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, July 6, 2014
Saturday, June 21, 2014
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.
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.
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.
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.
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