Hungary | Freedom House

Nations in Transit

Hungary

Hungary

Nations in Transit 2006

2006 Scores

Democracy Score
(1 = best, 7 = worst)

2.00

National Democratic Governance
(1 = best, 7 = worst)

2.00

Electoral Process
(1 = best, 7 = worst)

1.25

Civil Society
(1 = best, 7 = worst)

1.25

Independent Media
(1 = best, 7 = worst)

2.50

Local Democratic Governance
(1 = best, 7 = worst)

2.25

Judicial Framework and Independence
(1 = best, 7 = worst)

1.75

Corruption
(1 = best, 7 = worst)

3.00
Executive Summary: 

Hungary's transition from Communist dictatorship to consolidated liberal democracy is one of the most successful among the former Communist-bloc countries. The free market policies characterized by aggressive privatization and fiscal and monetary discipline have followed the early institutional reforms, but human services have relied on state support. The consequent fragility of the state budget underlines the need for further reforms. The strong and stable parliamentary system has permitted consecutive governments to succeed to power smoothly. The new political elite evolved at the onset of reforms comprised former Communist-era bureaucrats and the democratic opposition of the 1980s. By the end of the 20th century, a bipolar political system had emerged with social democratic and market liberal values guiding the political Left and conservative Christian democratic values guiding the political Right, an independent business sector developing, and a colorful civil society succeeding as dynamic actors of day-to-day policy making and implementation.

Events in 2005 attest that the country has successfully passed its transition period and society is now actively engaged in policy formulation for further development. The embedding of civic participation in the political process by nongovernmental organizations (NGOs) was the prime development of the year. Responding to popular support of NGOs, in June the Parliament elected the former president of the Constitutional Court to become the head of state for five years. Politics centered around the behavior of the two main political blocs, one led by Socialist prime minister Ferenc Gyurcsany and the other by center-right former prime minister Viktor Orban. Political life, crammed with policy reforms and successes claimed on the incumbent's side and accusations of failure, corruption, and crises from the opposition's side, demonstrated continued dynamism.

National Democratic Governance. Hungary's constitutional settings reflect the country's liberal democratic goals and democratically distribute checks and balances among the branches of government. The Parliament assumes a central role in rule making, allowing widespread public access to its work, but it has yet to comply with a number of Constitutional Court adjudications aimed at improving the democratic character of its own operation. In November, a significantly revised procedural law governing the work of public administration was entered into force, underlining the service-providing function of the administration. Vulnerable fiscal governance and the lack of genuine political will to reconcile with the country's Communist-era past give concern to observers both internationally and domestically. Hungary's national democratic governance remains at 2.00.

Electoral Process. The Hungarian electoral system adequately facilitates the free and fair succession of power among political parties of the Left and Right. The year brought an early start to political campaigning of parties for the national elections to be held in early 2006. While the two major parties tried to reach beyond their electorate and began competing, junior parties vied to remain parliamentary forces in the following year. The governing coalition's inability to agree on a joint presidential candidate led the candidate supported by the opposition to win and execute its four-year mandate. Parliamentary by-elections were held in Sopron to fill the empty seat of a previous individually elected parliamentarian who moved to the European Parliament. Hungary's electoral process is stable, and its rating remains unchanged at 1.25.

Civil Society. The legal framework governing NGOs is generally favorable, and politics does not impede the formation of nonregistered democratic citizen movements or petition campaigns. An overwhelming number of civil society organizations take an active role in providing direct social services to citizens or fellow organizations; there are several key watchdog groups closely monitoring public institutions, and there are also a handful of groups and think tanks aligned across party lines. The year 2005 marked a milestone for Hungary's civil society, reinforcing that citizens' commitment to political goals may ultimately gain a breakthrough via nonviolent means. Notably, Hungary's new president was elected by the Parliament in June following a forceful nationwide campaign by NGOs supporting former president of the Constitutional Court Laszlo Solyom as head of state. Also, the new Law on Volunteerism adopted in June-however altered from the original concept-is a result of years of NGO advocacy. Hungary's rating for civil society stands at 1.25.

Independent Media. Media are generally considered to be free in Hungary. The wide selection of media outlets prevents any control over freedom of the press and of access to information. Particularly in the print press, the media scene reflects Hungary's polarized political climate. Overall, although the quality of journalism in Hungary is generally adequate, the boundaries between factual information, analysis, and commentary are often opaque. Libel continues to be a criminal offense, and the high number of libel and state secrecy lawsuits that have occurred lately have raised widespread concern. The lack of proper legal regulation and financing keeps public service broadcasts at the crossroads of political and professional debate. Disputes left Hungarian Radio without a president in 2005. Hungary's independent media rating remains at 2.50.

Local Democratic Governance. Hungary has been a pioneer in modernizing the subnational government system in the region. Still, the system requires further reform to enable the subnational units to be financially viable. The local governmental system is highly fragmented; the financial autonomy of local governments is limited and cannot sustain the level of services mandated to them, as these units usually are not economically viable with adequate local economic activity. There is wide political consensus behind the necessary reforms of the local governments' economic system, yet in practice no steps have been taken. Hungary's rating for local democratic governance remains at 2.25.

Judicial Framework and Independence. The legal system, an independent judiciary, and human rights ombudspersons provide an effective framework safeguarding fundamental rights and freedoms. Hungarians have conflicting views about the impartiality of the judiciary. There is no systematic torture or ill-treatment of defendants in Hungary. Discrimination against the Roma continues to be widespread. Intolerant views exist on the margins and are not restricted from free expression, but social mechanisms respond promptly to condemn and keep such views away from the mainstream. Hungary's rating for judicial framework and independence stands unchanged at 1.75.

Corruption. Anticorruption legislation has been under continuous improvement in Hungary; nonetheless, implementation of these laws requires further reinforcement. Nontransparent businesses related to political parties and public officials continued to be a problem in 2005. Stories of fraudulent practices of public servants or politicians and favoritism with public procurement contracts were often in the news during the year. Hungary's corruption rating worsens slightly from 2.75 to 3.00 owing to the disparity between efforts to stem corruption and the resulting ineffectiveness.

