Tuesday, January 31, 2012

Hungary & Romania, bad slave & good slave of global finance.

   In the past few months, there has been a vigorous barrage of negative media coverage about the Hungarian government and their reforms since 2010.  The country’s prime minister has been compared to Vladimir Putin, Hugo Chavez, Ceausescu and a host of other dictators past and present.  So is it indeed true, is Hungary a totalitarian state?

            I will return to the above mentioned question later, but first I want to focus our attention on one particular article that was part of this intense media campaign of criticism towards this small country of ten million, which produces less than .1% of the world’s GDP.  The article I am referring to is the one carried by Reuters on January 13, which made its way to other news outlets, suggesting that Hungary should be just as accommodating in dealing with the IMF, because it would be better for them, given how good it’s been for neighboring Romania.

It may irk Hungarians who have always regarded themselves as superior to their poorer neighbours to the east, but Romania may have lessons to teach Budapest as it seeks a rescue from the EU and IMF.
By sticking to the terms of a similar programme, Bucharest has managed to put its once troubled economy back on the path to growth.”

This approach to criticizing Hungary was not chosen by accident given the history of these neighbors, which created many ill feelings between the two people.

            There are many reasons why I wanted to bring this article up.  The most important reason to do so was the surprising way in which the news was received in Romania.  I speak Romanian as well as Hungarian fluently so I had the opportunity to observe the reaction of Romanians on forums in regards to Hungary’s standoff with the EU and the IMF.  Generally, whenever Hungarians or Hungary are mentioned on Romanian news outlets, the reaction of the public is generally heavily negative and extremely hostile.  This should come as no surprise, given that in Romanian schools, there is for decades now a practice of vilifying and ilegitimizing the presence of the ethnic Hungarian minority of 1.4 million people living in Transylvania for over a thousand years now.  They go as far as engaging in heavy distortions of the region’s history for this purpose.

            To my surprise, while in much of the rest of the western world, I found judging by the reactions of people on forums dealing with this subject, most people bought into the propaganda campaign that was unleashed, and now most who have been exposed to this propaganda, indeed believe that Hungary is now some sort of a fascist-totalitarian state, the reaction of people in Romania, where one would always expect public opinion to be heavily negative towards Hungarians, was about 90% positive.

            So how can this be?  The answer is simple.  Romania’s policy of bowing their head to the IMF and other global players did not do them much good.  It is not only that people are tired of the harsh austerity measures that the IMF has imposed on them, which in my view was actually not even entirely necessary, which led to this sudden outburst of appreciation of Romanians towards Hungarians and their courage to stand up and fight.  It is also the realization of what these measures are actually doing to their country’s long-term health and their frustration with their political elites who behaved in a manner that was too docile and servile.

            While the article that praised Romania’s servility argued that Romania is now on solid ground economically, the reality is very different.  One of the greatest dangers to Romania’s long term economic and social stability is its demographic situation.  The country lost about 25% of its potential workforce to immigration in the past two decades.  A great deal of blame for this can be allocated to 20 years of post communist leadership deficiencies.  The role of the IMF in the past years to continue this trend for the present and the future cannot be ignored however.  Romania needed an avenue for economic growth, in order to stem the tide of the worker exodus.  In order to save themselves they even need to find a way to start attracting their young people back.  At present, they no longer have to worry about the shrinking of their workforce as a result of immigration alone.  Their potential workforce started shrinking due to demographic imbalances, by more than 1% per year.  At this rate, if we add the possibility that the potential workforce will also shrink by 1% or more per year  due to migration, Romania will be facing serious consequences by as soon as 2025, and by 2040, it is hard to see how Romania will even be able to still exist as a state, unless they can change direction drastically, because between 2030 and 2040, the rate of loss of their potential workforce due to demographic realities will double from about 100,000 people per year currently to over 200,000 per year.  This problem if further compounded by the fact that when they are losing their potentially productive population to immigration, they are also loosing their potentially reproductive population as well.

            The quantity of potential workers is not the only problem that was created by Romania’s inability to produce better leadership, and now by some flawed, or what some may argue are ill willed policies pushed by the IMF.  Cuts made to education, means that Romania is on its way of falling behind in providing increasingly necessary skills to its current and future workforce.  Its workforce is also likely to become increasingly less healthy, because the IMF demands that the country which has the lowest per capita GDP, and also spends the least on health care as a percentage of GDP in the EU, cut even more.

