American rapprochement with Viktor Orbán’s Hungary?

While readers of Hungarian Spectrum continue to discuss the possible reasons for André Goodfriend’s departure, let me share one right-wing Hungarian reaction to the exit of the former chargé, István Lovas’s opinion piece in yesterday’s Magyar Hírlap titled “The Bell Change.”

One could devote a whole series of posts to István Lovas himself, from his brush with the law as a teenager to the open letter he wrote recently to Vladimir Putin in which he asked him to start a Hungarian-language “Russia Today” because the Russian propaganda television station is actually much better than BBC. Lovas lived in Canada, the United States, and Germany, where he worked for Radio Free Europe. He was considered to be a difficult man who caused a lot of turmoil in the Hungarian section of the organization.

For many years Lovas was a devoted Fidesz man. He already held important positions in the first Orbán government (1998-2002). For years he worked for Magyar Nemzet, most recently as its Brussels correspondent, but a few months ago Lovas, along with a number of other Orbán stalwarts, lost his job. Mind you, the European Parliament had had enough of Lovas even before he was sacked by Magyar Nemzet, especially after he presented a bucket of artificial blood to Sophie in ‘t Veld, the Dutch liberal MEP. The bucket of blood was supposed to symbolize the Palestinian children who were victims of the Israeli-Palestinian conflict. Lovas, himself of Jewish descent, is a well-known anti-Semite.

After having lost his job at Magyar Nemzet and after Putin failed to respond to his plea for a Hungarian “Russia Today,” Lovas moved on. Gábor Széles, who owns Magyar Hírlap and EchoTV, offered him a job. Now he has a weekly political program called “Fault Lines” (Törésvonalak) on EchoTV, and he also writes opinion pieces for Széles’s newspaper.

So how does István Lovas see American-Hungarian relations in the wake of the arrival of Colleen Bell and the departure of André Goodfriend? To summarize his opinion in one sentence: from here on the United States and the Orbán government will be the best of friends.

According to Lovas, André Goodfriend was the darling of those lost liberals who have been wandering in the wilderness “ever since SZDSZ was thrown into the garbage heap of history.” They are still hoping that nothing will change. Originally they were certain that Goodfriend would run the embassy while the newly arrived ambassador would be its public face. Meanwhile, Goodfriend would continue visiting “left/neoliberal SZDSZ or MSZP politicians and intellectuals.”

These liberal hopes were dashed soon after Colleen Bell’s arrival. The new orientation was clear from day one. Bell went and laid a wreath at the statue of the unknown soldier on Heroes’ Square. She visited the Csángó Ball organized every year to celebrate a fairly mysterious group of Hungarians living in the Romanian region of Moldavia, speaking an old Hungarian dialect. These are important signs of the new American attitude toward things dear to the current government: fallen heroes and national minorities. Certainly, says Lovas, Goodfriend would never have been found in such places. Yet liberals don’t seem to have grasped the significance of all this. They think that more Hungarians will be banished from the United States and that Hungary will have to pay a high price for peace with the United States. Most likely, Orbán will have to compromise on Paks, on Russian-Hungarian relations in general, and/or will have to buy American helicopters.

But Lovas has bad news for them. There will be no more talk about corruption cases, and Hungary will pay no price whatsoever. Colleen Bell realized that Goodfriend’s methods had failed. Of course, Lovas is talking nonsense here. Even if Lovas is right about a change in U.S. policy, it was not Bell who decided on this new strategy but the United States government.

Lovas is certain that the change has already occurred. It is enough to look at the new website of the U.S. Embassy in Budapest. There are no more programs on tolerance, on Holocaust events, “all those things that are kicks in the groin of the Hungarian people and their elected government.” A drastic change occurred in U.S.-Hungarian relations which even such liberal-socialist diplomats as Péter Balázs, foreign minister in the Bajnai government, László Kovács, foreign minister under Gyula Horn, or András Simonyi, ambassador to Washington (2002-2010), couldn’t explain away.

This change couldn’t have taken place if Goodfriend had stayed or if the Orbán government had conducted “the kind of servile atlantist policy recommended by Géza Jeszenszky,” foreign minister under József Antall and ambassador to Washington during the first Orbán government. Jeszenszky, who just resigned as ambassador to Norway, had a long interview in which he expressed his deep disappointment with Viktor Orbán and his foreign policy, especially with his attitude toward the United States.

According to Lovas, what happened recently is a victory for Orbán’s foreign policy, a feat that “could be achieved only by the courage and tenacity” of the Hungarian prime minister. The United States government tried to mend its ways by sending someone to Budapest who is not worried about such things as tolerance or the Holocaust. From here on the Budapest embassy will function just as American embassies do in other capitals. The U.S. Embassy in Vienna, for example, does not report “breaking news” about the Anschluss.

Lovas might exaggerate, but something is going on. When was the last time that Viktor Orbán called together the whips of all political parties for a discussion on Hungarian foreign policy? As far as I know, never. As Magyar Nemzet put it, “Viktor Orbán asked for the support of the political parties in reaching the nation’s foreign policy goals.” Among the topics was the objective of “strengthening the American-Hungarian alliance.” Péter Szijjártó, who was of course present, claimed that “political relations with the United States are improving” and that the Orbán government “will take further steps toward the restoration of earlier economic, political, and military cooperation.”

The meeting of the leaders of the parliamentary delegations convened by Viktor Orbán
Source: MTI / Photo Gergely Botár

I’m sure that we all want better relations between Hungary and the United States, but the question is at what price. The United States can’t close its eyes to Viktor Orbán’s blatant attacks on democracy, the media, human rights, and civil society. And then there is the timing of this alleged renewed love affair between Budapest and Washington. If true, and that’s a big if, it couldn’t have come at a worse time for Hungarian democracy–yes, liberal democracy. Just when Viktor Orbán’s support is dropping precipitously and when it looks as if he may lose his precious two-thirds majority in spite of all the billions of forints he promised from taxpayer money to the city of Veszprém to buy votes. When a large part of the hitherto slavish right-wing media at last decided to return to more critical and balanced journalism.

No, this is not the time to court Viktor Orbán. It would be a grave mistake. It is, in fact, time to be tough because the great leader is in trouble. Trouble abroad, trouble at home. Frans Timmermans, the first vice-president of the European Commission, in a speech to the European Parliament said the following without mentioning Viktor Orbán’s name: “We cannot let our societies imperceptibly slip back; we cannot allow illiberal logics to take hold. There is no such thing as an illiberal democracy…. We are keeping a close eye on all issues arising in Member States relating to the rule of law, and I will not hesitate to use the [EU Rule of Framework established last March] if required by the situation in a particular Member State.”

