or Viktor Orbán set them aside. The less important characters had to be satisfied with positions inside state companies or insignificant administrative offices; the more important ones were either given positions that have clout on paper only, for example János Áder and László Kövér, or were shipped off to Brussels. Zoltán Pokorni, who at one point was chairman of Fidesz, had to be satisfied with a humble district mayoralty.

Until last November Fidesz spoke more or less with one voice, the voice of Viktor Orbán. If there were doubting Thomases, they became convinced by the cleverly orchestrated elections that, after all, “Viktor was right.” In fact, he is a political genius who can overcome all obstacles and lead the party to victory not just for the next four or eight years but for a very long time. Now, however, it looks as if Orbán has lost his touch. Instead of being able to correct his mistakes, he piles new ones on top of earlier ones. Moreover, several times in the last few months he had to retreat, which must have shaken the confidence of his closest associates.

I suspect that we are still not at a point that we will hear open criticism of Viktor Orbán himself. Instead, the criticism is directed against the men around him. The first public quarrel occurred in December when Zoltán Pokorni said a few disapproving words about the extravagant lifestyle of János Lázár. Kövér chimed in, taking Pokorni’s side. It is a well known fact that Kövér is no friend of Lázár, who runs the government’s daily business, serving as de facto prime minister, while Orbán himself acts like its all-mighty president, moving effortlessly on the stage of world politics. The quarrel didn’t end there. Lázár shot back and told Kövér that “a political veteran should think twice before he attacks us out of personal resentment or for political gain because he not only weakens us but also weakens or even executes himself.” I guess in this instance “execution” means the end of this veteran’s political career. This is not an idle threat. When after the lost 2006 election Orbán found out that some of his political friends at a party had discussed the desirability of replacing him because of his mistaken election strategy, they were promptly sent into political exile. The most prominent victim was János Áder. More recently, Tibor Navracsics, who as minister of justice criticized the legislative practices introduced by the prime minister’s office, soon enough found himself in Brussels.

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In January we learned that József Szájer and János Kövér also have their disagreements, primarily over Hungary’s relations with the European Union. Szájer is an old timer all right. He was one of the founders of Fidesz but, as opposed to the provincial Kövér, is now serving his third five-year term as MEP in Brussels. In his case, Brussels is not a political exile. He is still a very close associate of Orbán. In fact, Szájer’s wife is perhaps the most important person in the Hungarian judicial system today. In any case, the two old friends from college don’t see eye to eye on the European Union. Kövér belongs to the right wing of Fidesz, a Euro-skeptic who ordered the removal of the EU flag from the parliament building and instead put up a newly-designed flag of the Szeklers living in Romania. About three weeks ago Kövér in an interview expressed his dislike of the European Union and said that it might not be a bad idea to think about leaving. Szájer openly expressed his dissatisfaction with Kövér’s ill-considered statement in an interview on ATV.

Then came another open disagreement, this time between László L. Simon, undersecretary of János Lázár in the prime minister’s office, and Gergely Gulyás, the right-hand of László Kövér and head of a parliament commission dealing with legislative matters, who talked about the likelihood of modifying the law on freedom of assembly. This announcement was unfortunate. It looked as if the Orbán government was planning to restrict the current law and was thereby intending to limit the kinds of demonstrations that took place recently on the streets of Budapest. L. Simon immediately announced that the idea was Gulyás’s private opinion. The government has no intention of revisiting the law on assembly. A very wise move on the part of the government.

Then about ten days ago Zoltán Illés, earlier undersecretary in the ministry of agriculture in charge of the environment, decided to go public with his criticism of the Orbán government’s nonexistent environmental policies. Illés is a committed environmentalist and was useful to Viktor Orbán when Fidesz was in opposition as he attacked the socialist-liberal governments for their neglect of environmental issues. Illés was everywhere a tree was cut down. He organized demonstrations and blocked several projects because of environmental considerations. In 2010 he most likely saw himself as the next minister of the environment and must have been taken back when the ministry was abolished and he became only an undersecretary in the ministry of agriculture. But, as he explained recently, he still hoped that even in this position he could be effective. That turned out not to be the case. His position was stripped of practically everything that used to belong to the minister of the environment. Between 2010 and 2014, while in office, the formerly vocal Illés was quiet as a mouse for example when hundreds of trees were cut out overnight around the parliament building. Eventually he no longer could stand it. He was the only Fidesz member of parliament to vote against building a new reactor at the Paks nuclear power plant. That sealed his fate. Not only is he no longer an undersecretary, he didn’t even receive a cushy job. Now he “tells all” everywhere he has the opportunity.

In the last few days there have apparently been open disagreements between Lajos Kósa and Antal Rogán on immigration; between Zoltán Balog and Károly Czibere, his undersecretary, on the segregation of Roma children; between Antal Rogán and László Trócsányi, minister of justice, on the necessity of new legislation in defense of religions.

Finally, newspapers reported yesterday that János Bencsik, a Fidesz member of parliament, published a long critique of his party and the government on his own website.

The parrots are starting to learn words of their own.

Billions diverted from Hungarian state coffers to natural gas broker

Thanks to Budapest Sentinel, we now have an English translation of an article published on the internet site 444.hu with the title “This is the way to make the most money in Hungary.” Earlier I wrote a post about MET Holding A.G., headquartered in Switzerland. It is partly owned by MOL, the Hungarian oil company, and partly by Hungarian individuals–people formerly employed by MOL and businessmen with close ties to Viktor Orbán. At the time there were a lot of questions about this very successful company, but since then 444.hu‘s journalists managed to ferret out details of MET’s business model. As a result of their work, we now know how the Orbán government manages to divert public money into private hands. We can be certain that this is not the only enterprise that specializes in creating a new business class on taxpayer money. Enjoy!

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Russian President Vladimir Putin gives Hungarian prime Minister Viktor Orbán a knowing wink in January 2014

President Vladimir Putin gives Prime Minister Viktor Orbán a knowing wink in January 2014

  • MET has made huge profits on natural gas since 2011
  • For this it needed the help of the government and state-owned MVM (Hungarian Electric Works)
  • Russians are also involved
  • Even as MET makes a lot of money, its business partner MVM requires state support

Over the past four years a Swiss-based company partially owned by various off-shore companies was given the opportunity by Hungary to enrich its owners in a totally unique fashion.

The Hungarian subsidiary of MET managed to make a huge amount of money by securing an exceptional place on the domestic gas market thanks to government orders and wonderful contracts.  After tax profits in 2012 alone were nearly HUF 50 billion (USD 225 million).

The government was so generous that all three opposition parties (MSZP, Jobbik, and LMP) filed complaints of misappropriation, fraud, and money laundering.   The National Office for Investigations, however, found no crime and did not open an investigation on the basis of any of the complaints.   Over a year ago MSZP, and now LMP, formally requested the MET gas contracts from MVM.  The parties are awaiting a court decision.

