Hungarian Spectrum

Hungarian education: Back to state schools?

Let's face it, Hungarian education is in shambles. There are too many colleges and universities. Because there is no tuition for about half of the students and because there are no strict limits within which a student must complete requirements for a bachelor's program, a lot of students look upon higher education as a pleasant way to spend six years or so doing practically nothing. When it comes to elementary education, most of the village schools with only a handful of students are not only very expensive to maintain but also of poor quality. On tests comparing educational achievement in different countries Hungary is lagging behind. Researchers claim that about 25% of the adult population is functionally illiterate. And then there are the huge masses of mostly Roma adults who didn't even finish eight grades and who have no marketable skills.

Those who try to convince the world that there is no problem with Hungarian education point to the impressive results of Student Olympics in Mathematics or Physics, where Hungarian students excel. Well, both descriptions of the Hungarian situation are correct, because there are huge differences between so-called elite schools and the ordinary run of the mill schools.

Here is a very brief account of the history of public education in Hungary. Until 1948 there were basically two kinds of schools: parochial schools and schools run by the government. Most of the lower grades were in state hands while most of the high schools belonged to the Catholic or Protestant churches. That changed with the nationalization of schools: 99% of schools became state schools. After 1990 an entirely new system was introduced. Some of the schools were given back to the churches, but the rest were handed over to local governments. This is a hybrid system where the central government contributes a certain amount of money per student, but otherwise the local governments are responsible for maintaining the schools in their jurisdiction. This is not a very good system especially in the case of smaller villages. There are so few students and thus the head quota brings in so little money that it is impossible to maintain the school. But who will take it over? Yes, one could suggest that the children of village P could be bussed to the next village. Ah, but it's not that simple if the next village refuses to accept the children from outside. As happened not long ago when it turned out that the children of village P were mostly Gypsies. No way the next village would take them. Unfortunately, I don't remember what happened exactly, but at the end the children of the village were not left without a school.

But it happens left and right that even larger towns are unable to keep up their schools. Some time ago I wrote about Tatabánya where the last non-parochial school was to be taken over by the Catholic church because the town was unable to maintain it. I felt then as I feel now that not giving parents a choice between a public and a parochial school is wrong. Whether the parent wants it or not, he/she will forced to send the child to a parochial school.

And now comes the surprise. The government came to the conclusion that it should reestablish schools under the direct jurisdiction of the state and thus limit the discrimination rampant in the current system. Also, I assume, the state would like to prevent situations like that which occurred in Tatabánya. What will come of it? Perhaps nothing, although I think it might be a good idea to take some steps in this direction. Local governments are strapped for cash, small villages are unable to maintain their schools. A chain of state schools could solve a lot of problems and might improve standards. I'm not a great fan of centralization but what's going on right now cannot and should not be perpetuated.

Ferenc Gyurcsány swings into action

It is almost inevitable that when there is really big trouble, Gyurcsány's adrenalin surges.This was the situation in late 2005 and early 2006 when MSZP trailed far behind Fidesz and Gyurcsány launched an incredible campaign to sell MSZP and his program. Miracle of miracles the MSZP-SZDSZ coalition won the elections. In the process he even managed to rally the normally apathetic MSZP troops: for instance, a huge spirited crowd gathered at an outdoor meeting and enthusiastically sang the catchy campaign song.

A similar burst of energy can be observed in the last few weeks, especially in the last few days. Most likely because the European parliamentary elections are near, Gyurcsány's verbiage is becoming sharper. Until now he was very careful not to emulate the tone of Fidesz politicians, although Gyurcsány can be devastatingly sarcastic if he is aroused. He was merciless when he made fun of Tibor Navracsics in parliament on February 16 and yesterday when in a speech he called his opponents "political con-men."

Yes, Gyurcsány is full of ideas and spares no energy to promote them. His latest is that he wants the European Union to arrange a package of as much as 180 billion euros to help East European economies, banks, and companies survive the economic storm. Here he is competing for attention with Viktor Orbán who on February 22 in Vienna scolded the west for not keeping its end of the bargain by not helping eastern Europe. He referred to a "contract" that had been broken, though it is not at all clear to me what contract Orbán was talking about. A couple of days earlier he apparently had talks with the prime ministers of Poland and the Czech Republic about some kind of cooperation among the East European countries. Today Orbán had a 50-minute talk with Angela Merkel. Since Merkel said nothing about the conversation with Orbán we have only Orbán's description of the meeting. According to him, he made three suggestions. (1) Western banks should resume cash flow to their branches in the region. (2) The European Central Bank should sell euros under the same conditions to non-eurozone countries as within it. And (3) Western governments should urge their companies to continue their investments in Eastern Europe. He didn't divulge Merkel's reactions, though he remarked that "minds are already open but not the pocketbooks." Orbán is even more ambitious than Gyurcsány: he wants 350 billion dollars or 276 billion euros. I think one can count one's blessing if Gyurcsány's suggestions bear fruit. Orbán's surely won't. For one thing, however bright his political prospects may be, he is not currently a major player on the international scene.

