The real story behind Fidesz’s war on the EEA and Norway Grants (Part 2)

June 19, 2014

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The NGO fund and the Hungarian fund operators responsible for distributing the EEA Grants to Hungarian NGOs were thrust into the spotlight by the Hungarian government after Norway formally suspended payment of development funds to the Hungarian government in April this year. The Prime Minister’s Office accused Norway of interfering in Hungarian politics and the fund operators of deliberately channeling money to NGOs close to opposition political party Politics Can Be Different (LMP).  When the Norwegian Foreign Ministry categorically denied this, Hungary called on Norway to suspend payment of grants to Hungarian NGOs pending a comprehensive renegotiation.  When Norway refused, the Hungarian Prime Minister’s Office claimed that the money was actually Hungarian public money and arranged for government auditors to raid the NGOs in question as a means of applying pressure.

How the NGO fund became the target of misinformation

The EEA Grants Memorandum of Understanding (signed by the donor countries and the government of Hungary on 15 November 2011) clearly states that the “Financial Mechanism Office is entrusted with operating the Programme” and that “appointment of the fund operator shall be consulted with the National Focal Point.”

After Hungary signed the EEA Grants Memorandum of Understanding, the Brussels-based Financial Mechanism Office announced an open call for tenders for the purpose of selecting the NGO fund operator. A fund operator distributes the programme area’s allocated funds to NGOs whose activities are aligned with the purpose of the fund.

Applicants would be evaluated based upon three criteria:

1) Does the applicant have regranting experience?

2) Does the applicant operate independent from authorities (which is a basic criteria for the civil sector)?

3) Does the applicant have an established relationship with the civil sector?

A total of 8 entities had applied to the Financial Mechanism Office to become the NGO fund operator. After assessing each tender, the Financial Mechanism Office made its decision in mid-2012. The winning tender was submitted by a consortium of Hungarian foundations, whose four members comprise the Okotars Foundation (the consortium’s leader), the Foundation for Development of Democratic Rights, the Autonomy Foundation and the Carpathian Foundation-Hungary.

“Okotars was chosen because they were the only organization that met all three criteria…. It is important to note that there were no political considerations at play when Okotars was chosen, the decision to work with Okotars was based purely on the quality of their work – purely on objective criteria,” says Norway’s Ambassador to Hungary Tove Skarstein.

The NGO fund operators are responsible for administering just over €12.6 million (USD 17.1 million) – about 8 percent of the €153.3 million (USD 209 million) provided to Hungary under the EEA and Norway Grants scheme. However, unlike the other 92 percent of funds provided by EEA and Norway Grants to the Hungarian government to fund key priority programmes in conjunction with public monies, EEA and Norway Grants received by the Hungarian civil sector involve only foreign monies and do not involve any public monies provided by the Hungarian government. The NGO fund’s uniqueness in this respect is due to the fact that – as Ambassador Skarstein puts it – “an independent civil sector is a core European value”.

Put another way, a condition for making over €130 million available to the government to spend on key priority programmes was that Norway Grants and EEA also be allowed to fund NGOs that are often critical of government policies.

The plot thickened in 2014, and this is the source of confusion.

As indicated in Part I of this series, since January 2014 the EEA and Norway Grants donor countries had been trying to negotiate with the Hungarian government for months regarding the sudden dismantling of the National Development Agency which had been named as the National Focal Point in the Memorandums of Understanding signed by Hungary in 2011.

After months of failed negotiations, and most likely sensing the Norwegian government would not let the issue go, in mid-April 2014 State Secretary Janos Lazar wrote to the government of Norway accusing them of meddling in Hungary’s domestic affairs by providing funding to organizations with ties to political parties. The funds Lazar referred to are part of the Norway Civil Fund, and the organizations Lazar referred to are the NGO fund operators.

The Royal Norwegian Ministry of Foreign Affairs responded politely by explaining there is no political agenda from the donors, and that the funds in question are distributed in Hungary in accordance with the Memorandum of Understanding entered into by Hungary’s own government and Norwegian officials in November 2011. The Norwegian Ministry of Foreign Affairs’ response called Lazar’s accusations “surprising” and invalid.

On 30 April, State Secretary Lazar’s deputy, Nandor Csepreghy, was quoted by the Hungarian press as saying the NGO fund operators were a “useless group of partisan tricksters”.

On 7 May, the consortium of Hungarian fund operators responded to Csepreghy by unanimously rejecting his statements as “unacceptable, especially coming from a representative of the government”.

Finally, on 9 May 2014 (in response to the unrelated and much more significant issue outlined in Part 1 of this series), Norway, Liechtenstein and Iceland decided to suspend further disbursements of development funds to Hungary under the EEA and Norway Grants scheme because the Hungarian government had breached the Memorandums of Understanding – specifically with respect to programs in which Hungary’s now-defunct National Development Agency had been named as the National Focal Point.

