1 Profit, politics and sustainability 1 - The determinants of rural- and agri-environmental policy-making in Hungary GUSZTÁV NEMES Economic Research Institute, Hungarian Academy of Sciences H-1502 Budapest, P.O.Box 262 CRE, University of Newcastle, Department of AEFM, Newcastle upon Tyne, NE17RU, UK —————————————————————————————————— Abstract A strategic choice, concerning the direction for future rural policies, has to be made by Hungarian policy makers: • to base rural policies on the principles of the present Common Agricultural Policy; • or rather on the Common Agricultural and Rural Development Policies for Europe, widely referenced as a 'way out' from the present rural-agricultural crisis. The former choice would aim a competitive agriculture, built on market logic and comparative agricultural advantages, involving large-scale intensification, using EU aid and private western investments; placing Hungarian agriculture on a development trajectory, similar to advanced EU Member States. This solution could be profitable for the agricultural industry, though, it might bring severe environmental and social problems for Hungarian rurality as a whole. The latter choice would aim rural development, built on a sustainable logic and the comparative advantages of Hungarian rurality as a whole (environmental, social, cultural). This development should involve local resources and significant EU aid. It might result in a less profitable agriculture in the short term, but can bring a more sustainable development of Hungarian rurality on the medium-long term. In current Hungarian policy making there are steps and political will in both directions. However, the outcome (the design and implementation of relevant rural, agricultural and environmental policies) depends on a variety of domestic and international economic and political forces. This paper will analyse the determinants of rural policy- making in Hungary. I intend to explore forces and possibilities for the two alternative policy directions, described above. I try to show presumable impacts of these scenarios, with special regard to environmental and social consequences. I will conclude that, Hungarian policy-making is preoccupied by EU requirements for pre-accession programmes and the approximation of the acquis. There is a strong tendency for centralisation, though recent tendencies in the rural development system and in civil society represent a significant force for decentralisation. As a result of political and economic circumstances, rural policies, especially through agri-environmental elements, have a chance to progress into a more sustainable direction. 1 I would like to say thank to the WWF and the British Countriside Agency for providing the financial means for this research; to those Hungarian and EU officials and representatives who devoted some of their time for our fruitful conversations; to my colleague and friend Anett Zellei and to my supervisor Professor Philip Lowe, for their worthy comments and ideas during this work.