Author: Eva S. Balogh

Procreation and pensions in Hungary

In the last month or so article after article appeared about the conclusions of a group of economists and demographers who have been discussing possible solutions to the interrelated problems of the low Hungarian birthrate and the eventual depletion of the state pension fund. This group, the Népesedési Kerekasztal (Demographic round table), seems to have the support of the Orbán government. It is deeply conservative and a promoter of family values.

One of the most vocal proponents of pension reform among the group is Katalin Botos, an economist who was a member of parliament between 1990 and 1994 and also served as minister without portfolio in charge of the banking sector in the Antall government. Prior to the change of regime she was a department head in the Ministry of Finance (1971-1987). Lately, she has been teaching economics at various universities.

The Hungarian media acts as if this is the first time the public has heard about the outlandish plans of Katalin Botos. But in May 2012 Népszava ran the following headline: “One must give birth for one’s pension.” At that time Katalin Botos and her husband József Botos were active in the Working Group for a Family Friendly Hungary, which was organized under the aegis of the Ministry of Hungarian Economy. The study that appeared at that time was entitled “A középosztály gyermekvállalási forradalma” (The revolution of childbearing of the middle classes). In it, the Botoses explained the logic behind the introduction of a sliding scale of pension payments depending on the number of children. After all, pensions are being paid by current wage earners, and if a couple did not produce at least two children they are freeloaders.

At that time the group made calculations on the basis of 2010 maximum, minimum, and average salaries and came to the conclusion that an employee earning an average salary would get 14.4 points but only if he/she produced at least two children. Extra points would be earned for each additional child. On the other hand, employees with one or no child would be docked a certain number of points. According to this system, someone with an average salary of 113,000 forints with no children would receive a pension of 70,000 forints while a person with four children would get 142,000!

Triplets

The more the merrier

Members of the working group did address the problem of couples who cannot have children for physical reasons but somewhat heartlessly remarked that “the fact still is that there is no one behind them who is responsible for their pensions.”

When this study was made public the vast majority of experts found the scheme unacceptable and ineffectual. To hope for a higher birthrate by linking it to higher pensions thirty or forty years later is totally unrealistic.

The public reception was anything but friendly, and the government promptly announced that they have no intention of introducing it in the near future. But, as we can see, this plan has remained on the government’s agenda because the latest scheme released by the Demographic Round Table is practically the same as the one in 2012. The few additions to the new report in fact make it even less attractive.

As far as the government was concerned, the original Botos plan had one huge flaw: in the Roma population families are large and girls begin to reproduce early. Surely, the argument went, you don’t want to encourage them with a pension system that might increase family sizes. So, an additional restriction was added: only children who finished high school (matriculation) or trade school would count. Not surprisingly, this was considered by critics of the plan as anti-Roma.

This time around the authors of the scheme also addressed details that were not considered in the 2012 version. For example, a person whose child died before he could finish high school would be exempt. The same would be true of children with a mental disability. But many questions remain. What will happen to young people who decide to work abroad? Will their departure be accompanied by a drastically reduced pension for their parents?

Although the plan was fleshed out a bit, by and large the “mad” scheme, as many commentators called it, remained intact.

Across the whole spectrum of the Hungarian media the reaction was uniformly negative. And real panic set in when Péter Harrach, leader of the Christian Democratic parliamentary delegation, announced that the report of the Demographic Round Table was in line with the thinking of the government and therefore there was a good possibility that the suggestions will be adopted, perhaps as early as September.

This was unfortunate from the government’s point of view. Right before the municipal elections such an announcement could have disastrous consequences, especially among those under the age of 35 whose pensions would be directly affected by the new law. Mihály Varga, minister of national economy, quickly reassured the voters after Harrach’s unfortunate interview that “it will not be necessary to have more children for higher pensions.” The Hungarian pension system is stable and there is no need to make any changes before 2030. But then why all the talk about a scheme that has been on the table for at least two years?

Well-known experts on the pension system, like György Németh, are convinced that the entire economic framework that lies behind the Botos couple’s scheme is wrong. In fact, in Németh’s opinion, it is unacceptable. Raising the birthrate is desirable, but it can be achieved only by the introduction of government measures that lower the expenses of child rearing. Compensation forty years down the road for the heavy financial burden of bringing up children today will not achieve anything. It is no coincidence that this interview appeared in Magyar Nemzet.

I would like to believe that this madcap idea will not be adopted, but I have a strong suspicion that in spite of Varga’s assurances to the contrary something is afoot. I would not be at all surprised if within a few months parliament passes a law that links procreation with pensions. If such law is passed, even more people will leave Hungary and settle elsewhere where the state does not interfere in their private lives. Oh well, at least the state won’t have to worry about their pensions.

