OMRI DAILY DIGEST
No. 40, Part II, 24 February 1995

HUNGARIAN PRESIDENT APPOINTS MINISTERS, NATIONAL BANK HEAD. On 23
February President Arpad Goncz appointed Lajos Bokros Finance Minister,
Tamas Suchman Minister without portfolio in charge of privatization, and
Gyorgy Suranyi head of the Hungarian National Bank, MTI reported. All
three named financial stabilization, cuts in expenditure, market
liberalization, the acceleration of privatization and fight against the
black market economy as their priorities during parliamentary hearings
on 22 February. The appointments were greeted both inside and outside
Hungary as a major step towards restoring international confidence in
the commitment to reform and foreign investment of the government of
Gyula Horn. -- Edith Oltay, OMRI, Inc.

ROMANIAN-HUNGARIAN BASIC TREATY NEGOTIATIONS. Radio Bucharest reported
on a Romanian Foreign Ministry press release on 23 February that said
"significant progress" had been made at the latest round of high-level
negotiations in Bucharest on the basic treaty with Hungary. The ministry
said the two sides had also come closer to an agreement on the article
concerning the rights of national minorities. This article had been one
of the main stumbling blocks in the negotiations. The Romanian side has
submitted new proposals which will be discussed at the next high-level
meeting, most likely next week in Budapest, according to the press
release. -- Michael Shafir, OMRI, Inc.

VAN DER STOEL IN BUCHAREST. The OSCE High Commissioner on National
Minorities, Max van der Stoel, met on 23 February with Prime Minister
Nicolae Vacaroiu, Foreign Minister Teodor Melescanu, the chairmen of the
two houses of Romania's parliament, Adrian Nastase and Oliviu Gherman,
as well as Viorel Hrebenciuc, the secretary of the government in charge
of the Council on National Minorities. Radio Bucharest and Romanian
Television reported that Melescanu told his guest about the progress in
the negotiations with Hungary on the basic treaty. Max van der Stoel
said he was under the impression that the efforts "necessary for a
Romanian-Hungarian dialogue are being intensified" and expressed his
hope that these will also bear fruit. After the Vacaroiu-van der Stoel
meeting, the government spokesman said they had discussed, among other
things, the pending education law's provisions on teaching in the
languages of national minorities. The Hungarian minority says the law
(which has been passed by the Chamber of Deputies and is to be discussed
in the Senate) is discriminating. -- Michael Shafir, OMRI, Inc.

HOLBROOKE VISITS SLOVAKIA, ROMANIA. U.S. Assistant Secretary of State
Richard Holbrooke visited Slovakia and Romania February 23 to discuss
NATO enlargement issues, Reuters reports. After meeting Slovak president
Michal Kovac in Bratislava, Holbrooke told reporters "I must stress that
the United States considers central Europe of great importance for
stability throughout Europe." In Bucharest, he praised Romania's role as
a an "active participant" in NATO's Partnership for Peace program. He
also discussed the U.S. plan to have NATO offer Russia "a security
framework that we see parallel with NATO expansion." He stressed that
this plan "would not give Russia veto power over NATO." Holbrooke
further said that NATO would be sending a team to Eastern Europe to
discuss expansion. Radio Bucharest reported that Holbrooke was
"delighted" with the U.S. strategic relationship with Romania, thought
political relations were "quite good," but was disappointed with the
state of economic relations where American investments were lagging
behind those in Hungary and the Czech Republic. He blamed the slow
privatization process for this state of affairs. -- Michael Mihalka and
Michael Shafir, OMRI, Inc.

[As of 12:00 CET]

Compiled by Pete Baumgartner

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Friday, 24 February 1995
Volume 2, Issue 4O


REGIONAL NEWS
-------------

**US READY TO ARM CENTRAL EUROPE**
  Hungary says it is interested in acquiring new western air
  defense systems now that Washington is ready to sell them to
  Central and East European countries.  Last week the United
  States announced that it is willing to sell sophisticated
  weapons, including Lockheed Corporation's F-16 fighter, to 10
  countries, including Hungary, that formerly belonged to the
  Warsaw Pact.  Istvan Szent-Ivanyi, number two in the Hungarian
  foreign ministry, told reporters yesterday that gaps in
  Hungary's air defenses have been exposed by the war in the
  former Yugoslavia.  Aircraft involved in the conflict have
  frequently violated Hungarian airspace.  Szent-Ivanyi was in
  Washington yesterday to speak to US officials and members of
  Congress.  Szent-Ivanyi told US officials that Hungary has not
  drawn up a shopping list of US arms it wants to acquire but
  will start work on one as soon as possible.  Szent-Ivanyi
  didn't say how Hungary will be able to pay for expensive
  western weapon systems, or whether the United States has
  offered to help with financing.  But he notes that NATO is
  requiring nations like Hungary to develop compatible weapons
  systems before they can join. --David Fink

**NATO GENERATES APATHY**
  According to a new poll by the Hungarian defense ministry, 44
  percent of Hungarians are in favor of NATO membership, but
  almost as many either don't care or know whether it would be a
  good move for the country.  Only 16 percent of those surveyed
  said they were against entry into the alliance.  The poll was
  conducted earlier this month and released yesterday.


