Zsolt Törőcsik: The Government has decided on the size of the pension supplement, which means that in November those affected will receive an average of half a month’s pension more than the median pension. This was announced yesterday by Prime Minister Viktor Orbán, whom I welcome to the studio. Good morning.
Good morning.
Yesterday Gergely Gulyás, the Minister in charge of the Prime Minister’s Office, also announced that the increase will cost 190 billion forints. Obviously no one would dispute the justification for this in terms of showing appreciation for pensioners, but can the budget afford this now?
No. At first glance, one would say that it cannot afford it. Obviously your listeners can’t be expected to have this background knowledge, because whether we’re young, elderly, pensioners or hoping to receive child support, if we look at the Hungarian budget from a suitable distance, we always plan for a deficit. So after all it’s absurd that Hungary generates a certain amount of money in a year, and every year we spend more than we generate. There’s a difference between the two. This is why they say that the budget deficit is this much, that much, or whatever. And of course the difference needs to be eliminated somehow, and this is why we take out loans, which we then roll over for a long time. We’ll be a very strong, very stable and happy country when our listeners hear that the Hungarian budget has been closed out in surplus: that it produced more money than it spent, and even created reserves – or lent to others for interest and so on. But the Hungarian budget isn’t like that. And it hasn’t been like that since the communists. So it was ruined at some point in the communist system. Since then we’ve been rolling the budget over. And therefore at first sight if we were to look at all this spending just through the eyes of an economist – as the Left has often done, and Lajos Bokros was the champion of this, but there are also some other heroes who have distinguished themselves in putting the squeeze on people – the argument is always, “Look at the figures: we’re spending more than we can produce, so let’s not give it away.” Yes, but life doesn’t work out like that. You can’t do this to people who have done decent hard worked for forty or fifty years, who received relatively low salaries in the socialist era or in the turbulent years of transition, on the assumption that in return they’d be secure in their old age, because they’d have money, receiving it as a pension to give them that security. And then suddenly we say, “You know, we need to consider rationality and reason, and so you won’t get it after all…” So that’s what the Left does. But as the national government we’ll give this; because although numbers are important, they’re not the most important thing, and we don’t think in terms of them, but in terms of the nation, the country, people and families. This is why, in the Gyurcsány era, they took away a month’s pension, and now – despite the war and the COVID crisis – we haven’t taken a penny, and we’ve always given everything that was due to pensioners. So, as you say, if we ask the question of whether we can afford it, the answer is no. If the question is whether we have to do it, the answer is that we have to do it, and that from time to time it’s the job of the Government to undertake such impossible things. I’d like the country to feel some pride in the fact that in times of war we’re able to maintain the security of pensioners. This isn’t self-evident, not all countries are doing so, and in many places pension increases have been far below inflation. Hungary is one of those countries where pensioners have certainly been given priority, war or no war, and they’ve got what was due to them. The Government has an alliance with pensioners, an agreement dating back to 2010. They’ve always supported us, pensioners are overwhelmingly in favour of the national government, we’ve undertaken to preserve the value of pensions, and what was taken away in the Gyurcsány era will be given back. We’ve restored the annual thirteenth month’s pension. And now, when the war broke out, energy prices spun out of control, and there was inflation, but it didn’t even occur to us to take back the thirteenth month’s pension that we’d given. And the increase that we’re talking about now – which we’re not giving only in November – will be built into pensions over the coming months, because from January we’ll be setting next year’s pension increase by building the amount we gave in November into the base that we’re increasing.
Obviously another reason this is needed is the high inflation that the Government continues to fight. The latest forecasts suggest that inflation could be in single digits by November. And in this studio we’ve talked a lot about the reasons for this, whether it’s the profit hunger of the multinationals or the increase in energy transit fees. What do you see now as the biggest risk, the biggest danger, to curbing inflation?
