“Group think” blamed for CIA failure

A KEY REPORT LOOKING INTO INTELLIGENCE FAILURES LEADING UP TO THE 2003 INVASION OF IRAQ has found that much of the information used to convince allies to go to war was in fact false or based on overstated CIA analyses. The report, by the Senate Intelligence Committee, determined that intelligence analysts fell victim to “group think,” in gathering assumptions as to whether Iraq had weapons of mass destruction at their disposal.

The Hungarian government became prey to the same lack of critical thinking, even as late as December of last year the Hungarian foreign minister was convinced of the presence of WMD in Iraq. Hungarian Prime Minister Péter Medgyessy, meanwhile, refused to comment on principal on the failure of allies’ intelligence agencies. A contingent of some 300 Hungarian soldiers, meanwhile, continues to serve in Iraq.

First pro-European president for Serbia

SERBIA GOT ITS FIRST PRO-EUROPEAN, democratic president since ending the communiststyle appointing of heads of state in 1990. At the inauguration of Boris Tadic, at a lush ceremony July 11, he said: "I swear I will devote all my efforts to defend the sovereignty and integrity of the territory of Serbia, human rights, the constitution and laws, peace and the welfare of all citizens."

The leader of the opposition Democratic Party (DS), Tadic immediately made it clear that "stability" was a top priority on his domestic agenda. He indicated he was willing to work with Prime Minister Vojislav Kostunica and his shaky minority government, despite hostility oozing from the conservative nationalist leader toward DS. "The communication between the parliament and president must support stability," he told legislators after giving his oath. Following the ceremony, Tadic walked across the street to the presidency building andformally assumed office. A pro-Western reformist, Tadic defeated Tomislav Nikolic of the nationalist Serbian Radical Party in an election runoff in late June. The outcome signaled a halt in the resurgence of Nikolic's extreme nationalists, which has worried the West and foreign investors since an early parliamentary election in December. Reviving Serbia's progress toward membership in NATO and EU are Tadic's top foreign policy goals. "The victory of a pro-European president is a step for Serbia in the direction of its European integration," Secretary General of the Council of Europe, Walter Schwimmer, told reporters at the inauguration. Tadic assumed office, vacant for the past year-and-a-half, at a time when Serbia is under growing pressure to clearly show whether it wants integration or reliance on self-(in)sufficiency. The election outcome indicated that most voters want to be a part of Europe. With his very limited authorities, the new president faces a daunting task of unifying and mobilizing the feuding parties of the so-called democratic bloc to implement the necessary, painful steps in that direction. Most acutely, Serbia will have to cooperate with the United Nations War Crimes Tribunal at The Hague by arresting and extraditing wanted war crimes suspects. Tadic's two predecessors in office, Slobodan Milosevic and Milan Milutinovic, are currently both in detention at The Hague. At the moment, Prime Minister Kostunica's cabinet operates on votes from Milosevic's and Milutinovic's Socialist Party, which said it would withdraw support if Serbia extradites suspects to the tribunal. The development in Serbia puts Kostunica at the mercy of Tadic. Presuming Tadic really wants the government to survive long enough to push through the most urgent reforms - a constitution and laws to set up a functioning union with Montenegro - DS would step in instead of socialists and back Kostunica in the parliament. Without quick consensus among the parties of the bloc that once stood against Milosevic - in which Tadic aspires and has the instruments to be the key cohesive factor - Serbia would face another snap election and more uncertainty. An effective agreement would finally open the door to the growing European family.

Canada & the EU

FOLLOWING THE MOST AMBITIOUS EXPANSION OF THE EU T H I S SPRING, Canada has adopted a new strategy seeking to develop enhanced trade opportunities with new member states. Canada is looking particularly at high-tech technology, environmental, peace-building and creative arts as areas where closer cooperation would be warranted. Canada was the first non-European nation, in 1976, to conclude an economic cooperation agreement with the then-European Economic Community. The EU is Canada’s second most important trading partner, with annual two-way trade in goods and services pegged at EUR 47.7 billion.

