Budapest, 18 July 2014

Gábor István Kiss: Our guest in the studio today is Prime Minister Viktor Orbán. Good morning to you too!

Viktor Orbán: Greetings to your listeners, good morning.

GIK: We have several important topics to discuss this morning, but a few pieces of news cropped up unexpectedly yesterday, and I’m referring to news from the world’s conflict zones. Yesterday, an airliner flying from Amsterdam to Kuala Lumpur was hit by a rocket not far from Donetsk, on the Ukrainian side of the country’s border with Russia, and the plane crashed, killing every passenger on board. The Prime Minister of Hungary I would imagine also received information about what happened; what do you know, what happened as far as you know, what information do you have?

VO: Firstly, we expressed our condolences to the families of the victims. And indeed, in today’s world the shooting down of a passenger airliner is unusual, rare and shocking, and must be thoroughly investigated.

GIK: If it was shot down.

VO: According to the information that came in last night, that would seem to be the case. I can’t state it with 100 percent certainty, but let’s say that when I left the office for home at around 11pm last night, then the latest reports painted this picture. But all reports added that the information was as yet unconfirmed, so I would in no way like to make the impression that Hungary knows things better and with greater certainty than, for instance, the President of the United States, but we must undoubtedly prepare for the fact that innocent lives have been lost in the airspace of a neighbouring country as a result of…

GIK: Something…

VO: …it would seem that dozens of people have died as a result of military action. We have read similar news before, although it happens rarely, but these have always happened far away from us geographically.

GIK: Plus, a passenger jet has never suffered an accident of this kind above 30 thousand feet… Let’s refer to it as an accident for now.

VO: But the fact that something like this happens just next door draws our attention to the fact that what is happening in Ukraine, although the news sometimes gives people the impression that these things are happening on another planet, are in fact happening on our doorstep. If you cross the border to Transcarpathia, and the Hungarian Government regularly receives reports from there also, then you will see that a significant number of what we could call refugees have already gathered there. People who have moved either temporarily or permanently to the area of Transcarpathia from the eastern part of Ukraine, meaning there is migration going next door to us. A migration that also affects the Hungarian community living there, and in view of our being a neighbouring country also affects us, the Hungarians. We need to be vigilant and we must prepare for the possibility that this situation will not be resolved within the next few months, but will remain with us permanently for several years.

GIK: Now the leaders of the member states of the European Union clearly had food for thought, and I don’t mean the downed airliner, because that was still an unknown factor early in the week when you met with the leaders of the member states in the European Council, your colleagues, after the European Parliament voted to authorise Juncker’s candidateship at the presidential elections. But let’s get back to the eastern stretch of our borders; how difficult an issue was Ukraine and Russia at the EU summit?

VO: Ukraine is a separate point of order at every European Union summit. I must tell you that every EU leader without exception is aware of the fact that this is an extremely grievous issue. And in addition we are talking about an issue that isn’t simply an international conflict. Meaning we aren’t just talking about the fact that there are rogue military groups operating in the eastern part of Ukraine, the activities of which the government of Ukraine is currently incapable of preventing, and we are not simply talking about the fact that these rogue groups are clearly linked to Russia, but the fact is that following the political changes we have not yet seen the emergence of a stable, democratic state of Ukraine. So there isn’t just a problem in the country’s eastern regions, but we also have no idea how Ukraine will operate in the near future. What we can see is that the Ukrainian economy is currently unable to lift Ukraine onto its own two feet, and so the country requires foreign assistance. The level of the required assistance is frightening and the amounts of money needed are staggering; the world must pool its resources to provide a significant budget for this aid, and it seems that it will be the Western world who organises this, so that we can keep the Ukrainian economy operating at all. We rarely talk about it, but there has been a 60 percent increase in consumer energy prices in Ukraine in recent months and further increases can be expected; when autumn arrives we can expect to face serious humanitarian issues too. And so the world must prepare for the fact that in addition to military action, everyone, including Hungary, must pool together to support a Ukraine which is currently incapable of assuring its stable operation. Another thing we rarely talk about is the fact that currently only one or two states are providing tangible assistance in Ukraine, and the bulk is provided by Hungary. We are standing unassumingly in the shadows; the Hungarians don’t like to help while shouting the fact out to the world. We like to help, but we don’t like to brag about it. To all intents and purposes, Ukraine currently receives gas primarily from Hungary, and secondly from Poland, and perhaps from the autumn Slovakia will also be able to do so. So Ukraine is currently provided with the most tangible assistance by Hungary.