Viktor Orbán and the gathering storm clouds in the East

Meetings of the heads of EU member states usually last much longer than anticipated. At eight in the evening participants were still discussing who will replace Herman Van Rompuy as European Council president and Catherine Ashton as foreign policy chief.  They finally determined that the former post will be filled by Polish Prime Minister Donald Tusk and the latter by Italian Foreign Minister Federica Mogherini.

It seems, however, that the decision on further sanctions against Russia will be postponed for at least a week, although a draft of such sanctions dated August 27 exists which says that the bloc “stands ready to consider further steps” against Russia due to the “reported participation of Russian armed forces in operations on Ukrainian soil.” Petro Poroshenko, who was present at the discussions about his country, indicated that further sanctions are likely. The EU only wants to wait on implementation to see how Russia reacts to his attempt to revive a “peace plan” next week.

If Vladimir Putin’s threatening remarks are any indication, further sanctions and an increased Western military presence in Eastern Europe are indeed likely. Putin told the press that “Russia’s partners … should understand it’s best not to mess with us,” adding: “I think no one is thinking of unleashing a large-scale conflict with Russia. I want to remind you Russia is one of the leading nuclear powers.” Nuclear threat or not, the number of NATO troops in Poland and Romania has doubled already, and NATO is planning to send an additional 1,ooo troops to the region. And Britain and six other states are planning to create a new joint expeditionary force of at least 10,000 personnel to bolster NATO’s power.

map2

Meanwhile a rather frightening map was published by the Russian weekly Expert that showed the sphere of influence Russia is attempting to create. The green line indicates the reach of Soviet dominance, the red the current situation, and the orange Russian hopes for an expanded sphere of influence. That would include Estonia, Lithuania, and Latvia.

Observers of Russia and its plans might be also interested in reading a statement by Kazakhstan’s 74-year-old dictator Nursultan Nazarbayev. Let me quote it verbatim from Kazakhstan’s official English-language website Tengri News.

If the rules set forth in the agreement are not followed, Kazakhstan has a right to withdraw from the Eurasian Economic Union. I have said this before and I am saying this again. Kazakhstan will not be part of organizations that pose a threat to our independence. Our independence is our dearest treasure, which our grandfathers fought for. First of all, we will never surrender it to someone, and secondly, we will do our best to protect it.

Of course, he added that nothing of the sort can possibly happen because “there are three representatives from each country [Russia, Belarus and Kazakhstan] and three Vice-Prime Ministers. They also make their decisions together.”

Putin’s response to Nazarbayev’s statement called Kazakhstan’s future independence into question. Yesterday he said that Kazakhstan, although large, is only one-tenth the size of Russia. He also explained that Nazarbayev “created a state on territory where no state had ever existed. The Kazakhs had never had statehood. Nazarbayev created it. In this sense, he is a unique person for the former Soviet space and for Kazakhstan too.” But, Putin continued, underscoring his expansionist intentions, Kazakhstan is better off in the “big Russian world.”

Meanwhile Viktor Orbán, as his wont, gave a press conference upon his arrival in Brussels. Interestingly enough, he is usually driven to these meetings in his own Volkswagen minibus, an odd choice for such occasions. According to normal protocol, the hosts provide vehicles for visiting dignitaries, but for one reason or another Orbán insists on his own bus. One must wonder how this vehicle gets to Brussels. Is it driven or transported there ahead of time? Or, perhaps he has several identical vehicles?

It is also hard to know whether only Hungarian reporters are interested in what the prime minister has to say or whether journalists from other countries are also present. I suspect that only Hungarian reporters attend these events. On one of the pictures taken at the press conference I could see the mikes of only MTV and HírTV.

In Orbán’s opinion, today’s meeting was organized only for “the review and correction of the current political situation.”  The discussion centers around whether “the sanctions have reached their desired goals” but for that “we should know what the desired goals are.” He is convinced that sanctions will not work. Sanctions until now have not been successful and it would be self-deception to think that more of the same would end the conflict.

Finally, I would like to say a few words about the Conference of Western Balkan States that took place in Berlin on August 28, 2014. Participating were representatives of the European Union, Germany, Austria, Serbia, Croatia, Slovenia, Albania, Bosnia-Herzegovina, Montenegro, and the Republic of Macedonia. It was called together by Chancellor Angela Merkel, who also chaired the meeting.

