Zsolt Törőcsik: The Government has held a three-day external meeting in Geszt this week, where several important decisions were made. In addition to the economic programmes already announced, the Cabinet assigned new tasks, which will also serve to promote economic growth and implement the policy of economic neutrality. This will be the subject of some of my questions for Prime Minister Viktor Orbán. Good morning.
Good morning.
Before we get into the details, let’s step back a little. On several occasions you’ve said that the Government’s goal is to achieve economic growth in the 3–6 per cent range. By contrast with this, in the second quarter of this year growth was 1.3 per cent, in the eurozone it was 0.6 per cent, and the German economy was stagnant. And French president Emmanuel Macron told a conference recently that, if it continues on its current economic path, the EU could be dead within two or three years. How can such growth be achieved in these circumstances?
In such a situation, this is what sportspeople say: “To win from such a position is a beautiful thing.” As regards the government meeting, with your permission I’ll say a few thoughts on that. This was a multi-day government meeting to launch the autumn session. We do this regularly, once in the autumn, once in the spring: at least once in the autumn and once in the spring. This is about specifics, of course, and we’ll obviously talk about those, but from my point of view – or from the point of view of the Government’s functioning as a whole – it’s more a matter of settling on the proportions. This is because politics and governance is the sort of work in which you have a lot of different kinds of issues coming before you, and you have to decide what’s important and what isn’t; and you have to decide what you’re going to spend time on, and how much. And now there’s the huge temptation for Hungary to turn its attention to foreign policy and international affairs. After all, there’s a war going on, a Russian–Ukrainian war between Slavs, there’s the Middle East, Iran–Israel, and Hungary holds the Presidency of the European Union. As President Macron says, there are problems in Europe – in Brussels too – that we should be concerned about. So there’s a natural temptation to concentrate on foreign policy. But at the same time we must look after ourselves first and foremost; and for us, looking after ourselves principally means the economy. So we mustn’t get sidetracked, and must continue to focus most of our energies on domestic affairs, on the economy, on economic policy, on economic measures, on everyday life, on families, on jobs and on pay. And we must set these proportions in terms of the whole government and in terms of ministries. This is now the task. In the next six to twelve months we’ll be going through each ministry one by one, looking at what the challenges are, putting them in order, and asking ministers to deal with different issues in such an order and with such a weighting. Now, if we’re talking about the economy, then what you’re saying is that the European Union has taken a decision which seems to have sealed its own fate in terms of competitiveness, growth and development. “Seems to have sealed” means it’s bringing them to an end. This is an economic cold war. So let’s speak frankly: President Macron – who speaks a silkier language, because he’s French, after all – has gone so far as to use the expression “to die”. In these circumstances we Hungarians shouldn’t be timid, but should make it clear in our own style that what we’re doing – or what’s being done to us, or what the European Union’s doing – is an economic cold war. If I’m not mistaken, today the European Union will be deciding on whether or not to impose punitive tariffs on the Chinese economy, tariffs which we’re opposed to. And if I’ve read the news correctly, even the Germans are opposed to them, as are several countries; but I see that the majority is still in favour of imposing them. This will be the next step in the economic cold war. This is the worst thing that can happen to Europe at the moment; and while it’s their problem, it’s also our problem as Hungarians. Because, after all, the Hungarian economy is based on us producing many more products here than we Hungarians need, and selling these products to the world for good money – usually at a considerable profit. We always sell more than we import. We gain a surplus from this, we live off it. If world trade is paralysed, if there’s a cold war, if it’s divided into a Western and an Eastern bloc, then it will become increasingly difficult to sell our products – from cars to food products. This will have an immediate and negative impact on the daily lives of families, with no growth. If there’s no growth, jobs will be lost, unemployment will return, and wages and salaries won’t rise, but fall. And so on and so forth. So an economic cold war is a huge threat to Hungary, because we, as an export-oriented economy – this is our jargon for it – will be the first to suffer. We must fight it. This is not because it’s an international political issue, but because it’s the issue most closely linked to the quality of the everyday life of families. This is why we’ve introduced and are now building up a policy of economic neutrality. Because if you don’t want a cold war, what is it that you can want? Well, then you want neutrality: you don’t want to be stuck in either bloc, you want to trade with both, you want to maintain economic relations with both, you want to look in both directions for the chance of asserting your own interests. This is economic neutrality. Now the groundwork for this is being laid at both the intellectual and planning levels. What follows from economic neutrality? Neutrality of markets, neutrality of investments, neutrality of financing, neutrality of energy, and the neutrality of technology. And then there are the measures that the Government is now putting together, or has put together at this government meeting in the middle of the week.