Gyurcsány already gave a name to his 180 billion euro plan: the European Stabilization and Integration Program. It would include short-term financing for governments, restructuring of private debt, capitalization of banks, and liquidity for companies in twelve different countries. Gyurcsány will present his plan at the March 1 European Union summit in Brussels. The Hungarian government already warned the Hungarian public not to expect results at the summit. It is not enough to convince the Western European leaders of its necessity; the plan would have to be put in place, which as we know only too well can be a daunting task. The program would help Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, and Romania. In addition two non-EU countries would benefit: Croatia and Ukraine. Meanwhile the European Bank for Reconstruction and Development and the World Bank launched major lending programs. The EBRD will lend 11 billion and the World Bank about 7.5 billion euros.

Gyurcsány has another favorite plan: to shorten the waiting period for admission to the euro-zone. Hungary has substantially reduced its deficit in the last two years. Right now the deficit is under 3%, comfortably below the 3.5% insisted on by the European Union. Inflation not surprisingly will also be low. Most likely well under 3.5%. According to the current rules Hungary would have to wait two years while holding the current figures before admission. This is what Gyurcsány would like to change. It seems that Poland will support the Hungarian proposal to shorten the waiting period. Whether the proposal will find support outside of the region is questionable. But Gyurcsány can be very persuasive. If he manages to pull this off his chances at the polls in 2010 would greatly improve. 

Economic Cacophony in Hungary?

At least according to Tibor Erdős that's what's going on right now in Hungary. One doesn't hear as much from Tibor Erdős as, let's say, from Lajos Bokros or László Békesi. Most likely one reason is his age. He was born in 1928. But the few times he speaks or writes it is worth listening to him.

Uncharacteristically, he wrote two articles that appeared in quick succession in Népszava. The first on February 19 with the telling title "Cacophony" (Hangzavar) and the second on February 26 ("Four serious problems"). In both Erdős tries to shed light on the complexity of Hungary's economic situation. Without pointing fingers he makes it clear that the reform economists don't realize that some of their remedies would actually deepen the economic crisis. Such as major cuts in spending. He also discards major tax cuts because the resultant growth in demand would only add to the country's dependence on imports.

So what should the government do? They should stimulate segments of the economy that would provide jobs and would not rely on exports. For example, investments in infrastructure. Moreover, such investment would be useful in later years once the country's economy rebounds. Investments in small and middle-sized Hungarian companies that target the domestic market would also make sense. Such investments are well suited for projects financed by the European Union. Let me add that it seems that this is exactly what Gordon Bajnai, minister in charge of economics and transport, is trying to do.

As for cutting back on spending, Erdős is cautious. He recommends restructuring expenses rather than decreasing the size of the total package. For example, he, like many others, suggests reducing the number of institutions of higher learning. I don't think he would go as far as Lajos Bokros, who would shutter over 60% of these institutions, leaving only 25 of the current 70+ institutions standing. But he would close those institutions that are not worthy of support. It might even help standards, which are fairly low at the moment. Practically anyone who finishes high school can enter some kind of college.

As for reforms. Yes, Erdős says, reforms are necessary but "reform economists and politicians, attention! Be cautious when it comes to reforms in the middle of an economic crisis. Introduce them after the crisis is over." Basically, if I read Erdős right, he endorses the government's program and warns politicians not to get too enamored with the radical suggestions of the reform economists. And this piece was written before the Reform Alliance gurus came out with their plans. Of course, it is possible that Erdős already knew what was brewing. After all, he is an academician, and in Budapest everybody knows everybody, especially within the same discipline.

Although Erdős's ideas are close to the government's proposals (and I wouldn't be surprised if he were one of the advisors the government consulted with) in one aspect he goes against the common wisdom. He suggests that the budget deficit requirement be loosened. A slightly higher deficit would help the country's recovery. That is most likely true, but what about the highly desirable Eurozone membership? Everybody thinks that Hungary should join as quickly as possible, and the government seems to be making some efforts to shorten the waiting period for countries that achieve the requisite inflation rate and budget deficit. The waiting period at the moment is two years. From what Hungarian politicians drop here and there one has the distinct feeling that for the moment at least the introduction of the euro is uppermost on the Hungarian government's mind. They are especially anxious about joining as soon as possible because the weakening forint is a real threat given the high percentage of outstanding loans payable in foreign currencies.

Well, Erdős's warnings didn't make an impression on certain Hungarian politicians. The cuts recommended by the economists of the Reform Alliance are embraced by SZDSZ and MDF. Both parties adopted the plan as their own, and parliament will vote on the question of whether the plan should be an agenda item, subject to the vote of the full parliament. I would wager to say that it will be dead on arrival. MSZP won't vote for it, and Fidesz is adamantly against any cuts in benefits and entitlements. Yet in order for the government's bill to go through they need some votes from either MDF or SZDSZ. So I'm almost sure that certain parts of the reform proposals will be incorporated into the final package to appease the enthusiasts of the Reform Alliance. I do hope that, in the give and take, they won't forget Tibor Erdős's warnings.

