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Reinventing Central Europe - When To Run and When To Walk
Thomas Glaser, www.talá, 2006. február 9.

A choice of policy now may have quite unexpected results in ten years. It may be that Hungary's future prosperity rests on factors which are not yet taken into account. - An answer to Ferenc Miszlivetz.

There is almost nothing - in political or philosophical terms - with which one can argue in Professor Miszlivetz's recent paper Why Should We Reinvent Central Europe?. His analysis of the current malaise affecting the EU, and the malaise hanging over Hungarian political life is painful but objective. What is surprising, perhaps, is his enthusiasm - in a country not noted for enthusiasm - for change, and for the unspoken assumption that, with a bit more effort, this change can come about quickly, evenly and in a lasting form. My thesis is that fundamental change, when not imposed from above, operates very slowly and is linked to economic success in an almost indissoluble way.

When I lived in Hungary, many people told me that their model for Hungary's future development was Ireland. Of course, I could see why - a booming economy, firmly founded on knowledge-based industries, pharmaceuticals, biotech, IT-driven, low tax and yet a member in good standing of the EU club. When I left Hungary, Ireland's GDP per capita was 122.5% of the EU average, with only Luxembourg ahead of it. And nobody I spoke to mentioned Luxembourg as a model. So let us bow to the will of the majority and take a closer look at Ireland.

Professor Miszlivetz made the point that we should look beyond mere development, and focus on society and politics, and I fully agree with him. Ireland became substantially politically independent in 1922, only four years after Hungary. It ceased to be a member of the British Commonwealth only in 1947. You may say that this is meaningless, that Ireland was neutral during World War II, that President De Valera sent birthday greetings to Hitler in April 1945, but Irish society was still trapped in the mould of immediate post-independence. Just as in Soviet society, whose norms and forms were trapped in 1917, so that Soviet supersonic airliners still had lace and red plush decoration (like the Russian railway carriages of 1917), so Irish society remained dependent on British norms, with an overlay of its own Catholic puritanism. Few Irish families did not have at least one child working in England, and many found that emigration was the only path to personal fulfilment and success. In the 1960s, there were fully five million Irish people in England, all entitled to vote under the provisions of the 1922 agreement (which was not reciprocal for British nationals living in Ireland).

It was only in 1971 - fully 50 years after independence - that the Irish separated their pound from the pound sterling, and adopted a monetary policy that was anything more than a hurried adaptation to what the UK was doing. The failure of two separate waves of investment and economic management (one in the '60s and one in the '70s) meant that, in the 1980s, the Irish government's education policies were centred on providing the best skills they could for potential emigrants. Admittedly, the existence since 1973 of "Brussels" as a separate pole of attraction for the Irish (and by Brussels, we mean continental Europe) meant, for example, that the Irish government added languages to the skills set required by the emigrants, and meant also that this could be paid for, at least in part, by the European Social Fund.
This had a double effect - Ireland was producing a 'good' for Europe, in the form of talented, linguistically capable emigrants, and it was receiving a 'good' from Europe in the form of money for its training of those emigrants. But, in the final analysis, was it very different from its colonial task of providing manpower for the British construction industry and armed forces in return for remittances to their poor families at home? It was not until the IT outsourcing boom of the early 1990s that Ireland finally broke away from its colonial and post-colonial heritage by the expedient of having an educated Anglophone workforce which, for the first time, did not need to emigrate. With EU money to create the infrastructure, a pre-existing emphasis on education and training, a focus both on Europe and the "Anglosphere" (35 million Americans sentimentally claim Irish descent), Ireland finally broke out of its colonial prison, more than 70 years after the political fact. A long time to wait for "independence".

I apologise for the length of my digression but it is intended to show that there is no "silver bullet" for the success of a society. In the case above, neither political independence, nor external investment, nor government policy were able to alter Ireland's colonial status as a provider of human raw material, nor its social status of 1922, a poor, agrarian, dependent, Catholic society, forced to ape its powerful neighbour and sustained by remittances, either from its sons and daughters in exile or from a generous European Union. If Hungary has problems, as it surely has, then I agree that, without a lot of luck, it will take several generations for the moment of take-off and substantial change to arrive.

A further point to make is this: it was St. Catherine of Siena who said that more tears are shed over prayers which are answered than over those which are not. The booming Ireland of today is a much touted fact, but the social bonds there have loosened perceptibly. This is the first time in its history that Ireland is faced with immigration (112,000 from Central Europe in 2004-05) and there are worrying signs of racism and xenophobia. Collapses in family life, the blurring of ethical and moral boundaries, along with rampant materialism, are all part of the "dark side" of globalisation. When Europeans rebel against the "Anglo-Saxon" model as an economic and social blueprint, they often mean the "Celtic" model first and foremost: low tax, low regulation, low social provision, yes, but also the damage to "traditional" society.

None of this is meant to deter Hungarians from reforming their political, social and economic life. It simply means that a choice of policy now (for example, educating the workforce to succeed abroad) may have quite unexpected results in ten years (an available pool of trained manpower if massive outsourcing reaches Hungary). It also requires flexibility - this year's achievements in regional funding, and those of the next few years, may be minor, or temporary, or even wholly wrong, based on a false analysis of future tourist numbers or traffic flows. It may be that Hungary's future prosperity rests on factors which are not yet taken into account, so that political "ownership" of regional funds is dangerous and divisive. Unless there is bipartisan agreement that EU funding is based on a "best guess" principle and equitably distributed to all regions on the basis of their own forecasts, this valuable tool would end up - as it has in some of the EU-15 - as a massive pork barrel.
In short, four attributes are required: a bipartisan and long-term view of what Hungary's development priorities are; flexibility and calm analysis at the regional level to develop appropriate plans; meanwhile, from Brussels, a great deal more flexibility and freedom in interpreting those rules so that Hungarians have the time to plan, and to change plans, in the light of reality. Finally, there has to be patience, the understanding that there is no silver bullet for achieving the desired take-off. It might come next year, or it might take another generation, but that is no excuse for not drawing up plans, allocating resources and evaluating the results now.

Finally, there is a question that haunts me: I never heard Hungarians say that they saw Luxembourg as a model, but I never heard them say that they saw Austria as a model either. This strikes me as odd: Austrians have a successful European economy, less sclerotic than France, richer than Finland or Sweden. They are strongly attached to their social norms, not fanatically European but good team players. What makes them unattractive as a model? Is it their proximity, their level of investment (the "Ugly Austrian") or simply that the Irish are far away and, seemingly, on an upward curve? Certainly, if one were reinventing Central Europe, one should be looking more closely at a country with whose regions one is already in numerous cross-border arrangements, with similar traditions and with only a ten-year head start on how to get the best out of EU membership.

The author is former Communication and Information Director at the EU Delegation in Hungary.

Thomas Glaser
Reinventing Central Europe - When To Run and When To Walk. www.talá, 2006. február 9.