Center for Fundamental Rights

BErtelsmann Foundation’s BTI index

The Prominent International “Independent” Index, that Places Hungary’s Performance behind Afghanistan, Honduras, Gabon, Sierra Leone, Timor-Leste, and Benin

 

The falsities within the Bertelsmann Foundation’s BTI index

An analysis by the Center for Fundamental Rights

 

Executive Summary

  • The Bertelsmann Stiftung recently published its study called the “Transformation Index” (BTI), which deals with 137 countries that the creators of the index identify as “in transition”[1].
  • The part of the analysis that deals with Hungary is full of distortions and outright lies.
  • According to this study, as of 2020 Hungary hasn’t improved in any of its 49 indicators since 2006-2010.While in this period Hungary requested IMF assistance, had a budget deficit between 5-9% and the GDP was plummeting, in 2019 Hungary was among the top performers of the EU
  • The indicators that deal with government performance place Hungary behind Afghanistan, Sierra Leone, Iraq and Timor-Leste.
  • When it comes to political institutions Bolivia with its recent coup, and Ukraine are placed above Hungary.
  • The report is not up to date, in many cases it quotes data from 2018 and 2019. It refers to the 2019 elections for the European Parliament as a “serious tests for the Orbán regime”.
  • 9 of the 10 Hungarian contributors, self-declared experts, participating in the compilation of the report are from the left-liberal Political Capital, the 10th was a leading functionary under the communist dictatorship.
  • Political Capital is financed by the Open Society Foundations of George Soros.
  • One contributor, Anna Orosz is a politician of Momentum (Renew Europe) and is currently the deputy mayor of a district in Budapest.
  • It is a disgrace that a report that is entirely divorced from the reality and was compiled by leftist employees of a left-liberal organization, is depicted as “neutral” or “objective”. It is shameful that the Bertelsmann Stiftung accepted it and then characterized it as an international reference point. This is a smearing of Hungary.
  • We ask the MEPs not to fall for this political document disguised as “independent” and “professional”. The Bertelsmann report does not show reality, its sole intention is political: to smear Hungary and Hungarian conservativism.
  • The Center for Fundamental Rights considers it important to deal with the massive distortions of this report and the background of its compilers because there is a real, politically motivated phenomenon of left-liberal ideologues disguising “reports” they pose as “independent”. This effort’s sole purpose is to smear those countries, like Hungary with its strong and popular Christian Democratic government, that don’t fall in line with the left-liberal dogma.

General Summary

The Bertelsmann Transformation Index is designed to evaluate biannually the state of democratic/political/economic changes and the effectiveness, quality and transparency of governance in 137 countries in transition. The most developed countries (North America, Western Europe, Japan, etc., 58 countries in total) are not subjects of the study. The final product contains 137 country reports – dozens of pages of opinion by the “experts” purporting to “analyze” the countries according to 49 criteria. Századvég, a fellow research institute, has already demonstrated the methodological shortfalls and the pervasive subjective bias of the index in their earlier, exhaustive analysis.[2] A final score for a country is calculated based on scores received for the 49 individual criteria. Based on these and along four major categories (Democracy Index, Economy Index, Governance Index, Governance Index), rankings for the countries are produced. After weighing all the indicators, a general country ranking (Status Index) is also presented. Find the current lists here.

The 2020 ranking offers a damning picture of Hungary. Some of the most egregiously partisan pronouncement of the report must be addressed. This is what the Center for Fundamental Rights does in this analysis.

Hungary alongside African, Central Asian and Caribbean countries.

