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The Political Economy of Coronavirus Responses in Hungary

Updated: Dec 15, 2020

How can we interpret the characteristic steps of the Hungarian government to tackle the COVID-19 pandemic? What does Hungary’s example reveal about the political consequences of populist health crisis management?



How can we interpret the characteristic steps of the Hungarian government to tackle the COVID-19 pandemic? What does Hungary’s example reveal about the political consequences of populist health crisis management? How do political and policy effectiveness of health crisis responses relate to each other under a populist government? A wide range of analyses on populism highlight the centrality of personalism, anti-scientism, anti-elitism, and the resulting policy inefficiency as well as populists’ desire to exclude cultural outgroups as factors. These might explain certain consequences of populists in power. This essay offers a different, political-economic approach to populism and argues that there is a discernible policy logic behind the government’s responses that fit well into its socio-economic strategy that unfolded over the past decade. Based on this framework, the most controversial responses of the Hungarian government prove to be efficient but unpopular policies that require politically efficient solutions to curtail democratic feedback mechanisms to prevent a backlash from the victims of Orbán’s illiberal populism.

Keywords: illiberalism, populism, health-crisis management, policy effectiveness, political effectiveness, authoritarian capitalism


The coronavirus represents a challenge to political systems worldwide. A quick and efficient governmental response is pivotal. However, it is widely recognized that some governments used the pretext of health crisis management to centralize power more than others thus undermining democracy in the long run. Populist politicians and parties in government proved to be particularly prone to democratic backsliding during the coronavirus health crisis (Gilbert, 2020). Israeli Prime Minister Benjamin Netanyahu ordered all courts to close, effectively postponing his own corruption trial. President Duterte of the Philippines ordered officials to shoot ‘troublemakers’ protesting during the quarantine.

In most parts of the world, this is a new phenomenon not only because of the novelty of the pandemic but also because populists had been confined to the periphery of politics until recently, without being able to form government as a sole or majority governing party. Therefore, the overwhelming majority of the scholarly literature on populism has so far focused on finding the adequate definition of populism, analyzing the causes behind the rise of populist parties, and describing populist ideologies and discourses. The literature on the consequences of populists in power, especially with regard to health, is scant. The coronavirus health crisis presents a natural case study to examine the consequences of populism in power under stress.

Hungary is an avant-garde case of illiberal, authoritarian populism in Europe (Bozóki & Hegedűs, 2018; Kalb, 2018). Viktor Orbán’s Fidesz has established a stable illiberal government after 2010. The government has used the coronavirus health crisis to enact new measures that further centralize power and eliminate checks and balances that could potentially counterbalance the executive (Bozóki, 2020; Szombati, 2020). In addition to further ‘executive aggrandizement’ (cf. Bermeo, 2016), Viktor Orbán’s government also enacted some controversial epidemic and socio-economic policies in response to the crisis that diverged from the conventional approaches followed by most developed and emerging countries. The most widely discussed ‘unorthodox’ policies include freeing up 50-60% of hospital beds in the midst of the health crisis and maintaining restrictive social policies without adequate protection for the unemployed, low-income families and students.

How can we understand the political consequences of populist health crisis management in Hungary? The dominant approaches to populism emphasize culture and populist political agency (Mudde, 2004; Norris & Inglehart, 2019). This agency-culture approach sees populism as driven by a growing cultural divide between traditionalist nationalists and cosmopolitan liberals. Populists exploit this new political cleavage and build political momentum by attacking the ‘elite’ and offering to protect the ways of life and interests of the ‘people,’ and excluding cultural outgroups such as migrants. Populists rely on political movements that are supposed to create a direct link between the leader and the masses, leading to a personalistic, centralized leadership, which questions the role of intermediary organizations and bureaucratic expertise (Jansen, 2011; Kriesi, 2014; Weyland, 2017). Often, populism is described as a politics diametrically opposed to liberal policies. As Pappas (2014, p. 12) put it in his much-cited article on populism in Hungary and Greece: “Once the populists came into office, polarization became for them a much cheaper strategy for the maintenance of power than implementing painful liberal reforms.” In sum, based on the agency-culture approach, the unconventional nature of populist health crisis management is explained by political personalism, the rejection of expertise and evidence-based policies, and the desire to exclude cultural outgroups.

