Tag Archives: China

The great hope of the Hungarian right: Rex Tillerson as secretary of state

The revelations first disclosed by The Washington Post about possible Russian interference in the 2016 election to help Donald Trump win the presidency were received in Hungarian far-right circles with mixed emotions. Naturally, they identify with the president-elect, who is being portrayed by their media as Superman and the savior of the world. At the same time they find the possibility of Trump’s gaining the presidency with foreign help embarrassing. They even dug up a former secret service official, József Horváth from the Kádár era, who has close ties to Fidesz politicians. He announced with great confidence that “it is unlikely that the Russians intervened for the sake of Donald Trump’s victory.” Horváth’s expertise dates to the 1970s and 1980s, so he knows next to nothing about cyberspace or hacking. Even his reasoning is ridiculous. In his opinion, the claim of interference cannot be true because “such a hacker attack must have immediate legal and diplomatic consequences.” In the United States espionage is taken very seriously, but nothing has happened since the discovery of the alleged cyber crime. This nonsense was taken at face value by Magyar Idők, the government’s semi-official mouthpiece.

It is, however, Magyar Hírlap, the newspaper in which ranting demagogues like Zsolt Bayer and István Lovas publish their opinion pieces, that leads the way in Trump hero worship. Readers of Hungarian Spectrum are only too familiar with Bayer, but they most likely know little about Lovas, whom a couple of years ago I described as “one of the most unsavory characters in the Hungarian right-wing media.” Between 1976 and 1990 he lived in Montreal, Los Angeles, and Munich, where he was on the staff of Radio Free Europe’s Hungarian section. After his return to Hungary, he began working for decidedly right-wing publications. Although he has Jewish ancestry, he is an anti-Semite who received the Palestinian State’s “Objectivity” prize in 2002.

What Lovas cannot understand is how the CIA, which in 40 days will be under the thumb of Trump, dared to put forth a lie without any evidence of Russian support of Trump’s candidacy. The story is nothing more than “a long tale from the neoliberal/left-liberal Washington Post which regularly belches out fake news.” Moreover, Trump doesn’t care about the useless American intelligence reports and is ready to go against the “ruling elite,” which hoped that Trump would choose Mitt Romney, “one of the passengers on the irrational Russophobe hysteria train.” Romney is described by Lovas as someone close to the American defense industry who, if appointed secretary of state, would work hand in hand with the neocons already in the State Department.

But, thank God, Trump was brave and is rumored to have picked Rex Tillerson, an oil magnate and president of Exxon-Mobil “who has a good relationship with Russian President Putin.” Other less enthusiastic commentators describe the relationship between the two men as one of dependency. That is, Tillerson depended on his friendship with Putin to get oil deals done in Russia. Tillerson is described by politico.hu as the head of one of those Western companies who “were bowing and scraping before a man who had just shocked the world by violating international law” with the invasion of Crimea and who subsequently lobbied Washington to lift economic sanctions against Russia.

Rex Tillerson and Vladimir Putin are on very friendly terms

In connection with the nomination of Tillerson, Lovas attacks John McCain, The Washington Post’s “beloved Republican” who “called Orbán a fascist dictator” and who in an interview on Fox News called Putin “an aggressive character and a murderer.” McCain is “the mainstay of the genocidal U.S. policy in the Middle East.” Lovas wouldn’t be true to himself if he didn’t drag Israel into the discussion of Tillerson’s nomination. He cites an opinion piece titled “Thumbing Nose at Alleged Kremlin Debt, Trump Picks Putin’s Pal as Secretary of State” which appeared in Haaretz, adding that Jerusalem is bound to be disappointed by the choice of Tillerson.

A likely pro-Russian foreign policy naturally delights Lovas, although he sadly notes that the neocon John Bolton, former U.S. ambassador to the United Nations, might become Tillerson’s deputy. “On our side” is also James Mattis, who is not really keen on the Russian president, “but we, supporters of Trump, are ready for compromise and we are satisfied with the fact that our sworn enemies feel that they are lying bleeding on the battlefield.” The sworn enemies of Hungary are, of course, Barack Obama, Hillary Clinton, and the whole Democratic leadership. In his final sentence Lovas foresees the Democrats and Republicans like McCain one day standing before the International Criminal Court in The Hague.