The machination that opened the road

It is not clear whether the elimination of the KÁT (obligatory electricity purchasing system) played a role in MET’s success, or whether one followed from the other, but the story starts here.

The KÁT was a unique kind of state support available in the case of renewable technologies or power plants producing both electricity and heat.  Here the second pillar of KÁT is interesting, which numerous local governments have to thank for being able to obtain heat inexpensively for district heating.   The theory was that the so-called “connected production” producing both electricity and heat was environmentally friendly because it made more efficient use of energy.  In this way the gas-fired power plants also qualified for state support and could supply heat cheaper.

The price of KÁT was built into the cost of electricity.  But in 2011 after a long debate the part pertaining to power producers was eliminated.  There was a big scandal about it.  For example, it was on this matter that former state secretary for energy matters János Bencsik clashed with then Fidesz caucus leader  János Lázár who submitted the bill.  Lázár won the battle and from July 2011 producers of electricity and heat no longer received supports from KÁT, and therefore could no longer provide a discount to many dozens of cities.

It was for this reason that the government issued a decree providing cheap gas to the settlements and institutions that suffered.  585 million cubic meters of gas was released from Hungary’s strategic gas reserve for this.  In this way it was possible to avoid increasing the price of district heating to many dozens of cities.  However, it was necessary to replenish the gas.

We’re replenishing, we’re replenishing

Let’s first look at the replenishment of the gas taken from the strategic reserve because that was the biggest business.

For many years it has been possible to purchase gas less expensively in Western Europe than the gas coming from Russia on the basis of the contract concluded (with Gazprom) in 1995.  (Of course, the gas coming from Western Europe may also have originated in Siberia, it is merely a matter of Russian pricing).

In the hope of obtaining cheaper western gas, the government issued a degree whereby the HAG pipeline between Hungary and Austria could be used free of charge in the interest of replenishing gas reserves.  Under normal circumstances gas traders would compete with one another for the right to use the pipeline, with the one paying the most given the right to use it.  This is a EU requirement, by the way.

However, given the extraordinary need to replenish gas, this obligation was temporarily suspended.   In the name of energy security the government made it possible to access the HAG pipeline without auction for one year between July 2011 and July 2012.  The government was very generous.  Minister for National Development Mrs. László Németh’s pencil cut a thick line.  In the interest of replenishing the 585 million cubic meters of gas used to compensate KÁT victims, it ordered that 2.9 billion cubic meters of gas could be transported without auction, in other words, very cheaply.

Furthermore, the law providing special access was extended from year to year, always with reference to energy security.  The current arrangement is valid through the end of June 2015.

For the past four years it has been possible to import a total of 19.6 billion cubic meters without having to compete for the right to use the pipeline.  All of this in order to replenish 585 million cubic meters of gas.  As the discounted quantity of gas completely used up the pipeline’s free capacity, during this time others could not access the HAG pipeline.  In other words, beyond the fact that the government put someone in a very favorable position, it also removed all competitors from the road.

According to the decree originally two companies were entitled to import gas without auction: the gas trading company (MVMP) owned by state-owned MVM (Hungarian Electric Works), and a small amount by E.on.  The gas business unit of the latter was acquired by the state in 2013 and given over to MVM.  In this manner, since then MVM has been the only beneficiary of this arrangement.

Apart from the long-term contract concluded with the Russians, only the state could import gas cheaper.  However, somebody else also made money off of this.  To be more precise, somebody else primarily made money off of this.

How does MET come into the picture?

Profits arising from the sale of gas imported inexpensively by MVMP could have enriched its owner, the state.  Or it could have sold the gas cheaper to consumers, and in this way help decrease utility costs.  But it did neither.  The arising profits were collected by the Hungarian subsidiary of Swiss based MET Holding.

The model works as follows:

  • One of MET’s subsidiaries, METI, bought cheap gas from the west
  • It sold the gas at the Austrian-Hungarian border to MVMP
  • MVMP imported the gas by availing itself of free access to the pipeline in accordance with the decree on energy security, extended annually
  • On the same day MVMP sold the gas at minimal profit to MET
  • MET was than free to sell the gas to Hungary for whatever it could

So in practice the state allowed a market player to use the pipeline.  This is indicated by the fact that, according to the contracts, only such cash traded hands as was necessary for MET to pay MVMP a small margin for transporting the gas over the border.   This was HUF 2.50 (USD 0.012) per cubic meter.  Gas purchased from MET was HUF 32 (USD 0.15) cheaper per cubic meter in 2012 than the gas arriving from Russia on the basis of the long-term contract.

A year ago, an unknown individual posted part of the contracts concluded between MVM and MET online, without which no one would have found out what is happening.

And what became of the gas taken from the storage tanks?

The whole matter started when the government released 585 million cubic meters of gas from strategic storage in order to help those for whom district heating became more expensive as a result of the decrease in KÁT. Except part of the gas went to MET.

The official reason for this was that no one else needed the cheap gas.  According to the explanation, by the time the government decree was issued obliging MVM to release the cheap gas, every district heating company and potential beneficiary had already contracted with the market for the gas quantity required for the year.  MVM then decided that if it could not sell directly to those consumers leaving it in the lurch, it would issue a tender to sell the cheap gas.

In September 2013 and February 2014 Hungarian Socialist Party MPs Tibor Kovács and István Józsa posed questions relating to Mrs. László Németh, then Minister for National Development.  From her answers it is possible to figure out what happened.

From the answer given by Mrs. Németh in September, it can be determined that of the 585 million cubic meters of gas, only 270.6 million cubic meters could be supplied indirectly to the beneficiaries.  In other words, half the gas inventory was given over to traders.

And from the answer she gave in February 2014, it turned out that the trader was MET.

All of this the government found to be appropriate considering that by ministerial decree MVMP had to take delivery of the reserve gas.  And if it did not find a customer it was only logical that it sell the remaining gas through public tender with the requirement that the trader sell the gas to the KÁT victims.

Too much money, too little money

In 2012 it was readily apparent who was making money on this.  Even as the gas trading unit of MVM closed the year with a loss of half a billion forints (USD 2.3 million),  MET’s owners were able to take HUF 55 billion (USD 205 million) worth of dividends out of the company.

For a long time MVM was one of the largest revenue generators for the state.  Furthermore, it always had a lot of cash on hand.  It was precisely for this reason that from the first decade of this century it routinely happened that if there was a problem, MVM helped with the budget.   The trick was frequently employed by which the state took a few billions out of MVM if it got into temporary trouble.

Next to the state’s loss, MVM’s losses were negligible.  But one of Mol’s subsidiaries, FGSZ also lost on this construction because for years it could not issue a tender to use the HAG pipeline.  Fortunately, Mol was the 40 percent owner of MET.  (Mol stands for Hungarian Oil Company. -ed.)

But who are the owners?

This is not possible to know with certainty.   Even MET Hungary Zrt. CEO Gergely Szabó wasn’t willing to reveal this information to Figyelő.

