The Hungarian government turns up the heat on the NGOs

Yesterday I wrote about Viktor Orbán’s pro-Russian policy, which does not endear him to Washington. Another sore point is the Hungarian treatment of certain NGOs and the attacks of late on independent organizations that receive money from the Norwegian Civic Fund. Barack Obama specifically mentioned the importance of NGOs as watchdogs over rogue states like Hungary. One would think that Viktor Orbán might try to mend fences with the U.S. by retreating a bit on this issue and not pursuing the controversial attacks on the Ökotárs Foundation, the distributor of the Norwegian Civic Funds. But no, these attacks have shifted into even higher gear.

In May the government ordered KEHI (Kormányzati Ellenőrző Hivatal = State Audit) to investigate the case. The Norwegians consider the investigation illegal because in their opinion the money Ökotárs distributed among several NGOs was not part of the Hungarian budget. The money never entered the Hungarian treasury in any way. The funds came straight from an office entrusted with the task located in Brussels.

If the Hungarian government had wanted to remove at least this particular sore point from the agenda, they could have quietly dropped the case and simply forgotten about the report KEHI prepared. Or they could have come out with a very mild reprimand for some lax practices. But Viktor Orbán wouldn’t be Viktor Orbán if he had chosen that path. Instead, yesterday KEHI released its 40-page report in which it accused Ökotárs of mismanagement, fraud, forgery of private documents, and unauthorized financial activities.

As usual, Magyar Nemzet was the first publication to write about the report. Their initial article indicated that the KEHI document is already in the hands of János Lázár. From that point on Magyar Nemzet kept publishing shocking reports about the frivolous items these NGOs spent their money on. The one that caused the greatest uproar was the purchase of tampons. It turned out that the Kékpont Foundation was guilty of this particular crime. The foundation, which deals with drug addicts, gave “motivational” hygienic packages to the addicts, and the tampons were in packages distributed to the women. All these stories came out in Magyar Nemzet before the report was made available to the Ökotárs Foundation.

Yesterday at last the document itself appeared on KEHI’s website. Okotárs over the years distributed 500 million forints and KEHI found something wrong with 200 million worth of the grants. Actually, the questionable items amounted to only 10 million (about $41,000). Yet Lázár is outraged and wants to renegotiate the contract with the Norwegian government. He promptly invited the “appropriate Norwegian minister” to Hungary for a friendly chat. Then, perhaps realizing the absurdity of his suggestion, he added that after all he would be ready to meet the Norwegian politician in Brussels.

What will Lázár tell the “appropriate Norwegian minister”? Norway should break the contract with the Ökotárs Foundation since it is not worthy of Norway’s trust. The funds should be distributed by “state or private organizations.” The English translation of the report will be sent to the Norwegian ambassador in Budapest as well as to the European Commission.

But not all accusations are in the KEHI report. Népszabadság reported that investigators at KEHI complained about Veronika Móra’s frequent meetings with American diplomats as well as her visits to the Norwegian embassy. These kinds of contacts are suspect in the eyes of the regime, as we know from Viktor Orbán’s “illiberal” speech in Romania.

Meanwhile Magyar Nemzet kept attacking both the Norwegian government and Ökotárs. Yesterday morning an article appeared in the paper which claimed, on the basis of information coming from KEHI, that Ökotárs passed on important documents for safekeeping to the Norwegian embassy. And that is not all. Officials at the embassy postdated certain documents. While KEHI investigators were at it, they decided to accuse the Financial Mechanism Office (FMO) that handles the Norwegian funds in Brussels of complicity because its official suggested to Ökotárs that it move all its documents out of Hungary.

Late last night journalists from more independent media outlets began looking at the findings of KEHI. András Földes of Index observed that only in history books could one find examples of such accusations that used to lay the groundwork for show trials in the Rákosi period. And, he added, “the officials are actually proud of it.” The proof presented to the journalists did not convince them, but they surmised that the officials of KEHI simply did what was expected of them by the Hungarian government. The results were preordained. Without going into the details, the KEHI officials, by pasting together parts of different sentences, actually falsified the intended meaning of Ökotárs’s CEO. The reporter for Index cites several dubious practices of KEHI that call into question the validity of the charges.

In light of the above it is no surprise that Veronika Móra, CEO of Ökotárs, said to MTI today that it is impossible to respond to “accusations that are not supported by facts.” If the KEHI officials found irregularities, they should have described them precisely, but in the document one finds only generalizations. It is full of phrases like: “it also happened,” “there was also such a case.” Ökotárs is ready to go to court and hopes for a favorable verdict.