We’ll talk more about this in a moment, but the political dimension appears everywhere. And we can see that bloc formation was a political decision from the West. In political terms, Hungary belongs to the Western bloc. What debates can the strategy of economic neutrality generate?
It’s creating huge debates, and when now we see that our backside’s being kicked, we’re being pulled about by our jacket lapels, or our shins and ankles are being bitten, then this is the reason for all of this. So if you try to find a logical connection between what the German, French or American ambassadors have been saying recently and what’s been said in Brussels to attack Hungary, if you look behind the words, you’ll see that behind all the attacks is an attempt to divert Hungary from the path of economic neutrality and to beat it back, to batter it back, to force it back into the bloc where they are – to where, I believe, there’s no growth, no development, and no future. This is why we don’t want to go back to that bloc, but want to be where we are. Because if we can do it well, through a policy of economic neutrality we can raise this year’s growth rate of 1 or 1.5–1.8 per cent to between 3 and 6 per cent next year. This means growth, jobs, rising salaries and more public revenue; and then we can give public sector workers some money, a pay rise. So I’m convinced that economic neutrality will bring the development that leads to prosperity and a higher standard of living. Therefore we mustn’t allow ourselves to be pushed back into the bloc. The question is whether this is possible.
Indeed.
I’ll come back every week or every two weeks and tell you how the fight is going. They won’t automatically accept that this is Hungary’s position. We must stand up for ourselves, we must defend this position, we must fight for it, and we must succeed; because after all in politics the most important argument isn’t the size of your muscles, but success, and the result of what you say. If next year we have growth of between 3 and 6 per cent – or 4 per cent, to be modest – and they have zero, 1 or 2 per cent, then it will be very difficult to say that we must return to the bloc, because then we’ll ask why, as what they’re doing won’t be producing any results for them. So success will protect us, we need success.
On what basis can the Government do this, or can the Government start this work? So how do you see the Hungarian economy now?
There are some areas in which the conditions are good, but we also have some difficulties. For example, tourism is having a record year, and our food industry is in good shape. At the same time our automotive industry isn’t in the best of health. Because if there’s no growth in the West, where we want to sell our cars made here in Hungary, if there’s no one to buy them, then we can’t sell them. Then three work shifts will become two work shifts, one million vehicles will become 800,000, a new model won’t be introduced now but in two years’ time, and the whole thing will slow down. What we’re seeing now isn’t favourable for us. So, in terms of the car industry, the European market is creating a serious handicap for us now. But that will change. So everyone agrees – and I say this after having talked to the car manufacturers – that it will change. Overall, when talking about an economy, the most important question is whether people have jobs. We don’t think about it today, but when we returned to the helm in 2010, Hungary had an unemployment rate of 12.5 per cent: 12.5 per cent! Twelve out of every one hundred people didn’t have jobs. It wasn’t that they didn’t want to work, but that they just didn’t have jobs. By comparison, we’re now at a point where everyone has a job. There are sixty to seventy thousand job vacancies. There are more jobs in Hungary than there are Hungarians willing and able to work. So the most important thing is to maintain this characteristic of the Hungarian economy, its ability to offer its citizens at least as many jobs as there are people available for them. This is a fantastic success, but now everyone takes it for granted. But they shouldn’t, because it’s a huge achievement for the Hungarian economy, Hungarian businesses, Hungarian investors and, of course, Hungarian workers. Because we mustn’t forget that although the investments that create jobs are made by businesses, the reason that businesses make investments in Hungary is because of the workers – because we have high-quality, skilled and disciplined workers. If the Hungarian workforce were of lower quality, the rate and level of investment would be much lower. So the quality of the workers has a lot to do with the fact that there’s growth in Hungary. In this sense, the division of the economy into capital and labour should not be mechanical, and to set them in opposition to each other would be tragic. So this part is fine. There is, of course, the problem of wages, because the biggest punch to the ribs that we’ve had in recent years has been high inflation. There was war, high energy prices, sanctions, and then prices ran amok everywhere