Country Overview
Country Facts
- Area: 35,919 sq mi (93,030 sq km), slightly smaller than Indiana
- Population: 10,006,835 (July 2005 est.)
- Population Growth Rate: -3.7, per thousand of the population
- Life Expectancy: Male 68.18 yrs., Female 76.89 yrs.
- Infant Mortality: 6.6 deaths/1,000 live births
- Gross Domestic Product (GDP): $149.3 billion (purchasing power parity; 2004 est.)
- GDP Per Capita Income: $16,607 (purchasing power parity; 2004)
- Real GDP Growth: 4.5% (2004)
Overview of U.S. Government Assistance
In FY 2005, the USG allocated an estimated $14.67 million in assistance to Hungary, including:
- $2.70 million in democratic reform programs;
- $0.01 million in humanitarian programs; and
- $11.96 million in security, regional stability, and law enforcement programs.
In FY 2005, a total of 128 Hungarians traveled to the United States on USG-funded exchange programs.
The last year for new SEED bilateral funding to Hungary was FY 1999, although some additional SEED funds for public diplomacy and Democracy Commission grants were provided through FY 2003. Other forms of USG assistance to Hungary continued through FY 2005. In addition, some activities funded through SEED funding from prior fiscal years continued in FY 2005.
FY 2005 Assistance Overview
U.S. STRATEGIC INTERESTS
Located in the heart of Central Europe, Hungary is a stable, democratic country that joined the European Union (EU) in May 2004. Hungary?s location makes it a key player in the stability of Central and Eastern Europe, where it has acted as a partner to neighboring countries that have made less progress in modernization and integration. U.S. interests are focused on maintaining (and even increasing) Hungary?s solid cooperation in the global war on terror and on improving Hungary?s military and political performance in NATO. Hungary remains an important economic partner as it works to improve its investment climate and to tackle domestic economic reform. U.S. assistance to Hungary has been declining for several years and will continue to do so now that Hungary has joined the EU and has itself become a donor nation.
KEY ISSUES
Hungary has completed the transition to a stable, democratic state. Corruption remains a problem, however, and inter-ministerial cooperation is also problematic at times. Streamlining government and improving bureaucratic efficiency are important campaign issues in the run up to the 2006 national elections. Prime Minister Ferenc Gyurcs?ny was selected through the prescribed constitutional process in 2004 following the resignation of Prime Minister P?ter Medgyessy. Hungary made progress in its efforts to remedy discrimination against Roma. Roma political leaders have limited roles in Parliament and Roma have an advisory role on the local level through minority self-government councils. The only two Roma members of the European Parliament are Hungarian. Earlier targeted assistance programs in the areas of democratization and countering discrimination have concluded in 2005. However, these areas continue to receive attention through channels such as State Department visitor programs.
Hungary has a robust export sector, solid economic growth rate, and low unemployment. It has had a strong record of structural reform beginning even before the change of regime. Per capita gross national income (GNI) is $9,511; on a purchasing power parity basis, per capita GDP is about $16,607. Life expectancy, literacy rates, and other indicators, such as access to potable water, reflect Hungary?s status as an upper-middle-income country. Hungary no longer receives any development assistance for general economic or financial development. However, ongoing programs from several U.S. government agencies encourage development of legal and financial systems to fight terrorism and organized crime, and we actively engage Hungary on agricultural biotechnology. In 2005, Hungary's system received positive reviews from the European regional body coordinating efforts against money laundering.
As an EU member, Hungary is now a donor nation, and no longer receives any humanitarian assistance. Priorities have expanded in the social sector to include support for science, health, and environmental cooperation. Hungary has now institutionalized "Men's Health Week" and a Bridge Walk to promote breast cancer awareness and prevention. In January 2005, the U.S. Department of Health and Human Services entered into a Memorandum of Understanding with the Hungarian Ministry of Health to support health and medical science cooperation.
