Hungary and Eastern Europe Not Doing So Well Under EU; Regulations Crater Traditional Businesses!
Bicske, Hungary, September 3rd, 2015, refugee camp.
SPECIAL PROJECT. EUROPE'S CHOICE TODAY
The elections to the European Parliament will be held at the end of May. They pay special attention to them in Hungary. There are many movements in the country whose attitude to the EU's policy is critical. This distrust is mutual.
Ekaterina Sanders will now report on why Hungary has displeased the EU in her special report which is a part of the project Europe's Choice.
Asotthalom is a small settlement a few miles away from the Hungarian-Serbian border. It's in the southernmost part of the EU. There are 4,000 residents who are mostly farmers. The tiny town, or its head, to be exact, Laszlo Toroczkai became world-famous for building a 105-mile barbed wire fence with surveillance cameras, motion and heat sensors installed on it at the border with Serbia. The mayor decided to fence the town off from the neighbors after refugees began pouring in from the south through Asotthalom. At some point, the lack of a guarded border there made migration chaotic.
Laszlo Toroczkai, Mayor of Asotthalom: «In September of 2015, 9-10 thousand migrants would go through our town per day. They roamed the main streets without any control, bothered the public, interrupted our way of living».
Mr. Toroczkai who lives a mile away from the border zone saw his town resembling a transfer point more and more every day, a transit zone for refugees heading to inner Europe.
Laszlo Toroczkai: «There was terrible lawlessness here. I'm sure that it's an international criminal network having connections in Turkey, Italy, and Serbia. For example, in Syria, they handed out leaflets to migrants which contained addresses in Asotthalom where smugglers, for example, gathered and waited for them».
The mayor recorded a video address to migrants calling upon them to keep away from Hungary and Asotthalom. The video had a few million views and is still popular on the net.
Laszlo Toroczkai: “If you're an illegal migrant and want to get to Germany, the shortest way is through Serbia and Croatia. Hungary is a bad choice. Asotthalom is the worst.”
First, the locals tried to restore order in the town themselves by catching those who violated the border. But neither militiamen nor the police managed to stop the migrants.
Shandor Had, guard: «If a family with small children came, I could spare them. But 90% of those whom I saw were young strong men. Of course, I didn't have pity for them. They had their big iPhones, looked for a point where smugglers were to meet them on the map using GPS. I had no pity toward those people».
The fence stopped the illegal flow but opened a Pandora's box and caused another wave of indignation from Brussels. It already reproached Hungary for its overly harsh migration policy. However, official Budapest isn't ready to surrender.
Zoltan Kovacs, State Secretary of the Hungarian Government for International Relations: «As for this issue, we rely on common sense and our experience. We saw what happened at the Hungarian borders in 2015. We see what's going on at some European borders where the only way of migration is illegal migration. We think that these processes should be stopped. I mean not only illegal migration but the population of Europe with migrants. We should do more for our citizens and try to provide them with every opportunity for development».
Hungary looks like a loveless child comparing to other EU countries. The policy of its prime minister Viktor Orban raises too many questions from Brussels. Violations of the principles of democracy, human rights, and rule of law are the main claims of the EU. They should impose sanctions against rebellious Hungary, decided the MEPs last autumn. The majority voted in favor of that initiative.
Zoltan Kovacs: “In the last 8 years, the European Commission has had lots of claims against Hungary. But to some extent, we think that it's natural. If opinions differ, this can be solved in a certain way in the EU by legal means. And we have no problems with that. But it's a different thing when they attack Hungary politically, when someone criticizes us based on the difference in our political position. We respond to such political attacks in a political way. We think that the situation with the rule of law, freedom of the press, and the governance of courts in Hungary complies with the European standards.”
Hungary joined the EU in May of 2004. They launched fireworks. The country said goodbye to a bachelor's life and celebrated the beginning of a new union. From then on, they shared everything — currency, markets, important political decisions. Of course, they didn't expect that joining the EU will bring wonders. But they didn't think that shortly after that, there'll be skeptics emerging in the country regarding those common things, which resulted to be a political burden on the Hungarian national identity.
This is a famous Hungarian wine of 5 varieties of grape. This is a trademark of the Eger wine region and a taste which Soviet buyers are familiar with.
Silard Kishsh, winemaker: «The cherry taste will develop. It's a good full-body wine. It stimulates the receptors on both sides».
In the times of the USSR, dozens of millions of bottles of red and white wine from Hungary were sold in the Soviet republics per year.
