19 May 2017

Éva Kocsis: We have Prime Minister Viktor Orbán in the studio. Good morning.

Viktor Orbán: Good morning.

When you were in China, did you think of the joke about the mouse and the elephant, who said in unison: “Can you hear us roaring?”

Well, as on one occasion I had the President of Sri Lanka and the President of Fiji sitting next to me, I didn’t.

So we’re a completely equal partner of China then?

In my view I’d rather say that they didn’t choose the participants in this historically significant meeting on the basis of size, but rather according to the logic of the significant increase over the next few decades in China’s role in the world economy, its activity and its investments. China is a distant country, far from the rest of the world – particularly if we look at it from Europe. Therefore goods, investment projects, tourists, money and construction industry capacity will have to travel long distances, and they invited the countries which are situated on that route. In other words, they invited the countries which will potentially play a part in the growth of the world economy over the next two to three decades. It is splendid news that Hungary is included in this group, that Hungary is in this circle, and that we are seen as one of the locations in the world economy with growth potential over the next ten to twenty years. This is an opportunity that we should grasp.

But the situation is that in business and economic matters size is far from irrelevant. Can we say that Hungary has the strength to take on the competition with those who are jostling with each other on their way towards China?

Well it’s true that steps have already been taken in different groupings, and competition among the countries has also been part of this. For instance, in Budapest this autumn we’re hosting the business forum for economic cooperation between sixteen Central European countries and China. We meet once a year, sixteen Central European Countries. You could call this a jostle, but I’d rather say they’re competing for or seeking opportunities, and China is big enough for all the Central European countries to find opportunities. The question is what kind of thoroughly developed plans, proposals and programmes we’re able to come up with, how effectively we negotiate, and how the facts in the economy are able to support those programmes. Hungary is in an easier position today; it’s never easy to be Hungarian, but it’s easier than earlier, because they look at the economic figures and see that the country’s finances are in order. They look at unemployment and see that in seven years we have cut it by seven to eight per cent. They look at the growth figures – as they did for the latest quarterly figures – and they say: “Hang on, there’s a country which is growing by more than four per cent”. These are the things that genuinely create a competitive position.

We’ll come back to the figures later. But the question is – now that you’ve mentioned the countries of Central and Eastern Europe – whether we are partners or competitors with the V4 in relation to China and Asia.

Both – but our competitor position with the V4 has always been fair, we’ve never tried to trip each other up, we’ve never harmed the Poles, and the Poles have never harmed us; and I can say the same about the Czechs and the Slovaks. This sense of working together, cooperation, our awareness of our common geographical situation and historical past, is stronger than the temptation to engage in undignified economic competition. So the decisive feature is cooperation. I’ve just read, for instance, that Huawei – which has set up its logistical base in Hungary – is now creating some four thousand new jobs in the Czech Republic. So there’s room for us all.

Here in the studio we’ve had the Chief Executive of Eximbank, with whom we’ve spoken about the specific agreements concluded as a result of the visit to China. And earlier we spoke to the head of the trading house about the fact that it obviously takes economic strength for Hungary to gain ground in foreign markets, and it is also important for Hungarian small and medium-sized enterprises to have the desire, the ability and the strength to join in this process. If I’m not mistaken, in China it was a specific goal to create opportunities for Hungarian SMEs.

Yes, it undoubtedly was. But the biggest problems for SMEs are size and distance, so we need to take things one step at a time. In my view the most important thing is for Hungarian goods to be available on the Chinese market without restrictions. Over the past four years Péter Szijjártó personally and the ministry he leads have done a fantastic job. If we look at how many export agreements we have negotiated for export to China in different product groups – particularly in food industry product groups – we can see that we’re in a very favourable position in global terms. This is the result of diplomatic efforts: diplomatic efforts in trade policy. And for us Hungarians the most important thing is to be able to sell our goods not only in the West, but also in the East. We’re safe if there’s excess demand for Hungarian agricultural products, and this is the situation now. The next question is how Hungarian small and medium-sized enterprises can become partners for Chinese companies. Of course SMEs are confronted by the language barrier, distance, the difficulties of travelling out there, coming back and setting up an office. These things are not so simple. To make this work we need trading houses, investment offices and a system of incentives. In this regard the Chamber of Commerce provides a great deal of assistance, as they know best what Hungarian businesses need. But I see the large flagships as equally important. There have been decisions on large-scale cooperation schemes which small and medium-sized enterprises will be able to join later: the setting up in Hungary of Bank of China’s regional centre, Huawei’s a goods distribution centre, and of China’s regional tourism bureau in Budapest.

