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Hungary, Central-Eastern Europe and the role of sustainable development

To be presented at the International Studies Association Conference


Budapest, Hungary- June 2003

Chad Briggs
Assistant Professor of Political Science and Environmental Studies
California State University Fullerton
cbriggs@fullerton.edu

Abstract: In order to achieve membership, countries in East-Central Europe must quickly adopt
European Union standards for the environment. This will be a monumental task, hampered by a
long history of environmental damage and unsustainble economic practices, even though new
member states are receiving assistance from the West in the form of loans. Despite the influx of
new capital, however, sustainable development policies since Rio de Janeiro and Johannesburg
have increasingly stressed the importance of turning to private corporations and banks for
investment and development funds. By looking at the case of water in Hungary, this paper argues
that privatization policies may not be in the best interests of recipient countries, either
economically or environmentally.
Notions of sustainable development in the international realm, first articulated in 1987 by
the Brundtland Commission in Our Common Future, have attempted to provide guidelines for
how to balance economic growth with environmental sustainability. Since that time, the concept
of sustainability has changed in both theory and practice, the results of which have been evident
in subsequent conferences from the 1992 Earth Summit in Rio de Janeiro, to the more recent
2002 summit in Johannesburg, South Africa. Actors as varied as national governments, non-
governmental organizations (NGOs), multi-national corporations (MNCs) and academic
institutions, have all worked to put into practice the theory that economic growth can proceed
without significantly harming the environment.
Originally, the international development agencies (led by institutions such as the World
Bank and International Monetary Fund) had focused development efforts upon less industrialized
countries, arguing that proper investment in their economies was the best way to protect natural
resources and environmental conditions in those countries. Within Europe, however, more recent
attention has been given to the environmental and economic conditions of former communist
states of East-Central Europe, particularly as a number of them approach European Union
membership late in 2004. Principles of sustainable development have been used as the basis for
environmental standards now required by the European Union for Central-East European
accession.
The second half of the twentieth century witnessed a stark reliance upon heavy industry in
Central East European states’ (CEE) economies, largely at the expense of environmental
conditions and considerations. State socialist systems controlled both the heavy industry and the
agencies responsible for overseeing their behavior, a conflict of interest whereby the political
goals of industrial production left environmental regulations unenforced and flagrantly violated.
CEE governments often had numerous environmental and health-related laws written into statute,
but until the late 1980s citizens did not possess the means to question state complicity. It is
notable that in a number of countries, the first groups to openly and successfully challenge
communist governments were environmental groups. In Hungary, publicly expressed concerns
largely revolved around the quality of water and wastewater discharges into the Danube in
Budapest, or the construction of the BÅs-Nagymaros dam on the upper Danube.
Even with the demise of the state-run socialist system, environmental concerns in CEE
countries must still focus upon the legacy of the past. Years of poor investment into
environmental infrastructure will require years of remediation, at the same time that many CEE
governments are looking to European Union (EU) membership and further inclusion into the
international community. Accession into the EU and integration with western economies requires
harmonization with EU standards for environment and health, standards premised upon ideals of
sustainable development agreed upon at Rio de Janeiro in 1992 and Johannesburg in 2002. CEE
Countries will be expected to have enacted environmental legislation fully in compliance with
EU regulations by the time of accession (autumn of 2004 for some member countries), while
actual environmental quality will be expected to meet standards several years later.
While attention to environmental quality is important, it is worth questioning whether the
approach currently being advocated by the EU, the World Bank, the European Investment Bank
(EIB), and the European Bank for Reconstruction and Development (EBRD) is in the interests of
Central and East European citizens. The strong push for standardized regulations, efficiency and

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privatization may appear to be laudable environmental goals, but questions remain as to the
flexibility and fairness with implementation. Do EU accession-related standards reflect the
environmental interests of CEE states, or economic interests of existing EU members? This
paper represents background research into the question of new environmental regulation and its
appropriateness for CEE governments in addressing environmental issues. Based upon initial
research into this area, it may be hypothesized that UN, EU, European Investment Bank,
European Bank for Redevelopment and World Bank efforts to privatize environmental industries
will result in substantial environmental and economic damages, absent solid and lasting oversight
of such industries by government.

