From hungary-report-owner Sun Jun 11 17:16:12 1995 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id RAA18691; Sun, 11 Jun 1995 17:16:12 -0700 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id RAA18667; Sun, 11 Jun 1995 17:15:39 -0700 Received: from bruner@ind.eunet.hu () via =-=-=-=-=-= for hungary-report@hungary.yak.net (18665) 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 RAA18622 for ; Sun, 11 Jun 1995 17:14:45 -0700 Received: from [192.84.226.92] (bruner.dial.eunet.hu) by ind.eunet.hu with SMTP id AA05838 (5.67a8/SZTAKI-4.01 for ); Mon, 12 Jun 1995 02:11:42 +0200 X-Sender: pop029@ind.eunet.hu Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" Date: Mon, 12 Jun 1995 02:09:28 +0100 To: hungary-report@hungary.yak.net From: bruner@ind.eunet.hu (Rick Bruner) Subject: Hungary Report 1.11 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. 1.11, June 12, 1995 ======================== The Hungary Report is supported in part by: MTI-Econews, a daily English-language financial news service. For online (fee-based) subscription information, contact (not automated -- write a nice note). ======== CONTENTS BRIEFS Horn's US tour event-packed Slavonia poses new refugee threat Talks with IMF appear promising Bokros still under fire at home Current account deficit doubles in March Kidnappings end happily Opposition picks presidential candidate Hungary's biggest heroin bust Coke fined HUF 2 million Palotas, Csepi cheat on taxes Forint goes convertible Jan 1, '96 Audi ups investment Fabulon girl painted over Petofi declared best boxer NUMBERS CRUNCHED Direct foreign investment Families losing benefits 1995 1st 1/4 current account & trade deficits Rise in pensions FEATURE Troubled youths abandon 'Tomorrow' PARLIAMENT WATCH Goncz assured win, Bokros takes punches ====== BRIEFS Copyright (c) 1995, Rick E. Bruner ------------ GENERAL NEWS Horn's US tour event-filled Prime Minister Gyula Horn had met with President Bill Clinton for 45 minutes on Tuesday in Washington. The two leaders spoke about the war in the former Yugoslavia, Hungary's NATO ambitions and the Horn government's recent economic reforms, among other topics. After the meeting, Horn announced that Hungary could join NATO in 1997. In all, Horn appeared positive and upbeat on the seven-day trip, promoting an image of Hungary being the best reformed economy of Eastern Europe and most stable for investors. He also took several opportunities to remind the West Hungary expects a bit of help in its difficult transition. With characteristic candor, Horn told a meeting of top multinational executives at the Overseas Private Investment Corp., "We have made some mistakes. This is a difficult time." Comparing the US and Hungary, he added, "In deficits and debts we are very close," the Budapest Sun reported. In other engagements, Horn met with IMF Managing Director Michel Camdessus, Henry Kissenger, UN Secretary General Boutros Boutros Ghali, Senate House Leader Newt Gingrich, and NY Governor George Pataki. The prime minister also met with dozens of top business leaders to spur further US investment (which accounts for 40% of the nearly $9 billion invested in Hungary since 1989). He gave interviews to several US media, including the New York Times, the Washington Times, and the Dallas Morning News. One event in particular caught the attention of the American media: perhaps meant as symbolic of his government's new austerity plans, Horn took his leave of the White House aboard a city bus -- an Ikarus, jointly manufactured in Hungary and the State of Alabama, which parked specially in the White House compound for the occasion. Slavonia poses new refugee threat The Hungarian Foreign Ministry is anticipating a new surge of refugees in Hungary with the increase of fighting near this country's borders again. "Our most immediate concern is the eastern Croatian region of Slavonia," Andre Erdos, Foreign Ministry deputy secretary of state told the Budapest Sun. "It is bordered on three sides by Bosnia, Serbia and Hungary, so naturally that is where refugees are most likely to come from." Slavonia has been the site of recent fighting, with Croatian forces reclaiming what was till recently Serb-held territory. Hungary has throughout the war received large numbers of refugees, sharing its southern border with both Croatia and Serbia ('rump' Yugoslavia). -------------------- BUSINESS & ECONOMICS Talks with IMF appear promising On his trip to Washington, Prime Minister Horn announced a new stand-by credit agreement may be reached with the International Monetary Fund by September or October. After Horn's tete-a-tete on Monday with managing director of the fund, Michel Camdessus, Finance Minister Lajos Bokros and central bank president Gyorgy Suranyi (part of the prime minister's entourage) hammered out some details of the loan with IMF experts on Tuesday. Camdessus confirmed the fund's appreciation for the new Horn-Bokros-Suranyi economic reform package without quite making any commitments. Quoted in Econews, he said, "We completely agree with the government's goals, namely to put the country on the road of permanent growth through cutting the budget deficit.... I would be glad if a complete stand-by credit agreement could be worked out." Bokros still under fire at home Mastermind