Viktor Orbán in Saudi-Arabia: Wishful thinking and reality

One almost never knows Viktor Orbán's schedule ahead of time. So it was something of a surprise when I learned on October 3 that Viktor Orbán had delivered a speech about the "political and economic cooperation" between Hungary and Saudi Arabia and that the speech was delivered in Riyadh.

From the speech we learned that ten years ago Orbán had led a large delegation to Saudi Arabia with the aim of forging closer ties between the two countries, but due to the lost elections and the subsequent mistaken direction of the socialist governments' foreign policy this initiative "came to naught."

After talking to King Abdullah bin Abdul-Aziz Al Saud the Hungarian delegation "was authorized to discuss matters of agriculture, water management, health care, education, and sports." The Hungarian reporter on the scene was especially interested in finding out whether there was any plan for Saudi financing of Hungary's sovereign debt. Viktor Orbán's answer was cautious. He mentioned a mysterious "Swiss-Hungarian banker active in the Arab world" who is preparing such cooperation. Orbán admitted that relations between the two countries are hampered by the lack of a direct flight between Riyadh and Budapest, but it became quite clear that Malév is in no position to accommodate. If there is no direct flight "Saudi tourists, those who would like to take advantage of Hungary's health facilities and business" will not come to Hungary. It was a great surprise to hear about all those sick Saudis coming to Hungary to be cured when as far as I know Saudi Arabia provides free and most modern health care to all its citizens. In any case, Miklós Szócska, undersecretary in charge of health care, was in the delegation.

On October 4 Orbán delivered a speech to members of the Saudi Chamber of Commerce in which he painted a glowing picture of Hungary's prospects in the next few years. He made an allusion to his admiration of authoritarian governments like Saudi Arabia and China where it is so easy to do business. He announced that "Europe at the present moment is incapable of change and therefore the continent can look forward to crisis-filled years full of tension." However, he quickly added that this is not true about the whole continent because "in the next five to ten years" the growth of the European economy will be produced not by Western European countries but "by the Central European region between the Baltic Sea and the Adriatic." And in that region "Hungary will occupy center stage."

He especially emphasized the new tax code which will provide the simplest, most transparent system with the lowest tax rate in Europe. He pointed out that the government will change the educational system, health care, and the system of old-age pensions.

In parting, Viktor Orbán praised his trip as "extremely successful" and said that several agreements had been signed. Quick economic success is especially expected in the fields of health care and agriculture. The Hungarian reporter again asked about Saudi interest in buying Hungarian government bonds and Orbán's answer was evasive. He said that György Matolcsy led a delegation to negotiate with the governor of the Saudi Central Bank and "they agreed in a few things." Whatever that may mean.

He described his delegation to Saudi Arabia as "the advance guard" that managed to revive Saudi-Hungarian relations. This metaphor of "advance guard" signals to me that perhaps the results of the trip were less spectacular than the Hungarian prime minister would like us to believe.

The glowing terms in which Orbán described the state of the Hungarian economy have a sense of unreality about them. He assured his audience that in a year or so "Hungary will be very competitive." But the present reality doesn't promise such a bright future for the country, especially not in the next year or two. The new flat tax, which Orbán extolled in Riyadh, has led to a shortage of tax revenue that has caused further austerity which in turn has resulted in a slowing of consumption. In spite of all the extra revenues confiscated from banks and private pension funds the government will be most likely unable to meet the promised 2.8% budget deficit for 2011. The 2012 budget also rests on shaky grounds. The government is calculating on the basis of a 2.5% economic growth. Even the most optimistic forecasts talk about 1.5%, but the majority of economic think tanks predict an anemic 0.5% growth in GDP, perhaps even a shallow recession. Most predict hard times for 2012.

The forint has been steadily losing value to the euro and the Swiss franc. Yesterday it spiked above a level not seen since January 2009– 300 forints to the euro. Moody's is thinking about downgrading seven Hungarian banks. Moreover, most of the banks are no longer willing to lend money because of the risks involved given the state of the Hungarian economy and the unpredictability of the Orbán government. The construction industry is practically dead and the situation will be even worse if the government stops building shopping centers as LMP demands.