According to Skarstein, shortly after the EEA and Norway Grants were suspended on May 9, the Norwegian government had received a letter from Hungary’s Office of the Prime Minister (signed by Janos Lazar). Lazar expressed his desire to also see the NGO fund suspended (one of the priority areas targeted by the EEA and Norway Grants). However, the NGO fund’s donors replied that the NGO fund would not be suspended by the EEA and Norway Grants donors because it was not one of the programs that are affected by Hungary’s breach of contract.

The donor countries reaffirmed their confidence in the NGO fund operators and made it very clear that they would continue to provide the funding for Hungary’s civil sector through the consortium of Hungarian foundations entrusted with administering the civil fund.

Hungary’s government responded by stating that the government itself should have a greater say over how the funds are distributed.

On May 21, Csepreghy announced that the Office of the Prime Minister had asked the Government Oversight Authority to audit all funds distributed through the EEA and Norway Grants NGO fund. Csepreghy stated the audit was needed to “clarify whether there are grounds for suspicions arising over the past few weeks on the part of the Hungarian government that Norway Funds supported political organizations or civil organizations tied closely to them”.

The Norway Civil Fund’s donors advised the Hungarian foundations entrusted with administering the funds not to comply with the Hungarian government’s demands for an audit. The donors reasoned that, as the funds in question are provided entirely by the donor countries of the EEA Grants and involve no public funds from Hungary, its activities fall outside the purview of the Government Oversight Authority.

Upon learning of this, the government threatened to revoke the tax identification number of the Hungarian foundations if they did not comply with the audit.

The following week, the offices of the NGO fund operators were raided by the Hungarian government’s Government Oversight Authority. The government of Norway condemned Hungary’s government for the raids as did numerous watchdog groups, domestic and international NGOs, and Hungarian public figures.

Within a matter of weeks, the public almost completely forgot about the Hungarian government’s unrelated breach of contract. The public relations campaign carried out by Hungary’s Office of the Prime Minister which accused the EEA and Norway Grants of funding political parties successfully preempted the impending news that after months of failed negotiations the EEA and Norway Grants donors would suspend the significantly larger funding to Hungary because of the breach of contract.

If you repeat a lie often enough, it becomes the truth

The NGO fund is Hungarian public funds, therefore the Hungarian government reserves the right to raid the offices of the NGO fund operators

Janos Lazar, Hungary’s Minister overseeing the Office of the Prime Minister, has on numerous occasions referred to the EEA Grants’ NGO fund as a Hungarian public fund. That is factually incorrect. To assume there is any truth to that notion would lead one down a very steep and slippery slope – as in the case of Janos Lazar.

The NGO fund is comprised entirely of donations which come from the EEA Grants (they are donations from Iceland, Norway and Liechtenstein), i.e. there are absolutely no Hungarian public funds provided through EEA Grants for the NGO fund. None whatsoever.

Why does Lazar now insist on referring to the money as Hungary’s public funds? There are at least three reasons why:

1) That is the only way he can get his hands on it.

2) That is the only way he can justify raiding the offices of NGOs as part of a government investigation into the use of public funds.

3) To create yet another controversial issue to distract the Hungarian public’s attention from a much more serious issue the Hungarian government would like to avoid addressing publicly.

Okotars is funding Hungary’s opposition parties, therefore the Norwegian government is interfering with Hungarian politics

Hungary’s Office of the Prime Minister has stated that Okotars is funding Hungary’s opposition parties. While the possibility certainly does exist that the Norwegian government has its heart set on funding Hungary’s opposition parties, it is ridiculously unlikely. In the absence of evidence to support his claims, Lazar can say what he wants, whenever he wants and as often as he wants. Hungary’s state-run media will report every time.

Hungarian government officials continue to accuse the Okotars Foundation of funding opposition parties. Combined with the slippery slope that the NGO fund involves Hungarian public monies, the Hungarian government has committed numerous steps which trample the dignity of those organizations, basic civil rights and respect for international agreements – all this without the slightest shred of evidence.

On 13 June 2014, Hungary’s Office of the Prime Minister released a statement to the press which – again, riding the slippery slope – clearly illustrates the lack of any consequential reasoning as to what the big fuss is all about.

The author of the statement reasons, “Those, arguing for the unobjectionable activity of Ökotárs, should admit that an investigation proving their views would serve their interest.” Someone should have informed the author that in most democratic countries one is innocent until proven guilty in a court of law. Unfortunately, the Hungarian government never afforded the NGO fund’s operators this opportunity, and instead opted for the court of public opinion.