Portfolio blogger

Thursday, September 11, 2014

What does the portfolio allocated to the Hungarian commissioner mean for the EU and Hungary?

The strained relationship of the Hungarian government with the EU makes this question very interesting. Are turf wars being fought? How will the new Hungarian commissioner fit into the team? How will he perform? Will this mean something to Hungary? The topic is also good to give rise to some remarks on the sidelines about the structure of the new commission and about other portfolio assignments.
1., Contrary to his demands Mr Navracsics did not receive the enlargement or neighbourhood portfolio. This went to Johannes Hahn from Austria, previously commissioner for regional policy. Given the Hungarian government's nationalist rhetoric and recent tentatives to appease with Russia and to slip out of sanctions, this is no surprise.
2., Thus, the message of the president, that it is not countries but people to whom the portfolios are allocated (in plain English, that the experience and assumed capabilities of people defined the allocation, not the performance of their country – even, as the example of Mr Moskovici shows, their performance in their country), may not quite be true for the Hungarian commissioner. I will go into more detail below, it is just to mention that the performance and lines taken by a politician in his/her own country cannot be entirely separated from his/her capabilities and expected performance. The "persons, not countries" approach is rather true for the French and the British Commissioners. Although Mr Moskovici is under the coordination of Mr Katainen, he got a weighty portfolio (see below). By the nomination of Mr Katainen, however, according to Open Europe, a British think-tank close to the Conservative Party (and thus not really an euro-enthusiast) " Germany has ensured that there is a voice in favour of austerity and structural reform to balance out the French preference for fiscal expansion." See: http://www.euractiv.com/sections/eu-priorities-2020/dutch-eu-nominee-wield-veto-right-over-excessive-bureaucracy-308344. Mr Hill of Britain got the financial services (but not the internal market) portfolio and a dedicated new directorate general will be set up. To draw conclusions from the reorganisation (i.e. which parts of the organisation move to this new DG), requires a separate analysis.
2., Previous gossip that he may get the trade portfolio (although this version was quickly questioned: http://blogs.ft.com/brusselsblog/2014/09/03/the-mysterious-new-commission-organigram/) or development (somewhat akin to the enlargement or neighbourhood portfolio he was eyeing) did quickly subside (International Cooperation & Development was allocated to Neven Mimica, delegated by Croatia and commissioner since Croatia's accession, dealing with consumer protection,-separated from the health and consumer protection portfolio for him), but the latest guess that he may get customs also has proven wrong (customs was not, as it would have been in this scenario, separated from taxation and both were assigned to Mr Moskovici, to create sort of a super-portfolio of economics). Finally, he received the "Education, Culture, Youth and Citizenship" portfolio.
3., The EU does not have too many rights in education and culture (in federal Germany, education is not even federal, but "Länder" competence). Mr Navracsics has no great credentials in this area, either. The areas related to the labour market, skills, continuing and professional education etc., have been taken over to the Belgian Commissioner, Marianne Thyssen, to be responsible for employment, social affairs, skills and labour mobility Some bits and pieces were added to Navracsics's portfolio: the EIT, situated in Hungary and led by a strongly reform-minded ex education minister of Hungary (oh, another potential controversy), who is liberal by the way while Orbán, the Hungarian prime minister declared that he wants to build an "illiberal" state (whatever this means), the Joint Research Centre (with the message that the JRC has to support his activity by scientific analysis) – but research and innovation is the portfolio of the Portuguese Carlos Moedas - and the Publications Office (with a Director General, who is a Luxembourger and is at the moment assigned the portfolio of Ms Reding – both Luxembourg and the former Fundamental Rights commissioner and vice president Reding had a controversial relationship to Hungary and vice versa). As a small irony, he will take over part of that portfolio (although small): to manage the communication of the Europe for Citizens Programme, and the responsibility for the Preparatory Action “New Narrative on Europe” 2015.
4., He is mentioned in the press release as a strong point in the Commission as an ex deputy prime minister and ex minister (which is true) and as having extensive foreign relations experience as an ex minister of foreign affairs – a post he occupied for some five months and this only as a preparation for his post as commissioner. His real area as minister was law and administration where his track record has not been dismal in technical terms but he was part of some very controversial actions of the government (forced retirement of judges, cutting the rights of the Constitutional Court, creation of a mameluks' university "called Public Service University) and he was also part of the effort to curb media freedom. Besides his personal track record, he is a fathful member of FIDESZ, whose leader, the Hungarian prime minister was the only besides Cameron who voted against the nomination of Juncker as Commission president in the decisive Council meeting. If Navracsics and Juncker want to demonstrate that in spite of all these controversies, they can work well together, and thus avoid future controversies, may be helping the spirit but lead to conflict-avoidance even in questions where conflict could be productive. But having actions guided by past offences is not productive either. There is a declared will to co-operate, at least.
5., Five years are a long time. Mr Navracsics may plan to return to domestic politics thereafter (or try to spend another cycle as there is a probability that his party, FIDESZ will win the 2018 elections) but to do any of these, he has to perform in his role. To return to domestic politics, however, he also has to be in line of the government's lukewarm attitude to the EU. This is a contradiction in itself. He faces and even more difficult choice, on the other hand, if we assume that the elections in 2018 bring a new government in Hungary. The EU has not too many prerogatives in education but reading the mission letter http://ec.europa.eu/about/juncker-commission/docs/navracsics_en.pdf we can see that there are tasks. But these are not the ones in which the Hungarian government excelled – although independently of the influence of the new commissioner.
He is to take part in several priority projects of president Juncker where he will have to work under the co-ordination of several vice presidents, among others with Andrus Ansip from Estonia (a selection where the country is also right: Estonia is spearheading e-administration), where Hungary just recently closed its representation. There are interesting times ahead.
Further details: http://europa.eu/rapid/press-release_MEMO-14-523_en.htm