What is certain is that MET Holding AG was registered in Switzerland, which has numerous subsidiaries. 40 percent of the holding company is owned by Mol, 10 percent by a Swiss company by the name of MET ManCo AG, in which Benjámin Lakatos has an interest.  The 38 year-old Lakatos, who is also the director of MET Holding, previously worked for Mol and is considered to be a confident of Mol CEO Zsolt Hernádi.

50 percent of the company belongs to WISD Holding, which owns numerous miscellaneous companies via a complicated network of offshore companies.  (Hungarian investigative website) Átlátszó previously unearthed that, among the companies in which WISD has an ownership interest, are companies owned by István Garancsi and György Nagy.  Garancsi is the owner of the Videoton football team and a good friend of Prime Minister Viktor Orbán and Zsolt Hernádi.

In the domestic business world György Nagy is considered an ally of OTP president Sándor Csányi.   Garancsi and Nagy are owners of WISD through their respective Cypriot companies, Inather Ltd. and Westbay.

The third known owner of WISD is Small Valley Investments Ltd., which is registered in the British Virgin Islands.  According to our information the company is owned by Russians, and that altogether they own 20 percent of MET Holding.

The fourth owner of WISD is a Swiss company by the name of Deneb Algedi Invest AG which is also owned by Benjámin Lakatos.

Viktor Orbán comes up

In Autumn of this year a Swiss and a Roman paper published articles claiming that the reason Viktor Orbán traveled to Switzerland may have been to conduct MET business.  A number of Hungarian energy experts are of the opinion that the articles appearing in the foreign papers were a warning on the part of foreign secret services that they were watching the opaque energy deals of the Hungarian government with Russia.  The articles appeared in two relatively minor international papers that are not in the habit of breaking stories of world economic importance.

Even before the Swiss article appeared, there were a lot of rumors that MET was very important to the Prime Minister.  The theory was that the company is an important part of the new economic elite being organized around the Hungarian head of government.

The Russians were also needed

In 2007 Mol founded the company that grew into MET Holding, and which the oil company was the only owner at the beginning.  In 2004 Mol sold its gas unit, but with the establishment of MET retained the possibility of returning one day to the gas trade.

In 2009 a company registered in Belize (Normeston) bought half of MET, at which point the Russians acquired an interest.  Belize is a Central American company where the institution of “introduction shares” exists.  This means that those people receive the dividends who can personally show that the shares are physically with them.  It is not necessary for them to introduce themselves.  That Russians were behind the company was confirmed by Gergely Szabó, MET Hungary CEO to Figyelő.   The company needed the Russians in order to help obtain gas cheaply:  “We also hoped that through its owners MET could obtain gas advantageously”.   That Russians are involved in the company through Small Valley, I heard from person familiar with Mol matters.

As Szabó explained, the Russians can obtain gas inexpensively.  There are those who believe that they are the other leg to MET’s wonderful rise.

Anyway the Russians are willing to sell gas to a given country cheaper than what is provided by the official, long-term contract, and creates various trading companies for the purpose of conducting the business.

This is how the business works

The trade in gas is the most profitable business on this side of Europe because:

  • Huge quantities of it are needed, and it is possible to sell it in huge amounts.  Even with small margins it is possible to make huge profits in a short period of time.
  • Because it arrives through pipelines, it is easy to establish a monopoly situation with it: only those with access to the pipeline can also sell it.
  • The market is influenced by state regulations.  Who obtains the favors of the authorities needn’t be afraid of competitors.
  • It is almost impossible to obtain gas that is not Russia.  Whoever is on good terms with them shall be showered in gold.

In these parts nearly all the gas comes from Russia, where the state has a monopoly and where the huge company by the name of Gazprom is responsible for production, delivery, as well as trade.  The Russians like to agree on gas prices separately with countries in this region for long periods, whenever possible.  The last of the so-called long-term contracts concluded by Hungary in 1995 for twenty years expires this summer.  There is no agreement regarding its extension and for this reason there is a lot of movement in the Hungarian gas market these days.

The long-term contracts are always political decisions often determined over the course of negotiations between the Kremlin and the government of the other country.  Gazprom sells the same gas at prices that vary by as much as three-fold.  There were times when Gazprom sold gas to Bulgaria for USD 600 per cubic meter but only charged Belarusian USD 167. There really is not other product on the international market for which there really is no price.  Nobody knows how much it costs to produce gas in Russia, and the Russians sell to their customers based on whatever momentary political interests dictate.

The buyers have little choice in the matter.  For example, in Hungary most households heat with gas, and much of the electricity is produced from gas, which is indispensable for industry.  So gas is required.  And it is difficult to choose among suppliers.   Oil prices exist because it is possible to change sources of supply:  oil comes in a barrel and in containers from just about anywhere.  For this reason oil prices are, for the most part, uniform.  A seller cannot allow himself to play with prices.  However, this is not the case with the delivery of gas, which is tied to pipelines.

There is also a cheaper one

So the gas enters the country on the basis of a price structure contained in the 1995 agreement.  But if the Russians want, they supply the same gas for less.

The Russians anyway created a shadow model as well.  In certain cases, seemingly harmful to their own market, they also sell gas cheaply to certain beneficiaries.  The way the model works is that they set up a trading company that is allowed to purchase gas from Gazprom at a reduced price, and then sell it to the target market for less than what is provided for by the long-term contract, but still with a respectable profit.

The Russians operate such brokerage companies for two reasons: on the one hand it enables them to sideline those among their own people the Kremlin happens to target.

On the other hand, it enables them to create and control the oligarchs and politicians of the target country.  Operating such a brokerage company is not only a good investment from the point of view of bribing oligarchs in the target country.  In general, through these companies it is also able to blackmail the target country even if its partners lose their influence as a result of a domestic political change or domestic showdown.   If a country becomes addicted to cheap gas, then whoever is in power thinks twice before deciding whether to terminate the grey business with the Russians at the price of higher utility costs, or for the new people to take the warm seats of the oligarchs of the previous cycle.

In this manner it is possible to earn a lot of money without effectively doing any work.  The brokerage companies sell the same thing as their competitors from the same sources.  They simply are able to access it less expensively.  Apart from paper work there is no other task.

There is some indication that MET partially works on the basis of this model.  There is no proof of this, but various domestic energy industry experts believe it is likely that the company can purchase Russian gas in Western European less expensively thanks to its Russian owners.

How does a more sophisticated model work?

The largest of such brokerage companies to ever exist was the Russian-Ukrainian RosUkrEnergo, which during its heyday in 2006 was able to make USD 785 million in profits in just under one year (this is about one half of the profits Austria’s ÖMV made in 2013).  Apart from this, neither refineries, nor petrol stations, nor anything else had to be maintained.  All that was required was the work of some lawyers in Switzerland.   RosUkrEnergo bought gas at a discount on the Russian side of the Russian-Ukrainian border, and then sold it on the other side.  Naturally, nothing happened to the gas itself.  The transaction only took place on paper.  Half of the company belonged to Ukraine Oligarch Dmitrij Firtas, the other half belonged to a Swiss subsidiary of Gazprom.