The majority of U.S. assistance to Hungary is military security assistance and law enforcement. Although a North Atlantic Treaty Organization (NATO) member, Hungary has made slow progress on military reform. Direct military-to-military support, including visits and exchange programs, continues Hungary?s counter-terrorism program is still in its fledgling stage and the Hungarians will continue to rely on the U.S. and other allies for assistance and guidance. Hungary remains a transit country for trafficking in persons. Exchange and training programs on law enforcement and counter-terrorism have begun to bear fruit, with over 10,000 alumni of these programs now working in the region.
FY 2005 Country Program Performance
Democratic Reform
Hungary is one of the most stable countries in Central and Eastern Europe. It was one of ten countries that entered the EU in 2004, and is among the countries best prepared to meet the challenges of EU membership. It is a member of NATO, World Trade Organization (WTO), Organization for Security and Cooperation in Europe (OSCE), United Nations (UN), Organization for Economic Cooperation and Development (OECD) and the Council of Europe.
One persisting legacy of Hungary?s past is a weak civil society. NGOs, churches and other private organizations are still relatively dependent on the central government for financial and other support. In FY2005, USG-funded programs highlighted the importance of religious and ethnic tolerance for Hungary. The present government is committed to the values of tolerance and equality of opportunity, but implementation of key programs occasionally lags on the local level.
Corruption remains a problem and inter-ministerial cooperation remains problematic at times. Streamlining government and improving bureaucratic efficiency will be important campaign issues in the 2006 national elections.
Hungary made progress in its efforts to remedy discrimination against Roma. Roma political leaders have limited roles in Parliament and Roma have an advisory role on the local level through minority self-government councils. The only two Roma members of the European Parliament are Hungarian.
U.S. ASSISTANCE PRIORITIES
The SEED-funded Democracy Commission small grants program, funded in Hungary through FY 2003, completed its activities on September 30, 2005. In FY 2005, the highest priorities for U.S. democratic reform assistance in Hungary included strengthening non-governmental organizations (NGOs) promoting civic participation and education, minority issues, legal reform, equal opportunity, and the fostering of a healthy political climate.
PROGRAM PERFORMANCE
In FY 2005, activities funded with USG assistance from prior fiscal years continued to build capacity in the NGO sector. Hungary?s EU accession, the phase-out of the Democracy Commission Small Grants program, and transition from being a recipient to a donor country all contributed to the importance of NGO sustainability in Hungary. The SEED-funded Democracy Commission program promoted a competition for NGOs to help create a culture of volunteerism and to host programs in leadership development, grant writing, and fundraising.
FY 2003 Democracy Commission grants that were awarded in late 2004 concluded in FY 2005. These were designed to assist the NGO sector, including university administrators, improve its outreach, broaden its base of support, and identify potential new donors in order to survive in a market economy. In addition, USG assistance promoted the values of volunteerism and loyal political opposition through public diplomacy programs and engagement by the U.S. Embassy.
Three public diplomacy programs also supported the USG?s democratic reform goals. First, the International Visitor Program spent $40,000 in FY 2005 to send some of Hungary?s future civic and political leaders on professional tours of the United States. Other participants learned how to improve NGO management, and how minority organizations empower themselves in a pluralistic political system. Second, expert speakers from the United States were invited to Hungary to discuss measures to combat anti-Semitism, and to explain the U.S. election system. Third, the USG awarded $16,000 in small grants to support NGO capacity building and build volunteerism.
Hungary has an independent judiciary that conforms to democratic norms and respects rule of law but is still hampered by communist-era hierarchal attitudes that inhibit inter-departmental and inter-ministerial cooperation. In FY 2005 the current government made progress in this area by downsizing approximately fifteen ministries in an effort to cut costs and increase efficiency.
The Constitution provides for freedom of speech and of the press, and the Government of Hungary (GOH) generally respected these rights. However, both the current and previous governments were criticized for interference in editorial and personnel decisions of state-owned media. Privately owned media, although free, generally continue to report along predictable political lines. The government has made no progress in FY 2005 in its attempts to comply with EU and technical standards by amending the 2003 electronic communications law passed by Parliament.
