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1 CET - 3 January 1995 (mind)  124 sor     (cikkei)
2 OMRI Daily Digest - 4 January 1995 (mind)  73 sor     (cikkei)
3 CET - 4 January 1995 (mind)  287 sor     (cikkei)
4 CET - 29 December 1994 (mind)  364 sor     (cikkei)
5 Ministry of Foreign Affairs - Newsletter (jan.2) (mind)  292 sor     (cikkei)

+ - CET - 3 January 1995 (mind) VÁLASZ  Feladó: (cikkei)

03 January 1995
Volume 2, Issue 2


**Hungarian - IMF Talks Progress**
  Hungarian Finance Minister Laszlo Bekesi says Hungary could
  reach a long-term agreement with the International Monetary Fund
  by mid-year. Part of the agreement calls for the government
  to adopt a three-year modernization program. Budapest
  believes a fresh IMF loan package would ease the country's
  27 billion dollar debt crisis and assure foreign investors and
  creditors in the government's economic policy. In October, 
  IMF Managing Director Michel Camdessus said Hungary must
  reform its social welfare system, or it will not be able to
  fund its 1996 budget.


  For individuals or western companies the new year may bring
  resolutions to follow though on investment plans in Central
  Europe. What can they expect in 1995?

  AS 1995 takes off, Central Europe continues to be a ripe
  region for foreign investment. One person looking ahead, is
  Keith Crane, director of research for Plan-Econ, a Washington
  DC based investment consultancy. Crane says the monument of
  growth will keep foreign money moving throughout the region:

  "Every country in the region is reporting sharp increases
  usually in industrial output. It looks like GDP is up
  everywhere and it's getting up in the 4-6 % increases per

  "The recovery is extending into 1995. It looks like there's a
  good head of steam for the recovery, and so on into 1995 and
  '96, it should be a very attractive place to invest."

  One area Crane expects to see targeted for large investment
  is the energy and utility sector. Hungary and the Czech
  Republic, in particular, will need more foreign money for
  their power plants and telephone companies:

  "What we see happening is, especially for governments like
  Hungary, which are strapped for cash, there'll be increasing
  interest and pressure in privatizing utilities, and this is
  really the next wave of major investment in the region."

  Crane also says that the automotive industry will see a lot of
  growth.Especially through increased investment from
  Volkswagen, General Motors and South Korea's Daewoo.

  But in addition to these large corporations, Crane says
  medium-sized western companies and even individuals will
  enter the region, especially as more Eastern European
  investment funds crop up in the west.Therefore, financial
  services will be a big interest for investors.

  "Many investors ask are the banks going to continue to make
  loan decisions based on political pressure or have they
  become more commercially minded? And of coarse the second
  major question or problem for prospective investors are how
  large are the bad debt problems of these banks."

  "To this point, the bad loan problems always seem to be
  getting bigger and bigger and bigger."

  Crane adds that these private debts along with the political
  and economic uncertainty are warning signs.

  "Government financial stability is important for investors.
  The major reason why Hungary was able to attract 7 billion
  dollars in investment over the past few years and Poland
  substantially less was that Poland was not creditworthy and
  Hungary was. Poland welshed on its debts."

  Now Poland appears poised to catch up with Hungary on the
  investment trail.

  But Crane warns that there are hidden roadblocks on this
  trail. One is high-priced management costs needed to make
  ailing Central European companies profitable. He says some
  entrepreneurs have found ways around this, by starting from

  "More and more of our clients are going green field. they'd
  much prefer to set up their own company, build their own
  factory and avoid the problems that they've had buying into a
  local manufacturer."

  So while market forces and outside investment can drive a
  country's economic recovery much of it also involves a
  measure of risk and an investment of faith. Generally, this
  faith should continue to pay off in 1995.


* CET On-Line - copyright 1994 Word Up! Inc. and Cameron M. Hewes.
  All rights reserved.  This publication may be freely forwarded, 
  archived, or otherwise distributed in electronic format only so 
  long as this notice, and all other information contained in this 
  publication is included.  For-profit distribution of this 
  publication or the information contained herein is strictly 
  prohibited.  For more information, contact the publishers.

A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.

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Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.

+ - OMRI Daily Digest - 4 January 1995 (mind) VÁLASZ  Feladó: (cikkei)

Vol. 1, No. 3, 4 January 1995

We welcome you to the Open Media Research Institute's
Daily Digest - a compilation of news concerning the
former Soviet Union and East-Central and Southeastern
Europe. The Daily Digest picks up where the RFE/RL Daily
Report, which recently ceased publication, left off.
Contributors include OMRI's 30-member staff of analysts,
plus selected freelance specialists. OMRI is a unique public-
private venture between the Open Society Institute and the
U.S. Board for International Broadcasting.

Defense Ministry spokesman Lajos Erdelyi, in an interview
with Magyar Hirlap on 3 January, says his country wants
British and German troops to hold joint exercises with
Hungarian forces in Hungary later this year. Erdelyi
explained this is part of a Hungarian plan to take a more
active role in NATO's Partnership for Peace program. He
added that Hungary has set aside 400 million forint ($3.5
million) for this purpose. Hungarian troops are to
participate in NATO exercises in Italy this year. Erdelyi also
said the Hungarian military would be further reorganized to
bring it up to the standards of "Euroatlantic integrational
structures." Personnel changes in 1995 are to include
dismissing some 20% of army officers and drafting 7,000
fewer conscripts than in 1994. Also on 3 January, Foreign
Ministry spokesman Gabor Szentivanyi said Hungary
expects Austria, a member of the European Union since 1
January, to tighten border controls, AFP reports. Szentivanyi
noted that although no irregularities have yet been reported
on the Hungarian-Austrian border, Hungarian officials were
reckoning with the introduction of stricter tourist and
transport checks. -- Jan Cleave, OMRI, Inc.