Prospectus

For the sake of clarity and focus, specific attention will be paid to the Hungarian situation
and the problem of water quality. Much of the field and document research to support these
questions will be undertaken in Hungary and Russia in May through July of 2003, although for
practical reasons this paper will be written prior to the actual in-country research. For these
reasons it should be stressed that material covered in this presentation is highly conditional, and
only describes a background to the topics at hand.
In order to examine these issues and questions more carefully, research will be
undertaken in Hungary in May to June of 2003, with some additional work in Russia in July. The
methodology will involve qualitative case study research, using a comparative context for
analysis and a historic time frame. The primary materials will consist not only of scientific data
on environmental quality in Hungary and elsewhere, but also interviews with some of the key
players and stakeholders in the Hungarian water industry. These interviews include the Budapest
water companies (especially FCSM), European partners to privatization (such as Berlinwasser
Internat), relevant government ministries (Ministry of Environment and Water), and interested
non-governmental groups. A more detailed explanation of the Hungarian situation can then be
presented for the ISA conference at the end of June.

Background to the problem

Like many places in Central and Eastern Europe, Hungary is characterized by a relatively
plentiful supply of water, and most of its residents have easy access to drinking water from
municipal sources. Several major rivers, most notably the Danube, flow across Hungary’s
borders, and this is appreciably supplemented by large groundwater reserves. The problem with
water policies in the region is not limited by the total amount of water, but rather by the quality,
sources and ecological vulnerability of the water. Ninety-six percent of surface water in Hungary
originates in other countries, which greatly limits Hungary’s ability to implement basin-wide
approaches to pollution prevention and abatement. At the same time, Hungary adds significantly
to pollution pressures upon hydrologic resources to its downstream neighbors. Despite
widespread access to municipal (potable) water sources, Hungary and similar countries have

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substantially lower rates of access to sewerage systems and wastewater treatment facilities.1
The practice of polluting rivers and lakes in Hungary was not an issue of great importance
to the communist regime, particularly as municipal drinking water was often drawn from
underground sources. Around Budapest for example, most water was pumped from the area
around Csepel Island, an industrial area downstream from both the downtown and releases of
untreated sewage.2 The reliance upon groundwater, often while ignoring the quality of such
water, led to the widespread practice of releasing untreated waste into the Danube and other
rivers. Hungarian laws concerning sewage treatment plant design had been standardized and
inflexible, resulting in high operating costs and poor operation. When combined with weak
political will to invest in such operations, the result was widespread contamination of surface
waters in the country. As of the mid-1990s, 84 million m3 of untreated industrial wastewater was
leaked or dumped into lakes and rivers every year in Hungary. Agricultural operations were
producing nearly 50 million m3 of manure every year, while municipalities dumped 1.3 billion m3
of largely untreated sewage into rivers, mostly the Danube.3 Budapest alone contributed one
million m3 daily into the Danube, the same river from which it draws its supplemental water
supply. Only 20-25% of the city’s sewage is biologically treated.4 Although Hungary signed the
1994 Sofia Convention, promising to curb pollution in the Danube, the country faces massive
challenges in meeting such standards.
The heavy reliance upon groundwater carries other problems, as well. Over-reliance upon
underground sources have significantly depleted many wells, particularly those from karstic
groundwater. Some water development projects, such as the BÅs-Nagymaros dam, have severely
affected groundwater levels in the Szigetköz region and downstream from Bratislava. In many
ways the BÅs-Nagymaros project was a primary example of how former communist systems
placed much more emphasis upon heavy industrial production than upon ecological

1
Until recently, only half of people in Hungary were connected to sewerage systems. See
Hans-Peter Nachtnebel. 2000. “The Danube river basin environmental programme: plans and
actions for a basin wide approach.” Water Policy, 2, pp. 113-129.
2
The Csepel Island pumps were shut down in the mid 1990s, after it was discovered that
iron and manganese levels far exceeded World Health Organization potable water guidelines.
Until that time, the use of water purification plants for drinking water had not even been
seriously studied.
3
D. Hinrichsen and I. Láng. 1996. “Hungary.” in : Environmental Problems in Eastern
Europe. Carter & Turnock (eds.), London: Routledge, pp. 99-100. The amount of sewage
released into waters in Hungary each year would cover an American football field to a depth of
200 miles or 322 km. Put another way, it would take 325,000 Olympic-sized swimming pools to
contain that amount.
4
US Department of Commerce. 1997. Hungary- Wastewater Pollution Control.
International Trade Administration Market Research Report.
<http://www.mac.doc.gov/eebic/countryr/hungary/research/water.htm>