Silard Kishsh, winemaker: «In the times of the USSR, we supplied wine from Tokaj and Bull's Blood from Eger, first and foremost. We supplied about 30 million bottles, 8-10 millions of which were from the Eger region — Bull's Blood».
Silard Kishsh is the owner of a wine-producing business. He has 250 acres of vineyards in two regions of Hungary — Tokaj and Eger.
Silard Kishsh, winemaker: «I started dealing with vineyards in 2002. I bought them, my employees worked there, and I sold wine to Russia, first and foremost».
Silard has long relationships with Russia. He studied Russian in a secondary Hungarian school for 8 years. And when it was time to choose a university, he decided to go abroad. He entered the Timiryazev Academy in Moscow.
Silard Kishsh, winemaker: «I graduated from the academy in 1991. In addition to two diplomas, I stayed there to work. And I worked in Russian-Hungarian trade all the time».
For several years, Mr. Kishsh was an attache for agriculture of Hungary to Russia. But now, he retired from civil service. He's living in his homeland and doing business.
Silard Kishsh, winemaker: «You can see it starting to bloom. The leaves are appearing, and it'll begin to bloom soon».
This vineyard in the Eger region is 50 years old. Its harvest was used to make wine for Soviet republics. But the scale isn't like before, Silard says. Every spring, they trim off sprouts so that the vineyard doesn't produce more harvest than they can realize.
Silard Kishsh, winemaker: «We trimmed these trees a couple of days ago because it's very important to control the harvest. We shouldn't have more stems because we should plant not more than 11 pounds of grape on one tree».
The collapse of the USSR and the subsequent joining of the EU radically changed the market. Comparing to the best times for the industry, the export of wine has fallen by about 10 times.
Silard Kishsh, winemaker: «I think that Hungary now supplies 2-3% of import wines supplied to Russia. It's a total of 2-3 million bottles per year».
After it joined the EU, Hungary had to align its business, and not only wine-producing, with the common European standards. Among other things, there was a limit on the number of vineyards in the country. Some wine producers clear-cut their vineyards to comply with the new standards.
Silard Kishsh, winemaker: «When we joined the EU on May 1st, 2004, there were strict checks prior to that. They checked how many vineyards there are in Hungary. There were about 250,000 acres. They did so that we couldn't plant more grape. As of now, we don't exceed this limit».
Beekeepers were among the first affected by Hungary joining the EU. Honey makers expected that new rules will facilitate export and let them sell more. But it turned out to be the opposite. In 2004, the export of Hungarian honey to the EU countries fell by 50%, comparing to the previous years. Purchase prices of Hungarian honey decreased almost two-fold. As a result, producers couldn't compensate for their expenses.
Laszlo Nad, beekeeper: «When joining the EU, Hungary had to shut down a few sugar refineries. Honey producers were also affected. That's why we say that we need to create a system in the EU which gives equal opportunities and doesn't kill particular industries of a country».
Laszlo Nad has a bee yard of 200 bee families which produce up to 10 tons of honey per year. It's considered to be a small business in Hungary.
Laszlo Nad, beekeeper: «Hungary sells its acacia honey, first and foremost, in the international market. It's liked and appreciated everywhere. It's of very high quality».
Laszlo sells his products both in the domestic and external markets by giving the honey to major Hungarian exporters for them to sell it.
Laszlo Nad, beekeeper: «I produce honey in the settlement of Pustosobac. I travel all over the country with my bees. This lets us produce more than one variety of honey».
Laszlo says that the EU regulates honey supplies by quotas. It means that Hungary can't export more than a particular amount, which restricts foreign trade.
Laszlo Nad, beekeeper: «Each EU country protects its honey markets and its products. That's why quotas appeared. Everyone protects local honey and local bees. It isn't bad, but the abuse of it can pose a threat to production. Quotas are set by territory and economic indicators. There are economic interests behind it, first and foremost».
The EU foreign policy didn't also make Hungarian businessmen more optimistic. Anti-Russian and counter-sanctions considerably affected big enterprises.
Balazh Domian, head of production: «We're in the workshop where semi-finished products are being made. We make breaded products here. First, we stuff a turkey with ham and cheese, then bread it. After it, we bake it».
It's the biggest full-production-cycle turkey processing factory in Hungary They process about 40,000 tons of poultry per year, which is almost half of the country's market for it.
Balazh Domian: «Our firm will celebrate its 30th anniversary this year. We've been constantly developing. For 10 years out of 30, we built relations with Russia. The last two years were the most successful. The Russian market accounted for 10% of our production. So, it's 3 million euros of proceeds».
