By Gábor Takács

“Hungarian state captured by private interest groups” – this was the alarming title Transparency International gave to a press release last week on its report “Corruption Risks in Hungary 2011”. The media happily latched onto to this phrase, citing the report as a further evidence of the ruling centre-right Fidesz party ruining Hungary’s democratic order.

Certainly, the 279-page report, contains a wide range of criticism covering the period since 2008. Some concern the current government, others former left-wing administrations, and some both. But the conclusion that the Hungarian state is ”captured by powerful interest groups” is by no means a balanced account of the report’s findings – or the actual situation.

It’s hard to work out, for example, how prime minister Viktor Orbán’s government could be captured by private interests any more than its predecessors (or any government anyhwere), when most of its actions since taking power have reflected the priority
of politics over business interests?

This is clear, for example, from the imposition of the controversial banking tax, the sectoral crisis taxes and the increased role of the state in strategic sectors where privatisation had gone too far.

But let’s take a closer look at one of the biggest issues raised by TI : the financing of parties and election campaigns. As TI puts it: “political parties remain the major corruption risk in Hungary. Campaign financing regulations do not ensure transparency and accountability”. I, and many in the Budapest political establishment, completely agree.

The current regulations, drafted at the time of the post-Communist transition, are defective. For example in theory parties have to regularly report about their finances to the State Audit Office, detailing expenditures and naming large donors (applying to sums above about EUR 1,700). Yet they are not subject to the book-keeping rules that companies have to follow.

As a result, the State Audit Office relies on its own estimations, which explains why it has been so reluctant to levy fines for, say, campaign overspending.

The current campaign spending limit of Ft1m (€3,300) per candidate is a mere fraction of the sum needed for any election campaign. So, just as TI calculated, all major parties spent several times above the theoretical maximum during the 2010 parliamentary campaign. But, the office has only meted out fines on candidates in just a few exceptional cases during the last two decades.

So why have lawmakers not amended this rule, despite having the issue on the agenda for more than a decade? Simple: an amendment would have required a two-thirds majority – something no government enjoyed between 1998-2010. Though parties all said they sought cross-party consensus – as in many other key questions – it was impossible to achieve. Therefore, the status quo remained.

Now, with Fidesz having a two-thirds majority in parliament, a new law on party financing can be adopted. Indeed, the first consultations between parties on this matter were held this week. But hurdles remain: in particular, the left-wing opposition has made its participation dependent on unacceptable conditions, eg rescinding certain othere new laws.

The result? Rather predictably, last week’s roundtable” consisted only of the governing parties, plus the extreme-right Jobbik.

The attitude taken by the Socialists and LMP (Hungary’s greens) is a great pity, because their opinions on electoral finance do not differ significantly from that of Fidesz.

Indeed, the Socialists’ proposal from early 2010 was accepted as a possible point of departure by Fidesz, including theirr ideas on separate campaign accounts, increased spending limits and stronger supervisory rules by the State Audit Office.

Fidesz would love to have opposition support the new law. Therefore, its offer to consult is probably more than an empty PR-rhetoric. On the other hand, left-wing parties are well aware of the symbolic value of their cooperation, which explains their reluctance to be partners in the drafting process. This is a weapon against which the government is absolutely defenceless.

And with each refusal, the opposition parties can accuse the government of dictatorila behaviour and justify their existence as a future democratic alternative.

Under such circumstances, I believe it is the lesser evil to push on with legislation even without consensus. This way, at least a few key points can be deleted from Transparency International’s list of criticisms.

That can be counted as a success for any government.

Gábor Takács is an analyst at Nézőpont Intézet, a Hungarian think-tank

Related reading
OECD to Orban: sort your house out, beyondbrics
Transparency throws light on the darker side of Hungary, beyondbrics

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