From hungary-report-owner Sun May 7 13:06:25 1995 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id NAA13019; Sun, 7 May 1995 13:06:25 -0700 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id NAA13010; Sun, 7 May 1995 13:06:08 -0700 Received: from bruner@ind.eunet.hu () via =-=-=-=-=-= for hungary-report@hungary.yak.net (13002) Received: from ind.eunet.hu (root@ind.eunet.hu [192.84.225.42]) (fnord) by nando (8.6.5/8.6.5) with SMTP id NAA12979 for ; Sun, 7 May 1995 13:02:21 -0700 Received: from [192.84.226.92] (bruner.dial.eunet.hu) by ind.eunet.hu with SMTP id AA07552 (5.67a8/SZTAKI-4.01 for ); Sun, 7 May 1995 22:00:42 +0200 X-Sender: pop029@ind.eunet.hu Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Sun, 7 May 1995 21:57:24 +0100 To: hungary-report@hungary.yak.net From: bruner@ind.eunet.hu (Rick Bruner) Subject: The Hungary Report 1.06 X-Charset: US X-Char-Esc: 0 Sender: owner-hungary-report@hungary.yak.net Precedence: bulk Reply-To: hungary-report@hungary.yak.net ======================== The Hungary Report Direct from Budapest, every week No. 1.06, May 7, 1995 ======================== ====== BRIEFS Copyright (c) 1995, Rick E. Bruner ------------ GENERAL NEWS Thousands demonstrate on May Day As many as 10,000 union workers representing the army, the Interior Ministry, educators, scientists, performing artists and others gathered before Parliament in the rain Monday to protest the Socialist-liberal government's new economic austerity measures. The government's March 12 budget restructuring plan envisages 15% staff cuts in much of the public sector as well as a slashing of social benefits and other forced belt-tightenings for an already weary electorate. Another several thousand people showed up in Budapest's City Park on Monday for beer and sausages to hear Prime Minister Gyula Horn and Sandor Nagy, president of the Federation of Hungarian Trade Unions (MSZOSZ), pledge support to one another's agendas. Despite strong union support for the Socialist Party during last May's election, the new government appears to have taken little heed of union demands to date. Later in the week, the government broke off discussions with the unions over the details of its austerity package, saying all future debate on the matter would be limited to Parliament (which the government coalition controls with a more-than 70% majority). The Budapest Sun reports that May Day was indeed not what it used to be across the former communist region, with unions boycotting large state-sponsored celebrations in Bulgaria and police banning union demonstrations in Albania. Constitutional Court nixes presidential referendum According to a small item buried in Saturday's Nepszabadsag, the Constitutional Court has refused to rule on the Smallholders Party's (FKGP) petition for a national referendum on the manner of electing the president of the republic and the powers of that office. The FKGP would like to see the presidential office, today largely a figurehead position, made more powerful and elected directly by the citizens rather than by Parliament, as is presently mandated by the constitution. The Court, however, cited a 1993 ruling which concluded that public referendums could not affect changes to the constitution. "I have an entirely different view of the Hungarian constitution," said flamboyant FKGP leader Jozsef Torgyan, a successful lawyer himself, responding earlier in the week to speculation that the Court may rule exactly as it did. "The Parliament shouldn't meditate on whether the referendum is justified or not, they should just set a date for it.... As far as I understand, the whole issue is this power [the Socialist-led government] is afraid of being judged," he said at a meeting of the Hungarian International Press Association. The FKGP collected more than 200,000 signatures for the petition within six weeks, by far the largest number of signatures ever gathered in such an effort. Nonetheless, our two favorite political analysts named Tibor -- Szendrei, political editor of Hungary Around the Clock, and Vidos, director of GJW Government Relations and the Hungary Report's own columnist -- both interpreted the Court's ruling as the final word on the referendum bid. A new presidential election is due by this August at the latest. The current president of the republic, Arpad Goncz, who has consistently topped public popularity polls for five years, seems a shoe-in for re-election, notwithstanding the Democratic Forum's recent announcement to find a joint opposition alternative