            Aside from causing permanent damage to its workforce the policy of extreme austerity that the Romanian government was forced to accept, and is now praised for by the western media is also destroying its ability to catch up on infrastructure.  To attract serious investors, a country needs to provide solid physical human and legal infrastructure, as well an efficient governing system.  Romania sorely needed to provide solid improvements in all these categories, and in part due to IMF austerity pledges they were able to provide improvements in none of these categories, and their time to make it happen is limited because of the demographic problem I already mentioned.

            The IMF also demanded that this year Romania should privatize many of their state run companies (there are very few still left to be privatized).  Among the companies that the IMF wants to see privatized, energy and mining assets go to the top of their list.  Many of these companies are actually profitable, and they increase the government’s revenue stream.  There are also many that are far from being profitable, and they require subsidies to stay afloat, such as the country’s railway lines.  If privatized, the country’s railway system might once again become profitable.  The cost however will be that ticket prices, industrial transport prices will likely rise significantly, making it hard for people and goods to move around.  Privatization will also likely mean that many lines will be cut out of service, meaning that some parts of the country will inevitably become economical dead zones.  On balance, I believe that the subsidies are cheaper than the results of privatization.

            As the energy and mining companies will be completely privatized, and the energy market deregulated in Romania, people will have to cope with having to pay market prices for their heating in the winter, as well as for their electricity throughout the year.  That might sound like a reasonable idea to most, but most do not know that average wages in Romania are less than 1/3 the EU average.  Life will become even more unbearable, and more people will be compelled to immigrate.  When the IMF demands this of countries with high birth rates, it may not seem like such a big problem.  But Romania’s current birth rate is 1.3 per woman (2.1 is replacement rate).

            Romanians sense this, even if many cannot quantify it, and as a result they started taking to the streets to protest, ironically just a few days after Reuters decided to use them as an example that would be a humiliating blow to Hungary.  The protests in Romania are still ongoing despite the cold weather, and the government is already starting to backtrack on some of its policies of appeasing the IMF.

            So given that Hungary has now decided to bow to pressure and begin the negotiations between slave and master with the IMF and the EU, thanks to all the financial, political and propaganda pressure that has been exerted on this small country, perhaps it is true that they should take lessons from Romania.  Not necessarily the lessons that western media and their sponsors would like Hungarians to learn, but perhaps the lessons that they can learn by looking at the true consequences of allowing one self to fall in the hands of these institutions.  Looking at the side effects that IMF policies had in Romania, it is clear that Hungary can reach this level of economic “stability” without their help.  In other words, the consequences of turning one’s back on these predators are not much worse than bowing one’s head.  The difference is that by turning one’s back there is also an opportunity to make the slavers suffer.

            There are also many lessons that the rest of us westerners can learn from what has happened with the Hungary affair in the past few months.  The most obvious lesson is that any attempt to break the current hegemony of global finance over us will be met with vicious reprisals, as was the case with Hungary.  The Hungarian government did since 2010, what most occupy supporters could only dream their governments would dare to do.  They decided that as part of their economic restructuring, meant to deal with the new post 2008 economic realities, they will not ride the poor and the middle class exclusively.  They imposed a levy on the banking sector, and also demanded that they take some loss on the predatory FX loans they not only offered but effectively pushed people to take, with the consent of the previous Hungarian government.

            Given the stance of the Hungarian government on just how hard they will accept to ride the poor in order to exempt the banks, one would think that center and left leaning elites and media in the west would be supportive of this government.  Just as surprising as the positive response was on the part of ordinarily Hungarian despising Romanians, it is equally surprising where the most vicious attacks on Hungary came from.  Hillary Clinton, Paul Krugman, the EU’s socialists, and most center and left leaning media outlets were at the forefront of the effort to paint Hungary as a totalitarian state.  Unfortunately, from what I saw on the internet, most who were exposed to this barrage of distortions believed it, and even refuse it seems to take into consideration the feelings expressed by large segments of the Hungarian population, which thinks that these attacks on them are unfair (100,000 Hungarians took to the streets a week ago to support the government and denounce the IMF and EU).  They instead chose to focus on a few Hungarian eccentrics, who figured out easily that it is more hip and cool to be dissident eccentrics than just eccentrics, and therefore support wholeheartedly the campaign to drag Hungary through mud, in order to make them bow their head to global financial interests.  The lesson that needs to be learned for the average occupy protester and their supporters is that when push comes to shove, they have no allies within the ranks of the established elites.  Those who declared any support are mainly doing so knowing full well that the movement will not lead to change that they have to end up supporting as a result of new political realities as was the case in Hungary.

