From hungary-report-owner Mon Nov 13 08:04:08 1995 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id IAA09491; Mon, 13 Nov 1995 08:04:08 -0800 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id IAA09478; Mon, 13 Nov 1995 08:03:48 -0800 Received: from jbrown@isys.hu () via =-=-=-=-=-= for hungary-report@hungary.yak.net (9476) Received: from kingzog.isys.hu (KingZog.iSYS.hu [194.24.160.4]) (fnord) by nando (8.6.5/8.6.5) with ESMTP id IAA09448 for ; Mon, 13 Nov 1995 08:01:20 -0800 Received: from [194.24.161.32] (hrep.dial.isys.hu [194.24.161.32]) by kingzog.isys.hu (8.7.Beta.11/8.7.Beta.11) with SMTP id RAA15895 for ; Mon, 13 Nov 1995 17:00:39 +0100 (MET) Date: Mon, 13 Nov 1995 17:00:39 +0100 (MET) X-Sender: jbrown@mail.isys.hu Message-Id: Mime-Version: 1.0 Content-Type: text/plain; charset="us-ascii" To: hungary-report@hungary.yak.net From: jbrown@isys.hu (Jennifer Brown) Subject: H-Rep 1.27 Sender: owner-hungary-report@hungary.yak.net Precedence: bulk Reply-To: hungary-report@hungary.yak.net ======================== The Hungary Report Direct from Budapest, every week Also available on the World Wide Web (http://www.isys.hu/hrep/) No. 1.27, November 13, 1995 ======================== SPONSORED BY: iSYS Kft., providing full Internet solutions for companies and individuals in Hungary. For further information, send e-mail to , view our World Wide Web home page (http://www.isys.hu) or call (+36-1) 266-6090. ======== CONTENTS BRIEFS Smallholders Party rally on the 50th anniversary of its postwar victory Health care workers demonstrate for pay rise General electricity strike edges closer Slovak-Hungarian talks over language law fail APV Rt rejects French bid for Antenna Hungaria Figures show Hungary's economy stabilizing DM 1 billion credit line slated for Hungary EBRD and Hungarian bank sign on trade loan Polygram knocks again at Hungaroton's door New foreign exchange code eases transactions Government's recently resigned PR team has a strange interpretation about the role of the media. NUMBERS CRUNCHED Average monthly wage in real terms Next year's estimated rate of inflation Projected 1996 devaluation rate Unemployed recent grads Hungarian life expectancy Size of grey economy FEATURE STORY Report proposes new laws for prostitutes PARLIAMENT WATCH Socialists prepare for 1998 MAGYAR NET WATCH In the news The Hungary Report is also supported in part by: MTI-Econews, a daily English-language financial news service. For on-line (fee-based) subscription information, contact the Internet address: . (It's not automated -- write a nice note.) ====== BRIEFS By Kriszta Fenyo and Jennifer C. Brown Copyright (c) 1995 ------------ GENERAL NEWS Smallholders Party rally on the 50th anniversary of its postwar victory The Smallholders Party, currently the most popular opposition party, held a celebration rally last Saturday on the 50th anniversary of the party's election victory. Party leader Jozsef Torgyan vowed solemnly that the present party would repeat the grand victory again. In his three hour speech, Torgyan outlined an "alternative economic programme", that included lowering taxes, re-negotiation of the World Bank and IMF agreements, a "crusade" against unemployment, a rise of pensions, and the construction of 20,000 new flats, Magyar Hirlap reported. Torgyan also reiterated his conviction that by next year there would be early elections in Hungary and his party would come out as the absolute winner. One of the most controversial incidents during the rally was the speech of Franciscan monk Otthmar Faddy. In a passionate speech, he said that those who did not want a "Christian Hungary" of "God, homeland and family" must leave the country, Magyar Hirlap quoted him saying. Holding up a cross, he warned: "We won't hang or beat anyone but we will sweep the foreigners out of the country". Shortly after Faddy's speech, the Franciscan order issued a statement in which they distanced themselves from the speech and asked for forgiveness from those who may have been offended by it. -KF Health care workers demonstrate for pay rise Tens of thousands of health care workers took part in a demonstration in front of parliament last Saturday. The two biggest dailies estimated a showing of 50,000 to 60,000 people. The demonstrators handed over a petition demanding a 35% pay rise and a 10% increase in the funding of health institutions, instead of the 20% rise offered by the government, television news reported. Speakers at the demonstration warned that hospitals were already on the brink of collapse and without a more substantial increase of funding health care workers would not be able to treat patients properly. Health care work is among the lowest paid jobs with an average HUF 30,000 ( US$ 230) per month. Some nurses take home as little as HUF 12,000 ( US$ 92), according to a survey in Nepszabadsag. The government's welfare secretary of state acknowledged in an interview with a Sunday paper that wages in heath care were "unjustly low" but said that there was simply no more money available. He added that those institutions that manage their budgets better