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There are tensions between capitals, major cities and national governments in which parties governing cities are often the main opposition to the national governing party. This is the case in Barcelona, Berlin, London and Paris, all attracting varying amounts of media attention, often describing them according to political alignments by pro-government media, thus often expressing bias rather than balanced views. Budapest is one of those cities.

Background

Hungary has a population of just less than 10 million that reached its peak with just over 10,700 in 1981. Budapest has a population of over 1.7 million; approximately 17% of the national number. Hungary held a referendum on membership of the European Union (EU) during April 2003. The application was approved by 83.8% of the electorate, on a turnout of 45.6%. Hungary consequently joined the EU on 1 May 2004.

Budapest has a two-tier municipal government. The 23 districts have directly elected local assemblies and mayors, while the Budapest municipal government has a directly elected mayor and an indirectly elected municipal assembly, consisting of the 23 districts mayors, nine people from party lists and the mayor. Legislation on local governments allocates most local responsibilities such as housing or basic health care to districts, while the municipal level is responsible for infrastructural services including public transport, refuse collection, water, sewage and district heating. Municipal finance is given by central government split between municipal and district levels roughly equally. The locally raised financial resource is the business turnover tax from companies that are shared between municipal and district levels.

Politics

Since 1990 the system of governance has been decentralised, giving large tasks and relatively greater independence to local government. The law laid down the system of local taxation, the principal one being the business turnover tax from companies. Until 2010 the relationship between Budapest and central government was ’normal’, with routine debates and conflicts about how much the central government contribution should be given to support the extensive public transport system which operates on a large deficit in Budapest; ticket revenue covers less than half of all expenditures. During the period 2002 to 2010 too many economic promises were made, there were some corruption cases and the social democrat dominated ruling coalition lost the trust of the population.

Thus, the big changes in the situation started in 2010, with the development of an illiberal political system in Hungary. In 2010 right wing parties won a landslide victory. On a turnout of 64%, Fidesz received 52.7% of the votes, thus winning 68,1% of parliamentary seats (due to the asymmetrical voting system), which is to say a super majority that enabled constitutional changes to be made. Viktor Orbán, who had already been in office from 1998 to 2002, immediately began to use the super majority to apply rigorous policies. With over two thirds majority in Parliament, Fidesz was able change all laws, including the constitution, in order to increase the power of the party and its leader. The programme of radically altering Hungary’s political framework included changes to the election system, the electoral process, rules governing campaigns and campaign financing. Democratic checks and balances were eliminated, allowing Fidesz to appoint party loyal people to all key political positions. As a result, in 2014 Fidesz once again gained a super majority, whereby only 39.8% of voters gave them 66.8% of seats. In 2018 it happened again; 49.2% of votes giving them 66.8% of seats.

The death of pluralist media

Fidesz has transformed the entire media system in a way that allows it to disseminate its own political messages and political propaganda more effectively than ever before by using a small group of loyal media owners who are entirely dependent on the governing parties.

The increase in number of the new media ‘oligarchs’ has also been helped by distorted allocation of state advertising spending; the credits extended by oligarch owned banks and the media authority’s regulatory body, that is exclusively made up of Fidesz delegated members, having decision making powers to allocate tenders for media frequencies and appraisal of media market mergers.

Since 2015, the government has launched a series of campaigns that propagate unfounded content that also disseminated false and manipulative information aimed at appealing to citizens’ basic fears. The main targets of these campaigns were not only opposition politicians but also George Soros and even Jean-Claude Juncker. There are new ‘enemies’ generated whose profile has been accentuated (for instance: asylum-seekers, the EU, NGOs, George Soros), so hate campaigns were organised against them. In this illiberal state, corruption became a powerful cornerstone of the system, becoming systemic through diversion of EU subsidies from their designated purpose, to public investments that are used to channel public funds into private pockets, thus leading to redistribution of entire market sectors.