Saturday, August 23, 2014

Women in work - the trend increases in spite of traditional family values rethoric - introducing also the Eurostat gadget

Eurostat has a gadget generator on its site. I used this to show the proportion of women in work in Hungary during the latest years:

Sunday, July 20, 2014

Hungarians in the European Institutions

The European elections mark a change in the composition of not just the Parliament but also the Commission, election of the new president of the European Council and of the High Representative of Foreign and Security Policy, who is at the same time the vice-president of the Commission responsible for external affairs, head of the European External Action Service and chairs the meetings of the Foreign Affairs Council (all other Council configurations being chaired by the respective minister or prime minister or head of state of the country holding the rotating six months presidency of the Council, depending on the configuration).
Civil servants do not change, only some directors general may change posts (usually remaining directors general, just in another Directorate General), but this is a much smaller change even among directors general than the usual rotation after they have spent about five to seven years on their post. It is not going without attention, however, at least in some member states, how they are represented among civil servants of the EU (see here the British and here the French), in particular on management posts. So we will give a little analysis of what can be seen now in the “strength” of Hungarians in the EU.

The data and positions of the MEPs are public, and the Commission also publishes regularly different staff statistics. As far as the Parliament is concerned, the blog of Julien Frisch published overall nationality data. No data were found about the Council secretariat. Here is what Julien Frisch knows about it. Here you can find interesting research about the attitudes of Commission staff.

Hungary has 21 members in the European Parliament. Two of the members of the FIDESZ-group (EPP) are from the Hungarian minority in the neighbouring countries (Romania and Serbia) while three MEP-s won mandate from the Hungarian parties, one in Slovakia and two from Romania. One representative of the FIDESZ party was elected vice president of the Parliament – the FIDESZ-group already gave a vice president in the last cycle so this is confirmation of their position. As the EPP lost places, the support of the relatively large FIDESZ-group is important.
The distribution of Hungarians in the committees is not quite even, in some (the Committee of Civil Liberties, Justice and Home Affairs) there are too many Hungarians (OK, this will or could be the scene for discussions of the rights of national minorities, as here are two of the representatives of the Hungarians in Romania and in Slovakia in this committee besides the two MEPs from FIDESZ and one from Gyurcsány’s party; also, this was the committee which prepared and approved the famous “Tavares report” and also in the Committee for the Environment while there is no Hungarian in the important committees “Economic and Financial Affairs” and “Budget”. As far as vice-presidents of the committees are concerned, of the 20 committees and 2 sub-committees, four have Hungarian vice-president, among them one from the Socials and Democrats grooup (but not the leader of the Hungarian delegation of this group, who eyed a vice president's position in the Employment Committee,. The real power in the committees belongs, however, to the co-ordinators. Out of 56, 21 are German, 4-4 are Dutch, Spanish and French. All other countries have less posts – Hungary ne, and one vice-coordinator, both from FIDESZ.

The Parliament disclosed in 2010 the number of its officials by nationality (MEPs and their assistants have a special status, they are probably not included): out of 7652, 210 are Hungarian, which is a little more than the 2% (a little less since the accession of Croatia) Hungary represents in the number of inhabitants in the EU.

More detailed data (although only the latest status) are available from the Commission which is the biggest institution and also very important in preparing decisions. Although final decisions are taken in the Council and the Parliament, their staff has less influence on the decision of their institutions. In the Commission there were 2.39% Hungarians among the officials (and temporary agents, a category to replace them when their status is empty), this increased to 2.59% by now. This is important even if not a big increase, as slowly the return of officials to Hungary started: some didn’t like the environment or working abroad, the spouses could not accommodate, or, they were temporary agents and their contract expired (this was the case of several management officials).
The proportion of Hungarian administrators (the higher of the two main employee categories till the 2013 reform – as a third, lower category was introduced in 2013, their numbers are not meaningful) is higher than of assistants (the other group).

