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 2006. In addition, some activities funded through SEED from prior fiscal years continued in FY 2006.

FY 2006 Assistance Overview

U.S. STRATEGIC INTERESTS & FOREIGN POLICY PRIORITIES

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 not modernized or integrated into Euro-Atlantic institutions as rapidly. U.S. interests lie with the further increase of Hungary's already solid cooperation in the Global War on Terror (GWOT) and supporting its improved performance in the North Atlantic Treaty Organization (NATO), both militarily and politically. Hungary remains an important economic partner as it works to improve its investment climate and undertake economic reforms.

FOREIGN ASSISTANCE PRIORITIES

Due to its success in the transition to market-based democracy, Hungary does not receive U.S. Government (USG) transition assistance. Public affairs programs support the full range of USG goals, while defense and security cooperation promote NATO and bilateral activities. USG assistance provided in Hungary is for targeted programs that complement the areas in which the U.S. and Hungary are partners.

OPERATING ENVIRONMENT

In 2006, the governing Socialist-led coalition won re-election, then enacted sweeping government reforms designed to tackle the burgeoning fiscal deficit and entrenched bureaucracy. Many of these reforms support overall USG goals such as international financial stability.

FY 2006 Country Program Performance

Governing Justly and Democratically

Orderly parliamentary elections in March 2006 represented another milestone in the democratic development of Hungary. Vigorous, open campaigning by all parties was the norm. Despite sometimes violent demonstrations, the Government of Hungary (GOH) continued functioning, and began to look at serious civic reform as part of its primarily deficit-reducing austerity package.

U.S. ASSISTANCE PRIORITIES

In FY 2006, USG assistance provided targeted exchanges for journalists, government officials, and a political organizer. Alumni activities for prior assistance recipients remained a productive way for the U.S. to engage with Hungary on civic and democracy-related issues.

DESCRIPTION OF PROGRAMS, OUTPUTS, AND IMPACT

Although Hungary no longer receives USG support for the development of civic institutions, the vitality of several Hungarian non-governmental organizations (NGOs) is a legacy of earlier USG efforts. In FY 2006, these organizations continued to conduct programs on various aspects of citizen involvement in a participatory democracy, basic market economics, and youth leadership. In order to support the quality of Hungarian journalism, the USG sent a journalist from a widely read daily on a three-week international visitor leadership program to observe best practices in the U.S. The articles he wrote upon his return were widely read and commented upon.

The USG also provided a Hungarian political party organizer with the opportunity to observe preparations for the U.S. midterm elections. The participant examined use of the internet, message delivery strategies, and other political party and candidate preparation activities. In addition, with USG support an American professor was assigned to teach journalism in the southern city of Pécs, and a Hungarian television executive traveled to the U.S. to lecture on the media laws of the EU and how they affect broadcasters.

Economic Growth

In FY 2006, Hungary continued to experience strong export-oriented growth. The GOH embarked on an austerity package of revenue-increasing and expenditure-reducing measures designed to tackle the country's substantial annual budget deficit. With vibrant private investment already having played a key role in Hungary's transition to a market economy, maintaining investor confidence continued to be critical to the country's success. Concerns about transparency in both the public and private sectors remain a challenge.

U.S. ASSISTANCE PRIORITIES

While Hungary has enjoyed enviable growth rates in its rapidly transitioning economy, the reduction of persistent high deficits is a top priority in light of eventual euro adoption, along with much-needed improvements in transparency. With this as context, Hungary needs to increase the integration of quality of life criteria such as sustainable development, environmental protection, and diversity in the workplace to its economic planning.

DESCRIPTION OF PROGRAMS, OUTPUTS, AND IMPACT

In FY 2006, U.S. assistance sent nine economic professionals on international visitor leadership programs to discuss trade and economic development, urban planning, and integration of minorities, persons with disabilities, and women in the workplace. A recent survey of alumni from this type of USG professional exchange program indicated that a significant number of participants had been promoted to higher ranks or greater professional responsibility.

Also in FY 2006, the USG sent four Hungarian scholars to U.S. universities in the fields of economics, business management, and environmental management. Their work included research, teaching, and joint projects with U.S. counterparts. With USG support U.S. academics traveled to Hungary to lecture on land management and urban planning. An American graduate student conducted research and lectured on environmental studies.

Investing in People

Although the USG no longer provides transition assistance in this sector, targeted activities support broadening opportunities in education. A long-standing U.S. priority has been to support educational exchanges in order to provide Hungarians with exposure to best practices in areas such as teaching, administration, and public-private partnerships.

DESCRIPTION OF PROGRAMS, OUTPUTS, AND IMPACT

In FY 2006, the USG sponsored two Hungarian educators to examine the latest developments in U.S. higher education and nine high school principals to observe best practices in teaching and administration. Participants have begun instituting changes to their administrative systems on the basis of this visit and have welcomed follow-up visits to their schools from U.S. speakers, thus expanding contacts in the key area of youth outreach. The USG also supported a visit to the U.S. for a Hungarian university librarian, allowing her to learn how her U.S. counterparts attract donors and improve community outreach while still serving academic clients and safeguarding collections. The USG sponsored two Hungarians in medical sector-related exchange programs related to infectious disease control and humanitarian disaster response, and supported the visit of a GOH official in the field of alternative education for children with special needs.

As is part of ongoing efforts to encourage Hungarian travel to the U.S. and to promote the U.S. educational system, the USG sent a camera crew from Hungarian television to several cities in the U.S. to produce a program on Hungarian students studying in U.S. universities.

The USG supported fourteen Hungarians' studies at U.S. institutions of higher learning in fields as diverse as law, hard sciences, and art. Many of these, upon return, joined a new alumni initiative to recruit program applicants from underserved areas of the country and to create a DVD of their experiences to promote the program to possible donors. The USG also supported 18 American grantees in fields varying from social work and nursing to linguistics and computer science as they came to Hungary to teach or conduct research at universities. So many Hungarian universities requested American professors that, where possible, one professor divided his or her time between two nearby institutions.

Peace and Security

Hungary is a member of the NATO alliance and has participated in coalition activities in Afghanistan. As Hungary continues to mature into a market-based economy, defense expenditures remain a concern.

U.S. ASSISTANCE PRIORITIES

Given Hungary's EU membership and continued development, the country is regarded by the USG largely to be a donor nation, rather than a recipient, of security assistance. In order to improve Hungary's effectiveness to support international security and contribute to Euro-Atlantic institutions, USG assistance targeted increased professionalism of the Hungarian military and interoperability with NATO forces.

DESCRIPTION OF PROGRAMS, OUTPUTS, AND IMPACT

U.S. security assistance programs in Hungary supported specific unit operations, including police participation in an Afghanistan Provincial Reconstruction team and training and exchange programs, including public affairs exchanges. In FY 2006, Hungary received military financing assistance to ensure greater capability, interoperability, and deployability in specific military units. This assistance focused primarily on Special Operations Forces (SOF), deployable medical units, light infantry units, and a military police company designated for deployment as part of a Provisional Reconstruction Team (PRT) in Afghanistan. USG military education and training programs continued to be widely regarded as the most successful of all security assistance tools available for Hungary. Hungary sent 144 officers and enlisted students to the U.S. for a variety of military courses, with primary emphasis on infantry, SOF, medical, and non-commissioned officer (NCO) leadership development. The USG also sponsored four Hungarians from national security agencies on international visitor leadership programs, which emphasized the need for NATO members to fight terrorism and the proliferation of weapons of mass destruction. Some were operational in orientation, while others were oriented towards policy and media.

FY 2006 Funds Budgeted for U.S. Government Assistance to Hungary [PDF format]