CER | Interview with Istvan Stumpf

Chancellery Minister István Stumpf heads one of the most important new institutions in recent Hungarian history, the Prime Minister's Office, transformed in 1998 from a relatively insignificant institution to an intellectual and policy-forming powerhouse. Responsible for dealing with all issues of strategic importance, he recently succeeded in adding information technology to his portfolio. He can look back over a distinguished academic career, including a scholarship to Harvard University. I recently met him in his office suite in the Hungarian Parliament, where he gave me a brief demonstration of the state of the art computing and remote conferencing equipment he has at his disposal. Although modest and soft-spoken, his enthusiasm for the subjects he is called upon to deal with shines through.

Central Europe Review: István Schlett [one of Hungary's most eminent political scientists, ed] made the following statement in an interview published in Magyar Nemzet on 1 February: "The succession of cases of proven or suspected corruption, which have seen the light of day, the stupidity and lack of professionalism and style are all manifestations of the democratic deficit." Is it fair to speak of a democratic deficit in Hungary in conjunction with corruption? Do you believe that corruption has become so widespread in today's Hungary that it represents a threat to the existence of democracy?

István Stumpf: No, I do not believe that at all. In fact if we examine the facts and data available we can see that Hungary is deemed to be the most transparent country in the entire Central and Eastern European region in terms of making investments. We are not responsible for this evaluation, but I can safely maintain on the basis of an international survey, which examined the situation in 35 different countries, that with the exception of Italy and Great Britain Hungary fares better in the transparency stakes than even the countries of the European Union. The study took business activity, the political aspects of the economy, public accounting, the practice of governance and identifiable uncertainties in legal provisions as its starting point in auditing the countries and arrived at the conclusion that Hungary is doing extremely well in this region. That is the first fact.

The second fact is that Hungary's ranking in Transparency International's league table of the 90 countries it analysed from the point of view of corruption has not changed. It continues to occupy 32nd place. This emerged from information compiled by eight independent organisations in the course of surveys. Last year Hungary was ranked 31st with an index of 5.2% identical to this year's index. On the basis of this corruption index Hungary is given a favourable assessment amongst the countries of Central Europe. Only Austria, Estonia and Slovenia score better in this respect. If we leave aside Croatia everyone's position in this region has deteriorated whilst we are able to maintain ours. Whereas in 1995 we were only able to achieve an index of 4.1% we have now reached 5.2 [ten being the best possible score, ed].

Simply by way of illustration I would like to mention that the average score of the candidate countries for EU membership has dropped. For example the Czech Republic's index fell from 5.3 to 4.3, Poland's from 5.5 to 4.1 and Slovenia's from 6.0 to 5.5. This merits attention. In actual fact the situation of a series of Western European countries has deteriorated since 1995 from a corruption point of view. For example Germany's rating has decreased from 8.1 to 7.6 and Ireland's from 8.6 to 7.2. Against this backdrop I believe that if we consider the facts instead of the fears and conjecture we can ascertain that statistically and on the basis of empirical investigation Hungary lags far behind the Eastern European average as far as the spread of corruption is concerned.

Given that this is the case if I were to weigh up István Schlett's proposition in the light of the available facts I would have to conclude that it does not hold water. Looking at the issue from another angle we need to recall that we have been going through a transition for the past ten years, moving from over 40 years of one-party rule to a democratic, multi-party system, a market economy and the rule of law. An extraordinarily significant process of structural change is unfolding. If we compare Hungary's performance with that of countries in a similar situation we can see that Hungary's is the best.

At the same time the civic government [the reference here is to Fidesz, whose official name is Alliance of Young Democrats, Hungarian Civic Party, ed] has fought a determined campaign in a transparent and accountable manner to clamp down on organised crime. We have achieved positive results in this respect. The number of crimes committed has subsided and we have reorganised the police force. We have succeeded in reducing the debts piled up by the police force under the previous government and we have attempted to modernise the force at the same time. We should also bear in mind that this government managed to put a stop to the corruption that had centred around the Posta Bank. Similar tendencies towards corruption existed within the administrative bodies responsible for social security payments and we likewise succeeded in bringing corruption to an end there by reorganising the entire system of how social security payments are managed.

