Area: 93,030 sq km, slightly smaller than Indiana
Population: 10,045,407 (July 20036 est.)
Annual Inflation: 5.3% (2002 est.)
Population Growth Rate: -0.29% (2003 est.)
Gross Domestic Product (GDP): $134 billion (purchasing power parity, 2002 est.)
Life Expectancy: male - 67.84 years; female - 76.81 years (2003 est.)
GDP Per Capita: $13,300 (purchasing power parity, 2002 est.)
Infant Mortality: 8.58 deaths/1,000 live births (2003 est.)
Real Annual GDP Growth: 3.3% (2002 est.)
U.S. STRATEGIC INTERESTS
Hungary is one of the most prosperous countries in Central Europe. It is stable, democratic, and slated to seal its "return to Europe" with accession to the EU in 2004. Hungary's location makes it a potential linchpin in the stability of Central and Eastern Europe, where it can act as a mentor to neighboring countries that have made less progress in modernization and integration. U.S. interests are focused on the further increase of Hungary's already active cooperation in the global war on terror and improving its performance in NATO, both on the military and political levels. Hungary remains an important economic partner. Its congenial domestic economic policies help to ensure that U.S. firms enjoy greater access to foreign markets and enhanced investment opportunities. Once Hungary enters the EU, the U.S. will be engaging with it on an increasing number of economic, commercial, political, and security issues. With the exception of the military component, U.S. assistance to Hungary has been declining for several years and will continue to do so as Hungary joins the EU and becomes a donor itself.
OVERVIEW OF U.S. GOVERNMENT ASSISTANCE
In FY 2003, the U.S. Government (USG) provided an estimated $22.8 million in assistance to Hungary:
In FY 2003, more than 170 Hungarians traveled to the U.S. on USG-funded exchange programs.
U.S. ASSISTANCE PRIORITIES
Democratic Reform Programs: In FY 2003, the highest priorities for U.S. democratic reform assistance in Hungary included strengthening non-governmental organizations (NGO), promoting civic participation and education, minority issues, legal reform, equal opportunity, and the fostering of a healthy political climate. With less than a year left before accession, all sectors of Hungarian society are changing fundamentally to adapt to EU norms. USG-funded exchange programs sought to familiarize Government of Hungary (GOH) officials, politicians, educators, journalists, and researchers with U.S. best practices and resources to assist them in evaluating how to modernize and to meet European standards.
Economic and Social Sector Reform Programs: Reflecting the development and stability of Hungary's economy and financial markets, U.S. assistance in this area has focused on counter-terror finance, anti-money laundering, fostering Hungary's emergence as a donor nation, and the incorporation of marginalized minorities. Future U.S. priorities will remain largely the same, albeit with steadily declining resources.
Security, Regional Stability and Law Enforcement Programs: The Department of Defense (DOD) provided 95 percent of all U.S. assistance to Hungary in FY 2003. Assistance in the security area focused on improving Hungary's military performance, helping it meet NATO force goals, thwarting trafficking in persons, and enhancing cooperation in combating transnational organized crime, weapons trafficking, and drug trafficking. A number of USG agencies - DOD, Department of Justice (DOJ), Department of Homeland Security (DHS), USAID, and Drug Enforcement Agency (DEA) - administer these programs. With Hungary's increasing prosperity and entry into the EU, U.S. assistance efforts will remain focused on these programs in the future.
SECTORAL ASSESSMENTS
Democratic Reform
In FY 2003, Hungary's performance on democratization was good. Some important steps were taken, particularly in the field of federal support for NGOs. There were no major elections in Hungary during FY 2003. The Constitution provides for freedom of speech and of the press, and the 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. Parliament amended the Media Law in 2003 to conform to EU standards. USG funding supported the awarding of a prize for investigative journalism, one of the weakest aspects of the media in Hungary. USG assistance also provided professional media training to senior GOH spokespersons and supported several programs that provided opportunities for Roma in the field of journalism.