  • In the country report for Hungary, the authors use 49 criteria related to politics, economics, and governance to evaluate the country. (Such reports go back 14 years, to 2006, so we can compare how they change with different governments.) In 44 of the criteria, the awarded scores are lower or significantly lower today than they were in the period between 2006 and 2010; and there are five areas where the scores for 2019 remained the same as in 2006. The authors tell us that the state of democracy, the economy and governance in Hungary was more advanced in 2006 according to almost all criteria than in 2020.
  • According to the authors’ metrics, Hungary was on the 5th place in 2006 and is on the 25th in 2020 in the overall ranking. In the field of democracy and the political institutions (Democracy Index) Hungary was 5th in 2006 and only the 41st in 2020, slipping 36 positions. As a result, such mature democracies with exemplary political institutions as Ukraine, Bolivia, Benin, Gabon, Bhutan or Timor-Leste find themselves ahead of Hungary in the democracy index.
  • In 2006, under the left-liberal government led by the wealthy businessman and socialist politician Ferenc Gyurcsány, in a year when Hungary’s deficit reached 9%, in the field of economy (Economy Index), Hungary was in the distinguished 7th In 2020, after eight consecutive years of keeping the deficit below 3%, with record low unemployment, with 5% economic growth Hungary suddenly finds itself in 22nd place. Romania, Bulgaria and Botswana are placed above Hungary in this category.
  • But according to the authors, this only gets worse when it comes to governance (Governance Index). Hungary was placed 14th in 2006. In 2020 it finds itself in the catastrophic 93rd place[3], behind Afghanistan, Angola, Honduras, Mozambique, Zambia, Bangladesh, Papua New Guinea, Gabon, Sierra Leone, Togo, Ethiopia, Burkina Faso, Djibouti, Niger, Liberia, Malawi, Columbia, Timor-Leste, Gambia and of course, Benin.
  • In the similar sub-category of Governance Performance, we see another disastrous plunge. While in 2006 Hungary was in the 11th place, it came only 82nd in 2020.[4] In this category, Hungary was overtaken by such strong and stable countries as Iraq, Ukraine, Bolivia or Argentina.

The most egregious lies and distortions in the country report dealing with Hungary.

  • According to the authors, Hungarian monetary policy in the recent 10 years has been inferior to that of the left-liberal government in 2006-2010 (p. 22). The reality is that since 2013, the Hungarian Central Bank has gradually decreased the base interest rate to record low which made the management of state debt less burdensome and has thus stimulated the economy. This policy has contributed billions of Euros to the budget every year, helped to keep the country’s debt low and economic growth high. In sharp contrast, during the years of socialist government between 2006 and 2010, the high interest rate of the Hungarian Central Bank suffocated growth, made the financing of state debt more expensive, corporate and consumer credit became less affordable all of which sucked billions of Euros out of the Hungarian economy. In this period, the constant losses generated by the Central Bank had to be covered by the budget, and ultimately the taxpayer. Several economic studies underpin the above.
  • The authors think that Hungary performed better in the field of fiscal policy under socialist rule than in the last decade (p. 22). Just as a reminder: in 2006, Hungary posted a record high budget deficit of 9.2%, which was the second worst result globally for that year. State debt, as a percentage of GDP, went up from 55% in 2002 to 84% in 2010. In contrast, since 2011 the budget deficit has remained under 3% every year, the excessive deficit procedure introduced against Hungary in 2004 came to an end in 2013. State debt at the end of 2019 stood at 66%. Data from Eurostat is freely available for those who’d like to doublecheck those numbers.
  • Economic performance in early 2020 merited the same score as between 2006 and 2010, according to the authors (p. 25). Compare: The GDP of Hungary fell a total of 4% from 2006 to 2010, while it grew by 20% between 2013 and 2019. Unemployment, which rose to 12% in 2006-2010 fell below 4% at the end of 2019. The most recent European Commission assessment of Hungary’s economic performance notes that Hungary enjoyed “several years of outstanding growth”.[5]
  • According to the authors, Hungary is in a much worse shape when it comes to income inequality than in 2007 and they think that the country is among the most unequal societies in the EU (p.18). In contrast, the statistics of the European Commission show Hungary to be in the top two in this category, at the same level as Austria, Germany and France.[6]
  • When it comes to poverty risk among pensioners, the authors would have us believe that the situation has significantly deteriorated compared to state of affairs under the left-liberal government 2006-2010 (p25). And once again, the European Commission disagrees. Hungary was a European frontrunner in this category too.[7]
  • Inexplicably, the analysis states that the Hungarian government is planning the introduction of administrative courts (p. 11). The issue was dropped from the agenda over a year ago.
  • This recently published report has a passage in its executive summary (p. 41) where the authors stress that there will be two important elections (for local government and European Parliament) in 2019 that could put the “Orbán regime” to a serious test.