would be able to give more pay rises. Further talks are expected this week between the trade unions and the government. Some demonstrators, however, told the press that if the demonstration was not enough they were ready to strike. -KF -------------------- BUSINESS & ECONOMICS APV Rt refuses sole bid for Antenna Hungaria The State Holding and Privatization Agency (APV Rt) has scrapped French Telecom subsidiary TeleDiffusion de France's (TDF) bid for national broadcasting monopoly Antenna Hungaria. Some 50% of the company was offered for HUF 15 billion (US$ 10.9 million). Sole bidder TDF offered slightly less for the share, which, in the APV Rt's eyes, was too low. Meanwhile, the Budapest Business Journal (BBJ) reports that some close to the deal say the price for the bid was initially set too high due to mis-evaluation. The APV Rt plans to issue a new tender in December in hopes of attracting stronger bids. The rejection of TDF's bid is the latest in a string of botched privatization deals that have left foreign investors out in the cold. A year ago the government refused to sell HungarHotels to American hotel company American General Hospitality. More recently, state record company Hungaroton was sold to Hungarian investors for half the price offered by Dutch-owned Polygram (see Short Takes). An editorial in the BBJ states that the latest fiasco sends a negative message to foreign investors and could also cast a shadow on the upcoming sale of five state-owned utilities companies, estimated to bring in revenue of $2 billion. -JCB ----------- SHORT TAKES GENERAL STRIKE IN THE ELECTRICITY INDUSTRY EDGES CLOSER as workers plan to set up a strike committee on Tuesday. Trade unions warned that if the government did not agree to their 20% pay rise they would stage a general electricity strike in the near future, television news reported last week. The strike would last for 8 hours and is expected to cause a 25% drop in production. Newspaper commentators say that there is little chance for agreement. Meanwhile, warning strikes continued throughout last week, with three power plants lowering production for two hours. -KF SLOVAK-HUNGARIAN TALKS FAILED to ease tensions over the new Slovak language law bill when the two prime ministers met in Berlin last week. Slovak prime minister Vladimir Meciar and his Hungarian counterpart Gyula Horn met in the German city at an international conference and staged an "unofficial" summit to try and resolve conflicts over the new bill. Their standpoints, however, remained as far as they were before, Magyar Hirlap reported. Meciar maintained that the law would not infringe upon the rights of the Hungarian minority in Slovakia, while Horn insisted that it caused tensions and said that Hungary intended to consult the European Council on the issue and, if necessary, register an official complaint with the Slovak government. -KF NEW FIGURES REVEAL THAT THE ECONOMY IS STABILIZING, leading economists to believe that Finance Minister Lajos Bokros's austerity package seems to be working as planned, the Budapest Business Journal reports. Recently released economic figures show a trend of declining consumer spending. Other figures released also show that inflation is now at about 1.7% compared to 2% in September. Last year's inflation rate was 28.5% compared to today's 28%. -JCB THE EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD) HAS GUARANTEED A LOAN for the Hungarian Trade Bank. The loan will be used to revive trade between Central and Eastern European countries and the former Soviet Union. Both the EBRD and the Hungarian bank will contribute US$ 25 million toward credit risks. The Hungarian Foreign Trade Bank was the first bank to sign such a guarantee agreement with the EBRD. -JCB POLYGRAM IS KNOCKING ONCE AGAIN ON HUNGAROTON'S DOOR. The Budapest Sun reports that even after loosing a chance to purchase state record company Hungaroton, Polygram Hungary is now discussing the possibility of purchasing Hungaroton's valuable classical archive section. The Dutch-owned Polygram threatened to sue the State Privatization Agency (APV Rt ) earlier this fall on grounds of discrimination after it's HUF 680 million bid was rejected in favor of a HUF 250 million bid made by Hungarian investors. The rejection of Polygram's bid sparked complaints from the Dutch government and more than its share of negative publicity in the local English-language press. If Polygram is allowed to purchase the archives, the company reports that it will drop the lawsuit. (A little face-saving couldn't hurt now.) -JCB THE HUNGARIAN PARLIAMENT PASSED A FOREIGN EXCHANGE BILL last week that will ease the forint toward convertibility. While the code still imposes some restrictions on capital transactions, companies will now be able to freely exchange forints for any currency used in transactions related to business activities. The bill allows Hungarian companies to take out hard currency loans and set up companies abroad. The legislation also does away with the permission foreigners need to obtain in order to buy property. The legislation also fulfills