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considerations. The project decreased groundwater tables in the Szigetköz region, exacerbated
preexisting water quality issues near Bratislava, and in other ways heavily damaged the flora and
fauna of the inland wetland areas of the Danube Bend.5 Other notable events have been the
cyanide poisonings of the Tisza River in Romania/Hungary, and into the Danube in the
Vojvodina region of Yugoslavia.6 Despite the disturbing nature of these events, it must be said
that in many ways such headline issues obscure the more systematic problems faced by CEE
governments like Hungary.
The low investment in environmental infrastructure during the communist years was not
simply evidenced by directed investment into large, so-called ‘megaprojects,’ nor was the
environmental damage limited to visible areas or resources. Fortunately, heavy metal deposits
and suspended solids were not particularly worrisome within the Austrian and Hungarian
sections of the Danube, although some localized pollution has been evident.7 Surface waters have
been more susceptible to pollution from organic compounds, such as nitrogen, phosphorous and
nitrates leaching from agriculture or wastewater.8 Further damage has been caused by non-point
source runoff pollution in the form of oils and other persistent organic compounds, particularly
from transportation sources.9
Needless to say, the Hungarian government and its people have many tasks ahead in order
to meet EU standards for water quality and effluent emissions. It is not believed that these tasks
will be accomplished overnight, but handling water quality and wastewater alone may consume
one percent of GDP, roughly the equivalent of what other EU nations spend on all environmental
protection.

Hungarian Political Situation

Hungary has historically possessed surprisingly good environmental laws, but until
environmental issues became matters of legitimacy for the state around 1990, they were rarely

5
See Eugene K. Balon and Juraj Hol…ik. 1999. “Gab…íkovo River Barrage System: the
Ecological Disaster and Economic Calamity for the Inland Delta of the Middle Danube.”
Environmental Biology of Fishes, 54, pp. 1-17.
6
Mark Macklin, et.al. 2003. “The long term fate and environmental significance of
contaminant metals released by the January and March 2000 mining tailings dam failures in
Maramure County, upper Tisa Basin, Romania.” Applied Geochemistry, 18, 2, pp. 241-257.
7
P. Woitke, et.al. 2003. “Analysis and assessment of heavy metal pollution in suspended
solids and sediments of the river Danube.” Chemosphere, 51, pp. 633-642.
8
T. Németh. 1993. “Nitrogen in Hungarian soils: nitrogen management relation to
groundwater protection.” Journal of Contaminant Hydrology, 20, pp. 185-208.
9
Non-point runoff pollution is frequently under-acknowledged in importance, and little
research has been found thus far on its contribution to general CEE water quality.

5
recognized or enforced. One of the first reactions of the government to calls for more
accountability in areas of water quality, was to decentralize the process and devolve jurisdiction
to the municipalities in 1991. National responsibility was divided between several ministries,
such as Energy, Environment and Transportation.10 Such actions had real consequences for the
terms of economic development that were to follow, as many municipalities were forced to sell
their holdings to private companies. Such turnovers have not accounted for a large percentage of
total municipalities, but they have affected a substantial portion of the Hungarian population.
Since 1996, it was decreed that all settlements with a population of more than 2000 had to
have and maintain a sewage treatment plant by a certain date. By 2010, there will be 1365 plants
in operation, with a daily total capacity of 2.9 million m3. The necessity for this is illustrated by
the fact that inhabitants of large urban centers (slightly less than half the national population)
daily create 1.8 million m3 of sewage waste. The amount of waste created has remained fairly
steady, despite large decreases in overall water use within Hungary since the early 1990s.11
Steps have been taken since the early 1990s to remediate past damage, and new laws are
rapidly being adopted to bring Hungary in line with EU regulations. Many loans are being
channeled through the EU to Hungary, via the EBRD, EIB and even World Bank. EIB spending
alone for 2003 is expected to exceed EUR 1 billion. Many of these loans are given on the
condition that water utilities by privatized, meaning that at least their operation be given over to
private corporations. An EIB statement on the sale of Budapest Municipal Sewerage Company,
indicated that in privatizing,
The municipality will retain majority ownership of
FCSM.[Budapest Sewerage Co.] However, the devolution of
management control to the private sponsors and linking their
remuneration to efficiency gains will maximise the benefits of
private sector involvement, leading to significant improvements to
FCSM's capital and operating efficiency and a higher standard of
service.12

If the Budapest deal is illustrative of other projects in East-Central Europe, then it may pose a
problem as banks are loaning money to private corporations, while the government has to
guarantee profits for the company. Guaranteed profits margins were a problem when such deals

