the European Union

The tenth anniversary: Hungary and the European Union

It was ten years ago that ten new countries were admitted to the family of the European Union: Lithuania, Poland, Slovakia, Latvia, Estonia, Czech Republic, Malta, Hungary, Slovenia, and Cyprus. The Hungarians were somewhat disappointed because they felt that Hungary was better prepared for membership than some of the others and had hoped that the admission would not be wholesale, that Hungary would be handled differently from the rest.

Since then an incredible amount of money has arrived in Hungary from Brussels, but unlike some other countries in the region Hungary has not made good use of this largesse. To make the size of the contribution easier to grasp, 16 Metro4s could have been built from the EU monies. Or, between 2004 and 2013 the money Hungary received amounted to a gift of half a million forints for every citizen of the country. Or, as someone put it, Hungary received 2 billion forints every day for the last ten years from the Union. In forints, Hungary received 6.2 trillion forints that went straight into the budget while another 2.1 trillion came in some other form of financial assistance. In the last four years 90% of all government investment came from the European Union. Yet there is little to show for it.

The results are especially disappointing if we compare Hungary to other countries in the region. In 2004 Hungary’s economic advancement measured in GDP per capita was 63% of the EU average. Today that figure is 67%, only 4% higher. Slovakia, on the other hand, during the same period managed to gain 20% and now stands at 77% of the EU average. The very low Hungarian wages have also been slow to rise. Ten years ago the average wage was 93,000 forints. It is now 151,000. But in terms of real wages that is only a 12% rise. The number of jobs has grown by 38,000–only 1% more jobs than in 2004.

According to The Economist there are four clear winners among the new member states: Lithuania, Latvia, Poland, and Slovakia. One has only to look at the IMF chart below to see how badly the Hungarian economy has done in the last ten years despite EU subsidies that were the highest, given the size of the population, of any country in the region:

10-year EU tagsagThe Bruegel Institute, a European think tank specializing in economics, published a study yesterday entitled “10 years EU enlargement anniversary: Waltzing past Vienna.” According to the study, measured in terms of purchasing power Warsaw, Bratislava and Prague now have a higher GDP per capita than Vienna. Budapest failed to surpass Vienna, although it is not too far behind.

Enikő Győri, the person responsible for Hungary’s dealings with the European Union (I don’t envy the woman), naturally puts a better spin on the state of affairs. She emphasizes that Hungary’s EU membership is “an unqualified success.” I guess she is right if we look at the inflows, but the story is different when we look at the meager results. She claims that in the last ten years Hungary managed to increase its GDP by at least 10% and its economic growth by 1.2% . These figures apparently come from an unnamed Belgian research institute. She had to admit, however, that on the basis of purchasing power Hungary in 2004 was in second place, just behind the Czech Republic, whereas by 2014 both Slovakia and Poland managed to surpass Hungary. The Washington Post described the last ten years in countries such as Poland as a period of “galloping growth.” That was certainly not the case in Hungary.

The tenth anniversary came and went, but there was no commemoration of Hungary’s ten years in the European Union. Magyar Narancs published a very, very short article. It had only a headline and a “picture.” The headline read: “A telling picture of the celebrations of the tenth anniversary.” And underneath was an empty picture frame. ATV collected a list of comments by politicians from both camps. Those from Viktor Orbán’s side were uniformly negative. We must keep in mind, however, that the prime minister said in his victory speech that the election results showed that Hungarians want to stay in the European Union, albeit with a strong national government. There is no alternative to the European Union.

The Orbán faithful try to follow his lead, although it is clear that they find it difficult to be enthusiastic. Gábor Stier in an opinion piece in Magyar Nemzet does write that “we are on the right path,” but he bemoans the lack of “solidarity” in the Union. I don’t know how many more billions of euros would be enough for Stier to feel true solidarity coming from the richer members of the Union. And naturally, he is uncomfortable with the “crisis of values” the Union allegedly suffers from. But in the end, he even risks saying that the “rules of the club are a disciplinary force that keeps Hungary on the straight and narrow.”

Before we get too optimistic about future relations between the Orbán government and the European Union we might want to take a look at a headline in today’s Magyar Nemzet: “The European Union wants to shove dangerous honey down our throat.” Here we go again!