Crimes against Gypsies: 2008-2009

Népszabadság published a list of crimes committed against Gypsies in the last year or so. They mentioned 12 incidents but according to Viktória Mohácsi, Roma activist and SZDSZ member of the European parliament, the number is higher--16 or 17. In defense of the paper, it was not trying to come up with a definitive number; rather, it was summarizing those cases the paper had previously reported on. And I will summarize even more briefly.

The first incident occurred on January 22, 2008, in Szigetvár when five punks from Barcs attacked a Gypsy woman and her daughter late in the evening in the center of town. I wrote about the court's decision in this case: it was not a hate crime, it was not racially motivated. After all, said the judge, these fellows were not from Szigetvár and therefore they couldn't have known that this particular area was frequented by Gypsies. And second, it was dark so how could they tell that the mother and daughter were Gypsies? On March 1 in Tiszaroff someone set fire to the house of a local Gypsy leader and scribbled ugly epithets on the wall of his house. This case was never solved. On March 15 in Tapolca two 17-year-olds out of the blue beat a 32-year-old Roma man. He was seriously hurt and had a long hospital stay. On June 3 in Pátka Molotov cocktails were thrown into three houses. No one was injured but in the room where the children were asleep fire broke out. This time the police managed to find the perpetrators: the civilians who are helping the police keep order in the village! They are in custody but have not yet been brought to trial. On June 15 in Fényeslitke after a loud verbal exchange in a pub a 40-year-old local killed a 14-year-old Roma boy and seriously wonded his 16-year-old companion. On July 21 in Galgagyörk shortly after midnight someone fired through the windows of three houses owned by Gypsies. Luckily no one was hurt. The perpetrator remains at large. On August 8 in Pirics someone threw Molotov cocktails into two houses inhabited by Gypsies and wounded a woman who tried to flee. On August 19 in Székesfehérvár a bunch of youngsters hurled stones through the windows of an apartment house inhabited primarily by Gypsies. A 12-year-old girl was seriously wounded. On September 5 In Nyíradony-Tamásipuszta shots were fired at a house owned by Gypsies. Luckily, no one was hurt. On November 3 in Nagycsécs unknown assailants threw Molotov cocktails into two houses facing each other. When the inhabitants tried to escape two were shot dead. On November 18 in Pécs a grenade was thrown into a Gypsy family's house. The parents died but three of their children miraculously survived. On December 15 in the Alsózsolca Gypsy ghetto a 19-year-old man, cutting wood in the yard, was seriously injured when someone fired two shots at him.

With the exception of the Szigetvár and Pátka cases not one assailant has been apprehended to date. In the Nagycsécs case which, by the way, shows a remarkable similarity to the one in Tatárszentgyörgy the police offered a 10 million forint reward to anyone who can lead the police to the suspect. No luck.

In the face of the escalating crimes against Gypsies, many Hungarians don't understand why László Sólyom, president of the republic and self-styled moralist, has been silent on this issue. Last November, after the Nagycsécs arson and murder, the Association for Human Rights (Társaság a Szabadságjogokért) wrote a private letter to Sólyom and asked him to make a statement. President Sólyom never answered. They waited and waited until February 16, that is before the Tatárszentgyörgy murders, when together with several other groups concerned with minorities they wrote another letter to Sólyom. Once again they got no answer. Instead the president issued an essentially meaningless communiqué yesterday in which he expressed his hope that the police would discover the "motive" behind the murders soon. It is becoming clear that Sólyom is not willing to stick his neck out.

As we all know, Sólyom is no milquetoast. He can be tough, some might say irrationally stubborn, on issues that are important to him. For example, the U.S. practice of fingerprinting foreigners entering the country. Shortly after becoming president, he threw all diplomatic niceties to the wind and announced that he would not visit the United States as long as the country insisted on fingerprinting its foreign visitors. Or the case of the wild roses on the southern slopes of the Mecsek Mountains about the same time. He voiced his strong opposition to a radar installation nearby. NATO requirement or not, to this day there is no radar tower built in the Mecsek Mountains. He had no problem expressing his moral outrage after Őszöd when, even as the MTV building was under siege, he pretty well demanded Ferenc Gyurcsány's resignation. Or just today Sólyom traveled to Dunapataj where he gave a speech in the memory of the victims of communism. Perhaps HírTV, a right-wing television station, is correct in assuming that Sólyom doesn't want to make a statement because "the liberal legal defense organizations are expecting a racist statement" from the president. Racist from HírTV means: "in defense of the Gypsies." HírTV expressed its disapproval of Sólyom's silence after the Veszprém murder of handball star Marian Cozma by Romas belonging to the underworld.

My feeling is that Sólyom will continue to remain silent on the issue of hate crimes against Gypsies. As things now stand Fidesz is the odds-on favorite to win the elections next year, and I'm sure that László Sólyom would dearly love to have his five-year term extended. If his fate is in Viktor Orbán's hands, why side with the liberals? The best thing is to be quiet.

Two new victims in yet another attack against a Gypsy family

Two Gypsies, a man and his four-year-old son, are dead. They were victims of fatal gunshot wounds received while fleeing their house that had been torched.