10
See E. Fleit, et.al. 2000. “EU legislation concerning wastewater treatment- tasks for
wastewater treatment developments in Hungary.” Water Science and Technology, 41, 9, pp. 1-5.
11
Dóra Vimola. 2000. “Water Management Policy and its Principles within the European
Union.” Periodica Polytechnica Ser. Soc. Man. Sci., 8, 2, pp. 173-177. Water use decreased
since 1990 primarily because of improvements in industrial and agricultural efficiency. Per capita
municipal use has not changed significantly.
12
European Bank for Redevelopment. 1998. Budapest waste-water services privatisation,
Hungary. EBRD project summary document.
<http://www.ebrd.com/projects/psd/psd1998/273budap.htm>

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surfaced in Chile, and they would not be any more politically palatable in East-Central Europe.13

The favor of technical solutions and private investment

The extent of environmental pollution in CEE states is so significant that a large portion
of the countries’ GDP will have to be allocated to meeting EU requirements for environmental
protection and standards. The exact figures are often contentious, but range in the area of 3-5% of
total GDP for most given countries, amounting to an enormous investment of what are already
scarce government resources.14 The European Union has provided funds to assist in meeting
requirements for membership, but in most cases they only fund up to 75% of costs for a given
project. The remaining costs are still far too large to rely upon a polluter-pays principle, by which
costs of environmental protection are borne primarily by polluting industries and the fines they
pay. Rather, costs of environmental protection will have to be paid by society as a whole, with
crucial support coming from Western and Northern European states.
In some ways the situation is similar to that of developing countries, although it is by no
means completely comparable. CEE states have lower per capita income than those of the EU, at
times only a fraction of what could be found in France or Germany. Waste generated and energy
used per unit of GDP is higher than in the EU, indicating inefficiency in the use of resources and
treatment of waste. Despite suffering from greater inefficiency, it is interesting to note that with
lower levels of income citizens of CEE states produce less waste and use less energy than their
Western counterparts.15 If one of the primary aims of the EU is to increase economic prosperity,
it should be recognized that with economic growth will come greater strains upon natural
resources and environmental systems. Economic wealth is closely correlated with increases in
consumption.
The somewhat conflicting expectations for both growth and increased environmental
quality is why it is important to examine current policies of sustainable development. Is it
possible to increase economic growth in CEE significantly, while at the same time substantially
improving environmental protection? Three questions must be raised in this context of drawing
up new environmental regulation and projects. First, with the billions of Euros in aid being given
to CEE states over the course of only a few years, can this money be spent effectively and

13
The nature of trade agreements and loans often forces particular policies upon an
unwilling recipient. This has been the cause of much political controversy in Latin America,
Africa and Asia over the past few years. See Tony Clarke. 2003. “Water Privateers: International
trade agreements and loan conditions are pushing the privatization of public water systems
around the world.” Alternatives, 29, 2, pp. 11-15.
14
See Fleit, op.cit. By comparison, the United States currently spends approximately 3%
of its GDP on national defense.
15
Sándor Kerekes and Károly Kiss. 2000. “Basic Environmental Requirements for EU
Accession: An Impact Study on Hungary.” Environment, Development and Sustainability, 2, p.
61.

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efficiently given the short time frame? Second, will the need to provide 25% matching funds
from the new-member states impose unacceptable costs on certain sectors of the population or
environment? Last, are the conditions under which these funds are made available suitable for the
recipient countries, or are they more likely to favor the interests of other states or organizations?
The three questions are closely interrelated, and there is reason to doubt that the answers
will be very positive for those entering the EU. Despite the best efforts of individuals or of single
organizations working on sustainable development, policy directions may emerge that differ
significantly from their original intent. In practice, concepts of sustainable development have
evolved over the years into a process which favors technical solutions and often the transfer of
authority from public sectors to private corporations. This policy emphasis, reflected in a number
of World Bank and EBRD documents, shifts alternatives away from what may be lower-cost or
more politically stable alternatives.
Technicism is the process by which problems are defined in technical terms as problems
to be solved through the application of technical means, rather than as social or political issues in
need of debate. The tendency to apply technicism to environmental issues is to resort to what
Shrader-Frechette refers to as a ‘naturalistic fallacy,’ or the tendency to believe that ethical or
political problems can be explained away by reference to science or technical knowledge alone.16
Although the concepts of technicism and privatization may appear to be quite distinct, for a
number of reasons in CEE they have a close relationship.
Out of the many concepts that arose from the Rio de Janeiro conference in 1992, one of
the most important was that of decentralized control. It was felt that environmental policies and
development could only be effective if the state developed partnerships directly with local, non-
governmental and business interests. The idea of decentralization is hardly new, as much of the
environmental policy literature had addressed such approaches over the years.17 Yet as Allouche
and Finger wrote in their 2001 article on World Bank water policy, only two of the four
principles developed at the 1992 Dublin Conference on Freshwater have received primary
attention from western lenders. Principle two of the conference stressed the importance of a
“participatory approach” to water resources management, including a large number of
stakeholders in the decision-making process, such as the public, planners, scientists and local
government officials.18 This second principle was not at all controversial, and it was included
partly in response to past criticisms of World Bank planning methods. As with all political