As for the Norwegian response to the publication of the KEHI report, according to a brief English-language article on the Norwegian internet site, The Local, the Norwegian government already considered the KEHI probe illegal and it is unlikely that after this most likely fraudulent report they will change their minds. It is worth quoting some passages from this article:

Hungary’s squeeze on foreign-funded NGOs has been criticized by Norway and the United States…. US President Barack Obama last month included Hungary in a list of countries where “endless regulations and overt intimidation increasingly target civil society.”…  Relations between the US and Hungary sank further last week when Washington issued entry bans to six unnamed Hungarian government officials it suspected of corruption. The US charge d’affaires in Budapest, Andre Goodfriend, told AFP on Tuesday that “intimidation of civil society” as well as “centralisation of authority, lack of transparency, and corruption” could prevent the US continuing as an ally of Hungary.

Norway was tough all along but now it must feel even more hardened since the United States is supporting its stance on this matter.

Barroso in Budapest

José Manuel Barroso, the outgoing president of the European Commission, spent a day and a night in Budapest on the way to Ukraine. During his stay he and Prime Minister Viktor Orbán signed a “partnership agreement” that seals the European Union’s 35 billion euro financial support for Hungary for the period between 2014 and 2020. In addition, he received an honorary doctorate from Corvinus University.

In the last few weeks a debate has been going on between the government and the opposition: is the amount Budapest will receive in the next six years more or less than it got in the previous six years, support that was procured by the Gyurcsány government? Of course, the current government claims that it is more while almost everybody else, including financial experts, claims that it is less. Whatever the case, it is an enormous amount of money which, according to the critics of both the Orbán government and the European Union, enables Viktor Orbán to build his “illiberal state.” In brief, the European Union is the one that is supporting the destruction of democracy in Hungary.

People who oppose the current regime were dismayed when they heard that the official signing of the document will take place in Budapest. They argued that Barroso should not sanction Orbán’s autocratic regime with his presence in the Hungarian capital. Deep dissatisfaction set in, not just in political circles but also among ordinary people who watched what they considered to be overly friendly gestures by Barroso toward Orbán. It is true that the president of the commission did make a quip indicating his awareness of the Orbán government’s untrustworthiness when he remarked that he hoped the content of the Hungarian version of the document is what he expects. In the past it happened several times that the Hungarian government falsified translations of official texts.

José Manuel Barroso and Viktor Orbán: We can feel equal financially
Source: Népszabadság / Photo Zsolt Reviczky

I don’t know whether Barroso was aware of what Orbán told journalists after the ceremony, but I hope that by now he is. Orbán explained to journalists why this enormous amount of money is not really extra help for Hungary. He claimed that foreign investors move approximately the same amount of money out of the country that Hungary receives from the European Union. If Hungary did not get these subsidies, the country’s financial equilibrium would be out of kilter. This reasoning is of course economically unsound, but his reference to equilibrium brought to mind a funny line from Nick Gogerty’s The Nature of Value: “The only economic systems found today that are truly at or close to equilibrium are nearly dead economies. A cow that achieves equilibrium is called a steak, and the economy closest to achieving equilibrium today is probably North Korea.”

Orbán proposed another equally unconvincing reason that Hungary needs these subsidies. They raise the self-esteem of Hungarians who can in this way feel like full-fledged members of the European community. It’s nice to know that Hungarians’ psychological well being depends on 34 billion euros. Considering that the mood of the Hungarian population is abysmal, perhaps the money is not so well spent.

Now that the Orbán government’s attacks on NGOs have been widely reported and almost all the articles compare the events of the last few months to what Vladimir Putin did in the last year and a half to Russia’s civic groups, a lot of people hoped that Barroso would have a few words to say about them. The COO of TASZ (Civil Liberties Union) told Der Spiegel that “Brussels no longer can be silent on the putinization of Hungary.” However, Barroso was silent on the issue until a question was addressed to him about whether the EU will get involved in the dispute between Norway and Hungary over the Norwegian Funds. Barroso expressed the opinion that this is “the business of Norway and Hungary, but they follow the developments.” The author of HVG‘s opinion piece seemed to be very unhappy with this answer, and I know many people who share his opinion. I, on the other hand, think this hands-off decision of the EU actually works in favor of those who would like to stop the Orbán government’s assault on democracy. From experience we know that the EU has not been a steadfast defender of Hungarian democracy, and in the past it overlooked Viktor Orbán’s transgressions more often than not. The Norwegians are less accommodating; ever since May they haven’t moved an inch in their insistence that the Hungarian government has no right to investigate the allocation of their civic funds. 140 million euros are at stake. If the EU agreed to arbitrate, most likely a compromise solution would be found that would again allow the Orbán government to play one of its tricks.