Perhaps the most bizarre analysis of Donald Trump’s alleged decision to nominate Rex Tillerson comes from Viktor Attila Vincze, who writes for Magyar Idők and other right-wing publications. The article, whose title “Is Donald Trump ready to be America’s Gorbachev because of China?” took my breath away, appeared in 888.hu. What on earth is this man talking about? When I hear Gorbachev’s name, my first thought is the collapse of the Soviet Empire, which Vladimir Putin hasn’t been able to accept to this day. Let’s hope that Trump’s presidency wouldn’t have such grave consequences for the United States as Gorbachev’s term did for the Soviet Union. But no, Vincze views Gorbachev as the far-sighted politician who decided to end the cold war between the United States and the Soviet Union. Trump could end the unipolar world order with a diplomatic opening toward Russia “and toward other states” and perhaps, just like Gorbachev, he could end the war in Afghanistan. I assume Vincze would include Hungary among the “other states.”

If Trump wants to confront China, he has to change U.S. diplomacy toward Russia. Tillerson’s nomination “is the first significant step in this direction.” Vincze quite openly talks about Tillerson’s frustration over the sanctions that prevented Exxon-Mobil’s $500 billion deal with the Russian state company Rosneft. Obviously, Vincze doesn’t see any conflict of interest between Tillerson’s business dealings and his future role as secretary of state. Vincze hopes that Tillerson’s presence may result not just in the normalization of the relationship between Russia and the United States but also in a close friendship between the two countries. In this new world, Russia and the United States would be partners. This would put an end to the far too cozy relationship between China and Russia.

As you can see, the Hungarian right is very keen on close cooperation between Russia and the United States, and its spokesmen are counting on Donald Trump. The first sign that their hopes may be realized is Tillerson’s rumored nomination. If, however, the Washington Post is not just belching out another piece of fake news, this nomination is in danger of being blocked on the Hill, which may prompt Trump to go a different direction. That would sorely disappoint the Hungarian far right.

December 12, 2016

No, Viktor, illiberalism is not the key to economic growth

Today’s post was inspired by an article that appeared yesterday in 444.hu with the intriguing title “We only wanted to open the doors to Eastern dictatorships, but they were blown away by the Curse of Turan.”

What is the Curse of Turan? It is legend according to which Hungarians of the eleventh century were cursed by their pagan shamans when they abandoned their old faith for Christianity. And what about Turan? According to Persian mythical tradition, it was the name of an area which today is known as Turkistan.

We have spent countless hours discussing Viktor Orbán’s firm belief that western civilization and its market-based economy are on the decline while the eastern illiberal, autocratic, dictatorial regimes are thriving economically. They will eventually overtake the West. Orbán projected the recent spectacular growth in some of the Asian countries into a linear trend that might last–well, forever. He kept repeating that we live in a new world which only he was astute enough to discover. And he began making pilgrimages to these thriving eastern countries, courting them, praising their dictators so shamelessly that some Hungarians were outright embarrassed. He went so far as to return an Azeri murderer to Azerbaijan, although he must have known that he would be greeted as a national hero at home for killing an innocent Armenian army officer in Budapest.

This is what happens when someone with limited knowledge of the economic and political complexities of the world acquires unlimited power and begins to implement his idées fixes. Orbán’s theory was based on wrong assumptions and a flawed model. These countries’ economic growth was not due to the illiberal nature of their regimes, as Orbán believed, but to other economic factors–in most cases, to the commodity boom. Most of the countries Orbán so admired were flush with natural resources: oil, natural gas, and important minerals. As long as gas and oil prices were high, the political leadership of these countries was satisfied and did next to nothing to diversify. This is what happens when, as a result of the preponderance of state enterprises, no truly free market economy can develop that would ensure a healthier economic mix.

