Hungary, Slovakia: Nationalization in the Crisis

Hungary and Slovakia are coping with the crisis of the real economy with a notably different approach than Poland. While Poland's right-wing government remains committed to its large privatization scheme despite the low asset prices, the other two Visegrad countries' left-wing governments went into buying. (The Czech Republic, as usual, has only a modest care-taker government).

On November 5 the Slovak national assembly passed a law that permits the state to buy bankrupt firms which have been declared to be 'strategic'. The economy minister Ľubomír Jahnátek believes that this is an anti-crisis measure.

The Hungarian government bought back Malév, the former national airways from AirBridge. AirBridge is a strange joint company of the Russian state-owned bank Vnesheconombank , and a Hungarian private individual, Magdolna Költő. The asset-stripped, indebted Malév was privatized for a mere €1 million three years ago. The government, which is a big creditor or the company that fails to pay taxes and compulsory social security after its workers, spends approximately €70 million on the failed air passenger carrier. There has been rumors that the Hungarian state, or one of its enterprises will nationalize Hungary's first alternative gas supplier.

The Visegrad Countries are going against economic orthodoxy which boosts the economy with excess demand and sells companies when share prices are high. Poland wants to get rid of its underperforming state-owned portfolio, while the Slovak and Hungarian government claims to save jobs with nationalizing failed private companies, not unlike the US government in the automotive industry. However, Slovakia enjoys a healthy public finance as it has just recently entered the euro-zone and fared much better fulfilling the Maastrich-criteria than most EU economies. Hungary, much like the United States, is increasing an unhealthy budget deficit and an almost impossibly oversized state debt.