Statistics on management positions are currently not available (got hold of some before, when they were new) but we know that there are about 1200-1400 heads of unit in the Commission. We also see the composition of officials by grade and as Hungarians are not long ago in the organisations, it could be assumed for a while that those who are in grades where managers are, are indeed managers and not clerks who rose through time to a high grade. 2009 and 2011 data were published on the overall number of heads of unit and the proportion of Hungarians among them was only 1.89% in 2009 but 2.43% in 2011. Slowly, however, administrators who entered the Commission as AD5 or AD7, reach the level of AD 9 which is the lowest grade for heads of unit. So today’s figure of more than 3% can be misleading. A quick count through the EU Official Directory (showing management staff) and allowing for some people with Hungarian-sounding names who are not Hungarians but only of Hungarian origin – and the other way round, there are about 25-30 Hungarian heads of unit (so a little still more than 2%) and about 10 directors and equivalents, which always was above the 2%. Further analysis, however, shows that in at least three important central department (DG) there is no Hungarian manager: in the Secretariat General, the Legal Service and the Budget Directorate General. This darkens a little the bright picture shown by the numbers.

Sunday, July 13, 2014

The "Google case" - right to be forgotten by search providers

„Dumm hat Glück” - stupid is lucky, says the German. Sometimes lazy people also have luck: I did not have the energy to comment about the „right to be forgotten” case involving Google search results but recent days brought new developments, so I have an occasion to make up for this.

We read from time to time that “Google is evil”. Even Google gives nice results for this. And we also read sometimes interesting reactions to that. But it is not just Google. What appears once on the net, will stay there (or at least in references or at least in the cache of some computer) forever. So Viviane Reding, vice-president of the European Commission responsible for Justice, fundamental rights and citizenship made the “right to be forgotten” an important element of the EU data protection reform. We will give links to more recent materials on the reform below, and the blog quoted above also carries an analysis of the judgment of the European Court of Justice.

The case will be called “Google Spain”, it carries the number C-131/12 and the judgment can be found here . It says that the operator of a search engine is responsible for the processing it executes on personal data which appear on web pages of third parties and is obliged to remove the data from its search results on a legitimate request of the data subject, even if the data remain on the original web page. There are conditions, however, among others for the processing to fall under European law, and the Court also explained one aspect of the legitimacy of the request.

A Spanish citizen sued Google to remove from its search results data concerning him. The Court found that given that Google has an operation in Spain whose activity was found to be related to presenting the search results to Spanish users. The processing of the data and the presentation of search results was not done by Google Spain, who was only selling advertisements to be shown on the Spanish search result pages. This was sufficient for the Court to say that the activity was related. On the other hand, the Court also said that there may be reasons of overriding public interest which would justify that the search engine does not remove the data from its search results.

What is important in this judgment, that although the “right to be forgotten” will only be enshrined (if the Member States and the European Parliament approve – see a recent argument by the British minister of Justice) in new data protection regulation now under preparation, it already recognised based on the present legal framework that data subjects have the right not only to request the deletion of their data from the records of those who process their data, but also the indirect appearance of these data on the Internet.

This of course has consequences to all who provide references to data others put on the web. But also means that even if some data cannot be deleted (like official documents published), they may have to disappear from secondary sources, thus making finding this information more difficult or even impossible. If will be an interesting question whether the search results of the primary publisher of the information also will have to “forget” the information.

The saga is, however continuing as Google receives thousands of requests to remove information from its search results, and took an overly cautious approach and removed links to several articles on a public personality but was forced to retreat and reinstate the references.

For those who want to read more, here is a thorough analysis. And the Guardian, who was one of those whose articles were removed, who gave also a good reporting of the case.

On data protection reform, here is the latest text under discussion by the Council.

Sunday, July 6, 2014

What does the Hungarian minister of the national economy (including finance) know and understand?