Well, you learn a lot when you’re faced with such difficult challenges, such as the war and the sanctions in Brussels, and the resulting rise in energy prices. For a while we were going down the traditional path. The textbook way of dealing with inflation is that you have the Government and you have the Central Bank: the Government behaves sensibly, and the Central Bank deals with inflation because it has the tools to reduce price rises and preserve the value of money. The Central Bank has a lot of knowledge: complicated mechanisms, interest rate policy, the exchange rate. So there’s a lot to look at. It’s no coincidence that the best-paid government employees in every country in the world are always in central banks, because that’s where the most sophisticated financial knowledge is. And here, we did the same thing. So the inflation target is for the Central Bank. But after a while I had to admit that it wasn’t going to work. So the Central Bank exhausted all its options in the fight against inflation. This isn’t the Central Bank’s fault, because it only has a pocket knife, and inflation has grown into a tree. While it was just a bush, the Central Bank could deal with inflation with its knife, but now that it’s grown into such a huge tree, what’s needed is an axe. Well, the Central Bank doesn’t have one. The axe is in the hands of the Government, so in the fight against inflation it’s had to take over tasks and responsibilities from the Central Bank. And we’ve taken a big axe to chop away at inflation. And then came the price caps, and then came the interest rate freeze, and then came the compulsory competition or price reductions, and the online price monitoring system. We started to squeeze: we grabbed the multinationals by the ear and said, “My Dear Friends, these are unjustified increases, and so after all…” The Competition Authority, which also has a considerably large axe, has got to work and we’ve been trying to restore order. So we’ve dealt with it in a way that departs from the use of traditional instruments. This isn’t that easy, because the world doesn’t like it. So the world has got used to central banks sorting things out, with governments preferring to be cautious, avoiding the role of action movie heroes, and instead waiting for central bank approaches to take effect in bringing inflation down on their own. But we couldn’t allow that in Hungary, because we’re more exposed to energy prices than anywhere else in Europe. We had to intervene directly. With respect I can report that we’ve succeeded. The wielding of the axe has delivered the expected result, and inflation has been cut. As I see it, our goal is for this year, 2023, to be the year of disinflation, and for inflation to be in single digits – below 10 per cent – by the end of the year. The Central Bank says that next year it will be somewhere around 4–6 or 5–6 per cent. It has the best forecasting system, so we’ll rely on that. So we’ve done that, I think. That’s not the question now. We’re beyond that. The question is when we can start to see wage growth. And this is the question: Can we start the economy growing in parallel with wage growth, and can we start the economy growing in parallel with improved competitiveness? And on these three questions, I look to the future with great optimism, with great hope: my answer is “yes”. So my view is that in August, perhaps, but certainly in September, wages increased more than prices. So the process of wage increases has begun. I see that in the third quarter – which is now coming to a close – economic growth is already in positive territory. So growth has started again, and the same will be true in the fourth quarter. I’ve seen economic forecasts from major global companies, which say that next year Hungary could easily have the highest economic growth. And I see that Hungarian companies have adapted well to the energy crisis, are producing ever more efficiently, and have modernised their production and energy systems; and so over the past year the competitiveness of the Hungarian economy has increased. So all of this together gives the chance and the hope that enables me to say that 2024 will be the year of rebuilding economic growth.
Obviously there’s no doubt that the main cause of the problems that we see and that we’ve talked about so far is the Russian-Ukrainian war. In the last few weeks there’s been a certain loss of confidence in Western societies – and even in neighbouring countries – about supporting the war, and we’ve also seen Kiev/Kyiv kicking up a fuss against Warsaw, one of its most important allies. Where do you think this loss of confidence in the West about Ukraine is leading?
