A year for nothing

Following March 1st, much of Hungary’s press will be covering the story about the opening of the first calls of proposals under the government’s „New Széchenyi Plan” development scheme. The Prime Minister, and his „right hand”, minister György Matolcsy would probably have all us believe that this is a day ushering in a new era. Looking at the last 10 months, taking a fresh start would definitely be a good idea. Especially in development policy. Too bad that this „change” is only about quantities, not quality, and even that in relative terms only.

Actually, it could even have turned out well. In its day, the first Széchenyi Plan really meant a new departure. It was for the first time that any government attempted to gather all development funds at her disposal under the umbrella of a single development strategy. The initiative was fresh, and came at a good time. It was new, and it was right. Even if many criticised it – and rightly so – because it did nothing more than collect the funds that were already on the government’s table. Despite the whole lot of advertising that was going on. But György Matolcsy and his team pokered well. And the reward for the idea was the job of minister of economy. True, putting Hungarian development policy on genuinely new foundations would have required establishing a common framework for national development programmes and those financed by Brussels. But the Széchenyi Plan disregarded, what is more, it even tried to conceal EU funds, even though by then they already amounted to HUF 70 bn a year. Perhaps because they were under the management of a minister from the Smallholder Party...

Experts know: the development programmes of the socialist-liberal governments were a wholly different kind of animal. Yes, their budgets were a lot larger, especially after 20007, due to Hungary’s EU accession. However, the real novelty wasn’t this, but something else. The National Development Plan and the New Hungary Development Plan were true plans: with a situation analysis and strategy, a detailed, and pre-defined multiannual financial commitments. In the Széchenyi Plans, both old and new, you will not find these features. Even if without them any plan can hardly aspire to be more than a Christmas wish list. In any case, the challenges of EU accession in the field of development policy were solved well by Hungary. Not perfectly, but well, according to all opinions from Brussels, or any accessible and objective statistics. The successive EU commissioners for regional policy have declared on countless occasions that, in this area, they considered Hungary among the best. Despite the continuous high-pitched cries from Fidesz, Hungary has never had problems with the timely absorption of EU funds under the socialist governments.

Naturally, Viktor Orbán sees that all differently, again. In his view, the EU funding system in Hungary was so far only an “unstructured, corrupt, embarrassing pig shed.”  Extreme, outrageous formulations, as we have come to expect from him. I know, the aim of the prime minister was not to analyse, but to hit the front pages next morning. But OK, what the hell, let us take seriously what he said. Let us forget that in development policy there is a lot more achievements to lose and destroy than in many other sectors. Let us look concretely at what the previous 10 months have brought for those aspiring for EU funds.

One is forced to say: nothing good, really.

Let’s start from the top. After the elections the consistent management of development policy ceased to exist. With the Ministry for Economy and the Ministry for Development constantly battling each other, the National Development Agency was only muddling through. Its leading personnel was fired, almost without exception. Most of them – obviously after careful consideration – immediately. The many changes were also noticed by the EU, to the extent that – as one may remember – at the end of the year the responsible director of the Commission protested in a letter to the minister for development. In Europe, this is highly unusual, and very embarrassing. I for myself do not remember anything similar, although – as general opinion goes – all governments like to fill up their government cars with their “own” people. OK, you are right, this is exactly what happened in the entire state administration in Summer 2010, and, after all, the National Development Office is about serious money. But still, it is quite strange that, according to insiders, the man behind these decisions was not Zoltán Petykó, the new head of the Agency. Remarkably, Petykó does not even figure not among the many co-authors of the Széchenyi Plan. Perhaps his place was taken by film producer Andy Vajna? And, as rumour has it, neither was he the one who wrote the new government decree on procedures for the EU’s funding system in Hungary, which was intended to produce – according to the workbook of the Széchenyi Plan – “many simplifications” and “changes increasing efficiency”.

