From hungary-report-owner Wed Jul 5 01:19:11 1995 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id BAA25836; Wed, 5 Jul 1995 01:19:11 -0700 Date: Wed, 5 Jul 1995 01:19:11 -0700 From: owner-hungary-report Message-Id: <199507050819.BAA25836@nando.yak.net> Sender: owner-hungary-report@hungary.yak.net Precedence: bulk Reply-To: hungary-report@hungary.yak.net Apparently-To: hungary-report-out31415 Apparently-To: nobody Direct from Budapest, every week No. 1.14, July 3, 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 Courts attacts economic reforms, budget savings in doubt Electric workers seek to black out privatization plans Horn losing popularity with party faithful Mass murder's trial reveals judicial weaknesses BSE celebrates five years, but still a ways to go Commie coins cash out Magyar Nemzet newspaper still privatizing Nitrokemia wins $100 million deal Foreigner detension camp to be closed Seven killed in train crashes Phone prices up 36% Smallholders as popular as Socialists Kadar honored by thousands on anniversary of death Parliament takes a (...well, deserved?) break NUMBERS CRUNCHED Public opposed to privatization; wealth; foreign owners Men's wages exceed women's by wide margin Demand for pork plummets FEATURE STORY Journalists, weary and apathetic, lose fight for freedom PARLIAMENT WATCH Horn's latest solo performance has party leaders booing ====== BRIEFS Copyright (c) 1995, Rick E. Bruner ------------ GENERAL NEWS Courts attacks economic reforms, budget savings in doubt Hungary's Constitutional Court ruled several aspects of March's dramatic welfare-cutting state budget reforms unconstitutional on Friday. The court said the government seeks too much from the populace too fast, violating constitutional protection for children, mothers and families. In particular, the court struck down Finance Minister Lajos Bokros' plans to limit the state's liability for workers' sick leave and the highly controversial introduction of 44% social security contributions on artistic royalties. The court also said the state would have to give families more time to adjust before cutting from all but the most "needy" families welfare benefits, including maternity support and per-child payments currently provided for all families with children. According to Hungary Around the Clock, analysts estimate the court's ruling will negate up to HUF 30-40 billion of the HUF 170 billion the government is determined to shave from its deficit this year. Finance Minister Bokros shook off the set-back, saying he'd find other places in the budget to achieve the same savings. At the same time, Bokros seems to be facing up to the fact that targets on privatization revenue for the year are increasingly unrealistic. "We won't have HUF 150 billion in privatization profits as we hoped for," he told a conference last week celebrating the fifth anniversary of the Budapest Stock Exchange, according the Budapest Business Journal. Nonetheless, Parliament passed on Tuesday the supplementary budget for 1995, containing the same HUF 150 billion privatization revenue projection. The supplement targets total revenue of HUF 1.58 trillion this year, against expenditures of HUF 1.73 trillion, resulting in a deficit of HUF 156 billion. Electric workers seek to black out privatization plans The Confederation of Electric Workers Trade Unions (VDSZSZ) announced plans last week to stage a warning strike in mid-July to protest privatization plans that would allow for a foreign majority stake in the Hungarian Electric Works (MVM). Management and union officials appear to have spent more time last week debating terms for the strike rather than the content of the union's objections to the privatization plan. The union says the strike will not affect households or particularly vulnerable customers such as hospitals, and would be limited only to large corporate power users. Potential foreign buyers of MVM, meanwhile, are already disappointed by a compromise to the company's privatization plan that will see only 25% of the its shares sold to a strategic investor in the first phase, with a promise for the winning investor to up its stake to 50% after a year. The decision is seen by many as a victory for Laszlo Pal, who was fired as minister of industry and trade the week before precisely for his position on slowing the privatization of the power company. Perhaps as a consolation, the government says it will sell 50% plus one share of the Hungarian Oil and Gas Company (MOL) in the first round of that company's privatization, instead of only 35%, as originally planned. The official tender announcements for MVM, MOL and Antenna Hungaria are expected by the end of this month. Horn losing popularity with party faithful Prime Minister Gyula Horn's sudden dismissal of Trade and Industry Minister Laszlo Pal in late June was received especially