The politically operated public procurement process is the principal channel for redistribution, where problems include: weak competition, low level of transparency, favouring certain bidders and overpricing, all of which are generally recognised. This is especially true of the use of EU funds. All of these factors serve to boost the financial positions of the ruling political-economic elite. According to the director of a Fidesz affiliated think-tank (who has been elevated to rector of the largest Hungarian university): “what is referred to as corruption is in principle the essence of Fidesz’s policies”. The whole process of change appears to have been professionally managed in this EU member state in such a manner that individual steps are difficult to question, while democracy was being cut down, step-by-step.

Local governance and urban development under an illiberal system

During his first term from 1998 to 2002, Orbán was already arguing in favour of a centralised system, maintaining that the task of local government is to implement the policy of the central government. At that time, however, his majority was not strong enough to achieve that, and then in 2002 he lost power. Whilst Fidesz was in opposition, in around 2008, they urged local administrations to take ever more loans from banks, hoping that larger debts in the local government sector would exacerbate the economic crisis at national level. Since 2010, Fidesz have used the amount of debt of local governments as the central argument to strengthen direct political control, therewith dispensing of local government institutions:

• Education and health care systems have been centralised to make them ‘more efficient, saving public money’;
• changing the municipal finance system by limiting local autonomy and eliminating the right to take out loans without the consent of the central government;
• reorganisation of public administration, regrouping tasks from local government to attenuated units of state;
• introducing strong state control over local public services such as water, sewage, refuse collection, etc;
• withdrawal of the centrally financed housing allowance system.

All these steps served the purpose of limiting independence and political power of local administrations, leading in the direction of nationalisation of local government. Local government budgets decreased to 7,6% of GDP, among the lowest in Europe, thus Hungary became a highly centralised state once again after two decades of successful decentralised development.  Consequently, local administrations became ever more dependent on central budget support. This dependency taught mayors to behave submissively. Furthermore the electorate could get the feeling that the fate of their communities depended on the election of Fidesz mayors; otherwise their community would get much less support from the national level.

An important political manoeuvre has been the extraordinarily strong central political control over new developments. The Modern Cities programme which is allocation of development funds (essentially financed by the EU) is shown as a ‘gift’ from the central government, whereby more loyal municipalities may well receive more than those less loyal. Central government is taking over direct control of larger developments through a system of ‘investments of enhanced priority’. This system prevents any influence from local administrations and residents over large new developments in their territory. An example is Budapest City Park, whereby the proposal of having a Museum Quarter came with Orban’s wish to move into the Castle, from which museums had to be expelled.

Instead of discussions on real problems and burning issues of the day, such as the fate of the extensive public transport networks and extensive prefabricated housing estates with district heating and green areas, how to stop segregation or how to deal with migration, the government aimed urban development determined by their own political inclinations. Spectacularisation was given priority, through staging big events, sensational new buildings, sports associated big investments like football and athletic stadiums and swimming pools, with the ambition of hosting the Olympic Games, whereas health care and education systems suffered serious deficits and large brown field areas stayed empty and polluted in the city.

The takeover of Budapest

From 1990 Budapest was governed continually by liberal-social democrat leaders. Thus it was of prime importance for the Orbán government to start its fight against the capital city. With a super majority at national level, they could change the law on local governments, including the local administration system in Budapest. Firstly, in 2010 they decreased the number of assembly members, while in 2014 they changed the municipal assembly into an indirectly elected body with 23 district mayors, nine individuals from complementary lists and a single municipal mayor. Within the new system, in 2010, the Orbán’s Fidesz party took over political leadership of the city, which they would have lost under the original voting rules. Consequently, between 2010 and 2019 the central government and Budapest were politically on the same side. Even so, there were constant debates, whereby Budapest became largely dependent on the ‘goodwill’ of Orbán. Budapest has always had a large budget deficit, due to the unsolved systemic problem of public transport financing. The government ‘saved’ time to tame the city until it was politically loyal, which is to say the city leadership did not object to government plans. In 2014 central government established a new administrative position in the form of a state secretary for Budapest. By 2017 the government developed ambitious plans to bid for the 2024 Olympic Games, but opposition parties succeeded with a local referendum on the issue. Since it was apparent that a large majority of the population would oppose the idea, being afraid of ‘white elephants’ and ever growing corruption, the government had to withdraw its application, even before the referendum was organised.