According to a press article,the minister of the national economy, Mihály Varga (this superministry integrated or rather melted into itself the finance ministry, ministry of economy, labour and the different sectoral ministries - foreign trade, commerce, industry etc.) declared that the Hungarian government will not follow the recommendation of the European Council (it is prepared by the Commission but descussed in the Council and signed by the president of the Council) to cut tax benefits to poor people. Apart from the fact that low earners in Hungary have no special tax benefits (they were abolished by the FIDESZ government to cover partially the costs of the flat personal income tax), the article states that Varga confused the tax wedge with the tax benefits as the coutry-specific recommendation to Hungary proposed to decrease the tax wedge for low earners (see point 3 on page 7). Actually the document complains in an earlier paragraph (number 12 on page 5) that the" tax wedge on single low-income earners is one of the highest in the EU". Probably Mr Varga should have read the Hungarian version. There, the translator (who knows why, certainly not fearing misunderstanding by an economist and economy minister) translated the tax wedge to "tax burden" (pages 5 and 8 as the Hungarian text is somewhat lengthier).
The recommendations are denouncing the sectoral extra taxes (with the following justification: "The application of different tax rates across sectors is an obstacle to the effective allocation of resources
and thus negatively affects growth" and recommend a more equitable tax system. This is no surprise. No surprise either but very instructive are, however, some other statements about the situation of the economy and about economic policy: "Notwithstanding the Central Bank's subsidised 'Funding for Growth' scheme for small and medium-sized enterprises, normal lending to the economy has not picked up in a sustainable manner." (see also in Hungarian: Why the "funding for growth" programme did not help?)
"The regulatory burden on the financial sector has been
further increased, thus limiting the capacity for capital accumulation. Measures like
the increase of the financial transaction duty have contributed to a pick-up in the cash
usage of the economy. The household portfolio has further deteriorated and the high
proportion of non-performing loans currently represents one of the biggest
challenges for the financial sector. Portfolio cleaning is hindered by the weak
efficiency of resolution proceedings."
Also interesting: "The youth unemployment rate has decreased in 2013, while the rate of young people who are not in employment, education or training has increased." -  hints to the phenomenon often discussed in the Hungarian economic press that employment figures may hide more than reveal the real processes. "The Public Work Scheme attracts the bulk of budgetary resources available for employment measures, but in 2013 less than 10% of its participants were able to return to the open
labour market after exiting the scheme."
"The business environment in Hungary is characterised by frequent changes in the
regulatory framework and limited competition in an increasing number of sectors.
New barriers have been introduced in the services sector and existing ones have not
been removed (e.g. pharmacies, waste management, mobile payment, retail tobacco
and textbooks)."
"Overall investment has declined particularly strongly in those sectors
where sector-specific surtaxes have been imposed in recent years. Between 2010 and
2013, nominal investment declined by 44 % in energy, 28 % in finance and 18 % in
the communication sectors, while increasing by 3.4 % overall."

And so on, and so on. So if after this, the minister of national economy says that Brussels does not require adjustment any more, obviously concentrating on the budget balance (in fact this is also a little false as the recommendations state: "Reinforce the budgetary measures for 2014 in the light of the emerging gap of 0.9% of GDP relative to the Stability and Growth Pact requirements, namely the debt reduction rule, based on the Commission 2014 spring forecast. In 2015, and thereafter, significantly strengthen the budgetary strategy to ensure reaching the medium-term objective and compliance with the debt reduction requirements in order to keep the general government debt ratio on a sustained downward path."), he forgets his role beyond being the minister of finance, to be very polite. For the uninitiated: a lot of criticism and recommendations target the governments pet measures, denounced also in Hungary even by economists who supported FIDESZ before.

There are problems also in the social area (another superministry is the Ministry of Humnan Resources): "The proportion of early school leavers is on the rise and the adoption of an early
school leaving prevention strategy has been repeatedly delayed." - and this in the context when compulsory upper schooling age has been decreased.

A final quote: "Review the impact of energy price regulation on incentives to invest and on competition in the electricity and gas markets. Take further steps to ensure the autonomy of the national regulator in establishing network tariffs and conditions. Take measures to increase energy efficiency in particular in the residential sector." - Another pet project, the "decreasing utility charges" is under attack. If we look what was written above about the investment scenario, we see why. The criticism of the public procurement system is very diplomatic, but sstill, recommends improvement. THis would, however, stop the government from distributing public work contracts to its cronies. No surprise but very sad that the minister shows himself deaf.