            The lesson that we need to learn from the treatment on behalf of our elites of the good slave versus the bad slave is that we all can consider ourselves to be slaves given that change will not be tolerated, regardless of where the political winds will blow.  Hungary is like I said, a relatively insignificant country, yet by trying to gain more control of their finances through recent reforms, the reaction was enormous.  If they cannot allow such a small country, on the periphery of western society, to stray into a different direction, can we really believe that change within western society on a broad front will ever be tolerated?

            Change is necessary at this point as I already pointed out in previous blogs, as well as in my book.  It is necessary not for idealistic reasons, but for logical pragmatic economic reasons, yet change is something we no longer tolerate, despite us becoming a far more tolerant society in many other ways, especially on social issues.  When change is no longer possible, it means that we have become brittle, and we will be smashed to dust in the face of our challenges.  Or perhaps I am wrong about all this, and the Hungarian state really has become totalitarian, and the Hungarian people are just not up to speed yet.    



  1. This comment has been removed by the author.

  2. Many know that IMF policy is not county-tailored...I did read an article a while ago the years after it went to Argentina and failed with the "financial reforms", IMF recognized that it made a mistake and declared that it will review it policies to make redesign the policies according to each country in need. Did this happen? There were some changes; however, just months, an issue of The Economist published an article about IMF accepting that their approach in the Greek crisis was wrong. So, how many wrong approaches, with disastrous consequences, have to be made for everyone to understand that IMF is not coming to a country in crisis to support its recovery of the country, but as a hunting animal that has an easy access to a prey that is already weak, protecting the interest of the financial groups that provide funds for IMF. It has its own agenda, which is clearly different than the one of the country…
    In the case of Hungary, I think it is the fear that this "attitude" will serve as example for other to follow...might "give idea". This "banking control war" is too big for a country as Hungary, but the consequences of being a “winner” of this battle are huge on any side!
    In the case of Romania, I think things are more complicated:
    1. It is a country in troubles from a long time, which does not manage to put its shit (ups!) together.
    2. There are some resources that might have risen some interest, as always.... The last battle of humanity is that for resources, in which every country that is not careful enough will be "cannibalized"! Small, troubled countries have very little chances when it comes to this...!
    Bottom line is this…if a country can stay away of these, this is the best way!

    1. Yes, you are right, but especially for smaller countries it takes steady, long term discipline to be able to stay away. Sometimes it does not have to be perpetual bad governance, as is the situation more or less with Romania, in fact it may take only one bad government, as was the case with Hungary and the rule of former Socialist prime minister Gyurcsany.

  3. "Hungary is like I said, a relatively insignificant country, yet by trying to gain more control of their finances through recent reforms, the reaction was enormous. If they cannot allow such a small country, on the periphery of western society, to stray into a different direction"

    IMF doesn't care about the size of the Hungarian economy. They do not want to have a precedent. If Hungary gets its way, other countries may want to do the same.

    It's like groupthink. Let's say that we have a group of 11 people. 10 share an opinion and the 11th shares another opinion. The 11th is perceived as the odd one.

    But if one more person allies with the 11th person then other people are more inclined to question their own positions.

  4. "1. It is a country in troubles from a long time, which does not manage to put its shit (ups!) together."