Viktor Orbán put enormous effort into his “Eastern Opening” project, with few results to show for it. 444.hu examined Hungarian exports to six countries east of Hungary between 2009 and 2014: Azerbaijan, Kazakhstan, Saudi Arabia, Turkey, China, and Russia. Hungarian exports to Turkey grew slightly, the others either stayed the same or actually decreased. 444.hu describes trade with Azerbaijan, Kazakhstan, and Saudi Arabia as microscopic. Investments from these same countries are so insignificant that the Hungarian National Bank doesn’t even record their size. But even Russian, Chinese, and Turkish investments are minuscule, only a few billion, which is very small indeed as a share of total foreign investments in 2014, which was 2.5 trillion forints.

The percentage of the six Eastern countries in Hungarian export between 2009 and 2014. Source: KSH

Hungarian exports to the six eastern countries between 2009 and 2014 as a percentage of total exports. Source: KSH

In the past Viktor Orbán’s admiration of Azerbaijan’s economic accomplishments knew no bounds. In April 2014 he compared Hungary’s  modest 3% growth to the fabulous Azeri growth of 17% between 2003 and 2010 and, after that, 5-6% percent every year. But a little more than a year and a half later Azerbaijan is in grave economic trouble. On January 28 Bloomberg reported the start of negotiations between Azeri officials and the IMF and the World Bank for a four billion dollar loan. The discussion centered around the liberalization of the economy and the improvement of the business climate in exchange for the money. Although the Azeri finance minister insisted that they are in no immediate need of the four billion dollars, the facts don’t support his claim. “The Azeri central bank moved to a free float on December 21 after burning through more than 60% of its reserves last year to defend the national currency … the manat which nosedived by about half last year and slumped further to record lows this month.”

Orbán also sang the praises of Kazakhstan in June 2014. He found the achievements of the country in the last fifteen to twenty years absolutely spectacular. According to him, “the importance of Kazakhstan in the world economy will grow year after year.” Well, that forecast hasn’t panned out either. Because of falling oil prices Kazakhstan’s export income dropped by two-thirds after 2013. This year analysts predict a recession. The Kazakh currency, the tenge, crashed in a spectacular fashion in the middle of 2015. Bloomberg remarked that “Kazakhstan is a textbook case on why economies must diversify” and added that “powered by natural resources ranging from oil to uranium to copper, including the world’s largest proven zinc deposits, the economy has remained hamstrung by corruption and political controls.” Political control, which Orbán believed to be a necessity for economic growth, is in fact an impediment according to economic analysts.

Orbán was also very enthusiastic about the prospects of the Turkish economy. Western analysts, however, are less sanguine. Al-monitor, in an article written in August 2015, said: “Any one of the following problems would ring alarm bells for an emerging market: a slowing economy, rising inflation, distrustful citizens exchanging local currency deposits for dollars whenever possible, a rising tide of violence scaring away foreign tourists and hurting hard currency reserves, and concerned foreign investors eyeing the exit because of a bearish stock exchange and a possible hike in interest rates by the US Federal Reserve. Not content with just one, Turkey is facing all of those headaches and more.” The Turkish economy is still growing by about 3% per annum, but given the growth of the Turkish population this is considered to be a weak performance.

It was at the beginning of 2014 that Orbán visited Saudi Arabia and, as usual, lauded the greatness of the country and its leadership. Saudi Arabia has nothing but oil to export, and if the price of oil falls precipitously for a longer period of time the country is in trouble. At the moment the yearly deficit is 20% of the GDP. Foreign currency reserves are dwindling, and the Saudi princes are becoming visibly nervous. They are entertaining all sorts of measures that may or may not work. There are analysts who predict that the government of the House of Saud may collapse in the not too distant future.

