Prime Minister Viktor Orbán on the Kossuth Radio programme “Good Morning Hungary”

25 August 2023

Zsolt Törőcsik: This week the Hungarian Central Statistical Office said that earnings in Hungary rose by 16 per cent in June. which means that in that month real wages were still falling, as inflation was still 20 per cent at the time – although a month later it had already fallen below 18 per cent. So for now Hungarians’ money is still worth less than it was a year ago. But how long will this be the case? I’ll be asking this of our studio guest, Prime Minister Viktor Orbán. Good morning.

Good morning. When it comes to wages, the chant from the B-Centre Stand (at Ferencváros football club) applies: “More, more, more, this isn’t enough!” Hungary has historical disadvantages. Younger listeners might not remember this, but in 1990, when the communists were eventually ousted and the state economic system was dismantled, we switched to an economic system of private enterprise – let’s say a capitalist economy. And back then wages were set at an extremely low level. So in the 1990s, during the transition, Hungarian families suffered a great deal, and they had to cope with very many difficulties, with salaries starting from a very low level. So we have a big historical disadvantage going back to 1990, and the rate of wage increases can never be enough. Perhaps our children will be able to say that there’s the possibility of a more restrained policy on wages, but no matter how much anyone explains it to us, our generation will always think, “Well, look at the Austrians, at the Germans.” There’s a historical differential here. Another thing is that pay increases need to be agreed on by employers and employees, because if they’re badly timed – if pay increases are badly timed – then they can cause unemployment. This is why what the civic government is doing is right: helping employers and workers to negotiate and reach agreement; and unless there’s a big glitch we won’t intervene, but instead we’ll accept their agreement. So much for wages. Now, you’ve accurately said that although there were wage increases of more than 10 per cent or so in the month of July, which is high, the rate of inflation was even higher. So we’re not out of the woods yet. I think that August will be the month in which we see a change setting in, as far as I can see from looking at the figures for the first two weeks of August. I see it being something like 16 to 16.1 per cent. So inflation will be around that level in August, and here wage growth may be at or above that level. Our hope is – well, more than a hope, as we’re working relentlessly, dragging down inflation and pushing up wages – that after August wages will catch up with the rate of price increases. We’re going to have a tough autumn, so a lot will have to be done. No one can announce a result now, we’ll see that in December; but I really hope that the rate of wage increases and the average annual inflation rate will be close to each other. Something that’s also been very important to me has been to open up another historical dimension, one over a shorter time period. Because, looking back, we won the election in 2010, that’s when we returned, and that’s when the national government was formed. Two years were spent clearing up the ruins and the chaos left by the socialists, and from 2012 onwards the economy began to function stably. And as I recall, since 2012 – which by now is eleven years – there wasn’t a year, or even a quarter, when prices rose faster than wages for Hungarian families. Of course people often perceive the opposite, but the reality is that there wasn’t a fall in real wages in Hungary for more than ten years, for eleven years. By contrast, in the first half of this year there was, and it was quite significant. This has put a strain on families’ budgets and created a difficult situation. Energy prices have gone up around the world, the sanctions have arrived, and this has sent Hungarian prices soaring – with wages being unable to keep pace. So the first half of the year was very difficult, and it’s important that the second half of the year corrects the first half. 

If we look at the long-term targets, last week you said that 5 per cent inflation by the end of next year could be realistic. And in recent weeks you’ve also spoken several times about the need to take action against price-gouging multinationals, because they’re one of the reasons that inflation has been so high. Is this something that can be done in the long term? Because obviously controls to curb this can be put in place from time to time, but what can be done in the long term?