There was a small demonstration in front of Corvinus University. Népszabadság noted that Barroso as a seasoned politician knows how to handle situations like that. He acted as if he did not see them at all and marched straight into the building. Whether he read a letter addressed to him by the Oktatási Hálózat (Net of University Lecturers) or not I have no idea. It is an excellent description of what has been going on in Hungary in the field of education. To sum up: In the last five years government spending on higher education decreased by half. Hungary currently spends only 0.43% of GDP on it as opposed to the 1% that is recommended by the European Union. The autonomy of the universities will be curtailed when state appointed supervisors are placed above the presidents. It is now the fifth year that the government has no clearly stated higher-education strategy. Financial resources are distributed in an ad hoc manner, mostly to institutions preferred by the government. For example, 90% of the money received as part of the Horizon 2020 program subsidized by the European Union went to the newly established National Civil Service University. Just lately it became known that the Hungarian National Bank is spending 200 billion forints, which is one and a half times more than the government spends a year in higher education, to train people in “unorthodox economics.” Because of the high tuition fees the number of students entering college or university has decreased by 30%.  Moving away from higher education, the letter mentions the lowering of the compulsory school age to 16 from 18 and the government’s endorsement of segregated Roma schools.

It is too bad that this was the only letter addressed to Barroso. Where were the other groups? Where were the members of the opposition? Not that these letters achieve that much, but when only one group protests in front of Corvinus University and only one letter is written by a small group of university lecturers, it is difficult to stir the European Union.

After ten years Barroso is leaving his post and Jean-Claude Juncker is taking over. Hopes are high that a new era will begin, but for that to happen the Hungarian opposition must lend him a helping hand.

Retreat or another “peacock dance” by Viktor Orbán?

Something must have happened between yesterday afternoon and this morning in the Prime Minister’s Office. János Lázár, the minister in charge of the office, has been waging war for some time on at least two fronts, the Norwegian government and the Hungarian Jewish community. In both cases he now seems to be retreating, although his move may turn out to be, as has happened so often in the past, merely a tactical ruse–one step back and, once the glare of the spotlight dims, two steps forward.

Lázár has been trying to make changes in the original agreement regarding the disbursement of the Norwegian Funds, changes that the Norwegian government refused to accept. Then, in order to pressure the Norwegians to release the funds that they had withheld, the Hungarian government began to harass an independent foundation that was in charge of grants given to NGOs by the Norwegian Civic Funds. The latest attack, about which I wrote yesterday, was the most aggressive to date, but it did not shake the resolve of the Norwegian government. By noon today Vidar Helgesen, Norwegian minister in charge of European Union affairs, made it crystal clear that what happened yesterday in the office of the Ökotárs Foundation was unacceptable as far as his government was concerned.

Moreover, yesterday’s raids produced no damning evidence against the foundation. They will not be able to jail Veronika Móra, the director of the foundation, because she has done nothing wrong. At least, according to legal opinions I heard. It was thus high time for the government to throw in the towel.

As we know, Viktor Orbán, because naturally he is the man behind the attacks on the foundation and the NGOs, is not the kind of guy who likes to admit defeat. And he really wanted to stifle the anti-government voices being funded by the Norwegians. But the 45 billion forints the Norwegians were withholding, the bulk of their grant money that goes directly to the government, was hurting the public purse. This morning János Lázár announced that the Hungarian government will ask the European Commission to be the arbiter between the Hungarian and the Norwegian governments. Since a special EU office in Brussels has been supervising the activities of Ökotárs Foundation and has found nothing illegal about its activities, the outcome of the decision is not really in question. But at least Viktor Orbán can tell his people that, although his government is right, the bureaucrats in Brussels decided otherwise. Hungary had no choice but to oblige.

There might have been two other considerations that tipped the scales in favor of retreat. One is that, according to unnamed sources, Tibor Navracsics’s nomination has been unfavorably influenced by, among other things, the Norwegian-Hungarian controversy. Moreover, the raid on the foundation’s office, which was received with dismay abroad, coincided with the appearance of an op/ed piece in The New York Times by Philips N. Howard, a professor at the Central European University and the University of Washington, which only reinforced the commonly held view that Viktor Orbán is a man who cannot tolerate a free media. And, as the Norwegian controversy made evident, he would like to silence independent NGOs as well. The biting illustration that accompanied the article has since been reprinted in several Hungarian publications. If it had not been clear before, it had to be obvious by now that Viktor Orbán had gone too far. It was time to recall the troops.