Outlook for 2006. The spring general legislative elections and formation of the new government will undoubtedly prove to be the most important political event of the year. Two relatively homogeneous blocs to the left and right of the political spectrum, both under strong and enigmatic individual leadership, are expected to bring intense campaigning from the grass roots to the elite level, permeated by a number of negative defamatory elements, while society remains divided along party lines. However bitter the loss may be for any of the groupings currently running head-to-head, it is unlikely that the free and fair nature of the elections could be fundamentally questioned. In the fall, Hungarians will elect new leadership at the municipal level, and the past 15-year trend suggests that by strengthening the position of the would-be opposition, the Hungarian electorate will push the votes closer to a political equilibrium.

National Democratic Governance: 

Hungary's constitutional setting reflects a stable parliamentary democracy. The prime minister, elected by majority vote of the Parliament, is responsible for overall governance as head of the executive branch. The executive is controlled not only by the Parliament, where--with the exception of inquiries in the standing or temporary committees--majority parties are seldom inclined to object to governmental proposals or testimonies, but by the far-reaching authority of the Constitutional Court to review legislative acts, and the availability of judicial review of individual decisions of the executive contributes significantly to the effective checks on the administration. The Parliament assumes a profound role in appointing key independent actors of governance, including the members of the Constitutional Court, the president of the Supreme Court, and the chief prosecutor or president of the State Audit Office, often only after achieving constitutionally required broad consensus.

The Parliament's central role in rule making is unquestioned; however, the government also has the right to issue decrees as long as they do not contradict rules enacted by the Parliament. Stable resources and capacity and the adoption of close to 200 pieces of legislation and nearly 100 resolutions in 2005 testify to the Parliament's immense work.  Media, civil society organizations, and interested individuals all have ample access to members of Parliament (MPs) and the Parliament's work through the parliamentarians' interaction with their constituencies, the Parliament's Civil Office, simple media accreditation, and up-to-date Internet access to parliamentary records, including video broadcasts of sessions.  However, a plea by commercial television is pending at the Constitutional Court since August against the decision that only the Parliament's own closed-circuit broadcast service is allowed to record footage of sessions.

A few anomalies are causing concern about the operation of the Parliament and contribute to a growing negative perception about its work.  The Parliament floor is often believed to be mere performance space for MPs, who use the space for political cabaret.  Furthermore, failing to comply with the Constitutional Court's rulings to meet basic constitutional requirements, MPs have accumulated a backlog of about 20 pieces of legislation.  Most important, the rules and procedures need to be modified in accordance with the Constitutional Court's guidance to solve issues related to the participation of nonpartisan MPs in committees, adopt new rules and procedures of the committees, and standardize the schedule of the plenary meetings.

The irregularities of parliamentary committees are of great concern, since from time to time they become the centerpiece for both opposition and governing parties to hold each other accountable. Two competing investigative committees were established in 2005 to shed light on alleged wrongdoing of the two leading political competitors, Prime Minister Ferenc Gyurcsany and former prime minister Viktor Orban. Partly because of a lack of clear rules and procedures, but also in large part because of the absence of genuine political will among the MPs to explore the cases without bias and prejudice, both committees concluded their work without lucid findings and resolutions. Essentially, as analysts of the political think tank Political Capital point out, instead of searching for ultimate justice, these committees offer just another forum for parties to reinvigorate their otherwise well-known political standpoints, which behavior-instead of strengthening the parties' constituent base-further alienates undecided voters from the political process.

The new Law on Administrative Procedure was adopted in December 2004 and entered into force in November 2005. The long-awaited law replaces legislation dating back to the 1950s from the country's Communist past. While the old law, especially after its overarching revision in the early 1980s, served well in its time, the new procedures were necessitated by the service-providing nature of the authorities and the evolving Internet era. The legislation is claimed to be user-friendly and more effective and is believed to increase the democratic character of the administrative process.

The adoption of this law is laudable; however, the circumstances leading up to it left a bad taste in one's mouth and is indicative of certain vulnerabilities of the legislative process. In a March interview, law professor and former Constitutional Court justice Geza Kilenyi explained his deep frustration as chief drafter of the new law: According to him, the bill fell victim to the particular interests of various ministries and in the end produced more exceptions than generally binding rules.  This happened in spite of the government's solemn pledge to improve the quality of the legislative process. But improvement would have to start with upgrading precisely that piece of legislation that by and large governs lawmaking, and the current act on the legal framework also dates back to the time before democratic transition began. After years of preparation, consultation, and drafting, and two years after submission of the proposal, in April the Parliament opened debate on new legislation governing lawmaking, but--in the apparent absence of the required two-thirds consenting majority--MPs immediately tabled the bill.

The Achilles' heel of Hungary's central governance lies in state finances and the ominous budget deficit. The state budget deficit in 2005 is expected to reach as high as 7 percent of the gross national product and even higher in 2006, owing primarily to the carry-on burden of expensive state-subsidized human services: health care, pension system, education, and public administration. Contributing to the lack of efficiency are the political clientism and what Tibor Navrasics, center-right political scientist and chief policy aide to Viktor Orban, describes as the "gray zone of politics and administration."  One prime aspect of this in Hungarian national governance is the creation of plentiful centers of power headed by a group of political appointees--state secretaries and government commissioners--filled by Socialist MPs commonly in charge of parallel portfolios.  And there is little improvement in coordinating fiscal and monetary policies, largely a result of statements throughout the year by National Bank governor Zsigmond Jarai (appointed by the FIDESZ-Hungarian Civic Party). Jarai's behavior is perceived by many to be politically motivated and compromising to the credibility of monetary policy.

In April, Prime Minister Gyurcsany dismissed Finance Minister Tibor Draskovics, explaining the move as a need to expedite much-needed institutional reforms; yet in August, the Economist Intelligence Unit forecasted no progress in any of the reform policies until after the 2006 parliamentary elections.  The capsizing fiscal equilibrium drew serious consequences in 2005 in the form of warnings received from the European Union (EU) as well as a downgrading of the state's creditworthiness by the prominent credit ratings institute Fitch Ratings. But in December, in its annual Hungary supplement, the Financial Times contrasted this fiscal overspending and looming financial crisis with the country's generally healthy and prosperous private economy: "Most economists forecast growth this year and next about 4 percent, compared with eurozone growth of under 2 percent."  Thus, while politics is in a deadlock to introduce overarching reforms in key areas of human services, owing to what the Financial Times characterizes as "tribal-like divisions within the society,"  the economy thrives thanks to the massive success of the free market.