They lived in Tatárszentgyörgy (Pest County), a village with a population of about 1,800. Because there are no ethnic statistics I don't know how many of these people are Roma. I assume a fair number because this is not the first time that I encountered Tatárszentgyörgy in the Hungarian media. In December 2007 the Hungarian Guard (Magyar Gárda), formed a few months earlier, decided to have a demonstration in Tatárszentgyörgy against "the existing Gypsy terror." The march of the guardists in military formation was designed to put the fear of God into the local Gypsy population. József Tibor Bíber, then vice chairman of Jobbik, the party of the far right, made a rather threatening speech, reminding people of the horrible incident at Olaszliszka a year before where a Gypsy mob attacked and killed the driver of a car in front of his two daughters. The precipitating cause: a young Gypsy girl ran from her house into the road; the car struck her. Although the girl sustained no serious injuries, the enraged relatives killed the driver. (Just to give you an idea of how slow Hungarian justice is, the case hasn't been decided yet.)

But let's get back to Tatárszentgyörgy. The family had a good reputation in the village. They built a new house with a modern kitchen and bathroom. The young man was a musician, and the family photos show a good-looking family sitting in a well-appointed living room.

So what happened?  As far as I can piece things together, a fire broke out in the house around one o'clock in the morning on February 23. The father phoned the fire department, then set about to get his family out of the house. He managed to save his wife and two of the older children, but as he was running out of the house with the youngest boy in his arms both were fatally shot. The father's family who lived next door immediately called the police and an ambulance. The police arrived about half an hour later and the ambulance sometime after that. By that time, both father and son were dead. Two of the older children, a boy and a girl, were injured, one of them fairly seriously. The ambulance took them and their mother, in shock, to a Budapest children's hospital.

The firefighters and the police didn't seem to be concerned. The firefighters perfunctorily announced that the fire was caused by faulty wiring. Although the neighbors apparently kept telling the police that they heard shots, the police refused to consider the possibility of either arson or murder. Eventually the doctor from nearby Örkény arrived to ascertain the cause of death. Two versions, one earlier and another later, circulate. According to the first, the family doctor didn't notice the gunshot wounds in father and son and announced that they had died of smoke inhalation. The second version came later, in the afternoon, from the head of the medical establishment where the doctor worked. According to him, the doctor noticed the bullet wounds and appropriately reported it. I'm afraid I don't quite believe the head of the practice. Because if the doctor actually noticed the bullet wounds, then how it was possible that the police didn't handle the incident as a possible crime? Because they didn't. For example, they didn't cordon off the area, they didn't check the grounds and thus they didn't notice the blood-stained snow near the house.

The local police suddenly changed their tune when the neighbors got in touch with some of the nationally known Roma leaders--Viktória Mohácsi, SZDSZ member of the European Parliament, and Orbán Kolompár, president of the National Gypsy Association (OCÖ)--who in turn phoned József Bencze, head of the country's police force. By the afternoon, in what can only be viewed as a pathetic parody of all the CSI TV programs, they had roped off the crime scene, discovered the blood stains, acknowledged the empty shell casings they had received from the neighbors, and admitted that close to the window of the room where the fire started there was a broken bottle. Bencze immediately ordered an investigation. But the odds of solving this case are slim. After all, just in the last year sixteen or seventeen very similar incidents have occurred: Molotov cocktail, tail end of the village, close to a forest, bullets from a shotgun and already there were a couple of victims who died under very similar circumstances. As of now not one case has been solved.

But by now everybody has moved into high gear. A group of researchers of the Roma question wrote to László Sólyom that he should say something about the dangerous situation that has developed in the country. We don't know whether he will make any public statement--until now he certainly hasn't although there was plenty reason to do so--but he called in the police chief and the minister in charge of the police for consultation. I assume that meant that he kept asking why the police cannot keep order in the country. The ombudsman for minorities, Ernő Kállai, himself of Roma origin, asked to be heard in parliament. He made a speech in which he asked for a "peace plan" between Romas and non-Romas. Apparently only about 25 members were interested in what he had to say. While Gypsy politicians on the left accuse Fidesz and the right of inflaming passions, Fidesz Roma leaders claim that there is only one problem: there is no order in the country. A stronger police force is the answer.

Meanwhile, a committee of the European Council dealing with racism and intolerance sent a report to the Hungarian government in which they expressed their disapproval of Hungary's legal system that gives too much leeway to hate speech. I don't know what President Sólyom will do now because time and time again he has defended a broad interpretation of free speech. This would be the second time that Sólyom's and thus the Constitutional Court's opinions don't meet the approval of the European Union. Knowing Sólyom and the Hungarian Constitutional Court nothing will change. Meanwhile the attacks on Gypsies can merrily continue. And I guess the use of Molotov cocktails and killings. But where will that lead?