Hungary and Europe through Russian eyes

Today let’s look at some Russian responses to Viktor Orbán’s policies as well as Russian analyses of U.S.-Hungarian and U.S.-EU relations. It was about a month ago that Vladimir Putin profusely praised Orbán’s Hungary as Russia’s best friend and ally in Europe. A few days ago Hungary again came up on a Russian State Television program called “Bремя покажет” (Time will tell) when a political scientist, Yuri Solozobov, an associate of the National Strategy Institute of the Russian Federation, explained to his audience that, instead of employing sanctions against the European Union, Russia should use some of its member countries to loosen the unity of the Union. After all, Russia already has allies in Eastern Europe: Hungary and Serbia. If there is no consensus regarding sanctions against Russia, the entire anti-Russian policy of the West will collapse. The video below is a three-minute segment on Hungary with English subtitles.

Solozobov is not the only Russian political scientist who contemplates using Hungary as a tool in Russian diplomacy. Pravda interviewed two other political analysts in the aftermath of Viktor Orbán’s announcement that “a new era has started when the United States not only interferes but takes an active part in internal politics in central European countries,” adding that this was “due to the Russia-Ukraine conflict, and the free trade talks under way between the European Union and the U.S.” Finalizing the free trade agreement, officially called the Transatlantic Trade and Investment Partnership (TTIP), has been dragging on for a very long time and the issues are too complex to discuss here, but promoters claim that it would promote economic growth. Opponents in Europe insist that it would benefit only American corporations and would cause harm to the environment by adopting less stringent measures than those currently in force in Europe. Just the other day farmers and trade unions demonstrated in Brussels against the treaty.

The first political scientist to comment on Hungary’s economic and political dependence on the United States and the European Union was Vladimir Bruter, an expert from the International Institute of Humanitarian and Political Studies. He has written several studies for an English-language publication available online called Russia in Global Affairs, a quarterly produced with the participation of the American journal Foreign Affairs. In Bruter’s estimation Hungary depends on the U.S. both economically and politically, and the U.S. “has effective tools to create a conflict within a country that may result in [the] overthrow of power at the U.S.’s bidding.” Bruter is against the adoption of the free trade agreement because in his opinion it will merely serve U.S. interests. If adopted, “the actual independence of the European economy will simply cease to exist.” And this is especially dangerous for small countries like Hungary. American policy is “unacceptable for Central Europe.”

The other analyst who was questioned on Hungary was Aleksey Drynochkin, lead research scientist at the Institute of Europe of the Russian Academy of Sciences. He stressed that American political pressure on Hungary has been relentless. First, there were the accusations of a lack of democracy, now it is “corruption.” Surely, this is a cover story just as Viktor Orbán said. Drynochkin agrees with Orbán: the demonstrations are also the work of the United States. And he foresees the possibility that “some technical regulations on [the] operation of nuclear stations within the European Union may be toughened,” presumably undermining the enlargement of the Paks nuclear power plant by the Russian firm Rossatom.

As for the free trade agreement, according to Drynochkin “in terms of a bare economic theory, this project is likely to have no problems.” But there is a political aspect to it, and  it “is possible that [the] Americans are pursuing their own goal–to completely finish off Europe,” I guess economically. But what the U.S. would achieve by “finishing off Europe” remains a mystery. In his opinion, in political terms the European Union will be less and less independent and “will be more and more the conductor of some foreign actions and intentions.” What Drynochkin and other Russian analysts fail to see is that it was Russian aggression against Ukraine that brought the European Union and the United States closer together. Moreover, it is possible that Vladimir Putin’s belligerence will be the catalyst for a speedier adoption of the EU-U.S. free trade agreement.

But Russian strategists are correct: trying to undermine the cohesion of the European Union is a great deal less costly and risky than settling for a long trade war and a series of sanctions. Trying to torpedo the free-trade agreement is also in Russia’s interest. But why does Hungary support the Russian position in these matters? What does Hungary gain from standing by Russia? I find the Hungarian government’s position hard to explain.

And why does the editorial board of Magyar Nemzet believe it necessary to turn up the volume, accusing the United States of creating a Hungarian Maidan in Budapest? The title itself is outrageous: “Kievan scenario with Western producer?” Or why does Zsolt Bayer, a friend of Viktor Orbán and the owner of the #5 Fidesz membership card, write about “the many American scoundrels (gazember)” who are responsible for the Maidan uprising?  He says that the Americans achieved what they wanted. They will privatize the gas pipelines and will take over the rich land of the country. In brief, they will exploit Ukraine.

Hungary has a bad track record when it comes to picking sides in conflicts. And such governmental decisions have always come at a high cost to the country. “This time is different,” governments say, but it’s almost never different.

Hungary as a “field of operation”

Paranoia seems to have swept through the Hungarian government. Fidesz politicians are convinced that the United States wants to remove Viktor Orbán and cause his government’s fall. All this is to be achieved by means of the “phony” charge of corruption.

Recently a journalist working for Hetek, a publication of Hitgyülekezet (Assembly of Faith), managed to induce some high-ranking members of the government to speak about the general mood in Fidesz circles. The very fact that these people spoke, even about sensitive topics, to a reporter of a liberal paper points to tactical shifts that must have occurred within the party.

Their argument runs along the following lines. Until now the Obama administration paid little attention to the region, but this past summer the decision was made to “create a defensive curtain” in Central Europe between Russia and the West. The pretext is the alleged fight against corruption. The Czech Republic, Slovakia, Hungary, and Romania are the targets. Fidesz politicians point to recent Slovak demonstrations against corruption which were “publicly supported” by the U.S. ambassador in Bratislava. Or, they claim, the Americans practically forced the Romanian government to take seriously the widespread corruption in the country. They are certain that the resignation of Petr Nečas, the former Czech prime minister, “under very strange circumstances” was also the work of the CIA.

In its fight against the targeted Central European governments Washington relies heavily on NGOs and investigative journalists specializing in unveiling corruption cases. George Soros’s name must always be invoked in such conspiracy theories. And indeed, Átlátszó.hu, sponsored in part by the Soros Foundation, was specifically mentioned as a tool of American political designs.