badly by many members of Horn's own Socialist Party, where Pal was quite popular. Socialist representatives are increasingly angry about the prime minister's lack of accountability to his fellow party members. "The position of a leader who does not listen to his followers naturally weakens," said Socialist MP Ilona Szollosi, quoted in the Business Journal. At a party conference shortly following Pal's dismissal, Horn got an earful of criticism from colleagues who find it increasingly difficult to explain to votes the government's swing away from the interests of the poor who voted them into power in favor of foreign investors and international lenders, particularly when Horn's fellow MPs learn of government decisions only in the newspaper. Horn was receptive to the criticisms and vowed policy changes accordingly, according to sources quoted in the Business Journal. Mass murder's trial reveals judicial weaknesses The trial of Magda Marinko, a Serbian national accused of killing 15 people in Hungary and the former Yugoslavia as the leader of a ring of hired assassins and theives, is an unfamiliar sensation in this country -- a high profile media court spectacle. More significantly, it's a case that has witnesses, judges and even guards fearing for their lives. Approximately 70 witnesses have refused to testify and the case's first judge was relieved of his duty out of fear, according to the Budapest Sun, which also reported that Marinko has bitten off one guard's finger since his capture two years ago. Wearing sunglasses in court, Marinko openly threatens and jeers at witnesses, and generally wreaks havoc on the proceedings, once telling the judge, "This is my trial, I'll do the asking around here." The case has raised serious questions about the security and authority of the country's judicial system, where witnesses are required by law to testify yet routinely refuse to do so, even in simple divorce cases, the Sun reports. Marinko is simultaneously being tried in absentia in the Federal Republic of Yugoslavia. -------------------- BUSINESS & ECONOMICS BSE celebrates five years, but still a ways to go The Budapest Stock Exchange (BSE), the region's first revitalized share market after the fall of communism, celebrated its fifth anniversary at a conference on Friday, June 23. Unlike the importance of Hungary's pre-war stock exchange, the new BSE has been characterized by lack-luster trading, low liquidity and domination by large foreign institutional investors. Key to the exchange's future, according the BSE Council President Janos Szasz, quoted in Econews, is future share issues from the country's large utilities and banks, to be privatized starting this year. The government has not as yet made up its mind how to handle share issuing of such giants as the National Savings Bank (OTP), the Oil and Gas Company (MOL) and the telecommunication monopoly Matav; namely, whether to float shares primarily in the BSE or on foreign exchanges. The main problem of the Hungarian capital market is lack of a clear strategy, said Szasz. The BSE president seeks to introduce foreign shares to the market to stimulate local investors by enabling them to diversify their investment portfolios more. Szasz said he is waiting for to the National Bank of Hungary for the necessary foreign exchange permission to introduce the foreign shares. Finance Minster Lajos Bokros told the conference he supports reform efforts at the BSE, particularly the creation of a unified government securities market which would include financial institutions, brokers and investment banks working together. Szasz, meanwhile, said the stock exchange and brokers are vulnerable to loosing importance if government securities are developed as an interbank market, Econews reported. Government securities already represent three-quarters of the BSE's capitalization and two-thirds of its turnover. ----------- SHORT TAKES OLD SOCIALIST-ERA COINS are no longer valid in shops as of July 1. Banks and the post office will accept them for exchange into new coins until the end of the year. THE CONSERVATIVE DAILY MAGYAR NEMZET has announced a second round of bidding for its privatization, with the tender closing July 15. The first round was declared unsuccessful with all the bids too low. The paper, with a circulation of 50,000, is the last large daily to be owned by the state and is seen by conservatives as the only viable alternative to balance the largely left-oriented major newspapers. The CHEMICAL COMPANY NITROKEMIA has signed a five-year, $100 million contract with the US Monsanto company for the supply of pesticides. THE CONTROVERSIAL PRE-DEPORTATION CAMP FOR FOREIGNERS, KISTARCSA, IS TO BE CLOSED. The camp, formerly known as Kerepestarcsa, has repeatedly been the subject of criticism from human rights groups, who say conditions for inmates -- foreigners (mostly Romanians, Russians, Asians and Africans) in violation of legal residence status -- are appalling. The Interior Ministry is securing funds for a new site, abandoning for good the current facility, which, ironically, was once a notorious political prison. SEVEN PEOPLE DIED IN TRAIN CRASHES last Tuesday in two separate incidents. In the first, a van of railway workers near the western village of Nyul stopped on the tracks, killing all six van passengers. Another driver was killed when he similarly stopped on the tracks near Barcs. (I can't help thinking the rail authorities should get the idea to introduce lowering barricade arms at every rail crossing like the rest of the world, instead just the blinking lights that still predominate. Such tragic railway deaths are sickeningly common here.) MATAV IS PUTTING UP PHONE PRICES AGAIN. Day-time rates on work days will go up 36%. THE SMALLHOLDERS ARE AS POPULAR AS THE SOCIALISTS. The populist rural party, headed by the flamboyant media ham Jozsef Torgyan, has reached top approval rating with 15% of the public, the same percentage the Socialists have sunk to since winning more than 50% of the seats in Parliament in May 1994's election, according to the polling firm Szonda Ipsos. THOUSANDS VISITED KADAR'S GRAVE on the sixth anniversary of his death last Saturday. The leader of Hungary's communist government from 1956 till 1987, Kadar was honored with wreaths and speeches at his final resting place in the Fiumei ut cemetery by, among others, members of the communist Workers' Party (Munkaspart), the Marxist Youth Association, and the May 1st Society, according to Hungary Around the Clock. PARLIAMENT STARTED ITS SUMMER BREAK FRIDAY. It will resume activities on September 4. Which means it's now officially "cucumber season" (not much to report on besides cucumber crops), so the Hungary Report might be thinning out a bit for the next few months. (Unless, of course, you're crazy about cucumbers.) ---------------- NUMBERS CRUNCHED * Percentage of public who objects to the privatization of large companies (Median polling firm): 53% * Percentage of public against select few businessmen getting very rich (Median): 70% * Percentage of public against foreigners owning Hungarian land (Median): 84% * Amount by which the wages of men exceed those of women in blue / white collar jobs (Labor Research Institute): 30-40% / 50-60% * Projected 1995 decline in demand for that Magyar dietary staple, pork, attributed to government budget austerity measures (Agriculture Market Regulation Office): 16-18% ---------------- EXCHANGE RATE June 29, 1995 (National Bank of Hungary) US Dollar (buying) 124.55, (selling) 126.97 Deutschemark (buying) 89.91, (selling) 91.69 --------------------- ============= FEATURE STORY Journalists, weary and apathetic, losing fight for freedom By Rick E. Bruner Copyright (c) 1995 Hungary's one-year-old Socialist-liberal government may have declared a cease-fire on the press, but all sides concerned are losers in the country's exhausting so-called "media war." A harsh new assessment by an international media body regarding the new government's treatment of the press here, followed immediately by the political firing of a television news editor have observers suggesting it may still be years before this small Central European nation develops a mature and healthy free press. Even the prospect of a long-delayed new law on the media actually passing at last when the legislature resumes in the autumn produces little optimism among jaded professionals. Media freedom has been the great disappointment in Hungary's otherwise promising transition to democracy and a free market. During the four years of the first freely elected parliament, relations between the government and the media grew deeply acrimonious. The elected leaders' anti-press behavior culminated with the March 1994 mass firings of more than 100 state radio employees, mostly liberal journalists, two months before national elections. The new coalition of the reform-communist Socialist Party and the liberal Free Democrats, who won by a landslide in May 1994 owing in no small part to voter disgust with the ousted conservative's treatment of the press, were quick to set a new tone of tolerance towards the free media. Predictably, there came an immediate sweep of newsrooms at the state broadcasters when the new regime took power, but most observers allowed the act as one not of vengeance but an attempt to restore credibility to institutions staffed then almost entirely by toadies, quislings and demagogues. The new editors sought balance above all, the new government leaders strove to keep their tempers in check, and a mood of calm descended at last on the much beleaguered profession of journalism in Hungary, or so it appeared. It came as quite a surprise to many here, then, when the New York-based