Hungary's judicial system continued to make positive strides in 2003. Parliament passed numerous "transparency" laws to combat corruption with respect to government officials and agencies. Implementation of those laws will continue in FY 2004. USG-sponsored exchange programs included participants on a broad range of topics from five government ministries, academia, the private sector, the media, and Parliament.
In June 2003, the Parliament enacted the Law on the National Civil Fund, designed to help provide institutional support to Hungarian NGOs. To finance the Fund, the GOH will provide matching funds based on the amount taxpayers donate, up to 1 percent of their income. Sixty percent of the money collected will provide institutional support to NGOs, with the remainder going to help programs. USG assistance to local NGOs 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 USG-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 U.S. Several programs helped create a better-informed NGO community by strengthening Internet networks and newsletters. Several USG grants supported projects that sought to integrate underserved populations fully into the democratic process and pass laws to protect their rights.
In 2004, USG assistance will continue 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 will make working with NGOs to enhance their sustainability crucial for the long-term health of this sector. The U.S. Embassy's DCSG program will announce a competition for NGOs to propose projects to help create a culture of volunteerism and to host programs in leadership development, grant writing, and fundraising. The implementation of the new National Civil Fund will need to be tracked in 2004, to follow how "institutional support" will be defined. USG assistance will also continue to encourage improvement of the climate of political discourse through exchange programs that include both ruling and opposition political parties.
Economic and Social-Sector Reform
Hungary has a robust private export sector, solid economic growth rate, and low unemployment. It has had a strong record of structural reform even before the change of regime. Per capita Gross National Income (GNI) is slightly over $5,000; on a purchasing power parity basis, per capita income is about $14,500. Life expectancy, literacy rates, and other indicators, such as access to potable water, reflect Hungary's status as an upper-middle-income country. However, some parts of the population, particularly the Roma, have benefited less than others. Thus, U.S. assistance in this area has focused on grooming Hungary to play a role as a donor, helping to improve prospects for the Roma community and combating money laundering and terror financing.
The Hungarian-American Partnership Initiative (HAPI) is a training activity that provides opportunities for the countries in Europe and Eurasia to learn from Hungary's successful transition to a market economy and democratic society. This training activity is designed to involve the GOH in the implementation process, with the express purpose of jump-starting a Hungarian assistance program, required for EU entry, which would contribute to the stability and development of the region, with priority given to Stability Pact member states. In FY 2003, USAID provided $150,000 in SEED funding under a grant to the Foundation for the Development of Democratic Rights.
Since it began in 2000, HAPI has delivered short-term training programs to 507 participants in 45 groups, from seven Central and Eastern European and six Newly Independent States. Topics have included investment promotion, municipal government strengthening, taxation systems, community development and outreach, SME development, NGO financial management, anti-corruption, pension reform, privatization of the energy sector, multi-ethnic governance, the establishment of brokerage companies, regional health reform, and Roma community development.
The Roma Integration Program (RIP) is a $2.8 million four-year regional program in the Czech Republic, Hungary, and Slovakia that seeks to expand access to services and leadership opportunities for Roma at the community level and to contribute to a change in perceptions of Roma through anti-discrimination public awareness programs. The program also aims to produce models of integration that can be replicated in communities within the three countries, with possible implementation later in other countries with Roma populations and USAID Missions.
The RIP is a new activity, implemented by Partners for Democratic Change and its Centers in the Czech Republic, Hungary, and Slovakia. In FY 2003, $27,200 was spent starting up this four-year program, over the course of which Hungary will receive about $884,500 in funding, including small grants. During the program's initial months, Partners completed an assessment and selected target Roma communities in the three countries; hired key staff to manage all elements of the program; established program advisory boards in the three countries; and began a training series in conflict management, leadership, and advocacy. In the future, participants will utilize these skills in community-level programs, in cooperation with local government, social service agencies, and other sectors.