To these Fidesz politicians’ way of thinking, all of troubles recently encountered by the government are due solely to American interference. It doesn’t seem to occur to them that the government itself has given plenty of reason for public disenchantment. In fact, the first demonstrations were organized only against the internet tax. Admittedly, over the course of weeks new demands were added, and by now the demonstrators want to get rid of Viktor Orbán’s whole regime.

The Fidesz politicians who expressed an opinion think, I am sure incorrectly, that the Americans have no real evidence against Ildikó Vida and, if they do, they received it illegally. Vida got into the picture only because of the new “cold war” that broke out between the United States and Russia. Hungarian corruption is only an excuse for putting pressure on the Hungarian government because of its Russian policy and Paks.  As for Hungary’s “democracy deficit” and American misgivings about Orbán’s “illiberal state,” Fidesz politicians said that if the United States does not accept Orbán’s system of government as “democratic” and if they want Fidesz to return to the status quo ante, this is a hopeless demand. “Not one Hungarian right-wing politician would lend his name to such ‘retrogression.'”

The latest American “enemy” of the Orbán government is the State Department’s Sarah Sewall, Undersecretary for Civilian Security, Democracy, and Human Rights, who a week ago gave a speech at the Carnegie Endowment for International Peace in which she said that “we [recently] denied visas to six Hungarian officials and their cronies due to their corruption. This action also bolstered public concern, and on November 9th, the streets of Budapest filled with 10,000 protesters who called for the resignation of corrupt public officials.” As soon as Hungarian officials discovered the text of that speech, André Goodfriend, the U.S. chargé in Budapest, was once again called into the Ministry of Foreign Affairs and Trade.

I think it would be a mistake to characterize the American fight against corruption simply as a smokescreen for exerting political pressure on foreign governments. Sewall in that speech explains the potentially dangerous political ramifications of corruption.

Corruption alienates and angers citizens, which can cause them to lose faith in the state, or, worse, fuel insurgencies and violent extremism…. Ukraine …provides [an] illustration of how corruption can both increase instability risks and cripple the state’s ability to respond to those risks. The Maidan Movement was driven in part by resentment of a kleptocratic regime parading around in democratic trappings.

All this makes sense to me, and what Sewall says about Ukraine is to some extent also true about Hungary. But the Fidesz leadership sees no merit in the American argument. In fact, today both Viktor Orbán and Péter Szijjártó used very strong words to accuse the United States of interfering in Hungary’s internal affairs.

“We can’t pay as much in taxes as you steal”

Viktor Orbán sent a message from Belgrade. The prime minister does not know why the United States put aside 100 million dollars for “the preparation of an action plan against two dozen Central- and East-European countries in order to put pressure on their governments.” The United States declared Hungary to be a “field of operation,” along with others. Referring to Sewall’s speech, he expressed his dissatisfaction that he has to learn about such plans from a public lecture. “If someone wants to work together with Hungary or with any Central-European government for a good cause, we are open. We don’t have to be pressured, there is no need to spend money behind our backs, there is no necessity of organizing anything against us because we are rational human beings and we are always ready to work for a good cause.” It is better, he continued, to be on the up and up because Hungarians are irritated by slyness, trickery, and diplomatic cunning. They are accustomed to straightforward talk. (He presumably said this with a straight face.)

Viktor Orbán’s reference to the military term “field of operation” captured the imagination of László Földi, a former intelligence officer during the Kádár regime as well as for a while after 1990, who announced that in secret service parlance “field of operation” means that every instrument in the intelligence service can be used to undermine the stability of a country. The Americans’ goal, as Orbán sees it, is the removal of his government.

Meanwhile the staff of the Ministry of Foreign Affairs and Trade who were brought in by Péter Szijjártó are solidly anti-American. They consider the diplomats who served under János Martonyi to be “American agents” because of their alleged trans-atlantic sentiments. So I don’t foresee any improvement in American-Hungarian relations in the near future, unless the economic and political troubles of Putin’s Russia become so crippling that Orbán will have to change his foreign policy orientation. But given the ever shriller condemnations and accusations, it will be difficult to change course.

How not to win friends and influence people: Viktor Orbán

I’m sure that Viktor Orbán never read Dale Carnegie’s famous self-help book How to Win Friends and Influence People (1936) that has sold more than 18 million copies in the last 78 years. In fact, I fear that his own anti-Carnegie principles will ensure that he will eventually be hated by everyone, with the exception of the “hard-core” who think he walks on water.

One of the chapters in Dale Carnegie’s book speaks about the virtues of leaders, specifically “how to change people without giving offense or arousing resentment.” Among the principal virtues Carnegie mentions are qualities that Viktor Orbán totally lacks. He suggests that a good leader should talk about his own mistakes before criticizing the other person. Orbán and self-criticism? Carnegie also suggests that if a leader is wrong he should admit it “quickly and emphatically.” Or another piece of advice: “Be sympathetic with the other person’s ideas and desires.” Or “show respect for the other person’s opinions.” All these are alien concepts to the prime minister of Hungary. In fact, he does just the opposite of everything that Carnegie thought was necessary for a successful leader.

Take, for example, the erection of the ill-fated Archangel Gabriel monument. Regardless of how much criticism he receives, regardless of how many historians and art historians tell him that the concept is historically and artistically inaccurate, he plows ahead with it. Yesterday the Hungarian Academy of Sciences organized a conference on the issue; their condemnation was unanimous.

Or there is the decision to extend the capacity of the Paks nuclear power plant. As Bernadett Szél (LMP member of parliament) continues to dig into the details of the planned expansion it is becoming obvious that no serious feasibility studies were done before Orbán hurriedly signed the contract with Russia. But that is perhaps the least of the problems Paks is causing Hungary. Orbán’s newly found friendship with Vladimir Putin has led him to regard Ukraine as a potential trophy not only for Putin but for himself as well.

First, he tried to ignore the issue of Russian aggression in the Crimea, but since Hungary happens to be situated in a region that borders on Ukraine, Orbán had to line up, however reluctantly, with Hungary’s neighbors. He decided, however, to make a claim of his own–though for people, not land.

In the same speech I wrote about yesterday, he spoke briefly about Hungarian foreign policy. Here is a translation of the relevant part.