Reuters estimates that Gazprom lost USD 2 billion in under a few years by selling gas cheap to Firtas.  Except Firta was one of the most influential people in Ukraine for a long time.  More than half of the members of parliament literally took instructions for him, and in this way it was possible to manipulate Ukrainian politics to suit Russia’s needs.

For a while in 2009 Firtas was taken out of the business when Yulia Timoshenko became the Ukranian prime minister.  Then they took him back.  And then after (former Ukrainian president) Jankovics’ failure, he once again fell out of the picture.  He is presently under house arrest in Vienna, and most recently called attention to himself by announcing that Hungarian and Romanian paid assassins were threatening his life

However, the Hungarian connection does not only appear with Firtas.  He was the owner of a former Hungarian company by the name of Emfesz which, in its heyday, supplied Hungary with one-quarter of its gas, and which operated according to the same model: it gained a market for itself in Hungary with cheap gas from RosUkrEnergo.   In only a few years, Emfesz became the 27th largest company in Hungary out of nothing.  This also shows the huge amount of easy money can be found in this business model.

Is MET the new Emfesz?

With the failure of Emfesz Hungary’s shadow model domestic player died out.  But it appears that a new company, MET, was able to step into its place, but just a little differently.   The Russians appeared as owners of MET in 2009.  That was the year when Firtas was pushed out of the gas trade, and with this Emfesz’ fate was sealed.

MET happened to become the large winner of the KÁT gas compensation in spring 2011 when Hungary and Russia opened a new chapter in relation to energy.  At that time the Hungarian government purchased a 21.4 percent interest in Mol from Russia’s Surgutneftegaz.  It is not possible to know who the owners of Surgutneftegaz are, but it is for certain that we are talking about companies that are close to the Kremlin.   This company, for example, supplies petrol to the Russian military.

At the time the purchase of the shares in Mol appeared to be a victory: using state administrative means the Russians were prevented from having a say in the running of MOL, and the government considered the business to be a national security success.  They claimed to have arranged for us not to be at the mercy of the Russians.  However, in retrospect it appears that the business may have been the start of a new Russian-Hungarian energy cooperation involving the political leadership of the two countries.   This is indicated by the fact that until that time Fidesz regarded Russia with suspicion.  However, since 2011 the friendship between the two governments has strengthened, and they are more and more cooperation agreements to show for it.

MET is expanding

These days MET is visibly strengthening, and it is readily apparent that the company’s ambition goes beyond simply bringing gas to Hungary.  Last year it purchased the Dunamenti Power station which produces electricity from gas and which is the country’s second largest producer of electricity.  The power plant almost went bankrupt before MET acquired it.  MET was able to save the power station by acquiring gas less expensively than the French.

In the same way, MET acquired GDP Suez Energy Holding Hungary Zrt. last year, which was the domestic electricity trader for the French company.

Offshore is not a problem

The Hungarian government officially opposes the spread of offshore companies to Hungary.  The new Fundamental Law officially opposes the spread of offshore companies in Hungary.  According to the new Fundamental Law the government of Hungary may not conduct business with companies whose ownership structure is not transparent.   Among MET’s owners are numerous offshore companies which, with powerful help from the state, are able to find fantastic opportunities in Hungary.

 

Fidesz insiders think Orbán’s days are numbered

The week between Christmas and New Year’s Day usually offers little sustenance for news junkies. But today I discovered a front-page article in Népszava with the titillating title “Does Orbán have only months left?” The paper’s “sources close to Fidesz” claimed that “Orbán is already finished” and the only “question is who will take his place.”

The article was met with skepticism, especially in pro-government circles. Válasz described the article as sci-fi and “entertaining.” Gábor Török, the popular political scientist, wanted to know what his Facebook “friends” thought about the appearance of such items in the media. Do government politicians actually say such things to reporters of an opposition paper or are the reporters only giving voice to their wishes? The comments that followed were a mixed bag but a reporter, András Kósa, who also receives information from dissatisfied Fidesz politicians, didn’t think that the article was fantasy, although it might be exaggerated. Here and there commenters thought that Fidesz will collapse as soon as Viktor Orbán is gone, but most “friends” of Török considered the article humbug. I’m less skeptical than most of Török’s friends because I’ve usually found Népszava to be reliable when it reports on information coming from unnamed sources.

So, let’s see what Népszava heard from “sources close to Fidesz.” They claim that Orbán’s “system” has no more than a few months before it collapses. Apparently Fidesz politicians are increasingly avoiding the limelight because “the fall is inevitable. In their opinion Orbán started down a road from which there is no return. Not only will he himself be the victim of his own mistakes but also his party and the country itself.”

The problems that beset the work of the government emanate from the character flaws of the prime minister: inconsistency, impenetrability, and unpredictability. Most government and Fidesz officials have no idea what course they are supposed to pursue. Orbán trusts fewer and fewer people, and the ones he still does give him wrong advice. He apparently is looking for enemies everywhere, and this is one of the reasons that government decisions are not preceded by any discussion. It often happens that Orbán himself changes his mind in the last minute, which makes consistent communication nearly impossible. Underlings parrot a line that has been superseded by a new brainstorm of the prime minister. More and more people would like to save themselves from such embarrassments.

According to these informants, serious problems within Fidesz are not new although they are only now becoming visible. Signs of trouble began to surface when Orbán decided, sometime before the April elections, to change the “structure” under which Fidesz had been functioning very well for over twenty years. Until then, Lajos Simicska was in charge of the party’s finances, but “from the moment that Orbán decided to take over economic decisions” the old dual structure collapsed and with it the well-functioning system. When Orbán again managed to receive a two-thirds majority, he completely lost his sense of judgment. As months went by, anti-Orbán murmurs in the party began to proliferate, and the Christian Democrats, realizing that Orbán was losing his grip on the party, decided to put pressure on the beleaguered prime minister. That’s why Orbán had to give in on the unpopular law that forces stores to be closed on Sundays.

What observers see is no longer a “system” but a political process based on day-by-day ad hoc decisions which, according to the saner Fidesz leaders, cannot be maintained because “it is incapable of self-correction.”

The informers seem to have less information about actual attempts to topple Viktor Orbán. Names were not mentioned, but they indicated that the people they had in mind “would be quite capable of taking over the reins of government without changing political direction.” Népszava‘s sources consider Angela Merkel’s planned visit to Budapest in February a date of great importance. I guess they think that Merkel will tell Orbán that he is persona non grata as far as the European People’s Party and the European Commission are concerned.