The “independent” and “objective” authors behind the report.

There are other examples of absurd and inaccurate statements and metrics in the report, but perhaps it is time to turn to the people responsible for compiling it. This will help to understand how they came to their conclusions, so grotesquely divorced from reality.

  • The Bertelsmann Foundation, which is responsible for compiling the BTI, used to be an international partner of former socialist prime minister Gordon Bajnai’s Homeland and Progress Foundation (Haza és Haladás Alapítvány), which itself formed the basis for his future political party Together (Együtt).
  • Politico wrote a detailed exposé about the influence the Bertelsmann Stiftung has in Brussels and its dangers. The foundation owns the Hungarian TV channel RTL KLUB, which is perceived as “independent media” in Brussels.[8]
  • All the Hungarian authors of the report, with the single exception of Attila Ágh, work or worked for Political Capital (9 out of 10), a think tank financed by the Open Society Foundations.[9]
  • Political Capital had contracts worth millions of Euros with the socialist governments of Gyurcsány and Bajnai in 2006-2010.
  • Attila Ágh deserves a separate mention, he was the deputy director and acting director of the Institute of Foreign Affairs during the communist dictatorship of Kádár, from 1980 to 1990. He was also a scientific advisor to the Institute of Party History. One has to wonder why should anyone accept as credible the “expertise” of someone who even today tries to whitewash the crimes of the communist regime: “There are some western historians, who do not consider the Kádár regime totalitarian”.
  • The name of Anna Orosz among the “researchers” also raises some questions. The Hungarian public was introduced to Anna Orosz as a politician of Momentum (Renew Europe). She was a member of the leadership of Momentum from March 17 till May 2018. She stood for election in the 3rd electoral district of Budapest during the 2018 general elections. She lost in her constituency and as Momentum fell short of the 5% threshold, she did not get elected to the National Assembly. Orosz announced her return to politics prior to the local elections in 2019. She won an election to the local assembly of a district in Budapest. She is currently serving as deputy mayor. Enough said about her “independence”.

This fabricated report was designed to undermine Hungary’s international standing.

The Bertelsmann Transition Index and similar “reports” compiled by leftist, progressive and liberal “experts”, and the lies, false conclusions and manipulated results contained within them, are read by leading politicians, decision makers and researchers. Such reports regularly make their way into the documents and policy positions of the UN, OECD or even the European Commission or the European Parliament. They are widely referenced in the international press.  

This, in turn, misleads international public opinion end it serves to undermine Hungary’s reputation and in some cases can lead to serious political and economic repercussions.

[1] https://atlas.bti-project.org/share.php?1*2020*GV:SIX:0*CAT*ANA:REGION

[2] https://szazadveg.hu/uploads/media/57e3d8e300c7d/szazadveg-elemzes-a-nemzetkozi-indexeknek-komoly-hianyossagai-es-korlatai-tanulmany.pdf

[3] https://www.bti-project.org/en/index/governance.html

[4] https://atlas.bti-project.org/share.php?1*2020*TV:SDS1:MAP*DOA*TOPO:REGION:TOF

[5] https://ec.europa.eu/info/sites/info/files/2020-european-semester-csr-comm-recommendation-hungary_en.pdf (p.9)

[6] https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN-20190718-1

[7] https://ec.europa.eu/eurostat/web/products-eurostat-news/-/DDN-20190718-1

[8] https://www.politico.eu/article/europe-inc-bertelsmann-business-philanthropy-politics/?utm_source=mandiner&utm_medium=link&utm_campaign=mandiner_202005

[9] https://www.bti-project.org/en/about/country-experts.html#East-Central and Southeast Europe