Zsolt Törőcsik: Prime Minister Viktor Orbán held talks with French president Emmanuel Macron in Paris on Tuesday. The two leaders’ discussion included a review of the challenges facing the European economy, and preparations for the informal EU summit in Budapest in two weeks’ time – the aim of which will be the adoption of a competitiveness pact. Prime Minister Viktor Orbán is our guest in the studio. Good morning.
My greetings to your listeners. Good morning.
With regard to competitiveness, the EU has arrived at a point at which everyone can see the problem, but there’s debate about the solution. After these talks with Macron, what chance do you see of a joint proposal for a solution?
We tend to think that we Hungarians are honest and straightforward about our problems, and that therefore our message is somewhat out of place in the European concert. But this is wrong. To be more precise, this is only one part of the truth. One can listen to President Macron – which isn’t easy, because he speaks at length – or read Mr. Draghi – which also isn’t easy, because the former Italian prime minister and President of the European Central Bank writes at length. But if you do struggle through these speeches and writings, you’ll find much stronger – indeed harsher – statements about the state of public affairs in Europe than I tend to make when talking to you here. Now, the French president recently made a powerful speech in which he said that if we don’t urgently improve competitiveness the European Union will quite simply die out, or will die, because we’ll lose our markets. And President Draghi has written that if the European Union doesn’t do something urgently, then the whole European economy will founder. So it’s clear that when we talk about the difficulties of the European economy we’re not talking about a specific Hungarian point of view, but about a shared opinion. As the saying goes, “the Emperor has no clothes”, and now the little Hungarian boy in the crowd who says, “But that old gentleman is naked” is being joined by more and more others – and now even by grown-ups. Well, now the French President is playing a key role in the development of new European economic policy, a more competitive European economy. But how do we come into this picture, or how do I come into the picture, sticking out like a sore thumb? If you watch global political news, you’ll see that there’s a big “Eastern World” summit in progress. It’s taking place in Kazan, where the leaders of the so-called BRICS countries – non-Western countries with very powerful economies – are holding a world summit. It’s the Eastern World’s summit. And on 7 November, here in Hungary, there will be the Western World’s summit. Here two events will happen over two days, and so in the news reports they’ll converge. There’s a formation called the European Political Community. Around forty leaders associated with it will be coming. These aren’t just EU Member States, because the British prime minister will be here and the Turkish president, for example – leaders from countries which aren’t members of the Union. And the next day there will be a meeting in Budapest of the leaders of the twenty-seven countries that are members of the European Union. We’ve just spoken to the President – the President of France – about the first meeting, the European Political Community’s Western World summit; this is because it’s the French president’s brainchild, in the sense that he invented this formation. We’ll be the host of this event not only in terms of its location and organisation, but also in terms of its intellectual content: we’ve now agreed who will speak, how they’ll speak, what we’ll talk about, and what working groups will be set up. Therefore it’s right and proper to consult the French president, who’s the originator of the whole idea; and that’s what I’ve done. Add to this is the fact that the theme of the summit is the competitiveness of the European economy, and we had two reasons to meet. This is what happened. I suppose that there will be some inconvenience in the city, because when forty or so heads of state blow in, it makes the traffic situation difficult. But I ask the people of Budapest to bear this with patience and understanding, because this is really a summit of the Western World. In addition, the timing gives it a certain piquancy, because it will be two days after the US election – an event which could easily create a completely new situation in world politics.
Yes, the issue of European competitiveness and the response to it – the response to the problem – is also interesting from a Hungarian perspective. This is because yesterday the Hungarian business leaders’ representative said that the foundation for achieving the wage increase targets that have been set will be renewed economic growth. Later we’ll talk about the situation in Hungary, but if Europe is lagging behind in this competitiveness contest, how can Hungary produce the kind of growth that will make it possible to achieve wage increases, for example?
