Country:

Hungary

Subject:

The effects of the coalition crisis on the politics of the Budapest metropolitan council

Summary:

Some signs of the erupted government crisis on March 29, 2008 might be interpreted as a new situation designed to serve the political survival of Ferenc Gyurcsány and János Kóka. (See Budapest Analyses 188.) At the same time, however, the political developments in the metropolis might easily generate into de facto crises, which could not be managed either by offensive communication, or by agreements between the interest-spheres.

Analysis:

The socialist-liberal democrat coalition that has been in charge of the Hungarian capital since 1990 - for the first time since start of the 2006 autumn cycle - found itself in a situation when it spectacularly had to back out from the coalition interest-alliance. The first indication in this respect was the ostensible fiasco of the Municipal Supply and Economic Service (FEGSZ), created by the Metropolitan Mayor's Office. The enterprise established in 2005 - apart from the numerous operational tasks entailing a budget of approximately 3.5 billion HUF - had been responsible for all acquisitions of the office, ranging from the business cards of the representatives to company cars. At the initiative of the Christian Democrats´ (KDNP) faction, investigations were launched against the company and a disciplinary action was taken against the head of FEGSZ, Zsolt Sánta, on suspicion of flouting the economic interests of the Metropolitan Council, as well as violating the public procurement law.

After a brief existence, the company was dissolved and its heads were suspended from their jobs. It is of no secret in Hungary that companies, which spend public money by violating the public procurement law, but are politically controlled - on the whole serve the economic interests of the supervising political parties or the persons representing them. Thus, the closure of the FEGSZ was a serious blow for the socialist-liberal coalition, but the fact that they were unable to protect their protégée (the director of FEGSZ), implied that serious tensions prevail within the coalition. The latest, but much more serious scandal occurred at the Metropolitan Council in February, 2008. Only a single valid candidate competed for a tender launched by the Budapest Transport Company Zrt (BKV) in 2007 with regard to the acquisition of used buses.

With the near four billion HUF worth tender, only traders had been targeted from the start, which, too, renders the outcome of the public procurement more expensive. Alfa Busz Kft was the only company to make an offer. However, the son of the managing director of the BKV was employed at a sub-branch of the company and according to some information, he had been the mediator between Alfa Busz and the BKV. The muddled and contradictory communication of the BKV created a serious scandal, which forced the liberal democrat Metropolitan Mayor, Gábor Demszky to take preventative moves. In the role as protector of legality, he ordered wide-scale investigations into the matter, which he assigned to the BKV supervisory committee. Ostensibly, the committee carried out the investigations and the majority socialist-liberal delegates did not discover any unlawful activities.

However, the case was not closed yet, since the managing director of the Budapest Transport Company attempted several times to resign from his post. To start with, he cited health reasons, but when he was informed that he had sent his letter of resignation to the wrong address - in another letter - he proposed to the Economic Committee of the Municipal Local Government (GB) the termination of his contract on mutual agreement. It is emblematic of the situation within the ranks of the Municipal leadership that the managing director of the transport company did not know who was responsible for the management of ownership rights within the BKV and the employment rights of the managing director.

At present, the official machinery of the Municipal Mayor's Office is trying to destroy evidence, but we have discovered a few momentums, which the municipal leadership ostensibly failed to take into account. The precarious situation of the BKV managing director appointed without tender in 2007 - on the recommendation of socialist deputy mayor, Miklós Hagyó - came into the spotlight under more sensitive circumstances. Notably, the pre-arranged government crisis-scenario failed to consider the de facto crisis in the metropolis. The fiasco of the BKV bus tender will most likely deal another blow to the liberal democrat-socialist sphere of interests.

The tensions arising thereof are demonstrated by the fact that the BKV is believed to belong to the interest-sphere of the socialist Hagyó-circle, while the advisor responsible for the transport-branch of the Municipal Council, Gábor Dancs and the chairman of the BKV supervisory council Gábor Székely, are liberals. At the last meeting of the economic committee, the votes of these two liberals enabled the committee to table the issue of the BKV as proposed by the opposition KDNP. The walkout of the socialist chairman from the committee's discussion on the agenda further demonstrates the tension.

Another sign of the municipal crisis concerned the unforeseen mass-transport strike also. The loss of revenue from the mass-transport strike in Budapest is well-documented. At the same time, there is no indication that anybody would be inclined to approach the problem from the view of crisis management. At present, the BKV does not have a managing director and hence the management's capacities with respect to the negotiations with the trade unions are also unclear. However, the biggest problem is that the company needs an injection of 18.5 billion HUF to survive and avoid bankruptcy.

Socialist Prime Minister, Ferenc Gyurcsány however, staunchly refuses to budge on this point. The trade unions endeavour to avert further redundancies and they consider this financial injection as a guarantee on behalf of the government and the local government to this end. Since the BKV is the most important component in the socialist-liberal struggle for survival, the government's decision with regard to the financing of the BKV, could determine the fate of the government crisis, too. If the government were to refuse the allocation of the required lifeline to guarantee the survival of the company, the socialist-liberal tension generated thereof could become a reality in Parliament, too.

Conclusion:

While the government coalition crisis appears to be a prearranged and gradually implemented scenario, the clash in the capital generates a de facto crisis in the interest-spheres of the coalition parties. However, the common element in the two circumstances is explicit: neither the socialists, nor the liberal democrats are able to provide the right solution - either together, or separately.