Hungary continues to provide matching funds to NGOs based on the amount taxpayers donate, up to 1 percent of their income. U.S. assistance to local NGOs through the Democracy Commission, funded through FY 2003, also helped shape other examples of progress, including an initiative to increase private resources for the NGO sector and a law on volunteerism that supports best practices. A U.S.-supported NGO advised the GOH on donor tax incentives, endowments, and other financing mechanisms; hosted university non-profit law clinics; and sponsored internship programs in Hungary and the United States. Several programs helped create a better-informed NGO community by strengthening Internet networks and newsletters. Several U.S. grants supported projects that sought to integrate underserved populations fully into the democratic process and pass laws to protect their rights.
Economic Reform
Hungary has a robust private export sector, solid economic growth rate, and low unemployment. It has had a strong record of structural reform beginning even before the change of regime in 1990. Per capita gross national income (GNI) is $9,511; on a purchasing power parity basis, per capita GDP is about $16,607. Life expectancy, literacy rates, and other indicators, such as access to potable water, reflect Hungary?s status as an upper-middle-income country. The Government of Hungary continues to run high fiscal deficits. This remains a concern for Hungary's continued economic development, particularly in terms of conversion to the Euro.
U.S. ASSISTANCE PRIORITIES
Reflecting the development of Hungary?s economy and financial markets, U.S. assistance in this area has focused on countering terrorist financing and anti-money laundering, as well as openness to agricultural biotechnology. Future U.S. priorities will remain largely the same, albeit with steadily declining resources.
PROGRAM PERFORMANCE
In September 2005, USG assistance, through the Department of Justice and the Department of State, sponsored the third of three conferences on combating money laundering. This conference, hosted at the International Law Enforcement Academy, was on "International Investigations and Prosecution of Money Laundering Crimes: Examining the Current State of Hungary?s Money Laundering Regime." The conferences raised awareness of the importance of preventing money laundering as part of the fight against terrorism. The conferences also explored effective cooperation among law enforcement authorities on financial crimes. Participants included officials from the Ministry of Finance, The Financial Supervision, the Hungarian Police FIU, the Prosecution and Judges. Hungary is a member of MONEYVAL, the European Financial Action Task Force (FATF)-style regional body. MONEYVAL gave Hungary a favorable assessment in its formal review in 2005. Following this, Hungary submitted a formal application in September 2005 to become a member of FATF.
FY 2005 was the final year for the Cochran Fellowship Program (CFP) of the Department of Agriculture in Hungary. This program focuses on middle income countries, and, with full membership in the EU, Hungary has graduated out of it. Between 1990 and 2005, 220 Hungarian agri-business professionals spent two to three weeks in the United States on individual or small group working programs. In 2005, with a budget of $11,000, two fellows traveled from Hungary to the United States to build Hungary?s capacity in food safety and bovine breeding materials evaluation.
The Department of Agriculture funded the travel expenses of a well-known Hungarian journalist covering science and biotechnology, to participate in the International Service for the Acquisition of Agri-biotech Applications (ISAAA) Congress in Singapore, March 18-24, 2005. The $1,500 contribution was to facilitate a Hungary "node" of the international system of biotechnology knowledge systems of ISAAA, a science-development NGO. Department of State outreach on agricultural biotechnology included sponsoring highly knowledgeable specialist visitors, including Dr. William Danforth, head of the Danforth Plant Science Center, to meet with governmental, academic, commercial, and civil organizations.
In FY 2005, the Public Affairs Section deployed three programs in support of the Embassy?s economic reform goals. First, Hungarian economic and business leaders selected by Embassy officers received grants totaling $32,000 to study U.S. best practices in eCommerce, biotechnology and food safety, and environmental protection under the International Visitor Program. With a $10,000 grant awarded from the State Department?s Voluntary Visitor Program, Hungarian leaders in the development of environmentally responsible tourism met with American counterparts to identify best practices for adaptation in Hungary. Two small grants enabled one Hungarian economic expert to travel to the United States for similar economic study opportunities.
