From hungary-report-owner Tue Nov 21 00:59:12 1995 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id AAA12322; Tue, 21 Nov 1995 00:59:12 -0800 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id AAA12308; Tue, 21 Nov 1995 00:58:53 -0800 Received: from jbrown@isys.hu () via =-=-=-=-=-= for hungary-report@hungary.yak.net (12306) Received: from kingzog.isys.hu (KingZog.iSYS.hu [194.24.160.4]) (fnord) by nando (8.6.5/8.6.5) with ESMTP id AAA12281 for ; Tue, 21 Nov 1995 00:56:29 -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 JAA17580 for ; Tue, 21 Nov 1995 09:55:44 +0100 (MET) Date: Tue, 21 Nov 1995 09:55:44 +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: The Hungary Report 1.28 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. 1.28, November 20, 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 Slovak parliament passes controversial language law Thousands of teachers demonstrate for pay rise France supports Hungary's EU membership New customs law irks foreign investors Hungarian version of Windows '95 debuts Black market's costs measured ECU 425 million planned until 1999 Smallholders unveil economic plan Bridge-climbing craze halts city traffic NUMBERS CRUNCHED Joint ventures in Hungary State assets under foreign ownership Ten-month privatization revenues Illegal border crossings Hungarians addicted to nicotine compared to Westerners FEATURE STORY FBI school teaches new tricks to old enemies PARLIAMENT WATCH Agreement with labor waged before privatization MAGYAR NET WATCH Sorry, no Magyar Net Watch this week! 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 Slovak parliament passes controversial language law After a debate that lasted well into the night, the Slovak parliament passed the Slovak language law last Wednesday. The Hungarian government issued a statement expressing its regret and concern over the law and plans to take the matter to various European organisations. Hungarian prime minister Gyula Horn warned his Slovak counterpart in a letter on the eve of the vote, that the law would "create tensions in bilateral relations." In reaction to the law, Hungarian opposition parties have urged the recall of the Hungarian ambassador from Bratislava. The controversial law regulates the use of the Slovak language as the official state language and does not deal with the usage of the minority languages, such as Hungarian. According to the draft text published in Nepszabadsag a few weeks earlier, the Slovak language is obligatory and minority languages would be dealt with in a separate law. However, the Hungarian minority in Slovakia fears that in the absence of such a separate law, the use of minority languages would, in effect, be rooted out. Hungarian parties in Slovakia say that the law in its present form prohibits minority languages from being used in public administration and public life to such an extent that even marriages of Hungarian couples would have to take place in Slovak. The Hungarian government issued a statement on Thursday, saying that it received the news of the new law "with sorrow" because it "seriously limits the rights of language use of the 600,000 ethnic Hungarians in Slovakia," Magyar Hirlap quoted the text. The statement also said that the new law breaches the Hungarian-Slovak basic treaty, and several international documents such as the European Human Rights Agreement and the European Council's Minority Rights Framework Agreement. Hungary will take the issue to the European Union, the European Council, NATO members countries and other organisations, Foreign Minister Laszlo Kovacs announced at a special press conference last Thursday. The Slovak government has denied all charges, saying that they were one-sided. A European Council delegation is to visit Slovakia next week. -KF Thousands of teachers demonstrate for pay rise Some 70,000 teachers, lecturers and library staff took part in a demonstration last week, according to press reports. Television pictures showed a fully crowded Kossuth square in front of parliament. Fourteen trade unions also joined the demonstration. In a petition handed over to the Speaker of Parliament, the demonstrators demanded a 25% pay rise, an increase of funding of cultural institutions and security of employment. Speakers at the demonstration criticised the government for spending too little on cultural institutions, for, what they called, "launching a frontal and brutal attack on culture." The biggest teachers' trade union speaker was quoted saying that a country whose government saved money on education "had no future." The demonstrators also called for the resignation of Gabor Fodor, minister of Education and Culture. -KF --------------------- BUSINESS & ECONOMICS New customs law irks foreign investors Western businesses in Hungary have long been able