"Fidesz has a substantive program for solving the crisis"

That is what Viktor Orbán said today. However, Gábor Kuncze, former head of SZDSZ and nowadays a "radio reporter," appeared on an MTV program called "A szólás szabadsága" (Freedom of Speech). The conversation focused on Kuncze's interviews of leaders of the parliamentary caucuses, among them, of course, Tibor Navracsics of Fidesz. Kuncze related that in this interview he wanted to ask Navracsics about the "program" Fidesz keeps secret. He was expecting the usual answer: either "go to our website and read our program entitled 'Erős Magyarországért'"  (For a Strong Hungary) or "we have turned in hundreds of proposals that were ignored by the government." So Kuncze re-read the so-called program and looked up all the Fidesz proposals that were turned into parliament for discussion; he remained unenlightened. Moreover, it seems that he wasted his time. Navracsics, to the great surprise of Kuncze, said: "We can't get the necessary economic data and we therefore have no team analyzing them either." So, continued Kuncze, Navracsics basically admitted that Fidesz has no program.

Shortly after hearing this interview I read a transcript of a radio interview with Viktor Orbán on InfoRádió in which Orbán said that "Fidesz has a substantive program for solving the crisis." That sentence was used as the headline to the interview. Therefore, I read eagerly, hoping to find the answer. It was a fairly long interview but out of the eleven questions posed only two had anything to do with the "substantive program."  From the answer we learned that in fact Orbán has been talking about the main points of the program all along. If Fidesz wins the elections they will immediately implement the program. Period. Even InfoRádió's reporter was dissatisfied with this answer and asked, "Could we hear some details of this package?"  Orbán's response was that there are not enough people working in Hungary; Fidesz will create one million new jobs. "It will take some years, it will not be easy, but we will accomplish the task." When the reporter inquired how Fidesz would create these new jobs, Orbán repeated the old mantras: tax reduction, abolishing the grey economy, and reducing bureaucracy. The real problem, he repeated, is the present government. "Hungary's problems are not primarily economic but political." End of interview.

First of all, as we all know, the "program" outlined by Viktor Orbán is unrealistic. Can it even be called a program? Especially a substantive one? I don't think so. I'm afraid in this case Tibor Navracsics's admission that Fidesz doesn't really have a program is closer to the truth. By the way, contrary to earlier strict party discipline when it came to communication (the so-called parrot commando), Fidesz  no longer always speaks with one voice. Sometimes György Matolcsy, the Fidesz economic expert, says things that contradict Szijjártó or Orbán. Even Mihály Varga, former minister of finance, made the mistake of saying that tax cuts are out of the question under the present circumstances. An absolute no-no in Fidesz.

As for the suggestions of the Reform Alliance, Szijjártó made no bones about it: taking away any entitlement is out of the question. Orbán was less negative: he expressed his delight that the Reform Alliance's economists adopted some of Fidesz's suggestions. He didn't specify. If you ask me, I would guess that he liked the idea of tax cuts without the corresponding cuts in social services. And that is a non-starter.

Orbán seems to be putting his energy into trying to steal the limelight from Prime Minister Ferenc Gyurcsány who on February 18 called for a €100 billion rescue plan from the European Union for the troubled banks in central and eastern Europe. Gyurcsány also announced that he raised the idea of an informal meeting of European leaders on March 1. Orbán is now championing a similar idea, but he is no diplomat. He accused the west of "breaking the contract with Eastern Europe"but not helping out the region. I'm not sure whether this is a smart way to go. In any case, he seems to be warming up an old idea of his: a north-south axis from Poland to Croatia that would in some way compete with the European Union.

Meanwhile, as I indicated in my comment this morning, MDF and SZDSZ love the unrealistic suggestions of the Reform Alliance. A couple of SZDSZ leaders, specifically József Gulyás and Gábor Horn, didn't even exclude the possibility of early elections, saying that from the point of view of SZDSZ the date of the elections makes no difference. They are most likely right about that: in either case they probably won't receive enough votes to participate in national politics. So at the moment the outlook is rather bleak. But in the past Gyurcsány could always pull a rabbit out of his hat. I remain hopeful despite everything.

The Hungarian Reform Alliance: ideas of capitalists and economists

It was at the end of November, 2008, that a new organization came into being: the Reform Alliance. It consisted of nine representatives of business associations, the president of the Hungarian Chamber of Commerce and Industry, the present and past presidents of the Hungarian Academy of Sciences, the former presidents of the Hungarian National Bank, and ministers of finance and economic development prior to 2002.

Considering that the Reform Alliance's suggestions had to have solid economic grounding, a slew of economists were invited to work on the project. Publicly only four names are known: László Békesi, briefly minister of finance in Gyula Horn's government and now a professor of economics; Attila Chikán, minister of economics in the first half of Viktor Orbán's tenure as prime minister, now also a professor of economics; Péter Oszkó, CEO of Deloitte in Hungary; and Éva Palócz, CEO of the Kopint-Tárki Economic Research Institute. Three of these (Békesi, Chikán, and Oszkó) headed workshops, each dealing with different aspects of the economy.