The agency-culture approach has its merits. Personalistic power relations and new cultural-moral hierarchies play an essential role in populist politics. However, this approach puts too much emphasis on the dysfunctional character of populism, attributing too much weight to personalism, as if the irrational whims of the populist leader would completely explain the consequences of populist power. In this essay, I follow a political-economic approach to populism (Rodrik, 2018). This approach holds that economics does matter and suggests that populism is in part driven by inequality and the fear of status loss among working-class voters. However, the most crucial aspect of populist power is its relation to the elites. Masked by anti-elitism, crucial segments of the economic elite might also support populism, which could lead to policies that serve the interests of high-income groups and domestic businesses, while working-class supporters of populist parties could be among the biggest victims of populists in power (Bruff, 2014; Kalb, 2018; Schrecker, 2017).

This essay will distinguish between governmental policy effectiveness, which is related to how well a given policy instrument addresses a well-defined socio-economic problem, and political effectiveness, which is related to political tactics and strategies geared to the stabilization of power. The proponents of the agency-culture approach to populism downplay the policy effectiveness of populists in power – policies are driven by the whims of populist leaders, leading to policy failure (Dornbusch & Edwards, 1990; Houle & Kenny, 2018; Sachs, 1989). They hypothesise that populist policy making is solely politically driven, lacking any policy-strategy or underlying economic-structural logic: “Populists are not committed to a systematic ideology or a clear program but govern as they see fit, depending on their own tactical considerations, sudden ideas, and even whims; … thorough program elaboration and careful, systematic implementation are often missing.” (Weyland, 2017, p. 60)

While accepting the importance of ‘executive aggrandizement,’ the political-economic approach to populism connects the political and policy logic of populism. Populist policies might follow a well-defined policy logic, and this might reflect the embeddedness of populists in particular elite groups. These policies, therefore, cannot be described simply as anti-elitist or anti-scientific, and are not merely the product of political personalism. Political effectiveness might be a tool to veil the policy logic of populist politics, thus allowing for the implementation of unpopular policies that would be politically unsustainable under democratic circumstances. This essay uses the political-economic framework to show how Viktor Orbán’s socio-economic strategy to build a variety of authoritarian capitalism explains the governmental health crisis management.

Populist health crisis management in action

Health crisis management can be divided into three distinct fields: epidemic responses, socio-economic policies and political responses. Epidemic responses cover policies designed to mitigate the direct threats on civilian health posed by epidemics such as covid-19. Socio-economic policies respond to the social and economic dimension of the crisis, in particular to the repercussions of the lockdown for the revenues of businesses, and the livelihood and security of families and individuals. Finally, political responses include measures that affect democratic procedures and the exercise of governmental power.

Hungary’s government took the first epidemic responses belatedly. Hungary started to introduce significant restrictions on 16 March, with a full shelter-in-place order effective from 27 March. Shops, bars and restaurants were ordered to close after 3 pm, public gatherings were banned (with the exception of religious gatherings), and distance learning was introduced in schools. Epidemic measures also included other, less conventional, steps such as the suspension of admission of migrants from transit zones on the southern border, the expulsion of some foreign students, the introduction of centralized military leadership in hospitals, care homes, and companies in the food, health and pharmaceutical sectors producing basic necessities, the complete centralization of testing,[i] and the centralization of the flow of epidemic information.[ii]

The measures that target the restructuring of hospitals are particularly controversial. On 11 March, the government decided to freeze all non-coronavirus related admissions to hospitals and treatments with the exception of life-saving ones (¾ of hospital treatments was postponed in the only hospital that provided detailed data about the effect of this measure.[iii] If the hospital admissions remain restricted in the following months, it could allow the government to save around 10 billion forints on hospitals in the midst of the pandemic. On 9 April, the minister responsible for health ordered publicly funded hospitals to free up 60% of hospital beds  by 19 April for the treatment of expected new coronavirus patients.[iv] Hospital directors who refuse to fully comply are threatened and  two renowned hospital directors were dismissed.[v]

Nevertheless, as most countries in Central and Eastern Europe,[vi] Hungary managed to avoid a mass outbreak. Central and Eastern European countries are less connected into global movements (tourism, migration, businesses); therefore, the first cases appeared later, allowing time to prepare, and leaving more room for error. After the first weeks of hesitation and confusion, the epidemic responses of the government were overall adequate – though there remain critical problems with regard to infections in hospitals and care homes. As of 4 May, there were 3,065 detected coronavirus cases in Hungary, with 363 deaths.

