1 A Critical Review on Rural Development in Hungary: the Cserehát Programme 1 Umut Korkut - Introduction: It is rare to write on poverty and underdevelopment in an European Union (EU) member state, but it is timely. The consolidation of both democracy and market economy is far from being a closed issue in Hungary, given the current economic, social, political and spatial processes. The socio-economic situation of people in Cserehát demonstrates the very gist of current poverty in Hungary especially in rural settlements. The Cserehát programme – organised and funded by the United Nations Development Programme (UNDP) and the Hungarian Ministry of Youth, Family, Social Affairs and Equal Opportunities (ICSSZEM) – on human capacity building and rural development aims at replacing underdevelopment with sustainable development in the region. I have had a unique chance to be a participant observer to the implementation of the project at various stages twice in March and August 2006 – invited by the Programme Leader Márta Márczis. In this article, I am going to discuss rural poverty in Hungary and the rural development potential of the Cserehát programme with the help of the fieldwork and interviews in the region. With the European Union (EU) accession and the pending funds diverted for regional development, the rural localities are turning almost into ‘project markets’. 2 1 I would like to thank the programme leader Márta Márczis for giving me the chance to attend various events of the Cserehát programme. I also would like to thanks Richard Kobra and Brigitta Simó for organising the logistics. Finally, I would like to acknowledge the kind assistance of various civil society and local government members in many communities in Cserehát who full-heartedly explained their methods of breaking out of from poverty to a foreign researcher. 2 The Hungarian government attempted to modify the system of rural governance with the introduction of regional local governments. As this would have meant transformation of the system of public administration, the legislation required the approval of two thirds of m.p.s and hence the support of the the opposition. As a result, the legislation did not pass. However, in order for the Hungarian regions to turn into the EU statistical (NUTS 2) regions, the legislation was necessary. And this would have made the utilisation of cohesion funds in Hungary more efficient. In October 2006, a further crisis with regionalisation in Hungary broke out with a leaked speech of the Minister of Regional Development, where the Minister herself was caught promising the MSZP party council that the modification of rural development legislation can give good opportunities to the government party politicians in regional