The same thing seems to be happening on the Hungarian Jewish front. The government alienated the Hungarian Jewish community by making several controversial, unilateral moves. I wrote earlier about these government actions, starting with the appointment of Sándor Szakály as the director of a new historical institute and the designation of Mária Schmidt, director of the House of Terror, to head a new Holocaust Museum. The final straw was the decision to erect a memorial to commemorate the German occupation of Hungary on March 19, 1944. The result was a complete breakdown in communication–and trust–between János Lázár and the leaders of the Jewish community. Then, after months of silence, at the end August it became known that the government was ready to make concessions. The routinely scheduled  September meeting took place today and, indeed, it seems that the Hungarian government finally decided that it was time to come to some understanding with the Jewish community.

The meeting that lasted for four hours was a large gathering, including 60 people representing several Jewish organizations. Yet, according to András Heisler, president of Mazsihisz, thanks to the disciplined behavior of the representatives real progress was made on all eight points that were on the agenda. Although the Jewish organizations did not change their attitude on such vital issues as the House of Fates, the government offered several peace offerings. The government promised, for example, to spend up to a billion forints to fix up Jewish cemeteries that are in very bad shape in most cities and towns. Lázár promised to invite the head of the Kúria, Hungary’s supreme court, the minister of interior, and the head of the judicial office to talk over practical moves to be taken in cases of anti-Semitic activity. Lázár seemed to be ready to discuss the renovation of the synagogue on Sebestyén Rumbach Street that might serve two functions: it will be a functioning place of worship as well as a museum. Lázár also promised to renovate the synagogue in Miskolc.

The Jewish Round Table this morning
Népszava / Photo József Vajda

Although all these goodies were offered to the Jewish communities, the representatives refused to change their position on the boycott of the government organized events commemorating the 70th anniversary of the Hungarian Holocaust. They remained steadfast even though the government gave in on one serious bone of contention–the exhibit at the House of Fates. Lázár personally guaranteed that no exhibit will be mounted without the active cooperation of the Hungarian and international Jewish community. Interestingly, the controversial designated head of the project, Mária Schmidt, was not present.

All in all, it seems that there is a general retreat. Whether it is real or not we will find out soon enough.

A week in Hungary: worrisome developments

There is no silly season or “uborka szezon” in Hungary this year. In fact, I could easily write three or four times a day about not at all silly stories. Today I decided to catch up and offer a smorgasbord of “illiberal” news.

Let’s start with Zoltán Balog’s unfortunate statement about the Gypsy Holocaust on the occasion of the 70th anniversary of the murder of thousands of Gypsies in Auschwitz. Balog, minister of human resources and a very close associate and spiritual adviser of Prime Minister Viktor Orbán, has an uncanny knack for saying the wrong thing at the wrong time.

On Sunday morning Balog was interviewed on the state radio’s program Vasárnapi Újság. This program, even during the socialist-liberal government, was known for its far-right tendencies, but it was a favorite of Viktor Orbán who often appeared there. Balog was asked to say a few words appropriate for the occasion. Instead of paying tribute to the Roma victims of the Holocaust, he began ruminating about the proper historical interpretation of the deportation of the Hungarian Gypsies while showing a total ignorance of the details. He said that there are a lot of uncertainties–for example, the  number of victims–and offered up the nonsensical excuse that “no Hungarian Gypsies were ever deported from Hungary. Only from Austria.” He also had some advice for the Roma. They shouldn’t dwell too much on tragic events because Gypsy culture is already prone to portray its members as victims, as people who are at the bottom of society. And such an attitude hurts their chances of success.

The reaction in opposition circles was uniformly negative to this latest Balog faux pas. A lot of people interpreted Balog’s words as Holocaust denial or at least a diminishing of its importance. Historians expressed their astonishment that the minister in charge of Hungary’s Roma strategy knows so little about the details of the events of 1944 and the fate of about 5,000 Hungarian Roma who perished and the tens of thousands who were deported.

As usual came the standard excuse: his adversaries misinterpreted his words, although this time he added that he could have expressed himself more clearly. Instead of admitting his mistake, however, he launched into an attack against his political opponents. It is not he “who has to explain himself but the Left under whose governance Gypsies were murdered in Hungary.” As if the Gyurcsány-Bajnai governments were responsible for the serial murders of several Gypsies.