    The "shit" will never really be fixt since the whole corrupt power structure has been formed constantly during 50 years of communist repression and murder and has stabilized ( for now ).
    Our realistic options are between PDL ,(the Soros backt party similar in nature with the orange revolution in Ukraine ) and the USL alliance ( the ex commies ).The situation is very VERY similar with the US: the corrupt power structure in the US has been formed over a century of the FEDs capital transfer witch has created the monstrous corporations and all the oligarchs and perpetuates to ever lever of government ,media and society.
    The only realistic options for you are the Democrats and Republicans ...in essence ...same crap different name... The big difference of course is the fact then the US has an economic empire based on the Dollar as the world reserve currency and only needs to export debt via the IMF to survive and maintain the illusion of prosperity BUT bare in mind the catastrophic 30 trillion in "shit" debt the US has to deal with.

    Hungary on the other hand sis a totaly difrent breed in Europe and the western world in general. Hungary’s apparent spark of freedom and disobedience to the EU and the IMF was born out the public’s nationalism. Hungary managed to escape the corruption witch runs rampant in all Eastern bloc nations with the help of its nationalistic educational system ( ooo yes ) that drove the consciousness of people to elect such parties as the center-right Fidesz and the fascist Jobbik in to power. Nationalism is the glue then holds Hungary together BUT at a cost. Hungary is a nation with no natural resources (an advantage sometimes since no one will interfere in your country’s politics to influence the acquisition of your resources and so more stability) and a economy developed by the west after 89 and depended on the west since then. It also has a huge public debt for 82% witch is somewhat a consequence of developing your economy and a huge state debt of over 200 billion ( again all development in this world economic system comes with the burden on debt ).The debt served as a advantage for Hungary during the 90’s when it managed to raise its GDP and develop its nation twice as fast as its neighbor Romania and so save itself from the multitude of problems like emigration and social discontent BUT all things come at a price, and the price for Hungary was its submission to western influences witch cupped with an nationalistic mentality of the population sparked the rise in the right wing parties.
    What can Hungary really do? No resources , in debt, rise in extremism and facing isolation…Hungary may have to choose bankruptcy and I don’t want to imagine what will be the price for its liquidation of debt. And Romania is going there two at an accelerated rate.

  5. P.S:

    I have to agree during communism the Hungarian minority suffered ( as did all minorities ) but now you cant really say this since social equality is permanent and I have yet to meet a real discriminated Hungarian in Transylvania. Most Hungarians have flourishing businesses can speak Hungarian freely and enjoy large participation in administration, education as well as politics ,and I hope you agree.
    Sadly the process of forced assimilation for social cohesion was practiced all over in communist nations.
    The “vilifying and legitimizing” really goes both ways since, as i already said, the Hungarian educational system is very nationalistic and openly preaches the Romanians as illegitimate citizens of Transylvania and general enemies and a lot of other things I really really don’t want and need to get in to.
    Sadly we have not fully passed the mutual hatred or your two nations but I hope we will .I believe in this uncertain world all you can really depend on are the ones closest to you that you know best and this applies to countries as much as humans. Testvériség és tisztelet dear Hungarians ! I hope google translate spelt it right :D

    1. Yes I definetely agree that the situation of the Hungarian minority in Romania has improved imensly since 1990.
      The one thing which has not improved was the facilitation of amicable coexistence, and the education system is at fault. As far as the effect on society and Romania's culture, it is in my view worse and more harmful than most will realize in the absence of a detailed analysis.
      If I think back to my childhood, if there is one thing that leads me to feel sad is the memory of how our presence there was vilified. We were never talked about as a people who lived there for over 1000 years, but as occupiers and colonists. The people we occupied in Transylvania were of course the native ethnic Romanians, which later I learned that is far from being the truth, if we examine the archeological evidence, since the dominant culture in the region was in fact Slavic at the time.
      As far as Romanians being vilified in the Hungarian educational system, I am not sure to what extent that may be true, but even if it is, there is one fundamental diference, we should not forget, which is the effect. In Hungary, the Romanian minority numbers about 12,000 souls, and the only time the average Hungarian even thinks about them, is if they see a folk dance from Mehkerek being performed, which many Hungarians have become found of (myself included). The Hungarian minority in Romania on the other hand can hardly be ignored . It represents 15% of the entire ethnic Hungarian population, it is a significant population within Romania itself, and as such, it is constantly on the receiving end of the hostility that is being educated into people's psyche.
      It manifests itself in the form of constant attacks against Hungarian language inscriptions, buildings, statues. I was briefly in Romania in 2005, and it did not take long to hear the "B" word and many other hostile statements made in regards to the Hungarian minority living there, which I have not previously heard for 13 years. In short, you cannot deny that the effect of this rather primitive policy is very diferent than whatever the Hungarian government may or may not do given the circumstances.
      Unfortunately, many may disagree with this, but it has also affected the political environment for the past 20 years. In Romania, a hostile atitude towards ethnic Hungarians is currently a vote winner, since it speaks to the atitudes educated into the populus, so it is used to win votes, and to justify lack of progress on reforms, such as decentralization, which in my view would have been necesary for the economic good of the country.
      Many speak of the ethnic Hungarian political establishment blackmailing in order to get what they want. Few have ever considered the real effect of the political dynamic, which is that the Hungarians have to sign on to any policy, no matter how bad it may be, just so they can remain at the table, because thanks to the culture, it is in the automatic interest of Romanian politicians to take a hostile atitude towards the ethnic Hungarian community, and if they cannot stay at the table, it can get bad.
      Toate cele bune, si sper ca lucrurile sa se indrepte spre bine.