Alongside these efforts we have been doing everything in our power within the tax system to ensure that the economy "whitens," that it is continually being cleaned up. So that everyone has an interest in declaring his income and paying tax on it rather than hushing it up. So that the economy does not make a beeline for the loopholes, but respects the overall parameters. We have slashed the tax burden, and modelled the system in a more bearable way by for example cutting the amounts to be paid by way of social security contributions and by increasing the minimum wage this year to HUF 40,000. In so doing we have taken a major step in the direction of ensuring that the recruitment of workers take place within normal parameters so that it is simply not worth taking on clandestine workers. We bolstered the tax authorities, set up the tax police and boosted citizens' willingness to pay their taxes and social security contributions.

These developments have a very significant preventive effect on corruption. We also increased our tax revenues as a result. Perhaps the most important step of all was that a fortnight ago the government debated the substance of the comprehensive anti-corruption strategy. This was the second reading. The role of the law on civil servants is to increase the salaries paid to civil servants, to offer them the prospect of a clear career progression so that it becomes apparent that if an individual performs his work efficiently he can look forward to reaching such and such a level, but this of course hinges on making these conditions transparent, on preventing civil servants from being exposed to the temptation of corruption. This is why they will be required to submit a declaration of assets and we are also going to introduce a set of rules on what is compatible with holding public office in order to reduce even the likelihood of their being susceptible to corruption.

The same applies to the immunities, declaration of assets and probity expected of Members of Parliament. At the present juncture the new declarations of assets are being compiled and compared with the old ones. We are taking resolute steps to make circumstances unequivocal and transparent, to root out corruption, protect our civil servants and to allow for even politicians to be caught in the act if they stray off the straight and narrow. We are also working on a law on lobbying as we would like to regulate the activity of lobbyists along similar lines to rules adopted in other countries, to create a legal framework within which lobbying may take place although this is not an easy undertaking. We would like to close outstanding cases involving corruption by means of accelerated legal proceedings and by regulating the law on the police.

The oil affair is one of the high-profile cases, which caused quite a stir. The Parliament established a Committee of Enquiry and the Public Prosecutor devoted a great deal of energy to speeding up the legal and court proceedings surrounding the affair. If we cast a glance at the tangible measures adopted since the Orbán government came to power then the fight against corruption has featured consistently and conspicuously from the tax system, through the restructuring of the criminal law and the legal system in general as well as in court procedures. The oil scandals for example chronologically speaking belong firmly to the days of the two previous governments, this is beyond dispute, yet the court cases dated and still date to the present government's term of office and we would like to see them accelerated.

If I could be allowed to return to the figures I quoted at the beginning of my reply, I can safely say that Hungary really is in an excellent position compared to the other countries of the region. Of course this does not mean that we have nothing left to do by way of further improvement. I feel justified in maintaining that the criticisms, which have come to light, are not true. Of course members of the intellectual elite like to use unblemished and ideal circumstances as their yardstick. It is also true that politics and the economy can produce exceptional cases, particularly in times of transition. We are certainly taking pains to make the situation in Hungary transparent and to clean it up.

In the wake of the Torgyán [József Torgyán, disgraced former Minister of Agriculture and Smallholder's Party magnate extraordinaire, ed] scandal how can ordinary people in Hungary be convinced that not every politician is in the business of grinding his own axe at the expense of society at large?

In this instance it is a worthwhile exercise to work on the basis of comparative data. The Torgyán scandal is comparable to scandals, which have erupted in Western European countries as well, such as the Italian Christian Democrats scandal, which led to the collapse of the entire party, such as the French or British scandals or even the events in Germany. These are all several orders of magnitude greater than what happened in Hungarian political life and we have not even broached the subject of the various rumours surrounding the former President of the United States particularly in respect of immunities.

Of course this does not provide a reply to the question of how to restore the confidence lost in politics in Hungary. The only means of so doing is to go through the rules applying to political actors one by one. We have to make the laws on Parliamentary privilege and what is compatible with holding office and on the declaration of assets transparent in the public eye. József Torgyán has to pass muster according to these criteria as well. He has to prove in the court of public opinion that the criticisms levelled against him are not accurate and if he proves unable to do so then he must draw the requisite conclusions.