Now let’s move on to another story that broke a few days ago. Some eagle-eyed journalist found an interesting picture on the front page of the publication of the Hungarian Medical Association. It was taken in the enormous study of Viktor Orbán in the parliamentary building when the president and the vice president of the association paid a visit to the prime minister. In the background a poster depicting the crown and the Hungarian colors reads: Győzelem (Victory).

A few telephone calls to historians revealed that the poster was designed by Sándor Légrády (1906-1987), who made quite a name for himself as a designer of Hungarian stamps. The poster Viktor Orbán so proudly displays in his office was done in 1940-41 to commemorate the Hungarian army’s entry into the territories Hungary received in the Second Vienna Award (August 30, 1940). I might add that Légrády was a politically committed person who in 1941 became an undersecretary in the prime minister’s office ( Bárdossy government, April 1940-March 1942) and who was later transferred to the ministry of defense. Because of his posters extolling the war he was briefly detained in 1945 but was acquitted two years later.

Viktor Orbán’s study with the controversial poster in the background

What is such a poster doing in the Hungarian prime minister’s office? The official account is that he received the poster as a gift after the 2014 parliamentary election. A Fidesz politician explained the significance of the poster. Viktor Orbán began his infamous speech in Tasnádfürdő/Băile Tușnad by thanking the Transylvanian Hungarians for their support. Their votes gave Fidesz that one extra seat in parliament that ensured the continuation of the two-thirds parliamentary majority that allows Viktor Orbán to continue his rule unchecked. About 100,000 people who may never have set foot in the country decided the fate of Hungary for four years if not for longer.

This explanation is believable, but one must question the decision to display such an irredentist poster in the prime minister’s office. The year 1941 marked Hungary’s entrance into World War II. It was the year Germany attacked the Soviet Union. It was the year the United States entered the war. It is an affront to Romania, to Russia, and indirectly to all the countries who fought Nazi Germany and her allies–including, of course, Hungary. Just like his spiritual adviser, Orbán has no sense. A few years ago he proudly displayed a Greater Hungary decal on his car!

I would also like to mention that since leading American newspapers raised their voices in critical editorials against Viktor Orbán’s designs to transform Hungary into an illiberal state, the whole right-wing media has begun an anti-American campaign. At least three leading Fidesz opinion makers spoke out–István Tamás (Nemzeti.net, July 30), Tamás Fricz (Magyar Nemzet, August 4), and Zsolt Bayer (Magyar Hírlap, August 6). Soon I will devote a full post to the Orbán government’s anti-American propaganda campaign.

Here is another timely topic: the fate of some Roma families in Miskolc. On June 25 I wrote about the local Fidesz leadership’s plans to evict Roma families from their homes in order to make space for a new football stadium. The city was ready to pay 2 million forints to each family if they moved out of Miskolc altogether. Well, the evictions have begun. A young couple with a small child were the first victims. Then came an older woman who is disabled. Roma activists are trying to prevent the forceful removal of hundreds of families, but I doubt that they will be successful.

And finally, the situation of the NGOs. Viktor Orbán declared war on them in his speech and he was not kidding. Only yesterday papers reported that, although the Hungarian government made some concessions concerning the distribution of funds, the Norwegian authorities refuse to release the funds until the investigation of these NGOs stops. Viktor Orbán is not backing down. A criminal investigation of Ökotárs Alapítvány, the firm that distributes the Norwegian funds to NGOs, has begun. The charge is embezzlement.

NGOs as threats to the building of Orbán Viktor’s “illiberal democracy”

Yesterday while analyzing Viktor Orbán’s latest speech I concentrated on the topic that aroused the greatest outrage in opposition circles, the Hungarian prime minister’s plans to introduce a so-called “illiberal democracy.”

Here I would like to talk about a topic that at first glance might seem tangential to these plans: the NGOs and civic groups in general. While Orbán dispassionately lectured his audience on the state of the world and Hungary’s place in it, he became visibly agitated when he turned to this topic. We may think that the question of who distributes the relatively small amount of money provided to Hungary by the EEA and Norwegian Grants is not worth a major international fight, but Viktor Orbán does not see it that way. For him the issue is of critical political importance.

I wrote earlier about the controversy surrounding these funds. Currently, a private organization distributes the funds, an arrangement that Hungary and the Norway Fund agreed to earlier. Sometime in the spring the Hungarian government unilaterally changed the rules of the game by insisting that the Budapest government should be responsible for the dispersion of the funds among the various civic organizations. The Norway Fund resisted the idea. After all, these civic groups are supposed to be, at least in part, the watchdogs of the government in power. Giving the government the right to decide which NGOs can and which cannot receive money would defeat the whole purpose.