The idea for the conference came in response to the celebration of the 100th anniversary of the beginning of World War I. The intention was to show commitment to the process of future enlargement of the European Union as well as to shore up relations with Serbia as a strategic partner of the EU, especially in light of the problems in Ukraine.

Serbia has, since the second half of the nineteenth century, been a close friend and ally of Russia. Its negotiations with the European Union for membership have been going on for a long time, but Serbia’s chances have been strengthened by what is going on in Ukraine. Because, as Adelina Marini of euinside.eu points out, “if Serbia becomes part of the EU, Russia will lose its influence in the Balkans or, at least, it will be significantly limited.”

However, Serbia apparently wants to have its cake and eat it too. Although it desperately wants to join the European Union, it also wants to keep its special relationship with Russia. Brussels is unlikely to accept such a “special status” for Serbia. But if Russia becomes a real threat to Europe, Serbia’s membership in the EU might help block the spread of Russian influence.

Diplomacy in Europe and especially in Eastern Europe and the Balkans is a much more complicated enterprise than it was a few years back when these countries did not have to worry about the Russian bear. Orbán’s idea that diplomacy can be pretty much replaced by foreign trade is patently wrong. The current situation is complex, negotiations are difficult, and a bad outcome would be very dangerous for Europe. And even as storm clouds are gathering in the East, Hungarian diplomacy is being guided by Péter Szijjártó, who is totally unfit for the job.

Hungary is in a difficult diplomatic bind: The “Orbán doctrine” is dead

This morning 168 Óra ran the headline “The Orbán doctrine has collapsed after three days.” The reason is the Russian “incursion” into Ukrainian territory. After that, said Árpád Székely, former Hungarian ambassador to Moscow, there will be neither Paks nor the Southern Stream. Székely actually welcomes the first consequence, a dubious deal between the Hungarian and the Russian government to build a new nuclear reactor in Hungary, but he is sorry about the likelihood of scrapping the Southern Stream project that would have supplied gas to the Balkans, Hungary, and Austria.

While high-level negotiations in the UN, NATO, and EU are going on over the Russo-Ukrainian conflict, I had to think about one of the many fallacies Viktor Orbán presented us with during his pep talk to the Hungarian ambassadors only four days ago. In his speech he indicated that as far as he is concerned old-fashioned diplomacy is passé. “Not that classical diplomacy has lost its magic and beauty” but “we must acknowledge the realities of the economic age in which we live.” Well, the Russo-Ukrainian conflict must be solved by old fashioned diplomacy, and Hungary’s newly reorganized foreign ministry is ill prepared for the task. Moreover, its leaders are constrained by the prime minister’s unorthodox ideas on diplomacy. Orbán’s Hungary is in a bind.

I should note in passing that German-Hungarian relations have cooled considerably. Earlier, I wrote about a warning from Michael Roth, undersecretary of the German foreign ministry, that in his government’s point of view “Hungary is going in the wrong direction.” Since then an even more detailed and stronger statement was signed by Michael Roth, undersecretary in charge of European Affairs at the German Foreign Ministry, and his colleague Tomáš Prouza in the Czech Foreign Ministry. They warned that “Europe is more than a market.” It is a community of shared values.

According to Hungarian sources, Hungarian diplomats have been trying for some time to entice Chancellor Angela Merkel to visit Hungary for the annual German-Hungarian Forum. After all, this is the twenty-fifth anniversary of the German refugees’ safe passage to Austria thanks to the action of the Hungarian government in 1989. If she could not come, they at least hoped for a visit by the new foreign minister, Frank-Walter Steinmeier. Well, it seems that Budapest will have to be satisfied with an assistant undersecretary as the representative of the German government. The highest ranking German participant will be Reinhold Gall, social democratic minister of the interior of Baden-Württemberg.

Now, to return to the current diplomatic challenge. After the failure of the meeting between Vladimir Putin and Petro Poroshenko in Belarus, several thousand Russian troops crossed the Russian-Ukrainian border. Subsequently Prime Minister Arseny Yatsenyuk announced that his government will introduce a proposal in parliament to change the non-aligned status of the country and to request membership in the North Atlantic Treaty Organization. Some observers immediately announced that Ukrainian admission to NATO was very unlikely. However, NATO chief Anders Fogh Rasmussen made a statement today in Brussels, saying: “I’m not going to interfere in political discussions in Ukraine. But let me remind you of NATO’s decision at the Bucharest summit in 2008, according to which Ukraine ‘will become a member of NATO’ provided of course, Ukraine so wishes and fulfills the necessary criteria.” A strong warning for Russia. Putin often stressed that Russia will not tolerate a NATO presence on Ukrainian soil.

