Gabor Harangozo talks about Hungary’s decline in the GDP share of agricultural production. (Photo: John Feffer)
Cross-posted from JohnFeffer.com.
Nearly one-third of Hungarians live in rural parts of the country. Surprisingly the rural population in Hungary, as a percentage of the population, is larger than in Bulgaria. But agriculture has declined steadilyas a value-added portion of GDP – from over 15 percent in 1989 to 3.5 in 2010.
There are a number of reasons for why the rural economy has declined. Partly it was a function of market liberalization reforms in the early 1990s; partly it was the influx of agricultural products from the West; partly it was joining the European Union. Other countries in East-Central Europe experienced a similar drop in the GDP share of agricultural production. But the decline was particularly sharp in Hungary.
To some extent, the Hungarian countryside has retaliated for the reversal of its economic fortunes at the ballot box. In the last two elections, rural areas strongly supported both the ruling Fidesz party and the far-right Jobbik party. This could be interpreted as a repudiation of the market liberalism embraced by most of the governments that have been in charge of the economy since 1990.
Gabor Harangozo is one of the new young leaders of the Hungarian Socialist Party. He started out, as many of his generation did, working with Fidesz, which in the early 1990 was a liberal youth party. Gradually, however, he grew disenchanted with market liberalism and moved toward social democracy. That led him to the Socialist Party where he served in the European parliament in 2004.
Harangozo grew up in the countryside. His father was an agricultural engineer. His experience growing up in the shadow of a large agricultural cooperative has influenced his views on rural development even today.
“I could see at that time that almost everybody in the village had work,” he told me in an interview in his office at the Hungarian parliament in May 2013. “Many Roma people were living there as well. They had jobs and lived in quite decent conditions. Everything was organized. The basis was agricultural production, but they also created a system of side businesses that produced machines. It was not so important for each business to make profit because the agricultural production could finance the whole system. There were also what we call social work jobs. The main aim was to create jobs for everybody. And this profitable system could finance the local education and health care. It created good living conditions for rural people.”
When that system was rapidly dismantled after 1990, the land restitution was initially very popular. “Many people who were living in these villages had very bad family stories about when they had to give up their properties to the state and then had to work in their own properties as employees,” he told me. “So, emotionally, people wanted to get back their family properties, like their grandparents’ fields. I agreed with giving back these properties. But to give everyone a small plot without any cooperation, without any systematic assistance in the form of expertise, market organization, or logistical help? It provides emotional satisfaction but an unsustainable economic system that causes only problems for the families that got back their properties. Many investors bought up the small fields and created larger farming units. They sold the livestock and built industrial plants that make big profits but don’t provide jobs.”
Joining the EU brought a great deal of investment to Hungary. But the money didn’t necessarily trickle down to the village level. “Instead of reducing the differences between the regions with this EU money,” Harangozo explained, “we increased the differences. Those cities and areas where investment conditions were good — where they could create good projects and the financing was in place — they could use the EU money, make good investments, and create jobs. The economy started to grow there. Miskolc, for instance, grew a lot with EU subsidies. But in the territories surrounding Miskolc there is 50 percent unemployment. It’s totally hopeless, with no investments. Some money was available to renovate houses and repaint churches – in order to help mayors get reelected. But it was nothing like local economic development. That’s why this EU money created more social problems and more conflicts in society.”
Harangozo would like to see the rebuilding of the agricultural cooperative system in the countryside, but one that combines targeted assistance with market incentives. He’s not enthusiastic about the Fidesz government. But he’s happy that it is at least subsidizing social cooperatives. ”I have many problems with the policy, but it’s a positive thing,” he concluded. “For three years we were fighting for social cooperatives. I was personally pushing for it without success, and now the government is doing it. The problem is that it’s not taking place within a system. They are creating isolated social cooperatives that are not sustainable and that can continue only as long as the subsidies are flowing.”
We talked about the pervasive problem of corruption, the challenge of being in parliament when the ruling party has such an overwhelming majority, and why people in Hungary today are afraid to be honest about their political views.
When did you first get involved in politics?