candidate. The Court's ruling left it unclear what would come of the other items on the FKGP's referendum petition: to guarantee young people the right to jobs and apartments and to restore 55 as the retirement age for women, which was recently raised to 60. G-men teach East European cops how to do it like the movies The US Federal Bureau of Investigation has just launched the inaugural class in its first-ever FBI academy outside of the United States, taking place now in Budapest. According to a feature report in Budapest Week, 33 middle-ranked police officers from Hungary, Poland and the Czech Republic are enrolled in an eight-week course here learning about the importance of respecting suspects' "human dignity" and officers' personal "wellness," as well as the finer points of drug trafficking, money laundering, gangland killings and other ills exploding across the region today. US agencies have put up most of the $2-3 million annual operating fees for the school, along with commitments to continue the program well into the future, in an attempted to stem the spread of the East's new crime boom. -------------------- BUSINESS & ECONOMICS Budapest Bank stars in two scandals In two separate scandals this week, the Budapest Bank has raised questions about its ability to account for money other valuables. The media was up in arms when the bank's annual general meeting of shareholders this week revealed that in late 1994 the government slipped the bank a secret loan of HUF 12 billion ($100 million) to make it more attractive to potential private investors. Finance Minister Lajos Bokros, who was president and CEO of the bank and president of the Budapest Stock Exchange at the time of the transaction, caught the brunt of the press's cynicism over the revelation. Both Bokros and Laszlo Bekesi, who was finance minister overseeing the loan, have repeatedly gone on record as strongly opposing the previous administration's bank bailout program. Bekesi defended the move as a legitimate "business secret" to Nepszabadsag. The State Securities and Stock Exchange Supervision committee, however, says that keeping the loan secret from the bank's OTC shareholders may have been a violation of the law, and it is considering an investigation. Meanwhile, Credit Suisse First Boston, which had once been considered the front-runner to privatize Budapest Bank till its sudden withdrawal earlier this year, says it was never informed of the loan, according to Nepszabadsag. In a separate incident, Budapest Bank mysteriously lost track of HUF 400 million ($3.3 million) worth of Richter Gedeon shares belonging to Osterreichische Kontrollbank. Thieves allegedly offered the successful pharmaceutical company's shares to various private brokers and individual investors before police caught up with them. All the shares and a few suspects are now in police custody. In other banking news, all but one of the major six state banks reported an after-tax profit for last year. The National Savings Bank (OTP), by far the largest holder of deposit accounts, had the best bottom line by a long shot, with HUF 6.6 billion ($55 million) in after-tax profit. Budapest Bank was the third most profitable, with HUF 1.6 billion ($13.3 million) after taxes, factoring in the secret loan. Only the Hungarian Credit Bank (MHB) posted net losses, of HUF 954 million ($7.9 million), according to Vilaggazdasag, reported Hungary Around the Clock. MHB recently laid off 600 employees and says more structuring is still in store. ----------- SHORT TAKES TUBERCULOSIS IS ON THE RISE across Hungary and the region, responsible for 29,000 deaths in Central and Eastern Europe last year, estimates the World Health Organization, according to the Budapest Sun. The disease is particularly common among poor, young, alcoholic and homeless men, many of whom actively avoid treatment because state invalidity compensation is sometimes higher than unemployment benefits, reports Budapest Week. VOLVO IS INTERESTED IN BUYING INTO IKARUS, report several media this week. "It could be anything from industrial cooperation to purchasing the whole company," a spokesperson for the Swedish auto giant told the Sun. Ikarus, once the largest bus maker in the world, has fallen on hard times since the collapse of the Soviet market. Among factors thwarting recovery is the poor development of public transport systems in the more affluent Western markets. THE NORTH ATLANTIC TREATY ORGANIZATION will hold an official assembly in Budapest May 26-29, the first time ever the