The long awaited report became available today, and in the building of the Hungarian Academy of Sciences the leading members of the Reform Alliance along with the above-mentioned four economists gave a press conference. And the reactions? Perhaps Ferenc Gyurcsány said it most succinctly: "It is impressive but in its effects on society is at times chilling." However, he added, the government will analyze the document line by line. He somewhat optimistically added that the government's and the Alliance's numbers for 2009 are closer than might appear at first blush. It is true, he said, that the government officially talked about a savings of 220 billion forints for the year, but they believe that the final number will be closer to 260-270 billion forints. That is not so far from the goal of the Reform Alliance, 330 billion for 2009. János Veres, minister of finance, mentioned two problem areas. First, he can't see how they could introduce property taxes in Hungary this year as the Alliance suggests. Second, he doesn't see where the funds will come from to cover the reduction in payroll taxes after 2009--by 3% in 2010 and an additional 2% in 2011. Gordon Bajnai, minister in charge of economics and development, cheerfully added that some of the Alliance's suggestions have already been adopted while others will be introduced shortly.

Fidesz wasn't that charitable. Péter Szijjárto, who by now is not just an ordinary spokesman but the director of communications, held a press conference this afternoon where originally he didn't want to deal with the issue. The press conference was held to announce Viktor Orbán's "international negotiations" and their results. Szijjártó stated that Orbán is planning to launch a common regional front (the so-called Visegrád Four, i.e. Poland, the Czech Republic, Slovakia, and Hungary) in order to receive greater financial assistance from the European Union. There are a couple of problems here. First and foremost, Orbán is not yet the prime minister of Hungary. Second, Ferenc Gyurcsány already made the same suggestion, and next week he has scheduled meetings with European politicians to hammer out an agreement. And there is a third problem: Orbán most likely wouldn't be a welcome guest in Slovakia. He did visit Poland and the Czech Republic, but according to a sarcastic remark by the prime minister, he went there to lobby for their support in his quest to hold onto his post as one of the vice-chairmen of the Christian Democratic International, an umbrella organization of 74 European conservative parties. Szijjártó also announced a new Orbán junket. This time to Berlin where Orbán will negotiate with important politicians of the German Christian Democratic Union and will also have a conversation with Chancellor Angela Merkel. Well, we will see about that. The last meeting with Merkel didn't quite work out the way Orbán planned.

Most likely to Szijjártó's annoyance there was a question from a reporter about the suggestions of the Reform Alliance. Szijjártó was adamant that no austerity package is acceptable. Nothing can be taken away from the people who are not responsible for the crisis. After all, laws provide for these social assistance programs and in a democracy one must obey the law. Moreover, the current economic crisis has nothing to do with thirteenth-month bonuses. The cause of the crisis is the government's ill-conceived economic policies. The real problems started with the austerity package of 2006. Well, that sentence took my breath away because everybody knows that the austerity program was critical in reducing the bloated budget deficit. I would hate think what the situation would be today if Hungary's budget deficit were still over 10%. As usual, the reporter was satisfied with Szijjártó's answer.

Back to the Alliance plan, described by many newspapers as "brutal cutbacks." The Alliance outlined a five-year plan. During this period the economists of the Reform Allliance suggest cutbacks in spending amounting to 1,350 billion forints. They would abolish entitlements as they now exist. Instead people would receive assistance, including child support, only on the basis of need. They would abolish the extra month of pension completely, not just incorporating it into the normal year as the government planned. They would raise the retirement age at a much faster pace than the government announced. In the next three years they would reduce payroll taxes by 10%. The lower personal income tax bracket, qualifying for an 18% tax rate (as opposed to the 38% rate for the more affluent), would include all those with incomes under 5 million forints, 2 million more than the government's suggested limit.  Currently there is a flat rate of 1,900 Ft per month paid by an employee as his or her healthcare contribution. The Alliance would demand 5,000 Ft a month instead. The economists added that in addition to the 1,350 billion in savings another 1,000 billion could be saved by freezing government expenses at their current level. Attila Czikán claimed that the Hungarian educational system is "awful" and that another 20 billion could be saved while improving standards. Éva Palócz concentrated on such state enterprises as the Hungarian Railroads (MÁV) and the Budapest Transit System (BKV). According to her another 85 billion could be saved there. According to Péter Oszkó (Deloitte) the current disbursement of GDP is 50.5% as opposed to the Polish and Czech 42-43% and the Slovak 38%. Therefore it is clear that in comparison to the other three Visegrád countries Hungary is not competitive. The Alliance would like to lower Hungary's disbursement to 42.1%. According to Békesi such a move would ensure a 1.5% percent growth in GDP per year and it could even reach 3-4%. Their calculations are based on a forint-euro ratio of 260-280 and a 2.5% inflation rate. They think that Hungary would be able to fulfill all its obligations for entering the eurozone by January 1, 2012.

As Menedzsment Fórum, an online economic newspaper, summarized the current situation, neither the government nor the opposition will stand by the suggestions of the Reform Alliance because "they are afraid of social upheaval." My feeling is that the government will adopt some of the less draconian suggestions of the Reform Alliance in order to appease its framers. In the short term the work of the Alliance may benefit the government. The people may just think that they are lucky to have the government's proposal that is not so "brutal" after all in comparison to the "chilling" suggestions of businessmen and economists.