We will continue our policy of the Eastern Opening; we will strengthen our economic presence in the Carpathian Basin. This is in the interest of Hungary as well as of the neighboring countries and the European Union. This strengthening of regional economic relations is not in opposition to a resolute national policy [nemzetpolitika]. The question of the Hungarian minorities has not been solved since the end of World War II. We consider the Hungarian question a European affair. Hungarians of the Carpathian Basin deserve dual citizenship, communal rights, and autonomy. This is our view, which we will represent on international forums. The Hungarian question is especially timely because of the 200,000 strong Hungarian community in Ukraine whose members must receive dual citizenship, the entirety of communal rights [ közösségi jogok], and the possibility of  self-government [önigazgatás]. This is our expectation for the new Ukraine currently under reconstruction that otherwise enjoys our sympathy and assistance in the work of the creation of a democratic Ukraine.

Not exactly a friendly gesture toward a neighbor that is in great peril at the moment because of Russian aggression. As if Hungary would like to take advantage of the troubled waters for its own gains. Apparently, according to a leaked foreign ministry document, “Fidesz with its own national policy [nemzetpolitika]–even at the price of ‘fertile chaos’–is striving for a change in the status quo.” If there is one thing the European Union and the United States are worried about, it is ethnic strife in Eastern Europe. And Hungary just took a rather aggressive step in this direction.

The Hungarian ambassador to Kiev was immediately summoned to the Ukrainian Foreign Ministry. He was told in no uncertain terms that such a step “is not conducive to the de-escalation and stabilization of the situation.” The spokesman for the ministry noted that “certain aspects of [Hungarian] national policy were criticized by Hungary’s partners in the European Union.”

The Ukrainian reaction was expected. Donald Tusk’s response, however, was more of a surprise given the normally warm relations between Poland and Hungary. Both Tusk’s party and Fidesz belong to the same conservative People’s Party, and usually Orbán receives a lot of help in Strasbourg from Polish members of EP. But this time the Polish prime minister was anything but sympathetic. “I am sorry to say this but I consider the statement made by Prime Minister Orbán as unfortunate.” And he continued: “Today, when we witness the Russian efforts of Ukraine’s partition such a statement must raise concern. We need to be careful that in no way, whether intentional or not, it should sound as backing the actions of pro-Russian separatists.” He added that the Polish government will make sure that none of its neighbors threatens the integrity and sovereignty of Ukraine.

Donald Tusk and Viktor Orbán on May 5, 2014 / Photo Barna Burger

In cases like this it is Foreign Minister János Martonyi who comes to the rescue. According to Martonyi, Orbán’s words were misinterpreted. Orbán invoked “self governance” not autonomy. But if you read my translation carefully, you can see that he talked about both self-governance and autonomy in the Carpathian Basin. Martonyi tried to explain that self-government and autonomy are actually “cultural autonomy in Hungarian.” No, they are not. Cultural autonomy exists in Subcarpathian Ukraine already. There are Hungarian schools, Hungarian associations, Hungarian theaters.

Naturally, the opposition made hay out of these careless sentences of Orbán. Ferenc Gyurcsány recalled a sentence from the farewell letter of Prime Minister Pál Teleki to Miklós Horthy before he committed suicide. In April 1941 Hungary agreed to let German troops through Hungary in order to attack Yugoslavia with whom Hungary had just signed a pact of eternal friendship. In that letter Teleki told the Governor: “We became body snatchers!” On Facebook Gyurcsány asks Orbán whether he is playing the role of a body snatcher in these hard days in Ukraine.

Martonyi might have tempered Orbán’s harsh words but Orbán himself did not. He announced this afternoon that he simply reiterated the Hungarian government’s “long-standing views on the Hungarian minorities.” As far as he is concerned, the case is closed.

Viktor Orbán is the real danger, not the Hungarian far right

While commentators in the western media were not at all surprised about Fidesz’s electoral sweep, they were shocked at the substantial growth of the neo-Nazi racist party Jobbik. The original name of the organization was Jobb Magyarországért Mozgalom (Movement for a Better Hungary), which eventually was shortened to Jobbik, meaning “Better.”

Almost all the articles dealing with the election mention that “every fifth Hungarian” voted for an extremist party. Of course, this is not quite accurate because only 62% of the eligible voters actually bothered to vote, and it is a well-known fact that Jobbik followers turn out in high numbers. They even surpass Fidesz sympathizers. Nonetheless, this result must be a disappointment to Viktor Orbán, who has been trying for years to convince the West that his party is the guarantee that Hungary will not fall prey to extremists. After all, he argues, Fidesz is a party of the moderate right-of-center. On the far right are the neo-Nazis and on the left the “communists.” Naturally, with the exception of a very small communist party that hasn’t managed to get into parliament in the last twenty-four years, there are no communists in Hungary, a detail that doesn’t seem to bother the propagandists of Fidesz.

Now Orbán has to face the fact that all his efforts at weakening Jobbik’s base have failed. He thought that if he moved his own party farther and farther to the right he would be able “to steal” the Jobbik sympathizers. He showed Jobbik voters that his own government could satisfy all their demands. In his last termViktor Orbán gave numerous unexpected gifts to Jobbik. This was especially true when it came to media policy and questions of unifying the nation across borders. The rehabilitation of the Horthy regime was also originally a Jobbik demand. Moreover, it is possible that Orbán’s pro-Russian stance was inspired by Jobbik.

Despite Orbán’s best efforts, the 10% growth in Jobbik’s voting base came largely from the ranks of former Fidesz voters. On the last day of the campaign in Debrecen Orbán warned his audience that splitting their votes between Fidesz and some other party would weaken the Fidesz cause. Although he didn’t mention the party by name, it is clear that he was thinking of Jobbik. And indeed, once we have all the numbers I suspect we will find that a fairly large number of Fidesz voters split their votes between Fidesz and Jobbik. They voted for a Fidesz candidate locally but chose to use their second vote for the Jobbik list. In the final tally 100,000 more people voted for Jobbik than four years ago.