A certain part of the price increases, a certain amount of them, could be explained. Hungary imports its energy – its oil and gas – from abroad, and the war caused supply disruptions; and the EU imposed sanctions, Brussels imposed sanctions. Together these two factors sent energy prices sky high. These are very big numbers, and households don’t work with such numbers, so I’ll try to talk in a way that enables us all to understand what we’re talking about. Let’s say that last year Hungary paid 4,000 billion forints more than the previous year for the same amount of gas and oil. This was 4,000 billion without anything having happened, without us having done anything, without us having caused anything. So nothing happened within the Hungarian economy to justify this, and it was solely due to external factors. So 4,000 billion forints left the economy. If that money had stayed here, it could have been used to provide family support and wage increases, or to trigger them. But no, that’s not what happened, and this is the situation we have to face. And there has been a part of the price increases – especially in the last few months – that I see as not being justified. So, after all, prices emerge in the process of commerce, and someone has to organise commerce. And commercial actors naturally expect to make a fair profit that’s proportionate to their work. I don’t think there’s any anti-market sentiment in Hungary: people understand how the economy works, no one thinks that anyone should work for free, but everyone should be paid for their work. Traders should also be paid, and this means a fair profit. But what we’ve seen in recent months – particularly with the big international chains, and for simplicity’s sake let’s call them multinationals – is that they’ve kept their prices much higher than is allowable or acceptable from the point of view of what can be regarded as a fair level of profit. This is why I call them price gougers. So they were acutely aware of the fact that prices were out of control anyway, and that if they could just push a little more at the margins, then people would swallow a higher price for this or that product, even if it was a few per cent higher than justified. And we have to guard against this. There are no magic words that will help here, because this is about money, and obviously the price-gouging multinationals prefer to make more money rather than less, and so it’s very difficult to talk them out of it. It would be a nice world if it worked that way, but it doesn’t. So here the Government had to bare its teeth, show its strength and its claws, and quite simply take action against price gougers; because with families who were already in agony and with a Hungarian economy in such a condition we were faced with situations that were simply unfair, unacceptable, infuriating and outrageous. This is why we gave the Competition Authority teeth and claws and drew up some rules. And this has brought results. And finally, to answer your question, after much deliberation it was decided that next year the Competition Authority will retain the competencies that have enabled it to control inflation and prices this year. So the Competition Authority will have a continued presence in Hungarian commerce, in order to prevent the multinationals from resorting again to these price-gouging tricks.

If we look at the rest of this year and 2024, what are the Government’s other goals, apart from bringing down inflation and raising real earnings? Because although the country seems to be doing well in terms of the labour market, for the time being GDP growth seems to be negative

If I follow your journalistic logic, which tries to get to the heart of the matter in return for accepting some simplification, then your logic suggests that 2023 was the year for dismantling inflation, and 2024 will be the year for resuming economic growth. While we’ve been fighting inflation, while we’ve been pulling on trouser legs and jacket sleeves to bring it down, in the world of money there have also been processes which have led to increased interest rates. And now that interest rates on loans are high, let’s not think, Dear Listeners, about family budgets, about households, but about the world of business, where jobs and income are generated, and where the interest rates on loans available to businesspeople have grown so high that economic actors have no longer been able to responsibly commit to them. If there’s no credit, there’s no growth. Therefore the challenge in 2024 is to relaunch economic growth. And to do that we need lower, sensible interest rates on credit, so that then the engine of the economy will surge back into motion. I think we’ve already seen some promising signs of this in the third quarter and for the fourth quarter, but the real rebound will be in ‘24. So the goal in ‘24 will be to restart economic growth. Of course, neither the economy nor inflation are really about the economy; they’re about people, which means that the economy exists so that people can make a living. This is why the general concern – above all other considerations, above inflation and growth – is the issue of jobs, so that in Hungary every Hungarian can work. We need an economic system that’s independent of inflation and growth, and we need an economy with a logic and a structure – which we call a work-based economy – in which every Hungarian who wants to work can work. Today 4.8 million people – 4,800,000 – are in work. Now I’ll try to think back to 2010, when the lefties called it a day – or the people called it a day with the lefties – and there were between 3.6 million and 3.7 million people in work. Now we have one million more people in work.