organization will hold its meeting in a non-NATO country, boosting Hungary's hopes for admission into the defense organization soon. THE IFABO COMPUTER TRADE FAIR runs this Tuesday through Saturday. Nearly doubling in floor space since last year and with exhibitors from 34 countries expected, this year's fair will be the largest to date. Look for further coverage in next week's Hungary Report. CITIBANK OPENED A RETAIL BANKING BRANCH in Budapest this week on Vorosmarty ter. The branch honors the bank's Citicard and Citiphone services, and later this summer it plans to introduce Diners Club International to Hungary. ---------------- NUMBERS CRUNCHED * Unemployment as of April, down a tenth of a point from March (National Labor Center): 11.2% * Industrial production growth in January and February, 1995 (Ministry of Industry and Trade): 11% * Out of 23 politicians ranked by popularity this month, positions of Prime Minster Gyula Horn and Finance Minister Lajos Bokros, respectively (Szonda Ipsos): 21 and 23 ------------- EXCHANGE RATE May 4, 1995 (National Bank of Hungary): US dollar - 120.31 (buying), 122.45 (selling) Deutschemark - 87.68 (buying), 89.10 (selling) -------------- WACKY AS USUAL Samurai Magyar silences nagging in-law 47-year-old Pal Magulya of Salgotarjan acted out what is probably many men's fantasy, removing his mother-in-law's head with one mighty swing of his homemade samurai sword. He committed the act in response to a family argument, on the street in front of his father, daughter and other witnesses. A blacksmith by profession, Magulya made swords and knives as a hobby. ---- OOPS We regret a copyediting error which occurred in issue 1.04 of the Hungary Report, in which the Gypsy ethnic group was referred to in the lower case. More than simple carelessness, this error recurs with disturbing regularity throughout much of the world's prominent English-language media, a near institutional belittlement of an already much derided ethnic group -- it also happens to be a major pet peeve of mine (Rick's), and I'm very sorry to see it appear in the Hungary Report (I was out of town at the time). ------ THANKS We are otherwise very grateful for the excellent job Sarah Roe and Adrienne Haspel (my lovely wife) did producing the Hungary Report for the last two issues while John and I were traveling. ============= FEATURE STORY Eastern Europe Rings with Cable Telephony Potential Copyright (c), 1995 By Rick E. Bruner Hungary's decrepit telecom infrastructure may, in fact, be the key to its high tech future. Cable television (CATV) distributors and telephone exchange operators from the West are beginning to team up here. Because both local industries are in desperate need of modernization, investors say it's virgin territory to deploy shared fiber optic networks. And unlike many European Union countries and the United States, legislation in Hungary is no obstacle to the coupling of the two services. Hungary's new Telecommunications Law, which took effect at the same time as the partial privatization of the telecom monopoly in the spring of 1994, allows for telephone operators to provide CATV services after a simple licensing procedure. International firms on the scene, including France's CGE, the Israeli state phone company Bezeq, and Kabelkom, the local leading CATV provider owned by Home Box Office (HBO) and United International Holdings (UIH), are among those exploring joint cable telephony networks. Industry analysts point to pioneering deregulation in the UK as Europe's best example so far of operators combining CATV and POTS (plain old telephone service) revenues, while sharing the amortized costs of a single technical network. Hungary and other countries in Central Europe, however, hold promise of even more cost-effect investments in this field. Network developers will not need to back-fit one network to accommodate the other, as cable providers in the UK have done for telephones. Instead, because the existing telecom infrastructure is so poor, developers can build one combined network from scratch the first time around. Where in western Europe and the US, telephone penetration reaches up to 90% of the population or more, in Hungary the figure is around 15%. Developing both systems at once "is a unique way to optimize the investment without the kind of over-investment we've witnessed in the UK," said a source a France's CGE, who asked not to be named. An American firm, First Pacific Network (FPN), out of San Jose, California, has been looking at markets