f_0010090_7837 - Lack of Transparency in Hungary A...

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Fall 2008 The Ambassadors REVIEW 58 Source : The World Factbook, 2008. Lack of Transparency in Hungary: A Persistent Cold War Legacy April H. Foley United States Ambassador to Hungary ungary is a medium sized European country of approximately ten million people that shares with its Central European neighbors a common legacy of more than four decades of Soviet domination. Although a fully functioning democracy for nearly 20 years now, a member of NATO since 1999 and the European Union since 2004, Hungary still suffers from the heritage of communism. While the physical damage of this era has been largely eliminated, the less visible but longer lasting effects of the totalitarian period of Hungarian history persist in plaguing the economic and political life of the country to which I arrived in August 2006. The dramatic and rapid changes that began the final unraveling of the Soviet Bloc in 1989 were accompanied by a tremendous amount of corruption that continues to mar the democratization of Hungary and the other former Soviet satellites. The highly centralized command economies of Central Europe brought about the destruction of traditionally- accepted norms of political and economic behavior. They were characterized by poor allocation of resources, endless shortages and mutual favor swapping to get around the glaring inefficiency of the planned socialist economy. Consumers were forced to engage in corruption to get at the goods and services that were always in short supply. No one was completely clean since, to quote a saying from that time, “if you did not steal, you cheated your family.” After the 1989 revolutions, the sudden introduction of market economies, initially not hindered or regulated by much legislation or standards of ethical conduct, changed the nature of corruption. No longer was there need to bribe your local butcher for a better cut of meat, but corruption moved elsewhere and grew in magnitude. Now newly minted entrepreneurs could make illegal campaign and political party donations in return for hugely lucrative government contracts, favorable government policies and privatization deals involving former state properties. Given the lack of oversight and regulatory enforcement, the free wheeling post- communist Hungarian economy was bound for troubled waters. In fact, soon after my arrival in Budapest, it became clear to me that this rampant corruption carried a great economic cost. For example, Transparency International (TI), the global coalition against corruption, estimated the cost of the Hungarian government’s public procurement corruption at about one and a half billion euros. Clearly, the lack of transparency affects Hungary’s competitiveness and is one of the causes of its current lack of growth. The H
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This note was uploaded on 01/25/2012 for the course POLS 494 taught by Professor Garymoncrief during the Fall '11 term at Boise State.

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f_0010090_7837 - Lack of Transparency in Hungary A...

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