You’ve mentioned that last year the country’s utility bill or energy bill was 4,000 billion forints higher, and that in recent weeks gas prices have started to fluctuate again, with analysts warning of further price movements. In these circumstances, do we have the resources to maintain the reductions in household utility bills? 

Well, the Finance Minister is sweating blood. I can’t say he’s always enthusiastic when he sees the figure for the amount of support we’ve paid out from the budget to help families under the heading “reductions in household utility bills”. In the first seven months of the year we gave families 1,078 billion forints in the form of reductions in energy bills. This wasn’t written on people’s pay slips, perhaps not even on their bills – not even on their gas bills. But I always say that today all Hungarian families receive 181,000 forints in support every month in addition to their salaries: their energy bills would be 181,000 forints higher if there were no reductions in energy bills. So it’s a very big problem that the European Union is attacking this. The EU doesn’t agree with the system that we have in Hungary for reducing household utility bills. It’s shocked by this, and it says that less should be spent on it, and families should pay more. And it wants to impose this on us. It’s writing all kinds of letters, making threats and so on. So in Brussels we – and the Finance Minister – must constantly defend the Hungarian cuts in utility bills; because if we don’t do this, then the monthly expenditure of every family will increase by 181,000 forints, and that’s something they won’t be able to pay. Of course I understand why the Brusseleers are upset about the Hungarian system. For them the Hungarian system is an annoyance because, compared with the rest of Europe, Hungary has the lowest electricity and gas prices. The lowest in the whole of Europe! No other country has such low prices. This is a problem for other countries, because if it can be done here, why not there? Moreover, we’re paying the least, while there are many countries in the European Union that have their own oil and gas fields. So they have their own energy sources. They don’t import energy like we do, because we import it all. We provide it at low prices while buying it at high prices – or we buy it at the price we have to on the world market, and now that market price is high. Other countries have their own energy extraction industries, and yet they’re charging their own citizens higher prices, they’re charging more than we are. And people say, “Fine, but if this can be done in Hungary, then why can’t it be done here, Dear Fellow Citizens, Dear Politicians?” And then Brussels attacks us, saying that what the Hungarians are doing isn’t right. So I understand what their problem is, but we can’t let that influence us. So, in defiance of Brussels, we must defend the Hungarian cuts in energy bills.

As you’ve mentioned energy procurement, energy policy was one of the main topics at last weekend’s big diplomatic event, which on the one hand addressed the issue of procurement, and on the other hand that of securing supply. What results were achieved? Has Hungarian supply been assured at affordable prices in the coming period?