Sunday, June 8, 2014

The "fight" for the presidency of the European Commission

There was no big opposition against the idea that the European parties should nominate their candidate to the presidency of the European Commission as it was expected that this could boost participation. Apparently the participation did not fall as expected but many doubt ( see for example here) whether this was due to this so-called "Spitzenkandidaten" system.
The same newspaper demanded already in 2009, before the previous European elections in an editorial that: "Voters must be told what they vote for. The Parliament's groups should tell votes who they want to be the next Commission's president. ... European Parliament elections have for far too long been presented... as a vote for Europe or against it. Political parties should change their approach and make clear that these elections are about what kind of European Union voters want."If the debate were about whether naming the candidate for Commission president is just that, it would make sense. I will try to answer this question below.
After the election, however, political actors start to discover the inconveniences of this idea and thus their disagreement with the principle.
The principle comes from an extending interpretation of the Lisbon treaty:the Council proposes "taking into account the result of the EP elections" a president for the Commission and the Parliament has to approve him/her by vote. It is only after that, that the commissioners can be nominated by the governments (one by each) and it is even after that, that the High Commissioner for Foreign and Security Policy (who is vice president of the Commission and chairs the External Affairs Council) and as the last, the president of the European Council (which is different from the different formations of the Council of the European Union, of which the the External Affairs Council is one) are nominated.
The system of institutions and the way the EU works is a delicately constructed framework and there is no doubt that the European parties threw a stone into this - actually never quiet and sometimes murky - pond.
So it is the European Parliament who finally approves the Commission president while it can only vote about a proposal brought forward by the Council. So it sounds logical that the parties in this Parliament can express whom they are ready to vote for. On the other hand, the separation of powers of initiative and approval is a feature of the EU which among others gives a power to the Commission national executives do not have - while the Commission lacks some other powers of national executives -, thus it is an important part of the above-mentioned delicate construction. The Parliament was in fact limiting the choice of the Council in whom to propose. The more so, as the Council has a majority of conservatives (mainly in the EPP) and this party is also the strongest in the Parliament. Had the Socialists won the EP elections, and the Council proposed Juncker the EPP candidate, not Schulz, the Socialist's favourite, the EPP could have still assembled a majority in the Parliament to approve Juncker. A nomination of Schulz could also been digested, in particular by Juncker, whose ambitions always pointed more towards the presidency of the European Council, which he could have won in exchange. But the time of these bargains is over, it seems taht eithe Juncker, or another EPP candidate will be proposed by the Council.
But why is Juncker's nomination in question? He is supported by Angela Merkel, the strongest national leader in the EPP (the French government is socialist). The opposition came first from Viktor Orbán, the Hungarian prime minister, and then from Sweden, Denmark, the Netherlands and - Britain.
What makes the situation bizarre, is that although the question to be put was whether the voters want an EPP or a socialist candidate, the reservations against Juncker (and also against Schulz) are that they are too federalist. So we are back to the "more Europe" or "less Europe" question, which we should have forgotten. On this, however, the voters could not decide, as neither the ECR, to which the British conservatives belong, nor other eurosceptics staged a candidate for the Commission presidency. And - again no one knows whether due to that or not - all non-europhiles gained only 30% in the EP. A clear minority. We cannot go into the question whether this is much or little, why and how the people voted. It is widely discussed in the political press.
Before we deal with the Hungarian aspects, let's be up my promise: what can the European elections decide in terms of where Europe goes? Clearly, the power relations in the Parliament influence the direction, although no party has a clear majority and coalitions have to be forged. These are occasional coalitions, not like a government coalition. And some analysts like Professor J.H.H Weiler, president of the European University Institute (still a few but nevertheless I think they found the real problem in European-level democracy, the so-called "democratic deficit" of the EU) say, that in a real democracy, a governing coalition should be formed and it should define the way the executive works. The Commission, however, is not quite like a national executive. And its members are nominated by the member states and are usually adherents of the governing national coalitions or parties. Thus, the majority in the Commission will be conservative, but it is not automatic and there will be members from socialist and liberal parties. And the programme of the Commission will be set up by its members. Based on this, some could argue that finally the main political line will be defined by the political stream supported by the majority of the electorate (through both the choice of their governments and the elections to the European Parliament) but to explain to the common voter how this works is not easy. So the voters do not see that their vote has a real influence on the direction the EU takes. And the imperfections of the national vote (that you vote a general direction and a government may have individual measures and even policies you do not like but there is no party with whom you can 100% agree) is also present.
As explained in the previous post, the EP elections in Hungary had a domestic significance in spite of the fact that the national elections were less than two months before. It is more interesting to examine the reactions of the winner of both elections, the governing FIDESZ party to the nomination of Juncker. Of course, during the election campaign they did not mention the topic, it would have been couter-productive. But immediately afterwards, Orbán already declared that they do not support Juncker, who was the figurehead of Eurozone austerity, who is a "man of the past" and wants a Europe they do not want (i.e. too federalist).
And then Mr Szájer, MEP, explained (in the title of the article on the homepage of FIDESZ, the name of Juncker is incorrectly spelled since the 2nd June) the opposition in more popular terms: he repeated the antifederalist argument, that the interests of the nation states should be represented in the EU, but then recalled that during the government Juncker in Luxembourg, Hungary was significantly attacked. He called Asselborn, then foreign minister of Luxembourg the member of Juncker's party (which he is not) and also recalled that Viviane Reding attacked the Hungarian media law. Which in fact she didn't, she did deplore other laws which were more in her remit as European Commissioner and in this quality not reporting to Juncker. The latter mentioned this is his response.
Angela Merkel still appears to support Juncker, but left herself a back door: whe does not want to lose Britain for the EU. About this discussion next time.

Sunday, May 25, 2014

Quick commentary on the results

Although the victory of the governing FIDESZ was expected, the low turnout and the activation of its voters - or rather the results of the latest allegations against the third on the list of the far-right, eurosceptic Jobbik to have worked for Russia brought FIDESZ to a better result than in the April national elections. They won more than 50% of the votes while in the national elections they pocketed 43.55%. Jobbik is the clear loser: 14% versus 20.