The GOH has worked with the USG to counter terrorist financing and money laundering. With additional legislation passed in 2003, Hungary now has the legal infrastructure in place to combat financial crimes and money laundering. The Department of Justice (DOJ) conducts a two-pronged program that counters money laundering and government corruption. In May 2003, DOJ held a weeklong conference for prosecutors and law enforcement agents to train them in money laundering prosecution. In FY 2003, DOJ also donated anti-corruption equipment and trained law enforcement officials in its use. Total funding for DOJ programs in Hungary is $400,000, about three-quarters of which was spent in FY 2003.
The Treasury Department, through its Office of Technical Assistance (OTA), also provides anti-money laundering technical assistance. The first training event was held in early July 2003, at the International Law Enforcement Academy (ILEA) in Budapest. Total Treasury funding committed to Hungary is $125,000. Finally, the Marshall Center in Garmisch, Germany, has provided anti-money laundering training for senior Hungarian financial officials on an ad-hoc basis.
Public Diplomacy has three main vehicles with which to administer programs to strengthen economic and social reform in Hungary: Democracy Commission small grants, Individual/Project Grants, and the International Visitor Program. For FY 2003, those programs included projects that strengthened:
Security, Regional Stability, and Law Enforcement
Security: Hungary is a NATO member, but the legacy of its Warsaw Pact participation still shadows its military, which is currently involved in a fourth try at restructuring. If successful, this attempt will result in a much-downsized military with a radically different mission. U.S. military-military assistance has been designed to improve Hungary's performance in NATO and, by extension, in the war on terror. The GOH is strong 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 2003, Hungary received $1,843,346 under the International Military Education and Training (IMET) program. With these funds, Hungary sent 90 officers and enlisted students to the U.S. for various military courses. In addition, IMET funding was used for five other major events, including: 1) a U.S. Requirement Survey Team that traveled to Hungary to discuss development of a Non-Commissioned Officer (NCO) corps; 2) a U.S. Mobile Education Team (MET) visit to the Czech Republic to train both Czech and Hungarian military personnel; 3) a MET visit to Hungary to discuss defense restructuring with senior civilian and military leaders; 4) a trip by a senior Hungarian delegation (led by the MOD Political State Secretary) to the U.S. under the Distinguished Visitor Orientation Tour regime; and 5) the installation of an English Language laboratory in Hungary by a U.S. Mobile Training Team. The FY 2003 IMET program was very successful in exposing Hungarian military and civilian leaders to U.S. military training and in assisting Hungary in determining its future defense structure.
Hungary also received $18.9 million in FY 2003 for Foreign Military Financing (FMF) and has made great progress by using this grant money. All FMF requests are tied to NATO Force Goals or to increasing interoperability and military capabilities. Major ongoing programs include: 1) a Letter of Request for air-to-air missiles to arm the Gripen fighter aircraft; 2) Link 16 for the Gripen; 3) Multiple Integrated Laser Evaluation Systems (MILES) for use at the Varpalota Training Facility; 4) continuation of the Air Sovereignty Operations Center program; 5) Identification Friend or Foe (IFF)Mode 4 for Hungary's helicopters and MIG aircraft; and 6) continuation of the CUBIC contract, which provided expert defense advice as the Hungarian MOD developed and approved a defense review that will totally restructure the armed forces to meet national and international objectives.
Joint Contact Team Program (JCTP) and State Partnership Program (SPP) activities in FY 2003 were limited due to U.S. operations in Iraq and Afghanistan. Nevertheless, Hungary participated in three U.S.-funded events: 1) a senior Hungarian delegation familiarization visit to the U.S. to discuss U.S. military budget processes and financing international military activities (JCTP); 2) a public affairs workshop in the U.S. with the Ohio National Guard (SPP); and 3) a visit headed by the Hungarian military surgeon general to gather information on medical readiness and planning strategies for disaster relief/terrorism mitigation (both JCTP and SPP).
Hungary participated extensively in FY 2003 at the George C. Marshall Center (GCMC) in Garmisch, Germany, sending 21 military and civilian leaders to various conferences and seminars. GCMC activities are supported by joint U.S./German funding.