If we’re going to talk about it later, I won’t say here that we’re going to have a fantastic year in 2025 – I’ll say that in a few minutes’ time. Your question is a valid one, but it’s also one which derives rather more from the past. How have Hungarians – myself included – thought for a long time? Think back to the time around the fall of communism, thirty years ago. We have a socialist system that’s collapsed, the Soviet Union is disintegrating, Comecon is doomed, it turns out that economic entities built in the Soviet part of the world – or in the part of the world dominated by the Soviets – are generally uncompetitive, the world economy is unifying, and we also have to compete with the Westerners. What do we do when it turns out that we’re bankrupt? Because, after all, socialism bankrupted us. Well, then you have to look at what’s being done by those who are successful. In this world race between capitalism and socialism the capitalists have won and the socialists have lost; so let’s adopt the market economy – which is a more elegant or more sensitive term for capitalism, a more human expression. Let’s adopt the institutions and methods of the market economy that make them successful. That’s pretty much what we did sometime then, around the 1990s and 2000s. So it was relatively simple: there was a problem, there was a successful model, so we copied it. This is a slight exaggeration, because of course no two shoes are the same, no two feet are the same, and no two shoes are the same for every foot. So of course we needed to account for national specificities, but in terms of direction we had the answer. But now the Western world is in trouble. Today the Western world is losing its competitiveness, and in Hungary we can’t adopt the Eastern economic methods that seem to be more successful than ours – quite simply because they’re Eastern, and are therefore culturally and civilisationally non-transferable. So of course if someone goes to China their jaw will drop. But even though the Chinese economy is successful, if people think that Hungarians can be successfully organised in the same way as the Chinese economy they’re mistaken, because as people we’re so different here. So the simple solution of looking at some example of success in the world, translating it into Hungarian and implementing it won’t work. So we have to go our own way. If we continue to go along with the West as we’ve done so far, we’ll end up falling into the abyss. As President Macron has put it, we’ll perish together with the European economy; or as President Draghi has said, we’ll run aground. And culturally the Eastern model isn’t applicable to us. So there’s only one solution: we have to create an economic model – and the Hungarians are creative enough to do this – from examples known around the world, which can be tailored to the Hungarian people, which is compatible with Hungarian culture, in which Hungarians feel comfortable, in which they can perform, and in which they can make use of their own talents. So we must take everything from the West that’s good, we must take everything from the East that’s good, and we mustn’t take anything from the West or the East that isn’t good for us. For the sake of simplicity, let’s describe this way of thinking and this policy as economic neutrality, which means that Hungary must follow its own path.
Yes, but how much room for manoeuvre does our country have? Because in the case of migration and war, we’ve seen that there was room for a different policy, a policy different from that of the West – even if the price was conflict. But now on every issue it seems as if we’re seeing increasing pressure on the Hungarian government to stay in line.
There’s no doubt that the Cold War thinking that’s descended on the West like a dense fog since the Russo–Ukrainian war broke out has also appeared in the economy. The Cold War wasn’t so long ago, so there are a lot of people around the table who have memories of it from their younger years, and in such situations one’s mind goes back to the old model. I think it’s a bad idea to bring back the Cold War, but there are a lot of people who reflexively respond to the Russo–Ukrainian war in this way. And they’re building conflict not only in the area of security, but now also in the economic area, just as they did during the Cold War. Sanctions: we’re also negatively affected by a number of sanctions, and they want to introduce new ones, trade restrictions against China. This is what I’m trying to talk about, and I feel that your question hits the nail on the head. So the question of whether Hungary has room for manoeuvre seems justified. This is because in the economy, where one would think that there’s greater freedom, where the world’s more flexible, because after all it’s an area of life based on free initiative, there too we see tariffs, customs duties and types of approach that say “let’s punish, exclude and hang them, please”. In other words the situation is that the West doesn’t want to end the Russo–Ukrainian war but apparently wants to continue it, wants to wage war, and now wants to wage war in the economy. Therefore it’s legitimate to ask whether there’s room for manoeuvre. Well, let’s not speculate, let’s take our starting point as the real world. You’d have thought that there was no room for manoeuvre in the Russia–Ukraine war either, because if the whole of the European Union is singing from the same hymn sheet, then one country can hardly stay out of it. And what happened? We stayed out of it. They’re up to their necks in it, they’re involved in a losing war, they’re losing a war. These countries – or most of them – haven’t lost a war since the Second World War. Most of these countries haven’t lost a war since the Second World War, because although the Germans lost that, of course, most of them were on the winning side in the Second World War. Now they’re facing a completely new experience: they’re losing a war. Hungary isn’t, because this isn’t our war, and we didn’t enter it. So Hungary managed to stay out of even such a great Western alliance. Of course, with God’s help the pro-war people in America will be replaced by pro-peace people, and President Trump will return. And then we’ll be relieved, because we’ll no longer be alone, and at least there will be two of us. I don’t want to call ourselves mice, but if we walk on a bridge next to an elephant, let’s say, we’ll create a different impression. So I just want to say that we’ve managed to stay out of the Russo–Ukrainian war. Now, if we’ve managed to stay out of that, then I think we can also stay out of a misguided economic policy based on the logic of war.