GIK: Let’s get back to Juncker becoming the President of the European Commission. I can envisage lots of conflict; there’s usually lunch and dinner at EU summits of this kind and you sit at the same table, if I’m not mistaken.

VO: On this occasion, dinner, which was planned to begin earlier, but which was delayed because of the behind-the-scenes negotiations, began at 8 o’clock, and we put down our – I wouldn’t say spoons, but our pens – at 2am.

GIK: So there was a dinner. Were you both placed at the same table, or – if you don’t mind the joke – did you have a little table all to yourselves at the end of the row with David Cameron?

VO: We wouldn’t have been surprised if the latter had been the case, but luckily political culture hasn’t sunk quite so deep in Europe just yet.

GIK: So will you be able to work together with President of the European Commission Jean-Claude Juncker despite the fact that your clear standpoint was that you did not support his becoming President of the European Commission?

VO: First of all, at the beginning of the week following the elections I immediately called the new Commission President to congratulate him on his success, as did David Cameron. I told him that I am the only one who doesn’t object to his smoking habits, meaning to the fact that he regularly smokes during council meetings. He appreciated this. We have a good and old personal relationship, so the situation is made a little more complicated by the fact that we have otherwise had a good personal relationship for a decade and a half, which is something that we should handle separately from the issue of how we see the future of Europe and what kind of personnel the leadership of Europe requires to achieve this renewal. These are two totally separate things. We have never made a secret of our differences of opinion, and he is a very open man, meaning we should give President Juncker credit for being one of the people who speaks most openly within the European Union, because of which many people find him provocative. I don’t think he is; I think that he has a good style which helps the precise mapping of differences of opinion within Europe, and this kind of style is better suited to achieving solutions to these issues. And prior to the Commission and Council meetings I spoke to President Juncker alone about the future of Europe, in addition to which he presented a programme, meaning he put forward a ten-point programme explaining the most important issues that require action over the next five years. We agree with the majority of these points and wish to enter dialogue concerning the remainder.

GIK: Let’s have a look at the dialogue part; what is it that…

VO: Immigration.

GIK: Is immigration the main point of conflict?

VO: I wouldn’t call it a conflict. People in the EU, and as far as I can see the majority of European leaders think that immigration is a good thing. And the various green and white papers also state that Europe needs well-managed immigration, but I disagree. I think immigration is a bad thing. Europe doesn’t need immigrants; Europe belongs to the Europeans. We must welcome and assist those who flee political persecution, but people who leave their homes because of financial difficulties should not be helped by letting them settle down, but instead we should help them succeed in staying at home through a coordinated policy. So the target of immigration policy should be transferred from Europe to those countries from which immigrants arrive. And in addition I also don’t agree with the argument that Europe needs more labour, because if Europe needs a larger workforce then we should perhaps mobilise our own unemployed and instead use the money we would spend on immigrants to launch training programmes for them, which would help them participate in the European labour market system, including the almost ten million strong European Roma community. When we talk about labour reserves, we should talk about them instead of, for instance, immigrants from Africa; this is a more logical policy in my view than the one which, it would seem for the moment at least, is still in the majority in Europe.

GIK: Do you count on, or did you bring up what we might call pre-emptive conflicts that we can expect between the Hungarian Government and the European Commission? I am thinking in particular about the Land Act, with regard to which we have not yet received Brussels’ standpoint and I expect the files will now make their way to Juncker’s desk, and will Brussels be making a statement with regard to the programme introduced to save foreign currency debtors; are you counting on such a statement, or on the advertising tax?

VO: Conflicts such as these are not of a political nature to begin with, they become that later.

GIK: But if one talks to the President of the Commission about them, one might be able to pre-empt a lot of letter-writing.

VO: What usually happens is that the EU has an expansive and wide-ranging bureaucracy, and this is what begins to name the various problems, which are then put before the politicians. In anticipation of this, as you have just said partly in analysis and partly as a piece of advice, what I agreed on with President Juncker…

GIK: I’ll settle for either.

VO: Yes, and more so because I will accept your advice, so what we agreed on with President Juncker is that we will be holding a separate meeting before the new Commission begins work – it has not been convened yet – at which we will go through the various issues that are expected to be topics of debate between Hungary and the European Union over the next five years, so there will be a working meeting of this nature.

