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Feb 27, 2017 - Zoltán Kovács

‘The Hungarian model is working,’ says PM Orbán, ‘but faces 5 threats this year’

As a result of the hard work of Hungarian people, Hungary once again stands before an “economic breakthrough,” said Prime Minister Viktor Orbán addressing the Parliament earlier this week at the opening of the spring session.

When all signs indicate that the country is headed in the right direction, why are Hungarians still anxious? In his address in parliament this week and his regular, Friday morning radio interview, the prime minister had plenty of good news about the economy but drew a stark picture of the challenges we still face.

“[R]egardless of party affiliation it is great to see that hard work eventually pays off. With due humility, I can say that the economic facts of 2016 have shown that the ‘Hungarian model’ is working,” the prime minister said as he ran through a long list of impressive figures on the economy.

The debt-to-GDP ratio shrunk to 74 percent, the nominal deficit (848.3 billion HUF) shrunk by nearly a third (388.9 billion HUF) compared to last year’s figure. January brought the best first-month budget balance data in 17 years – the best result in the 21st century – showing a 123.4 billion HUF surplus. Hungarian GDP growth of 2 percent edged out the EU average of 1.9 percent and the Eurozone average of 1.7 percent. That growth is emerging along with an ever-improving financial balance sheet, meaning that it’s not growth fueled by new debt. In 2017, government forecasts anticipate growth of 4.1 percent and 4.3 percent growth in 2018.

“It has never happened in the history of the Hungarian economy that in one year we could produce a 10 billion euro trade surplus,” the prime minister said. Contrary to past decades, economic growth did not result in worsening trade balance. Seventy-one large companies invested 3.2 billion EUR in Hungary this past year.

Unemployment, following 54 months of steady decline, now stands at 4.4 percent. That’s a record-breaking low.

From growing support for families to growth in the tourism sector and increases in wages and pensions; from financial support for innovators and startups to the protection of the environment, the list goes on. Time to sit back and enjoy the ride? Hungary’s recent history tells us no.

“In the past circa 120 years, Hungary lived through similar growth cycles. These all had a similar fate: they started with consolidation, followed by an effective, rising period, which was cut off by an actual domestic or international crisis,” the prime minister said. “The significant economic shocks affected both economic growth and financial balance significantly, but it was an even more serious consequence of the crises of the past 120 years that they didn’t just break the progress cycle, but dismissed a portion of the achievements.”

Five threats will confront the government in 2017, and we must fight them off to preserve the economic advance achieved in the past years by hard-working Hungarians. “These are the following: First, Brussels attempts to ban the [government policy for the] reduction of overhead costs. Second, illegal immigration. Third, foreign attempts to influence [government policies]. Fourth, attacks from Brussels on Hungary’s tax reduction [policies]. And fifth, attacks from Brussels on our programs to create jobs.”

In his characteristic tough love, the prime minister had some harsh words for the respect of rules in the European Union during his radio interview. The French and Germans were allowed to ignore the fiscal rules. The Greeks were allowed to flaunt the financial rules. The Greeks and Italians and Germans were allowed to transgress the Schengen rules. “We continuously break our own rules. That’s what the EU today is suffering for,” he said. And the Union continues to pressure member states when they exercise member state rights.

In 2012, when Hungary introduced policies to reduce energy prices, “big international companies, through Brussels, wanted to force us to withdraw” it. Understanding the demand of some European countries, which want a European regulation of the energy supplies, we “hold on to our right to set energy prices for ourselves.”

“Regardless of the devastating, bloody reality and the frightening facts, in Brussels, many still advocate illegal migration.” Germany and Italy are slowly changing in this regard, and Hungary’s once ridiculed proposals – like stronger border protection or setting up camps for asylum seekers outside of the EU – are gaining support. But there is a new issue, which must be put on the table: limiting the free movement of illegal migrants before their asylum request is being ruled on. The situation today is that “they can move freely not just on the territory of Hungary, but also in the whole Schengen area. In today’s terror-threatened times, it is simply unacceptable.”

While they continuously let illegal migrants into the EU,” the prime minister said in the Friday interview, “they demand complete check of passport-holding, law-abiding citizens. That’s insane.”

On the third issue, the Prime Minister was referring to the growing problem that policies of a country are being influenced behind “a disguise, with foreign monies, international networks, in an organized way.” Contrary to appearances, “[t]hese networks have nothing to do with civic organizations. These are Hungarian distributors of international organizations” and their role has been the subject of debate in the US presidential elections as well as in France today. “It seems this is a general problem of western democracies.” Hungarians should not let internationally financed organizations decide on their fate. “[T] hose who are paid from abroad to influence Hungarian public life should declare it, bring it to the public, should be transparent, accountable, the exact same way as political parties,” the prime minister said in his radio interview. “This is a fair expectation from Hungarians.”

“We demand transparency, publicity and accountability [for these organizations] just as for political parties.”

Prime Minister Orbán expects the European Union will attempt to assert new authority over economic policies. Against these attempts, “we shall protect the successful Hungarian taxation system” because “we should not let the nations’ rights to provide workplace-creating support be taken away.”

As a first step, the government would like to hear the Hungarian people’s opinion on these issues and the protective governmental plan, which is called the “new national policy.” “For successful defense, agreement is needed first and foremost,” and in order to achieve that, the government is turning to the widely used national consultation, in order to define “agreement points needed for action.”

With his first address to the Parliament in 2017, Prime Minister Orbán laid out a clear agenda for the year. Comparing to where we stood in 2010, the country has achieved a great deal but there’s still much work to be done.