BORDER. Quoting a spokesman for the Environment
Ministry, Romanian television said on 3 January that an
oilfield accident has polluted more than 40 kilometers of
the river Barcau and the pollution might cross the border
into Hungary. The spokesman said the oil from a refinery in
the Bihor county was detected on 30 December. About 35
tons were removed by technicians but it was impossible to
collect it all and the pollution was now spreading down-
river. The Barcau enters Hungary above the town of Oradea
and becomes the Berettyo, which eventually joins other
rivers in the Hungarian plain. The deputy prefect of Oradea
county was quoted by Reuters as saying that a special
commission was investigating the cause of the spill. --
Michael Shafir, OMRI, Inc.

[As of 1200 CET]

Compiled by Pete Baumgartner and Steve Kettle

A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.

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Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.

+ - CET - 4 January 1995 (mind) VÁLASZ  Feladó: (cikkei)

04 January 1995
Volume 2, Issue 3

**Hungarian Troops In Western Europe**
  Hungary is going to take part in peacekeeping exercises this year in
  Italy.  It'll be the first time Hungarian troops will have stepped 
  onto western European soil.   NATO is planning a number of joint 
  exercises involving troops from the former Warsaw Pact and NATO 
  members this year.
**Romania Is Reporting A Large Oil Spill On The Hungarian Border**
  The spill on the Berettyo river will take days to clean up, but
  Hungarian Environment Ministry Counselor Anna Adacsy says
  it's not expected to cause serious damage to the surrounding
  environment. However, Adacsy is warning that the oil could
  seep into the area's underground water table and pollute
  water supplies. Adacsy is warning nearby residents to look
  for signs of contamination in their water. Hungarian officials
  have already collected 158 gallons of oil, and are continuing
  clean up efforts. In Bucharest a spokeswoman for the
  Romanian Environment Ministry says the spill is from the
  Suplacul De Barcau oil field, and was detected December
  30th. Romania has set up a commission of inquiry to
  determine the cause of the spill.
*Hungarian Forint Devalued**
  Hungary has begun the new year with a 1.4 % devaluation of
  the forint - a smaller depreciation than predicted by bankers
  and analysts. But they say it could be a prelude to a larger
  devaluation next month. The move became efficient yesterday.
  Csaba Pasztor is managing director of the National Bank. He
  says that Hungarian consumers will not see the inflationary
  effects of the devaluation for a while:
  "Probably not in the short run. I don't really think the price
  should go up because of this particular devaluation in the
  coming days, but it is a fact that for the whole year we do
  see about 18 to 20 % inflation in Hungary, so obviously the
  devaluation has some effect on the price increases."
  Pasztor says the 1.4 % is the first of a series of incremental
  devaluation, which will total 10 to 12 % by year's end. They're
  intended to offset the effect the country's expected inflation
  will have on Hungary's export. Ultimately,Pasztor says the
  National Bank wants to bring inflation down to single-digit
  Back when everything was state-owned in communist Central
  Europe, the question of buying and selling land didn't really
  come up. Those privileged enough to own land usually decided
  who bought, sold and rented it, and this came to in play
  rarely, for example when westerners were involved.
  Back when, real estate agencies were functions of the
  government, usually acting as arms of state-run tourist
  agencies, diplomatic, foreigner or interior ministries, And, as
  Business Central Europe editor Bela Papp explains, the only
  question involved in leasing space - especially for
  westerners - was what one was getting. It often wasn't what
  it appeared to be:
  "Sometimes these organizations worked hand in hand with the
  security organizations, ie. the KGB and others like that, and
  therefore you never quite knew what you were getting into
  and how if the places were bugged or what not. That's of
  coarse all changed now."
  Part of that change involved the breaking up of urban space
  for private ownership. With that came a dramatic growth in
  western demand for business and residential space. Papp says
  the evolution of Central Europe's real estate industry is a
  story of how competition brought order to chaos:
  "A whole host of companies were entitled to rent out, to
  acquire property and what not. It was a very chaotic period
  because on the one hand ownership issues were not clear at
  all so the people who were letting space didn't necessarily
  have title to it."
  "The whole industry of real estate agents has sort of self-
  regulated itself, it didn't wait around for governments to
  pass the necessary laws."
  The real estate agents also set up codes of ethics and
  behavior to ensure that local agencies measured up to the
  One of the most complex aspects of this new market was
  dividing up land which had various uses - including multi-
  leveled properties such as office suites and apartments. In
  some cases, properties were returned to the families of their
  procommunist owners. In others, ownership was given to the
  companies which managed those properties for the
  government. Local city and county governments got some lend,
  and some remained under national ownership.
  This dividing up of property inevitably created hassles and
  lawsuits. Governments often had to compensate or evict so-
  called squatters. Also, without an established real estate
  market, Papp says it was nearly impossible to determine
  market values:
  "Five years ago, it was a mess. There was no market value to
  any of this property. Now there is. Nowadays it's pretty easy
  to give value to some of this property, because people have
  been sort of renting them, buying  them, selling them."
  And the real value of these properties has soared, especially
  in the capital cities. Papp says this inflation was largely
  fueled by demands.
  "It's definitely a sellers market in the capital cities, it's