I was a member of an organization fighting for students’ rights in the early 1990s. We formed institutions of self-government that hadn’t existed before. We were trying to change the behavior of schools to be more open to students’ rights. When I went to secondary school, we talked more about the situation of the country and the changes in political life, but we did this in small groups not in political parties. At that time, we were closer to Fidesz, because Fidesz was quite a small liberal party that was fighting for change. Fidesz was also very open to helping such student organizations to have power. At that time Fidesz was known in public as the youth organization of the Liberal Party, SzDSz. It’s nickname was also Jidesz, or the Jewish young people’s party.
From 1994 Viktor Orban started to change the basic line of Fidesz. I remember how he kicked out all the Fidesz leaders and welcomed back only who those who supported the move of the party to the right wing. From that time, I stopped working with Fidesz. Until 2000, I didn’t have a party. I just talked with a group of young people who were my friends and who were active. We tried to figure out what we should do. Eventually we figured out how not only to talk about our ideas but also implement them. We decided to create not an association but a platform in the Socialist Party. This was the Third Wave platform in the Party. The liberal democratic framework was the basis of our platform but most of us were also very sensitive to social issues. For this reason, it was obvious that we were social democrats. The Socialist Party was not a fashionable party for young people interested in politics. That’s why we created a platform. The Socialist Party was made up of an alliance of such platforms. We created a new one because we wanted to make social democratic politics in a different way. From that time, I became more and more of a politician.
First I became a member of the party board in Budapest’s First District, and that’s where I did local politics. When I went to university, I had a scholarship in Holland. It was a post-graduate course in politics. When I returned, I got a job in the prime minister’s office to help on the first national development plan. This was a framework for handling EU funds, and I was responsible for rural development and the economic development of the regions.
In 2004 when we joined the EU, the Socialist Party had to create its own list of candidates for the EU parliament. We had a quota for young people under the age of 35: it was 20 percent. Since we counted on 10 possible seats in the European parliament, the party chose two young people. I was one of them. I was chosen not because of my political experience, for I had only local experience, but because of my rural development expertise. I knew something about the problems with the structure of the EU subsidies, and I had clear ideas about how to change them to serve better Hungarian public interest. I was on the list behind Gyula Horn and also Laszlo Kovacs, who didn’t want to be a member and just wanted to lend his name to the party. Practically I was second on the list, and so I became a member of the European parliament. From 2004 when I became a member of parliament, I was a politician.
I want to go back to 1989 when changes took place in this region. Do you remember the fall of the Berlin Wall? Did it have any impact on you at the time?
I started my studies in secondary school in 1990. My parents were very open to political debates. During the Communist period, they always held meetings in our flat for friends who came for political discussions. It was kind of a hidden opposition among intellectuals and academics that were friends of my parents. I knew what was happening in the country, and I was really happy and amazed when we saw on TV that the Berlin Wall was falling. We were full of hopes.
I was in a lucky situation. I had relatives in West Germany and also in Holland. My father traveled a lot to West European countries and also the United States. I had some personal experiences in West Europe, and I heard many stories from my father about how life there was. We wanted to have the same life that we could see and hear about in those countries. We thought that this change would open the way for Hungary to become a modern European democracy where we didn’t have to have secret talks with friends about the political situation and where we could give our opinion on the street or on a TV show.
Your father was a professor?
No, he was an agricultural engineer. He had a joint venture company with a Dutch company. Before the changes in Iran, the United States had a project there to create the kind of rural management system that Hungary had before the changes in 1989, a system in which cooperatives and local market organizations created a whole system to provide jobs, education, and health care for rural people. The U.S. government asked my father to go to Iran to create a similar system. They worked for 1.5 years but then the revolution happened there and they couldn’t start that project.
Is your interest in rural development related to your father’s work?
Yes. When I was a child, we were living in Mezofalva, a village in Fejer country with a large state cooperative. I could see at that time that almost everybody in the village had work. Many Roma people were living there as well. They had jobs and lived in quite decent conditions. Everything was organized. The basis was agricultural production, but they also created a system of side businesses that produced machines. It was not so important for each business to make profit because the agricultural production could finance the whole system. There were also what we call social work jobs. The main aim was to create jobs for everybody. And this profitable system could finance the local education and health care. It created good living conditions for rural people.