Freedom House released its annual report on Press Freedom Worldwide this May, which raised Hungary's rating regarding threats to press freedom by eight points (out of a possible 100), from 30 to 38, shifting it from the "free" category well into that of "partially free." On his recent trip to the US, Prime Minister Gyula Horn was questioned about the report. He brushed aside the criticism, blaming the report's conclusions entirely on the previous administration. "The [journalist then] called me," said Leonard Sussman, author of the report, "and I said, 'No, it's [Horn's] government as well.'" Sussman, the Freedom House's senior researcher in international communications, admitted he was overwhelmed by the response he got from Hungarian journalists querying the report's findings. In all, he gave nearly 20 interviews on the subject. "It kind of broke all records," he said. The report covers a period of 18 months, so the previous government's anti-press swan song was indeed reflected in the analysis. But Sussman was more concerned by what he sees as a less obvious manipulation of the media the new government has routinely conducted. Where the last government publicly assaulted the press, ostracizing all by extreme loyalists in the process, the new administration has applied more discrete pressures to shape the news in its favor. Chiefly these include, according to Sussman, back-room cronyism among the many news professionals with known sympathies to either to liberals or Socialists in power or, failing that, financial leveraging. The country's number-one selling daily and "paper of record," Nepszabadsag, one-time organ of the Communist Party, exhibits a distinct pro-Socialist bias, according to Sussman, whose research relies largely on the opinion of local analysts. "That's not to say it's the government's mouthpiece, but there is some connection," he said. At the same time, the Freedom House sees political motives in the government's March decree that the state television's staff to be reduced by 1,000 employees (more than a quarter of the payroll), which was presented as part of a much broader economic reform package to trim the state's enormous budget deficit. The point is debatable. On the one hand, virtually everyone agrees the television is grossly over-staffed, with 3,600 employees; according to the local English-language paper the Budapest Business Journal, that's considerably more than the worldwide staff of CNN International. Moreover, layoffs were to be carried out by department heads, thereby limiting centralized political influence. On the other hand, as one TV insider noted, "When mass firings are in the air, it's more difficult to be daring [in one's reporting]." In any event, the Constitutional Court recently blocked the firings pending the passage of the long awaited new media law. Despite all the controversy the Freedom House's report caused locally, Sussman stands by his conclusions. "In two or three cases, after [the Hungarian journalists who contacted him] turned off their tape recorders...they told me I was right," he said. "A lot of what has gone on since [the previous government's frontal attack on the press] has been more subtle and somewhat more sophisticated, but it still has an impact on content." As if to prove the point, not two weeks after the report was released, the editor of the main evening television news program, Hirado, was summarily fired with no official explanation. No one, however, doubts the move was politically motivated. "Everyone knows what it was," said ex-editor Janos Betlen. "I knew last summer [when he took the job] it was risky. I had to take the risk. I tried." Trained in journalism in the late 1960s, Betlen worked instead as a translator during the communist regime rather than compromise his integrity within an organ of the state. Re-emerging in the 1990s as a top television interviewer, the Socialist-liberal coalition offered him the news editor's position last July. There was no particular incident that outraged the government, as far as Betlen knows, but it was simply his dedication to independence that cost him his job. "There was no tone of criticism" in the news show, he said. If anything, most critics said the news was balanced to the point of being bland. Indeed, Betlen admitted to applying self-censorship, having decided it was more important to be "fair and liked by everyone" than to be "western and interesting" and risk controversy for the sake of sensationalism. The problem was he was not prepared to toe anyone's line. "They just couldn't foresee what I would do, they couldn't trust me. I wouldn't ask for advice and wouldn't accept anyone's veto. If anyone came to me with a big story, I would carry it. That seemed quite normal," he said. Meanwhile, the government has after a year's preparation submitted a draft of a new media law to