Hungary: the pitfalls of growth

UNESCO Courier, Nov, 1991 by Istvan Lang

AT the end of World War II, Hungary found itself politically and economically attached to the Communist bloc. From the beginning of the 1950s, a system of central planning and management was gradually developed. Companies came into State ownership, co-operative farms were formed and most of the service sector was brought under the control of the State or of cooperatives.

Quantitative growth at all costs became the watchword of industrial production. The development of heavy industry was given priority, energy-intensive technologies spread and raw materials were used with scant regard for economy. Nevertheless, the quantitative growth that occurred between 1950 and 1975 made it possible to raise the standard of living and well-being of the population as compared to the levels of the pre-war period.

After the first oil crisis, however, the limitations of the centrally planned system, its inability to adapt and its lack of competitiveness, soon became apparent. Failure to modernize the infrastructure and to introduce computer technology meant that Hungary, like the other countries of Eastern Europe, began increasingly to lag behind Western Europe. The position was made even worse by increasing external debts and the slowing down of economic development.

This falling behind in the economic field was matched by a delay on the part of political leaders in East European countries, including Hungary, in recognizing the importance of environmental protection. Although Hungarian scientists participated in UNESCO's Man and the Biosphere programme from its inception, government agencies took six to seven years to react to the environmental challenges raised.

During the 1980s, Hungary faced growing economic difficulties. During the decade 1977 to 1987 the country's external debt grew from $43 million to $18,957 million. Various economic reforms were carried out and central control of planning and management was gradually reduced, but this was not sufficient to lead to a smoothly functioning, market-oriented economy. So when the importance of environmental protection was finally recognized. Hungary was already in a period of economic decline and it was not possible to make the big investment needed to replace polluting technologies or the energy-intensive and raw-materials-intensive structure of industry.

The period 1989-1990 saw the beginning of radical, but peaceful, political change. In spiring 1990, free elections were held and with a new Parliament and a new government Hungary has set out on the road to parliamentary democracy, with a multi-party system, a market-oriented economy and independence from military blocs.

However, the new government inherited the old environmental problems and it take a long time to change old production structures. Nevertheless, data on the state of the environment have been made public and municipalities and voluntary environmental groups are being encouraged to play a larger part in pollution control by means of public debates and hearings.

Preparations for the 1992 United Nations Conference on Environment and Development have begun. A National Commission has been set up, and an action programme for the solution of local and national environmental problems has been drawn up with the aim of arousing public awareness. A panel of high-ranking experts has been formed with the task of working out, on the basis of the recommendations of the Rio Conference, a Hungary strategy for the attainment of sustainable development.

What, then, is the present position in key policy sectors and what changes can be expected?

ENERGY POLICY

Energy policy is a key issue in the Hungarian debate on environmental protection. For decades, energy has been wated on a vast scale in Eastern Europe, including Hungary. Owing to the use of out-of-date technologies, energy consumption per unit of product (e.g. per ton of steel or per ton of wheat) is on average 40 to 50 per cent higher than in the Western European countries and the proportion of energy-intensive sectors within industry is high. Energy consumption per capita, for example, in Austria and Hungary is practically the same, but, in relation to Gross National Product, Hungary consumes fives times as much energy as Austria.

Energy policy for the future has two main objectives: to increase the efficient use of energy and to reduce dependence on external sources of energy. At present there is intense public debate as to whether or not a second nuclear power plant should be built, and if not, on what primary fuel additional electrical energy will be based. This is a matter of great public concern because, although technological reconstruction of some existing power plants has led to some improvement with regard to the emission of pollutants, 44 per cent of the population live in areas where, at certain times of the year, the quality of the air does not meet minimum health standards.

INDUSTRY

Transition to sustainable industrial development and to market mechanisms entails considerable economic and social change. One example of this is that the previously established principle that "the polluter pays" seems to be being replaced by the new principle that "the polluter pays and the consumer pays". Another is that because of rising prices of raw materials and energy, coupled with decreasing government support, heavy industry is in crisis, with the unfortunate social consequence that unemployment has increased to an unprecedented degree. Paradoxically this is also an environmentally favourable phenomenon, since it means a decline in a sector of industrial activity which pollutes the environment the most.