Wednesday, 26 April 1995
Volume 2, Issue 81
REGIONAL NEWS
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**NATIVE SON VISITS HUNGARY**
Hungarian-American Congressman Tom Lantos was in Hungary this
week meeting with Hungarian President Arpad Goncz and Prime
Minister Gyula Horn. Lantos met with Hungary's leaders to
discuss bi-lateral issues, Hungary's hoped-for entry into NATO
and the Hungarian Prime Minister's upcoming visit to the US.
Lantos called Hungary a valuable strategic ally of the US and
said he'd personally push for Hungarian membership in the
alliance.
"For the US, Hungary is an island of important stability in a
very important part of the world."
The Congessman also met with ministers of finance, trade and
privatization and Hungary's national bank president. Lantos
said he commends Hungary's newly adopted austerity program,
adding that while it may cause economic hardship now, it's a
painful process which is long overdue. Lantos added that
he'll try and persuade the IMF and the World Bank to be more
forthcoming with Hungary. Lantos will also visit the Czech
Republic and Slovakia on his Central European trip. --Liane
Thompson
BUSINESS NEWS
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**HUNGARIAN BROKER AIMS ISSUE AT PRIVATE INVESTORS**
Hungary's CIB Broker hopes to raise some $4.38 million and
possibly as much as $15 million by offering one-year bonds
with an annual 30 percent coupon to the public. CIB's
President Gyorgy Zbedorsky said the move is to diversify the
company's resources. The broker has serviced other banks and
multinational companies, but now CIB is turning toward the
people. The subscription period will run from May 2 to May
15. Zbedorsky said, interest payment and principal repayment
is due on maturity in one installment. There'll be no listing
of the bond on the Budapest Stock Exchange, however, bid and
ask prices will be quoted by CIB offices and New York Broker.
BUSINESS FEATURE
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**PAIN IN THE AUSTERITY**
By Nancy Marshall
Hungary's austerity program, devised by Finance Minister Lajos
Bokros, looks good on paper, but will it actually work?
The plan calls for a 25 to 29 percent devaluation in the forint
this year and an 8 percent surcharge on imports. It also
eases rules on hard currency accounts, cracks down on
Hungary's vast grey economy and calls for public expenditure
cuts. Those still have to be approved by the Hungarian
Parliament, which may be getting cold feet. Large segments of
the Hungarian public are also skeptical. There have been
demonstrations against the plan's proposed cuts in social
spending by students and public employees. According to Delia
Meth-Cohn, business editor at Business Central Europe
magazine, Bokros's plan assumes Hungarians are going to react
in a certain way to the austerity plan, for example, that
they'll spend less on products from overseas because of the
import tax and save more of their money. Meth-Cohn said just
the opposite could happen.
"The other possiblity will be that people continue to buy
imported goods and that will increase inflation because the
prices are much more expensive. Purchasing power for other
goods goes down because there's a drop in domestic demand,
businesses don't invest so much. It could have exactly the
opposite effect than what they're striving for."
Another potential roadblock to the austerity plan is how the 8
percent surcharge on imports will affect business in Hungary.
The extra tariff could distort trade, reduce domestic
competitiveness and cause higher inflation. Finally, there's
the question of whether Hungarian exporters will be able to
make use of the breather they've been given with the import
surcharge and devaluation of the forint. Some analysts have
said the problem with Hungarian exports isn't an overvalued
forint or excessive foreign competition, but poor quality or
packaging. Others have argued that exporters are already
producing at full capacity and aren't able to ship more goods
overseas regardless of what Finance Minister Bokros does.
Still, Meth-Cohn sees a bright side.
"What is positive is that the business community as a whole,
even those who are badly affected by the changes, particularly
importers, still seem to be in favor of the move, just because
Bokros is trying to resolve the situation. So there's a
general acceptance of the motives behind this."
Meth-Cohn added that the austerity plan is also helped along by
support, at least for now, from Prime Minister Gyula Horn.
ANALYSIS
--------
**BRITISH AMBASSADOR REMEMBERS HUNGARY'S DEMOCRATIC REBIRTH**
By Duncan Shiels
The British Ambassador to Hungary, Sir John Birch, is due to
return to London next month after six years in his post. In
CET's final interview with the Ambassador, he evaluates
current Hungarian President Arpad Goncz and the man who was
Prime Minister from 1990 until his death in December of 1993,
Jozsef Antall. Sir John remembers a conversation with Goncz
just after the election in 1990 when it was still not clear
whom Parliament would elect as the country's president.
Sir John: At that time another name was the front runner, and
he said to me, "By the way, I'm going to be President" and I
said, "I don't think you are, I think someone else is!", and
he said, "No, no. It's been arranged", well not "arranged",
but he said, "I think I'm going to be the President". And
then one day when I saw him, and it was clear that he was
going to be President, I said, "Well that means next week
you're going to be host to the Prince and Princess of Wales."
And he looked absolutely astonished and said, "My goodness!
But I don't know how to talk to a Prince! Whatever am I
going to do?" And I said, "Well, I don't really know either,
but perhaps together we'll get through it." And I think we
did just manage it! And I think he'd been in office then for
two days, and I said, "What's it like?" and he said, "Well, I
never dreamed I'd be sitting in that office one day. It's
very hard work. I got in in the morning at six o' clock and
I'd been there till five and I was just about, yesterday on my
first day, to leave, but I could see there were some papers on
the desk and I said to my secretary 'What are all those?
Should I sign them?'. And he said, 'No, it's all right.'
'But what are they about?'" And his secretary said , 'Well
one is an appeal for clemency by a man, a gypsy, who's due to
be hanged in a week's time'" And Arpad Goncz said to me, "I
couldn't go home. I sat down and I looked at the papers and I
signed the clemency because I don't believe in capital
punishment and having been in prison myself I couldn't bear to
let a man wait a minute longer than was necessary to know his
fate." And immediately I warmed. I thought, well, this is a
man of real humanity who will serve Hungary well."
CET: How do you judge Jozsef Antall as a Prime Minister?
Sir John: Well, I think that he was, in a way rather sadly, he
was more revered in his death than in his life. He had a
great view of, a good view of European history and what he saw
as Hungary's destiny, and I think actually that history will
probably be kinder to him than contemporary opinion. The
people that formed his government had been denied a political
role for 40 years and so he had to draw on people who had no
direct experience of running a government machine. I liked
him, but there was a sort of professonial aloofness. But that
was his way. I mean he gave his life for Hungary, there's no
doubt about that. He literally worked himself to death. He
worked so hard that maybe he didn't see what was happening
around him.
CET: We've talked about the dissidents against Communism in the
early 80s. We now have a government in which the most extreme
of the dissidents are now coalescing with the former
communists. How do you view that?
Sir John: Well, it's one of the anomalies of the past. I think
both have changed, the people from the former party. And I
think people do change their views in their political life.
They change their minds, anyway. How deeply they change their
mentality is less certain.
CET: So you're fairly sceptical that they can live together for
too long?
Sir John: Well I'm not. No, I think that they have a common
interest and it's a common interest of trying to bring Hungary
forward. I know there are difficulties. It's not perhaps a
marriage made in heaven, but it's more than a marriage of
conveneince and I'm reasonably hopeful that it'll work.
ABOUT CET ON-LINE
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A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.
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