  certainly been very difficult to find quality space and for that
  reason, the prices have skyrocketed to levels found in cities
  like New York and Tokyo and London, the high end of the
  western property markets."
  But Papp says it's a different world in the so-called second
  cities, Like Gyor in Hungary or Brno in the Czech Republic.
  There, property rates remain a bit more down-to-earth.
  Other developments in the real estate industry seems just on
  the horizon. Some central European countries may soon
  liberalize lending laws, so real property can be used as
  collateral. So mortgage companies or lending bank could
  become the next tier in Central Europe's growing real estate
  service market.
  Romania's prospects are beginning to look  brighter at last.
  Investor interest is picking up and the economy has stabilized
  for the time being. 1995 could be a make or break year for
  Romania depending on whether the government can survive.
  These two young musicians playing in the Bucharest subway
  are simple buskers, out to earn some extra pocket money,
  they're not filling out tax forms and paying social security
  insurance yet, but they are part of Romania's expending new
  private sector.
  The private sector now makes up a third of the Romanian
  economy. And by the end of 1994, Romania had achieved a
  level of economic stability which gave the country a
  promising start to 1995.
  Theodor Nicolaescu, a director at the State privatization
  agency is optimistic...
  "The new-born private sector developed tremendously in the
  last years and it is reaching a sort of critical mass from
  which on it is able to continue structural changes in our
  economy that are necessary. Of coarse government action
  could be a welcome catalyzer, but even without it the capital
  market will appear."
  In the first weeks of 1995 the government will be pulling out
  all the stops to meet the conditions for the next installments
  of the International Money Failure structural adjustment
  loans. One of those IMF conditions, Romania's long-awaited
  stock market should appear early in the year - the legal
  groundwork has been laid and all that's needed now is enough
  companies listing shares, that can be traded.
  A new law designed to speed up privatization will encourage
  the development of Romania's fledgling capital market.
  Finally passed by the Romanian Senate in December, the mass
  privatization scheme will distribute shares in 3000 states
  enterprises by June.
  And Romania's state-owned commercial bank Banca Romana
  pentru Dezvoltare, the Romanian bank for development, should
  be privatized by August.
  Rodica Seward set up Romania's first investment bank,
  Capital SA, intends to establish an investment fund in 1995.
  Seward says its vital that privatization kicks off this year.
  "If we could have 2 or 3 very good successes in the first
  quarter of 1995 and then publicize them very well, and
  encourage other companies to do the same and we have got to
  start actively capital markets development and start stock
  market and more important,cos could open as physical entity
  create a few financial instruments to be traded on the stock
  But the Romanian government isn't expected to limit its new
  initiatives to the economic front.
  Last year Romania was the first country to sign NATO's
  partnership for peace agreement. But the country remains
  much further away from integration with NATO and the EU
  than its northern neighbors.
  Both organizations are likely to require that Romania improve
  relations with Hungary. Late last year Romania's lower house
  of parliament passed legislation severely limiting the rights
  of the Hungarian minority in Romania. Still Bucharest has
  been making encouraging noises on the prospects of a
  bilateral treaty with Hungary. And Stelian Tenase, the vice
  president of the Senate's foreign affairs committee and an
  opposition member sees it as a priority...
  "I think it could be the main step in the next future to sign a
  peace treaty with Hungary."
  Tenase hopes an agreement on the treaty can be reached this
  But for that Romania will need political stability. For much of
  last year. parliament was paralyzed by political squabbles.
  The government was subjected to five motions of no-
  confidence. And the opposition is talking of trying again to
  force early elections in 1995. But the opposition itself is
  divided over when and how.
  "I don't agree with president Iliescu but the problem is if we
  want to impeach the president Iliescu, to do it at the right
  moment with the right people."
  This year they may succeed. But new elections won't do much
  to cheer up the people on the streets. Most young Rumanians
  are fed up with political squabbling. Christine Schneider is a
  high school student. She has idealistic hopes for 1995....
  "I hope things will get better, I'm not talking about politics or
  something, people have to be more good to each other. We are
  all very concerned about money and job and we are not friends
  like we were in December '89.""
  Others like this student at Bucharest university, have more
  materialistic desires.
  "I want to visit England, maybe United States, or maybe I will
  stay in Romania.... more money you know its a problem with
  the money.
  Still with a growing private sector and mass privatization
  set to take off people should have a little more money in their
  pockets. And before long they'll be able to spend some of it in
  Romania's first ever McDonalds, set to open in Bucharest in
* CET On-Line - copyright 1994 Word Up! Inc. and Cameron M. Hewes.
  All rights reserved.  This publication may be freely forwarded, 
  archived, or otherwise distributed in electronic format only so 
  long as this notice, and all other information contained in this 
  publication is included.  For-profit distribution of this 
  publication or the information contained herein is strictly 
  prohibited.  For more information, contact the publishers.
A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.

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Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.

