"The Economist" magazine highlighted a supposedly threatened abolition of nation states being imposed by capitalistic organizations from other countries
Andrea Hossó, a Hungarian-born economist who works in London's financial district, wrote a blistering attack on the "bullies of Brussels" for the Daily Mail,
Hungary, Ms Hossó says, is facing "colonisation" in preparation for "a political environment favouring the abolition of nation states."
Checking into that article in the Daily Mail we read
In order to better understand the picture it is necessary to look back into the economic history of the past twenty years. The economic transition of Central Europe from planned to market economy has been hailed a great success. Uncontrolled privatization went nowhere farther than in Hungary. Successive governments heeded the advice of foreign advisers and international organizations deeming the speedy and often very cheap sale of assets to foreign companies the best way to 'catch up' with Western economic development.
Looking around twenty years later Hungarians find a bizarre economic landscape dominated by a handful of big foreign companies and huge shopping malls with barely a single local name or product. Whole sectors have been wiped out and quite a few remaining ones are almost wholly foreign-dominated. Unemployment is high, the huge external debt inherited and inexplicably taken over from the Soviet era is ballooning fed by intercompany loans from Western companies to their Hungarian subsidiaries. Economic growth is languishing, foreign companies’ profits are repatriated and little is recirculated into the local economy.
When the current government came into power in 2010, it found a country in tatters with a dramatically increased external debt burden and huge swathes of the population sinking into inexorable poverty where families – educated, working people – have difficulties paying their utility or dental bills.
In its efforts to reduce debt and thus vulnerability, the government decided to introduce some measures designed to return the economy to growth. Amongst these measures is the temporary windfall tax on the financial, retail, energy and telecoms sectors, which had been exceptionally profitable. Such taxes are not without precedent, and banking sector taxes have since been introduced in various European countries.
However, nowhere have they fallen mostly on foreign shoulders because nowhere else is foreign ownership as dominant as in Hungary. Both the IMF and the EU mention Hungary’s 'unorthodox' move taxing mostly 'foreign' companies but fail to mention that these foreign companies have literally taken over almost whole economic sectors. It seems that it is not so much the imposition of windfall taxes but the fact that foreigners have to pay these that they find objectionable.
The rarely mentioned fact is that foreign companies in Hungary have got used to generous tax holidays and financial incentives, and a generally lax operating environment. The special taxes have raised the spectre of a new situation where these privileges and the usual level of excess profits might be reduced.
A sweeping offensive of pejorative news and punitive measures is creating an atmosphere where financial markets become inaccessible and the country can be forced to return to the status quo: economic conditions favouring foreign capital and a political environment preparing the abolition of nations states.