Indeed, in order to be able to talk sensibly about energy prices and household bills, first we need energy. Because of course if there’s no energy we won’t pay for it, but then the country will come to a halt: the economy will come to a halt and households will come to a halt. So security of supply – politics uses this piece of bureacratese – takes precedence over all other considerations. I think Foreign Minister Szijjártó is absolutely right in this. This is his job. Although we have a minister responsible for energy, the minister responsible for the procurement of energy sources and for international negotiations is the Minister for Foreign Trade. And to date he’s done a brilliant job. Now of course ordinary Hungarians don’t know much about this, because the situation was simple before, and now it’s more complicated. Perhaps they remember the simple situation: we reached an agreement with the Russians, the gas came here by pipeline via Ukraine, we paid for it thank you very much, and everything was fine. Now Brussels is imposing sanctions on the Russians, we’ve had to fight for an exemption from them, and we’ll have to maintain this for years to come. And then the Ukrainians said that they’ve had enough of this, and so the gas is coming in much smaller quantities – and now they’re saying that in 2024 it won’t come at all. And, of course, there’s the problem of the Nord Stream pipeline, through which gas was still coming from Russia to Europe, until it was blown up. I won’t go into the detective story of who blew it up, because everyone who listens to this programme knows that it was blown up, it was ordered to be blown up, and large quantities of Russian energy were prevented from reaching Europe. As we’re continuing to import gas, what did the Hungarian government need to do? We needed to find another route. That other route is from the south. And this also explains the group of guests, the major diplomatic activity that we’ve been conducting in the past few days, taking advantage of the World Athletics Championships. Turkey comes to mind, of course. As Turkey has no gas and oil production of its own, no one thinks of it as a key player in Hungary’s energy supply, but this is indeed the case. So the tap which we used to say was in the hands of the Russians and the Ukrainians is now in Turkey’s hands, and the situation has changed. Today the tap is in the hands of President Erdoğan. All the gas we can import from the south comes through Turkey. If he closes this, there’s no gas. If it’s open, there is gas. Therefore, if we want to be treated favourably in terms of energy policy, it’s essential to reach an agreement with the Turks, to be on good terms, to accord them respect and to cooperate with them in other areas. So Turkey is the key country. Some of the energy entering Turkey comes from Azerbaijan. The President of Azerbaijan has also been here, and Hungary is also buying gas from Azerbaijan. And gas is entering Turkey from every other direction – even from Russia. The situation that the Turkmen have found themselves in is that they used to be able to sell gas to China, from one of the world’s largest gas reserves. But now that Europe has cut itself off from Russian gas and Russian gas has gone instead to China, Turkmenistan is also suffering from disruption and problems, and it wants to provide gas to Europe. This is good for us, because we need it. In this respect I also think that the major programme currently being developed is important. This will involve the production of huge quantities of electricity in Azerbaijan, which we can transport to Europe by cable, by undersea cable, so that it can go from Azerbaijan to Georgia, then under the Black Sea to Romania, and from Romania to Hungary. There’s this cooperative project and major plan, involving four countries, to enable us to import electricity – not only gas, but also electricity – cheaply from Azerbaijan. And if you’ve been following the news over the last two years, you’ll have seen that the big boys – including even the German chancellor – have been queuing up to visit Qatar, in order to enable European countries to buy shipborne gas. I, too, have negotiated on this matter, in three rounds: I used the opportunity provided by the World Cup to negotiate with the Emir when I was there; I went out in May this year to take a step in that direction; and now the Emir has reciprocated that visit and we’ve agreed on how gas will come from Qatar to Hungary – on ships, and then via Croatia.

Incidentally, news reports in recent weeks and months have shown that practically the whole of Europe has turned its attention to Central Asia and the Middle East, because it’s from there that they’re trying to replace the energy sources which have been lost as a result of the sanctioning of Russia. Does any advantage accrue from the fact that Hungary has in effect been building up its relations with the East for more than ten years? 

A huge advantage. We don’t have much time and I don’t want to digress, but I always say that a country the size of Hungary can’t afford to be stupid, and its leaders shouldn’t be chosen from a pool of such people. We’ve tried that before, and it didn’t work. So the strength of a country the size of Hungary resides in its intellect, because intellect confers foresight and speed. And a head start is gained over the big ones, for example, by those who are quicker to see what’s going to happen, are quicker to understand it, are quicker to make a plan, and are quicker to adapt. Indeed, the value of Central Asia is now beginning to rise. Looking back, for years the Hungarian press has been mockingly asking why we’re involved in cooperation with the Turkic states. Why on earth, they say, do we need to be friends with the Turks, Azeris, Uzbeks, Kyrgyz, Turkmen and Kazakhs? But it’s perfectly obvious that this region will play a decisive role in the next decade. Not only in energy, which is also important, but, for example, a large Hungarian bank has ownership interests in Uzbekistan. And there we see an economy growing at a tremendous pace. We’re now seeing the benefits gained from more than a decade of building friendly relations that can almost be called brotherly, based on shared origins and a shared past – and relations that are therefore culturally well-established. So we’re several years – even a decade – ahead of others, and very considerable economic advantages have resulted from this speed and foresight. Only the big ones can afford to be slow and stupid, because they’re big anyway, and they’ll manage somehow. But in our case we have to think and act differently. It’s the same with the arms industry. We’ve just handed over a huge factory in Hungary that produces one of the most modern pieces of armament in the world. Now everyone’s running around in a frenzy, but we didn’t wait for the war to break out before starting to develop our arms industry. In 2016 and 2017 we were already concluding strategic agreements that are now coming to fruition on the production lines. So speed and understanding of the future are important. This is a fine task for Hungarian politics, and in this sense the Opposition can contribute to the country’s performance. Because if we need to think about what the future will bring, it’s not a question of power: thinking isn’t a question of power, but a question of ambition, desire and resolve. Anyone who has a desire to understand the world can participate in the discourse that helps us to understand the opportunities facing Hungary. I’d rather not comment on whether this is the case now, but if the Opposition helped us have good, high-quality debates, then, despite the overall dispiriting role and impact of the debates, it would be good for the country as a whole.