+ - CET - 29 December 1994 (mind) VÁLASZ  Feladó: (cikkei)

29 December 1994
Volume 1, Issue 28
  Hungary's political scene is not renowned for its
  entertainment value. Larger than life characters are thin in
  the ground, especially since the demise of the 280 pound,
  ultra-nationalist, Istvan Csurka. Undeterred, CET went
  looking for the lighter side of events in 1994.
  The political year in Hungary was not short on irony with
  elections in April bringing back to power the former
  communists in a coalition with the Free Democrat former
  dissidents they spent most of the 70s and 80s hounding. And
  this change-over has also had its rough moments. One was
  when the newly appointed Prime Minister Gyula Horn and
  Interior Minister Gabor Kuncze both refused to follow police
  orders and move into more secure premises. Tibor Vidos, a
  political consultant for GJW Government Relations tells the
  "None of them wanted to move house, and the secret service
  parked a caravan in front of their homes and defended them
  from there and they installed some electronic devices. And
  then after 3 months or 4 months of pressure Gyula Horn
  yielded and actually moved to the official residence of the
  Prime Minister and Gabor Kuncze moved to a villa in the Buda
  Than there are those who didn't make into official residences,
  like Young Democrat Viktor Orban. A year earlier pundits had
  predicted the 31 year old party leader would be the country's
  next Prime Minister. But in last April's election his party got
  just 8% of the vote. On election night he inconsolable.
  "When a journalist asked for an interview she finally made it
  through to Viktor Orban's room and he was sitting in
  darkness, watching a hockey match and saying, 'Well, it's
  much more interesting than the election results.' He gave just
  funny answers."
  Some of those thrown out of office were no less bitter.
  Outgoing Defense Minister Lajos Fur of the Hungarian
  Democratic Forum actually refused to meet his replacement,
  Socialist Gyorgy Keleti. Keleti had to wait 2 weeks to get
  into his office. When he finally did take over, the new man in
  charge of the nation's armed services raised a few eyebrows
  when it was revealed that he had a passion for UFOs. Tibor
  Vidos again.
  "He admitted that yes he is interested and he believes that it
  is something that should be studied. His military career was
  with the press department of the army, he was the press
  spokesman of the army, so probably he's not very well trained
  in air defense or any radar technology, so that gives him some
  credit, that he should believe in UFOs."
  But perhaps Hungary's single most comical political image of
  1994 is one which at the time was quite serious. It would
  have been in rather poor taste to laugh at the metal
  contraption which held Prime Minister Horn's head still
  following a pre-election road crash in which he broke 2
  vertebrae in his neck."
  "It was a metal construction which was screwed to his head
  and supported by his shoulders in order not to let his head
  move. And so he had all sorts of strange suits with holes at
  the right place at the shoulder so that he could wear this
  headset. So there were lots of jokes about how he moves on
  the streets. Like, he could mount a blue light to his head like
  the one on his car and pass everywhere without any problems.
  Nevertheless, it probably brought him a lot of sympathy votes
  It also brought out the best of Hungary's entrepreneurial
  spirit. Hundreds of plastic imitations of Horn's headbrace
  immediately went on sale in Budapest's streets. Perhaps the
  final irony of a topsy turvy year was the site of a former
  Marxist accepting the office of Prime Minister with a huge
  iron crown on his head.
  This year, air travel news centered on building bridges
  between east and west.  There were new contracts, airplanes and
  routes -- and some botched agreements as well.
  The major news out of Central Europe's travel industry this year
  was how state-run airlines in the east tried to cope with
  increased service to the west.  From east or west, it hasn't been
  easy.  We asked Chris Warrington, head of Budapest's ESO
  leisure travel to review the year's travel news.  We begin with
  the Czech airline CSA and the evolution of its botched two-year
  partnership with Air France.
  "CSA started to take aircraft from Air France on a
  lease basis and this would actually increase their fleet to
  one of the most westernized for the former communist east
  European countries."
  But despite CSA's own financial troubles, it was Air France's
  problems -- with labor and a government bailout -- that forced
  the Czech carriers hand.  The relationship came to a formal end
  in March with the dumping of Air France's shares.
  Moving south, Warrington sees a rocky relationship for the
  Hungarian Airline Malev and its Italian strategic partner
  "Alitalia has had its own financial troubles and has
  been trying to get its own house in order and has neglected
  attention toward Malev.  Then there's a problem going the
  other way with Alitalia feeling they'd been overcharged in
  the amount that they'd agreed to pay toward Malev and
  decided that they were going to hold back on the second
  Other problems between Malev and Alitalia have included questions
  on high Hungarian customs duties and delays in establishing joint
  routes to Spain and Italy.
  In Poland, however, optimism prevails over the planned east-west
  partnership between national carrier LOT and American Airlines.
  That comes on-line January 10, with a code and route sharing
  agreement which will operate both markets.
  Another market to be opened this year -- and bound to expand next
  year -- has been Belgrade, capital of what's left of Yugoslavia.
  Coming out of international sanctions, Belgrade has seen resumed
  service from Lufthansa, Swissair and Aeroflot.  British Airways
  has expressed an interest in Belgrade and JAT Yugoslav airlines
  is negotiating the resumption of its international service.
  Depending on the what happens in the former Yugoslavia,
  Warrington says this activity will only pick up next year:
  "There is a large diplomatic community, obviously, in
  the capital of the former Yugoslavia.  It has been necessary
  for these people to transfer in Budapest in most cases to
  pick up flights to get out and in to the country."
  1994 also saw the opening of European Union talks on deregulation
  and uniform arrangements between eastern and western Europe.  But
  Warrington says these agreements could be years in the making.
  Ironically, the source of snags will be the financial troubles of
  some western European carriers.
  "I think some of the governments may really sort of
  struggle with a total open skies policy, especially where
  their national carriers are not exactly making a profit.
  Until they get their house in order, eastern
  carriers could well do very well with it."
  Also this year, the air carriers of the former communist
  countries began seriously phasing out the Soviet-made Tupolev and
  Ilyushin airplanes in favor of Western-made Boeings, Fokkers and
  Airbuses.  CSA flew its last Ilyushin this year, and Malev
  promises a Soviet-free fleet by the end of 1995.
  Warrington says the Russian airplane manufacturers have to be
  thinking about the future:
  "They're really going to have to seriously look at
  the selling and marketing of their air craft.  Both of these
  particular companies have been working in conjunction with a
  couple of the larger aircraft manufacturers. (17:50)
  Not that Tupolev or Ilyushin will be going out of business in the
  near future.  Warrington says the future for these Russian
  airplane makers depends on making the right decisions now.
  "I think it'll all boil down in the long run to price
  and how they can actually market it.  But they'll have to
  scale down their plans for the initial period anyhow."
  The Russians have been making plans -- including using highly
  touted Rolls Royce engines on their most recent models.  But
  surviving the marketing hits they've taken in recent years will