CalendarNépszava‘s description of the strife and chaos within Fidesz is most likely accurate. The question is what Orbán is planning to do to forestall the outcome described by Népszava‘s sources. For the time being, as we learned from the interviews of János Lázár, Viktor Orbán, and László Kövér, he will fight to hold onto power by convincing his Peace March troops that the “fatherland is in danger.” I’m almost certain that internal polls are being taken to gauge support. Would it be possible to turn out 100,000 people to defend the prime minister against foreign and domestic intrigues? I assume that the size of the planned anti-government demonstrations on January 2 will also influence Orbán’s decision about the next step to take to combat his opponents inside and outside the party.

In any case, for the time being it was Antal Rogán who was called upon to announce a countermeasure that might take the wind out of anti-government sails.  It is called the “National Defense Action Plan.” The details are secret for the time being, but it most likely includes some kind of answer to the United States’ decision to bar six Hungarian citizens from the United States due to corruption. It is also likely that a huge propaganda effort will be launched to discredit the U.S.-EU free trade agreement that until now the Hungarian government has welcomed. According to government and Fidesz sources, the “National Defense Action Plan” was put together in the prime minister’s office by Viktor Orbán, János Lázár, Antal Rogán, Péter Szijjártó, and Árpád Habony (who neither holds an official government position nor has national security clearance). These are the people who make most of the decisions in the Orbán government.

Meanwhile what are the anti-Orbán political forces doing in this fluid situation? Ferenc Gyurcsány decided to ask those followers who have been at the anti-government demonstrations all along to bring party posters and flags to the January 2 demonstration. József Tóbiás, leader of MSZP, did not respond to Gyurcsány’s request to follow DK’s lead. But István Újhelyi, an MSZP MEP, announced today a socialist “diplomatic offensive” against the Orbán government. Orbán must be stopped because his “Russian roulette” will have tragic consequences.

At the beginning of the new year there will be at least two important events. First, the mass demonstration planned for January 2 in front of the Opera House. Three years ago a gigantic anti-government demonstration also took place there, and for a whole month newspapers kept asking how long Orbán could last. We are again asking the same question. Since Orbán not only survived but thrived in the last three years, some people might come to the conclusion that the Hungarian prime minister will always triumph, even in the most perilous circumstances. But I would caution the pessimists. Three years ago the pressure came only from the inside. This time Orbán has embroiled himself and the country in a high stakes international power play in addition to alienating about 900,000 of his former supporters.

The second event will be Orbán’s new “remedy,” the “National Defense Action Plan.” Will it work? Is Orbán strong enough to rally his troops for another supportive Peace March as he did in 2012? And even if he manages, will anybody care?

The world according to László Kövér

Just when I think that Viktor Orbán and his fellow politicians must have exhausted their inventory of outrageous pronouncements comes another shocker. This time László Kövér, president of the Hungarian parliament and the third most important dignitary of the country after the president and the prime minister, decided to share his grievances and accusations. His message was intended for the Fidesz faithful, but soon it will reach Hungary’s allies from Washington to Brussels. I don’t think they will be pleased.

I guess the Fidesz leadership wants to make sure that everybody understands the Hungarian position, and therefore they must repeat their shrill message at least three times: first János Lázár, then Viktor Orbán, and now László Kövér. Although the underlying message remains the same, each repetition reflects the personality of the speaker. Kövér is perhaps our best source on the thinking of Viktor Orbán and the members of his closest circle. And what we find there is frightening–a completely distorted view of the world and Hungary’s place in it.

The basic outline is old hat by now: the United States wants to rule the European Union and is currently trying to teach Putin’s Russia a thing or two. Hungary is only a pawn in this game, but the United States is still trying to influence political developments in the country. Therefore, the most urgent task of the Orbán government is to retain the sovereignty of the Hungarian state. Also they “must assure the nation’s survival.” Their paranoia, they would argue, is grounded in reality.

The charge of American interference is based on a speech by Sarah Sewell, U.S. undersecretary for civilian security, democracy, and human rights, in which she stated that “addressing corruption is tough, but we are using a range of tools – and often working with other states and international institutions – to encourage and assist anti-corruption activity. At the State Department, our Bureau of International Narcotics and Law Enforcement works on corruption along with our bureaus that handle economics, energy, and human rights, and together State collaborates with USAID, Treasury, the Department of Justice, Interior, and Commerce – each of which brings specialized tools to the table.” For the Fidesz leaders this means direct interference in the internal affairs of East European countries. Kövér even suspects that the Americans had a hand in the recent election of Klaus Johannis as Romania’s president.

As far as U.S.-Hungarian relations are concerned, Hungary shouldn’t even try “to make the Americans love [them].” They must find other allies in the countries of Central Europe. The Slovaks and the Romanians shouldn’t put “the Hungarian question,” which for Kövér means “their phobia,” at the top of their agenda. They should think about their common fate. “Our goal should be emancipation within the framework of the European Union.”

Source: Magyar Hírlap / Photo Péter Gyula Horváth

Source: Magyar Hírlap / Photo: Péter Gyula Horváth

According to Kövér, the United States was always partial to the left. In 1990 U.S. Ambassador Mark Palmer ( 1986-1990) “favored the SZDSZ politicians” while Donald Blinken (1994-1997) during the Horn-Kuncze administration “sent exclusively negative information home about the activities of all the opposition parties.” He didn’t even want to meet the opposition leaders because he didn’t consider them to be human beings. To be fair, Kövér mentioned a few “good ambassadors.” For example, Charles Thomas (1990-1994), Peter Tufo (1997-2001), George H. Walker (2003-2006), April Foley (2006 and 2009), and Eleni Tsakopoulos Kounalakis (2010-2013) “at least as long as the State Department didn’t discipline her.” Every time there was a right-wing government the United States found “problems that should be solved.”

Until recently the Americans only wanted a simple change of government if they were dissatisfied with the one in power. But lately they have been thinking of “a complete elite change.” Their favorite was always the liberal SZDSZ and when it ceased to exist they supported LMP (Lehet Más a Politika/Politics Can Be Different). Then the U.S. supported Gordon Bajnai, who “became the Americans’ new favorite.” Now that Bajnai is gone “the new season of the soap opera will open.”

According to Kövér, the U.S. at the moment is looking for new faces in the crowd of “hired demonstrators” or perhaps they just want to maintain the constant tension so that “at the appropriate moment they can come up with a new Bajnai.” But surely, he continued, sane advisers to the U.S. government cannot possibly think that a new political elite can be created by 2018 that will be capable of governance. Perhaps their goal is to fill the place of the defunct SZDSZ with a new party that would be able to tip the balance of power in favor of the minority. This worked very well in the past when a small party, SZDSZ, managed to pursue a policy that was to the liking of the United States by blackmailing MSZP.

At this point the reporter interjected an observation: “But Jobbik did not exist then.” Yes, that’s true, Kövér answered, but the alleged American scheme would still work. Jobbik has gained some ground lately, but when Jobbik is stronger, more and more unacceptable, more and more considered to be anti-Semitic and racist and therefore cannot be considered to be a coalition partner, “it will be easy to patch together a coalition government on the other side in which perhaps Fidesz could also participate with its own weight. The important thing is that no government could be formed without the post-SZDSZ against Jobbik.”