  6. Myths:

    1. Romanian school system is vilifying the ethnic Hungarians.
    2. Etnic Hungarians persecuted by Romanians. Please give an example of one Hungarian ethnic mocked/molested/killed by Romanians.
    3. The minorities elswhere must be considered by means of percentage.

    Fact: I'll further read your posts to see if you go on 'beating the fields' if you know what I mean :)

    1. Ok!! You make the serious charge that I deal in "myths", so allow me to respond to your concerns.
      2. Ethnic Hungarians may not be commonly "molested/killed" as you put it, and I did not say that they are.
      3. I have no idea where you are going with that.

      As for your first concern, I did indeed say that the Romanian school system is vilifying ethnic Hungarians, and I stand by it. I experienced it on my own skin, and Romanian arheologist Ion Motzoi-Chicideanu, seems to agree with me. He stated recently that many of his peers are outright afraid to publish honest conclusions about their findings, due to fear of nationalist backlash, while many of his peers tend to aproach the investigation of an archeological site in a dishonest way, since they "already know what they will find before they even start digging". I suggest you read his comments in the Romanian newspaper "Adevarul". Furthermore, If you read my bio, you will see that I myself have a degree in History and Anthropology (real credentials, unlike Romania's current Prime Minister). One thing that I can point out from having read the work of some Romanian scholars, is that the conclusions they tend to draw, are not worthy of a first year university paper, but they do draw them for nationalist purposes.
      One such example is the common practice of linking the presence of christianity, or Byzantine objects with daco-roman continuity. These objects are widely dispersed thoughout the old world, found throughout Europe, Middle East and even Asia, so making such a link, as I said is outright shameles, especially since it is done in order to promote a version of history that does indeed vilify a minority.
      I want to end by pointing out that in my personal opinion, the ones that are hurt the most in this are actually Romanians and their society. It promotes a culture of acceptance of dis-honesty, which as you can see leads to dis-honest elites.
      The backlash against the few such as Mr. Motzoi who dare to be honest teaches people that it does not pay in Romanian society to be honest.
      Most importantly it is poisoning the country's political scene. As you may notice, Romanian politicians often make sure to outdo each other in promising to curb the rights of the ethnic Hungarian minority, and often follow through as they did in the case of the faculty of medicine in Tirgu Mures, where in a university founded by ethnic Hungarians, there is evidently no room for a wing that would teach in Hungarian. Romanian politicians win many votes through these actions, without having to do anything to improve people's lives, or the country's economy.
      As I often pointed out, culture is the most important component in a society's ability to cope within this increasingly competitive world. Be careful what kind of culture you embrace and fight for.

    2. Salut,

      Errata: point 3 above was a typo - The minorities elswhere must NOT be considered by means of percentage as you seem to consider and since you're Canadian - not Romanian citizen with Hungarian nationality, this should ring your bell.
      Now back to other points:

      1. I only have knowledge of roman and slavic influences in terms of forming the Romanian language and culture.
      2. Who's afraid of nationalist backlash, an archaeologist?! You must be joking.
      3. Why should I read your bio? "If you're head is alright you don't need binoculars to see the light" - Lemmy
      4. IMO the presence of Byzantine and Christian artefacts shows that the Greek colonists on the Black Sea coast were involved in economic and cultural exchanges with the local daco-roman population. Where's the shame in that and moreover, where are the vilifying actions?!
      5. Medicine in Targu Mures issue?! Dig this: it all started with the Government issuing that there should be a Hungarian part - on the other hand the University Senate voted against that. Ooppss - where is the university autonomy?! ooppss - where are the politicians doing you wrong?!