throughout Eastern Europe for its patented two-way, broadband coaxial network as a way to package phone, CATV and other value-added services. Using Kabelkom as a test bed, FPN demonstrated its product to Hungary's state telephone company, Matav, last year. Since then, FPN has explored opportunities in the Czech Republic, Poland, Russia, Albania, and elsewhere in the region. "I think Eastern Europe is an ideal market for this kind of technology," said Daniel Tautges, FPN's international managing director. "They have very little investment in infrastructure that they have to support. Therefore they are free to leapfrog from a technology standpoint and deploy a 21st Century network." At the same time, Tautges warns of "bureaucratic protectionism" in the region, despite liberal regulations. While still pursing proposals here, FPN has "shifted focus" towards more immediate opportunities in the UK and even China, he says. Meanwhile, others with more staying power are already building cable telephony networks here. Kabelkom's part-owner, UIH, recently bought a minority stake in MTT, an existing American-Hungarian joint-venture that won the telephone concession for Monor County last spring. MTT's founding partners include three rural US telcos out of Nebraska and Pennsylvania together with municipal representatives of the 42 of villages in Monor, only a few miles southeast of Budapest. Kabelkom is now set to become the program provider for the 40,000 new homes jointly cabled and phoned later this year. Monor currently has only 5% phone penetration. Nonetheless, according to Bill Szentagotai, vice president of MTT, "A lot of people there are more excited about having cable than phones." Meanwhile, France's CGE, which in February won an eight-year concession monopoly to provide telecom services in two prime counties outside of Budapest, hasn't yet decided when or how it will provide cable programming (as it currently does in the UK), but it is laying the fiber optic network now to leave that door open for the future. ================ PARLIAMENT WATCH FIDESZ-MPP for the new bourgeoisie Copyright (c) 1995 By Tibor Vidos From now on the smallest party in Parliament will be called the FIDESZ Hungarian Civic Party (FIDESZ - Magyar Polgari Part, MPP). The party that was founded in March 1988 as FIDESZ, a youth movement of predominantly young lawyers and law students, has taken the final steps at its Seventh National Convention to say farewell to its previous image and -- to a great extent -- to its previous policies. The English translation of the party's name does not fully reflect the meaning and taste of the Hungarian version. The German translation, "FIDESZ Ungarische Buergerliche Partei" is much closer to the original. "Buergerlich" is more conservative in its meaning than the egalitarian-legalistic sounding "civic." Unlike the English translation, the German implies a distinct connection to the middle class. And indeed FIDESZ or MPP -- I bet in two years they will be called only MPP -- would like to become "the" conservative alternative at the 1998 elections. In order to achieve this, Viktor Orban, the re-elected party chairman, and his team will have a long way to go. Though the basic values to which the party would like to adhere -- freedom for individuals, property and enterprise; environmental sensitivity; the importance of the family; assistance to national minorities living outside of Hungary -- were determined at the convention over the weekend, values themselves do not bring votes. What FIDESZ-MPP has to establish first of all is credibility. A movement that sailed across the political map from left to right within four years -- especially if its leaders keep saying that it has remained unchanged -- will have to prove that with changing political winds it will not move once again back to the other side of the map. Image is another key problem. At the convention center, huge plastic oranges -- symbols of the youth era -- decorated the hall while delegates debated whether the orange trousers of parliamentary leader Jozsef Szajer were adequate to the significance of the event. Membership and finances will have to be sorted out as well. The election defeat that FIDESZ suffered in 1994 has both depleted the party chest and turned away the most ambitious professionals from the once most popular party. With 20 out of 386 members of Parliament and elections three years away, reversing either problem will be difficult. But the party platform accepted at the convention is