When we find ourselves in the middle of international conflicts, such as the way we’ve been assessing the war since it started, there’s an immodest phrase that we use to encourage ourselves. Hungary saw this war differently from the rest of the Western world. We said that it wasn’t our war: it was a fratricidal Slavic war between two countries. There’s no doubt that one has attacked the other, but because it’s not our war, it’s in the interest of us outsiders to localise this conflict, as we say: to isolate it, to separate it, to prevent it from spreading further. And all the countries of the Western world have said, “No, we must globalise the conflict, we mustn’t isolate it, but expand it, we must get involved, because this is our war too, and we must contribute money, weapons, and so on.” And from the beginning we said that this is a completely misguided idea, mainly because you can enter a war – there are such wars, although it’s better to avoid them – if you can say what your goal is. And you can do this if you’re able to say what means you’ll use to achieve that goal. And is your goal high enough to be worth risking – and even losing – lives? And are the means that you want to use in this war realistic? If you don’t have the answers to these questions, then don’t even think of getting involved in a war, because your citizens will die, your soldiers will die, your people will die, and in the end the politicians won’t be able to account for these lives. And I felt that those in the Western world – who are far away from this war, while we’re close and understand what it’s about – haven’t done these sober calculations. So I continue to have the worst possible feelings about the war. The front lines aren’t moving, yet tens of thousands are dying. Without knowing where it will end, we see orphans, widows and people who are seriously injured or crippled for life. Meanwhile there’s a constant danger that increasingly modern, new, more dangerous weapons will be used, the effects of which will no longer be confined to the front line, but could reach those of us who are on the side of peace. This is what war looks like. So the saying I wanted to quote here is the one we use to reassure ourselves that the Hungarians aren’t right, but will be right. And unfortunately, we’ve been proved right about the war.
But meanwhile there’s also a process that’s bringing Ukraine ever closer to the European Union. You have Ursula von der Leyen, the President of the European Commission, talking about how she’s amazed that Ukraine’s able to implement the reforms necessary for EU accession while fighting a war, and yesterday Ukrainian prime minister Denys Shmyhal told Politico that his country will be a member of the EU in two years’ time. Do you see this as a realistic prospect, and what’s the Hungarian government’s view on the matter?
If we ask the question in such a blunt way, as you’ve just done, I can answer it in terms of whether Ukraine will become a member; and I can say that all EU Member States must consent to this. Some Member States need referenda, while others only need decisions in their parliaments. I look at the Hungarian parliament and I don’t see an implacable desire in the Chamber for the Hungarian parliament to vote in favour of Ukraine’s membership of the European Union within the next two years. So I’d be cautious about these ambitious plans. This is understandable, because in Brussels in the autumn when we have substantive discussions on the future of Ukraine we won’t be able to avoid the question of whether we should seriously consider membership for a country that’s at war, and whether we should start negotiations with a country that’s at war. It’s in a territorial war, so we don’t know how much territory this country has, because it’s still at war. We don’t know how big its population is, because they’re fleeing, and the whole European Union system is based on the sizes of countries’ populations. This is the basis for distributing responsibility, and this is how we distribute development funds. It would be unprecedented to take on a country without knowing its parameters. So I think that we have to answer some very long and difficult questions before we get to the point at which we can even decide to start negotiations.
Meanwhile, Brussels is also asking Member States to give more money than they currently do to support Ukraine. And yesterday Gergely Gulyás said that in negotiations on the allocation of EU funds to Hungary the European Commission is asking delaying questions. Why do you think Hungary isn’t receiving or hasn’t received the EU funds it’s entitled to?