The government’s socio-economic responses were more belated and highly selective. The thrust of the government’s economic measures is dedicated to alleviating the financial burden of businesses in some sectors (tourism, catering, leisure, sport, culture and personal taxi services). On 8 April, the government established the anti-Epidemic Protection Fund (663 bn forints = €1.89 bn)[vii] and the Economy Protection Fund (1345 bn forints = €3.83 bn). This fund was sourced by reallocating resources from ministries and from the Employment Fund, by cutting local government budgets, and implementing two somewhat symbolic taxes, a new financial tax on banks in the value 55 billion forints (€0.16 bn), and a new tax on retail chains in the value of 36 bn forints (€0.1 bn).

Overall, the government aims to keep the budget deficit below 2.7% for 2020, which amounts to a strict austerity policy, given that the projected increase in the budget deficit is much smaller than the drop in the GDP, which could even reach 10% by the end of the year. This macroeconomic conservativism diverges from the approach of most other governments and the recommendations of international institutions. The EU has suspended the 3% deficit rule, and most governments, including conservative governments inject significant hard money into the economy through deficit financing. The central bank led by György Matolcsy follows a more conventional economic response by significantly boosting private lending and buying government bonds on the secondary market.

The responses in the fields of social and employment policy are particularly restrictive and belated. Even conservative governments recognize the need to increase spending on social security in response to the coronavirus health crisis but Viktor Orbán’s government refuses to do so. The only significant policy response alleviating the financial burden of workers is a limited wage guarantee scheme introduced on 8 April. The government covers up to 70% (later increased to 75%) of the lost salary for workers whose work time was reduced by up to 50% (later increased to 75%). The government also pledged to increase the public works programme in response to the crisis, which currently employs around 80,000 people, and to offer extended training and education opportunities for the unemployed; however, these plans are yet to materialize. To help companies in finding ‘flexible solutions,’ on 18 March the government effectively suspended the labor code (Bruszt, 2020). This allows companies to diverge from regulations with regard to work time, workplace arrangements, and the minimum wage threshold.

Finally, the political responses to the health crisis also include several highly controversial measures. Although the centralization of executive power is a common approach in crisis management, the Hungarian government went further than most other democratic governments. In a widely discussed move, the National Assembly, relying on the qualified majority of Orbán’s Fidesz party, passed an act that made the previously introduced state of emergency indefinite and allowed Orbán to rule by decree, postponing by-elections and national and local referendums, and curtailing public scrutiny by making the spreading of ‘misleading information’ about the government’s pandemic response punishable by up to five years in prison. Although the special powers to rule by decree are phased out in June, some emergency regulations remain in place.

A few days after the introduction of rule by decree, the government cut the funding of political parties by half, under the pretext of reallocating money to the coronavirus responses. The 1.2 billion forints (€3.42 million) reallocated is little compared to the budget of the crisis funds, but it effectively hinders the operation of opposition parties that overwhelmingly rely on state funding as a source of revenue. Bolstered by their oligarchs and the political use of governmental resources, this cut does not affect Fidesz. The central government also reduced the budget of local governments by centralizing road tax revenues, with further selective punitive financial measurers targeting communities controlled by the opposition (e.g. Göd, Budapest District IX). The government also refuses to engage in any meaningful dialogue with the parties of the opposition and with social stakeholders such as trade unions, although communication with business advocacy organizations is regular.

Populist health crisis management in the context of Orbán’s authoritarian capitalist strategy

How can we interpret the characteristic steps of the Hungarian government to tackle the pandemic? As laid out in the introduction, the agency-culture approach to populism describes populist policymaking as a divergence from the principles of good governance, which is bound to be counterproductive and lead to policy failure. Populist policies are thus ineffective, a sole result of political effectiveness, that is, the over-centralization of personalistic power. Populist governments attempt to stabilize power through maximizing political efficiency and neglecting policy efficiency. This perspective can explain some policy choices of the government. The early decision to entirely suspend the admission of migrants from transit zones and to expel some Iranian students fits populist politics targeting the exclusion of cultural outgroups. The avoidance of mass testing might also be interpreted as an approach driven by political considerations to avoid the spread of panic. The introduction of military leadership in hospitals and the militarization of streets also fit this approach. These steps might be characterized as inefficient pandemic response policies driven by political personalism and the centralization of power.