BUSINESS NEWS
-------------

**FLUCTUATING FORINT**
  Hungary's new central bank chief Gyorgy Suranyi took office
  yesterday, pledging not to devalue the forint.  The Hungarian
  news agency MTI yesterday quoted Suranyi as saying the
  country's economic situation does not call for a devaluation at
  this time.  That goes against recent speculation that a large
  devaluation is due within weeks.

**STOCKS STILL EXPECTING DEVALUATION, THOUGH**
  Shares prices on the Budapest stock market weren't moved by
  Suranyi's comments. The exchange remained steady yesterday in
  light trading.  The index closed at 1,212.60 points, up .39.
  Analysts say traders are being cautious because they're afraid
  there will be a devaluation, which they say would make shares
  much more attractive to foreign investors. Reports that the
  National Bank recently sold tens of million of dollars only
  fuels the devaluation fears.  The bank typically sells off
  dollars to commercial banks before it lowers the value of the
  forint.

**BANK ENTERPRISERS INVADE POLAND**
  Germany's Dresdner Bank and the French Banque Nationale de
  Paris opened a joint subsidiary in Poland yesterday.  The new
  bank, called BNP Dresdner, has capital of $10 million. Both
  the French and German banks contributed to the subsidiary
  equally.  BNP Dresdner will concentrate on corporate clients
  in industry and trade.  Its two parent banks also have joint
  operations in Budapest, Prague and Russia.

**AUSTRIA HACKS INTO HUNGARIAN COMPUTER MARKET**
  Austria's Constantia Industrieholding says it has bought a
  majority stake in Hungary's computer components maker Falco.
  The purchase was made through Constantia's Hungarian
  subsidiary Homogenholz and the Hungary's privatization agency.
  Constantia hopes Falco will increase its Hungarian market
  share, as well as exports to other countries.  Constantia
  didn't release any financial details, but the Austrian media
  says Constantia bought just over half of Falco for almost $8
  million.


BUSINESS FEATURE
----------------

**COFFEE MAKERS NERVOUS OVER ACCUSATIONS**
  By Christina Crowder

  Green coffee beans tainted with the carcingen Ochratoxin A
  found last week by Hungarian health officials are not the only
  problem brewing for coffee roasters in Central Europe.  The
  larger coffee companies are steaming over government
  accusations of unfair price fixing in Hungary and the Czech
  Republic.  The issue at stake is who has the authority to
  regulate prices in the fast paced markets of one of the
  world's most popular drinks.

  Coffee roasters in Hungary got an unwelcome Christmas present
  last year.  On Dec. 21, the Hungarian Office of Fair Trade
  announced it would impose about $3.5 million worth of fines on
  the local subsidiaries of five international coffee companies;
  Douwe Egberts, Eduscho, Nestle, Jacobs and Tchibo. The
  decision followed a similar ruling last September against the
  Czech Coffee Association, Tchibo Jihlava, Tchibo Praha and
  Balirny Douwe Egberts by the Czech Ministry of Economic
  Competition.  In both cases, the issue is whether there were
  illegal agreements between coffee companies to raise prices
  last summer.

  Coffee prices in Hungary have almost doubled over the past year.
  In the Czech Republic, after rising last summer, prices have
  stabilized for an overall increase of eight percent since last
  February. Last Friday, Douwe Egberts, which under the ruling
  have to pay the largest fine, about $1.5 million, announced
  it's going to appeal. According to the Senior Vice-President
  for Legal Affairs and Communications for Douwe Egberts, the
  decision to appeal the ruling comes from the company's desire
  to uphold the principles of a free market.  Herman Bauman says
  Douwe Egberts did not collaborate with any other company when
  it decided to raise its prices, but was responding to the
  realities of the world market and changing domestic
  conditions.

  "What is very important for us of course is the price of the raw
  materials.  And that's the green coffee price.  And if you
  look at the development of the green coffee price, in, let me
  say calendar year 1994, after a period of seven years of
  stable prices, prices really skyrockete and that was in fact
  the reason for us to increase the prices of the retail
  coffee."

  Bauman adds, increased excise taxes and the devaluation of the
  forint also played a role in price hikes.  He says factors
  like that give Douwe Egberts a strong case. He thinks the
  Office of Fair Trade will be hard pressed to come up with the
  evidence to prove its allegations.