But how does the kind of pressure that you say is felt in economic terms also manifest itself in the political arena, and what can be done about it?
I’d rather not go into any more detail about this, because it’s one of the trade secrets of politics: exactly when and who gives whom a pinch or a wallop, pulls them around by the ear, collars them or – God forbid – blackmails or makes an offer that can’t be refused. Politics also has this side to it. Wise people say that you can buy a sausage in a shop, but you don’t go round the back to see how it’s made. There is a lot of truth in this for politics, too: there’s a power game going on, there are intentions and aims, there are tools that are used, you have to be skilful, you have to be brave, you have to be alert, cowards will lose, and the less capable will fall by the wayside, So you have to be good. You have to be good in difficult negotiations behind closed doors and in the back rooms of politics; but the Hungarians have never been bad in this respect. So there’s no reason for any feeling of inferiority and we’re used to doing well in these difficult power negotiations – as is shown by the state of the country. After all, we’ve stayed out of the war, and in negotiations with the new NATO Secretary General we even managed – with some difficulty – to obtain a written guarantee from him that we won’t have to participate in the war in Ukraine during his term in office. After all, we’ve negotiated that while the whole European Union is cutting off energy sources from Russia, Hungary can still buy gas and oil – and together with the Slovaks and the Czechs we’ve even negotiated to allow them to do so as well. So we’ve always found room for manoeuvre, and I believe that we’ll continue to do so in the future. There’s no point in starting from the defeatist assumption that the big players will push us down anyway. That’s not how it is! Hungary has the right to pursue its own economic policy, and if we have such a right, how we make use of it is simply a matter of ability, courage and skill.
How will the national consultation help the Government in this fight? Because we see that you’ve spoken here about negotiations taking place in closed rooms, but now it’s as if there’s the open application of pressure, if we look at the declarations by the European People’s Party, and if we look at the votes and the speeches that there have been in the European Parliament.
We have an open situation, but we couldn’t expect anything else, and so I suggest that we shouldn’t be offended. So the following is what the European Union thinks. It’s fine for the Hungarians to keep staying out of the war, to involve the banks and the multinationals in sharing the burden of public spending – something they don’t like at all, which means that they’re paying into the management of the Hungarian economy. Or the Hungarians are economically neutral and have a much more active relationship with the East than the Westerners do. So no doubt it would be more comfortable for the Brusselites if we weren’t such a stone in their shoe. And so I’m not calling them to account, but simply stating the fact that in Brussels a decision has been taken, with the European People’s Party at the forefront of it. You see, there are parties in Brussels, the European People’s Party is led by a German called Manfred Weber, and at the same time the Commission is led by a German lady called Ursula von der Leyen. And this is where the plan was hatched. It’s not a secret plot against Hungary: it’s an openly declared plan. I dare to say this because I was sitting there, and it was said to my face. And after everyone saw what happened in the European Parliament on television, we can say that it was said to the face of the Hungarian people. They said: “It’s over, Prime Minister. You and your government can clear off. Here’s the new future prime minister and the new future governing party. We Brusselites support them.” This is what happened. It can’t be denied, because it happened there before the eyes of the whole world. But one couldn’t have expected anything else, because the same thing happened with Poland. The Poles were also treading their own path. They too had their own independent Polish policy on migration, gender and the economy. On the war they were in step with the West, but not on anything else; and the Commission and the European People’s Party did everything they could to openly declare that the conservative Polish government should go and be replaced by a new one. This is how our friend Tusk became Prime Minister of Poland. Now the same scenario is happening in Hungary. They’ll work on this. So let’s talk straight: they need a puppet government. All empires are like that. The Soviets were like that, weren’t they? They also wanted a government in Hungary over which they had a strong influence – or rather not only influence, but also the ability to issue instructions. This is what the Brusselites like. We call it a “jawohl government”: you get a phone call from Brussels or Berlin and you have to say, “Jawohl!” And then you have to implement what you’ve been told. That’s what they’d like to do. I can’t blame them for it, because that’s the way of the world. But I’d criticise ourselves if we were to give in to this; because we Hungarians are expected to resist such pressure, and we don’t want to see a puppet government, a puppet prime minister and a puppet state replacing an independent Hungarian state and Hungarian government. This isn’t simply a question of power, because Brussels – as was perhaps clear from the beginning of our discussion – has disputes with Hungary over economic policy. I’ve also compiled a list of the demands made of Hungary in European documents over the past few years. These are of an explicitly economic nature and are evidence of a bloody struggle, and it would certainly cause Hungarians intense pain if we were to give in or if we had given in. There’s the question of taxes. They keep wanting to see higher income tax instead of Hungary’s low personal income tax. Then there’s the issue of taxes on multinationals. These are their multinationals. Every single time they want us to abolish the taxes on multinationals. And then they