  be difficult.  the ultimate test will be if they can ever sell
  airplanes again outside the states of the former Soviet Union.
  That may only come through partnerships with the likes of Boeing,
  McDonnell Douglas and other western manufacturers.
**Hungarian Year in Review**
  Since 1990, Hungary has been considered the most stable
  country in the former Soviet Bloc. Its conservative
  government held power for an entire 4 year term, leading
  Hungary gradually towards the west. But 1994 brought
  uncertainty as a deeply divided ex-communist party returned
  to power. While officially committed to an economic program
  of austerity, the Socialists have so far failed to implement
  the tough reforms needed to restore Hungary's economic
  health. CET looks back at Hungary in "94.
  Renowned throughout the world for their pessimism,
  Hungarians had a little more to worry about this year. Hungary
  hadn't faced so much uncertainty since the end of communism.
  A new Socialist led government took power, privatization
  went into limbo and Hungary's economic direction remained
  unclear. Just south of the border war raged in the former
  Yugoslavia, but Hungary's future security arrangements
  stayed up in the air. The Bosnian war dominated the Budapest
  summit of the Conference on Security and Cooperation in
  Europe in early December. Leaders from 52 nations came to
  Budapest for the summit, which was billed as the most
  important meeting in Hungary's history. But they couldn't
  agree on much beyond Ukraine's signing the "Start 1" nuclear
  weapons treaty. Even as Bihac was besieged, Russia blocked
  all references to the Bosnian conflict in the summit's final
  document. Russia also objected to NATO expansion into
  central Europe. But American President Bill Clinton says
  NATO is coming anyway.
 "NATO will not automatically exclude any nation from joining.
  At the same time no country outside will be able to veto
  expansion. As NATO does expand, so will security for all
  European states."
  No one would be happier than Hungary to see NATO expand or
  the Bosnian crises end. Hungary continued to walk a tight rope
  this year, trying to please the west and its Serbian neighbor
  too. NATO radar planes used Hungarian airspace to enforce the
  Bosnian no-flight zone. But Hungary also sought to normalize
  relations with Serbia, preparing for a resumption of trade
  when sanctions are lifted. Improving relations with Hungary's
  neighbors, especially those with large Hungarian minorities,
  is expected to be a top foreign policy objective of the
  Socialist government. It believes that the signing of treaties
  re-affirming existing borders will greatly reduce tensions in
  the region and clear the way for European Union and NATO
  membership for Hungary. Despite this western-oriented
  foreign policy, many people are concerned that Hungary's new
  government is dominated by former communists.
  Riding a wave of economic discontent caused by the
  transition to free market, the Socialists captured an absolute
  majority in Hungary's May elections. Budapest school of
  politics director Istvan Stumpf says citizens restored the
  party that brought them a higher standard of living in the late
  1980s under the reform communist leader Janos Kadar.
  "The ordinary people made a comparison and they found that,
  during Kadarism, the situation, from the living standard point
  of view and from the social security and economic point of
  view, was more comfortable."
  But the Socialists won't be able to make the price of bread 4
  forints again. In fact Hungary's financial woes; a high budget,
  trade and current account deficits, make it difficult for the
  government to increase spending at all. Hungary's state debt
  stands at 9% of its gross domestic product and its foreign
  debt is the highest per capita in Europe. Even within the
  party, many oppose more social spending. Stumpf says the
  Socialist party, which ran the country for the last 50 years,
  has support from business people and the wealthy as well as
  the working class.
  "The biggest problem of the Socialist Party is the very strong
  contradiction between the most important bases of
  supporters. One includes the leaders, the nomenclature
  peoples and the other side you can see the blue collar
  workers. The people who are living in a very low level and
  they are expecting that the Socialist Party can give back the
  social security."
  The Socialist's coalition with the liberal Alliance of Free
  Democrats hasn't ended all of the business communities
  concerns. For the first time since 1990, Hungary was not the
  top recipient of western investment in the region as
  privatization ground to a halt. Conservative critics, like
  former privatization commissioner Gyorgy Rasko, think the
  government is intentionally delaying to placate unions. Rasko
  says this is jeopardizing the economy's health.
  "The state owned companies, without financial restructuring,
  can't survive the next couple of years. The value, the real
  asset value has been decreasing since 1991. And if you
  hesitate, the so-called opportunity cost increases."
  One Hungarian company that'll have to wait for privatization
  is Channel 2. After a long battle with the Free Democrats, the
  Socialists succeeded in preserving government ownership of
  Hungary's 2 TV stations. A media bill submitted to Parliament
  this fall would free an unused channel for commercial TV. But
  the legislation seems to be prolonging rather than resolving
  Hungary's media war. Since 1992, Hungary's political parties
  have battled for control of TV and radio. Prior to the spring
  elections, the conservative government fired over 100 radio
  editors and reporters, an act condemned by the International
  Federation of Journalists after a fact finding delegation
  visited Hungary. But under the Socialist government, the
  conservative TV news program "Hirado" was canceled. And
  contradicting the wishes of most Hungarians, the coalition
  also canceled Expo '96, a world's fair. Since business support
  fell short, the equivalent of $300 million would have been
  needed from Hungary's bloated budget. Budapest Mayor Gabor
  Demszky explains.
  "There was no money for it. That was the basic problem since
  the beginning, and there were certain magicians and
  ideologues of the Expo, people who were for it, who tried to
  explain to society that the whole Expo can be managed on an
  entrepreneurial base. What does this mean in reality? I don't
  really know. But it means that it does cost too much for the
  state budget and the local government budget, but that it can
  be realized out of private money."
  Some in the business community were disappointed by that
  decision and by the proposed 1995 budget. It eliminates tax
  holidays for foreign investors and taxes dividends at a higher
  rate than income that remains in companies. Higher value
  added taxes and energy prices, slated for January, brought
  grumbles from ordinary Hungarians. Negotiations with trade
  unions on a social pact remain stalled. And the International
  Monetary Fund and Finance Minister Laszlo Bekesi are warning
  that further belt tightening will likely be needed to make
  Hungary financially ship shape.
  As the year comes to a close, the Socialist-led government
  finds itself between a rock and a hard place. Its leaders know
  what needs to be done, but the party rank and file and the
  public at large are resisting. Unions are restless, foreign
  business is concerned and privatization is virtually halted. It
  seems the government needs a clear vision and the will to
  implement it.
* CET On-Line - copyright 1994 Word Up! Inc. and Cameron M. Hewes.
  All rights reserved.  This publication may be freely forwarded, 
  archived, or otherwise distributed in electronic format only so 
  long as this notice, and all other information contained in this 
  publication is included.  For-profit distribution of this 
  publication or the information contained herein is strictly 
  prohibited.  For more information, contact the publishers.
A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.