  "As the investigation report, and the decision said, there was
  no hard evidence found and the competition board assumed that
  because every competitor raised its prices at more or less the
  same time, there is concerted conduct."

  But Peter Hodina, a spokesman for the Hungarian Office of Free
  Trade, says direct evidence is not always necesary, at least
  not according to the current interpretation of the 1990 Act on
  Prohibition of Unfair Market Practices.

  "A cartel case doesn't necessarily need written proofs.  If the
  companies behavior shows that they have probably had a
  consensus, then all we have to do is prove the circumstances
  under which their consensus has been made."

  The Czech government says it does have hard evidence backing its
  allegations.  Last June, the Czech Coffee Association issued a
  press release asking its members to increase prices by 10
  percent a month.  The Ministry of Economic Competition took
  that evidence into account in a new ruling it issued February
  1st.  The new decision modifies the Ministry's September
  decision and reaffirms fines totaling $250,000 against Douwe
  Egberts and Tchibo Jihlava.  However, all penalties were
  dropped against the Czech Coffee Association and Tchibo Praha.
  Douwe Egberts and Tchibo Jihlava have two months to appeal the
  new ruling.


DAY TRIP
--------

**HISTORY IN SMALL TOWN HUNGARY**
  By David Fink

  Nyireghaza is not the first stop for most tourists visiting
  Hungary.  The city sits in the far northeastern corner of the
  Great Plain, about four hours from Budapest. At first glance,
  Nyiregyhaza isn't much to look at.  The train passes cement
  block apartment buildings, until you reach the run-down
  socialist style station. It's a typical communist produced
  industrial town whose population has quadrupled to about
  100,000 since the 1950s.  Despite this growth, Nyieregyhaza
  has kept its quiet, small town atmosphere.  Many people in the
  area still lead a simple life, using horse-drawn carts and
  plows.  Change has generally occured slowly in the town.  Its
  written records go back to the 13th Century and you can learn
  all about Nyiregyhaza's past at the Szabolcs-Szatmar history
  museum.  One of the museum's main exhits features
  Nyiregyhaza's Hussar troops, of the famed Hungarian Cavalry.
  Museum curator Lajos Almasy says the soldier's hearty
  appetites helped local farmers stay in business.  The troops
  also livened up the town's dull social life and brought some
  outside culture.  Almasy says Nyiregyhaza had some culture of
  its own.  Artist Gyula Benczur lived in the time of the
  Hussars and is famous for his portraits of historical figures.

  "His paintings are so special, so Benczur-like.  He also made
  copies, like this copy of a Rembrandt here, but he always
  admitted when it was a copy.  Benczur had a special dark-toned
  style, that was unique, not the copy of someone elses."

  That style Brought Benczur a lot of recognition.  In fact,
  Austro-Hungarian Emporer Franz Jozsef visited Benczur to have
  his portrait done.  Interesting works by other artists can be
  found on the ceiling of Nyiregyhaza's Lutheran Church.  The
  18th Century structure is one of the city's architectural
  highlights.  Church secretary Ilona Liptak says the
  Austro-Hungarian Emporer opposed the Lutheran's plans to
  construct the building.

  "The Emporer, who had to approve the construction of all
  churches, doubted we could raise the money for the church. But
  the Lutherans pulled together and produced the funds."

  The city has many other well preserved older buildings in the
  downtown area, where it recently built a pedestrian mall.
  Nyiregyhaza resident Janos Szabo says he hopes this will help
  make the city a tourist center.  Since Nyiregyhaza's factories
  have fallen on hard times, the city needs a boost.  He says
  the regions good apples and famed Tokaj wine may help.

  "Our main aim is selling our products to western and eastern
  markets.  We would also like American tourists to come buy our
  wine and not our land."

  For now, Nyiregyhaza remains a peaceful, tourist-free getaway,
  perfect for those who want to take a step back in time.

ABOUT CET ON-LINE
-----------------

* CET On-Line - copyright (c) 1994- 1995 Word Up! Inc. All
  rights reserved. This publication may be freely forwarded,
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Alapitvany tamogatja.

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February 1995
No.5
NEWSLETTER
HUNGARIAN CENTRE FOR NATO/WEU INFORMATION
___________________________________________________________________
Budapest 1241, Pf. 181. Tel: (36-1)262-1920 Fax: (36-1)264-9623
E-mail:


Academics, Politicians and the Subject of Reform

The Defence Committee of the Hungarian Parliament and the Hungarian
Society of Military Science jointly held a conference in Budapest on
February 10th 1995. The title of the conference was "The Relationship
between Society and the Armed Forces". The aim of the event was to shed
light on the civilian and democratic control of the armed forces, from
several angles, amongst these the fields of constitutional law and
military sociology. Besides the researchers of military science that
were present, known Hungarian political figures also took part in the
conference.

