The latest nationalization plan: Dunaferr

Members of the Orbán government don’t like the word “nationalization.” To be precise, they don’t like the Hungarian word államosítás for nationalization. After all, they claim, the word államosítás can be used only for nationalization without compensation. As it happened after 1945 and especially after 1948. Today the state simply buys companies the government deems strategically important. Mind you, as usual the Orbán government doesn’t tell the whole truth about the recent nationalizations. After all, one of the first  moves of the Orbán government was the nationalization of public schools previously in the hands of the local communities. No one compensated them for their loss. The next step was the nationalization of hospitals. Again, no money exchanged hands.

This government seems to be enamored with the old socialist system of state ownership and centralization although they should be the first ones to realize its pitfalls, which eventually led to the total collapse of the socialist system. But I guess they think they can do better than those old party hacks. I don’t think that I’m alone in thinking that Orbán and his comrades are dead wrong.

I could go on and on listing companies, from MOL to E.ON and Rába, that have been taken over either in full or in part by the Hungarian state. E.ON cost the Hungarian taxpayers 870 million euros and MOL,1.88 billion euros. And now the Hungarian government has offered to buy the ISD DUNAFERR Company Group in Dunaújváros, which is one of the largest industrial firms in Hungary. The company is a diversified manufacturer of steel products. They produce hot rolled, pickled, cold rolled, galvanized strips and sheets, and hollow steel sections for engineering, automotive, and construction products as well as for the production of steel structures, household appliances, and other parts.

The company, owned early on by the Hungarian state, lost money year after year until the government managed to sell it to the Ukrainian Donbass Group in 2004. Later it was taken over by a Russian company. Eventually, the company became profitable but since the 2008-2009 financial crisis Dunaferr has suffered mightily. In an article that appeared on privatbankar.hu today one can see telling graphs of Dunaferr’s losses and debts.

A few days ago the company announced that because of its financial losses, it will have to let 1,500 workers go. Such a decision came at a very wrong time for the Orbán government. Dunaújváros plays a key role in the economy of Fejér County. We must also keep in mind that Viktor Orbán’s beloved Felcsút is also in Fejér County. Székesfehérvár, the first capital of Hungary, is the county seat and the city to which the Orbáns eventually moved and where the young Viktor went to high school. So, the whole issue has a personal aspect for Orbán as well.

On Monday morning Economics Minister Mihály Varga was dispatched to talk to the managers of Dunaferr in order to find a solution to the company’s problems. I assume Varga tried to convince the management of Dunaferr to postpone its decision to downsize its work force.  No buyout offer was discussed.

The decision to make an offer was reached hastily that same day during a cabinet meeting, which was conveniently and appropriately held in Székesfehérvár due to the August 20th celebrations.

Such quick decisions are typical of Viktor Orbán’s leadership style. I am certain that this particular decision, just like all the others, was the prime minister’s alone. Given the company’s dire financial straits it’s hard to imagine that no one in the cabinet raised doubts about the Hungarian state’s ability to take on another losing concern. But at these meetings Orbán is surrounded by yes-men; he doesn’t have to fear serious opposition. Perhaps at the meetings of the high brass of Fidesz there are men like László Kövér or even János Lázár who can have some influence over him, but such people don’t exist among the few ministers and the more numerous undersecretaries handpicked by the prime minister.

In the past it happened that the Hungarian state took over companies allegedly in order to prevent a loss of jobs and yet shortly after the nationalization the new owner, the Hungarian state, had to fire hundreds or even thousands of workers. In the case of Malév, the airline actually folded. It would be good to know whether the government has any business plan that would enable the company to continue employing its 7,500 workers and at the same time turn a profit.

I very much doubt that there is such a plan, so it is likely that sooner or later Dunaferr, this time as a concern owned by the Hungarian state, will have to let thousands of workers go. (Probably after the 2014 elections.) Meanwhile good money is being thrown after bad, as the saying goes. How long can all this go on, especially since only today I read that the deficit is on the rise again?

Water and politics: The case of the Roma in Ózd

There are times, though not too often, when Fidesz and the Orbán government retreat and give up positions earlier thought to be sacrosanct. This usually happens when there is a big stink. Not just nationally but internationally. This is what happened with the public faucets in Ózd.

Ózd, a town with a population of 34,000, fell on hard economic times when the heavy metallurgical industry collapsed in the 1990s. Ózdi Kohászatai Üzemek had employed more than 10,000 workers. In 1975 67.3% of the men between the ages of 18 and 65 were gainfully employed. Now the unemployment in Ózd is extremely high. Ózd also has a large Roma population. Officially only 7% of the population declared themselves to be of Roma ethnicity, but according to some estimates one-third of Ózd’s population might be of Gypsy origin.

The Gypsies live in several ghetto-like sections of the town. Most of their houses don’t have running water, so these people must carry  water in buckets from public faucets. Apparently there are 123 faucets that serve about 8,000 people. Some of these people live in areas where city water was never hooked up; others don’t have service because they couldn’t pay their water bill. A family of four or five needs at least 100 liters of water a day and, especially in the areas where a lot of people live without city water, there might be as many as 100 people who use one faucet.