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Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.

+ - Ministry of Foreign Affairs - Newsletter (jan.2) (mind) VÁLASZ  Feladó: (cikkei)

N  E  W  S  L  E  T  T  E  R

Republic of Hungary                             Budapest, 1394 . 423
Ministry of Foreign Affairs                     Telephone:36(1)156-8000
Press Department                                        Telefax: 36(1) 156-3801
1/1995.                                         Budapest, January 02, 1995

Hungarian-German Trade Near DM 10 Billion

        Bonn, December 30 (MTI) - After a temporary decline, economic
cooperation between Hungary and Germany set out again for vigorous
development in 1994, with bilateral trade approaching a record DM 10 billion,
Csaba Bazso, head of the Hungarian trade mission in Cologne, told MTI on

        Germany accounts for a quarter of Hungary's foreign trade turnover.
(Former East German territories have an exceedingly low share of around 5
per cent in total bilateral trade.) In 1994, both Hungarian exports to Germany
and imports from there increased by approximately 20 per cent.

        With exports growing faster than imports in the second half of the
year, the trade balance is expected to show a Hungarian deficit of DM 700-
800 million.

        The proportion of machines and equipment in Hungarian exports has
been around 10 per cent for years, while that of food products has stabilized
at 16 per cent after a drop last year. Almost 30 per cent of exports consist of
textile, leather and machine engineering contract work.

        Over the last few years, German companies have accounted for a fifth
of foreign investment in Hungary, and small and medium-sized firms are
beginning to exhibit an increased interest in Hungary.

        Under inter-state agreements, 12,870 Hungarians worked in Germany
in 1994.

        Bazso said that due to a shortage of marketable commodity funds,
Hungary was able to take advantage of only a part of the additional
advantages stemming from its association agreement with the European

EBRD Signs Agreement with MOL

        Budapest, December 30 (MTI) - A USD 55 million dollar credit
agreement was signed by executives of the Hungarian Oil and Gas Industry
Plc (MOL Rt.) and representatives of the European Bank for  Reconstruction
and Development (EBRD) to meet balanced consumption requirements in
peak periods, the London-based international bank told MTI today.

        The USD 55 million is designed to develop an advanced underground
gas reservoir and put it into service in the vicinity of an exhausted natural
gas deposit in Zsana (S Hungary).

        Peter Reiniger, director of EBRD, says the bank has resorted to a new
method of flexible crediting in the framework of which MOL can avail itself of
various types of credit financing structures.