I think this paragraph deserves closer scrutiny. As I read it, the most important consideration of the United States, according to Kövér, is to smuggle back a post-SZDSZ that would be, as SZDSZ was, a liberal party. To this end, the U.S. would make sure that Jobbik will grow and will be such an extremist party that Fidesz couldn’t possibly pick it as a coalition partner. Therefore, Fidesz would be forced to join MSZP and a second SZDSZ in an unnatural cooperation with the left. This post-SZDSZ would shape government policy to the great satisfaction of the United States of America. Although I don’t think it was Kövér’s intention, he unwittingly revealed in this statement that Fidesz might be so weakened in the coming years that it would have to resort to a coalition government with Jobbik.

Finally, a side issue that has only domestic significance. Here I would like to return to Kövér’s accusation of American manipulation in the formation of LMP. The party, currently led by András Schiffer and Bernadett Szél, has steadfastly refused any cooperation with the other democratic opposition parties. Therefore, the party’s leadership has been accused of working on some level with Fidesz because their “independence” was beneficial only to Viktor Orbán. András Schiffer’s refusal to have anything to do with the other opposition parties led to a split in the party in November 2012. Out of the sixteen LMP parliamentary members only seven remained faithful to Schiffer; the others joined Gordon Bajnai’s “Together” party. According to house rules at the time, a party needed twelve seats to form a caucus. The Fidesz majority was most obliging and changed the rules. LMP could have its own caucus with only seven members. The nine who left, on the other hand, had to be satisfied with the status of independents.

From the very beginning, the suspicion has lingered that Fidesz might have been involved in some way in the formation of LMP as a separate party. Now we learn from Kövér’s indiscretion that “the current politicians of LMP, until the split in the party, wouldn’t believe us when we explained to them why the Americans were supporting them. Then they suddenly realized how those who left the party in 2012–who were sent there in the first place–interpreted the phrase ‘politics can be different.’ They stood by Gordon Bajnai, who was the favorite of the Americans.” Thus Fidesz was in close contact with András Schiffer and warned him that his party was being infiltrated by “American agents.”

Kövér admits in this interview that “we, Hungarians, have never been any good when it came to diplomacy,” but now the Hungarian leadership thinks that their foreign policy strategy will be successful. They should make no overtures to the United States, in fact, they should turn sharply against Washington and instead rely on Germany. After all, Kövér is convinced that U.S.-German relations are very bad as a result of American spying on German politicians, including Angela Merkel. If Hungary keeps courting the Germans, perhaps Berlin will take Hungary’s side on the Russian question. Some friends think that Viktor Orbán may just be successful in pitting Germany against the United States. I, on the other hand, doubt such an outcome despite the fact that at the moment the European Union is very restrained in its criticism of Hungary.

The United States as enemy #1

Bálint Ablonczy, a journalist working for Heti Válasz, a pro-Fidesz publication, wrote a few days ago that “the idea of permanent revolution is not working anymore.” And yet the two most important players on the Hungarian political scene, Prime Minister Viktor Orbán and János Lázár, his chief of staff, resolutely follow a strategy that is in Ablonczy’s opinion “no longer accepted by the voters.”

Most commentators agree that the prime minister is losing his sense of reality. They point out that the present course of action can result only in defeat and the further isolation of the country. After listening to Viktor Orbán’s latest outburst against the United States last night, I must join this chorus of critics. But before I go into some details of his warped view of the world, let me summarize his accusations against the United States, the country that, despite the fact that it is one of Hungary’s allies, is in his eyes solely responsible for his current political problems.

According to him, the United States’ allegation of corruption against certain Hungarian officials is nothing but “a cover story,” as “every thinking man knows.” The United States wants to gain leverage to increase its influence in the country. Currently a CIA operation is underway in Hungary. The United States is not only meddling in the internal affairs of the country but “is in fact an active political actor.” By this he means that the United States is organizing the demonstrations against his government. It’s trying to topple him.

The American interest in Eastern Europe is twofold. The Americans want to gain access to the energy market, and they want to have a commercial foothold in the region. The U.S. is “sore” because they wanted to build the Paks atomic power plant but Hungary chose Russia instead. And now Washington wants to drag Hungary into the Russian-Ukrainian conflict, but the Hungarian government wants to avoid a conflict that will lead to a new cold war. These charges are nonsense. The U.S. not sore because an American company didn’t get the contract to expand Paks, and it was not the United States that dragged Hungary into the Russian-Ukrainian conflict. Just the opposite. It was Viktor Orbán who positioned himself in the middle of the power play between Russia and the Western alliance.

By the way, after the appearance of the Lázár interview, I found only one reaction coming from an “unnamed official” of the State Department that was published by HVGThe State Department urges the Hungarian government to take into consideration “the domestic and foreign misgivings.” Washington would like “to continue a constructive dialogue … about those decisions that are related to the state of democracy and rule of law.” Surely, Orbán has no intention of following the Americans’ advice.

As a Hungarian cartoonist sees it

As a Hungarian cartoonist sees it

Turning back to Orbán’s interview, I want to highlight some points that weren’t picked up by the wire services. One was his emphasis on Hungary’s “innocence” and its “loneliness.” One could feel Orbán’s hurt when he said that “we have never harmed anyone” and yet we are badly treated. The attacks on us are unjustified. As for the “loneliness” theme, Orbán returned to the age-old Hungarian lament that “we are alone” in the world. There are the Slavs to the East and the “honest (derék)” Germans to the West. The only thing Hungarians have is the land “where they have always lived,” their language, and their culture.

Note the adjective “honest/derék” in front of “Germans.” We can see from this interview as well as Lázár’s that the new government strategy is to counterbalance the worsening U.S.-Hungarian relations with an increased reliance on Germany. Both men tried to portray Germany as a great friend of Russia. Orbán, who when talking about the United States declared that Hungary will not be a “colony,” two minutes later announced that Hungary is happily following the lead of Germany when it comes to foreign policy. It seems that Orbán is hoping that Germany will ride to its rescue and mediate between Washington and Budapest. After all, since Germany has had its problems with the U.S. and since it is such a good friend of Russia, Hungary should benefit from German mediation.

As far as the Hungarian political leadership knows, Angela Merkel is still planning to visit the Hungarian capital in February. Dávid Trencséni, a journalist for Stop, put it bluntly: Berlin is “Orbán’s last hope.”

Berlin may be Orbán’s last hope but it may also have been partly responsible for his woes with the U.S. He’s been able to get his way most of the time in the European Union, thanks in large part to the German Christian Democrats. Both Fidesz and the Christian Democrats belong to the European People’s Party, a party that stands by its members even when they behave outrageously. By contrast, Orbán has no political ally in the United States. Both Republicans and Democrats condemn Orbán’s illiberal state and his pro-Russian policies.