Russia, which also relies heavily on its natural resources, is in trouble as well. As The Economist said a few days ago: “Russia’s economic problems move from the acute to the chronic.” Between mid-2014 and today Russia’s exports and government revenues collapsed. Its GDP shrank by nearly 4%; inflation was close to 13%. The ruble lost half its value against the dollar in 2014 and, after rebounding somewhat at the beginning of 2015, now stands at 80 rubles to the dollar. In March 2014 the exchange rate was 36 to 1. The latest is that Russia is exploring an international bond issuance, which signals that there is a shortage of funds as the economy heads for a second year of recession.

Finally, 444.hu reminds its readers of Orbán’s words at the Chinese-Central-Eastern European Summit in November 2015: “In the past there were many who had doubts about China’s long-term economic future. It was then widely held that the strengthening of the Chinese economy was only a temporary phenomenon and that the financial crisis would undermine its economic growth. But today we see exactly the opposite of this prediction. China is marching along with a permanent and sustained development, and we all know that it will soon be the strongest economy in the world.” But China’s economy is slowing, and worse may come in the wake of the greatest construction boom and credit bubble in recorded history. As an analyst described that bubble: “An entire nation of 1.3 billion has gone mad building, borrowing, speculating, scheming, cheating, lying, and stealing.” He called it a “monumental Ponzi” scheme. In any case, China’s economic growth in 2015 was the slowest in 25 years, and its economic decline is probably even more serious than its questionable figures indicate.

So much for Viktor Orbán’s belief that illiberal leaders are the only ones who know the secret of sustained economic growth.

Barack Obama on the threat to civil society in Africa, Asia, the Middle East, and Hungary

American presidents are lining up against the Hungarian prime minister and his illiberal state. On The Daily Show with Jon Stewart Bill Clinton said that “there’s the authoritarian capitalism model which is Russia and in a different way China, and it has some appeal. Like the Hungarian Prime Minister – they owe a lot to America; he just said he liked authoritarian capitalism, just saying ‘I don’t ever want to have to leave power’ – usually those guys want to stay forever and make money. And there’s the democracy model …” This was not an off-the-cuff remark. A few days earlier he said essentially the same thing in an interview with James Bennet in the Atlantic Magazine. He talked about different political models, among which “there is a contest here in the world today…. There’s autocratic governments trying to take advantage of market opportunities—what [Hungarian Prime Minister] Viktor Orbán embraced the other day.” Clinton was obviously familiar with the Hungarian prime minister’s by now infamous speech, which was described in a footnote as “a headline-grabbing speech” calling for Hungary to abandon its “liberal methods and principles of organizing a society, as well as the liberal way to look at the world.”

The official Hungarian reaction to Clinton’s remarks was predictable. Péter Szijjártó, who at the time was not yet minister of foreign affairs and trade (which he now is), said that the former president “was conned.” It’s been a long time since Bill Clinton visited Hungary and therefore, I assume it follows, he is ignorant. Period.

Viktor Orbán’s “headline-grabbing speech” reached a lot of people, including the current president of the United States, who addressed the 2014 annual meeting of the Clinton Global Initiative in New York City. His speech concentrated on the importance of civil society. He pointed out that “it was citizens here in America who worked to abolish slavery, who marched for women’s rights and workers’ rights and civil rights. They are the reason I can stand here today as President of the United Sates.” Moreover, support of civic groups is in the interest of the United States. “Countries that respect human rights–including freedom of association–happen to be our closest partners. That is not an accident. Conversely, when these rights are suppressed, it fuels grievances and a sense of injustice that over time can fuel instability or extremism.  So I believe America’s support for civil society is a matter of national security.”

Which countries suppress human rights?

From Russia to China to Venezuela, you are seeing relentless crackdowns, vilifying legitimate dissent as subversive.  In places like Azerbaijan, laws make it incredibly difficult for NGOs even to operate.  From Hungary to Egypt, endless regulations and overt intimidation increasingly target civil society.  And around the world, brave men and women who dare raise their voices are harassed and attacked and even killed.