Jan-Werner Mueller in his article in The Guardian sees a correlation between the growth of Jobbik and Viktor Orbán’s pro-Russian policy. In order to understand the connection between Jobbik and Orbán’s pro-Russian policy we have to go back a bit. The first time I learned of Jobbik’s infatuation with Putin’s Russia was in 2009 when I read a study on “Russia’s Far-Right Friends.” According to this study, Jobbik’s attachment to Russia became evident for the first time during the Russian-Georgian border dispute. It also turned out that Gábor Vona, Jobbik party chairman, made at least two trips to Moscow even before 2009. Jobbik wanted “to open Hungary to eastern markets and to sell Hungarian products to Russia, China or even Iran instead of the European Union.” Jobbik also wanted to expand Hungary’s nuclear capacity and even then, the authors of the study believe, Jobbik had the Russian Rosatom in mind when it came to the Paks power plant’s expansion. Keep in mind that at this point Viktor Orbán had very different ideas about Russia, which he considered to be a danger to Europe and Hungary. It seems that Jobbik managed to convince him otherwise. He saw the light and more or less copied Jobbik’s ideas on Russo-Hungarian relations.

These moves didn’t slow the growth of Jobbik, just as government policies didn’t help the position of the conservatives vis-à-vis the extreme right in interwar Hungary. Orbán followed a policy of appeasement in dealing with MIÉP, the precursor of Jobbik, during his first government (1998-2002) just as he did in handling Jobbik. Give them what they want and perhaps they will be satisfied with Fidesz rule. That strategy didn’t work in the Horthy era as it doesn’t work now.

Viktor Orbán at the victory celebration, April 7, 2014 /Photo dpa

To be fair to Horthy, there’s appeasement (at a distance) and appeasement (embracing). I think we can safely say that Orbán’s ideas are closer to the extreme right today than were those of any of Horthy’s governments. After all, Orbán is a populist while Horthy and his ministers were hard-core conservatives. The leaders of the extreme right in the 1930s held some “revolutionary ideas” when it came to social policy. Many of the party’s ideologues were outright admirers of the Soviet experiment with its planned economy and egalitarian ideology. Szálasi, for example, was well versed in Marxism. For Horthy all that was anathema. It would have been unimaginable for Horthy to allow his government to conduct a pro-Russian/Soviet policy or to get too cozy with Ferenc Szálasi and his friends. On the other hand, Orbán seems quite willing to take over Jobbik’s ideas–their pro-Russian foreign policy as well as their views on modern Hungarian history–and pass them off as his own.

There is a paper thin line between Jobbik and Fidesz. I know that the western media is preoccupied with the growth of Jobbik, but I think everybody would be better off realizing that the real problem is Fidesz and the system Viktor Orbán created. Jobbik will be in opposition, but Viktor Orbán, who often carries the Jobbik banner, has practically unlimited power. He is the much greater danger, not Gábor Vona.

A brief summary of the Russian-Hungarian agreement on the Paks nuclear power plant

The sharp-eyed reporters of vs.hu, a fairly new site favored by younger readers, discovered on http://www.pravo.hu.ru the Russian text of the Russian-Hungarian loan agreement in connection with the extension of the Paks nuclear power plant. Although some Hungarian media outlets claim the text is no longer available, it can still be downloaded from the link vs.hu provided. Here are a few details I gleaned from summaries of the Russian text.

There were rumors earlier that Viktor Orbán had originally turned to the Russians for a general-purpose loan but that in the end he had to be satisfied with a loan earmarked for Rosatom to build two new reactors in Paks, which will double the capacity of the Hungarian nuclear power plant. It looks as if the Russians tried to ensure that the Hungarian government can use the loan of up to 10 billion euros only for Paks. Moreover, the loan will cover at most 80% of the total cost. The remaining 20% (and all cost overruns) will have to be paid to Rosatom by the Hungarian government in euros.

From the text it appears that the Budapest team involved in the negotiations didn’t tell the whole truth about the details of the agreement. They repeated several times that the Hungarian government’s 20% contribution will be due only at the very end of the twenty-one-year period during which the loan must be paid back. This is inaccurate. Every time Rosatom submits a bill, it seems, Hungary will have to pay 20% of it from its own coffers, not from the loan. And the bill will have to be paid within 15 days. If Hungary can’t pay within 15 days, there will be a heavy penalty: 150% of the original sum. If Hungary can’t pay for an extended period (to be precise 180 days), the Russians can cancel the agreement and demand repayment in full. As some people have already pointed out, such an eventuality could bankrupt the country.

Beginning this year, Russia will grant Hungary an interest-only loan at an annual rate of 3.9%. Once construction is completed in 2026 (or presumably even if it isn’t), the principal balance will be amortized over 21 years, with an interest rate of 4.5% for the first seven years, 4.8% for the next seven, and 4.95% for the final seven. Every year there will be two payment dates: March 15 and September 15. Happy March 15th, Hungary!

As of now, only LMP responded officially to those details of the agreement that the Russians decided to make public. According to Bernadett Szél, co-chair of the party, there are several points that are unacceptable. One is that Hungary will have to start paying on the loan’s principal in 2026 even if the plant is not completed by that time. The Hungarian government until now had insisted that loan payments could be made from the sale of additional energy that the expanded Paks would produce.

No wonder that Putin looks so pleased / Photo AP

I’m sure that within days experts will figure out how much this loan will actually cost Hungary and that the number will be staggering. As it is, Hungary’s indebtedness is large. Much larger than it was  in 2010 when Viktor Orbán became prime minister. According to the latest estimate, it is 30% higher today than it was four years ago. And one must keep in mind that in the interim the savings of millions of people were used to lower Hungary’s indebtedness.

Oh, and by the way, only a few days ago I read claims that the extension of Paks cannot take place without building a dam on the Danube. Well, that would add a few forints to the bill.

All of these calculations may be academic, however. The EU might scuttle the power plant expansion altogether. It could object to the state subsidies that would implicitly be provided to MVM (Hungarian Electricity Ltd.) since Paks provides energy to the utility company. Such an arrangement would give an undue advantage to MVM vis-à-vis its competitors in Europe. And then there are the strained relations between the European Union and Russia as a result of Russia’s attack on Ukrainian sovereignty. With the EU outlining possible sanctions against Russia, it will be difficult for Orbán to sell the idea of initiating such a cozy relationship with Putin’s Russia. Mind you, I think that a EU veto would be a blessing in disguise because this deal should never have been made in the first place. Hungary’s financial situation at the moment is so shaky that such a major investment is out of the question. (I opted for the word “shaky” to reflect Reuter’s claim that “Hungary has made a particularly convincing case for turning the ‘fragile five’ [Brazil, India, Indonesia, Turkey, and South Africa] into a ‘shaky six’.”) I’m not saying that Paks shouldn’t be enlarged eventually, but not now and not with Putin’s Russia.