to import capital goods into Hungary duty free, but following Parliament's recent approval to change an amendment to customs legislation, foreign companies will begin paying customs duty on imported machinery and other capital goods starting Jan. 1, 1996. The new provision is designed to protect capital goods-producing companies in Hungary. In response, foreign investors have been outright critical of the customs amendment, fearing that more capital output required to set up shop in Hungary will decrease competitiveness. In-kind contributions have made up about 15% of investments in Hungary since 1990. The Budapest Sun reports that the new provision could cause foreign investors to overlook Hungary for other countries such as Romania, where duty-free status for such items is still in effect. According to the Budapest Business Journal, government officials are defending the new customs law, saying that the favorable tax treatment has long been abused by foreign companies. However, the government has not demonstrated that it has suffered losses due to favorable tax treatment. -JCB ----------- SHORT TAKES FRANCE SUPPORTS HUNGARY'S EU MEMBERSHIP, French European Affairs Minister Michel Barnier assured Hungarian Foreign minister Laszlo Kovacs last week in Budapest. Barnier's visit was a part of his trip through Central and Eastern Europe to "get to know" each country's plans for joining the European Union, Magyar Hirlap reported. In his outline of Hungary's plans on integration, Kovacs told the French Euro-minister that Hungary would like to start talks in early 1998, after the next EU intergovernmental conference, and hoped to become a full member by 2000. Barnier told Kovacs that Paris thought the chance for talks starting in 1998 was " very realistic." However, he did not venture any prediction as to when Hungary could eventually become a full member. -KF THE SMALLHOLDERS PARTY RELEASED ITS ECONOMIC PLATFORM last week. The 260-page document, among other things, calls for more state involvement in promoting exports, including export subsidies. Smallholders also support a decrease in personal income tax and propose a family taxation plan to encourage women to become stay-at-home moms. The Smallholders and the ruling Socialists are running neck in neck in the popularity polls, both with ratings of 25%. -JCB A RECENT PRODUCTIVITY STUDY REVEALED THAT THE OUTPUT of Western companies operating in Hungary falls short of their parent companies by 57%. The management consulting company that conducted the study, the Austrian Czipin & Partners, calculated output on a hourly bases without accounting for differences in labor costs between Hungary and the West. As a result, experts are calling the study "misleading", reports the Budapest Business Journal. Labor costs are about a fourth as much in Hungary than in Western European countries. -JCB PRIME MINISTER GYULA HORN IS GIVING MINISTRY HEADS and other organizations a year to come up with solutions to the black market problem, reports Nepszabadsag. The motion follows an assessment of damages caused by the black market.In one example, 440 cases of oil tampering in the past three years have cost the government HUF 15 billion (US$ 119 million)in unpaid taxes, according to the Prime Minister's Office. Some 100 companies have been investigated for illegal banking transactions costing 3,000 people HUF 13 billion (US$ 970 million) Some 160,000 investigations by the Tax Office have discovered unpaid taxes to the tune of HUF 35 billion (US$ 261 million). -JCB HUNGARY WILL RECEIVE ECU 425 MILLION ($554.4 MILLION) from the Phare aid program until the year 1999 in preparation for integration into the European Union. The agreement for the funding was signed Friday by Foreign Ministry state secretary Istvan Szent-Ivanyi, state secretary of the Ministry of Industry and Trade Karoly Attila Soos, the Foreign Ministry's state secretary and Hans Beck, head of Hungary's EU office. The aid is designated to support economic growth. Funding has been allotted for infrastructural investments, environmental protection, energy sector development, agriculture, regional development, privatization and education. -JCB THE HUNGARIAN VERSION OF MICROSOFT WINDOWS '95 MADE ITS DEBUT last week, three months after the release of the much hyped software. Microsoft's Hungarian subsidiary launched a heavy promotion campaign, offering the software for HUF 20,000 ($146), about two-thirds of the retail price. Despite reported glitches in the software, the Budapest Sun reports that the local language version is preferred four to one over the English-language version. -JCB ------------------ NUMBERS CRUNCHED * Number of joint ventures operating in Hungary (Nepszabadsag): 25,000 * State assets transferred to foreign ownership (Nepszabadsag): 15% to 20% * Revenues from privatization in the first 10 months of the year (APV Rt's Information and Property Directorate): HUF 58.8 billion (US$ 438.8 million) * Instances of illegal border crossings in the first 10 months of 1995, down 7% from the same time last year (Magyar Hirlap): 20,000 * Percentage of Hungarian men over the age of 15 addicted to nicotine compared to between 24% and 34% in Western countries (Szonda Ipsos): 45% -------------- EXCHANGE RATE Monday, November 20, 1995 (National Bank of Hungary) US dollar -134.10 (buying),137.