After the changes in 1989, because of political decisions made without any economic reason, they destroyed this system and put nothing in its place. There is some profitable agricultural production in the countryside and some successful small businesses in some villages. But there are large areas that lack even the basic conditions to make market-economic type of investments. Because the human capacity is lacking, the resources are just not there for investment. Even if EU funds are available, there still isn’t the human capacity to create projects. So, there are no jobs or hope in these rural areas. But we have experience from the past of a system that worked well. I don’t say that we should go back to the former regime when human rights were abused. But we can still learn from positive experiences of the past.
Even though you saw this successful structure in the countryside, you early on affiliated with a very economically liberal party, Fidesz, which supported economic reforms that destroyed that system. Were you aware in the early 1990s that there was a conflict between the values of political liberalism and the challenges of economic liberalism for rural life?
There was a lot of pressure not only within Hungarian politics but from the United States and West European countries to stabilize Hungarian democracy. To achieve a stable democracy, as I see now looking back, they destroyed this system. They also wanted to encourage as much international investment as possible.
On the other side, in rural areas, many people who were living in these villages had very bad family stories about when they had to give up their properties to the state and then had to work in their own properties as employees. So, emotionally, people wanted to get back their family properties, like their grandparents’ fields. I agreed with giving back these properties. But to give everyone a small plot without any cooperation, without any systematic assistance in the form of expertise, market organization, or logistical help? It provides emotional satisfaction but an unsustainable economic system that causes only problems for the families that got back their properties. Many investors bought up the small fields and created larger farming units. They sold the livestock and built industrial plants that make big profits but don’t provide jobs.
When you were making the transition from Fidesz to the Socialist Party, were there other changes in your philosophy that took place? I’m interested in how your political perspective changed.
I believe that I didn’t change. Fidesz was the strongest opposition to the Hungarian Democratic Forum (MDF), which was the conservative party. When MDF disappeared, Orban saw the political potential to make a conservative people’s party. It was Fidesz that changed, not me.
You could have gone to SzDSz, for instance.
Yes. But I don’t believe in market liberalism. I believe in political liberalism. In Hungary there are four million people living below the minimum standard of living. In these circumstances, the state has to invest in the social economy. Classical social democratic policy can improve the country’s life. If we would do what the former Socialist government also did — create good conditions to boost the economy – the economy will grow and the resources for the state will also grow. These resources can help poor people or vulnerable areas. The current policy is simply not working.
Of course the Socialist Party did have eight years in government in the 2000s. What would you say were the achievements during that time?
Before I mention the achievements, let me add another comment. The former Socialist-Liberal government invested in vulnerable areas. It gave more points for projects implemented in the vulnerable areas. But if the basis for a market economy is lacking, I could give hundreds of extra points and promise double subsidies and still nobody would go there and build a factory in those areas. Learning from the past, the state has to do more than just make discrete investments. It has to create a system that makes those investments economically feasible. This is what is totally lacking from the last 20 years.
Even when the Socialist government was in power, it didn’t do that.
Did they try?
No. The former leaders believed in the neoliberal economic model. They wanted to create good circumstances to boost the economy. They thought that this would create jobs. Yes, it created jobs. For example, when we started to get EU subsidies, a lot of money came to this country. But instead of reducing the differences between the regions with this EU money, we increased the differences. Those cities and areas where investment conditions were good — where they could create good projects and the financing was in place — they could use the EU money, make good investments, and create jobs. The economy started to grow there. Miskolc, for instance, grew a lot with EU subsidies. But in the territories surrounding Miskolc there is 50 percent unemployment. It’s totally hopeless, with no investments. Some money was available to renovate houses and repaint churches – in order to help mayors get reelected. But it was nothing like local economic development. That’s why this EU money created more social problems and more conflicts in society.
Yes. This can kill solidarity in society. The people who are living in these poorer areas, they don’t think they’re any worse than people living in successful cities. But they see that they don’t have a job even if they have a university degree or a good profession. That opens the door to scapegoating, to Fidesz blaming all the problems on banks and multinational corporations because they make extra profits and there are still no jobs in the localities. Or people will say that the Roma don’t want to work and are parasites. This is very dangerous. When the current government blames problems on multinational corporations and people who don’t want to have a job, it’s quite a widespread feeling. But we have Jobbik as well, which says that it’s the Jews who own the banks and the corporations, and the Roma people who don’t want jobs. Anti-Semitism and racism existed before as well. But it was a hidden thing. If some people had these thoughts, it was shameful and they did not talk about it openly. But now everything is loudly expressed. If you go to rural areas, this is the main topic.