An unusual debate on the new Hungarian nuclear plant: János Lázár and Benedek Jávor

The news from Russsia and Ukraine  is frightening. The major question now is whether Russia will be satisfied with the annexation of the Crimea or whether the Russian army will march in and occupy further territories at the “request” of the Russian-speaking inhabitants of Ukraine’s eastern provinces. I wonder what the Hungarian public will think if Russia manages to cut Ukraine in half and the Russian bear ends up quite a few kilometers closer to the Hungarian border. In addition, there are threatening Russian talks about Ukraine and its supply of natural gas, which naturally would affect the Hungarian energy supply. All this is happening in the wake of Viktor Orbán’s top-secret negotiations with Vladimir Putin about the expansion of Hungary’s only nuclear power plant in Paks, which will increase Hungary’s energy dependence on Russia.

Viktor Orbán was in a great hurry to close this deal, most likely because he wanted ensure that it was voted on while he has a guaranteed two-thirds parliamentary majority. But then came Vladimir Putin’s gambit, which casts the Paks deal in a different light. As it is, the majority of the population doesn’t want to build another power plant and a whopping 75% of them are against the Russians building it. The couple of months spent by the Orbán government trying to influence public opinion in favor of Putin’s Russia didn’t manage to erase the negative feelings Hungarians have when they think of the country’s almost fifty-year occupation by the Russians. With the events in Ukraine these fears have received a new impetus, which makes Viktor Orbán’s situation concerning Paks even more difficult. According to some observers whose opinions I trust, “Paks is dead in the water.” But for the time being the government is sticking to its guns and Viktor Orbán is acting as if nothing has changed. They even agreed to a debate on the expansion of Hungary’s nuclear capacity built by Rosatom on money lent to Hungary from the Russian state. It is about this debate that I would like to say a few words.

As we know, there was no debate whatsoever on Paks prior to the signing of the agreement although there is a great deal of interest in the issue. So a student organization of law students at ELTE called Joghallgatók Önképző Szervezete (JÖSZ) organized a post-signing debate. The law students active in the association invited János Lázár, representing the government, and Benedek Jávor of Együtt2014/PM, who is a staunchly anti-nuclear Green, to have an open debate. How did the students manage to convince such an important man as Lázár to participate? Gáspár Orbán, the prime minister’s son, is one of the leaders of JÖSZ. He was among the students who were busily arranging the podium just before the actual debate.

The interest was great. The large lecture hall was completely filled half an hour before the debate began. What was strange, and it says a lot about Hungarians’ attitude toward transparency, is that the debate was closed to the media as the result of a last-minute decision by the dean. Of course, reporters from several Internet news sites in addition to a journalist from Népszabadság managed to sneak in with fake IDs. Moreover, the whole debate, lasting longer than an hour, was recorded and is available online. But for those who don’t speak Hungarian here is a brief description of what transpired.

While Fidesz leaders might look very confident and can overwhelm their audience when delivering speeches, when they are supposed to engage in real debates they run out of steam. This is what happened to János Lázár.

Let’s start with the structure of the debate. There were three distinct parts. In the first part the topic was the circumstances of the agreement; in the second, questions concerning Russian-Hungarian relations were addressed to the participants; finally, in the third, the economic aspects of building a new power plant were discussed.

The debate began with Lázár, whose position was that nuclear capacity must be expanded because the old power plant will not be able to function beyond a certain date. This is true, but that date is far in the future. It would be quite enough to start to build the two new reactors in 2020. While he claimed that there will be no added capacity he did announce that in the government’s estimate in the next few years the need for electricity will grow by 1,000 megawatts. So, is there or isn’t there a need to produce more electricity? To give you an idea of the simplistic view Lázár and his friends entertain concerning this issue, for him the choice is “either a power plant or no Hungarian electricity.” No other options are available.

Jávor insisted that Paks II, the two new reactors, are additions to the present capacity. In addition, he listed the following objections: (1) the majority of Hungarians reject building the new reactors especially if it is done by the Russians; (2) the details of the agreement are not transparent; (3) the new investment will increase the price of electricity and will not add to the growth of the Hungarian GDP; (4) there will be too much energy when all four reactors are operational; (5) the building of Paks is too much of a geopolitical commitment to Russia; (6) the reactors will create fewer than the 10,000 jobs the government is talking about; (7) there are environmental concerns; (8) with interest the debt will be more than the government’s figure of 4.6 billion dollars. Jávor compared the deal to an especially deadly version of Russian roulette in which only one chamber in the revolver’s cylinder is not loaded.

When the moderator asked Lázár whether the government acted in such a way as to ensure the “democratic minimum,” he completely lost his cool. He interrupted the moderator and brought up a procedural question in order to avoid answering the question. He reduced the argument to: “either a power plant or no electricity.” From here on he talked about the fallacy of his opponent’s arguments but couldn’t come up with any arguments of his own. When he exceeded the allotted time he ignored the moderator and kept going. When the moderator inquired from him about the government’s refusal to make the details of the negotiations public, he told him and Jávor that they “should turn to the Russians with their requests.”

When it came to the price of electricity produced by Paks II, Lázár kept saying “atomic energy produces the cheapest electricity prices.” Yes, answered Jávor, the electricity Paks currently produces is inexpensive because the original initial investment has already been paid down. But the energy produced by Paks II will have to reflect the price of the new investment, which will be very costly. Lázár called this argument nonsense.

They moved on to national security issues. Jávor maintained that Hungarian dependence on Russian energy will increase after building Paks II while Lázár argued the opposite. In his opinion there is nothing to worry about because “the Russians have been here for sixty years and they are here today because they were the ones who built Paks.” So, nothing will really change. For Lázár nuclear energy means “independence.” Having only natural gas imposes energy dependence. To the question of why the Hungarian government asked for a Russian loan and why they didn’t turn, for example, to the IMF, Lázár’s answer was simple: “No one else would give a loan to Hungary except Russia.”

The debate naturally led nowhere. But there is also a good possibility that the grandiose Orbán plan for a Russian-built nuclear plant in an EU country will also lead nowhere. The Czech minister of defense already made it clear that Rosatom will never be in the running to build the Czech nuclear reactor. I can’t believe that the European Union could possibly let Putin’s Russia get close to an atomic power plant in Hungary.