Confusion and noise in SZDSZ

Within a week's time three SZDSZ politicians have spoken in three different voices. First there was Gábor Fodor, the head of the party, who in his response to Ferenc Gyurcsány's speech in parliament pretty well promised cooperation with the government. People who keep fingers crossed for some understanding between the two parties were relieved. Then came István Szent-Iványi, currently SZDSZ member of the European Parliament and the foreign policy expert of the party, who declared that "Gyurcsány is not the right person to lead the country out of the crisis." And he repeated Fidesz's favorite accusation that the prime minister is discredited. When pressed by Olga Kálmán today whom he would consider more suitable, Szent-Iványi couldn't come up with a name. When pressed again he came up with the shopworn idea of "a government of experts." I couldn't believe my ears.

But perhaps the most bizarre was an interview with János Kóka on György Bolgár's talk show this afternoon. János Kóka's answers are simple. (Apparently he learned the value of simple answers from Ronald Reagan!)  The answers are indeed very simple on paper: let 150-200 thousand public servants go, close about 50 universities, and reduce the number of hospitals by half. Simple, isn't it? It didn't matter how hard Bolgár pressed Kóka about the details, no creditable answer came from the man. Kóka kept repeating that if one wanted to know more about the details of SZDSZ's plan one ought to read his article in yesterday's Népszabadság. Well, I did.

I found even the title troubling: "The state itself is the problem." Well, that sounds familiar, doesn't it. As if János Kóka has been spending his days studying the life and political career of President Reagan! This is an interesting observation in the middle of a crisis that began in the United States at least in part because the state didn't pay enough attention to the financial world. Admittedly, his emphasis is not on regulation but on the size of government and its nefarious role in income redistribution. His plans, if you can call them plans, are simple enough. Everything ought to begin anew, says Kóka. One ought to forget about the past. Policy makers should start with a tabula rasa. First and foremost, Hungary should immediately introduce a flat tax. Calculations about how this would affect the budget or the deficit are not offered. The government should simply declare that from here on they would demand only 40% of people's income in the form of taxes and therefore it would have to reduce expenses. Drastically. Ten per cent. Less money for education, for healthcare, for social services, for pensions, for research, for agriculture, for the academy. But presumably more money in the pockets of citizens who, according to the mantra, spend more wisely and less wastefully than does government. I am not ruling out the possibility of a healthy debate about a flat tax sometime in the future. But now, when there's going to be a greater than normal need for a governmental safety net as the world markets implode, this debate on overhauling the tax structure seems singularly ill timed.

In the first few paragraphs Kóka outlined the sins of MSZP and Fidesz in promising heaven and earth before the elections. Very true. But when it comes to Péter Medgyessy's extravagant promises of a 50% raise in the wages of public employees, tax-free low income wages, and the thirteenth-month pension, Kóka was unwilling to take any of the blame. After all, SZDSZ was only the junior party in the coalition government. Another interesting observation from Kóka is that "the crisis didn't arrive in Hungary in the fall of 2008 but years before that." How many years before? After all, Kóka was minister of the economy between 2004 and 2007 and during that time he proclaimed that "the economy of Hungary is roaring." Another memorable pronouncement: "Hungary is the Pannon puma." Or: "Germany and France can be envious of Hungary." Kóka didn't seem to realize the depth of the crisis when he was in charge.

It is not at all becoming from the second man of SZDSZ to copy Fidesz's rather cheap attack on the government that "last fall we had to run, ahead of Pakistan and Ukraine, to the IMF." Moreover, it seems that Kóka thinks that the credit Hungary received from the IMF, World Bank, and EU Central Bank was the cause of the financial world's loss of trust in Hungary. And finally he comes up with a rather dubious historical comparison. The atmosphere of today is akin to that at the end of the 1980s. Everybody knew then that things couldn't go on in the same old way, but people were convinced that the Soviet Union would live on for at least another twenty years. "There was a small minority that was capable of moving the masses." Soon enough came the change of regime. Of course, the members of this small minority were those who later established SZDSZ. Kóka is convinced that "the minority is here again." "Perhaps their numbers haven't yet reached a critical mass, but their numbers grow day by day." Oh, how optimistic. The truth is that SZDSZ has a shrinking base.

A lot of people felt compelled to write comments on Kóka's article. The one I liked best was "The appropriate title would read: 'Kóka himself is the problem.' "

Katalin Szili and her beloved Pécs

Katalin Szili (prounced as "silly"), speaker of the house, is in a difficult situation: she has to decide whether to run for mayor of the city of Pécs where the MSZP mayor, Péter Tasnádi, died recently. Tasnádi became mayor upon the near fatal car accident of the earlier, very popular mayor, László Toller (also MSZP). Toller was an important man within the party and a very good friend of the speaker of the house, a native of Pécs. Toller fell into a coma sometime in June 2006, shortly before the municipal elections, and when it became clear that his recovery was unlikely Szili, a parliamentary member representing one of the Pécs electoral districts, helped to handpick Toller's successor, Péter Tasnádi. As far as I can see, Tasnádi was a bad choice.