GIK: The Land Act will be one of the greatest sources of conflict.

VO: The Land Act is a conflict of this nature, yes, and the problems of foreign currency debtors will also become one, and the issue of cheap energy, the reduction of utility prices, the issue of taxes and surtaxes on banks and multinationals will continue to come up again and again. So yes, we are roughly aware of the minefield we will have to negotiate during the upcoming years.

GIK: But, just to stick with my asking you questions, what are you counting on with relation to the Land Act; will the legislation already adopted here in Hungary have to be amended or not?

VO: The Land Act was devised to serve certain goals, Hungarian national economic and social goals. Farmland is a key issue for Hungary because Hungary produces no, or at least very little, energy of its own and its natural resources are also limited, or rather few. If I include land in this category, then Hungary’s only serious and important natural resource is its farmland. And this means that measures that affect it and decisions concerning it fall within a special sphere of responsibility. This cannot be given away, put on the line or handled irresponsibly. European principles are important, but farmland must remain in the hands of the Hungarian people and it must stay in the hands of Hungarian farmers. There are several regulations from Austria to France within the global world and the European Union’s free trade system, which have enabled Austrian farmland and French farmland to remain in the hands of Austrian and French farmers. These are the regulations that we have transposed into the Land Act and we are not prepared to accept double standards; what is acceptable in one country must also be accepted by the European Union when it comes to Hungary.

GIK: Let’s get back to some home issues. The spending freeze. Are you sad that we have had to stop the construction of football stadiums?

VO: We haven’t had to stop, luckily.

GIK: It would certainly seem so, because this 110 billion forint package that the government froze yesterday citing the need to achieve the deficit target includes stadium construction projects for the most part.

VO: Yes, but preparing the budget is a complicated matter and even I sometimes find it difficult to understand it precisely. The budget has great and interesting depth. This is a spending freeze that includes several items that we wouldn’t have been able to pay for anyway, for instance some sports development projects cannot be financed this year because the planning is running late. We would have liked them to go ahead, but these will be delayed until next year regardless of the freeze. We can call this a freeze, or we could call it saving money.

GIK: And why was there a need to introduce this measure at all? Although our listeners have already heard a long conversation about whether the deficit target can be kept to or not, so we needn’t go into too much detail, but clearly it was you who said to the Minister okay, certain monies can be frozen. Why?

VO: What usually happens is that the Minister responsible for the budget and joint finances puts forward a proposal, and it is he who said that although we are going to succeed in keeping the budget deficit under 3 percent, since we will be close to the maximum target the right thing to do is to make it absolutely clear to everyone that the Hungarian Government will definitely keep the deficit under 3 percent. The significance of this is that Hungary needs to continuously take on loans to replace expiring debts, so in order to pay back expiring debts we need to acquire money, and to all intents and purposes we are continuously swapping Hungary’s various debts and the conditions and level of interest at which Hungary acquires new financing is of paramount importance, and the interest rate is significantly influenced by whether those from whom we borrow the money regard the budget as being stable and feel that the Government is absolutely committed to maintaining a healthy budget balance in Hungary. Related decisions sometimes need to be made; I don’t thing that spending freezes are really needed at all, but they are justified as precautionary and safety measures.

GIK: Nearing the final third of our conversation, I would like to ask you about education and healthcare policy. The official gazette recently published new legislation according to which Parliament has adopted the amendments to the Education Act, and the most important part that I would like to ask you about now is that there will be chancellors working at the country’s universities as a kind of financial manager. Will you be appointing these people yourself; do you already know who they will be? The experts say that these are existing models, similar chancellor systems exist around the world.

VO: To say the least; they are the norm.

GIK: The question isn’t whether there will be chancellors or not, legislation has already decided that. The question is who these chancellors will be and to what extent will they succeed in cooperating with university rectors. Do you already know who you will be appointing to these posts?

VO: Some of them yes, and I am awaiting recommendations on the remainder.

GIK: Could you give us some examples?

VO: I will not tell you any names, but they will without exception all be acknowledged economic experts.

GIK: So economic experts for the most part?

VO: Yes, of course. I would have been happy to forego the introduction of this system, although what is characteristic of the majority of Europe is that the financial responsibility for the operation of institutions of higher education is usually handled separately from the rector’s responsibility to maintain the level and quality of university education. However, the universities in Hungary are in a bad state.

GIK: In a financial sense?