Meanwhile, EU foreign ministers are recommending tougher sanctions against Russia. They gathered in Milan today for an informal meeting to discuss the Ukrainian crisis. Tibor Navracsics represented Hungary in Milan, but I could find no report on his position in the Council of Foreign Ministers. We know that Germany, the Netherlands, Sweden, Latvia, and Denmark were strongly in support of tougher action.

"German

German Foreign Minister Walter Steinmeier is arriving at the informal meeting of EU foreign ministers in Milan

Tomorrow the European Council will meet again to decide on the President of the European Union and the EU Foreign Affairs Chief. According to the latest intelligence, the next President of the European Union will be most likely Donald Tusk, prime minister of Poland.

Tusk’s government has been among the most hawkish in Europe over the issue of Ukraine. Just today the Polish government announced that it will allow the plane of Russian Defense Minister Sergey Shoygu to fly over its territory only if the plane changes its status from military to civilian. Earlier his plane was barred altogether from Polish air space. Russia was not very happy. Its foreign ministry declared that Poland’s closing its air space to Shoygu’s plane is “a major violation of norms and ethics of the communication between states.”

Today three of the four members of the Visegrád4 (Poland, Czech Republic, Slovakia, and Hungary) issued statements about the Russian incursion. Poland’s foreign ministry said that it regards the incursion of Russian troops into the southern regions of the Donetsk province “as actions that fulfill the attributes of aggression, as defined in UN documents–Resolution 3314 of the United Nations General Assembly.”

The Czech statement was equally strongly worded. “The Czech Republic considers the incursion of the armed forces of the Russian Federation into the territory of eastern and southeastern Ukraine a fundamental threat to peace and stability of all of Europe.” It called on Russia “to immediately withdraw its troops from the Ukrainian territory.”

The silence from Slovakia was deafening.

Hungary chose an intermediate position and released the following statement: “We are closely monitoring and evaluating the situation on the ground, and we are in contact with our EU and NATO allies. A confirmed incursion of  Russian regular military units on Ukrainian territory would gravely escalate the crisis. In line with our consistently expressed earlier position, we emphasise that only a political process can lend a sustainable solution to the present crisis and therefore we support all diplomatic efforts to this end. The upcoming extraordinary European Council meeting and the informal meeting of the EU foreign ministers offer good opportunities for harmonizing the European position on this matter.”

Two of the opposition parties, Együtt-PM and DK, called on the government to stand by Ukraine’s independence and territorial integrity. The former also wants the Hungarian government to suspend preparations for the expansion of the Paks Nuclear Power Plant while Russian troops remain on Ukrainian soil. The party also asked Orbán to use his good offices with Putin to convince the Russian leader to withdraw his troops from Ukraine.

DK wants to call together the parliamentary committees on foreign affairs, national security, and defense and to have the government prepare a statement that condemns Russian military action against Ukraine. In addition, Tibor Navracsics should call in the Russian ambassador to Hungary to convey to him Hungary’s condemnation of Russian aggression. Naturally, none of these suggestions or demands will be considered by the Orbán government.

On the other hand, I believe that Viktor Orbán will quietly vote with the majority on all the issues that will be discussed at tomorrow’s European Council meeting only to go home and report on the excellent ideas he gave to his colleagues about how to solve the Ukrainian crisis.

The Hungarian central bank goes on a buying binge

It was on August 3 that I first read about the so-called Borbély castle in Tiszaroff. It was refurbished after the change of regime and was owned by a German businessman who made a four-star luxury hotel out of it. In the wake of the recent downturn in the economy, however, the business failed, and the owners put the property up for sale. The article I read in Vasárnapi Hírek reported on rumors circulating in the village that the Hungarian National Bank had purchased the castle for use as a vacation resort for the central bank’s employees. And indeed, a week later it became official. The bank purchased the property for €1.3 million (415 millon HUF).

Kester Eddy, a reporter for the Financial Times, had a great time writing a story about the purchase. It reminded him of the days when, under communism, state companies and institutions owned holiday properties so their employees could spend two weeks splashing around in Lake Balaton. The bank struck back and explained that “the Magyar Nemzeti Bank, like other EU central banks, seeks to provide its more than one thousand employees with fringe benefits.” Moreover, the castle-hotel is located in the country’s least developed region and by opening the hotel again “more than 30 new jobs have been created.” Between May and the end of August it will function as a recreational center and between September and April as a training center.