Shifting targets

HUNGARY IS NOT LIKELY TO JOIN THE EMU UNTIL 2010, the Fitch rating agency predicted. Even Hungarian authorities revised their target entry into the Eurozone from early 2008 to 2010 after a strong overshoot of the 2003 fiscal deficit targets, and the inability of the country to restrict its fiscal spending. Hungarian officials optimistically noted, meanwhile, that Eurozone entry could happen as early as 2009 if Hungary manages to reduce its fiscal deficit to below 3 percent by 2007

Room for Investment

HUNGARIAN ECONOMY AND TRANSPORT MINISTER ISTVÁN CSILLAG made public four large investment projects totaling HUF 10 billion targeted at multinational companies investing in Hungary, projects that will be supported from central funds. Companies benefiting from state funds will be those that create employment opportunities and apply the most up-to-date technologies.

Commission against violence

THE EUROPEAN COMMISSION HAS ADOPTED AN ANNUAL PLAN, called the Daphne II program, aimed at preventing and combating violence against children, young people and women, and protecting victims and at-risk groups. It resumes actions that have been carried out for seven years, 1997-2003, where 303 projects were funded for a total of EUR 33 million.

Hungarian & Jordan to boost tourism

ON AN OFFICIAL VISIT TO HUNGARY BY A JORDANIAN DELEGATION, which included Jordan’s tourism state secretary, Sultan Abu Jaber, and his Hungarian counterpart, Béla Pál, officials signed a bilateral agreement to promote tourism ties between the countries and expand business and professional ties. According to reports in the Jordan Times, cooperation between Hungary and Jordan is also set to be upgraded in the next year, with a special emphasis on tourism, a Hungarian diplomat was quoted as saying. Hungary and Jordan marked the 40th anniversary of the establishment of diplomatic relations in June. The number of Hungarian visitors traveling to Jordan has increased significantly over the last two years, reaching well over 20,000 passengers, largely due to the launch of direct charter flights between Budapest and Aqaba.

Austrian President Thomas Klestil dies of heart attack

KLESTIL, WHO DIED ON JULY 6, is said to have reinvigorated the Austrian presidency and strengthened Austria’s ties with Eastern and Central Europe by initiating yearly meetings between the heads of state of the Central European countries. Klestil became embroiled in political turmoil when he sparred with the rightist Freedom Party, which became popular based on its anti-immigrant and populist rhetoric. Klestil even clashed with the very party that nominated him to his post when he initially opposed letting the Freedom Party form a coalition government in 2000. Hungarian President Ferenc Mádl, who sent his condolences to Austrian Chancellor Wolfgang Schussel, called him a “charismatic statesman,” who “had felt particularly close to Hungary.”

Amnesty International calls for action in Sudan

AMNESTY INTERNATIONAL HAS CALLED FOR INTERNATIONAL ACTION IN SUDAN, asking the community to take a stand against continued violence in the region of Darfur. According to the organization, armed militias backed by soldiers have committed murder and rape in the Darfur region of of the country, forcing hundreds of thousands to flee. The United Nations refugee agency separately issued a supplementary appeal for USD 55.8 million for emergency assistance to Sudanese refugees from Darfur whose steady influx into Chad is likely to reach 200,000 by the end of the year.

OTP sees opportunity

HUNGARY’S LARGEST COMMERCIAL BANK, OTP Bank, submitted a letter of intent in the privatization of stateowned Jubanka Bank, one of Serbia’s largest banks. Other bidders included Germany’s HVB Group, Greece’s Bank of Piraeus SA and Italy’s Baca Intesa.