16
Kristin Shrader-Frechette. 1985. Science Policy, Ethics, and Economic Methodology:
Some Problems of Technology Assessment and Environmental Impact Analysis. Dordrecht,
Netherlands: D. Reidel Publishers.
17
Admittedly, another impetus to such thinking may have been the then-newly
acknowledged environmental conditions in former communist states, which were themselves the
very models of centralization.
18
Jeremy Allouche and Matthias Finger. 2001. “Two Ways of Reasoning, One Outcome:
The World Bank’s Evolving Philosophy in Establishing a ‘Sustainable Water Resources
Management’ Policy.” Global Environmental Politics, 1, 2, pp. 42-47.

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concepts, however, the real importance lies with the interpretation and execution of such a
principle.
The fourth principle was far more controversial, and stated that water was to be treated as
an economic, not merely a social, good. While stressing the right of all human beings to have
access to clean water at an affordable price, the fourth principle is based upon the argument that
failure to recognize the economic value of water has led to harmful and wasteful policies in the
past.19 Water policies in the western United States, for example, often encourage the draining of
entire rivers for purposes as varied as agriculture to golf courses, while the subsidization of such
practices by the government and relative lack of pricing on water does not force conservation.20
Others saw the shift to economic goods as being at least slightly at odds with past UN policies,
particularly as water is listed as a basic human right under the International Covenant on Human
Rights. Fearing that by designating water as a ‘need’ rather than a ‘right’ would allow more
selective services and quality to go only to those most able to pay.21
The World Bank in the 1990s extended its role beyond simply providing money for
development, but also compelled countries (and particularly governments) to work more
efficiently with the economy. With its sister institutions the International Monetary Fund (IMF)
and EBRD, the development industry began to see the state as impeding the performance of
economies. As a consequence, policies have been developed to reduce the role of the state in
many economic sectors, including water. Without state funds, however, it would be difficult to
find the necessary capital to improve or expand water infrastructure, leading the development
industry to turn to multi-national corporations.22 Lending institutions could therefore not only
focus upon water as an economic good, but could accomplish the decentralization called for in
1992. In other words, it precipitated a shift in thinking from water resources development to
water resources management, with the management function increasingly given over to
corporations. Development (i.e., building of infrastructure) became secondary to a focus upon
management of existing resources (i.e., privatization).
As a result of World Bank policies, the 1990s saw a significant increase in water
privatization throughout the world, and expectations remain that this trend will increase in future
years. This increase will be particularly notable in areas suffering from a relative lack of water
infrastructure maintenance or investment, while changes in public to private operation of water in
North America in Europe will be much more modest. Recent years have also seen a marked
increase in ‘tied aid’ in the area of water, meaning loans or grants available only under the

19
Ibid.
20
See Marc Reisner. 1993. Cadillac Desert: The American West and Its Disappearing
Water. New York: Penguin Books.
21
Maude Barlow. 2001. “Commodification of water- the wrong prescription.” Water
Science and Technology, 43, 4, pp. 79-84.
22
Allouche, op.cit. The impetus for this change is questionable, as it is possible that the
corporations themselves were behind much of the change to privatization agendas.

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condition that the utility be privatized. Such loans from the World Bank now constitute almost
100% of its water development funds, and have also been seen in Eastern Europe.23

