What the EU is doing to the Visegrad Four

Hungary, along with the other EU member ex-Stalinist countries, is at a serious crossroads. While considerable inroads have been made into the welfare state in all these countries, the fundamental fabric is still there, albeit in some cases partly privatised.

Now the headlong rush into joining the Eurozone, however, is sending alarm signals up and down Eastern Europe. "Convergence plans" are being produced, containing the most brutal attacks on all the gains of the last 60 years.

One fundamental part of Hungary's attempts to please the World Bank and WTO is to radically reduce the share of the wealth created by the labour of the Hungarian working class going to them and thus bolstering the profits of the robber barons that now own Hungary. The tax system is being reformed based on the assumption that everybody is a cheat and a thief. Not that they are thinking of the multinationals, oh no. It is you and me that they think are the criminals and the punishment planned is draconian.

Admittedly, Hungary, along with the entire region, has traditions of tax avoidance, created by the extreme poverty and exploitation that people have suffered over the centuries, but transferring this philosophy to the field of health is nothing short of criminal. The introduction of a 300Ft "visit fee" every time you go to the doctor, attend at a clinic or spend time in hospital cannot be seen as anything other than a cynical attempt at stopping genuinely sick people going to seek medical help. Even in a low wage economy, like Hungary, the administration of this fee will more than cancel out any income the Health Service would receive, so one must believe that this, along with a raft of measures in the field of pension provision, education, transport etc., etc. is designed to please EU mandarins, banks and Hungary's foreign masters, so that this small country may be allowed into this elite club, the Eurozone.

The present socialist government of Ferenc Gyurcsány is riding roughshod over the most vulnerable of the population, alienating most of the rest of the population in the process. His approval ratings at present are the lowest of any Prime Minister since records began in the post-Stalinist era [confirmed by the recent local elections]. It is also interesting to note what the analysts of Capital think of the processes in Eastern Europe.

We reproduce below an English translation of an article that appeared on FigyelőNet, a Hungarian news web site, giving an insight into how the bourgeois see this process. Note the frequent gobbledegook when trying to get across the likely tragic consequences of the cutbacks. Our Polish readers will be amazed to read that this report considers the cost of labour to be high in Poland. Poland's Western masters not only enjoy paying ridiculous wages, but they would most certainly like to reduce their contribution towards social security and health provision.

"They converge differently" (from FigyelőNet, September 1, 2006):

"As things stand at the moment Slovakia will be the first to introduce the Euro amongst the Visegrad nations (Hungary, Slovakia, Czech Republic, Poland), around 2009. The four countries face roughly similar problems, albeit in considerably different degrees - reveals the latest analysis by Ecostat.

"There is no doubt, that apart from their own economic interest, it is a question of prestige for these four ex-socialist countries, which one satisfies all the conditions laid down by the EU and joins as full member of the Eurozone. Hungary, the leading country until the end of the last decade, now watches the backs of the other three from an increasing distance, while the previously much patronized Slovakia jumped into the lead, not without social convulsions, though.

The "Tatra tiger" showed them

"Of the Visegrad four Slovakia alone is a member of ERM II - considered the entry room to the Eurozone - since November 2005. Their convergence program expects Slovakia joining the Eurozone in 2009, which seems realistic, although lately some doubts have emerged in this respect.

"In the background to these Slovak successes stands the endeavour to introduce measures that encourage increases in production as well as cutbacks in central expenditure - states the Ecostat analysis. Slovakia is in the third year of a 3-year plan of budget programme, started in 2003. Production increases are connected with the simplification of the tax system. Income tax used to have 9 bands, businesses 3 different systems, VAT two: 14% and 20%. This latter now has a single rate of 19% and all other systems have been unified as well. We must, however, add that the government of Fico, after its election this summer, is planning the introduction of a 10% VAT rate next year, which is aimed at reducing the cost of medicines and books.

"There has been significant progress in the field of pension reform by introducing a multi-based system, and it is an open secret, that the upcoming regulation of retirement age and pension rates will encourage most people to retire later, rather than early. However, there are serious social stresses associated with reform of the health service that is taking several years. A part of the service has already been privatised and the rest is being put into private hands at the moment.

The "Czech lion" is getting stronger

"While the Czech Republic has already managed to reduce its budget deficit to 2.6% of GDP last year, it decided that it will only satisfy all the Maastricht criteria by 2008. This means that they are due to join the Eurozone in 2010 at the earliest. Along with the other Visegrad nations and the rest of the EU, the biggest problem in the Czech Republic is the aging population and the unsustainability of the pension system. The Czech government definitely intends to stabilize their pension and health systems, although no agreement has been reached about the concrete measures aimed to achieve this - says the analysis.

The "Polish eagle" has had its wings clipped

"Like its counterparts in Hungary and the Czech Republic, Poland is also at the early stages of working on its reform plans, aiming at the transformation of both the expenditure and income sides. One thing is definite, however, that the Polish government hopes to reduce its GDP related deficit by pegging the nominal budget deficit figure.

"In Poland the biggest headache is the high rate of unemployment. At the end of last year, official unemployment stood at 17% of the adult population. According to the Ecostat analysis the biggest barrier to investment and the creation of jobs is the high cost of employing labour in Poland. The Polish government promises to work out its convergence program by the end of 2006, with a chief aim of reducing the budget deficit by 2008 to 2%.

The limping "Pannon puma"

"This Ecostat analysis gives no details of Hungary, but one of the latest developments includes the Hungarian Government having sent its convergence program to Brussels last Friday. Previously, the President of the Hungarian National Bank, Zsigmond Járai, gave his opinion that he hoped the program would be acceptable to the EU and that the preliminary foreign comment was favourable. This convergence program contained all the cutbacks and outlines from structural reforms which have surfaced in the Hungarian press lately. It is without doubt that amongst the Visegrad 4, Hungary has the most critical budget deficit when related to GDP, which requires fast and drastic intervention."

It will be interesting to watch how the working people of Poland, Hungary, Slovakia and the Czech Republic will react to this relentless onslaught on their living standards and hard won social wage. There is a tendency to emigrate or take on 3-4 jobs to make ends meet today throughout the region. This is what encourages the bourgeois to intensify its attacks, thinking they can push an entire region into poverty and hopelessness. Their expressions of "Tatra tiger", "Czech lion" and "Polish eagle" in the article above refer to the ruling classes and their system. But the working people of these countries will not be able to tolerate all this forever. When the working class tigers, lions and eagles of Eastern Europe begin to move, as no doubt they will at some stage, the edifice of these corrupt and reactionary elites will come tumbling down around their ears.