The most interesting question was how the three leftist liberal parties fare compared to each othe, given that they tried to win together in April. DK, the social democrat party of controversial ex PM Gyurcsány won two seats - a big feat but merited by the activity of its campaigners - this was the main factor in the joint results in the April elections too - while the purported umbrella organisation Együtt (Together) which then became an independent paty due to election rukes changed by FIDESZ not long before the National polls, won one seat, which is a result but puts it behind the DK. The socialists scored worth than expected - showing that their traditional srength is over.

The third-route green LMP remained a weak but existing force, with just over 5% (thet threshold to gain a seat) will have one MEP.

 Due to the low turnout, much cannot be deducted (e.g. FIDESZ did not get more than some 60% of the number of votes than in the national elections in spite of its win in percentage) than above.

Monday, May 5, 2014

"Suspension or no suspension?"

The tenth anniversary of the "big bang" enlargement and thus the accession of Hungary was also marked by some controversy. Some Court decisions against Hungary in infringement procedures (I will return to these later) and a controversy about disbursement of EU funds. So let's now speak about this and return to a summary of these ten years later.

The European commission is asking for additional information on the new system of managing EU funds in Hungary and asked the Hungarian authorities not to send new requests for disbursements (invoices) to the Commission before the workings of the new system is clarified. This is not a suspension of payments in the sense that payments on already submitted claims are going to be done. It is quite logical, these funds were disbursed under the old system which was working in a way (according to information from OLAF, there were twelve cases where OLAF proposed further follow-up (which can mean criminal prosecution, recovery of amounts paid or disciplinary action). The situation is that OLAF cannot directly take disciplinary action or initiate prosecution, it is up to the national authorities do it. The low percentage of criminal charges brought by the national prosecutors against fraudsters embezzling EU funds was the reason why the Commission proposed to set up a European Prosecutor's Office which would bring in these charges.

The Hungarian change came – and this shows the ignorance or lack of political feel, or even worse, lack of interest or understanding towards European developments – at an inopportune time: the Commission was strongly called upon in the report of the Court of Auditors and the discharge resolution (which accepts the report on the previous year and evaluates the management of the EU budget) by the Council and the Parliament to do more to tackle the loss of EU funds due to irregular and/or fraudulent claims for reimbursement submitted and not controlled by the member states.

The background is that while administrative expenditure and in general expenditure areas where the Commission directly spends EU money, get since years a "green" mark from the Court of Auditors, meaning that error rates are below the 2% materiality limit, i.e. are in the normal range, in the area of agricultural and structural funds, there is an error rate which is significantly beyond that. And the reason is that the member states' implementing and audit authorities do not provide the assurance requested that this spending really happens also in the quality expected. Unjustified costs are paid, documentation is lacking or erroneous affecting more than the (in)famous 2% (the materiality limit of 2% means that this is the level of errors which is considered a level where the cost of introducing additional controls is exceeding already the savings (improvement) which could be expected from them, and therefore this level of error is considered as inevitable). It can be disputed whether this level really is at 2% (some suggest it may be higher in complex areas), it is commonplace, however, that the authorities of the member states are too lenient towards their beneficiaries – among others because beyond the obvious economic interest, there is a political pressure to spend the funds assigned. This is evidently visible in Hungary, where the slow catch-up at the start makes the rate of spending an obvious target, in particular as the negotiations on the 2014-2020 financial framework did not result in a spectacular success for the government, so they want to differentiate themselves from the previous government by spending better.

So the Commission is finally planning to introduce a stricter monitoring and re-auditing of the implementation of EU funds by the member states, and it was in this process when the announcement by the Hungarian authorities to further centralise the implementation system and eliminate some actors in it came. And it is clear that at least a side-effect of this (if not the objective) will be less hassle – which would be nice if it would eliminate administrative hassle and unnecessary complications, on which the Commission is also working – and a quicker spending. This, however, entails more risk of irregularities being left unnoticed. And this risk – and weakening of the control system - the Commission cannot afford when its main task is to reinforce controls. Had the Hungarian decisionmakers taken this into account, we were better off now.

Wednesday, April 9, 2014

What happened in Hungary's elections?