Another corruption case and the news of the day

Yesterday I promised to write about another scandalous affair, this time involving a close friend and business partner of Viktor Orbán, István Garancsi. This morning after I read a number of articles on the subject I almost gave up on the idea. The case is so complicated–surely for good reason–that it takes some doing to figure out exactly what happened. Here is what I managed to put together. I’m waiting for more input from readers.

Shortly after Viktor Orbán won the election, companies dealing with distance heating wanted to raise their prices, a move that would not have been popular and something the new government wanted to avoid. So the government instructed the state-owned MVMP Partner Energiakereskedelmi Zrt. to supply gas to these providers from its reserves at a lower rate. In return, the government made sure that MVMP would receive cheaper western gas by way of compensation. In fact, the government bought a great deal more gas than was necessary to replenish the reserves. The extra, which was in fact the bulk of the purchases, was sold by MVMP to a company called MET. It then sold the inexpensive gas at a handsome profit.

MET has its headquarters in Switzerland, but some of its subsidiaries are in Cyprus, the British Virgin Islands, and the Cayman Islands. Behind its complex business structure are two Hungarians:  György Nagy and István Garancsai.  György Nagy was the founder of Wallis Rt., an investment company, whose CEO between 2000 and 2006 was Gordon Bajnai. Subsequent to Wallis Nagy was involved in several successful business ventures. István Garancsai is the owner of Viktor Orbán’s favorite soccer team, Videoton. He also owns a small credit union, Duna Takarék, which miraculously was not nationalized when all others were. It turned out that it was Duna Takarék that gave a loan of 600 million forints to Viktor Orbán’s soccer foundation in Felcsút.

These offshore companies got inexpensive gas thanks to the largesse of the Hungarian government. They then sold it at the going market price in Hungary. According to estimates, their profit was 50 billion forints in 2012 alone.

Those of you who are interested in the extremely complicated details should read the two articles published by atlatszo.hu on January 28 and February 3.

Just a taste of the complexity of the businesses involved / Source: atlatszo.hu

And now let’s move on to some important news of the day. Early in the morning it became known that although the Hungarian government claimed that the European Commission supported its agreement with Russia concerning Paks, the claim is not true. Of course, that doesn’t surprise me because members of the Orbán government are not known for their truthfulness. On Monday, for example, Viktor Orbán delivered a twenty-five-minute speech in parliament in which there was not one truthful statement about the real state of affairs. At any event, when the government initially made its claim that the EU was on board with the Paks deal,  HVG was skeptical and inquired from the commissioner for energy about the case. The reporter was told that the commissioner hadn’t received detailed information and that they were waiting until they had it in hand. Today came the news that the European Commission will investigate the case very soon.

And in a blow to the Hungarian government’s tax policy, the European Court of Justice ruled that

Articles 49 TFEU and 54 TFEU must be interpreted as precluding legislation of a Member State relating to tax on the turnover of store retail trade which obliges taxable legal persons constituting, within a group, ‘linked undertakings’ within the meaning of that legislation, to aggregate their turnover for the purpose of the application of a steeply progressive rate, and then to divide the resulting amount of tax among them in proportion to their actual turnover, if – and it is for the referring court to determine whether this is the case – the taxable persons covered by the highest band of the special tax are ‘linked’, in the majority of cases, to companies which have their registered office in another Member State.

To translate this convoluted sentence into plain English, the extra tax that foreign-based retail chains had to pay since 2011 is discriminatory. The judges instructed the Hungarian courts to make a ruling in accordance with EU laws in those cases where foreign companies suffered financial discrimination. Apparently the contested tax revenues amounted to about 90 billion forints. According to legal experts, it is likely that the Hungarian government will end up paying a great deal more compensation to these companies.

As for a resolution on the fate of the “Gabriel” monument, the suspense remains. Tomorrow János Lázár will have a meeting with various Jewish organizations. A leak published by Népszabadság claimed that the erection of the monument has been “postponed,” a statement that was promptly denied by Antal Rogán. Meanwhile one Jewish organization after the other is returning the money received from the government for the events of the Holocaust Memorial Year. In brief, it is a mess. But Viktor Orbán doesn’t like to admit defeat, and therefore there is a good possibility that he will go ahead with the project. Let’s hope that he realizes the gravity of such a decision given the general climate both within and outside Hungary.

Corruption and conflict of interest in Hungarian politics

Although Medián came out with a new poll on voters’ party preferences, it tells us practically nothing new. Fidesz is still leading and the united opposition has no more support than before even though a majority of people would like a change of government.

So let’s move on to two embarrassing cases, both involving leading MSZP politicians. The first is the easier to deal with. Gábor Simon, one of the deputy chairmen of the party, is accused of having two bank accounts, totaling €700,000, in an Austrian bank which he didn’t reveal in his financial statement. At the time Simon deposited the money he told the bank officials that the money was acquired by selling a piece of real estate and a firm he owned. The problem is that Simon didn’t own or sell any real estate or a company.

It was only on Monday that Magyar Nemzet published this explosive story, the timing of which was most unfortunate for MSZP. Attila Mesterházy, József Tóbiás, and Csaba Horváth are currently in the United States, but word already reached Budapest that Simon must give up all his important positions within the party. Simon, realizing his untenable position, “suspended his party membership.” A few days ago he was still a candidate in electoral district XIII, but according to rumors Ágnes Kunhalmi will run there in his stead.

Up to this point one could say that Simon was a bad apple and MSZP an innocent victim, but the situation is a bit more complicated. The prosecutor’s office has been investigating Gábor Simon in another case ever since last March. This particular case involved little money, only 300,000 forints. But his immunity was suspended despite MSZP’s protestations in committee. Although the two cases are not connected, the MSZP leadership should have been more cautious early on and not just say that it was a baseless accusation against one of the leading politicians of MSZP.

Apparently Simon’s downfall was caused by his wife, whom he divorced recently. (One has to be careful with estranged wives. Just think of the former wife of Attila Szász, Aranka, who spilled the beans about Viktor Orbán’s questionable business deals in Tokaj.)

The second case is a great deal more complicated. It involves István Józsa, an important MSZP politician who is the energy expert of the party. The background is as follows. Fidesz desperately wants to prove that MSZP always wanted to build one or two more reactors in Paks and that they also wanted to use Rosatom and Russian technology. This is what, they contend, Gyurcsány, Bajnai, and Mesterházy said before 2010, but now that the Orbán government made this fabulous deal with the Russians they are suddenly against it. Yesterday Fidesz came out with another “discovery.” István Józsa, who had a 42% share in a company called Gépkar Kft., received 6.6 billion forints worth of orders from Paks between 2000 and 2010. The Fidesz politician György Balla charged that Józsa’s opinions on Paks changed with his financial interests. Before 2010 he was for building the new reactors but now he is against it.