However, the agency-culture approach seems to be less capable of explaining the most controversial epidemic, socio-economic and political responses. The political-economic approach to populism emphasizes the economic-structural relations of populist power as an explanation of populist policy making. This suggests that populist policy making might serve a hidden agenda, masked by populist politics and discourses. The relationship between populist politics and policy is therefore explained by the political-economic background of populist power holders. Although from a social-scientific perspective it might be premature to uncover deeper social mechanisms from the crisis experience, I propose that the political-economic approach to populism is capable of elucidating the underlying mechanisms of populist health crisis responses, as I already have tentatively suggested elsewhere (Scheiring, 2020a).

Following a political-economic approach to illiberal populist governance in Hungary between 2010 and 2018, I have shown that Viktor Orbán did not dismantle democratic institutions because he is merely power-hungry and driven by populist whims (Scheiring, 2019, 2020c). Viktor Orbán’s illiberal regime follows a discernible political-economic logic that arose in response to the tensions induced by dependent development in Europe’s semi-periphery. Hungary’s international economic integration led to an internal economic disintegration that polarized the capitalist class and engendered the revolt of the national capitalists.

This led to the collapse of the class compromise between political technocrats and transnational capital that had sustained the pre-2010 liberal state. Fidesz utilized this opportunity to build a new authoritarian capitalist regime and facilitate a new class coalition comprising the national and transnational capital and the nationalist faction of the political class. Although Orbán rode the waves of working-class disillusionment with globalization to get elected (Scheiring, 2020b), his socio-economic policies frequently lead to further working-class dislocation and disenfranchisement (Szikra, 2018). It is crucial to recognize that neither national nor international capitalists have risen up to challenge Orbán’s illiberalism. This is because national capitalists are better off than any time before, while major transnational corporations in the technological sectors, such as German car manufacturers, are also crucial pillars of Hungary’s authoritarian capitalism.

I have shown that the socio-economic policies of Orbán’s illiberal state are designed to serve the interests of the class coalition on which it is built. The primary economic objective of the government is to facilitate the embourgeoisement of the upper-middle class and accelerate the capital accumulation of the national bourgeoisie and the transnational capitalists in the export-oriented tech sectors. In order to achieve this goal, the government fundamentally transformed education, social, employment, and fiscal policies. These transformations are socially costly, hurting large segments of society, from members of the working class to small and medium-sized entrepreneurs to urban liberal middle classes. A recent survey conducted before the coronavirus pandemic  asking respondents to evaluate the ten years of the Orbán regime reported that 43% of Hungarians think that the country is in a worse state than it was in 2010, and only 30% saw an improvement (Bíró Nagy & Laki, 2020). As a result of its unpopular socio-economic policies, Orbán’s government lost a large share of its working-class supporters between 2010-2014. At the 2014 parliamentary election, Fidesz received fewer votes than in 2006, when they lost and ended up in the opposition. The 2019 local governmental elections again showed that Orbán’s illiberal hegemony is vulnerable, as the opposition was able to take hold of critical large cities throughout the country, including the capital.

Viktor Orbán’s Fidesz does not rely on an overwhelming electoral majority. The stability of the regime depends in part on the institutional authoritarianism and authoritarian populism it employs (Scheiring & Szombati, 2020). To pre-empt a possible political backlash emanating from the losers of the government’s socio-economic strategy and to hinder the politicization of diffuse social unrest, Fidesz curtailed the institutions of liberal democracy. In other words, Orbán’s authoritarianism is, in part, a corollary to the acceleration of capital accumulation and the embourgeoisement of the upper-middle class. This political-economic framework allows us to understand the government’s most controversial responses to the coronavirus health crisis.