And finally a few oddities that run through both interviews. Hungary must be respected because it has a thousand-year-old history. Well, Egypt has a much longer one, so should I respect the current Egyptian government? Hungary in the past was successful only when it was independent. Well, actually the opposite is true. The period between 1867 and 1914 when the country was part of Austria-Hungary is considered to be the golden age of modern Hungarian history. Then there are claims that merit no comment. For instance, even Hungary’s enemies have to admit that Hungary has been a success story in the last five years. All the decisions Orbán’s government made were the right ones. Economically, every year was better than the one before. Hungary is a strong country that has weight and “will take an active part in this new era.” Well, maybe these claims do merit comment after all: Who unlocked the gates of the asylum?

János Lázár: “We want to remain Hungarians!”

With the permission of  The Budapest Beacon I’m republishing their English translation of an important interview with János Lázár, the “COO (chief operating officer)” of Hungary, that originally appeared in yesterday’s Magyar Hírlap, a far-right, pro-Fidesz daily. The interview contains  perhaps the most vituperative anti-American statements from a Fidesz politician to date. The language of this interview can be compared only to articles that appeared in party organs during the Rákosi and early Kádár periods.

Among other things, the United States is accused of raising a new Iron Curtain between Russia and Europe and of meddling in Hungarian domestic affairs. Fidesz politicians seem to be convinced that it is the United States that is behind the demonstrations. In fact, the country is accused of taking over the role of the opposition.

Yesterday the Hungarian government decided to begin diplomatic efforts to get the U.S. government to lift the American chargé d’affaire’s diplomatic immunity. The belief is spreading in Budapest that the Orbán government is planning to declare Goodfriend persona non grata. I do hope that someone can explain to Viktor Orbán the grave consequences of such a decision. The Orbán government is playing with fire.

* * *

JÁNOS LÁZÁR: WE WANT TO REMAIN HUNGARIANS!

Translation of interview with Hungarian Chancellor János Lázár appearing in the 22 December 2014 issue of pro-government Magyar Hírlap under the title “Lázár János: Dolgozni kell, nem szabad elbizonytalanodni”.  (“János Lázár: One must work, not entertain doubts”).

How do you assess the work of the Information Authority (IH), more commonly known as the Hungarian foreign intelligence?

The Prime Minister stated in 2010 that Hungarian intelligence is the most important task in protecting our national independence.  A condition of the country’s sovereignty is decreasing our financial and energy independence as soon as possible.  The task of every Hungarian secret service is strengthening the country, and towards this goal increasing our self-determination.  The Prime Minister brought the collection of intelligence under the Office of the Prime Minister two years ago.  IH operations can work even more efficiently now that European matters have been transferred to us from the foreign ministry.

There are economic interest groups— the bank, tobacco, energy and multinational company lobbies—which, for example, are trying to use the European Commission to advance their economic interests.  Naturally, Hungary does not spy on its allies but it is better to be afraid than to be frightened.  The task of intelligence was changed at the time of the financial crisis so that it helps the government’s work, not only with collecting information but with financial and money market analysis as well.  We expect precise information rather than conspiracy theories from our intelligence agents.

In a country with a high ratio of state and household foreign exchange debt, we are more vulnerable to, and dependent on, foreign interests.  It is no surprise that in the past few years we have faced these kinds of attacks intended to undermine the government.  My job is to direct the attention of the intelligence service colleagues to the performance of these tasks.   For this the government provides the necessary material and human resources.  I hope the world view of those in service has also changed, thereby significantly decreasing Russian or western innervation (sic), and finally increases the commitment to our country’s independence.

Unfortunately, the American wire tapping and spying scandals of the past few years have made it clear that our allies do not respect our partners, and that there are no inhibitions or limits.  The WikiLeaks documents indicate that America also collects information about the personal lives of leading politicians in our country as well.

What stands behind the attempt to exert influence over Hungary?

America’s interests are not the same as Hungary’s.  The United States does not take into consideration the traditions of the region, the country’s traditions.  Unfortunately, they don’t want to understand Central European history and national characteristics.  Naturally, there exist influential United States interest groups as well with which we do not agree on matters of fundamental questions of values.  This world violently, and with money, spreads its convictions such as disregard for the fact that, irrespective of their political proclivities, two-thirds of Hungarians understand a family to refer to the relationship between a man and a woman, and give them the right to raise children.

What is the stronger viewpoint for the Americans, exercising pressure for political or economic interests?

Both.  In the future America will change from being an importer to being an exporter of gas thanks to the mining of shale gas, for which it must create a market.  We can discuss this, but I am certain that the use of power politics is not a suitable method for securing markets.  Our point of view is unequivocal: Hungary is not for sale.  Neither for the Russians nor for the Americans.  We will purchase energy from whoever sells it cheaply and guarantees that it arrives to use as well.

However, we are a small market.  It is not sure that this is the only reason we became an important terrain to the United States.

Unfortunately, there is no economic growth in the European Union, and for this reason the region of Central Europe has become more valuable.  Our area has economic potential, from here it is possible to strengthen the western part of the continent as well.  A warlike situation has developed between the United States and Russia, and the Americans want to create a new iron curtain on Russia’s border.  We are starting from the basic thesis formulated by German chancellor Helmut Kohl and French president Francois Mitterrand:  Europe needs the Russians.   The war and Russia’s economic collapse has unforeseeable consequences for Europe and Hungary.  We are going to pay a high price for it.  In the midst of the Russian-Ukrainian crisis we should not forget either that more than 100,000 Hungarians are living in Karpátalja (Carpatho-Ukraine), a substantial number of which are Hungarian citizens as well.  The most important thing for the government is to protect them as well.

Do you also believe that the Americans are behind the Autumn demonstrations?

The demonstrations are proof that the right to the freedom of expression exists in Hungary.  The demonstrations are as though the American embassy had assumed the role of the Hungarian political opposition.  It might appear to some as though they gave up on the opposition parties ever winning the confidence of the Hungarians, and for this reason they have risen to the task of leading the dissatisfied.  They express opinions on matters not customary for diplomats.  They want to tell us how to behave, what to think about the world.  And they tell us how we should live.  The credibility of the United States has been called into question by the fact that the American spokesman André Goodfriend is either unable or unwilling to tell public opinion why six Hungarian citizens were banned from entering the United States.  Americans should respect Hungary’s thousand-year history, traditions, which cannot be changed through the use of outside force, pressure.  Hungarians do not want to be Americans, Germans or Russians.  We want to remain Hungarians!

But now once again we are forced into a swing policy.  How can this be continued successfully?

The struggle to preserve our identity and independence has characterized our history.  Once again we find ourselves facing such a situation.  I am convinced that the Hungarian opposition parties will not betray our country and assist the Americans in their efforts.  It is not by chance that the American embassy has taken politics to the street, and embolden the organizers and participants.