In his key-note speech, the Chairman of the Defence Committee, Imre Mecs MP,
described the legal frameworks which stipulate tasks and conditions for the
staff of the Hungarian Defence Force (HDF). In the presentation, special
attention was paid to the so-called 'Service Bill', which is awaiting
approval by Parliament. This bill, in accordance with the fourth and fifth
paragraphs of section 40b of the Constitution, forbids members of the armed
services to function within political party apparati, or to be politically
active. The Chairman saw the draft bill and the relevant section of the
Constitution as somewhat lacking, in that the restriction was also a
restriction of normal civil rights. For this reason he expressed his
agreement with a proposed modification of the Constitution which would
allow the professional cadre of the armed forces to play a better defined
part in normal everyday political life.

Following the introductory speech by the Chairman of the Defence Committee,
Col. Janos Szabo, the Deputy Rector of the Miklos Zrinyi Military Academy
gave the first discursive presentation. The subject was an examination of
the conflictual situations that have arisen under the process of modification
that the defence arena has undergone.
The Colonel stated that fundamental changes have happened to Hungarian defence
policy, in the last few years.

Firstly: Having exited the old structure of military alliances, the country
began to look for and develop contacts with new partners. Secondly: The
relationship between the defence arena and both the economy and society
had also changed from the ground up.

As a result of these two basic changes, the international and domestic
political situation of the Republic  was found to be different. This is
the same situation within which the country has to execute its reform of
the Armed Forces.

The most important indicator of what the new situation is like, is that
with the interaction of different political forces, the reform of the
Hungarian Defence Forces has begun. Another  characteristic is that Public
suspicion of the Armed Forces has been brought over, or inherited, from the
past era. To a certain extent it has even grown.

The Deputy Rector also stated that one could say that the defence arena as
such has been devalued within the general sphere of the population. A
significant improvement of information supply to the outside, and the
increased openness of the HDF and the MoD, have not been able to improve
on the state of affairs. This information service has to be further improved
in the interest of bettering the image of the Armed Forces.

Apart from having to cope with the complex nature of the current transitional
period, the planners and executive bodies implementing the new reform, have
also to face the other complicated factor, namely that in the last several
centuries, Hungary has endured a variety of differing political, economic,
cultural and military influences. At the moment the country's inheritence
comprises of a level mix of both of these influences, Eastern and Western,
stated Col. Szabo.

When issues related to changes in the defence arena and modernisation came up,
then the audience was reminded not to forget that the factors that have
influenced military thinking, are linked to a difficult and complicated past.

The remnants of contradiction, in combination with the complicated present
situation, create a source of conflictual problems, which are unavoidable.
Besides the normal, or naturally occurring difficulties, there are those which
are the result of the wrong decision being taken, or the result of an
opportunity being missed or not fully exploited.

Col. Szabo, in his piece encouraged greater flexibility and creative thought
during the process of forces reform. He stated that one should not have to
rely completely on the overall position of the commander in the military
environment. One has to make it possible for creative thought to reach the
surface and eventually reach the decisionmaking bodies which are dealing with
the reform. He also said the individuals involved in the latter process, need
to rely more heavily on the opinions and advice of specialists. This is the
only way that negative consequences to the given decisions can be avoided and
that foresight can be guaranteed.

The Deputy Rector also said that the arguments and plan connected to forces
reform should see more light of day. In this way, public opinion could be
drawn into a more positive direction as far as the HDF is concerned, whereby
the populus would be more ready to support the financial burdens which the
reform necessitates.

During the conference, Jozsef  Feher, State Secretary of the Ministry of
Defence (MoD), also gave a presentation analysing the debate in Hungary
concerning civilian control of the Armed Forces.

According to the State Secretary, in many instances views differ significantly
on this issue. In comparison to the situation prior to 1989, when the MoD and
the HDF were under the direct control of the Communist Party, much has changed,
with both organs being switched into the structure of freely elected government
. A democratic legal system has been brought into existence whereby civil contr
ol of the Armed Forces can be realised. Evenso, Mr. Fehir stated that more laws
 are required to e
xactly stipulate the working conditions of the HDF.

The State Secretary detailed those problems which will follow as a result of
the nature of the Hungarian Constitution. For instance, the Constitution
states that Parliament requires a two thirds majority in order to allow
Hungarian troops to be sent abroad, or to allow foreign troops to station
on Hungarian soil. Mr. Feher emphasised that the decisionmaking mechanism of
the government needs to be somewhat fine-tuned, in the interests of clearly
defining the possibilities to review the actual functioning of the army, as
well as defining the political and military spheres of competence, since
this too is an important element of democratic control.

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A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.

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Reposting is supported by Hungarian Human Rights Foundation News
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