Right now there is a standoff between Budapest and Oslo. Even the Council of Europe Commissioner for Human Rights, Nils Muižnieks, wrote a letter to János Lázár in which he expressed his displeasure at the government’s allegations that the Norwegian NGO Fund was used to support political activities in Hungary. He tried to explain that NGOs “should be able to pursue their public watchdog function … without undue interference in their internal functioning.” Lázár wasn’t moved. He argued that the Norwegian NGO funds “constitute public money, [and] it is the moral obligation of the Hungarian Government to order every measure in its discretion which is necessary for the thorough investigation of the questions to be examined, or the contents of the supported activities.” The sentence might be convoluted, but the message clear: Lázár insists on government oversight.

Why is this relatively small amount of money of such great political concern for the Orbán government? We can find the answer in Viktor Orbán’s speech delivered yesterday at Tusnádfürdő/Băile Tușnad. These independent NGOs threaten the illiberal state he is building. He looks upon the NGOs, especially the ones that receive funds from abroad, as impediments to his plans. And as far as he is concerned, this is a very serious matter. As he put it, “here we are confronted with paid political activists. Moreover, these paid political activists are foreign paid political activists. Political activists paid by definable foreign interest groups about whom it is hard to imagine that they consider the sums given by them as social projects. Instead, our suspicion is justified that through this instrument [the NGOs] they try–in a given moment and in a given question–to influence Hungarian political life.” Therefore, the decision was made to create a parliamentary committee whose job will be “the continuous observation, recording, and release of foreign attempts at influence peddling. ”

And this was just the beginning of his tirade. He complained about the fact that some of the people who administer these projects are getting paid from abroad, from the money allocated to Hungary, and that their salaries are greater than the salaries of Hungarian civil servants in similar positions and rank. He complained that  35% of the funds are wasted on overhead costs, which is intolerable. Once the Hungarian government gets hold of the funds, these costs will be reduced to a maximum of 15%.

Administrators in Brussels and in Oslo will have to be prepared for a protracted and ugly fight because Orbán is adamant: foreign money is not going to be used to undermine his government. If the Norwegian Fund decides to stick it out, the case most likely will end up in the European Court of Human Rights. Commissioner Nils Muižnieks in his letter to Lázár alluded to that possibility when he stated that “the case law of the European Court of Human Rights on the role of NGOs in democratic society is clear: when an NGO draws attention to matters of public interest, it is exercising a public watchdog role of similar importance to that of the press.” And he mentions the 2007 ruling in Zhechev v. Bulgaria as a case in point. In brief, Muižniek recommends that Hungary back down because, if the case gets all the way up to the European Court of Human Rights, defeat is certain. Not that Viktor Orbán cares about court decisions. He will do, if and when it comes, what he has done in the past. Blithely ignore the decision.

More resolute foes of Orbán’s plans for Hungary come from unexpected quarters: Luxembourg and Norway

In the past four years most of the battles between Viktor Orbán and the European Union have ended with a victory for the Hungarian prime minister. Or, if the Budapest government was forced to make changes in some of its controversial laws, they usually smuggled in other equally controversial provisions while allegedly fixing the problems with the first version. Eventually, the “bureaucrats” of Brussels, worn down, were satisfied with superficial, inconsequential changes that did not matter as far as Viktor Orbán’s long-range plans were concerned. But now he is confronted with other kinds of foes: Norway, which does not belong to the European Union, and the Luxembourg-based RTL Group, Europe’s leading entertainment company which is majority-owned by the German media conglomerate Bertelsmann. Neither of them seems to be a pushover.

I was surprised to see that almost three weeks had passed since I first wrote about the war between the Hungarian government and RTL Klub, the Hungarian subsidiary of RTL Group. At that time I reported that the Hungarian government had proposed a bill that was designed to tax the advertising revenues of all media outlets on a sliding scale depending on profitability. RTL Klub is the most profitable television station in the country and hence would get hit the hardest. In fact, the proposed tax of 40% on its revenues could cripple it. Since more than half of all revenues from the advertising taxes would come from RTL, it became evident fairly early in the game that the whole bill was designed to target this particular television station.