Which is clearly not an irrelevant consideration, even before one thinks about the economic environment – as the economic strength of a small enterprise, a business, depends on the circumstances in which it operates. Yesterday you said that the current growth level of four per cent is all very well, but not enough.

Well, we have an economic plan covering more than ten years. In 2010 the people honoured us with their trust. Then, together with Mihály Varga and György Matolcsy, we put together an economic plan for a period of more than ten years, and now we are working on its implementation. As the Hungarian economic and financial system was in a state of collapse, the first task was to stabilise Hungary’s finances, to put them in order. The symbolic culmination of these efforts was when we managed to send the IMF packing, because that showed that our efforts had succeeded. We successfully closed the first phase of our ten-year economic plan. The second phase of the plan was bringing about economic growth within a range of one to three per cent, as before 2010 Hungary was in economic decline. We successfully accomplished this as well. And now, in 2017, we’ve entered the third stage, in which we’re attempting to raise economic growth to a range of between three and five per cent. In this respect the first quarter results are promising and projections are also looking good. My calendar features the opening and the foundation-stone ceremonies for major new projects. From these I can see from a practical point of view – beyond statistics – how the Hungarian economy is doing; and I can say that in 2017–18 we’ll definitely have growth of between three and five per cent. But this is not the end of the story, because the last phase of our plan is to increase growth to a range above five per cent. As far as I can see, this will be possible at some time around 2020. Before then one or two things will happen: for instance, we’ll have to defend this economic policy, which in essence is based on pay rises and low taxes. We must win the election, as the Hungarian opposition wants to change this economic policy, and so we must defend it. We must defend it in the general election, and, if we succeed, after 2018 we’ll reach a growth range above five per cent by 2020.

We’ll continue with this in a minute. You mentioned major investments as one of the steps towards higher growth. What else is there? At first sight these don’t seem to be enough.

Tax reductions. Many had doubts about this in 2010. They thought that economic growth couldn’t be achieved simultaneously with tax reductions and financial stability. This is a major dilemma in economics. I don’t want to understate the importance of this issue. There’s a reason why so many have been proven wrong. All Hungary’s liberal economists have been proven wrong, as they claimed that the two things couldn’t be done at once: they always stabilised the finances through austerity measures, and growth always fell victim to that stabilisation. We wanted to break away from this approach. We wanted both growth and financial stability at the same time: the solution to this lies in targeting and achieving full employment through tax reductions, related public works schemes and the job protection action plan – which is a targeted form of tax reduction. These are the milestones along the path which has led to where we are. This has been a success. So I believe that tax reduction remains a key issue in Hungary. In Hungary we shouldn’t increase the amount, the percentage of money being collected from taxes. If we return to that socialist strategy it will kill the Hungarian economy. We must pursue a policy of tax reduction: 2017 will also be about this, as is the 2018 budget.

Could you give us a realistic target figure?

Well, in Hungary there are many different types of tax, so we can’t work with a single figure. For sales and consumption taxes, though, I can tell you that we’ve implemented major VAT reductions on basic food items – from pork to milk to eggs. Fish will soon be on the agenda: we’ve reduced rates from 27 and 18 per cent to five per cent, and there will be more reductions from 1 January 2018. We want to reduce VAT on internet services to five per cent, and we are also preparing for major cuts in tourism, hotels and catering services. Last year we implemented a measure, this year we’ve already implemented a measure, and next year we’ll also reduce VAT on these services to five per cent. By European standards corporation tax is at a very low rate: less than ten per cent. And we’ve also managed to reduce personal income tax: first to 16 per cent, and it now stands at 15. And we haven’t given up our plans. We mustn’t be dogmatic: tax reductions signal a direction, and then we’ll see what tax reductions in which areas the specific economic figures and performance permit. The third pillar is policy on pay increases. If you increase wages in line with economic output, the economy will benefit. Of course the question is deciding what perfect harmony involves. The founder of this economic policy was György Matolcsy, and its implementation is being directed by Mihály Varga, so the credit goes to them; but I should just quietly mention the Chamber of Commerce and Industry and its leaders, because it’s very difficult for ministries to answer questions about the actual situation of the Hungarian economy, what the next steps should be and what the right percentages are. The real players in the economy – who have knowledge on the ground – can answer these questions. In the area of wage rises it was therefore important for us to answer the question of what is and isn’t possible and what should or could be done by concluding an agreement with the trade unions and employers. As a result we designated figures for pay rises – based on the real-life experiences of stakeholders in business – that could be delivered without increasing unemployment or reversing the economic results we’ve achieved so far. Of course a sense of proportion and good judgement are important, and in recent years both employers and the Chamber of Commerce and Industry have provided this to the Hungarian government.