optimistic in its final sentences: "...because FIDESZ is a civic party. It is the party of the future. It is our Party." * * * Tibor Vidos is a lobbyist and political consultant in charge of the Budapest office of GJW Government Relations. A version of this article appeared in the Budapest Business Journal. ======= LETTERS The Hungary Report is *not* intended to be a general online discussion forum. Like most publications, however, we welcome letters to the editor. Please keep contributions as short and concise as possible. The following letter was edited for brevity. China NOT from whence Magyars came I have read John Nadler's article ["China yields secrets to the 1,000 year mystery of Hungary's origins," HR 1.04] and I am not amused. According to the article, "Hungarian anthropologists believe they have found the answer [for the origins of Hungarians] in the most faraway of places: the Xinjiang province of north-west China." In fact Hungarian anthropologists do not entertain such farfetched hypotheses; Mr. Kiszely does. The same Mr. Kiszely who a few years ago made a sensational discovery of the skeleton of Sandor Petofi, our great 19th- century poet in Siberia of all places. Eventually the finding proved to be a female skeleton. To make the story believable at first, Mr. Kiszely had to discredit the Finno-Hungarian linguistic relationship by claiming that it is based on "42 words in total today." Even a cursory glance of the etymological dictionary of Gyorgy Lako. ed. _A magyar szokeszlet finnugor elemei_ [The Finno-Ugric Elements of the Hungarian Vocabulary], 3 vols., (Budapest, Akademiai Kiado, 1967-1978, 727 pp.) makes it obvious that Mr. Kiszely is not a linguist. It is quite expedient to blame 150 years of Hungarian scholarly research that firmly established the Finno-Ugric linguistic theory on the infernal ideology of political subjugation by the Habsburgs and the Soviets. In fact the opposite happened: amateurish Communist historians of the late 1940s attempted to create an ancestral place for early Hungarians in Siberia rather than in the Ural region but because of the strong resistance of the rest of the Hungarian scholarly community they had to abandon the concept by the mid-1950s. Not much can be reconstructed about the Hungarian tribes prior to their arrival to the Hungarian basin in 896 but most specialists concur that among the tribes the majority must had been of Ugric origin, and that a sizable number of Turkic groups were allied with them. I can be charitable and presume that Mr. Kiszely was sincere when he stated that he serves "no one but the truth." But scholarship is not made by faith alone. Special skills and familiarity with scientific methodology are also needed. Gustav Bayerle Department of Central Eurasian Studies Indiana University =========== FINAL BLURB The Hungary Report is free to readers. To subscribe, send an email message to the following Internet address: hungary-report-Request@hungary.yak.net containing (in the body of the message, not in the headers) the single word subscribe Conversely, to stop receiving Hungary Report, simply send to the same address (in the body of the message) the single word unsubscribe * * * Back issues of The Hungary Report are available on the World-Wide Web (http://www.yak.net/hungary-report/) and via FTP (host: ftp.yak.net; directory: /pub/hungary-report/ ; login name: "ftp"; password: your email address) * * * The entire contents of The Hungary Report is copyrighted by the authors. Permission is granted for not-for-profit, electronic redistribution and storage of the material. If readers redistribute any part of The Hungary Report by itself, PLEASE RESPECT AUTHORS' BY-LINES and copyright notices. Reprinting and resale of the material is strictly prohibited without explicit prior consent by the authors. Please contact the authors directy by email to enquire about resale rights. * * * For information on becoming a corporate sponsor of The Hungary Report, contact Rick E. Bruner or John Nadler by email. Feedback is welcome. Rick E. Bruner John Nadler Tibor Vidos * * * For its briefs, The Hungary Report regularly consults the news sources listed below -- for information about subsriptions, contact them by email: The Budapest Business Journal <100263.213@compuserve.com>; Budapest Sun <100275.456@compuserve.com>; Econews (Fax: (36-1) 118-8204); Budapest Week and Hungary Around the Clock (same email address) <100324.141@compuserve.com>, and Central Europe Today (free online) . ================ END TRANSMISSION