The Borbély Castle-Hotel in Tiszaroff on 3.5 hectares

The Borbély Castle-Hotel in Tiszaroff on 3.5 hectares

Earlier the Hungarian National Bank had seven different vacation homes, but by 2009 the bank sold them off one by one. In these still difficult economic times it is hard to justify buying a luxury hotel even if the price was apparently attractive. The owners asked 680 million forints for it, but the bank managed to purchase it for a mere 415 million. Moreover, Matolcsy pointed out that the bank had earned a profit of 26.3 billion forints and therefore the purchase did not cost taxpayers a penny. An interesting explanation from a central banker.

The brouhaha over the purchase of the castle-hotel had barely died down when HVG learned that the Hungarian National Bank also bought perhaps the most expensive office building in Budapest, the eight-story Eiffel Palace. Originally it was rumored that some of the offices of the central bank would be moving into the building. Portfolio thought that purchasing a class A office building was an acceptable business concept. Others were less sanguine. For example, the popular blogger orulunkvincent.hu. According to him, the price was €57.5 million (18 billion forints) and the building has 14,000 square meters of rentable space. In calculating the potential return on this investment he assumed the top rental rate for space in a green building, €13.5 per square meter. In downtown Pest 86% of the available office spaces are occupied. If the Eiffel Palace has the same occupancy rate its gross annual rental income would be €1,950,480. Assuming an 80% profit and 10% tax, the net rental income would be €1,404,346 per year. That means a return of 2.44%. Five-year government bonds have an interest rate of 4.70%. So, says the blogger, this deal does not sound so fantastic to him.

According to critics of the deal, the Hungarian National Bank grossly overpaid the owners of the Eiffel Palace. They paid almost 18 billion forints when according to real estate assessors it is not worth more than 11-12 billion. E-PM will go to court in connection with the purchase of the office building because it suspects malfeasance or a breach of fiduciary responsibility on the part of the central bank.

But these two purchases were nothing compared to yesterday’s revelation. HVG learned that the central bank had transferred 200 billion Hungarian forints to its five foundations named after Pallas Athena, the goddess of wisdom, courage, inspiration, civilization, law and justice, just warfare, mathematics, strength, strategy, the arts, crafts, and skill. A perfect description of Hungary today!  This amount is one and a half times more than the Hungarian government spends a year on higher education.

Initially it was known only that this money will be spent on education. Today the central bank released details of its project. “We are creating a faculty of economics and finance at Kecskemét College, a faculty of finance in Marosvásárhely/Târgu Mureș (Romania), a doctoral school in the Buda Castle, and an intermediate financial training center in Pest.” The reason? “The already obsolete doctrines and mistakes of the neo-liberal school of economics continue to dominate Hungarian education in economics and finance.” Since Matolcsy thinks that mainstream economists in the country–and that means practically all respected experts–are wrong and since he cannot get rid of them, he will build parallel economics departments that will teach his unorthodox economic theories. Just as the Orbán government needs an alternative Holocaust Museum and an alternative academy of artists it also needs a new set of economists who will be the high priests of unorthodoxy.

Matolcsy admitted that it will be an expensive undertaking because, after all, they need “new institutions, professors of new vision, and new teaching materials.” Creating new institutions will probably be the least of Matolcsy’s problems. Where will he find those professors of new vision? Where is he going to find new teaching materials? Perhaps he is planning to write them himself because I can’t believe that any self-respecting economist would be willing to write textbooks acceptable to Matolcsy.

I tried to find out more about the institutions mentioned and, as far as I can see, only two seem to exist. The Kecskeméti Főiskola at the moment does not teach economics. It has one section that produces elementary school teachers, another where they teach information science, and another that specializes in what Hungarians call “kertészmérnöki kar”–less elegantly put, gardening and landscaping. This college was established in 2000, i.e. during the first Orbán administration. The second institution, in Marosvásárhely/Târgu Mureș, is not mentioned by name, but I guess it is the Sapentia Hungarian University which was established in 2001 and heavily subsidized by the Hungarian government. I remember that shortly after the 2010 election Viktor Orbán made a trip to Târgu Mureș and gave a billion forints to the institution. As for the others, I assume they will be established sometime in the future.

I used to think that I could not be surprised by anything that is done by this administration, yet I am surprised time and again. It is really frightening how much power is in the hands of people whose sense of reality is greatly impaired.

Did Viktor Orbán backpedal in his address to Hungarian ambassadors?

The consensus seems to be that in his address to the Hungarian ambassadors Viktor Orbán retreated from his previously articulated doctrine of illiberalism. In so doing he followed the lead of several right-wing analysts and journalists who tried to downplay the significance of the radical speech he delivered in Tasnádürdő/Băile Tușnad. In fact, they went to great imaginative lengths to explain the “true” meaning of the word “illiberalism.”