(selling) Deutschemark - 95.46(buying), 96.3 (selling) --------------- WACKY AS USUAL Bridge-climbing craze halts city traffic Traffic in central Budapest came to a hysteric halt for several hours last Thursday and Friday afternoon. No, it wasn't just the usual rush-hour or the first drops of rain. The complete halt around the city was due to the latest wave of bridge-climbing. On Thursday afternoon, a middle-age man holding his little daughter climbed up to the top of Szabadsag bridge and threatened to throw his daughter in the Danube unless he could talk to the Budapest police chief. After two hours, police and firearms officers managed to get the man on the ground, and the police chief, who had meanwhile arrived on the scene, also promised that he would talk to him. According to press reports, it was not clear what exactly the man wanted from the police chief. Friday afternoon, it was the next bridge up that attracted a bridge-climber. This time, the man was a "regular". The 41 year old father of four had already climbed the Szabadsag bridge seven times,usually to protest against high prices and unemployment. This time it was against the high interest rates on a loan he took out from his workplace. After some time spent walking on top of the bridge, he eventually agreed to climb down. -KF =========== FEATURE STORY FBI school teaches new tricks to old enemies By Susan Milligan Copyright (c) 1995 In matching navy blue polo shirts, the students sat transfixed as they watched slides showing the destruction of the Oklahoma City and World Trade Center bombings. "God forbid you should ever have anything like this happen over here," American instructor Ed Burwitz told his Central European class, outfitted with headphones for simultaneous translation of the lecture. "It is a tough task for any freedom-loving country to prevent terrorism," he added. The class on forensics is typical of what goes on in law enforcement academies across America. But in this classroom, the instructors are teaching crime-fighting tactics to students from onetime enemy nations. "This could not have happened five years ago," said Laszlo Simon, the Hungarian director of the International Law Enforcement Academy here. "We don't preach or teach," said Leslie Kaciban, the American director of the newly-opened facility. Instead, the American instructors - culled from the FBI and other law enforcement agencies - share information and experiences with the students for them to adapt to their systems. Students from Hungary, Russia, Poland, the Czech Republic and other Central and Eastern European nations attend ILEA's 8-week sessions, the first of which began in April. The United States fronted $2.5 million to renovate the campus, which includes a brand-new gym, classrooms, dormitories and one of Hungary's few indoor tennis courts. The Hungarian government contributed $500,000 to renovate the facility, but the U.S. will pay the $3.5 million yearly cost to operate the center, which is modeled after the law enforcement training center in Quantico, Va. The facility looks like any other college campus - students go on field trips together, take "wellness" physical fitness class together, and will have a yearbook and alumni newsletter. The idea is to help the Eastern Europeans with their burgeoning crimes problems, as well as to foster cooperation on international crime problems. "I'm amazed at the freedom of travel that is possible" after the opening up of the Eastern nations, Burwitz said. But "that means criminals can travel as well," he said, allowing them to traffic drugs and contraband. "The more interaction we have with these countries in law enforcement, the better it will be for emerging democracies," Kaciban said. Class topics range from "human dignity" - how to treat a crime suspect - to undercover operations and fraud. April's bombing of the federal building in Oklahoma City is being used as an example in several classes. In "crisis management," students will learn "how to contain it (a crisis) and keep it from erupting," said instructor Stephen Brooks, who helped handle the Oklahoma City bombing. Big-scale bombings are not common to this part of the world, students said. But they said they learned a lot about how to fight organized crime, which is mushrooming