So we’re talking about two things. One is the money for the Ukrainians, and the other is the money for the Hungarians. And then the question is whether the two are related. As far as the money going to the Ukrainians is concerned, we’ve simply run out. So I don’t see any possibility of giving money to Ukraine, because we don’t have any either. And that’s not just true of Hungary – the EU doesn’t have any either. The EU is also short of money. So in order to give money to anyone, the Member States have to pay in more money, and the Member States that so far have been receiving money from the EU will have to give up that money. This means that if we want to give money to Ukraine, we’ll have to pay more and get less. Hungary’s one of the countries which, in terms of the amount of money it pays in and the amount of money it receives, ends up with a positive balance of around 2 billion euros a year. We’ll lose that. So we have to be straightforward: the fact is that if we give money to Ukraine, we can’t give money to Poland, Hungary, the Czech Republic, Slovakia and Croatia: we can’t give money to the less developed countries, because we don’t have money for everything. So we have to take account of that. This is why I’m cautious about giving loans or money to the Ukrainians. In Brussels, of course, the answer they give is to take out a loan. But I grew up and lived under socialism for twenty-six years. Well, that’s what they did then: “Let’s take out a loan!” Who’s paying for that now? We are! So anyone who takes out a loan, not for ourselves, not for the European Union, not to make ourselves more competitive, not to develop the European economy, but to give it to someone else, who we know will never be able to repay it – at least not even in the lifetime of our grandchildren – is accepting that we give our children’s and grandchildren’s money and future to someone else. It can be done – but let’s just be honest about it. I wouldn’t support it, and I wouldn’t suggest that we do it. The other question is, this: why aren’t we getting the money? Maybe some of it’s already in Ukraine. So when we don’t even have enough money to give Ukraine the sums we’ve already promised, and then we promise more, and there’s someone who hasn’t received their money, then it’s reasonable to suspect that the money might no longer be there. We don’t know this definitively, because Brussels isn’t speaking clearly on this matter. What I see is that there’s a delay. Brussels owes Hungary approximately 3 billion euros, because we always pay what we have to pay: prompt full payment means long-lasting friendship. And if one doesn’t pay there are also heavy penalties. Coercion and good faith push in the same direction. So we pay what we have to pay, but what they should give us doesn’t arrive, and thus a debt is created. Brussels owes Hungary more than 3 billion euros! This isn’t child’s play, because at the rate of 400 forints to the euro, that’s 1,200 billion forints; and this is a considerable sum for an economy the size of Hungary’s. Now they’re stalling for time. So now they’re not saying that they won’t give it to us, but they’re saying that they’d like to raise a few questions about the functioning of our judicial system. We’ve just received nine questions. Among them are these: “Is there enough office space for judges?” and, “Is Item A accounted for separately from Item B?” So one can ask such questions, although of course they really have no business asking them, because according to the EU Treaty these questions aren’t relevant here. But even if we ignore that and accept their pettifoggery, these questions are frivolous. So now the whole debate is absurd. Everyone feels that Hungary has fulfilled all its commitments, but Brussels doesn’t want to give us the money, and to buy time it’s using objections cooked up in desperation. Now if you were to ask me when this will end, or how long it will last, I’d say that I might not be able to defend my answer in open debate, and so I’m cautious about giving this opinion; because I believe that the Brussels bureaucrats are waiting for the result of the Polish elections. Let’s be under no illusions, the Brussels bureaucrats want to bring down the Polish government: they want a left-wing government in Poland. They’re doing everything they can to achieve this. We don’t know whether they’ll succeed. The Polish people are facing very serious dilemmas. The elections are in the middle of October, and in Brussels the hope is that if there’s a left-wing government, Hungary will be left alone and it will be easier for them to deal with us. But if the conservative government stays in power in Poland, then nothing can be done: the two countries will always defend each other, and then Brussels will have to give way. I think that it’s the outcome of this question that will accelerate the decision on the fate of Hungarian money, one way or another.
Therefore this case is still on hold for the time being. But there’s another EU issue that’s seen a turnaround, and that’s migration. This week Germany made a U-turn, and now it supports the passages in the Migration Pact that it had previously objected to. Now it’s the Italians who have asked for a little patience. Can progress be made on this issue with Berlin’s support, but despite the objections of the V4 – including Hungary?
