Statue row overshadows Status Law deal

Hungarian Prime Minister Péter Medgyessy signed an agreement with his Romanian counterpart Adrian Nastase in late September, outlining the details for the application of Hungary’s Status Law to Romanian citizens.

A debate over the fate of an historical monument in Arad, Transylvania, overshadowed the visit and was a source of tension between the states as they settled their dispute over Hungary’s controversial law.

The tension was caused by Romania’s lack of initiative to re-erect a statue commemorating 13 Hungarian generals who were executed in Arad after the failed 1848 War of Independence against Austria. The statue, which was originally unveiled in 1890 but then pulled down in 1925, was scheduled to be erected Oct. 6 in Arad, the anniversary of the execution. The debate over the monument is sensitive in both countries given the large ethnic Hungarian population of Transylvania, which prior to World War I was part of Hungary.

The dispute also dominated a meeting between Romanian President Ion Iliescu and his Hungarian counterpart, Ferenc Mádl, in Budapest in mid-September. Iliescu proposed that the monument be placed in a statue park that symbolizes the reconciliation between the two nations. The Hungarian Government insisted, meanwhile, that the monument be erected in a public place.

Media law modifications planned... again

Proposed changes to the Hungarian media law would remove commercial advertising from public service broadcasts and attempts to eliminate politics from media monitoring bodies.
Three experts, acting on the request of the Prime Minister’s Office, have prepared a new concept for a media law that the government hopes will finally become devoid of political influence. The changes would put an end to the practice of political appointments to the media bodies overseeing public service broadcasting.
Under the new plan, there would be a "council of the wise," consisting of representatives from national institutions, such as the National Opera House or the National Academy of Sciences. This body would elect the heads of the public service media.
The original Hungarian media law was accepted seven years after the fall of Communism, only after a period of parlamanetary bickering. It was a compromise resulting from political mistrust among parties, and was criticized upon its inception in 1996 for being politically motivated. As modifications need a two-third majority approval of parliament, it has been impossible to make any changes because of constant political infighting.

Lamy assures Hungary on post EU-accession trade

Hungary will not experience significant changes to its trade policies after EU accession, EU Trade Commissioner Pascal Lamy said in Budapest. Lamy was in Budapest and Prague in late September to discuss trade issues with government officials, business leaders, representatives of civil society and trade unions.

With 80 percent of Hungary’s external trade tied to Europe and EU-connected countries, Hungary is "already part and parcel of the European trade process," said Lamy.

Hungary is currently the EU’s ninth largest trading partner, and third among acceding countries behind Poland and the Czech Republic.

Lamy went on to say that trade with some of Hungary’s other important trading partners - countries within the EU’s vicinity like Turkey, Israel and the Balkans - will also not be affected, since the EU already has similar trade agreements with those countries.

Hungary can expect, however, alterations to trade patterns with the remaining one percent it does with countries outside the EU’s sphere. Hungary will have to reduce some of its trade protection policies and give preferential treatment to a number of developing countries said Lamy. But by joining the world’s single largest trading market, Hungary will receive privileged access to countries like Chile, Mexico and Russia, which the EU already has trade agreements with, he said.

Austria’s Erste Bank takes Postabank

In the sale of what was one of Central Europe’s few remaining state-owned banks, the Hungarian government sold its 99.97 percent share of Postabank Rt. to Austria’s Erste Bank for the equivalent of EUR 398 million. Postabank, Hungary’s seventh largest bank, was seen as one of the last opportunities for a foreign firm to get a sizable cut in the growing Hungarian banking market.

With over 40 banks for a population of only 10 million, Hungary’s banking sector is viewed as being over-saturated. It is foreseen that after EU accession, the banking segment will only continue to consolidate.

Erste, which has posted high profits in Central Europe, has been eager to increase its share in the region’s banking market. In the Postabank tender, Erste outbid Bank Austria and General Electric in a high-stakes state auction. Erste dramatically boosted its first round bid from EUR 256 million, and its final bid was EUR 80 million more than analysts had expected. Erste suffered a surprising loss last May to Hungary’s OTP Bank for Bulgaria’s DSK Banka and appeared to be determined to avoid a similar defeat. Interfax reported that Erste sources said the bank was willing to pay "any price" for Postabank.

The acquisition of Postabank doubles Erste’s Hungarian market share to eight percent and makes it the second-largest retail bank in Hungary.

Divisions threaten delay in European constitution

Divisions between Europe’s smaller and larger states over the future of the European Constitution at the Intergovernmental Conference (IGC) in Rome in early October threatened to delay the treaty’s finalization, which negotiators were to complete by mid-December.

Smaller nations like Hungary, an EU accession country, are worried the constitution reduces their influence. Some have indicated they would like to renegotiate majority-voting rules, proposed cuts of EU commissioners and presidency rotation. Spain and Poland took a strong stance at the IGC, with Germany and France apparently retaliating by threatening the two European middle powers with aid cuts.

Prime Minister Péter Medgyessy said Hungary’s two main priorities at the IGC were to ensure each country would have one voting commissioner and that the rights of ethnic minorities be included in the constitution. A few days after the conference, Hungarian Foreign Minister László Kovács submitted a proposal that minority rights be included in the new European Constitution. No conclusion was reached on the matter.

Larger nations like Germany and France did not want to reopen the draft constitution to debate, and had hoped the current 15 EU members and 10 candidates would reach general agreement in Rome in time for May accession.