of the economic reform plan garnering praise across the US this week, Finance Minister Bokros continued to take a pounding in public opinion, with the media lining up to criticize his "golden parachute" from his last job. When resigning as president and CEO of Budapest Bank in February to accept his new cabinet position, Bokros quietly accepted Ft 16 million ($130,000) in severance pay which only recently became public. When the Socialist-liberal coalition took office last year, they quickly changed a standing decree allowing bank presidents large departure packages, but the decision wasn't retroactive, so Bokros' deal was safe. Politicians for all political hues, including the Socialist Party, have called on the finance minister to donate the money to charity. Meanwhile, Prime Minister Horn's proposal to create a position of deputy prime minister in charge of economic affairs, "may well signal the end of the Bokros Era," suggests the Budapest Business Journal in a front-page story. Current account deficit doubles in March For all the moaning caused by the 'Bokros Plan,' the current account deficit jumped dramatically in March, the month the austerity measures were announced. The C/A deficit, which takes into account the trade and tourism balances, capital investments, interest rates, personal foreign-exchange deposits and other indices, jumped to $720 million for March alone, which is twice the combined deficits for the first two months of the year, according to the National Bank of Hungary. The trade balance remained much lower, at $217 million for the month. Econews explains the jump in the C/A balance as due to a swelling of the deficit from revenues off interest rates and financial investments, which amounted to $329 million in March; plus a deficit growth in the tourism balance, $41 million for the month, from citizens drawing heavily on their $800 annual tourism allowance around the time of March's 9% forint devaluation. Officials at the National Bank and Foreign Ministry say the austerity measures were not reflected yet in the March C/A deficit -- the lowering of which is a major aim of the economic reform plan -- blaming the jump on seasonal and temporary factors. ----------- SHORT TAKES BOTH OF LAST WEEK'S KIDNAPPING DRAMA'S (see Hungary Report 1.10) ended with the children released unharmed and suspects in jail. On Friday the week before last, the second daughter on a wealthy entrepreneur kidnapped for random in five days, Budapest's 14-year-old Ildiko Hornok, was released when her four Romanian captors (three ethnic Hungarian) lost their nerve and ran out of money. Police tracked them down by Sunday through the girl's description of her blindfolded ride and thanks to the fact that the suspects used their real names when renting their rural bungalow hideout. OPPOSITION PARTIES AGREED ON A JOINT PRESIDENTIAL CANDIDATE at last, after more than a month's consideration. Ferenc Madl, 64, a lawyer by trade who served in the Antall government's cabinet responsible for the Academy of Sciences, accepted the nomination but said he doubts he'll unseat incumbent President Arpad Goncz. Only the Smallholders Party among the opposition has not backed Madl, as they plan to boycott the vote after losing their bid this spring for a referendum calling for direct national of the president instead of by Parliament. HUNGARY'S AND MAYBE THE REGION'S BIGGEST HEROIN BUST took place Friday when customs officer found 215 kilograms (473 pounds) of the drug under a load of hazelnuts driven by a Turkish trucker on the Gyula border with Romania. COCA-COLA AMATIL WAS FINED HUF 2 MILLION ($16,200) by the Office of Fair Trade (GVH) for marketing a mineral water, Bonaqua, as all-natural when it is really artificially enriched with minerals. WELL-KNOWN ENTREPRENEUR JANOS PALOTAS, president of the Republic Party and the National Entrepreneurs Association, cheated on his taxes by HUF 279 million ($1.8 m) last year, according to the tax authorities, who are bringing criminal proceedings in the case. Former chief of the State Property Agency, Lajos Csepi, has also been called to account for similar charges, Nepszabadsag reported. THE FORINT WILL BE FULLY CONVERTIBLE BY JANUARY 1, 1996, pending new legislation now before parliament, Hungary Around the Clock reports. THE GERMAN CAR MAKER AUDI plans to up its investment in Hungary by another DM 250 million with expansions to its engine plant in Gyor. Audi has already invested DM 300 million on its plant to date. A PRETTY FACE DISAPPEARED FROM KALVIN TER last month, that of the Fabulon cosmetics model who has stared down from an advertisement on the wall of a building overlooking the square for 20-odd years, the Business Journal points out. At the same time, the long legs of a Nino shoe ad and the Canada Dry logo (strategically placed where the similarly shaped derriere of the shoe-wearer ought to have been) were painted over as well. In their places are new ads for Coca-Cola and the Central European Investment Bank. ---------------- NUMBERS CRUNCHED * Direct foreign capital investment into Hungary and all of Central & Eastern Europe (respectively) from 1989 and '94 (World Economic Research Institute, Academy of Sciences): US$ 8.486 bn / $22.7 bn * Percentage of families to lose universal welfare benefits