A friend called my attention to an editorial by Matild Torkos of Magyar Nemzet who argued that Orbán’s criticism was not of liberalism per se. What he meant was the kind of liberalism that existed in Hungary before 2010 when the Hungarian state did not defend state assets, when it did not recognize Hungarians living in the neighboring countries as part of the Hungarian nation, and when it allowed the country to be indebted. Or, there was an editorial by Zsolt Bayer of Magyar Hírlap, according to whom Orbán was not talking about the elimination of liberal democratic rights but only about people who make their living by work and not by welfare payments.

Tamás Fricz admitted that the choice of the word “illiberal” was unfortunate because since 1997 it has been equated with autocracy and semi-democracies. He even had a suggestion about a better way to describe “the new state and social model.” It should perhaps be called “national democracy,” where the emphasis is on the community as opposed to the individual.

George Schöpflin, formerly Jean Monnet Professor of Politics at the School of Slavonic and East European Studies, University College London, is Fidesz’s “political philosopher.” He gave some learned answers to questions posed to him by HVG. For Schöpflin “liberalism” is a dirty word because “it seeks to coercively impose its ideals on the whole world.” In his interpretation, “Orbán was referring to economic liberalism, to market fundamentalism and the damaging impact that this has had on the Hungarian economy.” Later in an interview which is still unavailable in its entirety online he argued that in the United States “illiberal” has a different meaning than it does in Great Britain and therefore “its use was unfortunate.”

Fidesz analysts came to the conclusion that the word “illiberal” should be avoided, and indeed Orbán used the word only once in his address–by now available online–to the ambassadors. Orbán talked about the necessity of raising the number of the actively employed. In this context he said: “Our labor policy cannot be considered liberal because it does not give primacy to the individual but wants to have an equilibrium between individual and community interests. In plain language that means that we will not be able to provide social assistance to someone who is able to work and is offered a job by the government but is unwilling to work . This is an illiberal point of view. György Schöpflin is right that this word should be avoided because the Americans’ understanding of the word is different from that of the Europeans.” Of course, what Schöpflin claims is nonsense. Americans and Europeans have the same negative understanding of the word “illiberal.”

Suggested reading on "illiberalism"

I think it’s fair to say that as far as “illiberalism” and the admiration for authoritarian states or outright dictatorships are concerned, Orbán backpedaled in his address to the ambassadors. In fact, he stressed that “his country is anchored firmly in Western culture and political institutions.” As Ildikó Csuhaj of Népszabadság wrote today, Orbán must have listened to the critical voices coming from conservative circles and changed his tune. Of course, that doesn’t mean that he has given up on building an illiberal state, a project that has been going on for the past four and a half years. He has no intention of abandoning his goal. He just realized that it is not a good idea to talk openly about his plans.

The speech was crafted to avoid controversy. It was basically a pep talk to the ambassadors urging them to encourage foreign investment. There was relatively little about foreign policy, which in Orbán’s opinion has lost its importance.

When it came to the question and answer session, however, Orbán was less guarded. He addressed the subject of the Russian-Ukrainian conflict in response to a question from the Hungarian ambassador to Bratislava. And he offered a view of immigration that will undoubtedly raise hackles in Brussels.

European and American politicians are accustomed to Viktor Orbán’s “peacock dance.” At home he is belligerent while in Brussels he rarely raises objections and votes dutifully with the majority. Jean-Claude Juncker’s nomination was an exception and turned out to be a mistake. It is very possible that if it comes to further sanctions against Russia, Orbán will again support the majority. And the “peacock dance” continues.

Reactions to Viktor Orbán’s speech to the ambassadors

I simply cannot get over the ineptitude of the Hungarian opposition parties. It is hard to pick the biggest loser among them. Here we are before the Budapest municipal elections where the stakes are high since with good candidates and a good campaign the democratic parties have a chance of replacing István Tarlós and perhaps even receiving  the majority of the district mayoralties. The chief MSZP negotiator was Ágnes Kunhalmi, a young woman with little political experience who, it seems, had difficulties keeping the local party bosses in line. As a result, in several districts the democratic parties will run not only against the Fidesz candidates but also against each other. A sure way of losing.

And what did the brand new party chief, József Tóbiás, do during these tense weeks of constant intra-party negotiations? He went on vacation! In his opinion he has nothing whatsoever to do with local Budapest affairs. The locals will take care of local affairs! As for the common candidate for the lord mayoralty, when asked what he thought of him, Tóbiás without batting an eyelash answered that Ferenc Falus must be a good candidate if all three parties agreed on his nomination. When pressed, he admitted that he does not know Falus, but after he meets him he will form an opinion. As far as I know, the meeting has been postponed several times since. Tóbiás is too busy.