continuously attack the reductions in household energy bills. Brussels thinks that the system with which we give people the cheapest gas and electricity today – the cheapest gas and electricity in the whole of Europe – is not good, because a significant proportion of the costs are borne by its companies. This is why in every document it’s always written that we should revoke this. They call for pension reform. If you read these passages, they’re not about pension reform, but about the abolition of the thirteenth month’s pension. Or there’s the restructuring of agricultural subsidies. In Hungary there are 160,000 to 170,000 farmers who receive direct support as a result of European agricultural policy. There are continual attempts to reduce or withdraw it, sending it to Ukraine or reallocating it for other purposes. So if the Hungarian government gives in, in other words if there’s a puppet government in Hungary, the question won’t be who the Prime Minister is, but what the consequences will be for the people. And these are serious matters. So whatever they say, these programmes would be implemented by whoever is in cahoots today with the Brusselites – as we saw on live television. For now, his masters are still stroking his head, the puppy’s head, they’re stroking his noggin; but if they manage to put a puppet government in power, then the orders will come and what Brussels wants will have to be implemented. Brussels sometimes wants good things and sometimes wants bad things. These are bad things. Today we have a government that does the good things and refuses to do the bad things.
After talking about the circumstances, let’s talk about the practical details of the new economic policy. Yesterday the employers’ organisation said that the Government’s target would have to be met with wage increases totalling roughly 12 per cent over three years, but they say that at the same time there’s a need for development programmes and cuts in tax and employers’ contributions. What does the Government say to this? Is there any way, any possibility, any budgetary room for manoeuvre?
If we move from the bigger things to the smaller things, the first thing to mention is the US election. Because the scope for economic policy is fundamentally determined by whether or not the war continues or expands. Now, if President Trump returns and wins, the risk of the war escalating is reduced to almost zero. Whether he can bring the war to a close remains to be seen, but it’s almost certain – insofar as certainties in politics even exist – that the war won’t escalate under a new Republican US administration led by President Trump. So that’s the first thing. If this doesn’t happen, then the situation will remain as it is today: not only will there be war in Ukraine, but there will be the constant danger of spread, of further spread – of what in politics is called “escalation”. This will call for a different economic policy, because then we won’t need to spend just 2 per cent of gross domestic product on the military, but 2.5–3 per cent – or perhaps even more: some European countries already spend 4 per cent on the military. This will mean that some money won’t go back into the economy, but into security. While that would make sense, it wouldn’t contribute to increasing living standards. So also from an economic point of view it’s in our vital interest to see an American government in office that says that this war cannot continue: localise this war, as should have been done at the very beginning. If this comes about, then it’s our turn. And I think we have a fantastic opportunity, because we’ve put together a package that will finally get the Hungarian economy out of the difficult period that we’ve been in since 2020. It was a long time ago, few people remember it, but let me recap: up until 2019, the Hungarian economy was on a straight, upward trajectory; this was broken by COVID, and after that the war came, the sanctions came, and inflation came. We need to find a way out of this difficult four- or five-year phase, and I feel that we’ve done that. So if we stand on the ground of economic neutrality, the policy that we’ve put together – an action plan of 20–25 measures – could bring fantastic results in 2025, and could bring economic growth higher than in all other European countries: growth above 3 per cent. As we heard in your question, this goes hand in hand with the possibility of pay increases. This is where employers, workers and the Government come in. There are people – including among the listeners, I think – who think that the Government sets wage levels. But this isn’t the case. It wasn’t the case in the final years of socialism either; perhaps it was true under the Rákosi regime, but it wasn’t the case in the late eighties – and it’s definitely not the case now. So the Government cannot set wage levels, because if it sets wage levels badly, the economy will be ruined. How does one avoid that mistake? By employers and workers negotiating with each other. I’ve always tried to give them the maximum space and freedom to negotiate, and the Government hasn’t interfered in the ongoing negotiations – it’s helped when it needed to, but it’s let them come to an agreement. Because ultimately on one side there’s money – which is the capital, needed for investment, development and wages – and on the other side there’s labour, which produces the value. These two need to agree on a good balance. And when that’s in place, the Government will step in, sometimes facilitating the agreement by changing tax rules, changing regulations, and easing the situation for one side or the other. And then an agreement will finally emerge. Last time, agreement was reached for what was perhaps a six-year period. So these are fantastic things. Now that’s run its course, and I see that we can come to another big long-term agreement. The negotiations between employers and workers are making good progress. In Hungary in the foreseeable future there will be an average wage of 1 million forints, I think; and in the next few years we can get the minimum wage up to the level of 400,000 forints. This won’t be in one year, but within a multi-year wage agreement programme. Today there’s a good chance of that.