Weel, the facts are simple: the governing FIDESZ-KDMP won another election. It is second time that a governing party wins an election. We do not know until Sunday whether they will have the two-third majority necessary to amend the Constitution and the so-called "cardinal laws" (electoral, police etc. - they extended the scope of questions to be regulated by two-third majority to make it diffcult for the next government to eliminate their legacy). But there is a fair chance. As one who trusted that in spite of the strongly biaised election system and limited publicity afforded to the opposition, the hungarian electorate is sufficiently unsatisfied and politically active to vote for the finally united opposition(I will call them opposition alliance) - of course except the extreme right and LMP, which is the fourth party in Parliament, a green antiglobalist, human rights grouping. So I cannot say that the result was inevitable. Others, who predicted the victory of FIDESZ, are now looking for scapegoats which is also not a coherent behaviour. There were reports from small irregularities which could influence the result (in one district the municipality closed into a room whose door had been then welded, all voting slips while waiting for the votes to arrive from abroad - here there is verys little difference between the two main candidates). The votes of Hungarians without a fixed residence in Hungary (who could voty by letter and the authenticity of whose votes are very difficult to verify) could mean an additional parliamentary seat - all these count for the two thirds. But the fact is that 39% of the citizens did not care to vote. Out of those who voted, about 45% voted for FIDESZ, 26 for the united opposition alliance, 21% for the ultra-right Jobbik. There are some strange things: anly two (or three) constituencies could be won by the opposition alliance in the countryside while half of the Budapest constituencies were von by them. What is the big, decisive difference between the capital and the big cities? In one district, the reigning mayor lost. There were two strong candidates against him (which seemed to be the recipe for failure of the opposition alliance): an independent one who had a high profile as he was the ex-employee of the tax office who publicised a huge cheating scandal covered up ba the tax office and a candidate for the socialist party, who was involved in some embezzling scandal before. And, surprise: the socialist candidate won. So what can I offer as explanation? There are two differences between Budapest and the countryside: Accessibility of information and closeness of people. No wonder tha those who have no access to the Internet or do not use it for information and can access only the public broadcasters and the main commercial tv stations (and eventually the two tv stations controlled by FIDESZ) have no real picture of what is going on in the country. Their deterioration of livng standard and comfort is not attributed to the bad policies of the government as it began under the previous government(s) and they are convinced that a new government will also demand sacrifices. But they beleive the overall positive picture suggerated by these stations. They cannot by independent newspapers or don't care. The voting can be surveyed more closely and, sorry to say, manipulation is easier. There were constituancies where the number of invalid votes was equal to the advantage of the government candidate. Placing posters was deliberately made difficult for the opposition by different means - and the rules changed continuously - while the governing party could make use of their NGO and of government propaganda which neither was subject to the limitations. No party advertisement was possible in the commercial media (as it should have been offered free and none undertook that - while ATV, which is close to the opposition alliance, was fined for transmitting political propaganda (by giving speeches from an election manifestation) without registering its intent to do so in advance. In some marginal constituencies the phantom parties could also tilt the balance, although they received few votes. Two of them bore names resemblling those used by the opposition alliance. The circumstances under which these small parties collected the signatures necessary to post candidates were more than doubtful - some of them received fewer votes than signatures. Some commentators revived the theories that the unification of the opoosition alliance resulted in loss of votes as the different constituents were alienating each-other's voters. There was no strong message - and no way to get the message home to the people, due to the communication difficulties outlined above. The result is now there - what to make of it, no one except the government knows.

Wednesday, April 2, 2014

Let's carry on - on the EU budget

Everybody likes to get money. But not too many like to give. The masters of the EU (who are, contrary to common belief, still the member states) gave the Union a moderate financial framework (this is how the long term budget is called in EUspeak) and 2014 budget. The negotiations were relatively successful for Hungary - it remains the second-third most supported country in terms of net balance per capita or by share of GDP. So now the Hungarians should be happy, shouldn't they? Well, the EU funds are well "earmarked", at least the area where they could be spent, is defined.You cannot spend European Social Fund money for economic development or infrastructure, only if there is a social benefit, and cohesion funds also have certain goals to be adhered to and also limitations. Rules of spending, documentation and accounting are not so simple. Partly this is due to the conditionality, adherence to which has to be checked. There is, however space for simplification. Increasing the flexibility in using the funds both concerning eligibility criteria and administrative requirements in beneficial but this should be done in a way that the possibility of fraud should be avoided. On the other hand, in spite of the short-term temptations, the real interest of the country is to prevent that EU funds should be used to distort competition as on the long term this means loss to Hungarian competitiveness to richer countries. Hungary is interested in simplification and also in decoupling the EU budget from conjunctural changes and spirit fluctuations between member states, thus also in giving the EU genuine own sources, for example from a future financial transaction tax or energy tax. This has nothing to do with the extraordinary taxes introduced in Hungary and probably would require their abolition which would actually help the Hungarian economy. Work is in progress and finally sme member state control and also mechanisms to equalise temporary fluctuations can be expected. The condition of agreement of the European Parliament to a decreased budget was more flexibility in reassigning funds and also a review to see if increases are necessary. Hungary should carefully follow this review and support an increase in the budget - improvement of economic conditions can be expected and thus more could be made available - benefiting the recipient countries, Hungary among them. Inevitably there will be a question, what the additional funds should be used for. Part of the funds was made available already to the youth employment programme - if more Hungarian regions could benefit from increasing its amount and lowering the threshold where it can be used, it would address a burning problem.

