Graft fears as Hungary completes university privatisation

Eleven universities, their real estate and shares have been given over to foundations that observers say will be dominated by ruling party loyalists

April 30, 2021
Picture of the local office of Fidesz party in Szeged, Southern Hungary. This party is currently at power in hungary, on a right wing, conservative and populist position in the political spectrum
Source: iStock

Eleven Hungarian universities and their assets have been handed over to foundations, all but completing a privatisation of the country’s higher education system that observers fear will entrench the power of the authoritarian ruling party and risks opening the door to corruption.

The country’s parliament approved the transfer on 27 April, leaving just four universities still in state hands following a five-year privatisation push. 

The government insists that the change will allow universities to “integrate into the economy better” and act more independently – but critics point out that the foundations will likely be led by loyalists from prime minister Viktor Orbán’s ruling Fidesz party and are shielded from public scrutiny.

The changes bring “some opportunities” but also “incredible risks” for Hungarian universities, said Zsolt Enyedi, a political scientist at the Central European University.

“It will be easier for these universities to hire researchers and pay them a huge amount of money, or enter into partnerships with industry,” he said.

But the privatised universities will lack transparency, and leave academics and students “powerless against these all-powerful new boards”, said Professor Enyedi.

Local reports suggest that government ministers and chief executives are likely to be well represented on the new boards, he said.

With the foundations exempt from audits and freedom of information requests, the fear is that allies of Mr Orbán will use them to award lucrative contracts to insiders or sell off university property at below market value.

“They have got these huge properties now: castles, shares,” said Professor Enyedi. “They can do what they want with it.” He added that there were “similarities” with the asset stripping that occurred after the collapse of the Soviet Union.

Ownership of Semmelweis University, one of the country’s leading medical institutions, is to be transferred to the Foundation for National Health Care and Medical Education.

The foundation will take control of more than 50 pieces of real estate formerly owned by the state, according to a statement from the university, along with more than 1 million pharmaceutical shares and “holiday resort buildings”. The shares “can be used only to achieve the public-interest goals of the foundation”, the statement says.

Meanwhile, Eszterházy Károly University, a humanities-focused institution, will be handed over to the Catholic Church, and be known as a “Catholic university”.

The potential for “theft” has aroused the attention of a group of MEPs, who have warned the European Commission that the privatisation has introduced “opaque funding structures” while “at the same time further destroying academic freedom”.

Hungary is set to allocate 20 per cent of the EU’s multibillion-euro pandemic recovery fund to higher education, which the MEPs said would “disappear” into the new foundations.

“It will be hard for the EU to prove that EU money was spent corruptly if there is no window into the process of allocating the money to specific uses within universities,” said Kim Scheppele, Laurance S. Rockefeller professor of sociology at Princeton University and an expert on Hungary.

A further concern is that the foundation board members will effectively remain loyal to Fidesz indefinitely, even if the party loses power in next year’s elections, because they decide internally on a replacement if a member leaves.

“Orbán may actually lose the national election next year,” said Professor Scheppele, and so the transfer of universities was part of a “back-up plan” to “tide them over through a period of opposition control”, she argued.

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