requirements for Hungary's membership in the Paris-based Organization for Economic Cooperation and Development (OECD), now expected to take place Jan. 1. -JCB ---------------- NUMBERS CRUNCHED * Average monthly wage in Hungary, down 10% in real terms (Central Statistical Office): HUF 25,557 ($187) * Level of inflation projected next year (Ministry of Finance): 20% * Devaluate rate per month planned for the first six months of next year (Ministry of Finance): 1.2% * Unemployed recent graduates registered in October (Vasarnapi Hirek): 6,400 * Average life expectancy in Hungary compared to the European average of 72 (Napi Gazdasag): 65 * Percentage of the economy considered to be operating in the "grey" compared to 10% in Romania (European Bank for Reconstruction and Development's Transition report 1995): 30%. ----- OOPS! In last week's briefs, it was stated that the Brits have invested US$ 800 in Hungary. Obvious mistake. Of course, they have invested US$ 800 million. Thank goodness. In Numbers Crunched, we reported that the year-end budget deficit was initially expected to be HUF 56 billion (US$ 4.1 million). Unfortunately, the correct figure is HUF 156 billion (US$ 1.1 billion). Please excuse the errors. KF & JCB ------------- EXCHANGE RATE Friday, November 10, 1995 (National Bank of Hungary) US dollar -134.33 (buying),137.01(selling) Deutschemark - 95.4 (buying), 96.3 (selling) --------------- WACKY AS USUAL Government's recently resigned PR team has a strange interpretation of media's role Hardly a week after the new public relations team of the government introduced itself and was dubbed as the "dream team", its head announced that all but one of them would resign. The reason: their position was made "impossible" by the press itself, with which the team had earlier vowed to strike up good relations. The story started a week ago on the day the "dream team" appeared on TV at its first press conference. When the cameras showed one of the team members, Endre Mihalyi, several viewers stared at disbelief. They clearly recognised in the young man, who was introduced as a real expert and professional, the very same man who had embezzled the funds of a school trip to England. Televisions' A Het (The Week) programme got hold of the story and aired it last Sunday evening, revealing that Mihalyi was actually under criminal procedure for the embezzlement. "Dream team" head, Henrik Havas, himself a well-known journalist, said he had not known Mihalyi personally, but had only hired him on a recommendation. He also commented to the daily Magyar Hirlap that he couldn't possibly know everyone or fill up his team with his friends. And above all, he was deeply offended by the lack of "collegiality" from the press. Instead of coming out with the story immediately they should have warned him first to help him to smooth it over without a scandal. He was also hurt by the fact that none of the papers reported that he had made it clear at the introduction that he did not know Mihalyi, he told MTI. As a result, his work was "made impossible" by the press and in deep offense he decided to resign with his whole team. Prime minister Gyula Horn also blamed the press for losing his new team, reiterating that the press should have warned Havas instead of publishing the story. -KF ============= FEATURE STORY Report proposes new laws for prostitutes By Emmanuelle Richard Copyright (c) 1995 It might not be long before prostitutes in Hungary become legal entrepreneurs, giving out receipts and filling tax forms. At least that's the scenario foreseen by a new 40-page Interior Ministry report that recommends the legalisation and strict regulation of prostitution. The report, soon to be distributed to all government ministries, was drafted by a five-person board comprised of police executives and legislators. The effort is aimed at replacing current laws, considered out-of-date, and cracking down on the spread of the unregulated sex industry. "While Budapest has become a capital of prostitution in Europe, the law in force remains from another age", said Lt. Col. Akos Borai, author of the new report. Like France or Portugal, Hungary's current law is based on the 1950 world convention on prostitution, "a rather prostitute-friend treaty," according to Borai. It declares prostitution illegal, but the signatories are asked to pursue pimps and other profiteers rather than the prostitutes, who are considered victims. Hungary made its law even more ambiguous in 1993, introducing a decree which reduced prostitution to a misdemeanor. In practice, hookers incur minor fines for solicitation, while pimps and brothel owners remain the primary targets of police and other officials. The report, a significant step in the eventual drafting of new legislation on prostitution, contains several original proposals. Prostitution would be entirely legal, but geographically limited. Each municipality would create red-light districts, or so-called "patience zones" (turelmi zonak), mostly separated from traditional residential areas, schools and churches. Prostitutes would apply for and receive