János Lázár has said that by 2030 the number of children born will have to increase significantly. I know you’re working on how this could be achieved. Is there any new measure in this area that will definitely...

There will be. There will be new measures…

Would you tell us about them?

Not just yet: this morning it would be premature. Instead I’d like to clarify the starting point. We have some fine achievements: people are working more and better, it’s worth everyone’s while to work and the figures are improving. But in essence life takes place within the framework of families, and families are always more than a few figures or economic performance indicators. And the future of Hungary also depends on the future of families. If we have strong families, Hungary has a future; if we don’t have strong families, our good economic figures will count for nothing – they can only signify temporary achievements. So in the long run a precondition for both survival and success is for us to have optimistic, loving families which feel safe and secure. This needs men and women: we advocate an old-world, conservative policy, and for us a family means a man and a woman, with children born as consequence of that. The situation in Hungary today is that not enough children are being born. We don’t want to interfere in anyone’s life, because it’s for everyone to decide for themselves how many children they want; it’s for everyone to pursue their own life strategies themselves. No government of any kind can influence that. You can’t convert people, because whatever is in their heads and hearts will happen. But it’s important to say that if there aren’t enough children being born we’ll die out, and – to return to the beginning of our conversation – we’re not China, where there are now more than 1.3 billion people, and where from time to time they can afford a population drop of a few million. Hungarian citizens number just ten million, and if we add in all the Hungarians living worldwide I could perhaps push this number up to, say, 15 million. This number can easily waste away. In 2010 a married couple – one man and one woman – had on average just 1.2 children or thereabouts, if you can imagine such a figure. In other words they weren’t even having enough children to replace themselves in the long run, because on average two people had fewer than two children. That figure of 1.29 now stands at somewhere around 1.49. This is without immigration and migration – which is a key issue, because we’re engaged in another big debate: whether we can save the nations of European without taking in migrants. Our answer is that this is possible, but we have to pursue a correspondingly appropriate family policy. What János Lázár was speaking about is that the Government had a Cabinet meeting on demographics and family policy, and we adopted a decision that by 2030 we must have created conditions in Hungary for there to be an average of 2.1 children for every two parents: the number needed to sustain the Hungarian population level. This is a huge undertaking, a formidable and courageous target which will require a great many measures – from family support and the promotion of employment and housing, to the transformation of education. We must do a great deal for our nation to become by 2030 a community which is definitely capable of reproducing itself biologically: in other words, for our nation to be built of loving, safe and stable families.

Where is the atmosphere more positive these days: at your talks in China or in Brussels?

They’re different worlds – you also have to be careful in China. The Chinese are more optimistic people: harmony and the drive to achieve harmony are at the centre of their philosophical thinking. By contrast, striving for freedom is at the centre of Western politics; and striving for freedom is always a source of conflict, because we need to ask what it is we should free ourselves from, and how we should be free. European politics is in a continuous state of high alert to defend itself against phenomena that could endanger freedom, so that is what everything is about. In China, by contrast, people seek solutions to problems that lead to some form of balance, which they call harmony. Harmony doesn’t just mean a state of external equilibrium, but internal equilibrium also. They are a people with a positive outlook on life, and so it’s good to talk to them. But at the same time they are a very intelligent nation which pinpoints its own interests with geometrical accuracy; and while they’re amiable, when it comes to their own interests they don’t yield an inch. So we have to think long and hard to be able to propose solutions – smaller countries always have to think longer and harder – which are equally good for larger partners and also for us: solutions which are good for both them and us. This demands a major intellectual effort. And so in terms of atmosphere, it’s easier in China – but it’s harder intellectually.

The European Parliament likewise doesn’t yield an inch when it comes to its interests – or, in other words, they also aspire to a kind of state of balance. Talking about the EP resolution, the head of the parliamentary group of the European People’s Party has said that now the ball is in your court. If you respond appropriately, you’re a team player; if you don’t, there will be consequences.

There, you see…

It seems friendly, but not really a slap on the back.

Well, you see, no one in China would ever say anything like that. This clearly demonstrates that European politics has become distorted. Regardless of party affiliation, the fact that anyone in Brussels should address a Member State like that – telling them to behave in one way or another, and if they respond one way it will mean this, while if they respond another way it will be bad news... This whole attitude is disheartening. The essence of Europe doesn’t …

Fine, but that’s what rules are like: they must be observed.

