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Govt’s New Decree About Special Economic Zones Hits Hard on Opposition-led Göd

Ábrahám Vass 2020.04.20.

On Friday, the government created the conditions for the establishment of so-called special economic zones and later designated Samsung’s plant in Göd as the first one, meaning that the opposition-led town will fall short of 1/3 of its revenues. The government confirms the decision by citing economic goals, but critics view it as yet another step towards centralization and to downplay the autonomy of  the municipalities. 

According to the government’s reasoning, the regulation serves “to mitigate the negative economic consequences of the coronavirus, to help preserve jobs or even create new ones.” Such a special economic zone may include, for example, sites that were previously declared as investments of major importance for the national economy.

Within these designated territories, the ownership of certain public areas, including financial obligations, but also the right of taxation, will be transferred to the county assemblies. It is important to know, that while a number of municipalities were taken over by the opposition during the municipal elections in October, ruling Fidesz-KDNP managed to hold the majority in all 19 of the county assemblies.

Samsung’s factory in Göd has been appointed the first such special economic zone, that, through the local business tax, is responsible for 1/3 of the town’s total revenue. The South Korean giant’s battery production plant has always been a priority for the government, and has been on the receiving end of generous state support as well.

Samsung SDI Expands Battery Plant

Göd mayor: “It’s a death sentence”

Not surprisingly, Göd’s (Momentum) mayor Csaba Balogh was outraged and commented that “[this] is practically a death sentence. With the removal of the local business tax paid by Samsung, a third of the city’s budget will be lost, which will jeopardize even the fulfillment of mandatory tasks.”

In his Facebook post, the liberal party’s mayor also argued that this way, in the future, neither the municipality nor Göd residents would have a say at all in what happens in and near the industrial park.

Szijjártó: Jobs and economy restart

Minister of Foreign Affairs and Trade Péter Szijjártó, argued that “the pandemic poses not only health challenges but also very serious economic ones. Job protection and replacement has become a key issue. However, this is only possible if more and more investments are realized. For this purpose, the government has decided to launch a new investment incentive scheme, which is why we decided on the possibility of a special economic zone creation, he revealed.

“One of the most important elements of restarting the Hungarian economy is Samsung SDI’s investment,” he explained, “…through which Hungary would become the European stronghold of the modern, electromobility-based automotive industry,” Szijjártó said.

“Orbán cracks down on opposition cities”

The opposition, however, views this as yet another step towards centralization, to take revenge for the results of the municipal elections and to make the situation of the opposition (-led municipalities) more difficult.

According to Budapest’s (opposition) mayor, Gergely Karácsony, “virtually not even one week has gone by since the coronavirus outbreak, during which the government didn’t commit an assassination attempt against local governments and self-governance. The Friday night’s decree’s first victim was Göd. My utmost solidarity goes to Göd, where the government withdrew one-third of their revenue with a single stroke of the pen.”

Momentum party president András Fekete-Győr said that the government basically “annexed” one fifth of the town’s territory. “The Prime Minister’s revenge tour now continues in Göd, where locals showed that they have had enough of the [previous] Fidesz mayor who had been loyal to the Samsung factory and Viktor Orbán instead of the residents.” He also promised his party’s support in “defense against the government.”

Internal opposition battle in Göd

Recently, the town has seen minor ‘internal’ clashes of the local opposition (a mixed, joint opposition won the majority in the assembly in October). One faction, consisting of a local Jobbik, LMP, and two DK politicians, addressed several politicians, accusing mayor Balogh of abusing his office, abusing special powers that were given due to the state-of-emergency, putting his allies in political positions, and counterfeiting. Those who took Balogh’s side argued that it was rather he who tried to prevent corruption and “buddies” (according to 24.hu, mostly DK-backed ones) from getting important posts.

This adds to a recording leaked by pro-Fidesz tabloid Origo, when Balogh spoke of potential corruption cases he witnessed as mayor. Both parties, were, however, apparently interested in handling the conflict calmly. And Origo’s speculations that the government’s move was in fact driven by this feature are yet to be confirmed.

“We shall not give up on Göd”

Demonstrations, organized by Balogh, with respect to the rules of the on-going emergency situation, have been kick-started in Göd. Many, for example, hung banners out of their windows, while on Sunday, a car demonstration took place.

As of now, the decree is in effect until June 15th, at most until the end of the emergency. The government’s intentions with the regulation after the crisis remain to be seen.

featured image: Göd; via Csaba Balogh- Facebook