in the aftermath of the fall of communism. "They told they have a lot of problems (with organized crime), and that it's better if we learn from their mistakes," said Hungarian student Vilmos Szeplaki. Organized crime is doubly damaging to the emerging nations, because it undermines their economies, Kaciban said. Investors are naturally reluctant to dump money into a nation if they believe there is rampant corruption. Some teachings do not translate for the European students. For example, there is no Russian RICO - the Racketeer Influenced and Corrupt Organizations Act that is one of the strongest American legal tools against organized crime. Eastern European crime syndicates tend not to be based in crime families, instructors said. And organized crime in Russia and Ukraine is so much a part of the society, that it's hard to stop it, said Amy O'Neil, a State Department official not involved in the ILEA. "Under the communist system, you basically did what you could get away with. Everyone broke laws," O'Neil said. "That's how you survived." Both students and teachers said there was a remarkable similarity, however, in the use of evidence and investigatory tools among the countries. Eastern Europeans are very familiar with the use of DNA testing, for example, to identify suspects, although they don't always have the money to do it, Burwitzsaid."There are different orders of laws between the U.S. and here," said a Czech student who would identify himself only as Milan. "But essentially, we have the same methods of investigation." * * * Susan Milligan is a free-lance writer and stringer for the Boston Globe, the San Francisco Examiner, Business Central Europe and Hollywood Reporter. =============== PARLIAMENT WATCH Agreement with labor waged before privatization By Tibor Vidos Copyright (c) 1995 The government has approved the draft agreement between the social partners about 1996 incomes and taxation. Moreover, the government made commitments that real income will not decrease in 1997 and 1998. The social- economic agreement promised by the government for October, well ... um...1995 is thus finally shaping up. As a consequence of the 11% drop in real income, not only railway unions but basically all professions of the state sector took or threatened to take labor action this year. The hope is that once the major labor federations accept the recent agreement, social peace and stability will return to the streets and workplaces. Experts say that cutting real income in 1996 by only 2%, as opposed to 4% initially suggested by the Finance Minister, will not endanger the economic stabilization program. As the prime minister and Ministry of Finance officials said, "It will only slow down stabilization." How much slowing can be endured and where the billions will come from to compensate for the wage increases is another question. Finance Minister Lajos Bokros would like to raid the social security and pension funds; other experts say that keeping inflation below the 1996 forecasts will free up funds for that purpose. One of the toughest and bravest measures introduced as part of the March austerity package was the limitation of wage increases in state-owned industry to 8% for 1995 in loss-making companies, and 15% in the profitable ones. In previous years state owned companies always achieved wage increases equal or above the level of those in the private economy irrespective of their level of profitability, thus further increasing the budget deficit. In the current agreement, the government has promised that after 1996 no such wage control will be implemented. Since many major state-owned companies are planned to be partially privatized by next year, the government seems to hope that the new owners, mainly big international companies, will have more stamina to withstand unjustified wage demands. There is a major problem with this speculation: Until now none of the major privatization projects have succeeded. The privatization of Antenna Hungaria, the national broadcasting company, fell through just recently because of an unrealistic and rigid tender procedure. There is no guarantee that the gas and electricity privatization will be conducted in a more professional and fruitful manner. If the state owned economy and the public sector will not be significantly downsized over the next years, the current agreement will be an important though well-intended episode in Hungary's decline. If privatization and rationalization of public spending goes ahead as planned, the agreement will be an important milestone in Hungary's development. * * * 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. =========== FINAL BLURB The Hungary Report is free to readers. 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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