VO: In a financial sense, yes. We have just reviewed the finances of a few institutions, and we have had to order the reviewing of all of them. They are in debt and their financial management is in many respects irrational. I am not putting the blame on the directors of these institutions, because the question of where the responsibility lies is another matter, but I would certainly like to set down the fact that they are in a bad way, their financial management is poor, our universities are operating under financial conditions that are unsustainable in the long term and this cannot remain so. Universities are not supposed to create financial crisis zones; they are supposed to operate in a balanced way and to create a peaceful atmosphere so that they can provide the young people who go there with a peaceful, balanced and dependable opportunity to study.

GIK: I only asked whether you meant they were in a bad way in a financial sense earlier because if we take a look at the output, and at the value of their diplomas, then we could perhaps use very similar adjectives. There is work to do in this area too.

VO: You are right in that too.

GIK: To put a concrete question to you: can integrating universities be a possible solution, as an article published yesterday suggested? There are several similar faculties in Budapest, and if such super universities were to be established it would automatically lead to a significant improvement in output.

VO: If only that were the case. I’m afraid that would not happen automatically; the quality of university education is influenced by the organisational framework within which teaching occurs, but what influences it the most remains the quality of the teaching staff. Universities with good lecturers give their students valuable diplomas. At universities where students are forced to perform, and this is what good and suitably prepared teachers do, the output as you call it, or rather the quality of the new diplomas will be good. Where teachers are unfortunately not so suitably prepared, the quality will be worse.

GIK: Yes, except that university lecturers are in turn taught by universities, so we have arrived back at the beginning of the circle.

VO: I nevertheless regard the human quality as being the most important. A university is about the teacher-student relationship, after all. The job of the state, within the framework of state-financed universities, is to provide a peaceful and balanced working environment for the development of this relationship, this teacher and student, master and pupil relationship. This environment is not currently present, because universities are in a bad state financially. They are in debt, the structure of their expenditure is often irrational and mid-term dependability is clearly not included in their planning, and this cannot remain so, because we finance universities out of public monies; this must be changed. We and I must provide a guarantee to Hungarian voters that their tax forints are also used wisely by the country’s leaders when it comes to higher education.

GIK: Another key issue with regard to the future of Hungary is the performance of the healthcare administration. Hospitals have accumulated a record amount of debt in past years, primarily in unpaid bills. What the experts say, and they have also done so here on “180 Minutes” on several occasions, is that it has become almost impossible to solve the problem through modifying financing and there is a need for some kind of restructuring and definitely an input of new resources within the field of healthcare. Can you envisage the possibility that some hospital services, extra services, could be charged for?

VO: We would like to prevent such a situation. There are of course certain medical interventions that seemingly belong under the umbrella of healthcare, but which are in fact cosmetic interventions, so there are areas in which something like this could be introduced, but things of this nature can only be a marginal, special cases and can never overrule the fundamental principle according to which people must receive the required healthcare in return for the social security contributions they pay. But in the interests of seeing clearly, I would like to separate two issues here. The first is how in the short term we should go about solving the financial problems of hospitals that have found themselves in difficulties. I would like to mention in brackets that we have realised more than 300 billion forints in development projects within the Hungarian healthcare system during the course of the past few years. So while we may have a hole in our shoe, our jacket is still elegant, because spending 300 billion forints on healthcare and hospital development projects is a luxury that usually only strong and rich countries can afford. Maintaining the level of quality would in itself have been a great achievement on the part of the Hungarian state, but the fact that we have been capable of realising development projects of this magnitude is I think an achievement that deserves praise. But hospitals still have short-term financial difficulties that need solving. However, what causes these difficulties systematically and intrinsically is that the general practitioner system is not strong enough. If we want to solve the problems of our hospitals then we in fact need to reinforce our GPs. And they are not in a good state and often work in financially difficult conditions; it is they whom we would like to help achieve more favourable conditions in the upcoming years so that they can work more and to a higher quality. They often perform their work in unworthy conditions and it depends on general practitioners what percentage of our illnesses can be treated at home if we are ill, and in what percentage of cases we need to be sent on to hospitals. So the number of patients who require hospital treatment is also dependent – and I’m not saying exclusively – on how strong our general practitioner system is. And I must say that this is where the system is weakest and so this is where we primarily need to intervene and provide general practitioners with more resources.

GIK: Our guest this morning had been Prime Minister Viktor Orbán.

(Prime Minister's Office)