and people suffered as a result. And we brought them down, with great difficulty – initially to below 10 per cent last year, and now we’re somewhere around 3.5 per cent. But this doesn’t mean that prices have come back down – it just means that they’ve stopped rising. So we’ve been able to protect people, or we’ve been able to protect ourselves, from prices continuing to rise at a high rate. We can’t regulate prices centrally, or at most only temporarily. This is what we’ve done. So when there’s a very big problem, there’s a price freeze and price regulation. But this isn’t good for the normal functioning of the economy, and so it can’t be maintained in the long term. In the longer term, the only way we can help people against high prices is to have an economic policy which firstly gives everyone an income, in other words a job; and secondly which gives employers the ability to raise wages. And if wages are higher, it’s easier to pay even high prices. I can help in this way. I cannot promise to bring prices back down to earth, because that would destroy the economy; quite simply, price controls are only possible in periods of extreme crisis, for a short period of time. In the longer term, what will help most is maintaining or increasing the rate of wage growth. To do this we need to reach an agreement with employers and employees. Because it’s not the Government that determines how much growth the economic players can tolerate – that was thought to be the case under socialism, but it wasn’t the case back then either. In fact what the economy can tolerate is determined by two main players, the two main actors: those who provide the work and those who do the work. If they can agree on a high wage increase, then we’re in God’s own country. We have ambitious goals. So in the government meeting we talked about how to achieve a minimum wage of 1,000 euros [per month] and how to achieve an increase in the average monthly wage from the current 600,000 forints to one million forints. So we want to get to the point at which the average wage, which today is something over 600,000 forints, is one million. We want to achieve this within two or three years. This is possible if we can reach an agreement with employers and employees, who of course are always asking the Government for something: tax cuts, this, that and the other. These negotiations are under way, and we’ve given the Minister for Economic Affairs the task of finalising an agreement by the end of this year: to get a long-term, multi-year wage agreement with a date and an average monthly income of one million forints at the end of it.
What are the other measures through which people, businesses and families can feel the effects of the policy of economic neutrality? After all, the effectiveness of an economic policy is measured by how people feel and experience it.
We’re in a great dilemma, we’re between the hammer and the anvil; because of course it would be good to reduce taxes – if we reduce taxes on employers they can pay higher wages, and if we reduce taxes on employees people will have more of their earnings left in their pockets. This is on one side of the scales. On the other side are the wages of public employees, which we can only raise if there’s tax revenue. These two things are difficult to reconcile. So a balance has to be struck between having significant wage increases in the private sector and – optimally – having public sector wages keep pace with them. Incidentally, today they’re not keeping pace with them. So today public sector workers aren’t keeping up with the private sector in terms of their pay, except in areas where we’ve just been able to launch a big, comprehensive pay programme. An example of the latter is teachers, whose salaries are now going up every year, with things starting to look quite good for them. I’m not saying it’s looking good this year, but it’s going to look pretty good next year, and it’s going to look good in 2026. We’re in the same situation with doctors and nurses, who have had large increases over the last two or three years, and they’re in a reasonable situation. But there are sectors where things aren’t good. Those who have been left behind are in public administration, in culture, in the social sector, and I could continue. Everyone has seen how much the water management workers are needed in a crisis, they’re in a bad way financially, and they cannot stay that way. So the next wage programme will be a wage increase for water management workers. But anyone in the public sector who isn’t in a big across-the-board pay settlement programme will have average earnings that are below those in the private sector. If the economy grows at 3–6 per cent over three to four years, this problem will be solved, because if we can bake a bigger cake, there will be more for everyone. But first we have to bake a bigger cake. The 1.5–1.8 per cent growth we have – or less than that in the European Union – means that the cake is going to shrink, it’s not growing. So we need growth first, and then we can launch wage programmes for