Parliament. Controlling more than 70% of the legislature, it seems guaranteed the new government will be able to muster the two-thirds majority required to pass the legislation that blocked numerous drafts during the previous, deeply divided parliament. The proposed legislation would call for the privatization of the smaller of the state's two national television channels, ending the government's virtual broadcast monopoly. It would also set up two boards responsible for all public broadcast regulation, whose members would be appointed in equal parts by government and opposition MPs and would include (in principal) various safeguards against government intervention. Betlen, like other critics, has his doubts. After the mistakes the first government made dealing with the press, the new coalition had a genuine chance to set a new precedent and put media freedom on a path towards healthy development. It has since lost that chance, says Betlen, and few journalists have the strength or inclination to fight much harder to regain their rights. "We don't have too may [journalists] who consider freedom vital," he said. "These problems are deeply rooted in our social structure. For a long time, it's only going to be worse." ================ PARLIAMENT WATCH Horn's latest solo performance has party leaders booing By Tibor Vidos Copyright (c) 1995 Prime Minister Gyula Horn's recent dismissal of Minister of Industry and Trade Laszlo Pal caught Pal and his fellow Socialist politicians by surprise. According to government sources, Horn briefly looked at Pal during a cabinet meeting in which members were discussing the privatization strategy of the public utilities and told him, "You are relieved." Pal did not quite understand and approached Horn for clarification following the meeting. The reply: "You heard it: you are relieved." Following the resignation of Finance Minister Laszlo Bekesi in January and the resignation of the ministers responsible for welfare and the secret service in March, Pal is the fourth minister to be replaced in the Horn cabinet. While all four had been enmeshed in a dispute with Horn, the first three did not wait to be sacked but rather resigned in protest. In Pal's case, Horn chose to show that he is boss and that he is commanding the show instead of waiting for Pal to resign. The leadership of the Socialist Party listened slack-jaw when the sacking and the replacement candidate were announced. Obviously the prime minister did not consult anybody before making the decision. According to a statement of the National Council of the Socialist Party, the relations between the party and the government are not satisfactory. The party has no way to influence government policy. The party leaders also criticized the future ministerial appointment of Imre Dunai -- the non-partisan administrative state secretary at the Ministry of Industry and Trade -- instead of a party politician. Dunai, though a member of the communist party since 1968, did not join a party following the political changes of 1990. He has been a career foreign trade officer most of his life. Reacting to the criticism, Horn said: "There are situations when I have to take sole responsibility for decisions." According to Horn, it is not the role of any party body to participate in daily government business. Sandor Csintalan, acting vice president of the party, told the press that unless the situation changes, personal consequences will have to be drawn at the next socialist convention in October. In plain language: The party bosses are fed up with Horn's independent decisions. Whether they have any alternative remains to be seen in the coming months. * * * 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. ========= PERSONALS A 10-year-old Budapest youngster named David Cserne is looking for an English-writing pen pal. The goal: make a buddy, practice English. Correspondence will be conducted by pen, paper, and Paleolithic general post. Any Hungary Report reader knowing a child interested in swapping lies with young David can send the correspondent's name and postal address to John Nadler . (John's actually out of town for a few weeks, so be patient for replies.) =========== 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 Please note: all mailing lists suffer from frequent "error" addresses. If we have problems with sending to your address more than one week in a row, we will remove you from the list. If you haven't received the report for more than one week, feel free to enquire directly to Rick Bruner (but please wait for at least a week, as we're also just famously late in getting the thing out sometimes :) * * * 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 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 making us 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 -Robert Abatecola robert@tsgus.com