The parties’ reactions to Viktor Orbán’s speech to the ambassadors yesterday were also poor. Perhaps the most feeble was Együtt-PM’s statement. It was penned by Nóra Hajdu, who is not exactly a household name in Hungarian politics. I managed to find her in tenth place on Együtt-PM’s list for the EU election. At that point E-PM was hoping to send three people to Brussels, but in the end they received only a single mandate.

Her statement began by expressing the party’s disappointment over Orbán’s failure to remedy the mistakes he committed in his “illiberal” speech because these mistakes “are accompanied by serious international consequences.” Disappointment? Couldn’t she find a more forceful and apt word for this speech? Hajdu expressed her surprise that Orbán instructed the ambassadors to represent “his mistaken policies.” I don’t know what else Nóra Hajdu expected. That is what ambassadors are supposed to do. At the end she did mention the unacceptable turn of phrase about “the half-witted nations” who follow a foreign policy based on universal liberal values.

Tóbiás wasn’t exactly hard-hitting either. He talked in general about mistaken policies and an alternative reality that exists only in Orbán’s head. But the most surprising part of the announcement was that, in his opinion,”the ambassadors should represent the Hungarian nation and not Viktor Orbán’s parallel world.” I really don’t know what to think. Ambassadors represent the government they serve. If someone cannot in good conscience do that, he should resign.

Szabolcs Kerék-Bárczy of DK spoke somewhat more forcefully about his and his party’s objections on ATV’s Egyenes beszéd where he stressed the unacceptability of a foreign policy based exclusively on material gain. In his interpretation Orbán “gave the order” to lead Hungary further toward eastern dictatorships.

In addition to these official statements, Viktor Szigetvári, who by now has assumed the leading role in E-PM, wrote a long post on his own blog. Of course, this is not the best place to air his reactions to Orbán’s latest since few people will find it. It is, however, a surprisingly good analysis, which indicates to me that Szigetvári is most likely a better political analyst than a politician. After all, he was trained as a political scientist.

Szigetvári rightly points out that “in all mistaken analyses there are several real and factual elements.” For example, it is true that the European Union struggles with the problems of the protracted economic crisis.

According to Szigetvári, Orbán is also right about the necessity of conducting “intelligent Realpolitik.” In the classical meaning of the word, it means a diplomacy that is primarily based on power and material considerations rather than ideological or ethical premises. Such a foreign policy, however, presupposes individual, absolutely sovereign states who can play a power game on the chessboard of the world. Hungary cannot conduct that kind of Realpolitik since it is part of a larger unit, the European Union, and is a country without complete sovereignty. Therefore, the kind of Realpolitik Orbán advocates is unrealistic and doomed to failure.

Unless, of course, Orbán is contemplating a series of moves that would end in Hungary’s either leaving the European Union on its own or being forced out of it. András Vértes, an economist and chairman of GKI Gazdaságkutató Zrt, is convinced that, in spite of what everybody says, Orbán’s final goal is saying goodbye to Brussels. Orbán suggested in his speech that 50% of Hungary’s exports should go to countries outside the European Union. “That is an astonishing wish…. The overwhelming majority of investment in Hungary comes from EU sources and EU countries, but we send the message that Russian and Chinese capital is more important for us…. That kind of talk will frighten away the few investors who are still interested.”

Thus, there is something very wrong with Orbán’s version of Realpolitik. It doesn’t seem to serve the interests of the country. Orbán urged the ambassadors to entice investors to Hungary, but Vértes is right. Given the political and economic climate in Hungary, the ambassadors’ attempts cannot be successful.

As for the overall assessment of the speech, there seem to be two schools of thought. One is that Viktor Orbán retreated from his resolve to develop an “illiberal state” and the other is that he simply reiterated and strengthened the messages of his speech in Tusnádfűrdő/Băile Tușnad. Given Viktor Orbán’s penchant for delivering talks that are anything but clear, both groups will find plenty to support their contentions. But more about that tomorrow.