      To summarize: you tell me to be careful .... are you serious?!


    3. The vilifying action comes in the form of using the myth of Daco-Roman continuity as a tool of propaganda that paints a picture of Transylvania having been occupied by Hungarians for a thousand years, which the archeological record does not agree with. There is presently no archeological evidence that this daco-roman population existed in the region, at the time of the arival of the Magyar tribes. All sites from the period point to a region dominated by slavic settlements. I personally think it is outright disgusting and primitive what you guys are doing in this regard. Subjecting Hungarian children to the humiliation of having their heritage vilifyied with lies is barbaric and uncivilized. Not to mention that Romanian kids are taught to hate.
      Look if you insist on holding on to your indoctrination, I can't help you. I think the very fact that from an entire article that brings up many important issues, which I feel should concern everyone in Romania a lot more than the fact that I pointed out that the education system in Romania is engaged in a primitive policy of vilifying a minority through its falsification of historical facts, this is all you got, is proof of the fact that nationalist indoctrination is alive and well in Romania. Continuing with this 19'th century mentality is first and foremost detrimental to Romanian cultural development.

      PS: In the Tirgu Mures university issue; how convenient that in a university founded by Hungarians, in a town that was 2/3 ethnic Hungarian untill it became heavily colonized a few decades ago, the senate is mainly made up of Romanians, so of course they will be against anything that would be a benefit to the Hungarian community. Do you really think that those reading your justification will be impressed?

  7. Hi again,

    I'm not trying to act like a preacher assuming to know the absolute truth. Moreover I won't stick attributes like barbaric, uncivilized or primitive to you or your lines. I take serious charge when you end ideas with "Not to mention that Romanian kids are taught to hate" - who are you to suppose that?!

    Since you seem to like the importance of P.S...

    As long as there exists stupid texts like

    A magyar nyelvű orvos- és gyógyszerészképzés színvonalának emeléséhez és önállóságának megvalósításához szükségesnek véljük az erdélyi magán tőke hozzájárulását is igénybe venni.

    you must give credit also to the other part for eventual punches. What's the reason for further excange of words or ideas?!

  8. You ask who I am? I am someone who experienced it in Romania's school system. I therefore have every right to talk about this experience. My atribution of the words "barbaric", "uncivilized", and "primitive" to the way that history lessons are used in Romania, to not only teach a cinderela and grandiose version of your past, but also to vilify a minority that has suffered severe blows to its long term viability already due to past misdeeds, come from having also experienced the alternative. I am a Canadian citizen, and as you may know, the French minority there has been treated very differently.
    They are not vilifyied in the history books. The use of their language is official. There was never an attempt to destroy their cohesion through colonization and asimilation. (there were a few unfortunate deeds). There are French language universities (not funded by the French government, after all they pay their taxes in Canada, not in France), and the towns where they are in the majority, do not have their decision overturned by courts if they want to hire a librarian that speaks French, or if they want to change the name of a street. Towns that were founded by them still bear the French name, even where the population is not French, as is the case in many parts of English dominated Canada. In Quebec, the police and other authorities speak French (how is that compared to Harghita and Covasna?). In other words, they were respected by the majority.
    As for your last question in regards to exchange of ideas; My original article had almost nothing to do with the topic you chose to push. I would hope that your patriotism goes beyond trying to rebuke someone who points out a few nationalistic misdeeds, and turns instead towards the things that should in my opinion trully matter to you, such as the demographic problem that I mentioned for instance. These sort of problems stem from nowhere else but culture. By insisting on teaching history in a 19'th century nationalistic fashion, you are not helping with cultural evolution one bit, because people end up seeing the world through 19'th century eyes and minds. If you are trully a Romanian patriot, then in my view, you should care about this.