everyone. There’s one exception, because this is a government that’s family-friendly. There’s something which we won’t let go of. We’re like a dog with a bone: once we’ve got that bone, we won’t let it out of our teeth. And that bone is supporting families. Because we want to get to the point where the personal standard of living and wealth – their income and wealth – of someone with one, two or three children, isn’t worse than people who don’t have children. This is because children are, of course, a personal matter and a matter of personal joy for the family, for the father and the mother; but they’re also in the public interest, because if there are children there’s a future, and this is important not only for the family, but also for our national community. This is why we mustn’t give up on fair treatment for parents raising children. This is why now, after the ordeal of inflation which we’ve come through, we must now double the child tax credit. So this must happen next year. I won’t give up on this. Maybe we’ll increase it in two steps and not all at once, but over the course of one year we must double the child tax credit – which will apply to everyone, whether they work in the public sector or the private sector. So people with children can expect to see a noticeable improvement in their situation in 2025 and 2026, regardless of their occupation and the level of pay in their occupation.
You’ve mentioned the debates that could unfold on the policy of economic neutrality. And speaking of debates, there’s one debate – between Budapest and Brussels – that seems to be getting increasingly heated: the debate on migration. In Parliament on Monday you said that if the EU continues to insist on the fine that it’s imposed on Hungary, then migrants will be transported to the main square in Brussels. What reactions to this suggestion have you received from Brussels? What was the purpose of this statement in the first place?
Hungarian politics has the peculiarity – which is unusual in Brussels and not common in Europe – that we say what we think, and in the end we do what we say. So they’ve gradually learned that Hungarians don’t speak much, but when they do speak, they say something. And what they say, they mean – and they will do. So it’s a good thing that the Mayor of Brussels is getting ready, because if Brussels continues to torment us with all kinds of punishments, then they’ll get what they want, and we’ll bus migrants to their main square in a legally accepted, unimpeachable manner. And then they can reap what they’ve sown. So the fact is that President Macron has said that if the EU continues with this economic policy it will die in a few years, and I think that’s based on the recent report on the European economy from the former Italian prime minister, Prime Minister Draghi. President Macron’s statement is no exaggeration, and intelligent Europeans see that if this continues the European economy will die. But I’d add something perhaps more serious than this: the European economy cannot die because of bad economic policy, because first it will fall apart – and not because of the economy, but because of migration, because people are fed up with this. And forces are rising that are anti-migration and are on the side of the people. And Europeans will no longer tolerate the imposition on Europe of something that is destroying the lives of ordinary Italians, Germans, French and Hungarians, the imposition of this by people who live a different life: the bureaucrats in Brussels, all kinds of eggheaded abstract thinkers who never go home to a working class district, never take the metro, who, because they live in a sheltered world, don’t see or know how the life of an average citizen – from Brussels to Munich or Vienna – is changing, how Germans, French and Italians who have until recently felt at home in their own neighbourhoods are losing their sense of being at home. They will not tolerate this for long. This is why Prime Minister Babiš has just won in the Czech Republic, this is why the Freedom Party has won in Austria, this is why we won the European elections by a huge margin of 45 per cent – and I could continue at length. This is why the AfD is doing well, this is why Marine Le Pen is at the gates, and this is why the Italian prime minister won. So it’s clear to see that if Brussels doesn’t come to its senses and change from a policy of drawing in migrants to a policy of opposing migration and defending the borders, then the problem will not be the death of the economy – even before that happens, conflicts over migration will tear the European Union apart and paralyse its functioning.
We’ve just spoken about the constantly changing economic environment, but the security environment is also in a constant state of flux. Right now the conflict in the Middle East is intensifying, and this week you convened the Government’s National Security Cabinet. What are the most important lessons for Hungary’s security – whether from that conflict or from the Russo–Ukrainian war that continues to rage in a country neighbouring ours?