Social Reform and Humanitarian Assistance
Civil society is active and growing in Hungary and plays an important role in the every day life of Hungarians. While economic and social development is widespread, some groups benefit from this less than others. The Roma minority continues to face challenges in full integration into the shared benefits of Hungary's remarkable transformation. Developing health and environmental awareness, as well as enhancing scientific advancement, including in environmental and health sciences, is a shared goal of the United States and Hungary.
U.S. ASSISTANCE PRIORITIES
Reflecting the development of Hungary?s economy and civic institutions, U.S. assistance in this area has focused on the environment, health, and scientific cooperation, fostering Hungary?s emergence as a donor nation in addition to responding to Hungary's humanitarian needs, and the incorporation of marginalized minorities. Support for minority groups will continues to be a high priority. Future U.S. priorities will remain largely the same, albeit with steadily declining resources.
PROGRAM PERFORMANCE
The USG still has one active program from a prior fiscal year in Hungary to reduce social and political exclusion and improve the quality of life of Roma through the Roma Integration Program (RIP). The four-year, $2.8 million program is entering its third year. To date, over 80 participants have completed cooperative planning with minority representatives and municipalities in Ozd, Hatvan and Pecs to develop solutions to problems affecting relations between Roma and majority populations. Currently, community projects worth over $115,000 and designed to improve Roma access to services are being implemented in Hungary. The program, in cooperation with the Hungarian government and national Roma leaders, initiated two national roundtables to promote non-discriminatory media reporting on Roma and cooperation with Roma leaders and NGOs on targets for the Decade of Roma Inclusion.
Numerous NGOs based in Hungary bear witness to a sustained legacy of previous USG assistance through their continuing development activities within Hungary and the region. For example, the Hungarian NGO Foundation for Development of Democratic Rights (FDDR), which organized training programs on a wide range of issues for over 600 participants from 14 countries, has successfully diversified its funding base and continues to advocate for civil society in Hungary and regionally, even after the conclusion of the Hungarian-American Partnership Initiative, of which FDDR was a beneficiary. The Non-profit Enterprise and Self-sustainability Team (NESsT), which ended in 2004, successfully leveraged over $1 million in public/private financing from USAID and private foundations/corporations to support social enterprise development and the financial sustainability of civil society organizations. The European Center for Not-for Profit Law, created as a legacy of USG assistance 11 year partnership with the International Center for Not-For Profit Law, continues to promote the strengthening of a supportive legal environment for civil society in Central and Eastern Europe and Europe in general, by developing expertise and building capacity in legal issues affecting not-for-profit organizations and the public.
USG assistance through the Environmental Protection Agency has provided in-kind support to the Regional Environmental Center, a non-profit international organization with a mission to assist in solving environmental problems in Central and Eastern Europe. The Department of State facilitated a DVC conference with Dr. Harlan Watson, U.S. senior climate change negotiator, following the climate change conference in Buenos Aires.
The USG has been supporting Hungary in the fight against breast cancer since 2002, when an alliance of NGOs, businesses, and the health authorities called the Bridge for Health Alliance was formed with significant support from Nancy Goodman Brinker, former U.S. Ambassador to Hungary. The current Ambassador, George H. Walker, has continued this tradition, and expanded it to include activities to improve men's health. He introduced Men's Health Week to Hungary in June 2004. These health initiatives are related to ongoing cooperation between Hungary and the United States in the framework of on agreement on health and medical sciences. The Ministry of Health and the Department of Health and Human Services intend to enhance and expand cooperative efforts addressing their common problems in the areas of prevention- and health-promotion-oriented policies, health services, information technology, epidemiology, bioterrorism, and medical research. A January 2005 Memorandum of Understanding creates a legal framework for future cooperation.
