Country

Hungary

Subject

In 2004 Hungary became a net contributor to the European Union

Introduction

In 2004 Hungary obtained 50 billion forints, notably, a bare one-fourth of the available subsidy, while Hungarian contribution totaled approximately 135 billion forints. This diametrically contradicted the government's earlier promises that Hungary would be a net beneficiary.

Analysis

The National Development Office, the central institution responsible for Union support for tenders argues that the measure of the performance of structural subsidy funds depend not on payment received, but on the value of obligations vis-a-vis the European Union. This, however, is totally different from the assertions made by the spokesman of the Ministry of Finance in

2003: "At the time of calculating our post-accession net situation we must take into account the real balance between de facto payment from the EU budget to Hungary and the de facto annual Hungarian contribution to that budget. Thus, in 2003 the ministry still stipulated (rightly) that payment would be accounted only vis-a-vis payment and obligation vis-a-vis obligation. By contrast, in January this year – on realising the miserable balance as regards last year's actual disbursement – in their reports to the public, officials attempted to balance obligations to the EU vis-a-vis Hungarian contributions too.

The Finance Ministry had promised a positive net position for the first three years. However, according to the above-described method of accounting, in the first year, (i.e. 2004), the amount of subsidies paid to Hungary accounted for only 38% of the amount of contribution paid by us.

The reasons for the above situation are two-fold. On the one hand it was irresponsible to assert at all that our country would be a net beneficiary of the EU's contribution/disbursement system in the first –rump year – of our accession. This – knowing that the majority of prospective subsidies from the EU can be obtained only through tenders and the tenders are financed subsequently – was hardly realistic. Still, these do not vindicate either the creation of illusions earlier on, the current misinformation or the fiasco of the National Development Office and the respective

institutions: since the mere 50 billion received as opposed to the 135 billion Hungarian contribution is simply a debacle.

The problem as regards the domestic handling of European Union funds is mirrored by the situation of structural funds: 56 billion forints were allocated for de facto disbursement in 2004.
However, only 5 billion were actually paid out from this sum. The other seriously affected area concerns agriculture: the recent agricultural demonstrations target the method as regards the handling of the distribution of allocated funds. The cause of the demonstrations stemmed from the procrastination as regards the disbursement of subsidies. The farmers had completed the forms needed for subsidies dependent on farm size already at the beginning of 2004, which they saw again at the end of 2004, when the authorities returned them for correction or additional information (there were some who erred only 0.14 % in respect of the final figure…). The subsidies, however, were not received by those farmers either that completed the forms correctly in the first attempt: now – under pressure from the demonstrations – the Ministry of Agriculture is desperately trying to fulfill the obligations after nearly six months delay.

As regards the primary reasons – apart from the badly organised work of the ministry – we might suspect that the socialist government has tried to manipulate the balance of the 2004 fiscal budget by delaying the out-payment of its own contribution in addition to EU subsidies to 2005 – albeit to the detriment of the farmers.

The above-mentioned episodes as regards the EU are noteworthy, namely, the circumstances surrounding the reasons for becoming a net contributor and the agricultural demonstrations against the withholding of EU subsidies. We were unable to find any information on the portals of the Ministry of Agriculture, the National Development Office or the government in respect of the balance between contribution to and payment by the EU. It is also striking that the economic papers barely discussed the issue.

(The data cited above was obtained from the sporadic information published in the dailies and the economic journal "Külgazdaság".) Thus the question is not unduly posed: are those responsible trying to manipulate the accounts to cover-up the fiasco? The situation is similar as regards the agrarian demonstrations: the government has played all its trumps, i.e. it has conjured up extreme rightist threats and – at the peak of the demonstrations – created a diversion: a list containing the names of alleged informers of the former secret services appeared on the Internet.

Conclusion

All these factors seem to imply that the present socialist-liberal coalition government is either unable or is unwilling to draw the lessons from the anomalies surrounding EU subsidies. It ostensibly remains unperturbed by the fact that the economically and morally questionable policies as regards the handling of the subsidies – each day discredit the European Union and its institutions.