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Tamas Dezso Ziegler

Explore the conflicts between nationalism and the single European market in Hungary and the implications for foreign companies. Learn about the historical background, economic policies, discrimination, and systemic problems.

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Tamas Dezso Ziegler

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  1. TamasDezsoZiegler Nationalism versus the single European market in Hungary

  2. „Hungary’s pending infringements amount to a grand total of 66. This is because MrOrbán’s economic policies typically prescribe the deliberate targeting of sectors with foreign ownership with heavy-handed regulation and taxes, often leaving behind them a legal limbo in respect of Union law... Fundamental rights apply to all people, asylum seekers, employees, the media and investors alike.” Lambert van Nistelrooij Member of the European Parliament European People’s Party (same as Fidesz) Christian democrat The anti-democratic changes in Hungary also created the framework of discrimination against foreign companies. Conflicts with the EU.

  3. General background Free market v communism v stateintervention Pros Authoritariansystems: companiesforgethowtoadapttocompetition Protectionism and overtlynationalism: corruption + statecapture Cons Tax evasion (offshores): Stiglitz (UN plan to block it) Rich gets richer: USA 20% owns 80% of all financialassets When and how should a stateintervenein the market?

  4. General background EU: Single European Market (free flow of goods, persons, services and capital) Discrimination between EU companies (+EU citizens) not allowed: domestic vs. foreign investors: equal treatment Discrimination of goods stemming from an EU Member State is also illegal EU nationals may establish a company anywhere in Europe State aid for domestic companies: illegal (some exceptions persist)

  5. Tax & customs: king’s power (in Hungary: King Matthias: „chimney tax”, „garden-gate tax”) Matthias Corvinus (1443-1490)

  6. Historical background Governor Miklós Horthy, 1868-1957, Governor (Regent) of Hungary between 1920-1944 Kingdom without a king

  7. HistoricalbackgroundHorthy - Orbán patterns Stateinterventionwas a must (see Roosevelt) – stateinterventionintocommerce Aristocratic power: Order of Vitéz: new nobles receive land - oligarchs Limiting export, allowingittocertainbusinessman (jewswereexcluded): Nemzeti Önállósodási Alap (National IndependenceFund - statesupport of governmentfriendly businesses Income inequalities were high (feudalism lived on) - income inequalities gets higher (1.5 million extremely poor) Public communal work (1937) – public work (180 000 people) Hangya (Ent) communities– CBA, Coop, Reál – domesticsupermarkets Tobacco shop monopolies - Tobacco-shop monopolies

  8. Hangya

  9. CBA (Príma)

  10. Historicalbackground Communism Council for Mutual Economic Assistance (Comecon): triedtobalance EEC intheSovietblock

  11. Jobbik Fidesz government (Let’s stop Brussels campaign) • Illiberal democracy? • Electoral autocracy • Checks and balances abolished • Electoral laws changed • Far right ideology

  12. The supermarketsector Foreignaffiliated companies pay extra taxes, CBA –in a franchise system – did not have to pay extra tax tax: Tesco 600 million forints12 billion Spar, 325 million 9 billion CBA: same tax as before

  13. The supermarket sector Ban of supermarket chains not profitable Ban of building supermarkets above 300 sq. meters: 2011 Ban of Sunday trading: local, smallsupermarketsformed an exception?

  14. Erzsébet utalvány

  15. The supermarket sector: extras Changes on the voucher system (Sodexcho) – ICSID procedure Vouchersforemployees of theHungarianstate (Erzsébet utalvány, Szép card) Firstly: taxon local vouchers: 5%, taxon „foreign” vouchers: 51% Firstly: statevoucherscanonly be usedinHungariansupermarketchains: billionsfor local chains

  16. The supermarket sector: extras Latest plans Special tax for parking at major supermarkets Limit advertisements of supermarkets Ban free buses to supermarkets Minimum number of workers set in law Sunday trading: 100 extra sallary Official aim: to „reach a healthier supermarket sector”

  17. Systemic problems! Foreignbanksshouldleavethe country: statebuysbanks (MKB, Budapest Bank, Erste) Billions of EU money flow to government-loyal businessman – and flow back as well: GONGOs (Government Organised Non- Governmental Organisations) Kartells allowed Open corruption and system of oligarchs: the large scale is new, the institution is not Russian interests: atomic plant development Allows cartels in agriculture

  18. Other news (from yesterday) • MKB: One of the 4 major banks in the banking sector in Hungary • Was nationalized • State got rid of dept • Cousin of György Matolcsy, former minister of economics, now the Head of the National Bank together with one of Matolcsy’s colleagues bought 30% of the bank

  19. Lőrinc Mészáros • Former serviceman (gas-man) • Now + 100 billion forints (asset) in a year

  20. Presentsituation FDI: inoroutflow? 75% of GDP and 80% of export is generated by foreign companies: dangerous to ask them to leave market forgets competition in a number of cases the state gives incentives to certain foreign companies

  21. Foreign direct investment (FDI) Infiveyears - 2-3% of foreigninvestorsleft(esp. visibleamongcompanieswith more than1 billion Forint income). (http://www.origo.hu/gazdasag/20160524-csokkent-a-kulfoldi-cegek-aranya-magyarorszagon.html) Ratio of foreigncompanieswithatleast 1 billion EUR capital:

  22. Literature ‚THE LINKS BETWEEN HUMAN RIGHTS AND THE SINGLE EUROPEAN MARKET: DISCRIMINATION AND SYSTEMIC INFRINGEMENT.’Comparative Law Review, Vol 7, No 1 (2016) alsoavailableathttp://www.comparativelawreview.unipg.it/index.php/comparative/article/view/92 When the European moral vacuum meets Hungary’s autocratic regime. https://www.opendemocracy.net/can-europe-make-it/tamas-dezso-ziegler/when-european-moral-vacuum-meets-hungary%E2%80%99s-autocratic-regime Protectionism – The Side Effect Of Hungarian Nationalism. https://www.socialeurope.eu/2012/04/protectionism-the-side-effect-of-hungarian-nationalism/ BalázsHorváthy, TamasDezso Ziegler: Europeanisation Of The Hungarian Legal Order – From Convergence through Divergence to Cancellation?In: REVIEWING THE 10 YEARS OF CEE ACCESSION: SPILLOVER EFFECTS, UNEXPECTED RESULTS, AND EXTERNALITIES. (Hrsg. William B. Simons & Tom Hashimoto). Brill, Leiden-Boston. (soon to get published) My series of small articles on LSE EUROPP: http://blogs.lse.ac.uk/europpblog/?s=czigler

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