Monthly newsletter Hungary – January 2023
Compromise on EU funds for Hungary
As the Czech Presidency announced on December 12, a fundamental agreement was reached in the dispute over EU funds for Hungary. On the one hand, the Hungarian government gave up its veto against the billion-dollar EU loan for Ukraine and against a global minimum tax, and on the other hand, the Hungarian reconstruction plan was approved by the member states. The disbursement of the money is linked to the fulfillment of a catalog of 27 demands, which cover the areas of combating corruption, competitive public procurement and the independence of the judiciary. Furthermore, a compromise was reached regarding the payment of Hungarian EU funds. This now stipulates that instead of the previous 65 percent of the funds from three EU sub-programs, only 55 percent should be frozen. This would mean a reduction from 7.5 billion to 6.3 billion euros. This means that Hungary would have 1.2 billion euros more available than planned. The remaining funds from the programs would be made available in full to the Hungarian government if the remaining reforms are fully implemented within two years. However, the released amounts of money are currently only theoretically available to Hungary. The governments of the member states must conclude a so-called partnership agreement with the Commission, in which expenditure is divided according to purposes and operational programs. Such a budget agreement is still pending with Budapest. In an interview at the end of December, the Hungarian Chancellery Minister Gulyás was optimistic that part of the suspended money would be released in the next few months. A majority of the 27 demands have already been met and the negotiations with the Commission are very constructive.
Hungary 2023 – what will change in the new year
With the new year comes some new changes for Hungarian citizens. In July last year, the Hungarian National Assembly decided to rename the administrative names of the counties and the government representatives in the counties in historical reference. This change will take effect on January 1, 2023. The counties (formerly Hungarian megye) are now called castle counties (vármegye). The Fidesz parliamentary group leader Máté Kocsis justified the change in the basic law as follows: “The reintroduction of the word “vármegye” in today’s Hungarian legal system ensures that the constitutional traditions of the thousand-year-old Hungarian statehood live on in this form.” The basic territorial units of Hungarian administration since the founding of the state were the castle counties, which were renamed counties when the communists came to power in 1949. In this tradition, the representatives in the counties appointed by the government have been called Obergespan (főispán) since July 28, 2022, an administrative term from the Kingdom of Hungary that was in use between 1526 and 1950 and was also abolished under communism.
In view of ongoing inflation, pensions will be increased by 15 percent and the minimum wage by 16 percent in 2023. The average pension increase will be 27,000 forints (approx. 67 euros), and the minimum wage will be 232,000 forints (approx. 578 euros) gross. The latter will affect around 200,000 people. The guaranteed minimum wage for those who have completed vocational training rose by 14 percent to a gross amount of 296,400 forints (739 euros), which in turn affects 730,000 employees. Food prices rose by 43.8 percent in November compared to the previous year, and household energy prices rose by 65.9 percent. The average increase in consumer prices compared to November 2021 totaled 22.5 percent, reaching a new high after inflation had already reached 21.1 percent in October.
Furthermore, from January 1, 2023, young Hungarian families will be relieved: from now on, mothers under 30 will be exempt from income tax (15 percent). Another innovation affects Hungarian drivers. From now on, vehicle owners can leave their driver's license and vehicle registration document at home. This administrative offense has been deleted from the law; thanks to the electronic verification by the police, there is no longer any fear of fines. However, this only applies to people with a Hungarian driving license and Hungarian vehicle registration. In addition, the toll prices were adjusted. While the prices for annual vignettes rise by a relatively low five percent, monthly or 10-day users face surcharges of up to 71 percent. Not only did Hungary's neighbor Croatia recently join the Eurozone, but also the Schengen area. As a result, border controls on the 344 kilometer long Hungarian-Croatian border will no longer be necessary and the border fence there will be dismantled.
Green electricity deal between Hungary and Azerbaijan
In order to promote Hungary's energy diversification, Prime Minister Viktor Orbán signed a contract on the import of electricity from Azerbaijan via Georgia and Romania to Hungary on December 17 in Bucharest together with the Azerbaijani President, the Romanian Prime Minister and the Georgian Prime Minister. Commission President Ursula von der Leyen and Romanian President Klaus Johannis were also present at the signing of the contract.
The plan is to build a line through the Black Sea, which will be the longest underwater power cable in the world with a length of almost 1,200km. The imported electricity should primarily come from sustainable sources, such as the wind power plants currently under construction in the Caspian Sea. Orbán stressed that the European Union is in a strategic vacuum in which leaders must ensure that economic and energy security is guaranteed in their countries.
According to Orbán, the era of European economic history in which Europe imported cheap raw materials and energy from Russia in exchange for Western technology has come to an end. The solution is to find new energy sources for Europe. “For more than a decade, I too have had the experience that the European Union can always count on Azerbaijan as a reliable partner,” he added.
Census results in Romania: over 1 million Hungarians
The Romanian Statistics Office has published preliminary data for the 2022 census. According to the figures, the Hungarian ethnic group in Romania has declined significantly over the last decade, not only in terms of population size, but also in terms of share of the total population: according to the data, the largest ethnic minority in Romania now numbers only 1.002 million, compared to 1.22 million ten years ago.
Current survey
According to an opinion poll by the anti-government IDEA Institute in mid-December, support for Fidesz is stagnating. At the beginning of November 2022, a representative survey by the IDEA Institute showed that, despite the economic crisis, support for the governing party had increased to a stable 52 percent compared to previous months. The current survey, on the other hand, describes a decline from 5 percent to 47 percent among safe voters, although, according to pollsters, statistical errors cannot be ruled out. On the opposition side, there was only minor voter movement compared to the previous month, according to IDEA figures.
The largest opposition party remains the Democratic Coalition (19 percent), followed by the far-right Mi Hazánk Party with 10 percent support (+1), the highest ever recorded for this party by IDEA. Momentum has 6 percent, Jobbik and the Party of the Two-Tailed Dog each have 4 percent, the Hungarian Socialist Party, which used to provide prime ministers, is on par with Párbeszéd, the green party of Budapest Mayor Gergely Karácsony, at just 3 percent.
To the source:
The German-Hungarian Institute for European Cooperation is intended to provide a forum for academic, scientific and political dialogue between Germany and Hungary and to familiarize decision-makers and interested specialist audiences from both countries with topics, debates, processes, thought patterns and ideas from the other country. The aim is to achieve greater understanding, communication and constructive cooperation by objectifying the German-Hungarian discourse and thus renew our Europe together.
We would like to support this goal and publish excerpts with the kind permission of the authors. The complete issue can be found here as a PDF. The institute's website you can reach here.