The government’s socio-economic responses extend on its social policy strategy followed in the past decade, applying the same principles and targeting the same socio-economic goals. After 2010, Orbán’s government fundamentally transformed the welfare state. Spending on social protection was slashed from 18.1% of the GDP in 2009 to 13.3% in 2018 (Eurostat, 2020a) – an unprecedented reduction in Europe after the financial crisis. The government shifted from needs-based benefits to workfare-based benefits, as part of a broader paradigmatic shift from the welfare state to the workfare state. The government reduced the duration of the unemployment benefit to 3 months, which is the lowest in Europe. The allowance equals to 60% of the previous average pay, but the amount cannot be higher than 100% of the minimum wage (i.e. 149,000 forints = €425). It is widely recognized that three months are far from enough to find a new job after becoming unemployed, especially during a crisis. The government cut several forms of benefits, reduced the public works salary below the minimum wage, and significantly reduced the value of social assistance. Once the job-seeker benefit expires after 90 days, citizens are entitled to employment substituting benefits of about 22,800 forints a month (€65).

The cuts to social spending allowed the government to maintain a budget deficit well below 3% throughout the last decade. The new constitution in effect since 2012 contains a clause that mandates governments to follow a restrictive fiscal policy if state debt is above 50% of the GDP.[viii] Orbán’s illiberal state freed up so much money from social protection that it was able to significantly increase public investments that benefit the national bourgeoisie and to launch new pro-natalist family policies that help the embourgeoisement of the upper-middle class. As a consequence of these policies that redistribute resources from the bottom to the top, income inequality has skyrocketed in Hungary after 2010. Hungary is now the most unequal country in the Visegrád region.[ix] The number of people in severe poverty earning less than 40% of the median wage grew dramatically, from 197,000 persons (2% of the population) in 2010 to 478,000 persons (5%).

These policies are reflected in the way the government’s socio-economic policies have responded to the coronavirus health crisis. With the exception of a restrictive wage guarantee scheme and the freezing of loan payments, the state does not provide any new benefits that would go beyond the existing limited, workfarist social policy model. A close political ally of the government, László Parragh, the Chairman of the Hungarian Chamber of Industry and Commerce, summed up the government’s philosophy candidly in an interview, stating that ‘so many people have gone broke, that we cannot do anything about this.’[x] Viktor Orbán himself repeatedly refused to extend social assistance and pledged to uphold the government’s workfarist approach,[xi] which in essence implies no one receives income from the state who is otherwise capable of working.[xii]

The government’s most controversial epidemic response, the mandatory reduction of hospital beds, also fits the health policy of the illiberal state. Firstly, freeing up 39,500 beds, about 60% of all hospital beds, seems to be a gross overestimation of potential coronavirus cases. On 9 April, when the decree was announced, there were around 100 patients infected with the coronavirus treated in hospitals and around 1,000 detected cases. Freeing up 60% of the beds would be only required if there are 180-230 thousand actively infected people in Hungary, which was much higher than the actual numbers, and exceeded the number of infected people even in Italy, a country with six times Hungary’s population. Experts estimate that the reduction of hospital beds might have affected around 15,000 people who were previously being treated in hospitals and were sent home overnight without adequate home care services.[xiii]

Public health care spending declined from 5.2% of GDP in 2009, a level already low in international comparison, to 4.7% in 2018. The dilapidated state of public hospitals is a frequent topic of newspapers and public debates. People find the declining quality of health care the most worrying, with 57% of Hungarians highlighting the state of health care as the most significant problem (Bíró Nagy & Laki, 2020).[xiv] Based on the Euro Health Consumer Index, the quality of the Hungarian health system is the third lowest in Europe, primarily as a consequence of the underfunding of the public health system (Björnberg & Phang, 2019).

In contrast to education and social policy, Orbán has so far shied away from a full-blown restructuring of the health care system. As part of the last wave of avant-garde neoliberal reforms (Appel & Orenstein, 2018; Korkut, 2012), the last Socialist-Liberal government between 2006-2010 attempted to liberalize health insurance, decrease the number of hospital beds and introduce co-payment. At that time, Orbán took a strong stance against these commodifying reforms, initiating a referendum that he won by a landslide. This referendum was a significant blow to the government and an important stepping stone for Orbán towards conquering the state. This highly politicized conflict did not allow Orbán to take a complete U-turn in health policy. However, the cuts to public hospitals served as an incentive for well-off citizens to join private health insurance companies and seek treatment in private hospitals and clinics. The group of national capitalists supporting Orbán from the background includes several billionaires active in the health sector. The upper-middle class, on which Orbán heavily relies, is also not interested in funding a universal public health system as they are better off with their private providers.