This isn’t a step forwards, it’s a step back. This migration pact is a step backwards. This is the biggest question relating to our future. In politics there are always imminent threats. For example, we talked about the budget deficit, and whether pensions can be paid. And then there are longer-term permanent threats. Migration is one of these. Here we’re confronted by a historical process. If we look at European history, we see that on the two sides of the Mediterranean there are different demographic rhythms, with large increases in population on one side of the sea or the other – or what demographers call “surplus population”. And then they start to migrate. There have been times when we’ve gone down to the southern side of the Mediterranean, and other times when they’ve come up. Now we’re living through a time when they’re coming up. And this is a constant threat to us. This is a challenge that the European Union cannot deal with, because it doesn’t look at this issue from the horizon of history, from the horizon of children and grandchildren, from the point of view of their future, but from the day-to-day perspective of human rights. This is a mistake! We must stop this process. Migration is wrong. It’s dangerous. It involves crime, it involves acts of terrorism, it involves clashes between civilisations, between groups of people with different conceptions of life. For a long time this was able to remain a hypothesis; but as migration has become such an invasion since 2015, and daily experiences and facts are available, it’s is no longer a hypothesis, but a fact. There is crime, violence, the inability to coexist, and conflicts that we can’t manage. Hungary wants to avoid this. Let us thank God that for various reasons – including the courage of the Hungarian government – we’ve been able to protect ourselves against migration so far. Moreover, we’ve done so while there’s a lack of unity on this in Hungary. I think the majority thinks what the Government thinks, but in politics there’s no unity. The Left is pro-migration. So I look at the debates in Brussels, where all the parties from Hungary are represented, and I see that the Hungarian left – and even the Hungarian left that calls itself right-wing, because there is such a feature in our world – is out there voting for motions that seek to manage migration, not stop it. So they’re consenting to decisions there in the European Parliament which actually stimulate migration, even if they don’t talk about it much at home – although sometimes the cloven is revealed here too. There’s only one way to stop migration. A library of literature has been written, I know most of it, I’ve been involved in debates on this for over ten years, and there’s hardly an argument I haven’t seen. And I’m convinced that the question is a simple one: if you want to defend yourself against migration, don’t let in migrants. You can complicate it, twist it and contort it, but this is the bottom line. This means that you should only let people into your own country if they’ve made a prior application, you’ve assessed it and you’ve given a positive response. And then you can say, “Knock on the door, we’ve assessed your case, Dear Friend, you can come in”, or “You can’t come in.” But if you let them in first and then start procedures later, how are you going to send them away? You can’t! This is what the migration crisis is all about. So it’s a very simple thing, but it requires determination. But just because something’s simple doesn’t make it easy. It’s simple and difficult. This is what needs to be done. You have to say no. And if you say no, then they won’t come, they won’t leave home, they won’t drown, and there won’t be such human tragedies. So then we can say that we mustn’t bring the trouble here. To this the people on the other side of the Mediterranean will say, “Fine, but then bring help here.” The EU isn’t doing this, but it’s what we should be doing: we shouldn’t be bringing trouble here, we should be taking help over there. The biggest problem is in the Sahel region, where there is upheaval that’s pushing people northwards to the southern shores of the Mediterranean. We’re ready to participate in stabilising the situation in these zones, including the Sahel, and to provide economic, medical and military assistance. Negotiations are underway. So we want to solve the migration problem, but not by letting them in. The most painful thing isn’t the Germans’ about-face, because now – and since the Second World War – Germany is a country with limited autonomy: that’s how it is if you lose a war. What’s surprised me is that the Slovaks have switched sides. So Slovakia had always been in line with the Hungarian and Polish position. The Czechs had already shot themselves in the foot earlier. I made a bit of a joke about them, perhaps unfairly, and they snapped at me for it: I said that they’d tied their horses to a burning stable, but that was their problem. But the Slovaks are our neighbours, they’re a sensible people, and the Slovaks have always been part of the Polish-Hungarian joint position on migration. And yesterday, or the day before yesterday, I saw that the Slovaks have suddenly backed down on this. This is a problem, because cooperation between Poland and Hungary on migration is only successful if there’s geographical continuity, if we can guarantee and secure a lane: Poland, Slovakia, Hungary, then down to Croatia. This is the migration frontline. If any country jumps out of this, there will be trouble.
In the last half hour I’ve been asking Prime Minister Viktor Orbán about subjects including the pension supplement, the fight against inflation, the discussions with Brussels, and migration.