from new austerity reforms (Social Research Information Group, Tarsi): 28% * Current account deficit and trade deficit (respectively), cumulative first quarter, 1995 (National Bank of Hungary): US$ 1.4 bn / $895 m * Percentage rise in state pensions, effective in September but retroactive for all 1995 (National Pension Insurance Directorate): 4% ------------- EXCHANGE RATE June 8, 1995 (National Bank of Hungary): US dollar - 124.64 (buying), 127.06 (selling) Deutschemark - 87.80 (buying), 89.58 (selling) -------------- WACKY AS USUAL Petofi named boxing star The WPO has, for the third time in four years, bestowed its top international on honors on a Hungarian company. The prestigious World Packaging Organization has lauded once again the Petofi Nyomda es Csomagolo Rt (Petofi Printing and Packaging Material Co.) as being the best darn cardboard box maker on the planet, according to Econews. Named for one of the country's great poets, the firm has repeated amazed the multinational trade body for innovative packaging solutions for such firms as GE-Tungsram and Nestle. ---- OOPS Matav not such cheapskates, really No, you were right, that salary sounded a bit low. Matav, the phone company, is offering local IBM cheif Elek Straub $536,500 a year (HUF 5.5 m per month) to join their company instead, not one tenth that amount as wrongly converted from forints in a brief last week (blasted decimal points). Thanks to Don Levy, of Silicon Valley, for pointing that out. (Hope no one planned a multimillion dollar investment around that misinformation.) In any event, Straub has still not annouced his acceptance. Matav's board plans to a decision on its new general manager slot by June 20. ============= FEATURE STORY Troubled youths abandon 'Tomorrow' By John Nadler Copyright (c) 1995 When Hungary and her East Bloc neighbors broke with Soviet communism in 1989, citizens -- especially the young -- looked forward to better years. Six years later, social upheaval and poverty in the east have dashed these hopes for some, especially among the young. A documentary film by Hungarian-born director Gabor Dettre explores the youthful malaise and the unique angst generated by the broken promises of communism and capitalism. 'Tomorrow is Canceled from Lack of Interest' explores the darkest recess of Hungary's modern youth culture -- a nihilistic and self-destructive teenage cult called the "Gruftis," which has attracted hundreds of followers around Budapest and the nearby industrial city of Tata. Named after the German youth movement ("Grufti" is derived from "gruft" meaning "crypt" in Deutsche) that gained adherents throughout western Europe and the US in the 1980s, the cult's Budapest incarnation mirrors the stresses peculiar to Hungary in the chaotic 1990s. In a country that already boasts one of the highest annual suicide rates in the world, Hungary's Gruftis embrace a penchant for violence -- drug abuse, dangerous sex, and self-mutilation -- that sets them apart from their western cousins. As director Dettre reveals with his camera, Hungary's Gruftis are paradoxical. Their black-clad dress and teased hair is reminiscent of the punk movement that spawned a musical genre in Britain and the US in the 1970s. But they lack punk's assertiveness and braggadocio. Instead, Hungary's Gruftis focus their aggression inward. Different from other dark European youth movements, their motivation is neither hatred nor a skinhead-like racism, but rather a feeling of hopelessness and despair for themselves and, by extension, humanity. According to Dettre, self-mutilation and death are avenues of escape. "They say they are not death wishers," said Dettre. "They are not waiting for death. They are preparing for it, meaning that they are infatuated by it. It seems they are not scared of death at all. Most of them say that death can only be better than life because our lives, according to them, are really full of hatred, aggressiveness, and pain." Much of this hatred and pain is the by-product of the political revolution that has taken place in Eastern Europe. Specifically, the angst driving the Gruftis, who hail mainly from the working classes, results from the fall in status of the proletariat, and the extinction of the socialist values it once represented. Dettre: "During communism there was some dignity in coming from the lower classes. But after communism everything was taken from these families. After 1989, Hungary tried to become what it used to be -- a nation of gentry. The working classes really started to feel deprived. "These kids seem to be the most talented and sensitive of their generation," added Dettre. "Their questions are more sophisticated and reach deeper into what their lives are about. They are really questioning the craziness of the world around them." These queries often take the form of death rituals -- breaking into crypts where they consume alcohol and drugs (often the sniffing of glues and solvents), playing music, holding somber discussions, and reading spiritual books (often the Bible) by candle light. But death for Hungary's Gruftis is not just ritual and play. While making his documentary, Dettre reports that four members of the movement died from suicide or accidents related to their self-abusive lifestyle. Two others killed themselves