It is too early to conclude that reduction in hospital beds is part of a long-term programme of health care austerity serving the expansion of private health-care providers. However, recent statements by the government provide clues that this might, in fact, be the reason behind the drastic reduction of hospital beds. At a press conference at the end of last year, Gergely Gulyás, Minister of the Prime Minister’s Office, indicated that transforming hospitals is on the agenda of the government, stating that the recurring public debts of (underfunded) hospitals is a severe problem for which hospital directors will be held responsible.[xv] The ministry responsible for health prepared a reform proposal at the beginning of 2020 that also referred to the need to reduce the number of hospital beds.[xvi] This reform process was temporarily put on hold by the coronavirus.

However, it seems likely that the government wants to seize on the health crisis to push ahead with a restructuring of hospitals. At a more recent press conference, Gergely Gulyás said “as the coronavirus crisis also highlighted, we have to rethink health finance … it is unnecessary to maintain hospital capacities that are not justified by the number of patients.”[xvii] This response suggests a long-term plan to restructure hospitals, which is consistent with the elimination of 3,000 hospital beds that already took place between 2010 and 2018. Based on this statement it is likely that hospitals will not return to the same number of beds as before. In short, it seems likely that the government will use the crisis to implement another potentially unpopular reform that would  otherwise be very difficult to push through under normal democratic circumstances.


It is reasonable to conclude that the government’s most controversial policies in response to the coronavirus are not merely the product of irrational populist whims or the desire to exclude cultural outgroups. It would also be difficult to characterize these measures as anti-elitist, fiscally irresponsible steps designed to buy the support of popular masses. Hence, the most common tropes in the literature on populism especially characteristic of the agency-culture approach do not capture the essence of populist health crisis management in Hungary. In this essay, I have proposed a political-economic approach to populism and showed how this framework allows us to better understand how seemingly disjointed and inefficient policies of the government are part of a strategy. There is a discernible policy logic behind the government’s responses that fit well into its socio-economic strategy, geared towards social welfare divestment, labor flexibilization, and redistribution towards the upper-middle class and the national bourgeoisie. The coronavirus health crisis is just another opportunity to push ahead with this agenda and restrict democracy and political competition further to prevent a backlash from the victims of Orbán’s illiberal populism. Authoritarian capitalism is a robust framework to understand the consequences of populist health crisis management in Hungary.

Gábor Scheiring is a Marie Curie Fellow at Bocconi University, Milan, researching the social consequences of economic globalisation, the political economy of health and populism. His book, The Retreat of Liberal Democracy (Palgrave, 2020) analyses how global economic transformation gave rise to illiberal populism in Hungary. He served as a member of the Hungarian Parliament between 2010–2014.


[i] Hungary carried out the fourth lowest number of diagnostic tests in the OECD until the end of April. See [ii] Hospitals, care homes are not allowed to respond to queries independently to the state of emergency related to the coronavirus, all communication goes through the central government. [iii] [iv] This was reduced to 50% a few days later – while reaching 60% was postponed to an indefinite second phase. [v] There was a solidarity demonstration in one the cases where a widely respected director was fired, to no avail. [vi] [vii] All conversions in this essay are calculated with the exchange rate on 5 May. [viii] State debt in 2019 reached 66.3% of the GDP – continuously decreasing since 2012. [ix] The Gini coefficient jumped from 24.1 in 2010 to 28.7 in 2018 while every other Visegrád country saw a decline (Eurostat, 2020b). [x] [xi] Orbán has called it the ‘work-based society’ in his famous illiberalism-speech on 26 July 2014: [xii] ‘I want to tell every Hungarian citizen that they will not get any social assistance if they are capable of working.’ Speech at the meeting of the National Association of Entrepreneurs and Employers, 26 July 2012. [xiii] [xiv] It is also worth noting that people named inequalities as the second most worrying problem according to the survey. [xv] The overwhelming majority of hospitals in Hungary does not have enough resources to cover basic operational costs like buying syringes or masks; hospitals are constantly operating on the verge of insolvency. See [xvi] [xvii]


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Originally published on The New School's Democracy Seminar blog, 1 July 2020.


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