Hungary Annoys Investors

Hungarian Prime Minister Gyula Horn, by wrecking the privatization of a chain of state-owned hotels this month, has shown that Central Europe's ex-communist rulers could be a big drag on the march to market economies. They tend to juggle the interests of their old-line supporters with the need to attract investment, producing erratic policy.

In the hotel deal, Horn fired the respected privatization commissioner Ferenc Bartha and raised the price--even though American General Hospitality, a Dallas hotel-management company, had already won a tender at $57.5 million. "In making concessions to the left, he shot himself in the foot," says one investment banker. "It sends a very bad signal to investors."

Horn may now try to redeem himself by speeding up state sell-offs and appointing a credible successor to Bartha. Meanwhile in Poland, Prime Minister Waldemar Pawlak, another ex-communist, dithered for months before signing off on the privatization of some 400 companies late last year.

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