Hungary Becomes First OSCE Chairman-in-Office

        Budapest, December 30 (MTI) - Beginning October 10, Hungary played
host to the CSCE review conference, which was closed by a summit meeting
of the heads of state and government of the participating countries on
December 5-6.

        Hungarian diplomacy, already active in the Helsinki process, will face
even more work in 1995. It would like to strengthen the executive power of
the chairman-in-office of the CSCE, which will soon become the
Organization for Security and Cooperation in Europe (OSCE), and that of the
troika (consisting of the outgoing chairman-in-office Italy, the current
chairman-in-office Hungary, and Switzerland, which will take over the chair
in a year's time). Hungary will also concentrate on crisis prevention and hold
negotiations with parties directly involved in conflicts. Hungarian Foreign
Minister Laszlo Kovacs will be the OSCE Chairman-in-Office in 1995.

        At first, Hungary took part in the CSCE process as a member of the
Warsaw Pact. Despite its low strategic importance, it played an active part in
security negotiations. In the field of human rights, it became the first
socialist country to host a CSCE Cultural Forum in 1985. Two years later,
Hungary and Canada submitted a joint proposal on how to enforce the rights
of national minorities. At talks on the reduction of conventional weapons in
Europe, the Hungarian delegation insisted that the agreement determine
arms reduction levels separately for each country because of the breakup of
the Warsaw Pact. Hungary was also very active in working out mechanisms
for monitoring and safeguarding human rights and in determining the CSCE
norms in the field of human rights.

        Budapest, December 30 (MTI) - In the last few years Hungarian foreign
policy has continued to pay great attention to the CSCE's basic principles
and institutions. When it took on the organization of the CSCE review
meeting and summit, it wished to give a new impetus to this institution. The
summit was attended by 52 countries, and the Hungarian capital received a
total of over 70 delegations including those of the observer Macedonia, the
Republic of Korea and various international organizations. President Arpad
Goncz, Prime Minister Gyula Horn and Foreign Minister Laszlo Kovacs held
bilateral discussions with more than 60 high-ranking guests, including U.S.
President Bill Clinton and Russian President Boris Yeltsin.

        Hungary sees the Political Declaration, the declaration on the 50th
anniversary of the end of World War II and the 11 additional documents as
outstanding results of the Review Conference and the Summit Meeting.
Foreign Minister Laszlo Kovacs welcomed the principled agreement on
sending a peacekeeping force to help resolve the Nagorno-Karabakh
conflict. At the same time, he was critical of the Code of Conduct because it
deals with the minorities question in too general terms. Hungary also
considers it a failure that the participants failed to adopt a document either
on the Yugoslav crisis or the situation in Bihac. Kovacs said the debate had
convinced him that the CSCE cannot be effective in settling conflicts that
have already broken out, which is why he, as OSCE chairman-in-office,
would like to concentrate on conflict prevention.

        During the CSCE summit, the Hungarian capital was host to about
2,000 journalists reporting to about 4 billion people. Hungary has probably
never before received such wide coverage in the world press. Delegates
were guarded by 3,000 policemen and the residents of Budapest were
requested to use public transport during the two days of the summit. All the
foreign participants expressed their appreciation to Hungary's foreign
minister for the smooth organiztation of the summit, which cost the country
about HUF 300 million, or USD 2.7 million.

Quotas on Farm Imports from the EU and Visegrad Countries

        Budapest, December 30 (MTI) - In a joint decree, the Minister of Trade
and Industry and the Minister of Finance have published customs quotas
and related duties regarding agricultural and food products from countries
with which Hungary has signed free trade agreements. The product quotas
related to the Visegrad countries and the European Union are valid for the
first half of 1995.

        According to the agreement with the EU, 2,875 tonnes of frozen beef
may be imported to Hungary at the preferential duty of 10.5 per cent, down
from the normal duty of 106.3 per cent. The quota for seed potato will be
4,313 tonnes and the preferential duty 2.3 per cent. The normal duty is 50.7
per cent.

        In the first half, the quota for EU citrus fruits will be 49,000 tonnes
the preferential duty on oranges will be 4.8 per cent, tangerines 16 per cent
and lemons 3.3 per cent, down from the normal duty of 6 per cent, 35 per
cent and 5 per cent respectively. EU imports of rice total 6,250 tonnes duty-
free as compared to the normal duty of 89.1 per cent. The beer quota will be
172,500 hectolitres, with preferential duty of 28.2 per cent as compared to
the normal duty of 78 per cent.

        With respect to EU imports not stipulated in the agreement, 2,041
tonnes of fresh and frozen beef may be imported at 15 per cent, as compared
to the normal duty of 59.5 per cent. The frozen pork quota will be 1,255
tonnes and the preferential duty 15 per cent. The yoghurts quota will be
3,075 tonnes at a preferential duty of 15 per cent, down from the normal duty
of 75.2 per cent. In the first half of 1995, 8,750 tonnes of barley (seed and
other) may be imported at the preferential duty of 3 per cent as compared to
the normal duty of almost 40 per cent. The quota for mineral water will be
4,250 tonnes and the preferential duty 15 per cent - an 8.5 per cent discount.