None of which is yet discoverable, by the way. The new, unified decree on EU support has appeared just a while ago, while the new calls for projects were published in January. This would make it quite impossible for the Széchenyi Plan to start with radically simpler calls even if this seriously belated new piece of legislation had found the philosopher’s stone, which the socialist governments – obviously, as a result of total incompetence – have failed to discover. The minister of development has proudly announced that from now on, instead of more than ten government decrees, development policy would be regulated by one single piece of legislation. Splendid. But could anyone tell, who should bother? The applicants for funds, who are interested in nothing else but the text of the calls for proposals, surely won’t. All the more as in the latter, the only changes discoverable are the reduction of support budgets, advance payments and co-financing rates.

Same game in the system of the national institutions channelling EU funds: concentration is announced, which, in itself, is again quite meaningless. Of course, although not a novelty either, it could actually work. Pity that it doesn’t. Either because it was not properly prepared, or because it was messed up. An expert colleague, when seeing that his co-workers were not getting any concrete answers to their inquiries regarding the new calls for proposals, started to place a couple of phone calls himself. And what he discovered was that in some cases the responsible body was not even sure that the call in question was actually under their management. The fact that the application documents posted on the official homepages were incomplete and contradictory, did not even surprise him any more. Even though this was not very common previously, in those  “pig shed” times.

But OK, let us not spoil the first day of the New Spring. Let us be happy that now, finally, applications for EU funds can again be submitted. Which is quite something, because if anyone was trying to look for new calls on the homepage of the NDA around the end of last year, could only find that the Agency had, one after the other, shut down practically all EU application schemes. To the extent that professional advisory firms – often publicly denounced as a “bunch of parasites” – were gasping for air around the end of Summer 2010 already. (I forgot to mention that the new leadership of the NDA, as one of its very first steps, sent the advisors supporting its own work “to holidays”, too. True, during the last weeks at the latest, one could learn that not all advisers were parasites. The work of some external experts was indeed worth HUF 2 billion (€ 7,5 million) – made up by daily fees one and a half times the previous figure, or, if calculated on an annual basis, 3 times the amount spent earlier. Apparently they were so good that – in a hastily published tender over the Crhistmas holidays – they were worth being contracted for four entire years. How lucky that we are talking about public procurement specialists. One can now be sure that the era of “industrialised fraud”, condemned so many times by the prime minister, is finally over).

Make no mistake: all of this has a measureable effect. Last spring, as always, for many years, Hungary was among the top performer countries as regards the utilisation of EU funds. This January, she was camping down in 18th place. Translated into money terms, by a rough calculation, this means that in 2010 EU funds inflows into Hungary were reduced by HUF 150 billion (€ 550 million), compared to the level they would have reached if calls published under the previous government had been allowed to continue. Those looking for the overall figure of investments lost by the economy can safely add another 15-20%. Quite a strange way of supporting enterprises, isn’t it?

One could of course say, as the New Széchenyi Plan indeed does, EU development policy is not about absorption, or “burning money”, but efficient investments. Which – as they say at least – previous governments were utterly unable to produce. But if that were the case, could anyone tell why the new government has not asked for a modification of the New Hungary Development Plan? Why is it sufficient to quietly continue with the – as already mentioned – “totally mistaken” development plans of the previous governments? Perhaps because anything the New Széchenyi Plan wants to “renew”, is in reality, not a bit new, at all. Simplified calls for projects? Integrated regional programs? Increased support budgets for the economy? Refundable loans instead of “gift money” to enterprises? The Gyurcsány and Bajnai governments had done it all already. And, in many cases, they did it as pioneers even at European level. By the way, in line with this, they were even listened to in Europe. In development policy, Hungary had a voice within the Community, and during its seven year membership it could already delegate commissioners to the two most influential European directorates general of the sector: Regional Policy and Employment.

Now all of this is lightyears away. In reality: it’s no money, no fun so far. A whole year was wasted. A functioning institutional system was destroyed, but at least crippled for considerable time. A good part of the experts trained over a number of years was simply hunted away. I do not think that everything was perfect before. And one can have the hope that, sooner or later, Hungary’s development policy will regain consciousness. It could even work better than previously. But one thing is dead sure: this is not the way count Széchenyi would have “planned”.

Peter Heil, Ph.D.
Fmr. Vice President of the National Development Agency


Last Updated on Friday, 30 August 2013 09:11