The answer from RTL Klub was swift: the news editors decided to spend more time on political news than before, and they made sure that every day there was some story that reflected badly on the government. The government answered in kind. Mihály Varga, minister of national economy (basically the minister of finance), instructed the Nemzeti Adó- és Vámhivatal (NAV/National Office of Taxation and Customs) to examine the tax history of RTL Klub because, as he put it, “there is a suspicion that some of the transactions of Magyar RTL Klub in the past years are fictive; they don’t reflect actual business activity but are designed solely for tax write-offs.” It was at this point that an MSZP member of parliament charged that Hungary was no longer a country of law  (jogállam). The government was using the tax authorities to “punish” companies not to its liking.

The management of RTL didn’t cower. They told reporters that NAV has been after the company constantly. By now they have a department that deals only with tax matters. They have nothing to hide, and they invited NAV to come and investigate. It turned out that the “suspicious transaction” was a 2011 loss of 23 billion forints. The loss came about in the following way. RTL Klub purchased two cable companies which a year later were sold to its parent company. Apparently this transaction is a perfectly legitimate business practice. Because of this loss, RTL wouldn’t have to pay advertising tax this year. And that cannot be allowed.  Thus, the government had to come up with some other way to get to RTL.

Source: http://www.targetgdpi.com/

So came the old Orbán trick. If the law for one reason or another doesn’t have the desired result, let’s change the law. And indeed, as one newspaper put it, before the ink had even dried on the bill came an amendment according to which a company would be exempt from the tax this year only if its profits were either zero or negative in 2013. Clearly, this amended bill targets only RTL Klub. As László L. Simon, the man who presented both the original bill and its amendment, said, Hungarian newspapermen were the ones who called attention to this loophole. Since the government wants to make sure that everybody pays an equal share of the tax, they decided to change the bill.

Yesterday L. Simon for a solid 17 minutes tried to explain the intricacies of his amendment to the audience of ATV while a helpless young reporter sat and listened without interrupting him. He was less lucky when he made the mistake of giving an interview to RTL Klub. As a result of this interview it became evident that L. Simon doesn’t know what is in his “own” amendment. So much for law making in Hungary.

The RTL Group refuses to throw in the towel. Only yesterday a long interview appeared with Andreas Rudas, the director responsible for South-Eastern Europe, who as you might suspect from his name has a Hungarian background. He made it eminently clear that what is going on right now “is not a question of money” as far as the RTL Group is concerned. The firm is ready to stand by media freedom and to go to the highest courts to win against the Hungarian government.

During the course of the conversation we learned that Lis Mohn, the widow of Reinhard Mohn who was the owner of the media conglomerate Bertelsmann, serves on the supervisory board of the firm. And what is also important is that she is a good friend and supporter of Angela Merkel. Rudas revealed that he knows that the topic of what is going on with RTL Klub in Hungary is being discussed in Berlin as well as in other European capitals. RTL Klub is prepared to sue and they don’t care how much it will cost or how long it will drag on. It seems that Orbán has found his match in the business world.

Equally resolute is the Norwegian government. On June 25 a letter was sent to the Prime Minister’s Office which was brief and to the point concerning the suspension of the Norwegian Grants. No lifting of the suspension can take place until the demands of the Norwegians are met, which include the immediate cancellation of “the on-going audit by the Government Control Office.” The letter added that the “audit of the Hungarian NGO program is the responsibility of the Financial Mechanism Office in Brussels.” Well, that is clear enough. No answer has come yet from János Lázár’s office. As Népszabadság commented on the situation: “Lázár and Co. ran into a cement wall.”

In both cases we will see who will break his head first on that cement wall.

The latest scandal: The Orbán government and the Norway Fund

On May 9 we learned that Norway had suspended €140 million of aid funds to Hungary. Most Hungarians, I’d wager to say, have no idea that, in addition to funds coming from the European Union, Hungary receives aid from Norway, Iceland, and Lichtenstein. In fact, Hungary is the second largest beneficiary, after Poland, of the so-called EEA and Norwegian Grants. The money that Hungary receives is the result of an agreement that Norway, Iceland, and Lichtenstein signed in 1994, the “Agreement on the European Economic Area,” which allowed these three non-EU states to join the common market of the European Union. Joining the large EU market was financially advantageous to these countries because within the EU their products were no longer subject to tariffs. In return, the three countries agreed to extend aid to less developed countries of the Union. After 2004, a large portion of the funds went to former Soviet-bloc countries. Under the arrangement Hungary will receive €153.3 million over the next few years. A large portion of the money that has already been received was under the supervision of the Hungarian government, while a smaller amount, the Norwegian Civic Fund, was handled by an NGO called Ökotárs Alapítvány (Hungarian Environmental Partnership Foundation). This organization was chosen by a Brussels-based office to be the lead NGO in disbursing funds within Hungary.

