BUDAPEST: Two decades ago, post-communist Hungary and Poland were beacons for foreign investment. Both countries benefited hugely as that investment brought new technology and financing, and created jobs. Foreign companies buying state assets also stopped “oligarchs” taking chunks of the economies at cheap prices.
But as the 2008 financial crisis revealed, Poland, Hungary and their neighbours were left with economies, especially banking systems, dominated by outsiders. Now senior officials from the two countries suggest too much economic sovereignty was lost.
“These are national economies and the security of national economies must involve national influence. This is what I believe is economic patriotism,” said Viktor Orban, Hungary’s prime minister, at an appearance last month with Jaroslaw Kaczynski, who leads Poland’s governing Law and Justice party. Mr Kaczynski said he shared many of Mr Orban’s views.
What does this mean for the investments of foreign businesses? So far the picture is mixed. Since 2010, Mr Orban’s Fidesz government has slapped “crisis” taxes on the retail, telecoms and energy sectors, dominated by foreign businesses. It imposed Europe’s highest banking levy on mostly foreign-owned banks. Banks were forced to bear the costs of converting into local currency billions of dollars of mortgages issued in foreign currencies after borrowers were hurt by exchange rate moves in 2008.
As bank profits plummeted, two midsized foreign-owned banks sold out to Hungarian state-owned buyers, fulfilling Mr Orban’s aim of raising national bank ownership above 50 per cent. After the government cut utility prices, some foreign companies also left.