Viktor Orbán’s foreign policy doctrine: only national interest

Every year Hungarian ambassadors assemble in Budapest to listen to very lengthy lectures by Viktor Orbán on their duties.  I began covering this gathering in 2010, when the prime minister outlined “a much more courageous, much more aggressive foreign policy”  than the one pursued by the socialist-liberal governments. In 2011 he announced his intention to wage a war against the European Union in defense of the country’s sovereignty, and he urged the ambassadors to steadfastly defend all of the government’s unorthodox moves. In July 2012 his speech centered around the protracted economic crisis that was “not made any easier” by the existence of the democratic model. “Europe chose the democratic model after World War II,” so that’s that. This was not a criticism on his part, he added. And a year later, in 2013, he claimed that Europe can remain competitive only if it finds accommodation with Russia. He admitted that this is a difficult proposition because Russia is not a democratic country. “However, we must understand that for Russia it is not democracy that is the most important consideration but rather how the country can be kept intact.”

If anyone thought that after his speech of July 26 Orbán would try to retreat, realizing that foreign reaction was exceedingly critical of his illiberal ideas that are incompatible with the values of western democracies, they were mistaken. Here are the most important segments of his long speech as reported by MTI. It appeared on the government’s website.

Orbán in his 2010 speech urged the ambassadors to defend the Hungary’s unorthodox policies. Today he suggested the opposite. They “should not assume a defensive posture” because “the Hungarian position can defend itself.” They should listen to what other nations’ representatives have to say, but their answers should not be substantive. It should be no more than a polite gesture, “a civilised obligation.” In brief, Hungary needs no advice from anyone.

Source: Népszabadság / Photo: Zsolt Reviczky

Source: Népszabadság / Photo: Zsolt Reviczky

The ambassadors must not represent a country which is constantly criticized and questioned on its economic indicators or on its historical sins. “No one in the whole world has the right to take us to task, especially since Hungary’s democratic credentials are the best in all of Europe.” After all, at the time of the acceptance of the new constitution every possible legal question was answered satisfactorily.

As for Hungary’s place in today’s world order, there is no question that “Hungary’s place is within the western alliance system,” but “we no longer follow a foreign policy based on ideology.” The only consideration is “Hungarian national interest.” In his opinion “clever nations invented foreign policy based on ideology for half-witted nations.” And surely, Hungary is not one of them.

Normally, Orbán does not like question and answer periods. For example, apparently the reason for his recent cancellation of a speech at Georgetown University was the university administration’s insistence on such a format. It seems that on these occasions, however, whether he likes it or not, he has to answer a few polite questions by the ambassadors.

So Csaba Balogh, ambassador to Bratislava, asked him about Hungary’s position on the Russian-Ukrainian crisis. We already knew that Orbán is reluctant to support joint European efforts at containing Putin’s expansionist plans. This time he made his position crystal clear. For him the Russian-Ukrainian crisis has only economic ramifications, and these are obviously negative. Already last year on the same occasion Orbán advocated closer ties between Russia and the European Union. Today he sadly noted that, despite his advice, relations between Russia and the European Union are getting worse and worse. And that is bad not only for Hungary but also for the European Union.

So, what will Hungary do under these circumstances? Orbán’s Hungary will seek out those countries whose interests lie in preventing further rifts between Russia and the EU and promote closer cooperation with them. In plain English, he will try to drive a wedge between the member states in their policy toward Putin’s Russia.

Orbán seems to be convinced that criticism of his “seeking a different political model”–as he euphemistically called his illiberal vision of Hungary’s future– is some kind of punishment for his “different views on Russian sanctions.” Otherwise, there would not be all that fuss.

Finally, Orbán stated that he is “dead against” immigration because he does not consider multiculturalism a desirable end. Homogeneity is a valuable feature within individual countries, and therefore these homogeneous communities should not be broken up. To quote Reuters, Orbán told his audience that “we must fight to keep this issue under national jurisdiction…. I make no secret of this: we will continue with a very tough policy that does not at all encourage immigration … For Europe to have general rules that affect all of us who think differently is out of the question.” I assume he means only extra-European immigration. In plain language, this is a “whites (and probably Christians) only” policy. He called the EU’s immigration policy hypocritical, impractical, and without moral foundation. As Reuters rightly pointed out, that might put Orbán at odds with Brussels.

It is also interesting to note what MTI’s summary left out, which other journalists who were present noticed. The most obvious to me was Népszabadság’s reporting that “one must not overrate the so-called common European values.” The liberal paper considered that sentence so important that it used it as its headline.

So, there is plenty to chew on here, and I am sure there will be more to discuss when the complete transcript is released. In any case, the European Union has a problem on its hands as Wolfgang H. Reinicke, president of the Global Public Policy Institute, pointed out a few days ago. He optimistically predicted that “Europe’s Orbán problem” can be fixed. It all depends on the political will to confront him. Orbán is ready for that fight.