The Hungarian secret services, military, police, and border control are overseen by the three civilian ministers. Yet the functioning of the security services continued to be in the crossfire of criticism in 2005 owing to controversies revealed and the still unresolved issue of transitional justice. Two scandals placed the secret services in the spotlight in August. First, rumors erupted around the National Security Office's activities at an obviously far-right cultural festival,  and later in the month, Magyar Nemzet uncovered an espionage incident involving ethnic Hungarians from Romania working for Romanian security services. The episode stirred political whirlwinds and resulted in a parliamentary investigation, since it involved the phone tapping of government ministers. However, the parliamentary investigation did not offer a full account of the event. Instead, the process indicated that rival political camps penetrated the services with their political motivations in the services' functioning. As the story unfolded in the fall, it became clear that the incumbents were seeking to discipline those responsible for leaking the story,  and at the same time the opposition had created its own self-controlled network of security informants.

The first quarter of the year promised a new impetus and eventual reconciliation of some of the wrongdoings committed during the country's Communist-era past. Following Prime Minister Gyurcsany's 2004 pledge to declassify the past regime's secret service files, in January the National Security Office handed over to the Historical Archives of the Hungarian State Security the files accumulated in the Ministry of the Interior between 1944 and 1990, thereby making them available to interested researchers. Meanwhile, the parliamentary parties launched an intensive political discourse toward new legislation that would allow the files to be made accessible to the wider public. In parallel, reinforcing the need to solve the question once and for all, various lists of former collaborators naming the involvement of leading political, cultural, media, and church figures were disclosed by hvg.hu, the political think tank Political Capital, and anonymous sources.

Regrettably, the law fell victim first to the inability of crafting consensus among the opponent political blocs and, consequently, to unsettled contradictory legal objectives. Essential to complete disclosure of the files, the governing coalition could not garner the opposition's support to moderate rights protecting individual privacy vigorously guaranteed by the Constitution. In return for its backing of the bill, the opposition demanded that the law stipulate measures against revealed collaborators as well as officials of the former Communist regime, a move the governing coalition considered unrelated to the goal of the legislation. Finally, among his last acts, outgoing president Ferenc Madl referred the law adopted in May to the Constitutional Court for preventive review, and in October the Court declared that "there was no such Constitutional objective that justifies and necessitates curbing of the fundamental right [of privacy] pursuant to the full disclosure [of Communist secret services files]."

Electoral Process: 

The year 2005 brought an early start to political campaigning of parties for the national elections to be held in early 2006. While the two major parties competed with each other for greater popularity, their lesser counterparts were struggling to reach beyond the 5 percent support necessary to be elected into the Parliament in the upcoming year.

Overall, Hungarian elections have repeatedly been considered to be free and fair. An earlier insufficiency in the legal framework governing the electoral process--that is, the lack of regulation on how Hungarian citizens residing abroad on election day may cast their ballots--has been resolved permanently: The provisions required for ensuring voters' rights in line with the Constitution were formed in 2005. But the Parliament has not yet achieved formal representation of minorities, as required by the Constitution.

Presidential and national by-elections were held in Hungary in 2005. In the case of a single-seat mandate in the town of Sopron, earlier attempts failed to fill the empty seat of a previous individually elected parliamentarian from the major oppositional center-right FIDESZ-Hungarian Civic Party (FIDESZ) who moved to the European Parliament. Eventually, the new FIDESZ candidate won 72 percent of the vote against the ruling Hungarian Socialist Party (MSzP) candidate's 18 percent in May 2005.

At the beginning of June, parliamentary parties faced mutual accusations during the election of the new president, all of which revealed major tensions within the governing coalition, among oppositional parties, and between the government and the opposition. Under the Constitution, the president is elected indirectly by the Parliament by a two-thirds majority for a maximum of two five-year terms. If a qualified majority cannot be reached in either of the first two rounds, a third round with a simple majority is necessary. According to the coalition agreement, it was the right of the senior governing coalition partner, the MSzP, to nominate a presidential candidate to succeed President Ferenc Madl, whose term ended in August. The governing coalition faced tensions when its junior partner, the liberal Alliance of Free Democrats (SzDSz), considered the MSzP candidate, Katalin Szili (parliamentary Speaker and former deputy chairwoman of the MSzP), unsuitable for the post. While the governing coalition failed to agree on a mutually acceptable candidate, FIDESZ nominated Laszlo Solyom, candidate of the ecopolitical NGO "Vedegylet" (Protect the Future), who also enjoyed the formal support of more than 100 intellectuals across the political spectrum.

During and after the unsuccessful first and second rounds of voting, FIDESZ accused oppositional center-right Hungarian Democratic Forum (MDF) members of voting for the Socialist Szili in the first round. The MSzP believed FIDESZ broke voting secrecy rules during the second round by trying to record how MPs voted. Before the third round, FIDESZ alleged that the MSzP attempted to bribe opposition MPs with HUF 10 million (US$50,000) to vote for the Socialist candidate. Eventually, as the governing coalition could not agree on a mutually accepted candidate, Solyom (nominated by FIDESZ) gained 185 votes to Szili's 182 and won the ballot in the heated third round, from which most SzDSz members abstained. President Solyom is viewed by many to be able to create a new form of presidency independent from party politics, helping to bridge the political divide in Hungary. The political divide is expected to deepen, however, as the country gets closer to the national elections, which are to be held between April 1 and May 31, 2006.

This year, the political landscape is expected to be rather bleak, offering the fewest number of parties ever to represent the people in post-Communist Hungary: Only two are expected to clear the 5 percent threshold and win representation to the 386-seat unicameral National Assembly in the upcoming national elections. The SzDSz (currently with 20 seats) and the oppositional MDF (which by 2005 had lost 4 members to FIDESZ and seen 12 of its additional members become independent out of 24 seats gained) are not expected to gain enough support to be elected to the Parliament, although their status has not yet been determined. The main actors of the political scene are the MSzP with 178 seats in the current center-left coalition government and the oppositional center-right FIDESZ with 168 seats. Although for the first time since 1990, no independent candidate was elected to the National Assembly in 2002, those MDF members who left the party became independent MPs. The tendency to have fewer parties represented in the Parliament is a result of the trend toward majoritarian rule as well as the ongoing consolidation process within and among parties.

