With barely a year until what looks to be a tight election in Hungary, the government is shifting considerable amounts of public assets away from the state and into foundations. The goal could be to sustain Viktor Orbán’s “System of National Cooperation” (NER) should he lose the 2022 election. EURACTIV’s media partner Telex takes a closer look.
Last week the Hungarian parliament passed a bill that transferred 70% of the country’s higher education assets to foundations.
The bill’s wording made clear the objective to ensure the foundations’ independence from whatever government may be in power.
With the 2022 general elections coming up next year, the move could ensure that Prime Minister Viktor Orbán’s Fidesz can maintain important positions even in the event of a defeat.
Outsourcing the state’s responsibilities
As a first step following the law’s adoption, 32 public interest asset management foundations that will be carrying out public functions will be able to begin operations.
In addition to institutions of higher education, foundations will gain possession of mansions, resorts, ports, parks, estates, a theatre, clinics, and shares in a series of companies.
The foundation-based structure outsources activities related to education, culture, healthcare, agriculture, and memory politics away from the state.
The main point of the move is that the state assets handed over to these foundations will no longer strictly be considered public capital. Instead, trustees appointed by the current government will administer the funds and also receive founder rights.
Further, the law prohibits the revoking of this provision, and most regulations governing the operation of the foundations can only be amended by a two-thirds majority.
The move come as parliament passed another bill in line with the trend of slimming down the state.
A new Supervisory Authority for Regulated Activities will oversee the tobacco trade, the gambling market, judicial enforcement, the register of liquidators, as well as concession-related tasks. The implication of this last item is that the Concession Council would also operate under the new authority.
As with the Media Council and the Energy Authority, the president of this institution is appointed by the prime minister for a nine year term.
Funds needed to keep NER afloat
According to commentators, the precursor to the government’s moves date back to the end of socialism in Hungary in 1989, when the technocratic elite of the late Kádár period managed to salvage their influence and continue to hold onto important positions for decades.
This is allegedly what led László Kövér, now Fidesz speaker of the national assembly, to the conclusion that “we were in the government, but we weren’t in power” following the first Fidesz administration of 1998 to 2002.
According to this logic, Orbán’s goal may be to make things more difficult for the next government, should it be led by the current opposition.
It may also be to maintain the network that has been loyal to him and his party, at a time when the streams of funds keeping NER alive would be largely blocked off.
The Fidesz leaders on the boards of trustees of the public foundations – who currently hold important positions in the administration as ministers and state secretaries – would be given lavish salaries.
NER’s operations are costing a pretty penny. For example, the media holding company composing hundreds of publications loyal to Orbán, managed to generate billions in losses in 2019 despite the seemingly endless stream of state advertisements.
The financial motivation is conspicuous also because while state universities were subject to the public procurement obligation, the universities that are switching to the new management model are exempt from it, increasing corruption risks.
Opposition sees hope
Regarding the universities, opposition deputy speaker of the parliament, Koloman Brenner, said that a foundation-based structure is not intrinsically wrong. Beyond Hungary’s borders, large universities offering comprehensive education programs are all supported by the state because this is the only way they can maintain their extensive research and education portfolios.
Jobbik’s representative on educational matters pointed out that it was university senates themselves that had decided to switch to the foundation model and that they would still be able to request returning to a state-supported model in the future.
However, opposition politicians have raised two areas of concern with the privatisation of higher education. One is that the board of trustees, which is appointed by the current minister, can choose to stay in place practically for life.
The other is that the switch back to state support does not happen automatically even if the university senate elects for that option. It requires approval by a two-thirds majority in parliament.
Although the boards of trustees have fairly extensive authority over the institutions, the Higher Education Act can be modified with a 50% majority. With this, it is relatively easy to ensure the enforcement of student and teacher rights by such legal safeguards, said social-democrat MP Gergely Arató.
If the government changes hands, a variety of techniques would be available to restore university autonomy, but the Democratic Coalition (DK) politician did not wish to elaborate further so as not to show the party’s hand to the current administration.