It is fairly evident that this affair does not just cause problems for the Party of Independent Smallholders—and the Party certainly has been forced to endure serious consequences with its popularity rating plummeting to 1% according to the most recent opinion polls, a genuine tragedy for a Party with such a long-standing history behind it—because should we fail to conclude this matter decently, to deal with it in a manner, which would set the minds of the public at rest, then it will have ramifications for political life in the country as a whole.

In the wake of the Tocsik affair [in which a lawyer stands accused of donating an exorbitant fee paid on winning cases involving disputes between local authorities and central government to a political party, ed] these problems can be categorised as illnesses typical of societies in transition. I am not saying that they could not have been avoided, but given that they have occurred then we should clear them up and settle accounts in public. This is one of the biggest responsibilities facing the Party of Independent Smallholders and József Torgyán personally as well because if he is unable to straighten things out this will have serious implications for the Party of Independent Smallholders first and foremost and then for Hungarian politics in their entirety.

Once again, however, I would like to point out that these matters pale into insignificance alongside the scandals engendered in the large, highly advanced countries of Western Europe, which possess far stronger monitoring mechanisms and where the public figures involved have been putting democracy into practice on a day to day basis for decades on end.

The word "civic" features in the name of Fidesz. Every Fidesz politician stresses the importance of civic values, but what does this slogan mean in practice? Does supporting a middle-class, the fight against poverty and the creation of a climate favourable to the spirit of free enterprise not mean that the government spreads itself so thin that at the end of the day nobody is singled out for particular assistance, but that the government instead tries to give everyone some little improvement?

The Orbán government has a clear-cut and unfaltering social philosophy. We were confronted with the legacy of the economic difficulties of the collapse of Communism and the changeover to democracy and a free market economy. When Hungary was opened up to market forces society was split in two between the winners and the losers. If we look at the question from a psychological point of view most people believe that they belong to the ranks of the losers. It is possible to contend that two thirds of Hungarian society harboured this belief and it may very well be the case that they continue to think this way. About one third of the population looks upon itself as the winner. We would like to have and still wish to change this state of affairs on the basis of firm and lucid social policy objectives.

What this boils down to is that we aspire to bring back as many people as possible into the camp of those, who feel that they are winners as a result of the changeover or as we can see today of the establishment of a fully functioning free market economy and who might very well be potential winners. To give them back their enthusiasm and faith in being able to better yourself as a result of honest work, in being able to provide decent living conditions for themselves, in short to be able to create a normal middle-class existence and realising that the path towards this is that of honest, hard work rather than of cunning manipulation of the system or a network of personal connections. Restoring the value of honest work in the minds of the people of this country has been an extremely important point of departure. A country's productivity can only be founded on the belief that honest work brings rewards.

The second aspect is that we are in the process of building a knowledge-based society. The 21st century is the age of IT in which globalisation and information processing technology are everyday phenomena. Society can only hope to live up to this challenge if we assign a greater role to knowledge. This is why we are enhancing the already distinguished role accorded to education even further. When I went to university as an undergraduate in the second half of the 1970s only 10% of a given generation could gain access to higher education. Today the corresponding figure is 30%.

We cherish fond hopes that we will reach the stage in the near future where every second young person will be able to get into higher education should he or she wish to. We would like to create the requisite conditions for study. Partly by restructuring the grants system, partly by abolishing tuition fees for obtaining the first degree. We have set up a broader network of student halls of residence and are continuing to expand it. We are taking a great deal of care over encouraging the underprivileged to take their studies further and this is by no means our lowest priority. Education therefore represents the second important area.

The third is that a strong society can function only if it is in possession of a strong middle class. This once again involves bringing more and more individuals over to the winning side, consolidating the middle class, which forms the backbone of every modern society, supporting SMEs and remodelling the tax system so that it is more favourable towards these segments of society. Shoring up the suppliers' programme, which involves strengthening Hungarian suppliers and subcontractors so that they have a good chance of becoming partners of the multinationals, which have set up shop in Hungary, was designed to prove that it is possible to succeed in Hungary as a result of labour. In order to make this work, the middle class has to be bolstered and a supportive tax and social security system as well as an appropriate environment are essential to attaining the aim.