They supplied turkey legs and various semi-processed products, such as smoked breasts, spreads to Russia. Trade relations were severed because of the sanctions and counter-embargo. Balazh Domian says that the Russian market was closed for them literally in one day.
Balazh Domian: «We very much regret losing the Russian market because of the anti-Russian sanctions. It's a political decision the consequences of which market players face. When the sanctions were imposed, our economic relations with Russia flourished. It was the climax of it».
Businessmen now maintain relations with their Russian partners, monitor the development of the market, and want to return if they have such an opportunity.
Balazh Domian: “We hope that the sanctions will be lifted. It's beyond our duties but we try to maintain contact and further explore the market. Unfortunately, we see that Russian enterprises substitute imports more and more and build their own market.”
The food issue is one of the most difficult not only for Hungary. Thus, there was a big scandal about the quality of imported goods not long ago. It turned out that the quality differs seriously in Western and Eastern Europe despite the European market which is supposed to be common.
Zoltan Kovacs: «Big producers supplied products of lower quality to the Eastern market, comparing to the Western one. Of course, we should put an end to those double standards».
The Hungarian Food Safety Office compared 24 identical items in different countries and concluded that for Eastern Europe, unlike for Western, producers economize on quality ingredients, substituting animal fats with vegetable oils and sugar with artificial sweeteners, for example. Consumers began to talk about food discrimination.
Zoltan Kovacs: «The EU institutions first denied this phenomenon. Then, it turned out that it exists. And it was the European Parliament that imposed a ban on double standards in the food industry and adopted a single quality standard in all of the EU countries. De facto, it's a recognition of the fact that it was different before».
Ishtvan Adlozo: «Old postcards help us restore the history of the town of Gyor. We know that it was always a trade town. The majority of its population made their living by selling crops».
Ishtvan Adlozo is one of the keepers of the archives of the Hungarian town of Gyor. He's long been studying and restoring the history of that border settlement with the help of old postcards and other documents which have been kept here since the Middle Ages.
Ishtvan Aldozo, deputy director of the archive of Gyor: «The late 19th century was a turning point in the life of Gyor. They built a railroad here, which facilitated trade. This postcard shows it».
When the railroad appeared in the town, the industry began to develop rapidly. In the late 19th and early 20th centuries, a number of big plants were opened. They produced carriages, textile, leather. Later, in the era of wars, they built arms plants. It all is reflected in postcard views.
Ishtvan Adlozo: «The tannery was built in 1905. We're in its territory. We see that it doesn't exist anymore. Only one remaining pipe over there reminds of it. The enterprise worked until 2008 and was closed partly because of the crisis and partly because Hungary joined the EU which introduced production quotas».
They built a shopping mall in the place of the former plant. Some of the workshops were turned into residential property. But the majority of the facilities are abandoned. Some former town-forming enterprises now also look like this.
Ishtvan Adlozo: «We're in the former industrial center of Gyor. Since 1896, there was the biggest plant in the town — a car building plant. Unfortunately, there's a shopping mall here now. The plant's territory extended to those buildings. Now, they're empty. Those plants increased their outputs after WWII when Hungary obtained Soviet markets. The decline began after the political system changed in 1989. But the real crisis happened in 2004. On the one hand, when joining the EU, Hungary signed an agreement to shrink the manufacturing sector. On the other hand, we had to open our markets to the EU countries, and Hungarian goods turned out to be non-competitive».
The employees of the Ikarus factory long lived in this borough on the outskirts of Budapest. Houses occupy a few quarters and end at the entrance. Up to 70,000 people worked at the factory in the best of times. They made 60 buses per day and worked in two shifts.
Pal Shimon, entrepreneur: «Our buses were bought in any place in the world — in Malaysia, Colombia, the USA, Canada. And they bought a lot. I was very happy and proud to see it. The USSR was our main partner. 260, 250, 280 Ikarus models were bought in huge quantities. I went to Ulyanovsk, Moscow, and Leningrad. Our buses were everywhere».
«Of course, you recognized these great buses. They're made at the Ikarus factory in Hungary».
Pal Shimon began to work at Ikarus when he was a teenager, in the mid-60s. He remembers that they assembled only one bus per day then. But the factory rapidly increased its capacities. It prospered in the 70s and 80s and suffered a crisis in the early 2000s. Buses became unnecessary. Ikarus went broke, and employees were fired in one day.
Pal Shimon: “I was deeply shocked for three months. I stayed home and didn't know what to do. I thought I would work at the factory until I retire but it didn't happen. I didn't leave it. The factory left me.”