In 2005, both major parties worked on changing their images in the hopes of waging a more successful campaign. FIDESZ party leader Viktor Orban launched his "Year of National Consultation" initiative, which included the establishment of the National Consultative Committee--a focus group consisting of politicians and public figures primarily from the Right, aiming to bridge public life and the citizenry and reach supporters beyond the traditional FIDESZ base. In addition, FIDESZ looked further afield for extra-parliamentary political groups (such as the Entrepreneurs' Party) that might be integrated into its existing alliance. FIDESZ changed its national slogan from "Go Hungary, go Hungarians!" to "Change!" and returned from the Hungarian tricolor to the party's traditional orange. The new image seemed to be successful, as apart from a few weeks in the fall, the party led well in the polls during the year.

A few months after the failure in the presidential elections, the MSzP began its identity campaign and aimed to build a proud left-wing party image full of energy and optimism. The party resumed its series of public finance measures (the "100 Steps" program), and by making energetic speeches in the Parliament, Prime Minister Gyurcsany dictated the political agenda. In its identity campaign, the MSzP highlighted its red color and key concepts such as "Security, Justice, and Bravery" as common values and tried to gain constituents for the party who were not particularly interested in politics. With the MSzP's campaign in the fall, FIDESZ's advance had decreased significantly by the end of the year.

With Gyurcsany incorporating liberal values in and of themselves, the liberal SzDSz may not be able to gain any seats in the Parliament in the coming year. The party struggles to show an independent and determined liberal character and continues to lose support to the MSzP. MDF party leader Ibolya David has not been able to strengthen the party. The mission of FIDESZ to unite all right-wing parties under its umbrella led to internal conflicts within the MDF and to the departure of 16 of its MPs, who looked into closer alignment with FIDESZ. Opinion polls suggest that voter support of the party is between 1 and 2 percent. It is questionable whether the reunification of the MDF with the Hungarian Democratic People's Party, which broke off nine years ago, will help the MDF to remain in the Parliament. Among several party-forming initiatives, a new political party, Live Chain for Hungary, was formed in 2005 from environmental groups such as Protect the Future, whose candidate became the president of the republic. The support of Centrum Party or the radical far-right Hungarian Justice and Life Party was too insignificant to be measured in 2005.

Civil Society: 

The legal framework governing NGOs aids their establishment, and operation is sound and conducive to civil society's active role in democracy. The Law on Associations was adopted in 1989, while the rules governing the operation of foundations had already been added to the civic code in 1987. These laws and lower-level regulations provide reasonably easy requirements for forming foundations or associations, the two predominant forms of NGOs, and registration by county-level court can be denied in only a few cases. However, a 2005 study by the Environmental Management and Law Association (EMLA) tested the general interpretation of the laws when it submitted the same registration documents to 20 different courts and found that there is ample room for improvement, since each case produced a different outcome.

A major development in the legal framework of NGOs is the adoption of the Law on Volunteerism in June. According to the Hungarian Central Statistical Office (KSH) statistics, in 2003 close to 400,000 individuals volunteered for public causes, contributing almost 35 million working hours, saving HUF 24 billion (US$120 million) that would otherwise have been paid in staff costs.  Yet a 2005 study conducted by the Nonprofit Research Association in 2004 found that almost 3.5 million Hungarian citizens were giving some form of pro bono service to their communities.  Since 2003, the Hungarian Volunteer Center had been conducting an erudite advocacy campaign involving a coalition of NGOs for the legal recognition of volunteer work. Hungarian NGOs, relying on the favorable attitude of media and the general public, drafted the original piece of legislation, organized a handful of public debates, and carried out consultations with the government. Despite certain criticisms that the finally approved bill does not sanction free-of-charge activities offered to the smallest NGOs, the law enables NGOs to offer modest tax-free allowances, in-kind compensation, and training opportunities to citizens working for them.

Hungarian civil society can be judged as one of the most vibrant sectors of society. The U.S. Agency for International Development's NGO Sustainability Index puts Hungary's civil society in third place alongside Latvia among 29 former Soviet-bloc countries.  According to KSH statistics, among the nearly 75,000 registered organizations, the majority are working to provide human services, sport, and recreational opportunities to their communities.  Over 50 percent of them enjoy public benefit status, which has offered economic benefits to NGOs since 1997. Observers estimate that approximately half the registered groups are in fact operational. The garden variety organizations include strong Budapest-based resource centers with network institutes across the country offering training opportunities, legal counsel, technical assistance in their advocacy efforts, libraries, and Internet portals. There are also a host of politically engaged NGOs and think tanks supporting all sides of the party landscape.

Although 2005 was the first year to see a decline in overall NGO income through the 1 percent mechanism--whereby taxpayers are entitled to earmark 1 percent of their personal income tax for charities--the Nonprofit Information and Training Center (NIOK) organized a massive nationwide awareness-raising campaign each year since the adoption of the legislation, with the active support of the media. Funding of NGOs is persistently considered problematic given minimal corporate support and availability of state resources, but the culture of philanthropy should gradually take root, particularly because EU institutions constantly urge businesses to conduct and report annually on their corporate social responsibility programs.

The year 2005 marked a milestone for Hungary's civil society, reinforcing that citizens' commitment to political goals can ultimately gain a breakthrough via strategic civic mobilization. In February 2005, Protect the Future, an NGO promoting sustainable development, garnered the support of 100 Hungarian public figures from all sides of the political spectrum in an open letter and subsequently launched a public campaign nominating Laszlo Solyom as the new president of the state.

The letter harshly criticized the Hungarian political culture: "Amid the scenes of representative democracy, the political class and the client-bourgeoisie fight their private wars by trespassing rules to attain and plunder public goods." In contrast, the initiators recalled that in the heyday of the systemic changes, as president of the Constitutional Court, Solyom relentlessly defended the rule of law and the spirit of the Constitution.

It is true that in his former post, President Solyom was known for his active role in developing constitutional case law and even introduced an original and internationally emulated legal concept to interpreting liberal democratic constitutions. And his concept of the "invisible Constitution" meant that one needs to seek the spirit or moral objective of a constitutional clause. But initially, his nomination appeared as a bombshell to the entire political elite--not for Solyom's tenacious reputation, but because the Hungarian Constitution does not recognize civil society's role in the presidential election process per se.

Until last February, as in previous occasions every five years since 1990, political parties were conveniently preparing to consult among themselves and their favored candidates. But after Solyom was pitched in the public discourse and received wide-ranging civic support, parties were forced to consider him as a potential candidate. Solyom's active role in a 2004 campaign against the installation of NATO radar in the country, which the opposition backed to garner further public support, also assisted in putting him forth as the opposition parties' official candidate and in his eventual winning of the post.