The fourth element is attaching greater importance to the family. Hungary is a small country, but a great nation. This is proven by more than its thousand-year history alone. Everyone is familiar with the tempestuous times Europe has lived through in the course of the last thousand years. Hungary has always been an important protective bastion for the West and has always been firmly part of Western civilisation. Of course the great powers have often lobbed this little country back and forth, but the events of 1956 demonstrate that Hungary has the will and the ability to live and is looking for its place in the world again. The last ten years have shown that Hungary can survive in the Carpathian Basin as a successful nation, but in order to do so children, Hungarian children have to be born.

Up to now very many young people have decided against starting a family because they were afraid that such a step would be tantamount to plunging themselves into poverty. The biggest losers of the changeover to democracy have been young families, families bringing up young children at the start of their lives and careers and the greater the number of children, the greater the chances of poverty as well. This is why we have formulated a family policy according to which starting a family and bringing up children does not equal accepting poverty. We regard children as a social investment, a kind of common good, who have to lay the foundations of our own future too. We consider them in such a way that even the time spent on them is a worthwhile investment, which pays off socially. Hence the government is willing to set aside some of its own resources for the purpose of raising them.

We restored the former system of family benefit being awarded on the basis of individual entitlement [as opposed to income bracket] and by virtue of the maternity leave and child benefits have created the opportunity for young mothers to stay at home during the early stages of a child's life, taking care of it and we have altered the tax system so that a family with three children is given a tax break of HUF 10,000 a month for each child. This is a significant increase in the tax allowance. Nor is the manner in which we carried this out a matter of indifference. We linked the tax break to employment thereby encouraging people to work because they are only entitled to this tax allowance if they are in employment.

It is beyond all shadow of a doubt that when we stated that we intended to concentrate on families and bringing up children we were making a determined choice of values. We are not by any manner of means frittering away money here, there and everywhere, but we are spending money on the basis of a clear choice of values. Strengthening the family is all the more important because during the 40 years of Communism we experienced disorientation within society. Small communities, associations and families, the fundamental pillars of society began to crumble away. This is why we had to restore respect for the family, as the smallest cell from which society is formed and which holds society together. We have to make it strong and in so doing strengthen the nation as well. This was a very important consideration in our minds.

Now this year our economic performance has been such as to allow us to raise the salaries of workers in the public sector. One of this development's most spectacular elements is the new law on civil servants, which considerably increases their earnings. Over a three-year period their salaries will go up by 75%. If the Parliament adopts the law then their pay will increase substantially in June of this year. Together with workers in the police force about 150,000 individuals will benefit and as you know the term public sector workers also covers other types of public office-holders, workers in the health care sector and social workers inter alia. We will be increasing their income well above the average this year too. In some cases the increase will comprise one and a half times the average whilst in others it will be five to 10% above the average.

Why are these pay rises being awarded? First and foremost because we have to overcome the considerable wage deficit a large proportion of workers in this sector have been forced to contend with. Up to now economic policy measures have always been carried out at their expense. We believe that we are called upon to heal the wounds inflicted on them by the changeover to democracy now that Hungary has become one of the most dynamically developing and best performing economies in Central and Eastern Europe. This dynamic growth is what has opened up the opportunity to allow wider segments of the population to enjoy a share in the income generated.

The final point I would like to mention in this context is the Széchenyi Plan, a comprehensive social and economic development programme, which we designed to reduce the disparities between the regions within Hungary. There is a major difference between the highly developed Western region and its undeveloped counterparts in the East of the country. We cannot enter the EU if we have a modern Western region capable of competing with virtually any country of Europe and an Eastern region, which has fallen so desperately behind that it is flailing about somewhere in the Eastern marshes. The regional economic development programme is intended to bridge this gap.

I am convinced that we have excellent prospects of bringing about change because multinationals are not setting up shop exclusively in the Western regions these days, but Flextronics for example is making investments next to Nyíregyháza near the Slovak-Ukraine border. The Hungarian workforce is well trained and there is no shortage of an abundant labour force particularly in these Eastern areas. So companies are making their way there already.

