NATO a mixed blessing in queue for EU

THE LANDMARK accommodation between NATO and Russia on the alliance's eastward expansion was good news for the former eastern …

THE LANDMARK accommodation between NATO and Russia on the alliance's eastward expansion was good news for the former eastern bloc countries such as Poland and Hungary which are straining to become fully paid up members of the West.

Today the foreign ministers of the North Atlantic Treaty Organisation meet at Sintra in Portugal to finalise which of the wannabe westerners will be allowed to play with the big guys first.

The result will be awaited eagerly in Budapest, where the government has been treading a tightrope to keep the populace below revolt level over the austerity measures and ethnic concessions enacted in the past five years to get this landlocked country of 10 million in shape for the 21st century.

Hungarians, usually quite easygoing souls, have been feeling blue in the way one does when, having stood in a queue for rather a long time, there seems no prospect of ever actually arriving at the box office. Meanwhile, the queue grows thin and pale. In the same queue are countries such as the Czech Republic, Poland and Slovenia.

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Many ordinary Hungarians have seen their wages fall in real terms by between 15 and 20 per cent over the past three years as the centre left coalition government enacts a tough regime to tighten up the post communist economy for admission to the European Union.

With half of the average income regarded as the poverty threshold, 35 per cent of the population is living on or below the poverty line. Last month energy prices tripled. Inflation, which hit 28 per cent in 1995, was reined back last year, but only to 23 per cent.

News of imminent NATO admission will have delighted the political class in Budapest, but the requirement for a 10-15 per cent increase in spending on the army and defence equipment can only mean more straitened circumstances for the ordinary Hungarian. Estimates of the cost of bringing Hungary's 60,000 strong army into line with the requirements of the Pentagon and its NATO peers nudge the £2 billion mark: yet such a cost would further erode Hungary's hopes of becoming financially eligible for EU membership.

The historic dilemma for countries such as Hungary is well summed up by Prof Tony Judt of New York University in his recent book of essays on Europe: "For eastern Europe ... there is but one option: joining western Europe on the latter's terms."

On a recent visit to Budapest, it was delightful to see all the 18th and 19th century buildings that are left in their pristine state, but worrying to observe close up in just what a tatty condition, often unsafe, they are. The authorities instincts to preserve are commendable, but the money to restore is not forthcoming.

The Prime Minister, Mr Gyula Horn, sounded a note of desperation earlier this month when he called for an anti extremist coalition to defeat the wailing right wing displeased with the austerity measures, and also with conciliatory treaties with neighbouring Slovakia and Romania, with which much tension still remains. After the job losses and low wages which came with the closure or selling off of communist era state enterprises, the popularity of Mr Horn's Socialist Free Democrat coalition is on a slippery slope.

The fiscal target for the parliament on the Danube is a budget deficit of 3 per cent, in line with the best behaved members of the Organisation for Economic Cooperation and Development, to which Hungary was admitted a year ago. This has meant tough times for the lower income bracket.

Budapest was always accustomed to a divide between the rich and poor, even under communism. The majority of the population was crammed into flats or houses on the flat Pest side of the Danube. A local guide showed me a large flat, recently sold as office accommodation, in the centre of the Pest district. It is a charming place, overlooking an internal courtyard with flowers and vegetables grow ing, and with five large rooms and one small kitchen. But before 1990, when democracy returned, my guide told me, five families (two of them single units, elderly people living "alone"), occupied this one flat.

The problem is that things have changed little since democracy arrived. In Buda, and the leafy hills of the residential district, the monthly rent for a ranch style house built by a grateful government for a Hungarian gold medal list at some Cold Warera Olympics is the same as the purchase price for the type of flat most Budapesters occupy.

The difference is that the whole flat would be about as big as the sitting room of the Olympic mansion. Such houses are almost invariably inhabited by diplomats and the growing number of expatriates working for foreign companies opening up the Hungarian economy, with Germany and the US the main external investors.

The Austrian Foreign Minister, Mr Ivan Klinla, broke the hard news to his Hungarian counterpart, Mr Laszlo Kovacs earlier this month that the Austrians did not expect Hungary to become a member of the EU during the Austrian presidency, which takes place in the second half of next year. Hungary's long wait - it has been a formal "associate member" since 1994, after signing an agreement to that effect in December 1991 - still has no end in sight.