MSZP barely managed to hang on to Pécs in 2006. If I recall, in the city council they have a one-man majority. I also remember that Tasnádi's lead was so narrow that a recount was necessary. Unfortunately Tasnádi was not a good administrator. Perhaps the greatest fiasco was the cultural capital of Europe project. Toller managed to win the competition among Hungarian cities for this title, but under Tasnádi at least two or three years were completely wasted. One project manager after the other resigned; nothing, as far as I know, has even been started. There is only one year left and Pécs is simply not ready to welcome those thousands who would visit one of the three 2010 cultural capitals of Europe. (The other two are Essen and Istanbul.) 

The popularity of Tasnádi and MSZP, shaky in the fall of 2006, has been falling off a cliff. My relatives tell me there is no way that MSZP can win the interim elections. Except, the socialist party leadership strategizes, if they manage to convince Katalin Szili to run. But, understandably, Szili is dragging her heels. It would be a huge self-imposed demotion. As speaker of the house she has prestige as one of the top three politicians (the other two being, of course, the president and the prime minister). She has creature comforts becoming her status, including a spacious house. She is the most popular socialist politician and has a sizable following within the party apparatus: the left wing of the party especially loves Szili, I think because she has been a fairly severe critic of the liberal Ferenc Gyurcsány at the other end of the spectrum.

Initially Szili promised an answer for tomorrow but now I hear that the final decision has been postponed till Tuesday. Although there is certainly no comparison between her present position and that of mayor of Pécs as well as an ordinary member of parliament, a risk manager might recommend the move. After all, at the moment it looks probable that Fidesz will win in 2010. In that case, Szili would no longer be speaker of the house, just an ordinary member of parliament. So from her point of view it might be advantageous to try to become the mayor of Pécs as well.

Can Szili win in Pécs? Opinions vary. Some people think that the socialist leadership since 2006 has been so bad and the cultural capital project such a failure that not even the very popular Szili can prevail. Others are more optimistic. In any case, almost everybody thinks that MSZP's only hope in Pécs is Katalin Szili. If she can't win in Pécs, MSZP will be in real trouble in 2010.

Eastern European economic and financial woes

In today's New York Times there is an article that outlines the troubles of the region. See http://tinyurl.com/dkpqpv. Bloomberg is pessimistic (http://tinyurl.com/d9mnlk) as is the Wall Street Journal (http://tinyurl.com/bdlyuw). Meanwhile the Hungarian left-liberal media find it objectionable how gleefully Viktor Orbán walked out of the chamber prior to Ferenc Gyurcsány's important speech concerning the crisis. Picture below. One thing is sure: if one is concerned only with party politics, especially from the point of view of the opposition, a nice big economic crisis is a welcome event. However, it is hard to imagine that responsible politicians can look at the present situation with such obvious delight. Assume that Fidesz wins the next elections. And then what? Let's say that in the meantime the country comes close to bankruptcy. That cannot be good for Fidesz either. Hard to imagine what is in their heads. In the last couple of weeks the favorite adjective was "brutal." Everything was "brutal," especially any  news about the details of the austerity package. Now "brutal" seems to be passé. Neither the party spokesmen nor the leaders of the Fidesz-Christian Democratic caucuses speak of "brutality." It has now been renamed: "the package of hopelessness." Copyright Viktor Orbán. Isn't it a delightful psychological ploy to lift the spirit of Hungarians? The situation is "hopeless," but if it is hopeless now it wouldn't suddenly become hopeful if tomorrow the country's prime minister were Viktor Orbán.

Meanwhile a few more intended changes were announced: the government is planning to reduce the number of council members in local governments by fifty percent. In addition they want to increase the population threshold for villages to have a full-time mayor. Right now several villages with fewer than 500 people have a full-time mayor. That's all very nice, but as far as I know in order to change the current law one needs a two-thirds majority in parliament, and Fidesz will not vote for such a change. After all, most of the local governments are in Fidesz hands.

Another interesting development is that today it was announced for the second time that Viktor Orbán's yearly speech about the state of the country is being postponed. Orbán while prime minister adopted the American practice of giving a State of the Union address, but with a twist. He didn't deliver the speech in parliament. After all, there the opposition party leaders might challenge him. No, he gave these yearly speeches outside of the parliament in front of invited guests. All admirers of the prime minister. Even after Orbán lost the elections he continued his yearly orations called "évértékelők." Or in English: assessments of the year. This year it was announced that Viktor Orbán will wait until Gyurcsány makes his speech on the first day of the spring session in parliament. The date was to be February 18. Today. Then a few days ago it was postponed, and today it was further postponed by two weeks because of Orbán's international "negotiations." Apparently, he is planning to go to Poland "to talk with the Polish prime minister" and will give a talk in Vienna. Other "negotiations" were not mentioned. Most likely, the postponment is not due to international negotiations but rather because at the moment Orbán doesn't know what to say. Surely, he can't show up and offer no solution to the ever deepening economic crisis. Perhaps he wants to see what the next two weeks will bring. Sooner or later we will find out, I trust.