permits. Police would fine anyone practicing out of the zone or without a permit. Medical examinations would be performed weekly. The office of Budapest Mayor Gabor Demszky and National Police officials, however, have delayed the progress toward legislation, arguing that Hungary should consider abandoning the 1950 treaty and allowing brothels on the Amsterdam model. Neither of the new approaches would actually be new for Budapest. During the Habsburg and Horthy eras, prostitution was licensed with fixed prices in established "pleasure areas," which provided brothels and medical centers. In 1950, the Communist Party shut down the licensed brothels and compelled many prostitutes to undergo "re-education" at a labor camp in Dunaujvaros. But hookers gradually drifted back to Budapest in the 1980s as tourism was emerging. The new ministry report recommends the capital's "patience zone" be on Nepsziget, a peninsula on the Danube in the north of the city now mostly frequented by campers and nightclubbers. In addition, it recommends prostitutes to be free to register as individual entrepreneurs, but only voluntarily, in order to respect the 1950 treaty. "We would like to make them accept this status," says Borai. Under the plan, street walkers, like any business owner, would have to deal with red tape, give out those little green szamlas (receipts), and pay taxes, including AFA (VAT). But they wouldn't be allowed to hire other prostitutes. That would place them into the category of brothels, which would remain illegal. "We are very conscious of the limits of such proposals," admits Borai. "There are no good solutions, but these are the best we could find to deal with such a hopeless situation." Much of the pressure that resulted in the ministry report has come from Budapest's District VIII, the capital's poorest central district and its prostitution center for decades with an estimated 3, 000 hookers. "Prostitution has recently become an activity closely linked to organised crime," explains Borai. "The police can't infiltrate the milieu nor reassure residents who complain about growing insecurity," he said. A senior District VIII official meanwhile, said he believed the proposal to establish "patience zones" would not be enough to curb the street business that has plagued that district and does not sufficiently address the health issue related to prostitution. He also registered his disapproval over the fact that district governments have not been asked to offer their opinions on the latest proposal. The author of the report believe the moving of prostitutes to "patience zones" would help free District VIII from its pimps and other shady characters. Borai added that the relationships between pimps and prostitutes are particularly cruel in Hungary. Most of the hookers are women from disadvantaged families or institutions. By some estimates, 90 percent of them were sexually abused by relatives during their childhood and a large percentage of them are forced to work on the street. If the plan works, of course, there would be a third beneficiary; government coffers. Taxes from legalised prostitution could bring billions of forints a year. In District VIII, street walkers mostly pretend to ignore details of the potential legislation. But Kati, a smiling 30 something working on Jozsef utca, mocks the plan, saying the change has been rumored for years. "I'm sure it will never happen," she laughs. "It's just too ridiculous. Nobody would ever want to go working on Nepsziget or wherever. It's too far. By the time you get there, you have missed two or three clients. No way." When it comes to possibly filing with tax authorities, she says, "tell me how the government can tell whether I make Ft 800 a day or more?" Words such as "receipts" and "tax", she adds, have nothing to do with her daily universe. According to police estimates, only 10 percent of all prostitutes would likely accept to work in "patience zones". One pimp recently told TV reporters that armed struggle would occur during the move to "patience zones" and with the repartitioning of any new territory between competing groups. Some prostitutes, meanwhile, have indicated they don't want the state "to be our new pimp." Borai doesn't know when the new law on prostitution will be completed, or how it could be decently implemented. He even seems personally to favor the police and mayor's office attempt to try an even more progressive law. But he doesn't believe parliamentary parties will have the daring to pass a law licensing brothels. Still, he believes solving the problem has become so urgent, the ministry's proposals will likely be tried. "I'm the first to be skeptical. The next question will be: What can society offer these girls beyond simple legal impunity?" * * * Emmanuelle Richard is a freelance journalist who writes for French and English publications. ================ PARLIAMENT WATCH Socialists prepare for 1998 By Tibor Vidos Copyright (c) 1995 Socialist members of Parliament were recently asked to sign a circular calling for the election of a new caucus leadership. With this game of poker, the