        Budapest, December 30 (MTI) - The product quotas for imports from
the Czech Republic and Slovakia are included in a combined table.
Preferential duties are the same, while quotas on certain products differ, For
example, 1,500 tonnes of potatoes may be imported from the Czech Republic
at the preferential duty of 35.5 per cent, but only 500 tonnes from Slovakia at
the same duty. The normal duty for both countries is 50.7 per cent. The
quota for malt from the Czech Republic will be 3,000 tonnes and Slovakia
2,000 tonnes. The preferential duty will be 14 per cent, down 6 per cent from
the normal duty. The quota for mineral water and beer from both countries
will be 2,500 hectolitres, with the preferential duty on mineral water imports
at 27.3 per cent, down from 39 per cent and beer 54.6 per cent from the
normal duty of 78 per cent. The quota for alcoholic drinks will be 5,000
hectolitres from each of the two countries and the preferential duty 54.6 per
cent, down from the normal duty of 78 per cent.

        Budapest, December 30 (MTI) - In the first half of 1995, 3,250 tonnes o
poultry may be imported from Poland at the preferential duty of 20 per cent
as compared to the normal duty of 57.3 per cent. The quota for seed and
other potatoes from Poland will be 7,000 tonnes, with the preferential duty
on seed potatoes at 1.7 per cent and other potatoes 5 per cent. The normal
duty is 50.7 per cent for both types. The quota for cucumbers will be 7,000
tonnes and the preferential duty 6 per cent in winter months, 10 per cent in
spring and 20 per cent in summer. The normal duty is more than triple the
preferential duty. 15,000 tonnes of rye may be imported from Poland at the
preferential duty of 1 per cent - the normal duty is 47 per cent. The quota for
barley will be 30,000 tonnes and oats 14,000 tonnes. The preferential duty for
both products will be 1.5 per cent, down from the normal duty of 39.6 per
cent and 47 per cent respectively. The quota for alcoholic drinks will be
21,000 hectolitres at preferential duty of 20 per cent, while the normal duty
40 per cent. In the first half of next year, 180,000 tonnes of coal, produced
using Haldex technology, may be imported from Poland duty-free - the
normal duty is 3 per cent. Imports of engines, vehicle components,
refrigerating equipment and other manufactured goods from Poland will be
duty-free to a value of USD 5 million. The normal duty of these products
varies, but is usually less than 10 per cent.

        First half quotas on agricultural and food products from Slovenia will
range from 25 to 500 tonnes. The latter refers to pears and quince-apples,
imported to Hungary at preferential duty of 17.5 per cent instead of the
normal duty of 72.4 per cent. (Econews)

New Year's Address by President Goncz

        Budapest, January 1 (MTI) - The Hungarian president gave a New
Year's address on radio and television after midnight on January 1. Excerpts
from the speech are printed below:

        I think at the close of the year we have all reflected upon our last
twelve months. What did they bring and what did they take away from us?
What did we do well and what is to be done better next year? And we have
faced our conscience: Is there anything to be ashamed of or anything we
can justly be proud of?

        ... We held local elections for the second time. The re-election of
nearly two-thirds of mayors indicates that people have accepted the local
        ... I see the formation of half a thousand minority local governments
next to the municipalities as the political success of the year and a major
progress. I sincerely hope these will lay foundations for the cultural
autonomy of our national minorities and will safeguard their national
        ... Our life was not any easier in 1994: Many families had to give up a

lot of things. ... The gap between the western and eastern half of the country
has not narrowed, nor has the financial difference between the richest and
poorest. ... A great proportion of citizens live on the edge of society. This
is a
serious and dangerous issue: Delaying its solution will ricochet back to the
whole society.

        Changes in our spot in the world - if there were any - were to our
benefit. We are taking on a growing role in a historic process, the emergence
of European unity. With or without a schedule, with knowledge of set criteria
or without it, inside or outside of NATO, together with the other nations of
Eastern Europe or separately, we are irreversibly coming closer and closer
to the political Europe, the European Union, day by day. We have not taken
notice but our legislation, economic structure and system of relations, our
scientific life, social awareness and order of values are all being adjusted.
This is both good and bad: It is time to think through the probable economic,
social and cultural consequences of our accession. It is time to draw a
balance in anticipation of possible gains and losses.

        We are moving closer to Europe because we and our neighbours,
under the pressure of a common historic compulsion - reluctantly or not -
are becoming increasingly aware of the need to at last settle our common
affairs. And this includes the fate and rights of our kin living outside our

        ... It seems that 1994 was a year of ripening changes not only in the
political life but also in society and the economy.

        ... Although the final economic balance of last year is not yet ready,
is already clear that, after a long and steep decline, our industrial
has increased by close to 10 per cent, using 0.5 per cent less energy, and
our industry has the highest rate of productivity in the region. Despite its
difficult position and marketing problems, agriculture recorded far better
results than in 1993. Livestock numbers stopped decreasing and even began
to increase. Accordingly, we can justly expect a 3-3.5 per cent increase in
per capita GDP.

        According to preliminary estimates, personal savings rose by 20 per
cent and the amount of investments by 25 per cent at comparative prices.
For the first time in several years, there was a drop in unemployment. The
country's hard-currency reserves amount to USD 7 billion. Hungary
continued to receive most of the foreign working capital arriving in Eastern
and Central Europe.

        ... In the first moments of the new year, I would like to ask you to no
only manage carefully your strength and scanty financial means, but to also
make good use of your reserves of hope and patience. 1995 will not be an
easy year, but I have no reason to believe that the long-awaited economic
process will come to a standstill.

        I wish all of you strength and good health in the New Year, and the
crucial blessing of God for this.

A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.

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Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.