UN: Barrier “Violates law”

THE UN’S HIGHEST JUDICIAL AUTHORITY, the International Court of Justice, has ruled Israel’s planned 425-mile-long barrier in the West Bank must be dismantled. Israel has been building the fence, it claims, to keep out Palestinian suicide bombers who have killed hundreds of Israelis. Palestinians, meanwhile, call it a land grab that divides people from their families, jobs and schools. The Hague ruling, rejected outright by Israel Prime Minister Ariel Sharon as a “politically motivated ruling,” said that the fence “gravely infringes” on the rights of Palestinians and could not be justified on the basis of national security, and that it violates international law. The UN came after the Israeli High Court issued a temporary order halting work on parts of the barrier.

Charges dropped ...

CHARGES IN THE CASE AGAINST FORMER HUNGARIAN COMMUNIST PARTY LEADER, János Kádár and Soviet leader Nikita Khrushchev, both accused of having a large role in the execution of former Hungarian Prime Minister Imre Nagy, were dropped. The two “suspects,” meanwhile, were found guilty of committing the crimes, but charges where dropped due to both suspects being dead. Khrushchev died in 1971, while Kádár passed away in 1989.

Resolution to Transdniestrian conflict vital, report

A RECENT REPORT HAS URGED THE RESOLUTION OF THE SECESSIONIST DISPUTE IN MOLDOVA, claiming it to be a “potential source of chaos on the periphery of the expanding European Union.” The report, prepared by the International Crisis Group, made specific recommendations to all parties, and urged a greater engagement by the US and the EU in pushing forward a now-stalled peace process in the impoverished and unstable part of Europe. Russia's support for the self-proclaimed and un-recognized Dniestrian Moldovan Republic (DMR) has prevented resolution of the conflict and inhibited Moldova's progress toward broader integration into European political and economic structures, the report stated.

Yukos struggles to meet unpaid tax bills

THE FATE OF THE RUSSIAN OIL GIANT YUKOS remains in doubt after it missed a deadline for the payment of some EUR 2.7 billion bill in back taxes. The company had until June 7 to pay the outstanding tax bill. The bill applies to fiscal year 2000, when Russian authorities allege Yukos abused tax laws to reduce its tax burden. Bank assets have been frozen and federal tax service officials hit Yukos with a second claim for 2001.

The courts ruled that the company cannot sell any physical assets to make the payments. The oil giant, continuing to deny any wrongdoing, could still face additional tax bills for the years 2002 and 2003. The OECD, a Paris-based think tank, has condemned the Kremlin for pursuing “highly selective law enforcement” against Yukos, which accounts for 4 percent of Russia’s economy and is now pushed to the brink of bankruptcy.

President Putin’s relentless pursuit of Russia’s largest oil producer is widely seen as an attempt to settle political scores with Yuko’s former Chief Executive Mikhail Khodorkovsky, who had been funding political opponents of Putin and allegedly had political ambitions himself. Khodorkovsky, meanwhile, has been in prison since his arrest in October last year and awaits trial on charges of fraud, tax evasion and embezzlement related to the controversial privatization program in the 1990s when he made his fortune.

Kremlin analysts have identified the Yukos affair as the biggest political and economic crisis of Putin's three-year period in office. With investors fretting over the company’s future, shares in Yukos have plummeted. After a slow start with two adjournments, Khodorkovsky's trial is scheduled to restart July 12. If convicted, Khodorkovsky and his business partner Platon Lebedev could each face up to 10 years in prison.

Danubius buys stake in Gundel operations

HUNGARIAN HOTEL OPERATOR DANUBIUS HOTELS RT. PURCHASED A 49 PERCENT STAKE IN THE FIRM THAT OPERATES THE LANDMARK GUNDEL RESTAURANT and the neighboring Bagolyvár restaurant in Budapest, as well as wine cellars in Eger and Mád, for an undisclosed price. Danubius is aiming to raise its stake later to 66.6 percent, but will continue to operate the business under the Gundel brand. The Gundel group had revenues of HUF 1.7 billion in 2003. Ronald S. Lauder and George Lang, former majority owners of the company, will become minority shareholders.