Incidentally, the occasion prompting the recent major diplomatic activity was the World Athletics Championships. Last week you said that sporting events are what draw the world’s attention, that Budapest is the capital of a nation that needs to be visited, and this is what Hungary wants to show the world. Today is the seventh day of the World Athletics Championships. Do you think that this statement has been confirmed?

There are people who are better qualified and more eligible than I am to comment on that, and I think it’s worth listening to the President of World Athletics and the members of the Hungarian organising committee, because they have sufficient experience. I’m following the events, I’ve been out there, and I’m following what’s happening every day. What I see is this. The stadium is fantastic. And not just because it’s impressive or makes a big impression on you, but also because it’s friendly. So if you’ve been out there at any of the events, you’ll have seen that somehow bad feelings are left outside the gates. This is despite the fact that there are major competitions taking place inside. Somehow the spectators and the competitors are in the world of fairness that the whole sport was invented for. So it’s a world of courteous generosity, in which you’re glad at the success of others. Of course we’re happy for our own success, and I congratulate Bence Halász and all the members of the Hungarian team. But we’re happy for the success of others, for the records achieved by others, we’re happy to be here, and we’re happy to be together. The whole space operates according to a logic which is completely different to that of the world outside the athletics stadium. So I see these World Championships as proof that sport can make a very positive contribution to the quality of life, not only in terms of health, but also in the spiritual dimension: it forms and builds community, and creates shared experiences. And in this respect I think our stadium and the event itself are among the best in the world. As I see it, the athletes are promoting the good name of Hungary, and when I ask what the impact of the World Championships is, the only responses I receive are that the athletes themselves are using superlatives when they talk about Budapest and the Hungarians. We seldom see this, because we tend to focus on our shortcomings and deficiencies; but it turns out that now foreigners are telling us that we’re truly attractive, we can conduct ourselves well, and we’re good hosts. This is a decent country, where everyone’s welcome. It’s a friendly country, and let’s say that it’s a country where the Christian roots of love still exist, and therefore fellow humans who are complete strangers can be part of the Hungarian community’s life, at least for a week. This is a great thing, which isn’t true in every country in the world. And if I look at the whole thing from a slightly more distant perspective, this whole construction of sports venues and international sports diplomacy, I can see that the world really is paying attention. But I can also see that life outside sport is also going on in these venues. I’ve just counted that this year in the Puskás Arena, the Puskás Ferenc Arena, there have been more concerts than there have been football matches. So the gripe that it’s a waste of money, that it’s just about sport, that it’s just a hobby for a few people – including the Prime Minister – simply isn’t true; because outside sport these community spaces serve all well-intentioned Hungarians, providing spaces for cultural events, conferences and huge events. The flow of cultural productions from the Western world doesn’t stop at Vienna, but now comes to Budapest.

The questions I’ve been asking Prime Minister Viktor Orbán have included those relating to inflation and wage rises, the major diplomatic activity in recent days, and the World Athletics Championships.