Trade unions and interest groups enjoy significant autonomy in Hungary. By far the most influential workers groups within the Hungarian government are those in the public sector and state-owned public services, such as the various public transport companies. In addition, several organizations were established in past years to represent farmers' interests and exhibit substantial bargaining power.  In February and March 2005, farmers held a series of demonstrations and succeeded ultimately in demanding that the government release payments mandated through the country's pledge to the EU. While unions in the public service sector and particularly the predecessors of the former Communist unions are considered to be closely aligned with the political Left,  agrarian interest groups and some larger trade worker alliances formed around the systemic changes are frequently identified with the Right. Therefore, and because of low membership, observers consider the unions to be generally weak and in need of perking up their reputations.

Hungary's educational system is free from explicit political influence. The Ministry of Education bears overall responsibility in overseeing educational policy, but the altogether 1.8 million students can decide to attend public, parochial, or other private institutions.  Universities operate freely, particularly after the university reform introduced in 2005 was ruled unconstitutional in October by the Constitutional Court for curbing their academic independence and self-government for instating a governing board over university senates.

Independent Media: 

Media are generally considered to be free in Hungary. There is a huge selection of media outlets, and several new private television cable channels were launched in 2005. Freedom House's annual Survey of Press Freedom rated Hungary "Free" in 2005.

The continued high number of court cases against journalists raised concerns in 2005. Libel and secrecy laws continued to be criminal offenses, which according to many restricts press freedom. The high court annulled last year's 10-month suspended jail sentence for libel handed to editor Andras Bencsik of the weekly Demokrata in a case brought by an MP. The arbitrary prosecution under outdated secrecy laws of Nepszava journalist Rita Csik, charged in 2004 with "deliberate breach of a state secret" after she wrote a story quoting an unlawfully classified police memorandum citing criminal evidence collected on an MP, continued in 2005 with the acquittal of the journalist in the lower court (the case is to be continued in the appeals court). This was the first case since transition in which a journalist accused of breaching state secrets was brought to court.

In 2005, journalist Antonia Radai of the weekly HVG (Heti Vilaggazdasag) was also taken to court for publishing parts of a Mafia case that allegedly involved several civil servants. The indictment was classified, and one cannot know the details of what Radai is accused of under security law. According to Miklos Haraszti, the Organization for Security and Cooperation in Europe representative on freedom of the media who was allowed to attend the court trial, the provision regulating state secrets is unconstitutional on at least three or four points, all of which should be changed immediately.

While acting as minister of youth and sports in 2003, Prime Minister Gyurcsany took Laszlo Torok, a journalist at the daily Magyar Nemzet, to court; in 2005, Torok was put on probation for libel for quoting the deputy head of the oppositional FIDESZ. According to the judicial branch's interpretation of the Hungarian criminal code, grounds for libel charges include not only statements damaging one's reputation, but publicity given to another person's derogatory statements. While politicians are under immunity, journalist quoting them are not.

In 2005, police took action against individuals who were distributing leaflets criticizing the mayor of Mako. The police explained that the activists had prepared and distributed a type of publication that should have been previously reported and thereby committed a misdemeanor against press policing. This offense used to be a tool against oppositional samizdat before the fall of Communism and is now thought to be used for political purposes.

The quality of journalism in Hungary is generally adequate, but the boundaries between factual information, analysis, and commentary are often blurred. For the first time in Hungary, Magyar Hirlap introduced a news ombudsman to improve journalistic standards. The main task of the ombudsman is to monitor and report on the objectivity, accuracy, and balance in news coverage of the paper.

The media landscape is dominated by market forces in Hungary, and foreign media companies are very active in both national and local newspaper markets. Only a small number of daily papers are owned locally. Local papers are particularly important and manage to keep their monopolies in the counties where they publish; their total circulation is about the same as that of the national daily papers combined. However, in the race to attract readers by print media outlets, tabloids prove to be the winners.

The 1996 Law on the Media introduced commercial broadcasting and broke up the monopoly of the state-controlled public service channels. The law established the National Television and Radio Board (ORTT), a regulatory and supervisory body whose members are delegated by political parties. The ORTT monitors the activities and programs of public and commercial broadcasting stations and grants licenses and broadcasting frequencies. Half the members of the board of trustees of the public service broadcasters' presidium are appointed by governing political parties, the other half by the opposition, leaving too much room for political interference in public service broadcasting.

The Law on the Media has been widely criticized on many grounds, and the almost decade-long wish to modify it or create a new one has approached an end. The ORTT itself prepared a new draft version, which instead of strengthening media freedom focuses on the regulation and sanctioning of TV and radio channels as well as the Internet.  Whether the new law will transform public service media into a modern, financially independent outlet free of political influence remains to be seen.

Attention in public service broadcasting centers around the succession of the president of Hungarian Radio. After President Katalin Kondor's mandate expired in July, the board of trustees made four unsuccessful attempts to elect a new president, thus leaving the public broadcasting station without proper legal representation. The legal status of public radio and what powers the vice presidents have in the interim before the new president is elected are unclear. It is assumed that before the national parliamentary elections there will be no consensus on the new president of Hungarian Radio, which illustrates how public interest is overruled by party politics.

Since public TV attracts only about 10 to 15 percent of viewers and has been on the edge of bankruptcy for years, the rationale for maintaining six state-sponsored stations is questionable. Nonetheless, public TV channels plan to launch three more thematic TV channels in order to compete with private channels for viewership. Owing to financial, legal, and broadcasting constraints, these plans have not yet materialized. Hungarians receive information primarily from private TV channels, most of which are foreign owned. Besides the three state-supported channels, two commercial stations--RTL Klub (affiliated with the Belgian-French RTL-UFA) and TV2 (owned by a Hungarian-American-Scandinavian consortium)--also reach the entire population. There are several commercial cable and satellite channels, such as foreign-owned radio stations and thematic TV stations. New to the local media, Hungarian entrepreneurs such as industrialist Gabor Szeles have begun to enter the media market, which was dominated previously by multinationals. Besides buying 76 percent of the daily Magyar Hirlap, Szeles launched a financial and business news channel, Echo TV, in September, and a lifestyle channel, Vital TV, is to be launched soon. There are over 200 local or regional public, commercial, nonprofit, and cable radio stations, most limiting their programming to entertainment without significant original news content. According to a recent report by the Open Society Institute, "Hungarian [television] channels scarcely ever broadcast investigative reports and can hardly be labeled as watchdogs of democracy."