When Hungary joined the EU, they expected new investments here and the restoration of serial production. Instead of it, new players came to the market — large automakers in Western Europe. Here's the territory of the enterprise that used to be one of the leading ones in Hungary.
Pal Shimon: «In the territory of the factory, there are workshops of 400,000 square feet. Nobody can use them. It's impossible even to rent them out. Many facilities are empty».
After being fired, Pal couldn't find a job for a long time. As a result, he started to do what he liked as an entrepreneur. He gathered a team of his former colleagues, invested his money in the opening of a workshop where they repair and restore buses, rented a hangar in a former facility of Ikarus.
Pal Shimon: «This is the biggest workshop of the remaining. My partners and I rent it. I had to buy these cranes. 35 employees now work for me. But this number changes. I had 100 employees when we made buses. Now, we restore 3-4 buses per month».
The pride of Pal is the trolley bus which he restored from scratch. It's a rarity. Stalin gave it to Budapest on the occasion of his 70th anniversary.
Pal Shimon: «There was a portrait of Stalin here on the first trolleybuses that arrived in Hungary. The Hungarian flag was here, and the Soviet flag was here».
There were no trolley buses in Hungary at all. In the memory of such a gift — Moscow sent 50 vehicles — they were given numbers which began with 70. By the way, there aren't still smaller numbers. Pal Shimon restored one of those trolley buses using a photo.
Pal Shimon: «We had only the frame of it and, in fact, we had to restore everything. These are new sections, we made them. And these nails are decorative. We were afraid to fix it with nails. We welded iron sheets together but restored the nails so that it looked beautiful. There are 400 nails on each such trolley bus. This trolley bus is 90% genuine».
Pal hopes that he'll continue to receive orders and be able to stay in the market. But he doesn't expect for his favorite Ikarus to revive.
Pal Shimon: «As far as I know, this land is now owned by a US-Israeli entrepreneur. They bought it from the last Ikarus's owner 15 years ago. There wasn't a rich businessman in Hungary who could buy the factory and develop it again. Foreigners bought our market and flooded it with their buses. That's it».
Until recently, the owners of the brand name dealt with one-off production of buses. Last year, there was news that they wanted to recommission Ikarus, launch serial production of new models, with the help of Chinese investors.
There's Serbia on that side of the fence. There's Hungary on this side. From here, one can very well see their neighbors' fruit trees blooming. And there's only an empty field on the Hungarian side.
Laszlo Toroczkai, Mayor of Asotthalom: «You see, in the Serbian territory behind the fence, there are blooming orchards everywhere. There are apple orchards, first and foremost. They supply those apples to Russia in particular. And you can see that orchards disappeared on our side».
The fence that stopped the flow of illegal migrants through the Hungarian town of Asotthalom drew a physical border of the EU and clearly showed the difference in market approaches.
Laszlo Toroczkai: «The EU didn't aim to help but only to make us buy its garbage — goods of poor quality from the West. And the funding by the EU was aimed at making our fields empty so that there are more forests. There have become many more forests but not farms after it joined the EU. In addition to it, we lost markets. The Russian embargo affected Hungarian producers a lot».
Laszlo Toroczkai used to be a member of the Hungarian far-right party Jobbik. It's the party which took to the rally against the country's membership in the EU in Budapest in 2012. Protesters were dissatisfied with the conditions which the EU imposed on Hungary in exchange for financial help. The Jobbik party considered them to be an attack on the country's independence. Protesters burned the EU flag and demanded a referendum on Hungary's withdrawal from the EU.
Now, the mayor of Asotthalom withdrew from the Jobbik party and created his own movement, Our Home. As a representative of right-wing radicals, Laszlo Toroczkai will run for the upcoming elections to the European Parliament.
Laszlo Toroczkai: «I'm in politics not to accept the status quo. Those slowpokes in Brussels want to destroy the European culture. I call upon Europeans to choose candidates who replace the Brussels establishment because otherwise, it'll lead to anarchy in Europe and there'll be economic consequences. I want to change it, so I run for the elections to the European Parliament. I hope that similar voices come up in other countries».
After the scandal with migrants, Laszlo Toroczkai became world famous. And his radical decision to fence off from refugees was supported by the government and a big part of the Hungarian community. The mayor of Asotthalom expects to use this popularity as an advantage over his right-wing rivals — the Jobbik party — and the representatives of the Hungarian Civic Alliance Fidesz which is in power in the upcoming elections to the European Parliament.