Since the city must provide water to the inhabitants, these people receive their water free of charge. The Fidesz-led town hall found the 13 million forints the city had to pay for the water used on roadsides too high. They claimed that the families living in those parts waste water. They use it for washing cars, watering their gardens, and for the children to splash around in. The city fathers, including the sole MSZP member, voted to restrict access to water at public faucets. They completely closed 28 of the 123 faucets and set the water pressure in another 61 very low to discourage the use of too much water.

There are conflicting claims about how slow these faucets became after the town hired a company to lower the pressure from 100% to 60%. The mayor and other Fidesz officials in town claim that lowering the pressure made little difference. (Then why do it?) One of the city fathers declared that the difference between full pressure and reduced pressure is negligible, but others figured that it now takes at least ten minutes to fill a ten-liter bucket with water. A family of five that needs 100 liters of water a day would have to stand for an hour and a half to fill the requisite number of buckets. The men are not around at this time of the year because they managed to get some seasonal work in agriculture, so it’s mostly women and children who carry these buckets. Ten liters of water is terribly heavy, especially for a skinny eight-year-old whom I saw on one of the photos. And he must make at least ten trips. Sometimes quite far. There are cases where they have to walk at least half a kilometer each way.

The water is barely trickling / Népszabadság photo by István Konyhás

It’s easy to blame everything on the Gypsies, but one of the city fathers admitted that it’s not the inhabitants of the “segregatums,” as one journalist called these Gypsy ghettos, who steal the city’s water but owners of weekend places outside of Ózd. They come by car and take away 200-300 liters of water. In fact, 444.hu received an e-mail from someone who called attention to a 2011 Google Earth video of a hose that led from a city faucet to a well appointed house in one of the wealthiest sections in town. You can see it on YouTube:

http://www.youtube.com/watch?v=P1msthmIB3o

It was inevitable that the decision of the Ózd City Council would become a national issue. Although the city fathers never mentioned the word “Roma” or “Gypsy,” it became a Roma issue. It couldn’t have been otherwise when it is the Roma population’s neighborhood that is without running water and when it is mostly the dirt poor Roma who can’t pay their water bills.

Opposition politicians were on hand, led by István Nyakó (MSZP) who is from these parts. László Varju (DK) arrived as did Aladár Horváth, a Roma activist. There were all sorts of useless negotiations between Nyakó and Pál Fürjes, the Fidesz mayor of Ózd. I don’t know in what language they tried to converse, but the two gave entirely different reports of their conversation. Nyakó understood that Fürjes promised to restore the standard pressure in the faucets while Fürjes claimed that there was no such agreement. Moreover, he made it crystal clear that the city will not move an inch. It is not fair that the majority of the city’s population has to pay for water while others don’t. As he put it, “perhaps the majority of people feel good when they steal, but someone has to pay for the water.” He neglected to mention that these people have no choice because they have no water hook-up.

Fürjes’s claim is especially distasteful in light of the fact that Ózd received 1.75 billion forints from the Swiss-Hungarian Cooperation Program for the express purpose of providing running water to the Roma ghettos. Opposition politician Péter Juhász of Milla and Együtt 2014-PM demanded to know the fate of this money. According to the website of the town of Ózd, work on the modernization of the whole system will be done between 2013 and 2017. Well, more than half of 2013 is gone and there is no sign of any work on the pipes. Fürjes immediately rebuked Juhász, saying that the Ózd Fidesz government is not like the Gyurcsány-Bajnai government which stole the country blind and was corrupt to the core. The money is there and work will begin in November. I must say November’s not the best time of the year to start such a project.

Negotiations between Nyakó and Fürjes led nowhere;  the city was ready to open only one faucet. Nyakó then said that he was going to call on Sándor Pintér, minister of the interior, to force the town of Ózd to restore all the faucets that had served the town’s Roma population.

I must say that yesterday I wasn’t very optimistic that Pintér would intervene, especially after the  Fidesz spokesman Róbert Zsigó threw the party’s weight behind Pál Fürjes. Since yesterday, however, a few things happened that changed the situation.  Zoltán Balog, whose ministry is responsible for Roma integration, announced that he considered limiting water to the Roma ghettos inhumane. Then came the bad publicity from BBC, Deutsche Welle, Der Spiegel, and a very long and detailed article in the Swiss Tages Anzeiger. After all, a lot of Swiss money was given to Ózd specifically for the purpose of making running water available in the Roma ghettos and now the mayor of the town limits water for them even at the roadside faucets!

In any case, Pintér gave a friendly or perhaps not so friendly telephone call to Pál Fürjes, who suddenly saw the light. In order to save face he repeated that the town’s action was entirely legal. But the extended heat wave that hit Hungary after the town council made its decision led him to revoke it. Tages Anzeiger immediately reported the good news. It would be interesting to know whether the Swiss, directly or indirectly, put pressure on the Hungarian government to change its mind on the issue of water supply in Ózd.