Convention of the Socialist Party scheduled for Nov. 24 has taken a new and exciting turn. Imre Szekeres, the parliamentary leader of the Socialist Party, is in the spotlight again. In October 1994 he almost became the Deputy President of the Party - and with that, the official successor to Prime Minister Horn. The convention rejected at that time the establishment of the office of the deputy president, and Szekeres withdrew into the well-fortified walls of Parliament. The parliamentary group developed into a professionally managed institution, a remarkable achievement taking into account that 209 elected politicians sit in Parliament, representing a great variety of interests. There have been no scandals about procedures, no public fights between leading personalities in the leadership -something quite unusual, especially compared to the government or other socialist bodies like the Presidium of the Party. Szekeres, though publicly loyal to Horn, defended the coalition between the Socialist Party and the Alliance of Free Democrats at times when the prime minister seemed determined to break up with his liberal partners. In fact it was Szekeres who played a crucial role in forcing the Prime Minister to give up tampering with the coalition by forging an alliance between the presidiums of the Party and the Parliamentary group. As a result, Szekeres found himself again in the top list of candidates to succeed Horn. And this is exactly why signatures are collected for new elections in the parliamentary caucus. The convention in November will be soon followed by another convention, in which party leadership will be elected that will take the Socialist Party into the 1998 elections. Horn's future as prime minister and party president will be one of the hottest topics at that convention. The socialist elite, including the five socialist ministers who have resigned from Horn's cabinet since 1994, and Sandor Nagy, the resigned trade union boss, are all eager to build up positions to be part of the '98 dream team'. It seems that in 1994, socialist leaders all could agree on one issue: Let's prevent Imre Szekeres from becoming the second man in the party. Now that succession is not a matter of theory any more, such an agreement will be more difficult to reach. * * * 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. ================ MAGYAR NET WATCH In the news... by Attila Beno Copyright (c) 1995 Printed publications are slowly becoming old-fashioned. Well, maybe that's not the case yet, but it's definitely true that more and more newspapers and magazines go "on-line", and make their articles and pictures available for the public. And there are some publications, that ONLY exist in electronic format. The "Hungarian electronic library" (Magyar Elektronikus Konyvtar) is the place where you can find all (or at least most) of the electronically published Hungary-repeated magazines. It can be found at gopher://gopher.mek.iif.hu/11/porta/virtual/magyar/efolyir It provides access to many periodicals including The Hungary Report. One of these papers is the weekly 168 Ora at http://www.atm.com.pl/COM/xlori/168/ora.html which is a very popular political and cultural newspaper. You can read most of the articles here, browse through back issues, and even look at their cartoons. Wow, these cartoons are great. Well, gotta go now. I have lots of cartoons to look at... :-) =========== 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 inquire directly to Steven Carlson (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.isys.hu/hrep/ and via FTP ftp://ftp.isys.hu/pub/hrep/ * * * ABOUT THE CO-EDITORS Angels' Land, Budapest native Kriszta Fenyo is a researcher for the BBC World Service and BBC Television, (also fledgling freelance TV producer for Reuters). She is also completing her PhD in 19th century Scottish history. She has lived in Hungary on and off since birth. Whitefish, Montana native Jennifer C. Brown reported for the Budapest Business Journal for a year before joining the Hungary Report. She also works as a freelance journalist for regional and international business and foreign affairs publications. She has lived in Hungary on and off since 1991. * * * The entire contents of The Hungary Report are 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 directly by email to inquire about resale rights. * * * For information on becoming a corporate sponsor of The Hungary Report, contact Steve Carlson by email. Feedback is welcome. Rick E. Bruner, Creator <74774.2442@compuserve.com> Steven Carlson, Publisher Jennifer C. Brown, Co-editor Kriszta Fenyo, Co-editor Tibor Vidos, Parliament Watch Attila Beno, Magyar Net Watch * * * For its briefs, The Hungary Report regularly consults the news sources listed below -- for information about subscriptions, contact them by email: The Budapest Business Journal <100263.213@compuserve.com> & Budapest Sun <100275.456@compuserve.com> Budapest Week <100324.141@compuserve.com> Central Europe Today (free online) , as well as most Hungarian-language media (e-mail addresses to come). ================= END TRANSMISSION