PM Orbán: Without collective change, the war economy will prevail across Europe

In his regular Friday morning interview on Kossuth Rádió, Prime Minister Viktor Orbán spoke about the European energy crisis, the utility price reduction, and the drought in Europe.

Commenting on the war, the prime minister stressed that the Western war strategy does not appear to be working: It was thought that a Ukrainian army reinforced with U.S. advisers and training officers, but without a personal NATO military delegation, could defeat Russia, but that is not what happened. The sanctions policy has also “backfired,” and contrary to previous thinking, Europe is drifting towards a war economy.

A new strategy has to be worked out, PM Orbán underlined, because “if we don't succeed in making a collective change, we can expect a war economy across Europe from October on,” he said.

The new strategy should focus on agreeing with the warring parties that there should be a ceasefire and a peace process. Sanctions and arms transfers will not lead to results, he said, stressing the key role of the U.S. as well: “As long as there are no direct U.S.-Russian negotiations, the chances of ending the war are slim.”

Regarding energy supply, he said it is a matter of subsistence whether there will be heating in winter or not, and it is not Brussels that should solve the problem of Hungary’s energy supply, but “ourselves.”

“Hungary will have enough gas,” PM Orbán said, adding that a route has been built to transport large quantities of gas from Turkey via Serbia, and that today most of the Russian gas is also arriving in Hungary via this southern route. An agreement has also been signed with Croatia, allowing for the import of 1.5 billion cubic meters of gas a year through their LNG terminal.

“What will be a problem is the price,” he warned: The government still aims to defend public utility cuts and find alternatives to gas consumption, so it is looking at the possibility of restarting the Matra power plant and reopening brown coal mines; firewood exports have additionally been banned.

The system of public utility price cuts has worked well for more than 10 years, the idea being to set a price for electricity and gas to help families, PM Orbán stated. In 2021, this meant an expenditure of HUF 250-260 billion for the state, but in 2022 this figure would be about HUF 2 trillion, which the Hungarian economy cannot afford at the moment. This is why it was decided that all Hungarian families will continue to receive electricity and gas on a reduced tariff basis, but only up to the average consumption, he explained.

This year, he said, this system can certainly be maintained, but the next time Hungarian economic policy will be in a decision-making situation will be in October, when we will see whether the European economy will drift into a war economy, whether war inflation will be sustained, or whether energy prices will get higher.

On the “inevitability of an economic downturn,” he said that between 2007 and 2009, the government at that time simply “threw up its arms” when economic growth stalled and unemployment began to rise. The current government, however, has drawn up a series of measures to try to fend off the impending trouble. “We will fight the recession, the economic downturn, and we will fight to protect jobs so that people have enough income. We are going to fight against public utilities taking away the entire income of families, and we’re going to fight against a decline in their living standards, so people can rest assured that we're going to make decisions that will try to help the situation.”

Finally, on the drought that is affecting the whole of Europe, Prime Minister Orbán said that reduced exports constitute a loss of income for the Hungarian economy, but “the security of Hungary’s supply is not at risk.” Furthermore, a working group has been set up to take measures to help farmers because “it is in our common national interest that they are able to get along.”