Medgyessy tries to drum up business in US

HUNGARIAN PRIME MINISTER PÉTER MEDGYESSY undertook his second official visit to the United States June 19-24, visiting business and political leaders as well as potential investors. The Hungarian prime minister was received by US President George W. Bush, who praised Hungary as being, “an attractive investment destination with a stable economy governed by transparent and clear rules.”

Opposition MP’s, meanwhile, criticized the visit as having come up short on generating concrete deals or new investments in Hungary. Medgyessy and a Hungarian delegation met with officials from companies including Exxon Mobil, General Electric, EDS, IBM and others, many firms which already have significant investments in Hungary. Medgyessy visited companies in Virginia and California, including the Hungarian Technological Center HTEC, a Virginiabased Hungarian enterprise promoting Hungarian-created IT technology in order to get access to the American market - a project fund by the Hungarian government. During his visit, Medgyessy stressed the need for closer cooperation in the fields of IT development and knowledge-based industries. Another issue the PM held as vital was the development of Hungary as a logistical base for American companies doing business in Europe. In talks with President Bush, Medgyessy brought up the issue of the US’s tedious visa regime, a long-time complaint of Hungarians traveling to the US. In his previous visit almost two years ago, the issue was not included on the timetable. The US president promised that the issue would be reviewed. According to embassy sources, the time-andmoney-consuming procedure for Hungarians results in an approximately 30 percent rate of refusal – high considering many EU countries are not even required to obtain an entry visa as a tourist. US Secretary of State Colin Powell also promised to develop a solution for the visa problem, viewed as humiliating by many Hungarians.

“When meeting with President Bush, Medgyessy raised the visa issue and it is now being dealt with on the highest possible level of the US Administrationm” deputy government spokesperson Erika Gulyas told Hungarian news agency, MTI, responding to opposition criticism. During his trip, Medgyessy also visited California, where he met with influential Silicon Valley leaders including Safra A. Catz, president of Oracle, who hosted a reception for Medgyessy aboard the yacht “California Spirit.” The software giant employs about 170 persons in its Hungarian regional center and is currently planning to expand operations to Czech, Polish and Slovak markets.

Jose Manuel Barroso to be next EU president

EUROPEAN LEADERS NAMED PORTUGUESE PRIME MINISTER JOSE MANUEL BARROSO as the next president of the European Commission at a special summit held in Brussels late June. Barroso emerged as a compromise candidate after other leading contenders fell by the wayside after disagreeing EU camps found them unacceptable. While some EU politicians criticize Barroso’s candidacy as “the lowest common denominator,” his appointment came as a relief to many European leaders, finally content they could come to an agreement at all. Barroso, a rather low-key figure, is set apart as one of the most seasoned politicians in Europe who may well be perfect for the job of repairing the bureaucratic and self-important image of the Commission. Barroso, 48, is the center-right leader of Portugal's coalition government, and has also served as foreign minister. He has a plenty of international experience, including hosting a summit with the US, Britain and Spain before last year’s US-led invasion of Iraq. Although the summit underscored Barroso’s support for the US campaign in Iraq, he managed to back the Americans without antagonizing the anti-war camp, led by France and Germany. Germany, meanwhile, eyeing the job of a new “supercommissioner” for the economy and France coveting the competition policy post, pundits say the most challenging task of Barroso’s presidency will be resisting the Franco-German opposition to liberal economic reforms without isolating the two powerful EU countries. EU experts are already linking the credibility of Barroso’s presidency with his ability to stay independent, not just of France and Germany, but also of the British government, which has openly welcomed Barroso’s commitment to a limited, more effective and liberal role. EU leaders were said to have been looking for a successor to Romano Prodi who would have good communication skills and an ability to effectively run the Brussels bureaucracy apparatus. Barroso assumed his new post in mid-July.