Time is short, but there are two more questions. One relates to the fact that the economic policy objectives that have been set out to increase people’s earnings and to ensure lower cost housing are probably agreed by all. In this situation, why is a national consultation needed?
We need to strengthen the foundation of everything. Achieving this will require a struggle. I’ve just said that Brussels wants the kind of economic policy that they’re pursuing, which would bring us alongside them in the direction in which they’re now heading, with the European economy heading towards a competitiveness breakdown. So we’ll need to engage in a battle to develop, defend and represent this; and for this we’ll need strength. And as a country Hungary is as big as it is: I can’t point to our military strength, I can’t point to a huge Hungarian population, and I can’t point to the world-beating size of Hungary’s gross domestic product. In these struggles I can only appeal to one thing: the will of the Hungarian people. And if the Hungarian people say “yes” to economic neutrality, an independent Hungarian economic policy based on this and higher growth based on this, and that we should use the resources of higher growth to achieve higher wages and to deal with housing issues and the creation of homes, then I can defend it. This will give me strength, and a firm foundation on which to stand. With a democratic mandate I can engage in negotiations in the difficult year or two ahead of us. So the national consultation will strengthen Hungary, because it will strengthen the Government, it will strengthen economic policy, and the statement that we can achieve this won’t be an empty government promise or a standard government promise, but a reflection of the collective will, which the Government will be obliged to enact. Remember, this is how we created one million new jobs. Back then everyone also agreed that it would be better if there were more jobs in Hungary. But it had to be implemented, it had to be done, and the first economic consultation contained the steps that led us to the point at which in Hungary today everyone who wants to work has work, and a million new jobs have been created. But the same was also true for the issue of migration: the Government didn’t simply stop migration; we were necessary for it, but before that the people said that they expected the Government to stop it, that they shouldn’t come here, that Brussels shouldn’t tell us who we should live with, and that we’d decide that. All of this gave the Government’s policy a strong foundation, a foundation which it then managed to assert, through fire and water.
While we’re on the subject of migration, let’s turn to that for a moment, because this week you held talks on this issue with the Serbian head of state and the Slovak prime minister. You said that the EU’s migration pact should be scrapped, while at the same time a majority in the European Parliament voted for it entering into force as soon as possible. What are the forces that support migration – even in opposition to what could be called the majority of the Member States?
What happened was that the bureaucrats in Brussels – backed, of course, by some of the larger states – said that the migration pact is good and that its implementation should be speeded up. Unfortunately, the Hungarian opposition – with the exception of Mi Hazánk [Our Homeland Movement] – voted in favour of it, and in addition to approving the punishment of Hungary, approved withholding funding for our border defence efforts. Mi Hazánk, Fidesz and KDNP representatives fought well, but there weren’t enough of us in the European Parliament. Perhaps we’ll be more successful in the Council, where I sit. The fact is that there’s still a struggle in progress between pro- and anti-immigration forces. The proportions are changing in our favour, so on that, too, we have high hopes.
Prime Minister Viktor Orbán has been our guest in the studio.