News portals such as origo.hu and index.hu are providing readers with their own news content around the clock, and television and radio broadcasting on the Internet have become increasingly popular in Hungary. In 2005, the National Communications Authority reported a 92.5 percent increase in the number of broadband Internet subscribers,  yet according to GFK Hungary, market research company, only 32 percent of the adult population reported using the Internet by 2005.  Among the barriers to deeper Internet penetration in Hungary, experts list the still high subscription fees, low computer-equipped population, and lack of knowledge of and trust toward the Internet.

Internet censorship has been limited in Hungary. To prevent state intervention, self-regulatory organizations founded by Hungarian Internet content providers such as the Hungarian Association of Content Providers have formulated a voluntary code of conduct to regulate the norms of Internet content. The planned new Law on the Media aims to regulate the Internet in order to provide legal background for the protection of personal rights and civil liberties and to apply the same liabilities and rights for both online and offline media outlets.

Local Democratic Governance: 

Local government reform legislation took pride of place among transition laws in Hungary, and the country has been a pioneer in modernizing the subnational government system in the region. Still, the system requires further reform to enable subnational units to be financially viable and to procure and administer EU structural funds.

In Hungary, every village, town, and county and the capital has the right to freely administer local affairs autonomously. However, as a result the local governmental system is highly fragmented, with 3,158 municipal, county, and local governments and the capital, Budapest, as a separate unit. Every municipality has become a unit of local government and in each settlement provides various services, such as primary education, basic social services, health care, and public utilities. County self-governments provide public services with a regional character. There are seven countrywide local government associations, as local authorities have the right to form interest representation organizations for the protection of their common interests and promotion of their collective representation.

The process for electing local self-governments--that is, a mayor and a local representative body--every four years has generally been free and fair. Although in smaller villages it is difficult to recruit enough candidates, generally there is competition for local government mandates. In larger cities, there is a much higher partisan character of local councils than in smaller settlements. In cities with a population over 50,000, almost 9 in 10 councillors belong to a political party.  Mayors and local representatives along with their partners and children are required to declare their assets.

Although the legal autonomy of local governments is well protected, their financial autonomy is highly limited, and they rely heavily on state subsidies. Among the municipal governments, 91 percent represent fewer than 5,000 people, while more than half have a population under 1,000. These units often cannot sustain the level of services mandated to them, as they usually are not economically viable with adequate local economic activity.  Most municipalities regularly run deficits. A frequent complaint from local governments is that while providing only a fraction of the necessary financial means, the Parliament keeps assigning new public duties to municipalities. Others say that the state's sole duty is to create opportunity for local revenues.

Although municipal governments can raise their income by levying local taxes and fees, only one-third of their revenues come from local taxes. The size of the population and foreign investment creates huge differences among municipalities, favoring larger cities in their ability to raise local taxes.  Many municipalities have consumed most of their wealth by selling their assets to cover the expenses of new responsibilities.  County local governments have no right to levy taxes.

According to Tocqueville Research Center, small local governments have a greater tendency toward elitist top-down governance and are less responsive to citizens' needs than larger local governments. Because of the local governments' often opaque and unaccountable handling of finances, so goes the center's argument, the state has no trust in their capacity to handle money adequately and has silently begun a recentralization process. Social institutions that could make local leaders accountable are weak or do not exist in smaller municipalities. Fewer than one in four municipalities have media outlets independent from local government subsidies, and there are none in 58 percent of Hungarian municipalities.

Citizens are particularly active at the local level in Hungary through various NGOs and local initiatives, but their participation in local public affairs through local governments is limited. Most decisions on local matters are determined by state subsidies, constraining citizens' effectiveness in influencing local matters, especially in small municipalities.

Between local elections, citizens' inclusion in the decision-making process is guaranteed by a minimum of one public hearing a year, as set by the Law on Local Government. Out of the 15 local referendums held in 2005, low voter turnout invalidated the results in 5 cases.

Pressured by the EU to approximate the subnational model of the EU financing system, Hungary is conducting further reforms and has identified two directions of modernization. With the creation of 168 entities at the "small region" level of administration (instead of the fragmented municipalities) and the establishment of 7 larger development regions, the reform aims to increase public service quality. The legally defined 168 small regions are meant to have three dominant functions: the performance of local governmental public services, the management of state administration tasks where local knowledge and expertise are necessary, and the operation of spatial development functions.

As the reform of administrative and development units has yet to be realized, the newly introduced Law on Administrative Procedure, effective as of November 1, under the e-governance concept reaches no further than technical modernization. E-government services at the municipal level are mostly informational rather than interactive or transactional. According to a survey by GKIeNet, Internet research and consulting company, released in May, only 3 percent of municipalities are able to receive completed online forms electronically. 

The 1993 Law on the Rights of National and Ethnic Minorities guarantees Hungary's 13 recognized minority groups the right to establish national and local minority self-governments. The basic tasks of these minority governments are to organize the activities of minorities, respond to their needs, and help preserve their culture and ethnic identity. Minority self-governments are financed by the state budget, and there is no central coordination of the allocation of money for them.

At the local level, 1,841 minority self-governments were elected in the fall of 2002. However, many of the elected representatives lacked any true ties with a specific minority. In 2005, the Parliament modified the Law on the Election of Minority Self-Government Representatives and introduced the registration of minority voters. The modification aims to prevent nonminorities from holding positions in minority self-governments in order to gain personal business advantages and benefits. Certain paragraphs of the law, however, have been annulled by the Constitutional Court. The original proposal would have allowed certain minority candidates to bypass local municipal elections and gain seats at the municipal level without being elected, which would have violated the direct and equal representation of local municipal elections.

Judicial Framework and Independence: 

The Hungarian Constitution recognizes fundamental political, civil, and human rights and obliges the state to protect them. Among the legal institutions the individual's right to appeal to the ombudsman is particularly important. The four ombudsmen protect individual privacy, ethnic and national minorities, and citizens' rights generally. All four individuals are prominent legal academics and, following constitutional rules, were appointed by consensus of the parliamentary parties. The Ministry of Education employs a commissioner who protects students' rights. Prior to his election, the new president drafted a legislation to the Parliament proposing the introduction of a fift--"future generations"--commissioner to be entrusted with care of the environment, whereas the government wishes to bring to the fore another ombudsperson to protect employee rights.

The 11-member Hungarian Constitutional Court commenced its work in 1990 and is the institution par excellence for safeguarding fundamental rights and freedoms. The Court's authoritative interpretation of the Constitution on political rights and civil liberties canceled many clauses of the legal framework and prevented a handful of newly enacted legislations from entering into force. Members' impartiality and independence are ensured through consensual election in the Parliament, but-curiously-until 2005, when the Hungarian Civil Liberties Union contested the Court in a number of instances, there was much less public scrutiny of the Court's resolutions than of the similarly elected ombudspersons.

Reaching consensus on the nominees to the Court has always been prolonged and burdensome, at times putting the Court on the verge of a standstill. The stalemate generally ends with the election of both ruling coalition and oppositional candidates. In 2005, membership decreased to the limit of eight justices, and lawmakers and the jurist community were already expecting amendments to the rules of selection to overcome the current deadlock. Finally, during the fall three new justices filled the missing seats. The former president of the Court was also reappointed, but because his term as president ended in 2005, the Court elected a new head in October. Mihaly Bihari, the new president, former member of the Communist Party, expelled him in 1988 for his reformist views. Since then, he has become known for his bold support for the country's democratization and has molded himself as a preeminent expert of Hungary's nonviolent transition.

The Hungarian judicial branch is organized in a four-tier structure. There are magistrates at the local and county levels with jurisdiction over their districts. The highest appeals courts with larger regional jurisdiction are based in Budapest and four other large cities across the country. The Supreme Court in Budapest, charged with safeguarding the coherent interpretation of legislative acts, issues abstract judgments and develops a limited body of case law; it also serves as an extraordinary appeals forum for cases adjudicated at the highest appeals courts. At the end of 2004, there were 2,710 judges in the country, and over 60 percent of the entire judiciary had 10 or more years of court experience; however, at the local level of courts, where the majority (60 percent) of cases are concluded, this figure was only 43 percent.

The judicial branch has been self-governed by the National Judicial Council since the council's formation in late 1997. The council is headed by the president of the Supreme Court, and 9 of its 15 other members are judges elected by fellow justices. The remaining members are the minister of justice, the chief prosecutor, the chairman of the Hungarian Bar Association, and two MP delegates from the judicial and financial parliamentary committees.

Hungarians have conflicting views regarding the impartiality of the judiciary. Nepszabadsag covered a September Median survey stating that a third of Hungarians suspect political influence behind judicial decisions.  De Jure magazine, on the other hand, in November reported on a Szonda Ipsos survey that found the judiciary to be among the most trusted institutions. Hungarians have little information about the judicial system  and learn of judicial proceedings only through high-publicity cases. The National Judicial Council's April resolution endorsing the code of ethics developed by the Hungarian Association of Judges is therefore particularly welcome.  The code of ethics sets forth unbinding rules on how justices should behave, complementing the rigorous regulations on conflict of interest in place since 1997. Judges are prohibited from holding jobs outside their duties, holding public office, or being a member of a party.

There is no systematic torture or ill-treatment of defendants in Hungary. In April, a police officer received a one-year suspended prison sentence for unlawful detention of a suspect.  A leaked videotape in 2005 about the extraordinary treatment of a white-collar criminal suspect contributes to Hungarians' views that law enforcement favors the rich. However, public defenders, NGOs, and their network of human rights lawyers are ready to assist disadvantaged suspects. Likewise, victims of crimes may turn to NGOs and find remedy through legal means. In November, a Council of Europe report underlined the well-known contention regarding Hungary's overburdened prison system. 

Intolerance against the Roma continues to be widespread. Discrimination based on race, ethnicity, and sexual behavior is particularly embedded in the society, penetrating the workplace and public services. The legal framework and practice, however, is steadily improving. In 2005, a court issued a fine of HUF 500,000 (US$2,500) against a private security company that openly discriminates against Roma. This was the first binding warrant issued under the equal opportunity legislation adopted in 2003.

Illiberal views among nonstate actors are not entirely foreign, but institutions and citizens' attitudes stand firm against the pervasion of an extremism society. The Hungarian criminal code prohibits the use of totalitarian symbols, such as the Communist red star or the Nazi swastika. But free speech is amply safeguarded by the courts' decisions and rights protection watchdogs, even at the expense of the appearance of illiberal opinions in public. In October 2005, the highest appeal court of Budapest issued a warrant dissolving the allegedly cultural organization "Ver es Becsulet" (Blood and Honor), which in fact was a neo-Nazi group promoting ethnic hatred and intolerance, which was judged unconstitutional.

After the abrupt emergence of the neo-Nazi "Magyar Jovo" (Hungarian Future) group in 2004, a poll run by Marketing Centrum proved that the vast majority of Hungarians believed authoritarian views were endangering the social order.  But liberal democratic attitudes by far outnumber illiberal ones, and no groups can imperil social stability. Throughout the years, citizens have staged numerous antiracist and peace rallies. In May, a large antiracist demonstration was held in response to the stabbing of a Roma boy on the bus. The first ever festival held on International Human Rights Day was organized in 2005 by the Hungarian Civil Liberties Union, the Hungarian Helsinki Committee, and the Legal Defense Bureau for National and Ethnic Minorities-perhaps the three most influential human rights watchdogs in the country.  Also, mainstream media frequently report on illiberal views in a timely and responsible manner.

Corruption: 

Hungary's institutional framework for preventing and curbing corruption has gone through significant improvement in past years and meets international standards. Nevertheless, the implementation of these measures requires more reinforcement and commitment not only from parties and state institutions, but from civil society as well. In 2005, nontransparent businesses closely associated with political parties and the bribing of public service employees were regularly reported in the media, suggesting continuing problems.

Hungary has a reputation for being one of the least corrupt post-Communist countries. In 2005, Transparency International ranked Hungary 40th out of 159 monitored countries worldwide.  Transparency International's Corruption Perceptions Index shows a slight improvement in the country's score from last year's 4.8 to 5 out of 10, where 10 indicates the lowest level of corruption. According to GfK Polling Institute's study, however, Hungarians give bribes to public service employees more frequently than the Central and Eastern European average.  A number of doctors use state equipment for their private profit. The practice of "gratitude money" for public health care employees, when the state-employed doctor receives money from the patient for provisions to which he or she is not entitled, is widespread.

The year 2005 was effective in revealing questionable practices: Cartels were formed (to the mutual benefit of all parties) largely from public procurement tenders involving highway construction. Parliamentary committees have been set up to investigate the family business interests of Prime Minister Gyurcsany and former prime minister Orban and have failed to come to any conclusions. By 2005, charges against more than 20 suspects had been filed in Hungary's biggest banking fraud, revealing money laundering partially involving public procurement funds at K&H Bank's brokerage arm. The scandal, in which the total sum embezzled reached HUF 23 billion (US$115 million), broke out in 2003 and allegedly has strong political ties on both the Left and the Right. Public service employees, such as public attorneys, a tax inspector, a mayor, and policemen, were caught on fraud charges, out of which many of these latter cases were successfully revealed by the Protective Service of Law Enforcement Agencies (RSzVSz). The 10-year-old RSzVSz is a monitoring agency without investigative powers in charge of fighting corruption in the law enforcement agencies.

Although no independent body deals solely with corruption investigations, a number of state institutions are empowered to fight corruption. The main investigative law enforcement body is the police, while high-level corruption (involving parliamentarians, ministers, and heads of public departments) and organized crime cases fall under the jurisdiction of the Central Investigation Department of the Office of the Prosecutor. Additional institutions with enforcement authority, such as customs and tax agencies, also have separate units to combat corruption. However, cooperation among these institutions is not yet sufficient.

The State Audit Office of Hungary exercises ultimate financial control over all public and EU funds and is a completely independent agency reporting to the Parliament. The "glass pocket" law made it possible for the State Audit Office to trace the path of public funds even through private business files and widens the circle of individuals required to declare their personal assets.

However, the path of public funds is still difficult to follow. Procurement experts claim that in Hungary only about 10 percent of roughly 3,700 annual public procurement tenders are clean. Bribery, cartels, or other irregularities are likely to be present in most cases.  Although the "glass pocket" law, which introduced the concept of public interest, requires ministries to publish their operational costs and contracts of high value on their Web sites, little information is up-to-date. In addition, in 2005 the State Audit Office criticized the financial management of the Ministry of Information, where the paths of public funds distributed personally by the minister were unable to be traced. The Law on Freedom of Electronic Information adopted in July 2005 and to enter force from January 1, 2006, obliges public institutions to publish information of public interest held by them on the Internet.

According to a report adopted by the Organization for Economic Cooperation and Development (OECD), Hungary needs to take further steps to combat corruption and bribery in international business transactions.  The report identifies the lack of well-understood laws and untrained officials as significant obstacles in fighting bribery. The OECD was concerned when one of its public official interviewees announced that bribery is "the only way to do business in certain countries" and that in such countries, "formally it is not a bribe because it takes the form of a commission." Among the report's recommendations are ensuring necessary resources for the effective functioning of the Central Investigation Department, increasing the transparency of prosecution, and enabling auditors by law to report all suspected of bribery by any employee or agent of the company to the management or to competent law enforcement authorities.

Despite the various promising initiatives the MSzP-SzDSz coalition has introduced since in government, many anticorruption policies have proved to be short-lived. The Ethics Council of the Republic, an anticorruption board aimed at facilitating the establishment of a cleaner public life, and the State Secretariat of Public Finance, established to monitor public procurement procedures and ensure transparency in the handling of public funds, ceased to exist in 2004. In 2005, however, clean public life returned to the government's agenda, and the coalition has aimed to increase openness in some areas of public life: to prevent the creation of phantom companies for tax evasion purposes, to modernize public procurement, to create a Law on Lobbying, and to modify the regulations of party financing.

Since September 2005, cartel activity resulting in the restriction of competition in public procurements has been criminalized under the changes to competition legislation. Recent modifications to the Law on Public Procurement, of which an earlier version was returned by the president to the Parliament for reconsideration, now further limits the authority of local governments to engage in contractual services without open tender.

The long planned Law on Lobbying was under discussion in the Parliament at the end of 2005. Prior to this, lobbying activity (often associated with corruption) was not regulated but was touched upon indirectly by legislation both on conflict of interest and on lawmaking and by various anticorruption regulations. The draft law aims to contribute to a cleaner public life by making public the interests behind certain legislative decisions via registering the activity of lobbyists and requiring detailed reports of their activities. However, there remains no protocol or code of ethics for political decision makers.

According to previous reports of both the Open Society Institute  and the Group of States Against Corruption, there is significant evidence of illegal party and campaign funding in Hungary. The operations and activities of party-based businesses lack transparency and adequate control, and there are no effective sanctioning and enforcement mechanisms in place for illicit bookkeeping of party financing. There is a discrepancy between accounting law and the legislation on parties over reporting systems, and there are loopholes in the regulation of campaign finances. The matter should have increased in urgency, as campaigning for the 2006 elections already started in 2005; however, there is insufficient political will for these changes.

Despite the various promising initiatives the MSzP-SzDSz coalition has introduced since in government, many anticorruption policies have proved to be short-lived. The Ethics Council of the Republic, an anticorruption board aimed at facilitating the establishment of a cleaner public life, and the State Secretariat of Public Finance, established to monitor public procurement procedures and ensure transparency in the handling of public funds, ceased to exist in 2004. In 2005, however, clean public life returned to the government's agenda, and the coalition has aimed to increase openness in some areas of public life: to prevent the creation of phantom companies for tax evasion purposes, to modernize public procurement, to create a Law on Lobbying, and to modify the regulations of party financing.

Since September 2005, cartel activity resulting in the restriction of competition in public procurements has been criminalized under the changes to competition legislation. Recent modifications to the Law on Public Procurement, of which an earlier version was returned by the president to the Parliament for reconsideration, now further limits the authority of local governments to engage in contractual services without open tender.

The long planned Law on Lobbying was under discussion in the Parliament at the end of 2005. Prior to this, lobbying activity (often associated with corruption) was not regulated but was touched upon indirectly by legislation both on conflict of interest and on lawmaking and by various anticorruption regulations. The draft law aims to contribute to a cleaner public life by making public the interests behind certain legislative decisions via registering the activity of lobbyists and requiring detailed reports of their activities. However, there remains no protocol or code of ethics for political decision makers.

According to previous reports of both the Open Society Institute  and the Group of States Against Corruption, there is significant evidence of illegal party and campaign funding in Hungary. The operations and activities of party-based businesses lack transparency and adequate control, and there are no effective sanctioning and enforcement mechanisms in place for illicit bookkeeping of party financing. There is a discrepancy between accounting law and the legislation on parties over reporting systems, and there are loopholes in the regulation of campaign finances. The matter should have increased in urgency, as campaigning for the 2006 elections already started in 2005; however, there is insufficient political will for these changes.