Press Release

Deputy Secretary of Commerce David A. Sampson
Opinion Editorial, Vilaggazdasag
Budapest

Transparency is critical to creating a competitive, dynamic business environment everywhere in the world. Countries like Hungary that are taking the final steps away from communist dictatorships towards fully free market economies are particularly aware of this challenge because under the old system there were no incentives to be transparent or open.

In fact, there were significant disincentives for doing so.

This mindset is still a challenge for many, and there is perhaps no more critical- and no more difficult an issue today in Hungary than sustaining an ethic that encourages and rewards transparency and predictability.

Hungary has had no shortage of difficult choices to make in recent years. As a determined and fiercely independent people, Hungarians have never shirked from the challenge of creating a strong and vibrant nation. Changing attitudes toward transparency will not be easy either.

We in the United States, including nearly 1.4 million Hungarian-Americans, stand with you as you continue on your path. President Bush acknowledged this during his visit to Gellert Hill a year ago when he said “America admires your perseverance, we welcome your progress, and America values our alliance with the free people of Hungary…Hungary represents the triumph of liberty over tyranny, and America is proud to call Hungary a friend.”

In that spirit of friendship we want to speak frankly about the need for transparency in free market economies. It is a critical element that makes free market economies work and thrive. This is more important than ever as the world is moving faster and the countries of Central Europe and beyond are constantly honing their advantages and finding ways to be more competitive.

Every country and every company needs to be constantly vigilant in enforcing good rules, maintaining the right processes, and keeping leaders engaged on the issue of transparency.

Corruption and a lack of transparent decision making threaten all that Hungary has accomplished.

A lack of transparency raises the cost of business and adds an additional layer of risk. It makes it harder to ask people to sacrifice as part of an austerity plan, for example. It also raises uncertainty regarding protection of intellectual property, stifling both technology transfer and domestic innovators. Transparency is a feature that makes an economy competitive, an attribute that Hungary cannot afford to be without in a world that is increasingly integrated and interconnected, and where resources can easily be deployed anywhere and everywhere.

The World Economic Forum Global Competitiveness Report identifies the “Business Cost of Corruption” in Hungary as one of the highest in the EU. This ranking seems to show a correlation between transparency, low levels of corruption and economic competitiveness: countries like Estonia and Ireland are ranked favorably, while countries lagging in economic competitiveness tend to also have higher levels of corruption. This is also reflected in other international measurements. For example the Freedom House Nations in Transit study which reports that a lack of transparency pervades throughout Hungary’s procurement system. Or the World Bank’s Ease of Doing Business Report which ranks Hungary as one of the most difficult places to deal with licenses in the world.

In the U.S. we became so concerned with the lack of transparency in foreign procurement by American companies that we passed- and vigorously enforce- the Foreign Corrupt Practices Act. We have found that by taking firm, fair and open actions, with real penalties, our system is strengthened. By doing so we fulfill an obligation not only to our partners in international agreements and our international investors, but to our people and to the laws they expect us to uphold.

Maintaining transparency in free market democracies is a constant struggle. It is a struggle that those here in Hungary and around the world who advocate for good government are in together.

I am here in Hungary as part of The Transparency Initiative which provides a forum for cooperation with Hungary on the issue of transparency. This effort, launched by Minster Koka on May 8 is a partnership between the government of Hungary and Ambassadors of nine countries that account for 85 percent of the foreign direct investment here. These Ambassadors have also formed a working group which will recommend concrete solutions and recommendations that will help improve Hungary’s overall competitiveness.

Your success in increasing transparency and reducing corruption benefits not only Hungary but also its friends and neighbors. This makes Hungary a better partner and a better place to do business. And that strengthens Hungary, improving our alliance, our relationship and our competitiveness.