shortly after the filming. These casualties have not gone unnoticed. But is telling that blame is being directed abroad. In the opinion of some Hungarian parents, the nihilistic music and message of pop bands like The Cure and Depeche Mode, whom the Gruftis emulate in style and dress, are poisoning the minds of their children. During the Budapest premier of "Tomorrow is Canceled" two parents -- the mother and father of a young suicide victim discussed in Dettre's film -- stood up at the post-screening reception, and loudly protested the fact their dead son had been associated with the cult. He was not a Grufti, they pleaded. His death was an accident, not a suicide. Although the outburst ruined Dettre's premier, it was a moving exclamation point to the theme of his documentary. Better than any interview, this parental protest underscored the generational chasm that appears to be the root of the despair that is suffocating many of Hungary's best young spirits. "Tomorrow is Canceled from Lack of Interest" (1994), 63 min., directed by Gabor Dettre, Opal TV Production, plays periodically in Budapest cinemas. ================ PARLIAMENT WATCH Goncz assured win, Bokros takes punches By Tibor Vidos Copyright (c) 1995 Parliament will hold the first round of the presidential elections on June 19. MPs will have to choose a candidate by secret ballot from a list of nominees. At least 50 parliamentarians must support a particular candidate in order for his name to be put on the list. In the first two rounds of elections, a candidate must garner two-thirds of the 386 votes to be elected. Should no one receive the necessary votes in the first two rounds, a simple majority will suffice in the third ballot. The whole procedure has to be accomplished within three days. Nomination will close June 15 for the first round and June 20 for the second. In the third round, only the two top vote-earners of the most recent ballot can participate. Two candidates have been announced by the parties supporting them. Backed by both governing parties, the Socialist Party and the Alliance of Free Democrats, President Goncz is set to receive the necessary nominations and to be re-elected to office. Not being able to prevent Goncz's second term, the opposition's major goal is to make sure that the new president is elected only in the third round of voting. At least 22 government MPs have to vote for an opposition candidate, abstain from voting or stay in bed in order to accomplish this goal. The motives of the opposition are difficult to understand and go back to the previous legislative cycle, when a severe conflict between the government -- today's opposition -- and the president developed. The Smallholders' Party will boycott the presidential elections since their referendum proposal to elect the president by a popular vote was rejected by Parliament. Following a series of negotiations, law professor and former minister, Ferenc Madl has been announced as the candidate of the Hungarian Democratic Forum, FIDESZ- Hungarian Civic Party and the Christian Democratic People's Party. In the meantime, following the passage of the austerity measures, emotions in Parliament are running high on the Ft 16 million severance payment Finance Minister Lajos Bokros is said to have received from Budapest Bank when he gave up his job as chief executive officer to head the finance ministry. Bokros, who is accompanying Prime Minister Gyula Horn on his visit to the United States, did not comment on the issue other than stating that everything happened according to valid regulations. Budapest Bank has confirmed the payment. Not only opposition politicians cried foul but also leading members of the Socialist Party expressed their hope that the amount will be donated to a charity. Ivan Peto, president of junior coalition partner, the Alliance of Free Democrats, has said that Bokros' blistering austerity package makes acceptance of such a high sum highly unethical. Tamas Deutsch, vice president of FIDESZ-Hungarian Civic Party, argued that Ft 16 million is the lifetime earnings of a typical teacher. A finance minister takes that home every ten years. Bokros will, no doubt, have to bid the money farewell in the end. His main consolation will be that in Hungary, the office-life expectancy of a finance minister is well below ten years. * * * Tibor Vidos is a lobbyist and political consultant in charge of the Budapest office of GJW Government Relations. or A version of this article appeared in the Budapest Business Journal. =========== TRAVEL NOTE Greetings readers. Rick will be traveling for the next several weeks. In the meantime, John, Sarah Roe, Adrienne Haspel and other capable souls as required have been roped in to assure that the Hungary Report keeps coming out regularly. We may be particularly unresponsive to reader email during that period, but we'll do our best. =========== 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 or * * * 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> (and tell them what dwads they are for me pay for issues at the newsstand); Budapest Sun <100275.456@compuserve.com>; Budapest Week and Hungary Around the Clock (same email address) <100324.141@compuserve.com>, and Central Europe Today (free online) . ================ END TRANSMISSION