For reasons unknown, the Orbán government unilaterally decided to change the way it handled the aid received from the EEA and Norwegian Funds. As of January 1, the office that had been in charge of the distribution of the grants closed its doors and a private non-profit organization took over its duties.  This new organization has strong ties to Századvég, a Fidesz-related think tank.

The Norwegian government considered the move a breach of  the agreement the Hungarians signed with the Norwegian government, which supplies 97% of the funds. The Norwegians did not mince words. Vidar Helgesen, minister of EEA and EU Affairs who is also the chief-of-staff of the prime minister’s office, said that “Hungary’s actions in this matter are unacceptable” and added that “the Hungarian government has shown little willingness to find solutions that comply with the agreements entered into. We have therefore decided to suspend payments until this matter has been resolved.” He insisted that “the monitoring and implementation tasks in connection with the programs and funds under the EEA and Norway Grants scheme must be transferred back to the central government administration in Hungary, in line with the practice used in all the other beneficiary countries.” Up to now there is no sign that the Hungarian government is ready to oblige.

And that is not the only issue in dispute between Norway and Hungary. The Hungarians are also unhappy about Ökotárs Alapítvány’s administration of the Norwegian Civic Fund. According to Origo, friction between the Orbán government and Norway over the Civic Fund goes back to 2012 when Tibor Navracsics complained to the Norwegian foreign minister about Ökotárs Alapítvány. He alleged that  this so-called independent organization has strong ties to LMP, the Hungarian green party, and therefore its distribution of funds favors the opposition forces.

The Hungarian government also complained about the process that selected Ökotárs as the lead NGO. Indeed, Ökotárs was the only organization that was found to be acceptable by the members of the jury, although originally there were seven applicants. Some of the groups had close ties to the government, while others were brand new creations with neither history nor reputation. Two were actually owned by the Hungarian state. The owners of two others were involved with CÖF, the government-created Civic Forum, the organization of the peace marches and sponsors of the pro-government election campaign. In any case, Navracsics’s complaint fell on deaf ears. The Norwegians were satisfied with Ökotárs.

Then, sometime after January 1, János Lázár again tried to convince the Norwegians to “renegotiate” the agreement on the basis of the new status quo. In addition, he wanted to take the Norwegian Civic Fund out of the hands of Ökotárs. The Norwegian government wasn’t impressed. So, Lázár began harassing Ökotárs Alapítvány. First, the government released nine names from the 50-60-member staff who, according to them, had had some kind of relationship with LMP, MSZP, or an anti-government university organization that was active for a short while in 2012. What they neglected to mention was that several employees had had close relations with Fidesz. Second, the government compiled a list of recipients who, in their opinion, should not have received any financial support from the Norwegian Fund, including the Roma Press Center, the Association of Liberal Youth, Women for Women against Violence, Transparency International, TASZ, the investigative journalism portal atlatszo.hu, Foundation for Democratic Youth, and two gay organizations that received small sums of money, Labris Lesbian Association and  the Rainbow Mission. Obviously, for the Orbán government, grants should go only to pro-government organizations. Critics should not get a penny as far as they are concerned.

Since neither Ökotárs Alapítvány nor the Norwegian government was intimidated, this morning the Hungarian government ratcheted up its campaign against the four NGOs that have helped Norway disburse the grants. It said that it would audit Ökotárs, the lead NGO. And today employees of the state audit department appeared at two partner organizations. At Autonómia Alapítvány, employees cooperated with the auditors but announced that they found the procedure illegal. The Hungarian State Audit Department does not have the right to investigate non-state funds, and clearly whatever small amounts of money these organizations received came from Norway. At the second organization, Demnet, the two men who showed up claimed that the investigation might take weeks. Demnet also put its objections in writing, claiming that the State Audit Department lacks jurisdiction.

Already on Friday Bernadett Szél, co-chair of LMP, wrote: “To János Lázár, the non-government sector is just another area to occupy. LMP rejects the charges.” And atlatszo.hu board member Attila Mong told Reuters that the government had set out to “cut that lifeline from the organizations it considers unfriendly, adding there were almost no other financial sources to replace these grants. Orbán’s message is clear: he wants his hands to be the only ones to feed NGOs. If you don’t want it, you will starve.”

This is where we stand now. Another unfinished chapter in the endless war of independence. Shameful, utterly shameful. Viktor Orbán and his henchmen have been systematically ruining what little remains of the reputation of Hungary.