Regional Stability: Hungary is considered a Tier II country in terms of trafficking in persons (TIP), as the GOH does not fully comply with the minimum standards for the elimination of trafficking. Hungary is primarily a transit and secondarily a source and destination country. In addition to having developed an action plan which will assist the GOH to make concrete efforts in combating trafficking, the State Department's Office to Monitor and Combat Trafficking in Persons recently awarded $500,000 to the Budapest office of the International Organization for Migration (IOM) to complete several projects with the goal of assisting Hungary to reach Tier I status.
In March 2003, the USG organized a Regional Conference on Trafficking in Persons and Public Health. USAID provided $92,000 to the IOM to organize this event, which was attended by over 200 people from 17 countries for three days. Participants represented NGOs, donor organizations, victims of trafficking, and governments. The main conference theme was the impact of trafficking on all aspects of the victims' health. Discussion topics included physical and psychological abuse and trauma, sexually transmitted and other infectious and non-infectious diseases (including HIV/AIDS and tuberculosis), human rights issues, treatment and prevention, and appropriate government policies toward this growing problem in the region. Following two days of working group sessions, findings and recommendations were presented to high-level government representatives from 10 countries in the region, and all present adopted the Budapest Declaration on Public Health and Trafficking in Human Beings.
Law Enforcement: Hungary's cooperation with USG agencies on law enforcement issues has generally been excellent. The DOJ and its Hungarian counterparts have worked productively via a task force on transnational organized crime. The DEA has begun promising cooperation with the Hungarian National Drug Police. The Department of Homeland Security works with Hungarian Customs to track and interdict illegal weapons procurement. The Department of State, Bureau of International Narcotics and Law Enforcement Affairs (INL), administers SEED and FSA funding to support the Budapest-based International Law Enforcement Academy. It indirectly enhances regional stability and contributes to law enforcement efforts by offering police and law enforcement courses to officials from Central and Eastern Europe, the Trans Caucasus, and Central Asia. INL also works with DOJ, Office of Prosecutorial Development, Assistance and Training (OPDAT), to provide training and assistance on money laundering and combating public corruption. OPDAT also procured and donated specialized investigative equipment to the GOH.
Public Diplomacy uses three sources from which to administer programs to strengthen security, regional stability, and law enforcement in Hungary: Individual/Project Grants, Expert Speakers, and the International Visitor/Voluntary Visitor Programs. Projects included those focused on:
Humanitarian Assistance
In FY 2003, the U.S. provided DOD-managed humanitarian assistance donations of over $640,000 to Hungary under the U.S. European Command Humanitarian Assistance Program (HAP). These included funding for construction, renovation, and equipping of refugee reception centers and providing disaster management equipment (heavy machinery, vehicles, and supplies) to the Ministries of Interior and Environment. Specific donations included $200,000 for construction of a refugee home for unaccompanied minors (in Bekescsaba) and an additional $50,000 for improvements at Hungary's three major refugee camps, in Bekescsaba, Bicske, and Debrecen. In addition, the Ministry of Interior received over $355,000 worth of excess property that was distributed among these refugee centers.
COUNTRY PERFORMANCE MEASURES
Economic Policy Reforms and Democratic Freedoms in Hungary, 1991-2002
Ratings based on a 1 to 5 scale with 5 representing the most advanced.
Sources: EBRD, Transition Report 2003 (November 2003); Freedom House, Freedom in the World 2003 (2003); and (various years).
Economic Structure and Human Development in Hungary, 1991-2002
The Human Development Index (HDI) is based on three indicators: longevity, as measured by life expectancy; educational attainment, as measured by a combination of adult literacy and combined primary, secondary and tertiary enrollment ratios; and standard of living, as measured by real per capita GDP ($PPP). The HDI ranges from 0 to 1, with higher values representing greater human development. UNDP, Human Development Report 2003 (July 2003), and previous editions; EBRD, Transition Report 2003 (November 2003), and previous editions.