In the economic development plans tourism and the development of the regional economy and of information society have a very prominent role to play and within this broad general heading infrastructural developments are also given priority. Industry follows in the wake of the motorways we are building eastwards. The faster we take the motorways to the east the greater the likelihood that capital will follow. I believe that it represents a major, sweeping positive vision of how Hungary ought to look in the 21st century and its pillars are the initiatives I have just described.

In his state of the nation address Viktor Orbán pointed out that the government had undertaken a commitment to implement the medium-term action programme for the Roma. One of the positive signs he mentioned in conjunction with this programme was that compared to the 1998 figure of 300 these days 8,000 Roma students were receiving scholarships to help them continue in education. In spite of this there is still no tangible sign of the billions spent by the government in the lives of most Roma. How can the effectiveness of the programme be improved? When will the benefits of economic upturn finally start to reach the poorest and most underprivileged groups in society?

This is an extremely important issue and belongs to the most urgent facing Hungarian society. I would like to emphasise that although this government was not responsible for creating the Roma issue it is the first government, which would like to come up with a genuine, detailed solution. One aspect of the solution is that we have considerably extended the scholarship system and the government has played an active role in education by for example establishing independent Roma halls of residence. There are non-profit companies, which create job opportunities for the Roma. For example the Roma Self-Governments are planning to involve them in housing construction schemes. The government spends substantial amounts of money on all these initiatives.

Another important aspect is that we attach a great deal of importance to the public works schemes, assigning them a prominent role. We have restructured the unemployment benefit system primarily as a means of encouraging work to be given to the unemployed, even if that work is only in one of the public schemes. This goes back to the issue of giving work back its value as I mentioned earlier. People should work and receive an appropriate income in keeping with the circumstances. People have to be accustomed or re-accustomed to work.

In the last ten years a practice has emerged whereby given that a person with low qualifications could almost get hold of more money from benefits than from paid work a mentality came into being amongst some of them, which meant that they migrated from one type of benefit to another. I do not want to use the word spongers, but they exhibited a sort of passive, expectant behaviour: hello here I am, I am poor come on and help me instead of thinking about how they could change their lives so that they could re-enter the labour market. Now we have witnessed the unfolding of a situation in which there is a shortage of labour in Hungary in certain sectors. According to the most recent data, unemployment lies at about 5.6% in Hungary.

It is true that within that figure Roma unemployment, particularly in the East of the country, is very high. The Roma problem has been around for a long time and is rampant. Solving it is not something that can be achieved overnight. In April 1998 the government adopted a medium-term Roma action plan to deal with the problem and, in agreement with Roma representatives we have taken the necessary steps in a huge variety of fields, ranging from culture, education, housing, health care to combating discrimination.

I am convinced that it is extremely difficult to solve the problem from the outside. The Roma population needs to play an active role in the process of change as well. One very important example is the role of the Roma intellectual elite. How they can illustrate what these problems mean within their own community so that everyone can grasp their implications. We must also work side by side in eliminating certain prejudices. I must point out that certain prejudices have come into being in conjunction with getting to grips with this issue and sometimes people get carried away by their personal experience. Some people have positive experiences, others negative and people are prone to blowing up the bad experience out of all proportion to an extent.

It would be very important to present positive examples. For this reason the 8,000 recipients of scholarships will be able to play a cornerstone role in the socialisation of the Roma population and its integration into mainstream society. Here I am expecting the process to be a long one. Swift, spectacular results have not been achieved in any European country thus far and I do not believe anyone will expect Hungary to be an overnight sensation in this respect. We have to work in close co-operation in this field and I can discern very substantial results even now. I have also noticed that the Roma organisations have learned how great a burden of responsibility they shoulder in representing the interests of their community.

We foster excellent relations with the Roma Self-Governments and are able to work together in the areas of the economy, health, culture and education. In the realm of information technology we are endeavouring to bridge the digital divide, which we feel represents a real danger. Making use of a kind of positive discrimination we are trying to facilitate access to computers and the Internet for the Roma, thereby promoting mobility, so that they can take the initial hurdles, which would be very difficult to achieve in a traditional society.

