Hungary's Red Sludge: A Product of Capitalist Restructuring

By Heather Cottin
Published Oct 15, 2010 10:17 PM

Hungary has arrested Zoltan Bakonyi, managing director of MAL Aluminium, the privately owned company responsible for the country’s worst environmental disaster. Bakonyi is son of the company’s owner, Arlep Bakonyi, “a businessman who played a central role in the privatization of the country’s aluminum industry and is the largest shareholder of the company.” (New York Times, Oct. 11)

As of Oct. 11, 4,000 people were desperately working to reinforce the reservoir dam owned by MAL that had partially burst a week earlier.

Some 200 million gallons of toxic red sludge created by MAL’s aluminum processing plant in Ajka, Hungary, had flooded out of the reservoir, devastating the villages of Devecser, Somlovasarhely and Kolontar. Eight people died in the flood’s wake and hundreds were hospitalized with alkali burns.

The toxic flood killed all plant and animal life along the beautiful Marcal River. As the sludge flooded the water systems that feed into Europe’s second-longest river, the Danube, the aluminum company denied responsibility. It said the incident was a “natural catastrophe” and insisted on its website that, according to European Union safety standards, the sludge is not considered toxic. (BBC, Oct. 8)

The plant’s owners are Hungarian and own plants in Slovenia and Bosnia, as well — perks for them after a U.S. war destroyed the socialist republic of Yugoslavia and broke it up into competing mini-states.

According to the BBC report, when Hungary put its state assets on the sales block in 1995, three of the country’s richest men bought the aluminum plant in Ajka.

Capitalist structural adjustment

Even before the toxic sludge inundated Central Hungary, Hungarians were suffering.

The World Bank called Hungary’s privatization process the most comprehensive of any East-Central European country. The World Bank was deeply involved in restructuring the Hungarian economy.

Prices for Hungarian products fell 65 percent, killing family farms. The World Bank’s structural adjustment loans were conditioned on the elimination of low-cost housing loans. Residential subsidies also fell 80 percent, causing a housing crisis of huge proportions for the poor. Family subsidies, which included educational, social and medical support, fell 50 percent. Education, public health and government support for families became victims of repeated cuts.

The Hungarian government’s embrace of neoliberal economic reforms meant that the new owners could offer low wages, no limits on overtime, six- or seven-day workweeks, three-month contracts and low safety standards. An Employment Code instituted in 1992 weakened the rights of labor unions and safety standards. Most privatized firms have been unwilling to adhere to safety regulations or to adequately invest in plant improvements.

Meanwhile, automation and the loss of the Soviet market led to a 30-percent reduction in the country’s workforce. This forced wages down by 15 percent in the decade after 1990.

The CIA World Factbook admits that capitalist Hungary currently has an official unemployment rate of 10.8 percent, up 40 percent from 2009. In addition to the social and economic destabilization resulting from the destruction of socialist planning, wages have plummeted for the majority of workers.

A Law on Economic Partnership rewarded the directors of publicly owned companies with the productive assets of those companies, so the privatization process “managed to transfer public assets into the hands of a few, influential individuals.” (www.saprin.org) MAL Aluminium’s owners got very rich.

Red mud, environmental anarchy

A European Commission spokesman said the red sludge was regulated under European Union law but was not necessarily considered a hazardous waste. The factory received a permit from the Hungarian government for handling the sludge in 2006.

International and national environmental laws are written to assist the companies that run the world’s mines, farms, factories and processing plants. The owners of MAL Aluminium claim to have been dealing with the waste according to law. But the neoliberal adjustments the World Bank forced upon Hungary, among other countries, were written to make profits, not to protect people or the environment.

The volume of muck that escaped from the red mud reservoir in Hungary was almost as large as the oil spewed into the Gulf of Mexico after the recent BP well rupture. (Associated Press, Oct. 8)

Like the oil spill, there were warnings before the disaster.

“The wall [of the reservoir] did not disintegrate in a minute. This should have been detected,” Hungarian Prime Minister Viktor Orban told the BBC. (Oct. 8) A blogger noted that on Google Earth, a website offering satellite views, the wall of the containment reservoir was visibly cracked in a photo taken two weeks before the toxic flood. (Observer, Oct. 8)

Disaster management officials expect another huge wave of contaminants to break free of the damaged reservoir containment wall. Hungary’s environmental secretary, Zoltan Illes, said, “We don’t know whether it will last another day or another week.” (Xinhua, Oct. 10)

Illes confirmed that the sludge had a “high content of heavy metals,” including carcinogens. If the sludge dries out, he said, these toxins can be blown by the wind and wind up in the human respiratory system. (BBC, Oct. 8)

Greenpeace found levels of arsenic, mercury and chrome. The arsenic level was “double what is usually contained in such red sludge.” (BBC, Oct. 8) These heavy metals can cause birth defects. They affect the brain, liver, kidneys and, if they enter the soil, the entire food chain.

The Hungarian government has dumped tons of plaster into the rivers feeding into the Danube to neutralize the alkaline levels of the water, but the heavy metals from the toxic sludge threaten the fish and health of all who live along the rivers. Hungarians consider the company’s offer of 110,000 euros for compensation to the villagers an insult to the dead, the injured and those who had to evacuate their homes. (Observer [Britain], Oct. 8)

Capitalist transformation has brought nothing to Hungarian workers and farmers but hardship and devastation.
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