But no, the essence of Europe is not in Brussels: its essence is in the Member States. Europe is not Brussels: Europe is Warsaw, Budapest, Paris, Berlin, Rome – it is in the hearts of the nation states. And it’s discouraging that the nation states don’t receive the respect they are due from the people working in the European institutions – because the latter are in the saddle, but sat on the horse back-to-front. The reality is that they depend on us, not the other way round. This is a mistake, this whole approach is a mistake, and the European Parliament’s whole resolution recently is proof of a misguided policy. There’s no doubt that there’s an obvious underlying reason for the attacks now being made against us, and everything else is irrelevant: that reason is migration. The situation is that in Europe there is a major community of intellectual, political and economic interests. This community sometimes even crosses party boundaries, setting for itself the goal of transporting hundreds of thousands of – or, if possible, a million or a million and a half – immigrants into Europe every year. Let’s be clear about this: the founding father, joint funder and co-organiser of this strategy is George Soros. The European Parliament will now prepare a report – this is not the first one, by the way; the previous one was called the Tavares Report, and it was an ignominious failure. This is one of the European Parliament’s most wretched moments. They will now prepare a Soros report. Let’s tell it how it is: the European Parliament has now decided to commission a Soros report on Hungary. If anyone reads the resolution we’re talking about – the one that the European Parliament adopted a few days ago – they won’t know whether to laugh or cry. My favourite part of it is when they  list our supposed wrongdoings. I’ll quote one of these now. Ahmed H. – a Syrian national resident in Cyprus – was, they said, given a ten-year prison sentence in an unfair trial, simply because he used a megaphone to call for calm, and because he threw three objects at the border police. Well now, this is the Syrian man who wanted to break through the fence during the Röszke riot, who used a megaphone to incite people to violence, and who attacked police officers. This is what it looks like: this is our wrongdoing, this is how it’s described in Brussels, and this is given as a reason to condemn us. It is astonishing. So one doesn’t know whether to laugh or cry, but this text, too, clearly shows that the Soros teams in Brussels are extremely determined, and are prepared to make absurd allegations.

If we jump forward in time, and focus on a court decision, will Hungary laugh or cry in, say, three or five months’ time?

Well, Hungary is a country with faith in its own future. These events – being attacked in Brussels – do not deter us from our goals, and they will not change our goals. Hungary will continue to pursue its own path, as it has done so far. We want to decide who we live alongside and who we won’t live alongside, and we shall not surrender this right to anyone. We want to determine the level of energy prices in Hungary, and we shall not surrender this right to Brussels – much as they would like us to. And we shall also decide on tax levels and how to regulate our economy – we shall surrender this right to Brussels. So, whatever they may do in Brussels, I believe that national powers cannot be transferred to Brussels without the approval of Hungary and the other Central European countries. We represent a European position. Of course they’re playing the game with us – saying that whoever doesn’t agree with them doesn’t represent a truly European position. This is not a very smart argument. The truth is that we want to protect the current division of powers and rights in Europe. This is a European achievement: we created it together. This, too, is a pro-European position: we shouldn’t change what we have and what we have built together. They claim that those who don’t want to change this aren’t European. In my view, that argument is not acceptable; we must insist on Hungary’s national interests.

But the situation is that, thanks to European People’s Party politicians, a stronger resolution was adopted, and the process leading towards invoking Article 7 in relation to Hungary will start. The question is how far Hungary will go: all the way, or are there provisions in the laws – we know more or less what these laws are about… What if they ask for changes in the legislation on higher education and NGOs? So, what if...

And migration: the migration legislation is the most serious.

And migration. But are there any of these that we’ve mentioned here that you’d be willing to change?

In the European Union there is a dispute settlement procedure. If someone doesn’t agree with someone else, or if a nation state is found to be in violation of a European regulation, there is a procedure for settlement of the dispute. These procedures are ongoing, and we are regularly involved in these disputes – sometimes they’re about economic issues, sometimes ideological issues, and sometimes they’re about immigration or migration. We take part in these debates, present our case, and if needed we go all the way, as you put it: through to a court case in which it is decided who’s right according to the legality of a given case. We have always recognised these decisions, but – in the spirit of Ferenc Deák – we won’t surrender any of our rights.

But what if the court decides that Hungary must change this law?

Well, then Hungary will have to implement that decision. As to exactly what implementation entails and how it should be done, that will be the next struggle. Because we may be subjected to rulings of one kind or another, but no one can ever convince us that we should not fight for our interests. We shall always fight for our interests.

You have been listening to Prime Minister Viktor Orbán.

(Cabinet Office of the Prime Minister)