Sunday, March 23, 2014

It’s election fever in Hungary. The national elections the 6th April will decide and show important things. As soon as they will be over and the parties have digested their results, the European election campaign will start. Usually, European elections are used as risk-free safety valves – discontent with governing (or in general „establishment” or mainstream parties can be expressed, without a consequence on domestic politics. In Hungary this time this doesn’t have to be so: domestic political opinions can be expressed in April and there will be no experience on the performance of the new government (which will be formed about a month after the elections only). Hungarian national elections also have seen a lot of protest votes and this time this will not be different. But this is another story. It can be expected that the campaign and the voting will really be about Europe, and also that only those go voting, who are interested in Europe. Thus, less Eurosceptic votes can be expected – save some surprise and a huge mobilisation by the eurosceptics – who cannot expect domestic advantage from the votes. What message can the parties give? More Europe, roaming fees, federalism, Agenda 2020, peace – or on the other side: national independence, exploitation, eurocracy – the latter are easy and popular messages but do not mean more than the ones in the first group. If we investigate, however, the national interests which Europe can support or hinder, there can be clearer messages. Hungary is dependent on imports (among them energy from Russia) and also on exports. Foreign capital is an important factor in creating employment. Hungarians are not as mobile as some other East- and Central-Europeans but still fairly mobile. Learning languages is paramount for young people and for job-seekers. Free movement in the EU is in our interest. To be able to export, we are interested in all measures to provide not just a level playing field but also abolishing administrative barriers, thus: unification of rules and practices in the area of trade, technical and security requirements, standards. And this also extends to the legal field: consumers in Hungary should be safe in buying European products and Hungarian products should be accepted in the EU as equally good quality and secure. Hungarian companies provide services abroad, competing with lower prices. It is our interest that fears from “social dumping” should not hinder our companies working abroad and our compatriots who want to work or study there. We do not want that Hungarians working abroad should have less social security because working abroad. So we are interested in a level playing field, good rules hindering social dumping so that this allegation should not have a basis. However, our budget and social security is not strong enough to provide the level in some richer countries and if we were forced to do that, we would lose our competitivity and even face serious financial problems at home. In the area of consumer protection and data protection, we favour a common approach and the possibility that the consumer or citizen (who would like to complain against abuse of personal data or unfair practices in selling or servicing goods) should be able to do it without having to b entangled in legal disputes in a faraway country. I will also go on to talk about other areas but would like to raise another question: who should be the Hungarian Commissioner and what function could he/she target? We already have some experience in the dealings and also the pitfalls of the distribution of responsibilities in the Commission.

Wednesday, January 15, 2014

A new survey report from Gallup shows some interesting figures for Hungary. The general trend is not at all surprising: The appreciation of EU leadership is at record low. "Although it suffered double-digit losses in support in countries such as Cyprus and Spain (the latter of which exited the bailout program at the end of 2013), low approval of the EU's leadership was not limited to bailout countries. Fewer than one in three approved of the EU's leadership in the United Kingdom, the Czech Republic, and Sweden.". The trend from 2012 to 2013 is increasing a little in Portugal and Italy and, surprise: in Hungary where (like in Italy) it almost reached the level of 2010. This is not a big feat, but remarkable and countering the general trend. We will see, whether this is just a fluctuation, or a real turn of the tide. In fact. change between 2008 and 2013 has been positive in 8 countries, only 3 of them new member states (which joined in 2004, Bulgaria and Romania and 4 countries joining in 2004 were not measured in 2008). The trend from 2012 to 2013 is in fact more encouraging but not compensating for the loss during the crisis in most countries. "Europeans between the ages of 15 and 30 are and have been, on average, the most likely to support the EU's leadership. In 2011, a majority of young people in only a handful of countries disapproved of the EU's leadership. In 2013, the youngest generation continued to be the most likely to approve of EU leadership compared with the older age groups. In 14 EU countries, a majority of this youngest group approved of EU leadership." The trend, however, is not encouraging, recent developments have influenced young people negatively. For Hungary, it is remarkable that there was an increase in approval from 2011 to 2012 but a slight decrease to 2013. 33 % approval in 2010, which increased to 45 for 2012 but fell to 41 in 2013. In twelve countries has the appreciation improved among young people from 2012 to 2013. Cypriot, Italian, Spanish and Finnish youth got the most disappointed from 2012 to 2013, while young people in Ireland, France, Finland, Spain and Italy experienced the biggest disappointment from 2008 to 2013. Only Finland and Spain are in both groups - an odd couple, isn't it? The two countries with the most of EU institutions score relatively well: Belgium shows a positive change on all four counts (from 2008 to 2013 and 2012 to 2013 among the total population and young people also) while Luxembourg has a high rating but youth data from 2008 and 2012 are missing and the rest of the trend is negative, and an improvement can only be seen in the total population from 2012 to 2013.