With the sunset of SEED funding for Democracy Commission small grants in FY 2003, three public diplomacy instruments remain to provide low levels of USG assistance in social sector reform. First, in FY 2005 the U.S. International Visitor Program funded several promising leaders from civic institutions to travel to the United States. The insights they gained from American counterparts have been adapted for use with their home organizations, making this program one of the most important in terms of impact for positive change. The total amount spent on this program in social sector reform was $72,000. The themes of these visits included minority empowerment (which resulted in the creation of the Roma Police Association ? a first of its kind in Europe); cultural preservation; and development of leadership skills for women and youth. U.S. speakers on themes similar to those in the International Visitor Program were funded to speak in Hungary. Finally, grants to NGOs and individuals working on programs to fight racism and build institutional capacity, as well as USG donations of books and study materials to schools totaled $33,400.
Security, Regional Stability, and Law Enforcement
Hungary remains a relatively safe and secure country, making advances in establishing a more effective border guard to patrol the EU?s southern and eastern flanks. Trafficking in persons is still a large area of concern as Hungary continues to serve as a major thoroughfare for persons being transported to the west from the poorer countries lying to the south and east of Hungary. Hungary?s counterterrorism program is still in a fledgling stage and the Hungarians will continue to rely on the USG and other allies for assistance and guidance. Militarily, Hungary faces no serious threat to its national security and as such lacks the political will to allocate resources necessary to meet NATO standards. Nevertheless, Hungary does continue to refine its military and develop niche capabilities that can be available to contribute to regional stability and the war on terrorism. While Hungary has made minor progress in military reform, they have shown an overall unwillingness to allocate adequate funds to make serious progress. Complacency under the NATO umbrella may be one the most difficult challenges to overcome in this area. Making Hungary realize the terrorist threat is real and prompting them to take appropriate action will also continue to be a challenge.
U.S. ASSISTANCE PRIORITIES
Improving Hungary?s military performance, thwarting trafficking in persons, and enhancing cooperation in combating transnational organized crime, weapons trafficking, and drug trafficking remain the major U.S. assistance priorities in security and law enforcement. With Hungary?s increasing prosperity and entry into the EU, U.S. assistance efforts will remain focused on these programs in the future. Indeed, Hungary will increasingly be expected to carry more weight in the international sphere.
PROGRAM PERFORMANCE
Hungary is a NATO member, but the legacy of the Warsaw Pact still shadows the Hungarian military, which is currently involved in a fourth attempt at restructuring. Downsizing the military and shifting mission focus are aspects of this ongoing process. U.S. military-to-military assistance is focused primarily on improving Hungary?s ability to deploy more capable and interoperable forces for alliance/coalition operations in the war on terrorism and peace support operations. In addition, the GOH is committed to non-proliferation and export-control regimes and often passes on U.S. technical assistance in these areas to neighboring countries through mentoring and training.
During FY 2005, Hungary received $1.9 million under the International Military Education and Training (IMET) program, to expose Hungarian military and civilian leaders to U.S. military training and to help the Hungarians determine their future defense structure. Hungary sent 117 officers and enlisted students to the United States for various military courses, with primary emphasis on infantry, special operations forces, medical, and non-commissioned officer (NCO) leadership development. IMET funds also were used to support a seminar on HIV/AIDS prevention in the military.
During FY 2005, Hungary received $200,000 in DoD Counterterrorism (CT) programs. CT funds were used to send Hungarian military and civilian experts to a regional Mobile Education Team (MET) event in the Czech Republic on civil-military response to terrorism. It was also used to enable Hungarian attendance at a CT course at the Naval Postgraduate School; and for a 12-nation regional CT seminar in April 2005, hosted by the Hungarian Ministry of Defense (MOD), to discuss various aspects of combating terrorism.
In FY 2005, Hungary received $5.9 million in Foreign Military Financing (FMF). Reflecting guidance to refocus FMF away from infrastructure development and into military capability development/enhancement, the Hungarian MOD submitted FMF requests that should provide greater capability and interoperability of specific military units. These requests have focused primarily on special operations forces, deployable nuclear/biological/chemical (NBC)/medical units, light infantry units, and a military police unit designated for possible deployment as part of a potential Provisional Reconstruction Team (PRT) in Afghanistan. FMF funds for legacy infrastructure projects diminished significantly in FY 2005, with both the CUBIC defense advisory contract and support for the Air Sovereignty Operations Center being phased out.
