1 György Jenei Managerial Requirements in a Newly Established Legal State. The Hungarian Case. TIRGU MURES, June, 2008

2 The impact of the European Rechtsstaat tradition After this pre-Weberian period the basic task was the creation of a strong legalistic state. But the task was not so simple because in the European tradition there were three different Rechtsstaat models. What type of Rechtsstaat model was established in Hungary? The Napoleonic model can be excluded because the authoritarian system was not abolished on a revolutionary way. The Hungarian ambition and intention was to create a liberal constitutional Rechtsstaat based on the primacy of the law. Legal sources should be the basis of administrative actions implemented by a modern professional bureaucracy. In spite of the fact that Hungary followed the German Rechtsstaat model in the period of the Austro-Hungarian Monarchy there were no attempts for its renewal (Hajnal-Jenei, p ).

3 By now it turned out that serious insufficiencies are in the implementation of the Rechtsstaat model. From time to time cases occurred when the separation of execution and judiciary is not enforced. The extent and the forms of arbitrary actions is also an Achilles heel of the system. Politicians and bureaucrats are not demarcated in the commitment of bribery and corruption. Sometimes elected politicians are the initiator. Sometimes it is a bottom up corruption when low level civil servant must give a certain share for their principal. But top-town corruption also occurs quite frequently when top level civil servant has to buy silence of the others. Just recently Hungarian citizens could observe and experience arbitrary actions of the police and other law enforcement bodies in the limitation of their basic freedom rights (freedom of speech, right of assembly).

4 Decline or emergence of NPM? According to the typology of Pollitt-Bouckaert public management reforms in Hungary had begun on the modernising trajectory in the mid 1990’s. Our first statement of evaluation is an incomplete trajectory. From the three different contracts ( contractual based relationship between the regulative and service delivery function; contracting out for quality improvement; Citizen’s Charter) only contracting out is applied in the Hungarian practice. Compared to the British public management reforms the first difference that the steering and rowing functions were not uncoupled.

5 The consequence is that public agencies can not compete in the regulated market of service delivery. Private enterprises were involved in the service provision. Contracting out, public procurement, Public-Private Partnerships are applied in the tool-kit of the government. But without substantial civil monitoring. Citizens are not empowered. No Citizen’s Charter can be seen on the horizon.

6 The consequence is that the “value for money” principle is seriously hurt. For instance: the average cost for building a kilometre length highway in Hungary is double higher than in Croatia. It is not acceptable when we build our highways in the Great Hungarian Plain and in Croatia highways are built among the mountains, requiring bridges and tunnels. The state monopoly is being replaced with private monopoly. In a county (where the ruling coalition has majority in the county assembly) the hospitals have been contracted out. There are four hospitals in the county. Three of them are already in the hands of a private firm. (In this “private firm” leading officials from the government are interested with investments.) This firm has made a bid for the fourth hospital with the support of the county assembly. The capital of the county – where the hospital is located – resists. Let us suppose that the private firm will win and control the fourth hospital as well. Who will compete with whom? How the public can control them? Will the regulative power of the government be efficient?

7 In the reality these are actions under external and internal pressure. It was a cut back in the civil service because of financial constraints and it is called reform. But the name is misleading. This process does not meet with the EU reform criteria. There is a lack of strategic vision, the actions are not legitimised in the civil society. There are neither participative nor civil dialoques. The administrative principles of the EAS are not implemented. I would say this process is deviated from any trajectories outlined by Pollitt and Bouckaert. What are the reasons in the background?

8 The democratic political system in Hungary is in the stage of a representative democracy now. I would add that a special version of representative democracy has been implemented in Hungary. In this version the party leaders supposed to be charismatic and democracy means for the citizens a regular participation in the voting process. And nothing else! There are two problems with the Hungarian version. Firstly strong social groups of the Hungarians do not accept it. The public opinion polls show a frightening decline in the personal prestige of the politicians. Very limited confidence exits in the political institutions and in the public agencies anymore. (Exceptions are a few local politicians, among them even city mayors as well.) This level of mistrust endangers the stability of the system. I characterise the political culture with the instruction of a party leader. It was given in a county party meting in the 2006 election campaign. The very essence of the instruction was as follows: The basic principle what we have to follow that two functional illiterate matter more than a Nobel Prize winner. They have two votes compared to one.

9 This statement has a logic. But it does not fit to the value orientation of strong social groups and secondly it does not meet the requirements of increasing the economic competitiveness of the country. It has become quite evident by now that the economic competitivess of the country depends on such factors as the quality of public service provision, the performance level of public trust in the public agencies, the openness, transparency, predictability, reliability and accountability of the public sector. The main problem is that the current tasks of the public sector modernisation require a post-parliamentary democracy (Jordan and Richardson, 1987), in the terms of the EU a participatory democracy. But in Hungary participative democracy is the only claim of trade unions and certain civil society organisations. There are ongoing efforts for organising referenda against the government. In this special situation participative democracy is replaced by direct democracy because it is the only – and costly – opportunity for pressure groups to express their criticism or resistance to governance.

10 The second reason is that public management reforms are not coupled with reforms in policy making.

11 The relationship between politicians and civil servants is not consolidated. It means that every changes in the coalition – which was quite frequent in Hungary – had an impact on the composition of public administration on the top and the middle levels. It was the main obstacle of building up a neutral bureaucracy based on professional expertise. Party affiliation mattered more in the nomination of top – and middle level bureaucrats. The process has begun already in 1990 when top level technocrats were ousted from the government. In spite of the fact that their attitude was basically loyal to the new government, following the good old slogan originated from the time of the Austro-Hungarian Monarchy: “Maul halten und weiter dienen” (Shut up! And do serve further!) This procedure was repeated every four years from that on.

12 The main deficiencies of the Hungarian public sector we can find some critical points: The openness of the government is on the traditional level. No progress has been made in transparency, accessibility and responsiveness. Performance management and budgeting has not been implemented in a series of public agencies. Public policy making assists of only web of actions without a relevant strategy. We can speak about strategic management mainly on the local level. Process was made in the efficiency of public agencies, but the implementation of effectiveness is only sporadic. There is a widespread abuse and mismanagement of the market type mechanisms. The core issue has to be solved is the adaptation to the changing needs of social groups and maintaining coherence of public policy and continuity of governance values at the same time.

13 The relationship between politicians and civil servants is not consolidated. It means that every changes in the coalition – which was quite frequent in Hungary – had an impact on the composition of public administration on the top and the middle levels. It was the main obstacle of building up a neutral bureaucracy based on professional expertise. Party affiliation mattered more in the nomination of top – and middle level bureaucrats. The process has begun already in 1990 when top level technocrats were ousted from the government. In spite of the fact that their attitude was basically loyal to the new government, following the good old slogan originated from the time of the Austro-Hungarian Monarchy: “Maul halten und weiter dienen” (Shut up! And do serve further!) This procedure was repeated every four years from that on. It resulted in the decline in the professional expertise of the civil servants. Sometimes they identify themselves as independent, but the question of the public for them: “On which side are you independent?”

14 The third reason is that involvement of the Hungarian civil society is only partial and therefore can not be kept under pressure the government. The third sector is in a controversial position. Nowadays two competing views have of same importance – especially in Central and Eastern Europe. One view sees the third sector as an expression of civil society, rooted in democratic culture – in CEE in an emerging democratic culture – and based on social participation – in CEE on a broadening social participation -. According to the other approach the third sector is basically an extension of the central and local governments in the sense that a large part of the third sector organizations plays an important role in the provision of public services (Jenei-Kuti, 2003).

15 In the CEE member countries – depending on differences in the economic, social and cultural context and on historical traditions – a diversity exists in the empowerment of civil societies and in the involvement of their organizations. However, some general conclusions can still be drawn: The level of the empowerment is related to the ongoing shift from representative (output) democracy to the participatory (input) democracy. The bargaining and lobby power of civil society and its organizations has not been increasing in the area of regulatory policy making. However the service provision function of TSOs in different policy areas has grown significantly Civic participation has not been strengthening through the emergence of a “civil dialogue” which has different meaning from consultation to co-decision. In the contrary in the EU member countries mechanisms of a “civil dialogue” exists with stronger or weaker impact apart from the traditional “social dialogue” with the so- called “social partners” (trade unions, employer association etc.). Civil society organizations are not accepted and, accordingly, supported as having important economic and social roles in democratic societies. The multifunctional character of these organizations is outlined on the EU level by distinguishing between operational organizations with service delivery function and advocacy organizations aiming to have an impact on the policies of the government, on the behavior of public agencies and on the public opinion. It means that civil society contributes not only to the improvement of the input but also to the output legitimacy of democratic societies. This distinction does not exist in Hungary.

16 Compared to western European countries, in Central- and Eastern European countries in transition public administration has had to face special challenges because the creation of a political democracy and the implementation of the principles of efficiency and effectiveness that have become crucial tasks of modernisation at the same time. Even in the EU countries there are tensions between the administrative principles. There is a broadly discussed tension between the principles of professional integrity and professional loyalty. And a well-known consequence of customer orientation, quality improvement and application of management techniques is the tension between legalism and managerialism. In the EU the development of the “Rule of Law” and the introduction of “New Public Management” was a sequential process. (Even in this development tensions are well-known )

17 Creating a legal – organizational framework for a “Rechtsstaat” does not mean that it is already a functioning legal state based on Weberian principles. But without a functioning Weberian democratic system, without regulative and monitoring power of the state the initial steps of “New Public Management” can strengthen corruption. On the other hand without introducing the quality models the CEE countries cannot increase the competitiveness of the public sector which is an essential component of the economic, social and political modernisation processes of these countries.

18 Are we really in the trap situation? Is it a dilemma which cannot be solved? The only solution is that the CEE countries must not try to avoid the Weberian phase of development. A functioning Rechtsstaat is a necessity in the course of modernization but you have to add to this development the application and implementation of the western quality models as well. You need a balanced position and public administration needs a stable political background and strong consensus of the political parties in supporting this process. CEE countries must learn from the West-European experiences. We have to find our own solutions. We can only absorb or assimilate their experiences when we have a realistic evaluation on the current situation of our own countries. And we have to take into consideration that every piece of knowledge has always its cultural connotation. To make an eclectic selection from the experiences of different models is a possibility but you can be sure that the consequence of it will be a combined mistake instead of a relevant synthesis. This is a central challenge of the coming years.

19 Only a Neo-Weberian State can provide a synthesis between legalism and managerialism and can solve the previously outlined problems? A Neo-Weberian State where the governmental actions are based the Rule of Law, where private enterprises are involved for competing quality in the service delivery, where civil society organizations have a full range involvement in public policy making, from decision making to service provision? As for Hungary does the Neo Weberian State mean that the light at the end of the tunnel are in sight or are we just running in a long tunnel?

20 Thank you very much for your attention!