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EU Enlargement Tuesday, 10 March, 1998, 17:35 GMT
Hungary: country report
Hungary & its neighbours
The European Commission has recommended that negotiations to join the Union should begin with Hungary, Poland, the Czech Republic, Slovenia, Estonia, and Cyprus.

The Commission's report on Hungary is summarised below.

Gyula Horn
Gyula Horn, Prime Minister of Hungary
Hungary's political institutions met the bulk of its obligations under a previous agreement with the EU. Its political institutions function properly and elections are free and fair. Problems still exist in relations with the gypsy minority Roma. The unemployment rate for Roma is four or five times that of the national average and life expectancy for the Roma is 10 years less than it is for the rest of the population.

Hungary has one nuclear power plant, in Paks, which produces 40% of the country's electricity. Work must be carried out for it to comply with international safety standards and it will have to find a solution to the problem of nuclear waste.

In the next few years particular attention must be paid to frontier controls, treatment of asylum seekers, visa policy and the fight against organised crime.

Hungary can be regarded as a functioning market economy. Liberalisation and privatisation have progressed considerably, and there has been strong growth of new private firms. Hungary has had a head start over other former eastern block countries due to its unique economic history and geographical closeness to the West, providing some experience of a market economy.

Hungarian enterprises are already competitive in EU markets. Restructuring of banks and industry is well under way. Hungary's record of consistent commitment to steady market reforms and its ability to take difficult decisions when they are necessary is an important positive factor. It has had a consistently high level of foreign direct investment.

Hungary's ability to attract Foreign Direct Investment (FDI) has been impressive: Hungary has the largest inflow of FDI in the region, attracting 40% of the total FDI in Central and Eastern Europe. This has helped to reduce the foreign debt and contributed to the restructuring, privatisation and modernisation of Hungarian industry.

If Hungary continues to put EU law on the statute books and to implement the law at the rate that it has done over the past years, in the medium term EU law will be fully applied. Further administrative reform will be necessary if Hungary is to have the structures to apply and enforce EU law effectively.

Relations with Hungary are good. There are a few trade problems, and Hungary has made good progress in implementing a previous agreement with the EU. Hungary has adopted a realistic negotiating position, which has helped resolve potential problems.

Ethnic relations in Hungary, as in most other Central and Eastern European countries, need to be improved, not only socially but also in the work place and within legislative systems. Economically, Hungary has made vast changes in its move away from a centralised planned economy and is highly likely to meet all the EU criteria in the next wave of enlargement.

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