Hungary received about $180,000 in FY 2005 to send 13 participants to resident courses and to attend six separate regional seminars/conferences at the George C. Marshall Center (GCMC). The GCMC enjoys great popularity among governmental agencies in Hungary, with increased participation by non-MOD participants.
The cooperation between Hungary and U.S. law enforcement agencies has generally been excellent and continues to improve. For the past five years the Federal Bureau of Investigation (FBI) and the Hungarian National Police (HNP) have targeted transnational criminal enterprises with the only Organized Crime Task Force between the FBI and an international law enforcement partner. In April 2005, this task force was approved by the U.S. Congress for permanent staffing and by March 2006 will include four FBI special agents, an intelligence analyst, a language specialist, and an administrative assistant. The FBI Legal Attache in Budapest maintains effective liaison with counterparts, particularly concerning counterterrorism matters. The Drug Enforcement Administration (DEA) has begun several investigations with the Hungarian National Police, but is frustrated by Hungary?s intelligence policies that prevent sharing of information on narcotics investigations. The Department of Homeland Security works with Hungarian Customs to track and interdict illegal weapons procurement.
The International Law Enforcement Academy (ILEA) is a joint U.S. - Hungarian operation. The Department of State?s Bureau of International Narcotics and Law Enforcement Affairs (INL) supports operations, about $2.1 million annually; and the GOH augments ILEA staffing and maintains the infrastructure. Since 1995, over 10,000 law enforcement officers from 26 Eastern and South Central European and Central Asian countries have participated in training. ILEA hosts five eight-week core classes, each comprised of 50 mid-level officers and usually from three adjoining countries plus Hungary, plus 14 one- and two-week specialized courses. All of the instruction is translated simultaneously. Contacts formed among participants and instructors support efforts to combat organized crime and transnational terrorism. The FBI?s National Laboratory is updating equipment at ILEA?s forensics lab and ILEA is seeking private sector participation to maximize use of its facilities on issues like protection of intellectual property rights. Also, NGOs and U.S. military are encouraged to take advantage of ILEA facilities to share ideas on protection of infrastructure, media, and personnel from criminal and terrorist elements. In its second decade, ILEA is focusing on tracking alumni to maintain law enforcement cooperation opportunities.
Hungary is considered a "Tier II country" for trafficking in persons (TIP), as the GOH does not fully comply with the minimum standards for eliminating trafficking. Hungary is primarily a transit country, and secondarily a source and destination country. Reflecting Hungary?s increased concern over TIP, the GOH established both an inter-ministerial working group and a bilateral working group with the U.S. to combat trafficking. In FY 2004, Hungary also formed a dedicated anti-TIP investigative office within the National Police, which conducts international and regional investigations of trafficking rings in conjunction with other nations. The Budapest office of the International Organization for Migration (IOM) continues to conduct police and judiciary training on TIP, with funding assistance from the State Department Office to Monitor and Combat Trafficking in Persons. However, IOM?s highly visible "Don?t Fall In" prevention campaign will come to an end in December 2005. In 2005 Hungary funded a dedicated TIP victim shelter operated by Hungarian Baptist Aid. Hungary is a member of all non-proliferation regimes and has become a mentor to regional neighbors in border control issues, and it actively participates in the Southeast European Cooperative Initiative (SECI), as well as in the GUUAM (Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova) Group.
The USG used $48,000 through the International Visitor program to send law enforcement, military officers and legal experts to the United States to observe and discuss American practices in such fields as combating trafficking in persons, managing emergencies, protecting electronic commerce and intellectual rights. The Voluntary Visitor Program spent $7,300 to help Hungarian experts confer with American counterparts on the development of the new biometric visa and associated processing systems. In addition, a total of just under $29,000 was allocated for Hungarian journalists? visits to NATO, which serve to acquaint both reporters and columnists with the details of NATO?s new missions in extending stability both within and beyond the North Atlantic area and to highlight Hungary?s activity within the Alliance.
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