Do you think there were any achievements for the Socialist-Liberal government?
There were achievements. For example, in the higher educational system far more students could go to university. People who have university degrees are more flexible, and the economic changes are less painful for them. Significantly increasing the places at the universities was an important achievement.
There were also many investments in agricultural production, which became competitive even though the general structure is not the best. Agricultural products are now one of our biggest exports. In the early 1990s, agricultural production dropped sharply as the big cooperatives were destroyed and all the machinery was not used any more. Our agriculture was very competitive before the changes, but it fell on hard times for several years. We invested a lot into this area, and now it’s working.
Also, we had achievements in the cultural field. If you look at Budapest cultural life, it was very lively and very liberal and open to everything and of very good quality. Everyone could find what she or he was interested in.
These days corruption is a big topic — with Fidesz today around cigarette concessions — but also with the Socialist -Liberal government. How did you deal with that issue as a politician?
I think corruption is one of the biggest problems in Hungary. But it’s not just political corruption. Business plans often included calculations of how much had to be paid – and it wasn’t just to a corrupt decision maker. For example, EU subsidies didn’t provide 100 percent of the financing. So, investors started to be creative in increasing the costs to make financing their projects easier. This behavior took a lot of money out of real investments. The amount of money taken away from real investments because of this kind of game could have financed a very good health system.
In the time of the Socialist-Liberal government, there were some people who engaged in some political corruption. There were accusations, at least, though no proven cases. But anyway, there were some individuals who were corrupt. What’s different now is that the whole system is built for corruption. The government doesn’t hide it. They want to show people that if you are a Fidesz supporter we will give you what you want. If you are not with us — and you don’t even have to be in the actual opposition — then we will take away your opportunities.
You can see this happening with the land leases. The secretary of state Jozsef Angyan resigned from his position over this issue because he no longer wanted to assist with what was happening. Everybody knows these stories, and the government doesn’t refute them. They just say, “If you can prove it, then you should go to the judge or to the police.” But they don’t say that it’s not true. I did go to the police. Everyone was saying that Fidesz members of parliament were given the leases to land by the authority that chooses the winners of the tenders, the National Land Management Organization. We went to the police with this case. The police rejected the investigation. They said the decision was made not by the Fidesz parliamentary members but by the employees of the office. Since this office is not a legal entity and the employees are not legally employed, therefore it couldn’t be a misdemeanor committed by an official legal person. The police didn’t say that there wasn’t a case. They said that the decisions were not made by legal persons. So, this is a change in the quality of corruption.
The opposition doesn’t have much power in parliament. Is there anything you can do in parliament other than complain about government policy?
Not really. We can organize different kinds of events where we meet people. We can also go to the media. But it’s not so easy because there is one nationwide TV station where opposition members can go and speak. When I go there, first there is a long video that explains to the viewers the situation. This creates the framework for the report, and then I can have four minutes. And the government can have four minutes. And then an expert loyal to the government can have four minutes. And the other party loyal to the government can have another four minutes. I decided to be as tough as possible in these interviews, but it’s not easy. To reach the media, we could be more creative and create surprising events. Politics Can Be Different (LMP) has organized a lot of this kind of events. They can get media coverage, but the voters didn’t take them seriously. The Socialist Party would like to show that we are ready to govern the country, so we have to be serious.
Is there any possibility of working with Fidesz on an issue-by-issue basis, like rural development?
I have some good personal relations with responsible Fidesz members on this issue, for example the Fidesz member responsible for social cooperatives. I can influence him. But if I table something in parliament, they would never support it. But sometimes if I table something that they don’t formally support, a Fidesz member on the committee responsible for the issue would table an amendment with the same content. So yes, we can achieve something in this way, but only through personal relationships. It’s better to conceal this relationship. If I held a press conference about it, they would probably decide not to follow through.
Has there been anything good to happen in the last two or three years on rural development?
Yes, for example, the government started to subsidize social cooperatives. I have many problems with the policy, but it’s a positive thing. For three years we were fighting for social cooperatives. I was personally pushing for it without success, and now the government is doing it. The problem is that it’s not taking place within a system. They are creating isolated social cooperatives that are not sustainable and that can continue only as long as the subsidies are flowing.