I wonder how much the Saudis bought of the rosy economic picture painted by Viktor Orbán. I suspect they know as well as the rest of us who read foreign assessments of the Hungarian economy that this boasting is a desperate act of bravado.

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Ron
Guest

He made an allusion to his admiration of authoritarian governments like Saudi Arabia and China where it is so easy to do business.
Obviously, he never did business in these countries. It is very difficult to set up a company. And if you do it, it always needs to be a joint venture with a local partner. Unless you are in a special zone where different set of tax (if any) and legal rules apply.
In fact to do business there is just as difficult as doing business in Hungary pre-1995 and post-2010.

Paul
Guest

“and the unpredictability of the Orbán government”
This could be OV’s biggest problem. Big money and big business, and countries like Saudi Arabia and China, don’t care about right or wrong, but they don’t like uncertainty.
And no one, not even Szent Orbán a Viktor, knows what he’s going to do from one day to the next.

Ron
Guest

Quick economic success is especially expected in the fields of health care and agriculture.
I do not understand what he is talking about. Apparently, Saudi Arabia is re-organizing its health care. I found this website of Arab News.
Here the coverage of the Hungarian visit
at the bottom of the page one picture:
http://arabnews.com/saudiarabia/
Here the article to cover the Health Advisers visit from the UK.
http://arabnews.com/economy/article512258.ece

Ron
Guest

Here is the Saudi Arab Chamber of Commerce report on the visit:
http://www.saudichambers.org.sa/2_20774_ENU_HTML.htm
Two things Hungary expect more students from Saudi Arabia and Saudi Arabia expect Hungary to help with dates. Wow that is a real success.

Eva S. Balogh
Guest

Ron: “Quick economic success is especially expected in the fields of health care and agriculture. I do not understand what he is talking about.”
Neither do I. I checked the state of health care in Saudi Arabia and I found glowing reports on the internet.

Odin's lost eye
Guest

Oh Ron that is not all that the Saudis can get from Hungary. Their Doctors can learn about ENVELOPES (and the people about what to put in them).

Joseph Simon
Guest

Whatever he does, Orbán Viktor still gets Eva excited. Imagine if he brandished a gun and organized mass-prayers, like Rick Perry, to secure Jesus’ support, what a field day Eva would have. Oh yes, and the Texan Governor also thinks that floods, etc., are messages from God. Compared to all this, Orbán is just a plain, practical politician seeking support from other countries.

Joseph Simon
Guest

Also, despite Eva’s glowing account of the Saudi health care system, little is known about the quality of primary care in that kingdom. Generally, there is poor access and effectiveness for chronic diseases or for much needed extended care.

GW
Guest

Joseph Simon wrote:
“…Orbán is just a plain, practical politician seeking support from other countries.”
Are you not in the least disturbed that Orbán’s strategy here is restricted to non-democratic, authoritarian (and , indeed, in the case of the PRC, communist party-run) countries? Does Orbán sit in his office, flipping through his rolodex, wondering which dictator he can try to tap next?

Paul
Guest

Well at least we have signs (at last) that OV is bothered by the growing protests against him – http://thecontrarianhungarian.wordpress.com/2011/10/05/hungarian-government-to-block-protest/
At last things are starting to warm up.

Paul
Guest

“Generally, there is poor access and effectiveness for chronic diseases or for much needed extended care.”
Any sources for this statement, JS – or are you working from the same sort of ‘facts’ that JB uses?

Rigó Jancsi
Guest

I don’t think that the building industry would be affected very much by a stop for shopping centers. You cannot be deader than dead. And we don’t talk about shopping centers like Arena, Westend, Mammut… The plan is to stop Aldi, Lidl and the like from spreading further and destroying the classical Hungarian ABCs. I somehow sympathize with that plan, but I also understand that many people simply cannot afford the prices in the ABC around the corner, while Aldi is unbelievable cheap. In any case, this building moratorium would be the industry’s smallest problem.

Abdullah Almefdaa
Guest

With no government help, Saudi and Hungarian businessmen are working together

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