There’s an easier side to this and a more sensitive side. So it’s obvious that if there’s a war in the Middle East, we’ll all immediately suffer the consequences. Iran as a state has launched an attack on Israel, Israel has responded, and now there’s a military conflict in a third state, in Lebanon. So as soon as the threat of expansion of the conflict in the Middle East becomes tangible in this way, the world economy becomes cautious, and immediately the value of the Hungarian currency starts to fall. So we can see how the forint–dollar exchange rate has developed recently So what happens in the world is also important to us from an economic point of view. Moreover, that region isn’t far from us – not our neighbour, but almost. So what happens there can also have security implications for us. Just think of how many refugees who have arrived as migrants from Syria – which isn’t our neighbour, but these migrants have just arrived. And there’s a third aspect, which is sensitive. The fact is that there are a large number of citizens of Jewish origin living in Hungary, who are directly or indirectly affected by this war – and are certainly affected emotionally. So this is a war in which a certain section of Hungarian citizenry is affected on a personal level, and what happens there is particularly important to them. Moreover, their sense of being threatened isn’t due to what’s happening on the streets of Budapest, but from what’s happening now in Israel, and whether or not there are acts of anti-Semitism in Western Europe, and whether or not Jewish communities in Western Europe are safe: whether it’s possible to go out on the street wearing identifiably Jewish clothing without being physically assaulted, as is now common in Western Europe. Is it possible to live normally or not? So this war affects a certain percentage of Hungarian citizens as directly as one could imagine, and we must do everything in our power to protect them. And so whenever conflicts escalate in the Middle East, as they have just done, in Hungary we also carry out security duties directly related to their protection. This is why I had to convene the National Security Cabinet, so that we can guarantee the security of all Hungarian citizens, regardless of their origin.
And in relation to the Russo–Ukrainian war, a group called “Friends of Peace” was set up this week, at your initiative, with the participation of China and Brazil. What action can we expect from this grouping in the upcoming period, given that the new NATO Secretary General has committed himself to further support for Ukraine, and Russia is increasing its military spending in next year’s budget?
There is a war in Europe – now outside the European Union, but in Europe, because Ukraine is part of Europe. When we took over the Presidency of the European Union, we took the decision that it was imperative, for Christian spiritual reasons – which is the most important consideration – and also for reasons of state interest, that we should make it clear that we’d try to do something for peace during our Presidency of the European Union. This is why we’re on a peace mission during these six months. We started with a big rush: Kyiv/Kiev, Moscow, Beijing, Donald Trump. Then we formulated a six-month peace strategy for ourselves. The core of this is the realisation that, having spoken to the leaders of the warring parties personally, I’ve seen that they have no intention of making peace with each other. So if we allow events to follow their own logic and go on as they’ve been going on, there will be no peace, but war – with the threat of continued expansion, of war expansion, right up to the point when – as one of the belligerents is a nuclear power – the danger includes that of world war. If you can’t get results there because they’re determined to keep fighting, what can you do? Then you have to come to an agreement with the major players on the international scene to try to enact an international, global policy that moves the belligerents towards peace. This is why it was necessary to go to China and this is why it was necessary to go to what we hope will be the next US President, to create an international environment that will move the warring parties towards peace. The result of this is what we’re seeing now: at our initiative the international group “Friends of Peace” has been formed, already with ten or so members, led by the Chinese, led by the Brazilians – so a Brazilian–Chinese tandem. Three of us from Europe have been invited: us as the initiators, the French and the Swiss. And we’ll see how people react. So we’re building this large, strong group that exerts international pressure. Or it’s the strong, big ones who are building it, because it’s good if Hungary doesn’t misunderstand its own level of importance; so we can initiate things, but it’s up to the big ones to carry them through. So the building work is under way, and we can hope that, in the event of a favourable US presidential election result, the international mood will quickly change from pro-war to pro-peace – even in the Western world. This is what we’re working on now.
And we’ll see the results of that. I’ve been asking Prime Minister Viktor Orbán questions about neutral economic policy, migration and war.