The government wanted to create a new land law. With different kinds of tools, they wanted to kill small and medium-sized enterprises that had formed out of the former cooperatives. In Hungary, many of these enterprises are involved in livestock management. The government wanted to take away the land from these companies. If they do this, the animals won’t have any feed. In this way, they wanted to destroy these companies. We’re hoping that the government will change its mind and leave some land for these companies. It won’t be as much as they need, so half will close. But at least not all of them will.
You mentioned the difficult situation for Roma, many of whom live in rural areas. What can Hungary do to improve their living standards?
I think we have to create a local economic development program for the vulnerable areas. If you look at the map of Hungary and the most disadvantaged areas from a regional development point of view — areas that are lagging behind because of bad roads or bad infrastructure — and then on the same map you look at the poorest villages and the villages where most of the Roma population live, the two maps will exactly coincide. General programs that help Roma or help poor people are important, but they can’t change the situation because these programs only help with a few families. You have to improve the vulnerable areas with local economic development. And it’s not enough to create a social cooperative to produce something. You have to create an area-based organization that can provide expertise, organize the market, and help out with the logistics. Before the changes in 1989, there was an institution in Hungary where everybody could take their produce, whether it was half a pig, some salamis, or 20 eggs — this company collected everything. They selected, they made the necessary arrangements, and they took the produce to the market. They had their own shops. Today you don’t need your own shops, but you need an organization that can help organize the market. There is a demand for such services. If the government creates such an institution and provides economic subsidies, we can help create jobs.
The other important thing is to create these side businesses next to agricultural production. Then we can say to the agricultural companies that they need to employ a certain number of people per 100 hectares. If they have livestock, that creates a lot of jobs. If they don’t, they can get subsides to create a side business with employees. We have to use these new creative tools to create jobs in the vulnerable areas. This is crucial for Hungary. The country is already fragmented.
You have very little parliamentary power. You have little access to the media. The elections are next year. How can you possibly win?
First of all, we have to create a situation in which there is only one candidate from the democratic opposition in each electoral constituency: one from Fidesz, one from Jobbik, and only one from the democratic opposition. Almost 70 percent of voters are not satisfied with the current government. They still don’t know who to vote for in the next election, but they don’t like the current government. So we have to create a clear option for those who want change. That will require an agreement with other opposition parties around one candidate.
The other thing we are doing in each constituency is to create a multi-tiered marketing arrangement. We start with our party members. We ask our party members to involve their friends who are left-wing supporters or open to leftwing politics. We invite them to meetings. These are not party meetings. They’re not publicized through the media, and journalists are not invited. It’s only for individuals and families, and we try to reach as many people as possible. In my constituency, for instance, we started one month ago with 20 people. I have 71 villages in my constituency. The first meeting will cover 11 villages, and 60 people will come to that meeting. This was based on the contacts of three of the first 20 activists. So, we’re trying to reach people personally.
And you think you can win?
I do believe that we will win. When I have discussions with people in my constituency, they are always saying that they don’t understand the public opinion polls. They go to the pub and no one supports the current government. So, nobody knows where the people are who support Fidesz.
There’s a lot of fear out there, and people are not responding honestly to public opinion pollsters. If you remember, on the day of election in 2002, when the exit polls came out, Fidesz had a 7 percent advantage. There was only one public opinion firm that said that the Socialist Party would win, because they counted in the fear factor. According to their calculations, there was an 8 percent difference between what people said and the real results. And they were the only ones who were right. And now the fear is far far greater because of thetrafik case and the land-lease case. When the government fired many civil servants and local employees, they didn’t hide that they were fired because of their political views. In 2010, the government passed a law where civil servants could be fired without any justification. They created another law that said that in the case of public employees, the state is entitled to undertake investigations into their private lives, including those of their family members.
They show to the people that the government knows what they are thinking, what they are saying to their colleagues and their family members. The government is saying that it has the right to listen in on your phone conversations. So, people are afraid to be honest. In Somogy county, many of my party members told me that when a public opinion poll company called them, they said, “Of course we support Fidesz.” When we collect signatures, they say, “Gabor, we fully support your initiative and we will support you in the campaign. But don’t ask me to sign any paper.”
Budapest, May 13, 2013