Privatization

On a global scale, the results of privatizing a natural monopoly have been mixed, at best.
High profile cases have emerged in South America, where prices in Bolivia rose so much that it
sparked political protests and forced the American-based corporation to withdraw its investment.
Notable cases have also been present in Ontario, Canada, where the privatization of water testing
helped contributed to the deaths of 7 people from e.coli bacteria in the small town of
Walkerton.24 Efforts to privatize water in Atlanta recently have proven unsuccessful, while earlier
privatization of water utilities in the UK received mixed marks from economists studying the
companies’ performance.25 The relevant literature concerning privatization of water is expanding,
and it is neither possible nor necessary to consider all possible aspects of the situation. As it
relates to Central-Eastern Europe, several factors and influences should be taken into account.
The first issue to consider is that corporations have different regulative ideals than do
governments. This is a crucial point, because it should not be assumed that corporations act in a
particular fashion purely out of malice or disinterest.26 Rather, their legal mandate for action is to
generate profits for their shareholders, and it is this focus upon profit maximization that may
result in policy distortions. By contrast, a politician running for office often uses the campaign as
a regulative ideal, and it is this dedication that may result in other policy distortions. In the case
of water utilities, there are a number of the notable side-effects. Examples might be an effort to
establish full-cost recovery for water delivery (which makes water bills more regressive
according to income levels), efforts to invest more in areas with higher rates of return (meaning
that wealthier neighborhoods would receive better service, or any service at all), and efforts to
increases prices where inelastic demand exists (resulting in far higher water bills).
Although there may be some basic similarities, not all privatization programs are the

23
Center for Public Integrity. 2003. The Water Barons.
<http://www.icij.org/dtaweb/water/>
24
Another 2300 fell ill from the bacteria. Some commentators believe that privatization
only exacerbated previously low infrastructure investments. See Elizabeth Brubaker. 2002. “No
More Walkertons.” The National Post (Toronto), 23 January, p. FP17.
25
David S. Saal and David Parker. 2001. “Productivity and Price Performance in the
Privatized Water and Sewerage Companies of England and Wales.” Journal of Regulatory
Economics, 20, 1, pp. 61-90.
26
Considering the charges of fraud and corruption brought against the two largest water
conglomerates in the world, French multinationals Vivendi and Suez Lyonaise des Eaux (its
water arm has since been renamed Ondeo), it would be very easy to prejudice any research on
this subject.

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same. Varying degrees of involvement may be seen with private interests, from the state simply
contracting out maintenance jobs via public bidding, to full private control of resource rights and
infrastructure operations. The exact mix of responsibilities and oversight make a large difference
in determining the success of any project, and one should therefore be wary of making blanket
statements regarding privatization processes.
The emphasis that has been placed upon water as an economic good, the desire for
privatization, and the structure of PHARE/EU funding itself, has resulted in a strong
concentration upon high-cost and high-technology solutions to water quality issues. The focus
upon higher-cost alternatives exists for several reasons, the most salient of which is the
requirement that any EU funds be given for a minimum amount (between 5-10 million Euros). It
is also the case that EU standards are not context or geographically specific, so that they may not
be entirely appropriate to the country adopting them.27 This problem may be common in any
large country or confederation, but evidence has already surfaced suggesting that current
regulation of water and wastewater in Hungary tends toward overproduction of water supplies
and heavy investment in certain areas at the expense of others.28
As with any program where enormous sums are invested in a short period of time, it is
fairly easy for such investment to be asymmetrical to actual or even projected need. The
questions persist as to how effectively EU funds can be applied in such a short time frame, and
whether they are likely to be effective in significantly restoring environmental conditions. The
case of Hungary is therefore not necessarily indicative of all CEE states, but it may be illustrative
of the problems when attempting to overcome past environmental damage in so short a time
period.

Conclusion

When dealing with issues of how to balance economic growth with environmental
protection, Hungary is not in a good position to bargain. The country believes it has a historic
right to enter the EU, yet it realizes at the same time that there are many hurdles to its accession.
Lacking the necessary resources to ameliorate past environmental damage on its own, countries
like Hungary are forced to accept the conditions laid out by the EU, EIB, EBRD and World
Bank, even if those policies are not in the best environmental interests of Hungary. Concepts of
sustainable development are much easier to agree to in theory than in practice, and their current
evolution may favor ideals of World Bank and IMF economists more than Hungarian
environmental regulators.
The purpose of this research is to caution that future growth and the process of
privatization cannot be the prime motivators for proper environmental protection. Cost-effective
and target-effective policies must be the sustained goals of affected governments, and it is not

27
See Sándor Kerekes and Károly Kiss. 2000. “Basic Environmental Requirements for
EU Accession: An Impact Study on Hungary.” Environment, Development and Sustainability, 2,
p. 60.
28
Ibid., p. 68.

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enough simply to find the necessary capital investment for economic growth. Considering the
strong relationship between economic growth and consumption of natural capital, making
economic growth a priority does not mean that environmental issues will be addressed. Absent
strong oversight from CEE governments, the UN-inspired concepts of sustainable development
may guarantee profits for multinationals while harming economic and environmental interests
domestically.

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