In 2018 the Public Works Committee was set up that included five national government and five Budapest local politicians, in which decisions have to be consensual. At the same time the government announced a development plan for Budapest with 62 extensive projects, amounting to almost €4 billion without thorough consultation with the population. The big, politically loyal developers were happy about that. Budapest will now develop fast, without unnecessary political opposition and superfluous popular debates, which, in their view, would slow down the development, similar to Lisbon, Berlin and other European cities.

The battle for Budapest

In October 2019 opposition parties gained an election victory in Budapest, as well as in 10 other of 23 larger secondary cities in Hungary. Not only Budapest’s directly elected mayor, but also the majority of district mayors were in opposition to Fidesz, thus the municipal assembly became opposed to the Orbán government. The reaction happened quickly and since October 2019 Budapest has become ever more hamstrung. In 2020, the government gained permanent autocratic powers to manage Covid-19 (with a decision by the Parliament, where Fidesz had a two thirds majority), and has cut back the city’s revenues, especially those related to the pandemic; local government no longer receives car tax, parking charges have been suspended due to the uncertainty of the economy and mobility and there is now a 50% reduction of local taxes paid local government by businesses. The city is no longer allowed to raise charges for any public services and no longer gets permission to take out loans from banks. The government withdrew parts of its support for public transport, while ordering the city to run it at full capacity.

These regulations apply to all local government authorities, but have particularly hit the biggest cities, especially Budapest. Moreover, the government gives compensation under different labels to politically loyal cities, clearly punishing the ones where opposition governs. Simultaneously, the ‘Law on developments of especial importance’ is applied more often, excluding key areas of Budapest where the local level no longer has any say in and control over government supported new developments. The government gives enormous resources to the Budapest Development Centre, ensuring that all large development plans for Budapest are controlled by this central agency and not by the municipality. There is enormous contrast between the 180 well paid planners in the Development Centre and the very limited planning capacity at municipal level in Budapest and its districts. Not only do numbers and salaries differ, but this also causes wide scale frustration among local government planners, since none of their ideas have any chance of being realised under present conditions. In fact, there is a forecast that by the autumn 2021, Budapest local government might approach being bankrupt.

The progressive leaders of Budapest, its city districts and some other big cities are in big trouble. Not only are their development plans hampered and their schemes suppressed, but they are also seriously limited in their ability to communicate about those problems. Government controlled media, which is to say all major TV and radio stations and the majority of newspapers, does not allow access for opposition politicians. In this situation, mayors have to find direct links to the populace as their strongest allies and have the intention of sharing power with them. There are now attempts in Budapest to develop and broaden out platforms for involvement in participatory budgeting and organising citizens’ assemblies, following leading European examples, such as Paris or Madrid.

Recently Hungary has made news headlines for legislation to ban the dissemination of content in schools that appears to promote homosexuality and gender change, with strong criticism from human rights groups and opposition parties.  Recently Ursula von der Leyen, President of the European Commission, was urged by MEPs to suspend EU coronavirus recovery funds to Hungary to force Viktor Orbán to address concerns over those laws, mishandling of EU funds, politicised courts and corruption. Consequently, the €7.2 earmarked for Hungary has for now not received approval. Gergely Karácsony, the mayor of Budapest and leader of the opposition, has called for ministerial resignations from the government over allegations it selected journalists, owners of media and opposition figures as potential targets for the invasive Pegasus spyware. Karácsony is likely to challenge Orbán for the post of prime minister next spring when national elections take place. The next local elections are in 2024. There is a big question about how opposition politicians will be able to show voters what can be achieved through their efforts at present. This largely depends on the performance of local opposition run administrations which are facing a wide range of challenges, barriers and difficult situations in every regard.

Featured image by Andrea Piacquadio on Pexels.

This article was written by Peter Austin and Brian Milne, in part to allow their sources to maintain discretion, using their detailed notes.

Peter Austin and Brian Milne
Writing on current affairs, history and international politics.

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