The advantage of a knowledge-based society is that if someone is already linked up to the Net he can more easily find answers to his questions—provided, of course, that he has the motivation within himself to do so—and can overcome the disadvantages facing him more easily. This sense of personal, internal grit and resolution is something, which cannot be substituted for by anyone else.

At the Nice summit, Hungary was allocated 20 seats in the European Parliament. Portugal and Belgium, with roughly the same population size, by contrast have 22. Should we not begin to fight against this act of discrimination now so that by the time of accession Hungary does not end up in a far worse situation than the current Member States? What steps do you deem necessary?

By way of introduction I would certainly have to say that Hungary was only able to attend the Nice summit as an outsider. Given that this is the case it is perhaps somewhat of an exaggeration to speak of discrimination. At most we could talk about presumed rights, in other words about the time when we are already fully-fledged members of the EU. The implied criticism contained in the question is justified as a matter of fact, and in our own way with the modest instruments we have at our disposal we have voiced it in political debate.

The head of the Office of the Under-Secretary for Integration stated at an international conference that Hungary too asserts its right to a number of mandates appropriate to its population size and most recently Ferenc Mádl, President of the Republic, also broached the subject. We would welcome it if some means were to be available to rethink the allocation of the number of seats. We do not consider this to be an arbitrary demand, but argue that if the allocation of seats takes place on a normative basis then Hungary's population by no means falls short of that of other small European countries. I resolutely hope that this will not upset their sensibilities, that it can be the subject of a rational discourse and that we can come up with a healthy solution.

Might this whole issue not mean that Hungary will be forced to relinquish some of its vital interests such as the law on land ownership or the free movement of workers in the hope of a swift accession?

I have noticed that since we have been in government, since 1998 in other words, that we have always been very clear and assertive in all our statements concerning EU-related issues and interests. We are not selling a pig in a poke. We have made it absolutely clear that this country has a number of national interests, which we would like to assert in the course of negotiations. In part these feature in derogations. There are not all that many. Agriculture falls into this category, the environment and one or two other questions. As far as these are concerned we feel that there is a need for transitional periods.

At the same time a demand has surfaced amongst the Western countries concerning the suspension of one of the most fundamental rights of all. If the Member States wish to place restrictions on the free movement of workers and put forward a request for a derogation to us then that would be a fairly serious issue. In my opinion the fears, which exist in Western Europe, to the effect that when workers from the East start showing up they will simply inundate the Western labour market and that Western workers will be forced into cutthroat competition are over exaggerated.

Personally speaking I do not expect a massive movement of workers. It is all the more unlikely since we live in the age of the information society, distance working when someone does not necessarily have to travel hundreds or thousands of kilometres to carry out his work, but can send it via the Internet instead. A great deal of work can be performed in rural areas and the user can get hold of the information wherever he happens to be at a given moment. The world will have changed by the time the EU embraces new Member States into its ranks in other words.

In my view the fears originate from the 20th century whereas we are now living in the 21st century where information society and the globalised world operate according to different rules and I hope that this knowledge will dispel the fears in future. I am optimistic. The Member States to be from Central and Eastern Europe will have a lot to offer the EU, they will represent a resource, the advantages and benefits will be mutual, and I, as the member of the government responsible for information technology, feel that the information society, globalisation and the new economy have opened up a series of new opportunities for Europe, which have not been fully explored or exploited.

An article has just been published about how the European information technology industry is on the verge of a major boom. We have seen that some dot com enterprises have foundered at the stock exchange. Many people expected that a recession would ensue in certain areas of the new economy as a result, but I disagree. The first clay pigeons often do shatter to pieces, but the new economy as a whole has become a far more firmly established presence within society to be daunted and the accompanying culture is well on the way to adjusting.

By virtue of our cultural strength in Europe we have reserves at our disposal, which will allow us to catch up with the United States' technological superiority in a historically short space of time and in so doing Europe has the potential to become a major player in terms of the global competition, which is being played out between the USA, Europe, the Far East and other countries.

In Hungary everyone pays lip service to the information society, whilst the reality is somewhat bleaker because Internet access prices are amongst the most expensive in all of Europe. What can be done to end this glaring contradiction?

