Commissioned by: International News Services, Sep 29, 2009.
It was just over a year ago, on September 15, 2008, when the European Institute of Innovation and Technology (EIT), the EU's flagship initiative to boost Europe's competitiveness on a highly globalized battlefield of development and innovation held its constituent meeting in Budapest, Hungary. The meeting was addressed by Hungary's then-Prime Minister Ferenc Gyurcsány, then-minister of research and development Károly Molnár, both of whom seemed overjoyed over the EU's decision to pick Budapest as the host city of the institute's headquarters. "The decision is an important acknowledgment of the state of research and development in Hungary on behalf of the EU," Molnár told journalists after the meeting, adding that Hungary would contribute HUF 100m (EUR 3.7m) from its 2009 budget to cover the costs of the necessary preparations.
Now, only a year later the Prime Minister is gone, the minister for research and development is gone, and much of the money has gone up in smoke as well. What's left of it, a mere 67%, is still enough to cover all costs, the government confidently claims, while its press department repeatedly turned down our requests to elaborate on the subject. "Everything is just fine", the brief ministry-statements suggest. Especially as long as you don't bother asking questions, we may add.
According to the original schedule, with which the government vows to comply, the congress center for EIT will open in December 2009, in Budapest's Infopark quarter, a highly equipped office complex in the neighborhood of the city's most important universities and IT companies. Hungary undertook that it would cover the office costs of the EIT for 20 years (an estimated worth of HUF 200m or EUR 7m at current rates), and it is to pay the salaries of 20 EIT-employees for five years. The headcount of the institute will reach 30 by next year and it will start working with its full capacity of 78 employees (including the management) starting from 2011.
Hungary's contribution may not seem large compared to the aggregate EUR 309m budget of the EIT (provided by the EU), still the last couple of months have seen unexpected changes. The ministry for research and development (technically the position of Károly Molnár, a minister without portfolio, responsible for research and development) was abolished in April, and the preparation's budget was cut back from the originally planned HUF 100m to HUF 67.1m. Tasks and responsibilities also became somewhat chaotic. The role of Károly Molnár was taken over by the Ministry of National Development and Economy, but while the ministry's press statements claim it is personally minister István Varga, who is in charge of the preparations, other (informal) ministry sources suggest that it's the ministry's cabinet chief, Gergely Balla, who is handling the project. Both have declined our interview requests.
Asking how the budget was rearranged after its dwindling by 35%, most surprisingly we were told that nothing needed to be changed. "Conditions in Hungary to host the headquarters of the EIT have always been perfect, and there was no need to rearrange sources, nor have we fallen behind schedule," a statement of the press department informed us.
The budget or the schedule of the preparations, are not amongst the biggest problems, industry specialists agree. "It's just that the government is sending out the wrong message, concerning how important innovation and research is for Hungary," Zsolt Monszpart, vice chairman of the Hungarian Association for Innovation and deputy CEO of Ericsson Hungary Ltd. tells us. According to Monszpart, the EIT will have little or no market relevance for Hungary, whose most instable administration structure and flawed higher education system are the main obstacles of becoming a real innovation center of Europe. "Innovation is a key to survival on the market, and what the industry is most eager to see is stability and predictability in the frameworks of the administration," Monszpart explains. "An innovation today will result in a product in five or ten years, and you can't afford an administration that will have completely different priorities by then," he adds.
Under the current circumstances, even laws are unable to guarantee predictability. In 2003, the government introduced a compulsory fee for companies to support a research and development fund, saying that the state will contribute twice the amount collected from companies each year, and spend it on research and development projects. To date, the government has fallen short of its own undertaking by HUF 55bn (EUR 204m), despite the fact that it is against its own legal regulations. In June, the government announced it earmarked HUF 0 in its 2010 budget for the purpose of research and development, and it was only the protest of industry NGOs that changed this amount to HUF 20bn. It is not the amount ordered by the law, but it is at least something, the industry wryly noted.
Experts agree that the current structure is completely instable, and changes, too, are entirely ad hoc, without any underlying concept. The National Office for Research and Technology (a government body that decides on subsidies and tenders on the field of innovation) has seen four directors in the last two years. There are tenders for 2009 that haven't even been put out as of now. Conditions, priorities and organization structures are subjects of continuous changes, that inevitably result in late payments. Most SMEs have to wait nine months or longer to have their subsidies paid after winning a tender, which is much longer than what an average company can afford to pre-finance. "Treating innovation this way is like throwing the engine out of your car to make it lighter," Zsolt Monszpart concludes, adding "you don't want to do that, because you know it will stop at the bottom of the slope".