Józsa, who gave an interview to Hír24 on the fly in one of the many corridors of the parliament building, sees nothing wrong with his company getting work from the state-owned Paks nuclear plant. He pointed out that in 2002 when he became a member of parliament he withdrew from the actual management of the company. The company got the bulk of its orders from Paks between 2000 and 2002 when Fidesz was in power. Moreover, the sum of 6.6 billion forints in ten years may sound like a lot of money but anyone who is familiar with this industry knows that it is not considered to be a large amount. In 2010 they sold the company because they no longer got any orders. Zsolt Nyerges, a close business partner of Lajos Simicska, made their situation untenable. The man who bought the company eventually went bankrupt; under the circumstances the business was no longer viable.

The reporter inquired from Józsa several times whether selling his stake in the company wouldn’t have been more appropriate once he became an MP, but the politician indignantly refused the suggestion. He is upright man; he had nothing to hide; he didn’t do anything illegal; the company received work from Paks through competitive bidding. He doesn’t understand what’s wrong. I fear Józsa is not the only one who seems to be unable to grasp the inappropriateness of such arrangements.

On this score one could congratulate the Orbán government’s decision to forbid outside business or professional activities for members of parliament. However, as we know, in the political structure Viktor Orbán set up members of parliament are not the ones who truly matter. Fidesz MPs currently function as puppets or robots and most likely will do so in the future as well. The money and power are elsewhere, in the financial and economic circle of oligarchs around Viktor Orbán. They are the ones who matter.

Tomorrow I will investigate a case involving close friends of the prime minister in one of the shadiest business dealings of late.

Hungarians are not happy with the Putin-Orbán agreement on the Paks reactors

Well, it seems that for perhaps the first time in almost four years Viktor Orbán may be running into serious political difficulties on at least two counts. One is the government’s handling of the Memorial Holocaust Year, which has caused an international outcry by Jewish organizations as well as historians of the period. The second is his decision to make a deal with Vladimir Putin for the Russian state-company Rosatom to build two new nuclear reactors in Paks.

The Russian government will provide a loan of 10 billion euros which Hungary will have to pay back in thirty years. Although we know nothing of the details, we are supposed to believe János Lázár’s claim that the agreement just signed in total secret “is the business deal of the century.” In fact, the deal was so secretive that even László Kövér learned about it only after the fact. And to make sure that no one will know any of the details for at least a decade, Sándor Pintér, minister of interior,  immediately declared the negotiations and their accompanying documents a state secret.

Not everybody is happy on the right. Kövér, perhaps the best known anti-communist in the bunch, was apparently disgruntled but, being a good soldier, kept his anger to himself. Ágoston Sámuel Mráz, “the independent” political scientist at Nezőpont, initially said that many of Orbán’s supporters were surprised that the two reactors will be built from a massive Russian loan “because Viktor Orbán for a long time used anti-Russian rhetoric.” But since Kövér said nothing publicly, soon enough Mráz was writing articles supporting the brilliant idea of cooperation with Putin’s Russia.

Heti Válasz wasn’t exactly taken with the deal and rightly pointed out that “Paks is not a simple business deal.” Building the two new reactors “is a geopolitical concern.” And András Lányi, a faithful supporter of Fidesz and adviser to Viktor Orbán, thinks that Paks is “bad business and poses an unacceptable risk.”

At last we also know what Hungarian citizens think because Medián’s poll, taken between January 24 and 28–that is, about two weeks after Viktor Orbán’s visit to Moscow, was just released. The first surprise for me at least was that 82% of the population knows about Paks. One might say that, given the importance of this piece of news, the figure is not all that high. However, given the total lack of interest of the Hungarian population about anything political, I think this is not a bad result and shows the concern of Hungarians over a questionable decision that was thrust upon them.

Half of the population (51%) agrees that new reactors are necessary as a supplement to the existing ones. However, the Russian connection is controversial. Those who oppose it are in the majority (56%); only a third of the population supports it. As shown in diagram #1, half of the Fidesz voters support the Russian deal. (In the summer of 2012 only 25% of them supported a reactor built with Russian technology, which demonstrates the power of government propaganda.)

Diagram #2 shows the results of a question about receiving news of the Putin-Orbán agreement. Were people very, somewhat, or not at all surprised hearing the news? Seventy percent of even Fidesz voters were very or somewhat surprised. By contrast, all of LMP’s (I supposed one could call them naive) supporters were surprised; none thought that such Russian-Hungarian cooperation could possibly occur. Another interesting figure concerns those who are undecided voters (elkötelezetlen;  second from the bottom). Their figures are closer to the responses of the opposition parties than those of Fidesz-KDNP voters, which strengthens my conviction that the majority of the undecided voters leans toward the opposition rather than toward the government party.

Diagram #3 is the most important one. Here Medián asked whether people would support holding a plebiscite on the future of Paks and the further use of nuclear energy. The answer is clear: 59% the population as a whole supports holding such a plebiscite. Even Fidesz voters.

In light of these figures I have the feeling that Viktor Orbán miscalculated the effect of his “business deal of the century” and made a big mistake in forcing it through before the election. He rather cockily told Professor John Lukacs that “I would bet a lot that on the question of Russian relations the day after the election there will be perfect agreement.” Of course, that is, if Fidesz wins the election. But given the significant rejection of the Russian connection and the even larger demand for a popular vote on the subject, the quickly signed agreement might have been a serious mistake from Fidesz’s point of view. The election might turn on the question of Paks. Some observers are already comparing the situation to the Horn government’s decision in 1998 to go ahead with the controversial Slovak-Hungarian treaty that obligated Hungary to build waterworks at Nagymaros after Hungary lost the case at the International Court of Justice. Without going into details, suffice it to say that the treaty originally signed by Czechoslovakia and Hungary played a large role in the political unrest in 1988-89. Some people claim that Horn’s decision to go ahead with the project played a  major role in the socialists’ defeat in the 1998 election. Orbán might find himself in a similar situation, which is largely due to his ever-growing self-confidence. In the last four years he managed to get away with everything and therefore abandoned all caution. But he might be running out of luck.