What ought to be done is that Internet access prices should be slashed. The government is in the middle of serious talks with the Internet service providers on this very issue and I am very optimistic. One of the results of this year's negotiations on telephone charges is that telecommunications companies have promised to cut Internet access prices and telephone charges where calls are made to access the Internet by 15 to 20 percent. At the same time we want to introduce a number, the so-called 51 dialling code, the aim of which would be to separate ordinary telephone calls from telephone calls to access the Internet. It will become easier to keep track of when people are making calls to access the Internet as a result and at the same time it will be possible to cut the costs of making those calls.

Apart from that the government has instruments at its disposal, which it can use to prompt and possibly even compel service providers in given cases to reduce prices. Delivering results swiftly in this area has been given top priority. So-called free Internet service providers have also begun to put in an appearance on the market. There are already two operating in Hungary at the moment.

We still have to sort out their relationship to the major service providers because in many instances the fact that they link up to the central telephone exchanges in the same way that ordinary telephone networks do the user is often disconnected from the Internet and is forced to redial the service provider, which ultimately causes technological problems. In part we want to solve these problems and in part we want to establish a system of preferences within the framework of the new uniform law on telecommunications, which is in the process of being drafted, which would mean that the uniform law on telecommunications would form the foundation of a liberalised market. We want to achieve complete liberalisation of the market in Hungary by 1 January 2002.

From then on we would expect fierce competition to be the order of the day. New service providers would enter the market alongside the existing ones and we hope that the consumer can look forward to the pleasant prospect of the prices of the various services falling due to the very intensity of the competition.

The law, which the government will be debating on Friday [2 March] and which I will be submitting, will be one of the fundamental laws of the new economy and will significantly alter the landscape since we want to put an end to monopolies and the contradictions and discrepancies arising from bottlenecks. Cross-financing is a pronounced trend and in many cases the way in which it takes place is far from transparent. Considerable investments have been made in this market by quite a few operators, who would like to see a return on these investments. Huge profits have also been made. For example mobile telephone service providers have enjoyed an impressive career.

The use of mobile phones has caught on in Hungary to a quite astounding degree. We also hope that the introduction of the electronic signature, the law on which we have just presented to Parliament, will pave the way for e-commerce and for paper-free communication. If we can also include mobile telephony in these developments, for example by means of UMTS, with the auctioning of the three and a half gigahertz frequencies then we could increase the room for manoeuvre and this would lead to the appearance of a completely new, fast communications system, which would galvanise the economy, making it more dynamic. These two laws are extremely significant in every possible sense, economically, culturally and politically.

The aim lying behind all these efforts is that of increasing Internet access. We are drawing up an action programme to provide computer, communications and Internet access to various segments of society. We launched the Family Net programme. It was an experimental programme involving giving 1500 families support in buying computers and getting access to the Internet.

On the basis of experience gleaned there we would like to extend the programme to include civil servants, entrepreneurs, teachers and possibly some young people as well. We have now introduced a free Internet access scheme for young people. The so-called Sulinet/Írisz programme is up and running, in the framework of which a computer has been placed in every school and the possibility of Internet access has been provided. One of our aims is to continue with this programme dynamically. We would like to introduce a so-called public Internet access scheme, which would mean that Internet access points would be set up in post offices and public places, not confined to Internet cafes, but in shopping centres and elsewhere so that people become accustomed to using the Internet.

We, the government that is, have to play an important part in taking the initiative and setting the ball rolling when it comes to spreading Internet culture because it is a culture involving socialisation and people have to be prepared for it. I am very optimistic concerning all these issues. I have faith in the Internet. Many individuals are allying to realise the dream of Central Europe's Silicon Valley being situated in Hungary and investors and service providers equipped with hefty capital clout are here already. We can boast of Hungarian expertise, which has already notched up a great deal of achievements. Mathematics is one of our particular strong points and we have excellent professionals in the software branch. If the government, the civil and the professional sphere work together and make full use of the relatively good position we find ourselves in, then Hungary will be in poll position in the region in the areas of information technology and telecommunications.

Gusztáv Kosztolányi, 12 March 2001

Moving on: