Eastern lynxes in need of better schooling

By Edward Lucas

Asia has tigers, I mused, so eastern Europe has...lynxes! That was a handy way of illustrating an interesting bit of research by some Austrian economists (at the Vienna Institute for Comparative Economics and BA Creditanstalt) which shows how well the post-Communist economies of the EU are doing.
The key to understanding the region's economy is to look at the composition of exports and the Austrian study shows how the lynxes, (the eight former captive nations now in the EU) are doing rather well in shifting their exports from low-value to more hi-tech categories.
It turns out that on almost every count the lynxes are pulling ahead of the second-rank Asian tigers - places such as the Philippines and Malaysia.
It's always a pleasure to confound the doomsayers. I still remember the cantankerous Finnish diplomat who told me in 1992 that Estonian independence would be a "catastrophe" for his country and the many Germans who sneered about the polnische Wirtschaft next door. For the next few years, "new Europe" is going to give the old rich bit of the continent a healthy competitive boost.
But in the long run there are two big problems. One is demography. That's a pan-European problem, but it's most pressing in places where national savings have been stolen and squandered by Communist gangsters. The result is rich-country population structure with poor-country economies. The further east you go, the worse it gets: Georgia, for example, will almost certainly be old long before it is rich. And there's little chance of such poor countries plugging the gap with migration. So the lynxes, both the sleek tribe of central Europe and the Baltics, and their mangier cousins further afield, need to breed a lot faster.
The other problem is brainpower. There's startlingly little research and development in post-Communist countries - just 0.8% of gross domestic product, compared to more than 2% in rich Europe (which is still too little). There are three reasons. First, world-class research and development is mostly too expensive for either the public or private sectors in post-Communist Europe to afford. Even a big company like the Czech Republic's CEZ can't match a global giant like Siemens.
Second, rich-country subsidies distort the market. Estonia would be a natural place to do research on internet banking - but the big banks there are all foreign-owned and likely to heed their home governments when spending research money.
Third, the universities are not good enough. There are honourable exceptions - usually in capital cities, in disciplines unspoiled by Communism either because they are so rigorous (physics) or so new (computing). But most post-Communist universities are introverted, mediocre, bureaucratic and hierarchical. In some respects they are the last bastions of the planned economy, capturing state resources through favouritism and then fulfilling the bogus targets set by the state.
It is hard to solve the first two problems. Foreign ownership has brought so many benefits, it would be absurd to restrict it. But lynx-country governments could free their universities to compete internationally (they already have two advantages: cheap living costs and beautiful buildings). Most advanced courses should be taught in English, by star academics hired on highly competitive salaries. Great teachers and researchers attract not just world-class students, but lucrative ones, too (Americans! Study creative writing in Prague! Guest lecturers Milan Kundera, Ivan Klima and Vaclav Havel!). Most importantly, it would kick-start R&D (especially as old-Europe's universities are mostly too sleepy to compete). Globalising fast might dent national pride, but the lynxes don't need fading academic trophies any more than they need national airlines. They need more brainpower, and fast.
# Edward Lucas is central and eastern Europe correspondent for The Economist.

© Copyright 2006 The Economist Newspaper Limited. All rights reserved.

Belarus and naval strategy

Free media and naval strategy in Belarus

When I used to work in the BBC's religious broadcasting department some 20 years ago, we sometimes teased our slightly dim presenter by telling him that the next item concerned a conference of Catholic bishops' wives (or Muslim brewers, or a Mormon coffee-morning: in those happy days, you could still make jokes about religion).

He usually fell for it. So when I received an e-mail apparently from the Belarus Embassy in London, inviting me to a government-sponsored media conference in Minsk, my immediate reaction was that some friend of mine was playing a practical joke.
Admittedly, any official invitation from that quarter is about as likely my spending New Year's Eve at Vladimir and Lyudmila Putin's dacha. I can't at the moment get a visa for either Russia or Belarus. That's a pity: I have been covering both countries for nearly 20 years, and my affection for their language, culture and people is matched only by dislike (doubtless mutual) for the creeps in charge, and the bullies and sycophants around them.
But the subject of the conference was so unlikely that it couldn't be a joke: the "10th International Special Exhibition: Mass Media in Belarus". Even my most ingenious friends would not think that one up. A conference on mass media in Belarus is as implausible as that landlocked country debating naval strategy, or a meeting of Icelandic trainspotters.
For those unfamiliar with the benighted politics of Belarus, it may be worth pointing out that the mass media there do not fulfil the functions of their counterparts in other countries, of raising issues of public concern, holding officials and politicians to account, and so forth. In Belarus, the media's task is to operate in the Leninist sense, of a transmission belt bringing the political wisdom of the country's leadership to the masses. The deeds of the president are the main, sometimes the only, item in the news. Misdeeds (such as the ruination of the country's education system, relations with rogue states, state-sponsored criminality, the murder of political opponents, and the blatant rigging of elections) don't feature.
A bit of Googling reveals that the previous nine conferences really did take place. From the accounts posted on official Belarussian websites, these seem to have been ghastly Soviet-style affairs, awash with toasts and endless maudlin self-congratulation.
For anyone who doesn't remember the Soviet Union, these sort of conferences were the staple diet of public life in those days. Delegations would arrive armed with wordy communiqués of staggering blandness and banality. There would be lengthy speeches, punctuated with lethargic applause. The main business, of course, was shopping and socialising (rather like American business conventions, now I come to think about it, but with secret police, instead of corporate PR departments, checking that everyone stays on message).
But such conferences are valuable for a different reason. However boring the official sessions, the bits between are a rare chance to get alongside top goons, drink them senseless, and try to get them to spill a bean or two. So I phoned the embassy and pleaded for confirmation that I would actually get a visa. The theme of the conference, after all, is the "integration of Belarus into the world media landscape", and surely the participation of The Economist, one of the few big international publications to cover Belarus solidly, would speed that noble goal? "We'll get back to you," said the embassy official smoothly.
Perhaps it would have improved my chances if I had asked for advice on how to arrive by sea.
# Edward Lucas is central and eastern Europe correspondent for The Economist

A big bang from a small eastern country

By Edward Lucas

The economic history of Estonia might sound arcane. But when the speaker is Mart Laar, twice prime minister and the father of its unique blend of free-market capitalism and internet government, it proves quite a draw.

A few weeks ago, I was watching Mart Laar launching the Polish-language edition of his book in Warsaw. The audience, at the city's top economics school, reminded me of a harried group of believers getting a red-hot sermon from a much-admired foreign preacher. It was much the same at a dinner in London, organised recently by Politeia, a conservative think-tank.
Estonia has that effect on both free-market liberals and geeks: it has done what other countries just dream about. Laar's administration in 1992 abolished all subsidies and tariffs, balanced the budget, introduced a flat tax, auctioned most industries to foreign investors and reformed the pension and welfare system. This wasn't just shock therapy: this was the most radical high-voltage treatment experienced by any economy in Europe, ever. (I was living there then. It was thrilling, but uncomfortable.)
Laar is chubby, bearded, rather rumpled, more like a university professor than a political icon. His Estonian-accented English takes a bit of getting used to (he pronounces "invite" and "invade" as if they were the same word). And he is very modest about his account of those exciting years. He didn't know much economics, he admits freely: he'd just read Hayek and Friedman and they made sense. He hoped that the flat tax would bring in roughly the same amount of money, but he couldn't be sure (in fact, of course, it brought in a lot more). He is far too polite about the bad advice Estonia received from outsiders (including a ninny from the International Monetary Fund who recommended a common post-Soviet currency "from Tallinn to Tashkent"). Laar, thank goodness, ignored it all.
But he certainly fires up his audience. The Poles wondered, wistfully, if radical reform could only work in a country with Estonia's small (1.3 million) population? (Answer: no.) And was it now too late to try such radical measures in Poland, 15 years on? (Again: no.) The UK Conservatives, whose current leader, David Cameron, is a platitudinous semi-socialist who shows not the slightest interest in low taxes and lean government, listened enviously. Their questions were admiring, but peppered with excuses about why real reforms wouldn't be practical, timely or popular in the UK. (Laar replied that necessary reforms are never practical, timely or popular, and you have to reckon that you may lose the election after you implement them: but they're still worth doing, all the same).
Amid the swooning admiration, I was struck by a paradox. Most of the parliamentarians and party groupies round the London dinner table were Europhobes, who would like the UK to leave the European Union, or reduce it to a free-trade area with no central institutions. I asked Laar what he thought. He replied that people who criticise the EU are just looking for someone to blame for problems they can't solve themselves. Joining the EU had not affected Estonia's economic freedom and the Brits should stop whingeing and start working to make it work better.
This didn't go down very well. But as UK Conservatives hunt around the nutty fringe parties of Europe for partners who are suitably Europhobic, they might stop to notice that a politician who has actually won an election in living memory and has promoted capitalism, freedom and European security with striking success, thinks they are plain wrong.

Edward Lucas is central and eastern Europe correspondent for The Economist.

Central European competitiveness

Lynx economies

Apr 12th 2006
From The Economist print edition

The advanced ex-communist countries have done well—and will do even better

THE best-performing ex-communist economies are setting quite a pace: Estonia and Latvia posted 10% GDP growth in 2005, reminiscent of Asia's “tigers”. The question now is whether the new Europeans can keep it up and catch the richer half of their continent. Few worry about external shocks, though Hungary, with its big current-account and budget deficits, looks vulnerable. For most, basic competitiveness is more pertinent.

A study by the Vienna Institute for Comparative Economic Studies, a think-tank, and Bank Austria Creditanstalt paints an encouraging picture, at least for the eight ex-communist countries that joined the European Union two years ago. They are usually termed the EU-8, but “lynx economies”—in honour of the region's own fierce felines—would be catchier. Their prospects are much brighter than those of the next candidates for membership, such as Romania and Bulgaria. In particular, the lynxes look set to keep their edge against their Asian competitors in the EU market.

The study measures the EU-8's competitiveness in terms of export performance (both size and quality), economic structures (a big share for services is a strength, farming and manufacturing are not) and the friendliness of the business environment (from bureaucracy to infrastructure). On some scores, the lynxes have almost caught up. They gain 65% of their gross value-added from services, only just below rich EU countries, at 69%. The second-rank tigers (Indonesia, Malaysia, Philippines and Thailand) make only 47% through services. They have 13% of value added coming from agriculture; among the lynxes, it is 4.3%, in old Europe, 2.7%.

The growth in the lynxes' exports to rich countries (see chart) beats that of any Asian economy bar China. Those exports are fuelled by sharply rising foreign direct investment. As a share of EU-8 GDP, it was worth 29% in 2000 and 38.1% in 2004. In the second-rank Asian countries, this ratio fell, from 26% to 19%.

Even better, the quality of exports is shifting upwards. The study notes particularly fast growth in what it calls “medium high-tech” industries, which now make up the biggest category of exports. Here the lynxes are raising not only the prices they charge but also market share.

Two big weaknesses remain. One is in the quality of public institutions. The World Bank and others compile detailed scores of business-friendliness on which all European countries, rich and poor, are outshone by the likes of Singapore and Hong Kong. The EU-8 need to make sure that they emulate not stagnant old Europe but its dynamic rivals in Asia.

This is improving, slowly. A bigger problem is in research and development. Most post-communist countries devote puny amounts of money to this: the lynxes average only 0.8% of GDP, compared with 2% in western Europe. Politicians grumble that the foreigners who own most of their industries prefer to shop at home for brainpower that rich countries can afford to subsidise more generously.

That's partially true, but politicians are slow to recognise another problem: post-communist universities are still largely unreformed, complacent and introverted. There are plenty of ways that ambitious countries could pep them up—for example by paying internationally competitive salaries, teaching in English and encouraging closer links with business.

Copyright © 2006 The Economist Newspaper and The Economist Group. All rights reserved.

East European media

Londongrad

Apr 12th 2006
From The Economist print edition

A million east Europeans in London are creating a thriving media market

Home thoughts, abroad

WHEN spies from MI6 were caught red-handed in Moscow earlier this year, Natasha Chouvaeva knew just the espionage expert to interview: Oleg Gordievsky. He is a former KGB officer who spied for Britain, escaped from the Soviet Union and now lives in well-guarded anonymity. For the media inside Russia, he's taboo. But unlike her counterparts in Russia, says Ms Chouvaeva, editor of the fortnightly Londonskiy Kurier [London Courier], “I don't have to worry about the Kremlin.”

Her paper, with a circulation of 12,000, is just one of a dozen thriving publications aimed at the east European diaspora in Britain. The latest arrival is a glossy English-language colour weekly, Fusion, with a circulation of 60,000. It is designed strictly for people from the eight post-communist states of the European Union. There are two other Russian weeklies plus a clutch of glossies focused on shopping and lifestyle; then there are six Polish publications (including a daily) and a radio station; and two Lithuanian papers. Their combined sales are over 120,000, and that is only a fraction of the market. Fusion's editor, Klara Smolova, reckons there are up to 1m east Europeans in London—nearly four times the government's official figure.

The most interesting material is the advertisements. As well as the predictable pages dealing with shared housing offered and sought in the grottier parts of London, and the nannies and builders who have proved the salvation of the British middle classes, there are ingenious lifestyle tweaks: for example, a way of using your mobile phone contract to get free calls home. An escort agency wanting new recruits stresses that it is “run by women”.

Ms Chouvaeva's paper apart, most of the publications show little interest in politics. Editorial content is a mixture of news from home and tips about how to survive in London. One Russian paper recently had a two-page spread on “Fake marriages, for and against”. There is a smattering of snide commentary about British social mores, but the overwhelming sense is of appreciation and awe at the opportunities offered.

Some still find the offerings pretty amateurish. At a Polish newsagent in west London, Bogusia Jarzebska, a graphic designer currently working as a cleaner, sniffs about the Polish papers' clunky layout, bad prose and inaccurate information. “One of them is published by a company that used to be a cleaning agency. I think it's the same people working there.”

That is why Fusion is so striking. Owned by the company that also publishes the Guardian, Britain's biggest liberal daily, it boasts both professional layout and sharply focused articles on survival (how to deal with double taxation) and fun (cheap days out). Its stablemate is TNT, published since 1983 for Australians, New Zealanders and South Africans in London. After only two months, Fusion's circulation is only 7,000 behind.

Poland

Radio nasty

Apr 12th 2006 | WARSAW
From The Economist print edition

Anti-Semitic radio in trouble

THE Polish government is the most technologically advanced in the world—because it is radio-controlled. That jibe reflects the close relationship between Radio Maryja, run by an outspoken Roman Catholic monk, Father Tadeusz Rydzyk, and a government marked by its senior figures' piety.

Now Radio Maryja is embroiled in scandal. At the end of March one of its commentators, Stanislaw Michalkiewicz, said Jews were “trying to force our government to pay extortion money disguised as compensation payments”. This was tasteless even by this station's standards. It brought a protest from the Vatican, which urged the bishops to keep the station under control. It also led to a rare statement from one of Poland's best-known Jews, Marek Edelman. The last surviving commander of the Warsaw ghetto uprising of 1943 called for Radio Maryja to be closed down because of its “xenophobia, chauvinism and anti-Semitism”.

Many Polish bishops, who represent the brainy, open-minded faith embodied by the late pope, John Paul II, feel the same. They find Radio Maryja creepy and superstitious. The mainly secular Polish mainstream media have piled in as well, probing the station's questionable financial dealings. None of this may have much impact on the radio station's traditional, mainly elderly, rural and poorly educated listeners. But it may give the government pause for thought, as it prepares for a visit by the new pope next month.

Newly published: "Why I am still an Anglican"

http://www.amazon.co.uk/exec/obidos/ASIN/0826481434/qid=1144686709/sr=8-1/ref=sr_8_xs_ap_i1_xgl/026-2890637-1254841#product-details

...is how you can buy it from Amazon. But my chapter (the last) is here

Happy Easter (for those people on the list who celebrate the western calendar)

Home thoughts from abroad

St Saviour’s Anglican church is built of brick, and it stands on British soil. But it is hundreds of miles from Britain, in the Latvian capital, Riga: the earth below its foundations was brought there by patriotic English merchants in the nineteenth century. St Andrew’s has similar Victorian church architecture -- but it’s in Moscow. In my nearly twenty years as a foreign correspondent in eastern Europe, these and other Anglican churches of the European continent have provided the spiritual landscape for my life, and my education in Anglicanism.

I thought I knew the Church well: I was brought up in an Anglican family, studied religion, and worked as a journalist for the BBC’s religious affairs department. There were, I reckoned, at least seven kinds of Anglican. My crude caricatures went like this:

1) The Evangelical — well-scrubbed, austerely dressed; the self-conscious, even smug heir to the traditions of the Reformation and, before that, the Early Church. He worries that many Anglicans are Christians in name only, but likes the idea of evangelising them. He sees the Church, not as the bride of Christ on earth, but as the ‘best boat to fish from’.

2) The Anglo-Catholic -- scented rather than scrubbed, and elaborately coutured. Would be a Catholic in Italy, or Orthodox in Greece. Liberal-minded on the Bible; nit-pickingly precise on details of liturgy and vestments. Loves the Church; less keen on outsiders. Worries that other Anglicans do not have the right idea about sacraments and neglect saints’ days.

3) The Liberal -- relaxed in dress and manners; open-minded to a fault; sees central tenets of the faith as dearly held but hard-to-believe, valuable in a symbolic, rather than literal context. Finds evangelising distasteful, and worries that other Anglicans make the church look off-putting.

4) The Traditionalist -- British to his bones; sees, often unthinkingly, the Church of England as part of the national identity, the wellspring of the country’s literary and constitutional tradition. Loves the Book of Common Prayer and the King James Version. Dislikes modern Britain. Thinks other Anglicans are faddy and over-excitable.

5) The Radical Do-Gooder -- goes to church because he wants to bring down the mighty from their seats and exalt the humble and meek; to dump the debt and save the rainforest. Right-on politics usually combined with ultra-liberal theology. Regards other Anglicans as stuck-in-the mud and introverted.

6) The Community-Minded -- a staunch supporter of the playgroup, the choir and the youth club; admires the vicar more for his people-skills than his preaching. Hazy on doctrine; thinks other Anglicans are rather “churchy” and intense.

7) The Loyalist -- faith rests on shaky foundations, but unwilling to ditch the Church altogether (at least while his parents are still alive). Feels that an hour a week of reflection and hymn-singing makes him a better person. Finds other Anglicans too clubby.

These caricatures (admittedly crude) were all features of my life. It didn’t put me off churchgoing altogether, but it did strike me as an odd feature of Anglican Christianity that each strand of the Church attracts vehement criticism from other parts of the church. The evangelicals in particular seemed to regard all other motivations for churchgoing as peripheral: you’re either saved or you’re not. If you want a social club, a political party, or a family get-together, go to one.

Other bits of the Church were equally (un)charitable, regarding the evangelicals as simplistic and narrow-minded. Many outside Anglo-Catholicism regarded that as something of an affectation: a club for people who like prancing about in strange costumes amid clouds of incense, pretending to be holy. Those bits of the Church that believed in the Virgin Birth, the physical Resurrection and the Ascension were uncomfortable with those that didn’t. The radical do-gooders distrusted the traditionalists, and vice versa.

It was tempting to conclude from this that Anglicanism was a ragbag of warring and contradictory beliefs, a historical accident which is now facing a deserved and inglorious demise. In a world which likes clear boundaries -- gay or straight, pro-Bush or anti-, vegan or not -- the ambiguities of Anglicanism seemed quite out of place.

But even before I went abroad in the mid 1980s, I began to see that this argument could be turned on its head. If you agree that it is rash to be too certain about the future of Christianity then a dose of inclusivity and tolerance is wise. Take three examples: first, if women priests and bishops prove to be a temporary enthusiasm, destined to wither away, then the traditionalists will be vindicated and recover their central role. If, on the other hand, there is an overwhelming and permanent shift going on in human understanding of women’s roles, then much of Anglicanism has already grasped it.

Secondly, if there is a general revolt against literal readings of holy texts then Anglicanism offers a ready framework for a Christianity that does not treat the Bible as a history-book-cum-instruction-manual. If instead there is a renewed interest in devotional use of Scripture, Anglicanism has a powerful intellectual tradition to support that, too.

Thirdly, the sacramental tradition may perhaps prove to be a hangover from a pre-modern age, and will die out along with indulgences, relics, exorcisms and prostrations. Or maybe sacraments will prove to be the key to religion in a post-modern age, where people seek symbolic expressions of hidden meanings. Either way, Anglicanism can accommodate the shift in spiritual appetite.

I appreciate this breadth all the more because my own Anglican faith has veered so sharply between all points of the ecclesiological compass. I grew up in a family where churchgoing was an unquestioned part of life. My father, a philosophy don, advised the Church on doctrine; my mother has a theology degree. As a teenager, I was an evangelical; as a student, a right-on modernist, combing ultra-liberal theology and ultra-liberal politics. As a busy young journalist, I found my faith stretched, and resorted to habit and tradition, joining the Prayer Book Society and going to church mainly to sing hymns and make good resolutions.

It was only when I was travelling abroad that I began to feel at ease with the Church. As a student in Cracow in 1986 (with no Anglican church nearer than Berlin), I sought out the tiny Methodist congregation, and tingled to the sound of familiar hymns sung in Polish (Abide with Me was a local favourite). It was an experience that both prompted homesickness and cured it.

Working as a western journalist in eastern Europe before the collapse of Communism was a lonely, sometimes scary experience. The outside world was largely uninterested -- the Berlin Wall seemed a permanent fixture -- and friends and colleagues were thin on the ground. Every contact with a local brought an ethical dilemma. Was the nice girl I met at a lecture in East Berlin truly a secret dissident eager to pass information to a friend from the free world, or a Stasi plant trying to embarrass me (and, worse, the BBC)?

As I wrestled, callowly, with these problems, I found the Anglican congregations in West Berlin and, later, Prague, Riga, Vienna and Moscow, became a central part of my life. There were big contrasts: the Berlin services were in a splendidly fitted-out military chapel; the Prague ones, until the collapse of Communism, were celebrated in the basement recreation room at the British embassy by a visiting priest from Vienna. But for me the effect was always the same -- and ever stronger.

Of course there were plenty of services in local languages, and I attended them when there was no alternative. But I found nothing to match the pull of a familiar liturgy, of fellowship with like-minded believers, and those beloved hymns. The effect on the soul was similar to that of Marmite on the tastebuds. Admittedly, analogies like that make expat congregations easy to caricature. People who would never darken a church’s doors in England start coming, because they are bored and lonely. There is a sometimes ridiculously self-conscious Englishness (not always confined to the English members of the congregation): I remember, after one service in Berlin, hearing an elderly German woman hissing reproachfully to the (also German) intercessor, “You forgot to pray for our Queen”.

But behind the absurdities are huge pluses. An Anglican church abroad can play a role which is muffled at home. In eastern Europe, it represents the triumph of good over evil. St Saviour’s in Riga was closed by the Soviets in 1940 and turned into a youth club. St Andrew’s in Moscow was confiscated by the Bolsheviks after the Russian Revolution, and clumsily converted into a recording studio. Even then, the architecture was a mute witness to happier days, and local Anglophile believers would offer a silent cheer as they passed. But regaining and re-consecrating the buildings after the collapse of Communism was a symbolic triumph: atheistic, xenophobic intolerance was vanquished, and a precious historical and spiritual feature of both cities was restored to its rightful use.

In communist Czechoslovakia, where atheism was the state ideology and the church leadership had to a large extent been bullied and suborned into making shameful compromises with the system, the existence of a “real” Church, however tiny, was of symbolic importance. And, peripheral as the Anglican services were, they made me feel that I was doing something in my spiritual life to stand alongside the underground priests and dissident pastors whom I met in my journalistic life.

In Berlin, the Anglican Church also had symbolic value. One strand, as in Prague, was fighting the good fight of the cold war. Many members of the congregation were officials (actually spies) and soldiers from what was then the huge British official presence in Berlin. They were clever, brave and friendly --and I found the atmosphere in the congregation a refreshing contrast to the ignorant peacenikery of much of the Church back home. Another, contrasting but complementary, element of the congregation was reconciliation between old foes. The congregation also included elderly couples consisting of British servicemen who had been posted to Berlin (in the days when part of the job was to keep a vanquished enemy subdued), and local girls they had met and married.

In the new conditions of freedom, the Church remained a protagonist, but this time in another culture war: between the spiritual values of western civilisation, and the brash, avaricious ways of post-communist capitalism. The end of totalitarianism left a moral vacuum, where greed was elevated to a virtue, and brutality overlooked. Many expatriates found the temptations overwhelming: compared to life in respectable western countries, the money was far better, and the fleshpots far fleshier. One (bachelor) journalistic colleague of mine in Moscow confided that, in his first six months in town, he had never gone to bed alone or sober. For westerners living and working in a city where swindling, promiscuity, drugs and drinking were everyday pursuits, church was a place that refreshed and inspired.

For me, there was an increasingly important extra dimension. My marriage was breaking up. There was a danger that my children would end up living far away, and my contact with them would be sharply limited. As my home life deteriorated (and my children were no longer able to come to church), St Andrew’s in Moscow kept me from disaster. The shabby, desecrated church fabric, like the wounded body of Christ, matched my own feelings of hurt and despair. Weeks would go by when it was only at services -- sometimes the Sunday Eucharist, sometimes the daily said evening prayer -- that I felt (rightly as it turned out) that hope of a happy future was not altogether lost.

The miserable physical state of St Andrew’s highlighted another powerful way in which a church abroad inspires commitment: through its vulnerability. For most congregations in Britain, the parish seems a permanent fixture. Even if it closes, or is merged in a team ministry, life will go on. For an expatriate congregation, existence is much more precarious. St Saviour’s and St Andrew’s are both in advanced states of disrepair—St Andrew’s in particular needs millions of pounds to keep the rain out and the roof on. Everything portable was stolen or destroyed under Communism, and the interiors disfigured by hideous, Soviet-era conversions. Obtaining even the simplest church furniture requires head-scratching and fund-raising.

Solving those problems is made more difficult because of the nature of the congregation. Expats come and go frequently, and it seems a rule of life that the best people are always moving on elsewhere, while the most tiresome seem to stick around indefinitely. But that mixed-bag congregation makes it all the more compelling. There is a sameness to Anglican congregations in Britain. Moscow’s included worshippers from all corners of the Anglosphere (Indians, Americans, Australians and the like). That was to be expected. Less so were the many others: Dutch and Germans, Poles and Finns -- not to mention a bunch of Russians. All these people had made a conscious, thought-out decision to go to a church of a different tradition, in a different language.

That is humbling and thought-provoking for someone brought up to feel that Anglicanism is as unremarkable as bus services or running water. It demonstrated to me Anglicanism’s unique inclusivity. Those from in the Orthodox tradition were able to feel at home, just as much as those from a Protestant background (one regular attender was a full-time worker for the Salvation Army), or from no religious affiliation at all.

It was when I returned to England that I realised how much more at home I felt in the Church than I had when I left, some fourteen years previously. But Living abroad had deepened not only my ties with Anglicanism, but also my knowledge of other Christian denominations. In Russia, I was deeply impressed by the Roman Catholic Church, whose priests’ brainy integrity was in sharp contrast to the obscurantism and often dubious practices of much of the Russian Orthodox church. But I also found much to admire elsewhere in the eastern tradition. By happy coincidence (or maybe more), I came across a former fellow-student, an American of Ukrainian extraction, who runs a Byzantine-rite Catholic seminary in Ukraine. Although our contact was infrequent, it was inspirational. His seminary -- really a university -- was a moral lighthouse to a whole region, teaching students everything from classical languages to moral philosophy. Its rigorous standards and loving pastoral care are in sharp contrast to the often corrupt, exploitative and debased system of state-financed university education.

That helped shape my choice of church when I returned to London. Whereas in the past I had been lucky to have one Anglican church to go to, now I had hundreds. I decided to explore a part of the Anglican tradition that I had scarcely encountered in past years. I wanted transcendence, beauty in sound and sight, mystery, reverence and historical continuity; but also a feeling of being part of the widest possible Christian family. So I began going to St Mary’s, Bourne Street -- probably the most High Church of all Anglican churches, anywhere.

At first it was rather a shock. I had barely said a Hail Mary in my life, let alone sung the Salve Regina. I had never attended Benediction, nor sung plainsong, nor touched a rosary. Some of my friends were surprised. Given that my beloved new wife is Roman Catholic, and that the Anglo-Catholic wing of the Anglican church is weak, splintered and demoralised, and the whole Church so riven with dispute, they wondered why I didn’t take one step further, and join (as one friend kindly put it), “a proper Catholic Church, rather than a pretend one”?

My answer was that the Church of England is not perfect, but neither are other denominations. It has problems, but so do others. The current rows about sex may get worse, or better, but one does not escape them by moving elsewhere. Equally, whichever course the Church decides to follow, there will be some damage to its ecumenical relations, but the nature of Christian disunity means that there is no single Church that can claim untroubled relations with all other Christians. Leaving the Church you are brought up in is like severing relations with your own family -- it may sometimes be necessary, but it should be only the last resort. So long as Anglicanism maintains its inclusivity, tradition and ecumenism, with its ambiguity a witness to humility in the face of the unknowable, I can think of no better spiritual home.

So, for the first time in my adult life, I now feel that my faith and my life are firmly in tune. The Church’s job is to provide a framework for modern life, and to fill the gaps. If the secular world is busy, ugly, shallow and selfish, the Church offers peace, rhythm, contemplation, humility, aesthetic riches, history, friendship -- all combined in a narrative that makes sense of our actions, hopes and fears. The strands of belief that have passed through my fingers in the past decades have finally knit together; I have never felt more strongly tied to the Church.

EDWARD LUCAS
Edward Lucas was born in 1962 and educated at Winchester, the LSE and the Jagiellonian University, Cracow. He has been a foreign correspondent in Eastern Europe since 1988 (chiefly in Moscow, Berlin and the Baltic States) and is currently Central and Eastern Europe correspondent for The Economist. He is married to Cristina Odone and has three children.

For real afficionados, here is a very lengthy, though I hope intermittently amusing, report of my trip to Hungary.

Have a nice weekend

Edward

Hungarians are the gloomiest people in central Europe, until you suggest that they trade places with anyone else. A friend of mine writes from New York, recommending people to see “in my tortured homeland”. He is not joking. Hungarian gloom has a special acidic, self-obsessed quallity to it. But the special agony of dismemberment and defeat is only part of the story. Even worst is being lumped together with anyone else, as “eastern European” or even worse “Balkan”. The surefire way to get Hungarians sounding patriotic and cheerful is to ask them if they would like to emulate Slovakia, their much poorer, but reform-thirsty northern neighbour. What they like is a nice comparison with Austria, where they can sink back into their self-indulgent gloom.

I am visiting Hungary to find out three things. How is the election (in April) is being fought. What’s happening to the economy. And how is society changing. Hungary was the freeest and most sophisticated of all the Warsaw Pact countries in the 1970s and 1980s. There was repression, and there were political prisoners, but the Communist motto was “He who is not against us is with us”. That left plenty of room for low-key dissent—the kind based on a raised eyebrow, a bent rule, and an unsaid word, rather than a shipyard strike or demonstration broken up by riot police. In the 1980s I used to visit Hungary to meet east Germans—meeting them in their country was difficult and costly for me, and dangerous for them. Hungary then felt rather like a mildly repressive version of Yugoslavia. There you were safe if you didn’t criticise Tito directly. In Hungary you were safe so long as you didn’t mention Imre Nagy, the leader of the 1956 uprising, or the Soviet Union whose tanks crushed it.

“Reform” may have a nice resonance to western ears, but in much of post-communist Europe, and particularly in Hungary, it stands for pain and uncertainty, particularly price rises. Hungarians started off in the early 1990s with a burst of vigorous reform, privatising most state-owned industries more or less cleanly. Then, to everyone’s surprise, the same commies who had dismantled the old system, only lightly relabelled, came back to power in 1994. They sooon hit the buffers with a nasty financial crisis, but thereafter governed soundly. Foreign investment, particularly from the German car industry, boomed.

But in 1998 the rightwing won again, in the form of Viktor Orban, the youthful and charismatic leader of Fidesz. I remember Fidesz as the brave and idealistic Young Democrats, who were the most attractive counter-cultural opposition to the greyness of communist rule. Their most famous poster in 1990 showed Honecker and Brezhnev kissing (and seemingly snogging). It embodied the gruesome kitsch of Soviet-era diplomacy.

Since then Fidesz has moved sharply to the right, ditched its liberal identity and found a conservative one, losing a bunch of “real” (ie lefty) liberals in the process. To general surprise, and despite a colossal spending spree, Fidesz lost the 2002 elections. The lefty liberals teamed up with the ex-commies and formed the government which is now standing for reelection.

But with a difference. That government spent its first two years in an unashamed attempt to reward its supporters for voting for it: “I can understand why they made these idiotic promises, but not why they kept them” says a finance minister from a nearby country. But the prime minister of that government turned out to have been a secret police informer in the communist era, and even in Hungary’s exceptionally forgiving political culture that was too much to swallow. In came Ferenc Gyurcsany, a wealthy tycoon who combines capitalist credentials with close family links to the old regime.

Against him, and neck and neck in the polls, is Mr Orban, who has returned from a mammoth three-year sulk to try to win power back for Fidesz. Orban is the sort of politician that The Economist would like to love: a freemarket anti-communist liberal with robust political skills. But there are doubts about his democratic credentials. His opponents demonise him as a cynical populist willing to play the most dangerous of cards—revanchist, anti-semitic, demagogic. It’s true that his government managed to fall out with most of Hungary’s neighbours (though it did get the country ready for Nato in 2002, and EU membership in 2004. In turn, Orban and his supporters demonise the incumbent government: crooked commie turncoats who have bankrupted the country and will do anything to stay in power.

By the end of the visit, I am equally fed up with both parties. But at the start, I am favourably disposed to Orban. That’s partly because I have a soft spot for people who were anti-communist back in the old days. I remember in 1988 going to Budapest and laying flowers on Imre Nagy’s grave. He had recently been reinterred from his anonymous plot at the corner of the cemetery—a sign that Hungarians could begin to commemorate the trauma of the crushing of the 1956 uprising. But to my surprise my friends in Fidesz—including, I think, the young Orban—were scornful and teased me. “Why waste flowers on a dead communist?”. That set me thinking, as I still do, about redemption. Can you have a reform communist any more than you can have a reform Nazi.

The nice things about Budapest are the food and the architecture. The bad thing is the language. I have been struggling with Hungarian, intermittently, since the mid 1980s. I think have had (and lost) three, or possibly four, copies of “Colloquial Hungarian” all well thumbed in their early chapters and pristine in the later ones. Hungarian is the Mount Everest of post-communist languages: if you speak one Slavonic language you can learn the other with a bit of effort. German helps with Czech; add Polish and German and Russian to a bit of Latin and Greek and you have Lithuanian. Romanian sounds like a drunk person speaking Italian (and no doubt to Romanian speakers Italian sounds like drunk person speaking Romanian). But Hungarian… there are 14 cases, with bewitchingly lovely names like the “adessive”. The vocabulary is huge, and the grammar intricate. I am not even in the foothills, despite knowing a bit of Estonian (which is as distantly related to Hungarian as English is to Persian). Anywhere else I can more or less manage to read the papers and understand the news. But not here.

So I spend the flight alternately reading IMF and OECD reports about the Hungarian economy (which make gloomy reading, even in the polite bureaucratic tone that these august bodies use), and looking with increasing frustration at my Hungarian phrasebook and grammar. Every now and again a word leaps comfortingly from the page: Haz is house. Szabad must be from Svoboda, which means freedom in a lot of Slavonic languages. Uj is new, which is like the Estonian Uus. But I not going to progress beyond sub-kindergarten level unless the Economist kindly gives me six months off. And even that would not be enough. I haven’t felt so helpless since Afghanistan.

We arrive (I’m with a colleague) and head straight for the Fidesz campaign headquarters. These are rather mystifying: there is no sign on the door, although there is a gigantic wall drape over several stories of the outside of the building which is all but invisible as the street is so narrow. We are too early, and the reception, monoglot to a man, are very confused. This is one of the striking things about Hungary. I have never found an office in Poland in recent years, even in the boonies, where the receptionist can’t at least manage a few functional pleasantries in English. But Hungary, which is a smaller country (and therefore should be more multilingual) simply doesn’t do foreign languages. We were looking for a ministry and the sign outside said it was the “Otastasi” ministry. Whatever that might be.

Hungary doesn’t do a lot of other things either. In Romania, taxis have little printers that spit out receipts in two seconds. In Hungary, they are all written out, laboriously, by hand with carbon paper. Very few shops and businesses bother to advertise their web addresses.

We wait, and then a phonecall comes. The Leader is delayed, and offers a five o’clock slot instead. Luckily, that’s free (I always leave three or four gaps when I’m planning a trip). Everyone is gratified that we don’t kick up a fuss. Fidesz gets a tough deal from the local and foreign press, who tend to treat Orban as if he was a closet anti-semite and nationalist. By contrast we are at pains to show we are going to fair, and they like us for it.

But the overwhelming impression at the Fidesz headquarters is that all the noisy populism of the campaign is just for show. This party is not really economically protectionist or interventionist. “We are a continental Christian Democrat party with central European characteristics” says one person. I take it that these characteristics are chiefly a loathing of communism. Nor does it really like making expensive spending promises. “This is just for the election. What will happen once we win is very different,” someone murmurs off the record. That’s encouraging if you just worry about outcomes, but depressing if you think that politicians in a democracy should keep their promises.

Our next stop is with a friend of mine who has been living in Budapest for years. He speaks impeccable Hungarian, which leaves me feeling envious. He is also one of the few westerners living here who doesn’t demonise Fidesz—indeed he thinks that Orban is going to win, on the grounds that Hungarians have never reelected a government so far. That’s actually one of the remarkable things about post-communism: nobody gets reelected. Whether you reform or not, the voters chuck you out. There is only, I think, one exception to this rule and that is Slovakia, where the first reformist government, that displaced the thuggish pro-Russian Vladimir Meciar, was reeleected—but it too is facing defeat now in the elections due in the summer.

Our friend is interestingly dismissive of the lefty liberals: “very tolerant until you disagree with them”. Orban is gutsy and has a point about media bias against him. I’m interested in this. Fidesz are furious with the foreign press, who they think give Gyurcsany an easy ride. But the party does itself no favours by its prickliness. When Gyurcsany’s propaganda people used a sentence (wrenched out of context) from an FT article, saying that Hungarians were living better than ever, Fidesz said that this was because the FT had been bribed by the government. Unsurprisingly the FT regarded this as libellous, and Fidesz rather grudgingly retracted. But one senior Fidesz figure wrote a formal letter of complaint to the Economist, complaining that we wrote about Fidesz’s silliness, but not the government’s far worse sleaze and dirty tricks.

He may have a point. But the Fidesz campaign has been full of gaffes. They hacked into the Gyurcsany campaign computer, but left a clue. They also seem to let their party fax machine be used by newspapers that are supposedly quite independent. “A coincidence” they claimed, prompting a television interviewer to ask sarcastically if any member of the public could walk in off the street and use their fax machine.

I was rather looking forward to some proper Hungarian food, but this restaurant is Hungarian-Italian, which means it serves Italian food, but cooked the Hungarian way and in colossal quantities. Also everyone apart from us is smoking. And the service is very slow. We gulp down our coffee and head for a meeting with a Fidesz-related economist.

This is rather fun. He is an unabashed Laffer curve enthusiast, who wants to rescue Hungary’s dreadful public finances (the government deficit is probably a stonking 10% in reality) by cutting taxes. That, he says, will raise revenue.

He reckons Hungary has two economies. One is the private sector which is prospering, the other is the laggard public sector which is inefficient, bloated and spendthrift. Since late 2000 when Gyurcsany took over, he says, relishing the words, we have a “catalogue of disasters and a string of scandals”. It’s true that the last Fidesz government, at least at the beginning, was rather fiscally conservative but they blew that in the pre-election spending spree (and still lost). However, the debt-to-GDP ration was a comfortable 53%. Now it is 61%. That’s too high for Hungary to join the euro in 2010, which it is nominally pledged to do (if the weather is fine, the harvest is good, nobody is on holiday on the time and there’s a full moon, I add mentally). Corruption is worse (measured by the Transparency International Corruption Perception Index, which I regard as largely bogus, but never mind).

He wants four things.

One: is a flat tax (rate to be decided, but between 16% and 19%).
Two: huge reform of the public sector
Three: a brand new national economic development plan perhaps sponsored by the EU which will invest in infrastructure, small business etc
Four: fight corruption “because it spoils everything”.


This programme, he reckons, with a swoosh of wishful thinking, will take 18 months, bringing the 2010 euro target back in sight. I like number one, which has worked well everywhere it has been tried. It is increasingly hard for the opponents of flat taxes to claim that they are a lunatic economic gimmick, when in every country they have been used the tax base has widened, and tax revenues, investment and GDP have grown. You can try to make a counterfactual case that these countries would have done just as well or even better with a “mature” [complicated] tax system, but it’s hard to see why. He notes that in 1995 Hungary halved the corporate tax rate from 36 to 18 % and tax revenues doubled. He reckons that the “grey” (ie illegal) economy accounts for 1/3 of GDP. So cut taxes, and that goes legal, GDP shoots up, there will be 200,000 new jobs, and tax revenues will rocket.


The rest of the programme is pretty much moonshine. Big reforms of the public sector are the standard policy of every reformist government from Estonia to Moldova. The question is how to do it. It’s very difficult. Even Estonia, which started 15 years ago, has only been a partial success. It requires the right computers and software, the right political leadership, the right bureaucrats and public support. And if you have all that, you probably don’t have much of a problem to start with.

The national economic plan has a nice dirigiste ring to it, and might appeal to the voters. But I have never heard of a national plan working as planned. They are almost always counterproductive. The best thing the government can do is stay out of wealth creation and concentrate on a really good legal environment with quick clean courts, sensible rules, and no cartels. The idea that the government should take money from successful businesses and try to hand it out more sensibly than banks would always strikes me as far-fetched. But I am just a swivel-eyed Hayekian looney.

Fighting corruption is another fine idea. But it is very difficult to do. Romania is managing thanks to huge external pressure and frenzied political support. But I doubt it will last even there. The best way to fight corruption is to have honest bureaucrats and politicians, and public-spirited businesses and citizens who kick up a stink when asked for a bribe. But then you don’t have much corruption to fight.

The big hole is that there’s no mention of cutting spending. He replies that this is all in the plan: 200,000 “redundant” public sector jobs will go. I wonder if that’s a widely-known bit of their programme.

I am a bit bored by the triteness, but pleased by his examples from other countries. Slovakia has got it right on foreign investment and taxation, Ireland and Finland on industrial policy; Scandinavia on education, Spain on tourism.

We finish on energy security. Yes to a new nuclear power station (again, I doubt that’s in the election programme) but the real priority is cutting wasteful consumption of energy.

Comparing his basically sensible if rather shallow and optimistic reformist agenda with Orban’s speeches is quite interesting. Orban has railed against “luxury profits”, criticised the current government for depending too heavily on foreign investment; and threatened to renationalise Budapest airport, which has just been sold to a British investor. I ask politely how this can be squared with what we’ve just heard. “Oh that’s just for the election” he says, looking entirely unbothered. “I am looking forward to after we win”.

Hmm. We then go off to see Orban himself, in his large office in the Buda hills. There’s a bit of wait, during which we have two slightly surreal interventions. First, I am called by a tabloid newspaper wanting me, with great urgency, to write 2000 words, for a vast fee, about why Putin is a new Stalin. It’s possible, so long as I do it between midnight and bedtime. The peg is the anniversary of Khrushchev’s secret speech. I love this sort of commission. You write something, a bit more lurid than you usually would, and then they don’t run it. But they pay all the same.

As I’m mentally brushing off my Putin cliches, we get another phone call. I’ve been trying for two weeks to arrange an interview with Gyurcsany, and received a rather puzzling series of brush-offs. He had promised an interview this time last year (though why any post-communist prime minister should need any persuading to talk to the world's most important newsweekly is another story: in other countries they are begging to speak to me, not vice versa).

Anyway, I have sent a series of increasingly cross and disappointed e-mails, first to the government, and then to the Socialist (Gyurcsany party) offices, with no results. Suddenly, the phone goes and it is a very apologetic-sounding spin doctor from the prime minister’s office, oozing apologies. He will see us tonight and see what can be done tomorrow.

Then Orban bounces in, dynamic, confident, charming, casually dressed. He recognises me, but we can’t agree where it was we met. In these situations I always say firmly that we must have met at something in Oxford. Most people in international politics have been to Oxford at some point, and this works well—he reckons it was a meeting of the Liberal International in 1997. I am sure that’s not true but never mind. (I should say that I learnt this trick from my father, an Oxford don whose many ex-pupils recognise him more easily than he does them. He says firmly “We last saw each other in the Broad”, which is a large street in central Oxford. This always brings a delighted affirmation. Funny thing, memory).

Orban makes no bones about being a populist. “My mission in politics is to speak in an understandable way about even the most complicated issues. . The content is serious, the way I express it is popular. I am trying to send my messages to everybody in a way that they will understand.”

I reckon that Fidesz and Orban is actually trying to ride three horses at once. It has its core voters, who are conservative, market-minded, patriotic, pro-family, Euro-atlanticists. I call that CDU Viktor, after the German party. Then it needs to hoover up any stray voters on the radical right, by banging on about Hungarianness, the iniquities of foreign capital and delivering nasty coded messages about Jews. That’s FPÖ Viktor, after the radical right (and, coincidentally, ex-liberal) Austrian party. Thirdly, it is trying to attract voters from the other side, the poor and dispossessed who have done rather badly under both reform and four years of millionaire-socialism. For that he makes expensive promises about higher pensions, social solidarity, fresh starts in life etc and denounces “luxury profits”. That’s SPD Viktor.

This would be a tricky task for a brilliantly-run western party, and it is a tall order for Fidesz which is run by a very small group of people round Orban who don’t seem terribly well organised. Orban starts off in FPÖ mode, laying into the government for being unpatriotic. “They don't trust the internal forces of Hungary, they are always looking for solutions from outside, and neglect the energies inside.” I find that rather dispiriting. Surely the whole point about being a small country is that you can flexibly adopt all the best ideas from elsewhere—improve and adapt them, sure, but why try to reinvent the wheel? But he claims that foreign investment and the EU “leave far less space for Hungarian companies, educating people, utilising our cultural heritage that has economnic force, eg engineering.” I have heard of the “lump of labour” fallacy, that there is only so much work and it must be shared out fairly. But this is even pottier: “the lump of ideas”fallacy—a kind of intellectual protectionism that would shelter bad Hungarian ideas from good foreign ones. If the foreign ideas were worse than the local ones, after all, there would be no problem because nobody would adopt them.

He carries on, still in FPÖ mode: “There must be a place where Hungarians are most important and that is Hungary”. I am not sure about this at all. I can see that countries need to privilege their languages and cultures (which is why I passionately defend the Estonian and Latvian language laws, for all their flaws and quirks). But what does it mean for the government to make the indigenous population “the most important”? Surely the whole point of the EU is that we compete and trade on the basis of merit, not local preference. He's not impressed. “Just like France for the French.”

That’s a killer argument. France and Italy (and Greece for that matter) make it very hard to lecture post-communist countries about bad government, pig-headed defence of national interest, and so on.

Then we get on to the ticklish question of privatisation. “We will reverse it if it is possible.We have to study the contract.” says Mr Orban, switching into SPD mode. That’s a bit cleverer. He can bang the anti-foreigner drum now during the election, claiming that the airport was sold cheaply, or corruptly, or whatever. And after the election he can say “very sorry, the lawyers say that our hands are tied”. A bit like Tony Blair’s government did with rail privatisation.

He continues in CDU mode, on the “two economies” theme, which I like. The region is full of companies that are internationally competitive, mostly foreign-owned but with an increasing number of local ones. And they have to operate amid public services and bureaucracy that is miles away from world-class. But then he comes back to FPÖ and the covert protectionist theme. “The tax system is good for foreigners and bad for locals. Government favours foreign investors rather than creating equal conditions.” I think that’s misguided. Foreign investors bring knowhow and money. They are likely to compete hard with local companies. And that’s good: it raises standards. I can’t think of any country that got poor because it had too much foreign investment.

However Mr Orban redeems himself in CDU mode when we move onto reform of bureaucracy. “Estonia is probably the model. They have been very successful with technical modernisation, e-governnment. In Hungary it is ridiculously bad”. Now we’re talking. Having spent a lot of the past 15 years banging on about Estonia to people who are mostly unbelieving, bored or plain ignorant, it’s deeply gratifying when other people start citing Estonia back to me as a place to learn from.
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But he doesn’t quite share his adviser’s appetite for sacking bureaucrats “Hungary’s problem is not the number of bureaucrats but the number of inefficient regulations. We have to identify all unnecessary regulations and delete them and then it will be visible how many bureaucrats are unnecessary.”

I ask about flat tax. He likes it, so long as it is not quite flat. There must be special allowances (not benefits, he insists) for families with children (he has five).

He carries on in high CDU mode with a nice-sounding idea about rebranding Hungary as a really business-friendly location. “a country where you find less bureaucracy, which has a pro-business government and lower taxes. ‘If you want to run a good business in Europe, then the best place is Hungary’”.

That’s magnificently inconsistent with what he said before, but never mind.

Then we swing back into FPO mode on the subject of Hungarian minorities outside the country. This is a very tricky issue. In short, most of Hungary’s neighbours have unhappy historical memories of domination by Hungary, in the days when it was half of the Hapsburg empire. Slovaks, for example, will say readily if inaccurately, that they were treated as “second-class citizens” by the Hungarians. Now they are the top dogs, and the Hungarians have to get used to it.

Actually, relations are pretty good. Hungarian parties are in government in Romania and Slovakia. There are some tensions in Voivodina, a bit of Serbia with 100,000-plus Hungarians. And the hapless Hungarians of Ukraine are very poor. But nobody’s killing each other, or even shaking fists. One school of thought says that Hungary should behave very delicately, not raising even the ghost of territorial claims or special status, but just concentrating on preserving Hungarian life, language and culture in these “lost territories”. But Mr Orban sees it quite differently. “Hungarians are the only ethnic group in the Carpathian basin not entiled to dual citizenship.”

That’s true, but I can’t think of a quicker way to annoy the Slovaks and the Romanians to start handing out Hungarian passports to a large chunk of their citizens. He continues, raising the subject of the Benes decrees, and my jaw drops. These were the very harsh measures taken by post-war Czechoslovakia (before, incidentally, the Communist putsch of 1948) which deported hundreds of thousands of Germans and Hungarians. When I discuss the interview later with an assistant, I am told this bit was meant to be off-the-record, so I will honour that, rather reluctantly.

But I am left flabbergasted by what he says. One of the worst bits of the last Orban government was that he seemed set on quarrelling with everyone in the neighbourhood. This government’s strongest suit is it’s foreign non-policy: it is friends with everyone. So why bang the old drum again, even in private? Everyone in Central Europe has a grudge against their neighbours about something. If you ask for financial compensation from them, they may ask it from you.

On that, we leave, and head into the centre for a meeting with a Personage Famous in Hungary (PFiH for short). I can’t name him because it wouldn’t be fair. But he is very clever, and was a very good minister in a difficult time, and knows lots of economics. We are a bit late and there is no sign of PFiH in the horrid little bar that he has suggested meeting in. I ask the barmaid if she has seen him (he’s highly recognisable and a household name: it would be a bit like asking someone in a coffee bar near Harvard square whether Larry Summers has been there in the past few minutes). There’s a blank, rude stare. No she doesn’t speak English, or any other language. I try in Hungarian. Still a blank stare. Perhaps I have used the adessive case wrongly, or my vowel harmony is adrift. Luckily the people in the café speak English, and say he hasn’t been there. We wait, and wait. Suddenly I see a familiar figure going down the street. I run out and shout “Mr PFiH!, hellooo”. He turns round looking rather cross, but then becomes apologetic. He thought our meeting was next week.

So we go to another, much nicer bar, and I order Unicum which is always a treat, and we get into a detailed discussion about macro-imbalances in the economy. Trying not to be too technical, the problem is that Hungary’s growth is fuelled by debt. The government is borrowing huge amounts, and so are private households. It is quite normal for people to take out loans in Swiss francs or Euros, not just for mortgages but even to finance things like cars or televisions. This is terribly risky. Foreign money is flowing into Hungary because investors believe that the government will sort out public finances, and join the euro. If that comes into doubt, then the foreign money will go swooshing out, and the forint will collapse, interest rates will have to go up, businesses will find borrowing more expensive and will cut investment, jobs and pay. So a lot of people will find that just as they are becoming poorer, their foreign-currency loans have become a lot more expensive. So they will have to work extra hard to pay them back, and cut back on other spending, deepening the recession.

Will that happen? PFiH says “If I say that it will, then it will. So I am not saying so publicly. But it may well do”. He is not a man plagued by doubt or modesty. He thinks both main parties are “idiots”. The government has done nothing but spend, and Orban’s lot are talking nonsense.

We hurry off to our next meeting, with the spin doctor. It starts well: he is very apologetic. Someone, somewhere in Gyurcsany’s office has clearly blundered badly. I rub in a bit that we have just had a most interesting meeting with Orban. More apologies. He is going to try to fix someone important up tomorrow. But soon the atmosphere gets prickly. I certainly don’t meant be rude, but when I try a couple of mild jokes and put alternative interpretations on the facts, he gets cross. He insists that Fidesz is anti-semitic. I point out that it has some senior Jewish figures. Are they the ones in charge of the anti-semitic propaganda? He huffs and puffs. “You really shouldn’t believe all this propaganda from Fidesz. I would expect more insight and analysis from a journal of your reputation”. Things get even stickier when we get to a restaurant. I order a very nice bottle of wine. He sips a coke. I ask what the model is for this government elsewhere in post-communist Europe. None. We like Hungarian solutions to Hungarian problems. So he’s prickly and xenophobic. Perhaps he should go and work for Orban, I wonder, but luckily don’t say. Our spin-doctor professes to be an uber-Blairite. If so he has clearly modelled himself on Alastair Campbell.

I ask him what the the outgoing government’s single biggest achievement is. He comes up with the surprisingly feeble answer of a reform to higher education that makes it fit the socalled Bologna model. I know what he means because I used to be the Economist’s education correspondent, but I doubt one Hungarian in a thousand would know or care. (It is going over to a British-style system of a three- year bachelor’s degree, two year master’s and three-year doctorate.). But it certainly is not the sort of reform that would kickstart an ailing post-communist higher education system. When I point this out he gets cross, and says that the real achievement of the government is that it is now in a position to get reelected. I suppose that is true, given that after the first two years it was on the verge of collapse, and Mr Gyurcsany has some claim to be carrying out a Blairite modernisation. But it is a bit thin, particularly given the absymal performance on controlling public spending.

After a bit I get fed up with his prickliness and confront it. I’m just doing my job, I point out, exploring the pros and cons of his arguments. He backs off, rather sulkily, and then leaves. I’m puzzled. I had expected this sort of behaviour from Fidesz, not from the government. But in fact Fidesz has been charming and helpful, and it is the government that has been obstructive, and now rude.

We have dinner with another foreigner who loathes Orban and has a very soft spot for the liberals, Gyurcsany’s small coalition partner. I argue that it’s actually a sign of success that Hungary has a stable party system with two-and-a-bit parties, That’s considerably better than Germany, Austria or Italy, let alone any post-communist country. Of course I am not saying that the fewer parties the better, but I do think it is a good idea to have clearly defined chunks of the political spectrum. Except of course that in Hungary the two-party system consists of a supposedly centre-left outfit that is run by a millionaire Blairite with pro-business policies, though backed by a bunch of reluctant and uncomprehending old grey ex-commies. The supposedly right-of-centre outfit is flirting with strident economic nationalism and extravagant social protection.

One interesting fact from the “real”, ie non-political, world pops up. The Lubavitch Jewish community, who are a kind of Opus Dei of the Jewish world, are trying to persuade the government to allow Jews to define themselves as an ethnic minority. That is hotly opposed by many Hungarian Jews who have been insisting for more than a century that they are just as Hungarian as any other Hungarian. If this goes through, it will be a gift to the anti-semites, who will feel confirmed in their belief that the Jews are not proper Hungarians, but potential traitors like the (tiny) Slovak minority or just unwelcome intruders like the (huge) Roma/Gypsy minority.

I go back to the hotel and bang out 2000 words on Putin and Stalin. I am rather tired, having got up at 0400 in order to go to the airport. But one of these articles every month adds up to a hefty contribution towards my quixotic quest to match my parents’ heroism in educating their children properly on a middle-class salary. It is easy to write tabloid prose when you are slightly drunk and rather tired, because the normal inhibitions about exaggeration are gone.

I get up at 0600 to go to the market, which I remember as a paradise of smells and sights. But it is very disappointing: sterile, and with all the prices suspiciously similar, and high. I manage to get some honey, some gooseliver (flinching at the thought of the poor goose), turn down the caviar, and load up on salami, sausage and paprika.

Then we have breakfast with a friend of mine who runs an accounting outsourcing company. Her big problem is the labour shortage: the university graduates are not very good, and increasingly scarce. A year ago she would get 100 cvs in response to an advert. Now it is about 15. And they are not very good. It is very hard to get people to move house in Hungary. Tax and bureaucracy are better in Slovakia (where her company also operates). But she loathes Orban.

Then we go to a western embassy, and have one of those highly informative off-the-record talks which make perfect sense at the time, but are alarmingly elusive when you try to recall them afterwards. Nobody really knows what Orban really thinks, is the main message. What he likes is power, and he’s not too choosy about how he gets it. The media is very bad—except for a weekly called HVG which models itself on the Economist. How flattering.

The spindoctor, despite his prickles, has come up with a Very Important Government Figure (VIGF). We discuss the upcoming Putin visit. Amazingly, Putin is going to bow his head at the memorial to the victims of the 1956 uprising. He compares this in significance to Brandt kneeling at the Warsaw Ghetto memorial. I remember rather uneasily that my just-filed tabloid piece is about how Putin’s regime ominously echoes Stalin’s. Putin is also returning a library looted from a Protestant theological college by the Red Army. It has been stored in Nizhny Novgorod (no doubt a centre of study of Hungarian 17th century theological literature). Now the Hungarians are paying $400,000 to the Russians for “storage”. But they are getting the books back. Nobody else in the region has managed that. One up to Gyurcsany.

I’m beginning to agree that both parties are as bad as each other. Both parties say privately that when they are elected they will reform public services, control public finances, and be sensible. The government says this mutedly in public too. But the government’s record gives little reason to trust them, and Fidesz’s silly and sometimes inflammatory rhetoric means that there is little reason to trust them either. And both parties are doing nothing to make Hungarians take democracy very seroiously. Rather like in communism, where there was an aphorism “we pretend to work and they pretend to pay us” now the motto of post-communist politics is “we pretend to make promises and you pretend to believe them”

The VIGF is smooth and has a huge and complicated wristwatch. I wonder how he can afford it on his salary. He smokes throughout the meeting, but does ask us first if we mind. He gives rather a better account of the past four years and lists the government’s achievements as follows.

1) Health care-- individual insurance accounts are basis for future reform after elections. That’s true but as they are all paper based, and impossible to check, there is no incentive for people to come out of the black economy and get their contributions up to date.
2) Vocational training. Big mismatch with needs of industry, we are trying to bring these close. Plus law on higher education (bologna). Er yes, but there is no real progress here, it’s just talk
3) Code of conduct in public administration which reforms procedures. Er yes. But having new rules doesn’t work if the people and structures are all wrong. He says that institutional reform will come outside the election “We plan much more decisive measures after the election.” In other words: when I ask him what he’s done, his answer is what he’s going to do.

He admits that the previous ex-communist government focussed on eliminating injustices rather than reforms, and also blames the opposition for blocking sensible laws that needed to be passed by a two-thirds majority. He doesn’t contest the idea that public finances are the biggest challenge. “The PM mentions it constantly”. So that is principle number two of Hungarian Blairism. Because we talk about it, we will do something.

After the election, he says, more than 100 bills will be presented to parliament “to reform state in a decisive way”. I am increasingly unconvinced by this, and plead for specifics. He gives three priorities.

1) Reform of public administration (yawn)
2) Health care reform, probably with a single insurance fund and competing providers. That is a refreshing change from Orban who says that health care is not a business and doesn’t need competition.
3) Education reform, promoting knowledge-based industries with high value-added, plus skills to make Hungary financial and logistical hub. And Tourism--especially the medical kind,. It sounds fine, but every country in the region says that a) it is at the crossroads of Europe and b) wants to develop knowledge-based industries. I am rather shocked when he says that only 20% of students study natural and life sciences. He comes out with a typically meaningless target: Hungary wants to be among 10 top countries in the world for natural and life sciences by 2010.

I find all this rather maddening. The way to reform higher education is to open it up, to have a mixed economy with private, public, and foreign providers, all competing in a fairly liberal environment. No country I visit seems to want to compete in the global higher education business—they all see universities as an adjunct to their industrial policies.

Then we go to the economics minister, Janos Koka. He’s a wealthy independent businessman who managed to sell his company, an internet service provider, to foreign investors who bankrupted it. So he bought it back, restored it to health and then sold it again. His main job in the government is promoting efficiency, and to my pleasure he spontaneously mentions Estonia as the e-government model (and Singapore and more generally Scandinavia). However, I am more pleased when people do this having actually been there and studied it, which he hasn’t. I get the impression that Estonia is rather like Silicon Valley—a place that people talk about approvingly without actually knowing what makes it tick.

He makes complete sense, in a liberal, market-friendly, high-tech sort of way. Someone says that he is the minister for Yuppies, and that sounds about right. Sadly, Hungary doesn’t have many Yuppies. His team of modernisers, brought in from the private sector, numbers 20 in a ministry of 600. He has some modest successes to talk about, in streamlining road-construction, centralising snow plough procurement and so on. “There are huge holes where the system is leaking money and I want to close them”. He describes rather amusingly how scared some officials are of the transparency, measurability, flexibility and reliability that IT brings.

He strongly supports a flat tax, and reckons it will come in no later than January 2009.

So how would I vote if I was a Hungarian? Sentiment says Orban. It is thanks to people like him that we have an election at all. I bet Gyurcsany, as onetime head of the young communist league, didn’t lie awake at night worrying about multiparty systems, civil society, and getting the Soviet troops out of Hungary. And by the remarkably elastic standards of Hungarian political life, he’s not behaving that badly. But voting for Orban requires two leaps of faith. One that he will dump his SPD and FPÖ side, and return to the CDU. The other that he will not muck up Hungary’s neighbourhood relations again. That’s a stretch.

But Gyurcsany requires a leap of faith too. He has done very little constructive during the past 18 months. Will he really be different with four years ahead. My colleague, wisely, reckons that the right approach is to look at it like Italy: neither party is really going to grapple with the real problem, of underperformance and mounting long-term demographic and financial disasters. That’s a real reason for Hungarians to be gloomy. And on that note, we head to the airport.

Here is a short piece from the business section about a gold mine in Romania. All the research was by my excellent stringer in Bucharest, Cristina Merrill.

Romania

No gold please, we're Romanian

Apr 6th 2006 | BUCHAREST
From The Economist print edition

A gold mine excites suspicion

A FOREIGN investor promising up to 1,200 jobs and a $2 billion boost to a poor country is normally welcome. But not when the investment is a gold mine, and the country is Romania.

The investor is Gabriel Resources, a Canadian mining company. It has been trying since 1997 to develop Rosia Montana, a region in northern Romania that, it reckons, contains 10.6m ounces of gold and 52m ounces of silver. This month Gabriel is due to publish a much-awaited environmental-impact assessment of the project.

Under communism, mining in Rosia Montana (as, indeed, everywhere else) was carried out without the least regard for the environment, or the region's archaeological heritage. The area is now badly polluted with cadmium and other heavy metals. In 2000 a cyanide spill from another mine in the region contaminated a river that flows into Hungary. That makes Romanians, normally apathetic about such things, twitchy about any new mining there—especially if it, too, involves cyanide, as the new project will.

The company has tried to assuage these worries. It says it has spent $160m on preparatory work, including advertising campaigns to highlight its high-tech and ultra-clean approach to mining, and on environmental and archaeological projects. It promises more once mining starts. But that has done little to convince the protesters. They are a mixed bunch, including anti-globalisation and Green idealists, as well as some dodgier characters who regard opposition to the project as a way of demonstrating their public-spiritedness.

A report in 2004 for the Council of Europe by Eddie O'Hara, a British MP, described the opposition to the project as “in part exaggerated” and “very much fuelled by outside bodies, presumably well-meaning, but possibly counter-productively”. The environmental objections “do not take account of modern mining techniques...in fact the project will help to clear up existing pollution.”

There are strong arguments in favour of the mine, though they rarely get a hearing in the partisan and excitable Romanian media. Average incomes in the region are only one-third the national average (itself a measly $270 a month). More than half of the workers there are unemployed; that will rise to 90% once another communist-era gold mine closes later this year. In a village of 2,000 people that will have to be demolished (the company plans to rebuild a modernised replica 5km away) more than half the homes lack running water. Some 42% of the villagers have already sold their homes to the company.

A local mayor, who supports the mine, was recently re-elected with a huge majority. Candidates opposed to the mine polled less than 10%. Romanian do-gooders may relish bashing multinationals. But the people directly affected see it otherwise.

Hungarian elections

First, here is a much delayed piece about Hungarian politics, pegged to the first round of the elections this weekend. Apologies to those who so kindly fixed me up with interviews and so on: there has been a lot of news about in Europe in the past few weeks and this piece kept on being bumped out of the paper. But I hope I have done justice to it now.

Hungary's election

Sense and nonsense

Apr 6th 2006 | BUDAPEST
From The Economist print edition

The politicians promise everything, but will find life harder if they win

BOTH sides talk nonsense in public while promising in private to be sensible. That, in brief, is Hungarian politics in the run-up to the first round of parliamentary elections on April 9th.

Looking at the government, spendthrift and sleazy, it is easy to see why the opposition is cross. The Socialist-liberal coalition has presided over the worst mismanagement of public finances anywhere in post-communist Europe. Officially, the budget deficit is 8% of GDP. Including off-balance-sheet financing, it is more like 10%. That has helped to stoke a huge current-account deficit, and has now sent the forint to a 28-month low (see chart).

Most damage was done in the government's first two years, in a bid to reward its supporters. As one finance minister from a neighbouring country comments, “I can understand why they made these idiotic promises, but not why they kept them.” When Peter Medgyessy, who became prime minister in 2002, turned out to have a background in communist-era intelligence, that was too much to swallow even in Hungary's forgiving political culture. So in 2004 in came Ferenc Gyurcsany, a tycoon who combines capitalist credentials with family links to the old regime.

Asked to list his practical achievements in the past two years, his supporters look faintly baffled. Their big feat, they say, has been staying in power and getting ready to win the election—which, according to Hungary's often unreliable polls, they seem likely to do. The Socialists are polling around 46%, and, crucially, their small coalition partner, the leftist liberals, seems likely to get over the 5% threshold necessary to enter parliament.

That will be a huge disappointment for the opposition Young Democrats (usually known, by their Hungarian acronym, as Fidesz) and their leader, the outspoken Viktor Orban. Mr Orban has impeccable credentials as a brave and effective communist-era dissident. But he has moved sharply away from the radical liberalism of his youth, in a conservative, nationalist and populist direction. Many Hungarians' discontent with the government tends to evaporate as soon as they look at the opposition.

Mr Orban's campaign has been gaffe-strewn, and his programme is peppered with expensive spending commitments, including bigger housing subsidies. He rails against “luxury profits” and rapacious foreigners, though he insists also that he wants “a country with less bureaucracy, a pro-business government and lower taxes.” His public speeches, though, more often feature lines such as this: “Grant us...a national government in Hungary, which sees the world through Hungarian eyes, thinks with a Hungarian mind and senses in its heart a Hungarian beat.”

That could just be a robust yet defensible bid to appeal to patriotic voters. But others hear a cynical, demagogic appeal to revanchism and xenophobia. Some also charge Mr Orban with coded anti-Semitism. He strongly denies this; so do his Jewish colleagues. Even so, his colourful election tactics put one question-mark against Mr Orban's suitability for office.

His record raises another. His previous stint as prime minister, until 2002, showed mixed results. He ran the economy well—until a vote-grabbing binge in the final year. Hungary gained NATO membership and moved fast towards the European Union. But relations with the neighbours were scratchy. Fidesz still hankers after justice for the Hungarians deported from neighbouring countries after 1945. “Sooner or later, they have to pay,” says one senior figure, “200,000 Hungarians were expelled and lost all their possessions.” That contrasts sharply with the present government's emollient foreign policy of being friends with everybody.

In private, both parties say much the same things: in the short term, there must be fiscal tightening and, thereafter, radical public-sector reform. The first, particularly, will be an unpleasant shock for Hungarians, who have got used to living well but dangerously on borrowed money.

European Voice Wilder Europe Column

Opera and strudel beat stag nights and sex

By Edward Lucas

There is a red-light district in Vienna, but you would never hear about it from the Austrian tourism authorities.

That's because they want rich, refined visitors who come for high culture and upmarket shopping. Such people spend a lot of money on food and accommodation too - and they raise the tone of a city.
Advertising your city for its civilised charms, rather than for cheap sex and booze, is common sense. So I was baffled and infuriated at a conference last week to see a brochure from the Lithuanian Tourism Board giving a prominent puff for a visit to the striptease joints of Vilnius.
This is so wrong-headed I can only assume that it is part of a clever Russian plan to destabilise the Lithuanian economy. Promoting the red-light district is the best possible way of deterring the well-heeled tourists that Lithuania, like every other poor but beautiful post-Communist country, needs to attract.
It's not as if there was any shortage of real attractions. The Vilnius Old Town is a panoramic paradise of baroque and rococo architecture, rivalled only by Cracow and Lviv. Admittedly, the 20th century left the insides of the buildings less interesting than their outsides, but there's still plenty to admire. My own favourite is the lingering traces of the Jewish and especially the Yiddish-speaking civilisations of pre-Holocaust Lithuania. There are also Polish, Russian and Soviet legacies, plus of course medieval and modern Lithuania.
There is a feast of real diversion and entertainment, of the kind that uplifts the soul, informs the mind and stimulates the aesthetic senses. So why on earth obscure that with sleaze, especially when it will attract the kind of visitors who will ruin Vilnius for ever?
I would like to take the Lithuanian tourism authorities (at gunpoint if necessary) to Cyprus, where they could see what happens when a beautiful place drenched with history and culture is run by greedy stupid people. The bars and fast-food joints of Agia Napa, where drunken sluts and macho louts drink until they puke, make a fair bit of money, it's true. But they have ruined any chance that Cyprus might have of being anything more. Once you take the downmarket road, it's almost impossible to go back: you have the wrong hotels, the wrong restaurants, the wrong shops - and worst of all, the wrong reputation.
The stag parties (bachelor nights) that plague the cities of eastern Europe are still only a nuisance, not a menace. It's hard to stop them altogether. But the aim of the tourism authorities should be to herd them away to places where they won't put off the other tourists. If there must be a red-light district, put it somewhere where no normal visitor will have to see it.
I tried explaining this to a bumptious Lithuanian diplomat, but he thought I was just being prudish. He seemed to think that striptease joints are just a bit of fun and that sex-tourists are the inevitable consequence of low-cost airlines. I tried to explain that this was not the point. Venice is served by low-cost airlines, and nobody goes there for the nightlife (the moonlight dances on the water, but that's it).
The sex industry shouldn't be banned. But it should be made to pay for the damage it does to a city's reputation. Licences for lapdancing clubs and the like should be auctioned, to extract the maximum amount of cash. That could then help finance the kind of events that attract a desirable kind of tourist.

Edward Lucas is central and eastern Europe correspondent for The Economist.