Goodfriend aside, didn’t the government err in a number of issues giving birth to social discontent?

After the local elections in October the period of governance started.  We never claimed to be infallible, or that we never make mistakes.  We received a two-thirds mandate from the voters to build an independent, strong Hungary, and not break ranks under the pressure of domestic or international interests.

Fidesz is living high off the hog (urizál), and some of the main criticism has concerned you.

It is obvious that young members of Fidesz living high off the hog is a well-constructed political campaign on the part of the opposition and the press.  They want to create an image of us as the party of the rich and which only supports the rich.  That’s a lie!  We introduced the free meals at kindergarten. We were the ones who offered government subsidies to those buying used flats, who continuously raise the minimum wage, who drastically decreased household utility costs, who increased the wages of teachers, and executed an increase in salaries of health and law enforcement workers.

As a result of our economic policies, inflation has disappeared, which the left-wing politicians and intellectuals always said was a tax on the poor.  In addition to all this, we are helping the most vulnerable social strata, those with FX loans:  They will see the first half of 2015 that their monthly payments decrease 25 percent or 30 percent.  And we’re the party of the rich?  Our steps have created opportunities for social inclusion for the poorest.

But in spite of everything it seems that within your own party people are upset that you bought a flat for your young son, or that you have a watch costing many hundreds of thousands of forints.

I hope they don’t want to say that who saves for his children’s future is acting like a lord.  I know there are many who are not able to do this, and that is why I am working, so that they get an opportunity for this.  At the same time in my city the normal order of life is that people support their children to the best of their ability, and try to provide for their future.   In a civil society this cannot be cause for shame but rather virtue.  Let’s see things clearly.  Today there is a political campaign afoot built on jealousy organized by the opposition that involves accusing everyone of corruption and living high off the hog, especially the younger politicians who are in power.  They are doing that with me, those who for the past 25 years look down on Hungarian reality from the homes in the hills of Buda, while I had to struggle on two occasions to win the confidence of a poor provincial part of the country.  How can anyone imagine that I could have won the confidence of those living in poverty and those in need of help if I considered myself exception or looked down on them?  In politics there can only be one answer to this accusation, this campaign to discredit us, this character assassination: total unity within Fidesz.

What can you do against the fall in your popularity?

Decisions come with disputes and consequences.  The current government won’t let up even though it has harmed the interest of a good many groups.  The interest groups behind the press use journalists to mess with the people.  That is what is happening at RTL Klub, whose owner, the German Bertelsmann group, suffered a serious financial loss as a result of the advertising tax.  This group includes a number of oligarchs as well who are not able to access the state’s resources, and that is why they dictate magical questions to journalists who are dependent on them for their existence.  Let’s not forget either that from American money Romanian investigative journalists are training the colleagues of certain internet newspapers, while I know, and this is just part of the legend, it is as though this, too, is happening within the framework of the American operation.

The only question is whether the loss in popularity becomes a tendency, a continuous fall, or whether we’re talking about a wave which happens to be standing at the bottom right now.

We musn’t become uncertain.  We need to work!  If Viktor Orbán had become uncertain in 2011-12-13, then we would not have won the election in 2014.   Then there were moments when Fidesz was even less popular than it currently is.  We didn’t wet ourselves and we didn’t hide. We waded into the fight, picked up the glove, and in the end we won.  Winning back trust after losing popularity means even more work now than before.  We had to struggle for three years for the country, which was threatened by financial collapse.  Now, economically speaking we have risen ourselves up to be among the three best-performing countries in the EU.  There is no western analysis that does not acknowledge our economic results, we, however, fall into the mistake of entertaining doubts.  There is no reason for this.  We are on a good path.   We don’t have to be afraid.  We have to work!

The decrease in household utility costs was the Fidesz panacea during the first cycle.  What is it you want to win over voters with now?

We continue to step in the direction of decreasing the cost of utility to the economy and the state.  We are decreasing court fees and we want to provide more services, all of this in a transparent manner.  We will do everything so that economic actors, especially industry, can obtain cheap electricity.  The government’s goal is for us to be the strongest country in the region.  In the interest of improving economic competitiveness we are going to reform technical training, improve the educational system and modernize the country.   European Union taxpayers are providing enormous material support for this. A strong state is needed.  A decrease in bureaucracy on the other hand increases competitiveness.  There will be more debates on this, but an efficient, cheap and well-functioning state is worth a political fight.

How many positions will be eliminated over the course of decreasing bureaucracy?

There are 198 prefectures (járás) in the country.  By the end of 2015 we will create 260 government windows.  The prefecture structure works well, it is close to the people.  By contrast 925,000 people work in state administration, while at the same time four million pay taxes.  Three million taxpayers maintain the current bureaucracy.  Furthermore, this is a reverse pyramid:  the higher we go, the more workers there are.   There are two bosses for every worker who meets with citizens and customers.  This is unacceptable.  Today for example there are 3,500 directors for 26,000 government office employees.   This cannot be called reasonable.  For this reason there is no point in talking about how many should be dismissed, because there are areas that need to be downsized and there are ones where it is necessary to hire people.   It is the job of the state to serve the people, which is why we need to deal with matters that interest the voters, and which improves the quality of their lives, like strengthening the system of local practitioners, or preventative medicine.  Or whether for social security somebody who regularly goes for a screening test represents the same risk as someone who does not.  How can the state motivate someone to deal with sickness through prevention and preliminary control?   I could cite examples of public transportation as well for which we need to use our time, energy and trust.

When will the restructuring of public transportation start?  What changes should travelers expect?

We want to organize state services on the level of prefectures, and in this way we are modifying the health education centers.   Many governments have undertaken the reform of health, education and social systems, but no one has ever reconciled this with a transportation map of Hungary.  We would like to achieve when talking about health reform that we also discuss how patients get to a given hospital.  There are places where it is necessary to reorganize the trains and the bus services, but there are also parts of the country where it is not possible to use public transportation, where it is only possible to get to a treatment center by car.   We have to change the practice by which Volán (the national bus company) has ignored the needs of the traveling public for years when preparing schedules.  We need to organize a unified, country-public transportation system in which train and bus schedules are harmonized.  It is outrageous that twenty-five years after the system change there are still unresolved issues.

It is as though you are not speaking as a minister but still as a mayor.

If you you see it like that, then that is a compliment.  The Prime Minister expects me to deal with these matters.  I do this with the enthusiasm and vehemence characteristic of me as a mayor.  I look for solutions because I learned over the past 15 years that you can neither govern a society without people nor against people.   My style is too fast or too determined for some people.  I am convinced that it is only possible to serve the country’s interest with this kind of purposeful politics and a lot of work.

Reference:

http://magyarhirlap.hu/cikk/12905/Lazar_Janos_Dolgozni_kell_nem_szabad__elbizonytalanodni#sthash.6kFhYKaZ.dpuf