Obama Clinton Global Initiative

A Hungarian blogger who happens to be a conservative took the president’s words seriously. He entitled his post “Hungary at a crossroads” and added, “Obama said that Hungary had decided already: it fixed its place next to Russia, China, Kenya, Egypt, Burma, Azerbaijan, etc.”  Moreover, he wrote, Obama made it clear in his speech that “there is no gray zone, there is no Hungarian trickery, there is no double talk. We either stand next to Burma or next to the United States.”

In his address Obama announced a series of new steps that the United States will take to strengthen civil society where there is need. Yesterday he issued a presidential memorandum in which he instructed federal departments and agencies to pay close attention to civil society groups. Specifically, the United States “will oppose efforts by foreign governments to restrict freedoms of peaceful assembly and association and expression.” The United States will create “new innovation centers to empower civil society groups around the world.” NGOs will be able to use these centers “to network and access knowledge and technology and funding that they need to put their ideas into action.” Finally, the United States will increase “support to society groups across the board [and] will increase emergency assistance to embattled NGOs.” The Treasury Department will be instructed to “finalize regulations so it’s even easier and less costly for your foundations to make grants overseas.”

All that is good news for the embattled Hungarian NGOs and the four distribution centers currently under attack. Norway will no longer have to stand alone in its defense of Hungarian civil society. It also may mean that more funding will be forthcoming from American sources to Hungary. After all, Hungary is a unique case. The other countries Obama referred to are in Latin America, in sub-Saharan Africa, in the Middle East, and in Asia. Hungary is the odd man out in this company, and that might attract the attention of donors in the United States. The importation of Putin’s methods into the European Union would be a dangerous precedent which, especially given the current international situation, should not be tolerated.

Obama spoke and Hungary’s shaky reputation abroad received yet another blow. How did Hungarian politicians react to the news that Hungary was compared to some of the worst dictatorships in the world? The usual way. Szijjártó basically called the American president a liar because the president’s remark about “the Hungarian government’s placing any restriction on Hungarian civil society lacks all foundation … because the Hungarians are freedom-loving people.” When Lajos Kósa, one of the deputy chairmen of Fidesz, was asked to comment on Obama’s inclusion of Hungary on a list of countries that harass NGOs, his answer was that “Obama is most likely not entirely familiar with current Hungarian affairs.” For example, it is unlikely that he knows what the third largest city of Hungary is. Then he turned to the reporter from Klubrádió and asked him whether he knows which city it is. The reporter gave the wrong answer when he said it was Miskolc. (Actually it is Szeged.)  Kósa triumphantly exclaimed, “You see!” I assume that means that he did not know the correct answer either. The botched moral of the story: if you don’t know which city is third largest in Hungary you are most likely totally ignorant of everything that goes on under Viktor Orbán’s rule.

Magyar Nemzet is silent. So is Magyar Hírlap. But the Orbán government’s new so-called English-language online paper added these sentences to the news about the speech itself. “Obama has criticized Hungary because of the recent scandal of the Foundation ‘Ökotárs’…. Barack Obama could have the opportunity to share his concerns with János Áder, since the Hungarian president is on official visit in New York this week.” The fault lies with Obama; he should have consulted with Hungary’s president to learn the truth about the Hungarian government’s treatment of the civil groups before he spoke. One could laugh at all these pitiful reactions if the situation weren’t so terribly serious.

Charles Gati: “The Mask Is Off”

The following article appeared in the August 7 issue of  The American Interest and was summarized in Hungarian in Népszabadság. I should add that the Hungarian Telegraphic Agency (MTI), which in the past has always reported on Professor Gati’s analyses, ignored this article. In it Gati shares his thoughts on the possible steps U.S. policy makers could take in the wake of Viktor Orbán’s admission of his plans for an “illiberal democracy” in the center of Europe. The article has elicited a great deal of interest in Washington as well as in Budapest.

Today Professor Gati was interviewed on Klubrádió’s call-in program Megbeszéljük/Let’s Talk It Over. The approximately twenty-minute interview can be heard during the first and second segments of the program’s archives.

Charles Gati, Senior Research Professor, European and Eurasian Studies at Johns Hopkins University School of Advanced International Studies, is the author of Failed Illusions: Moscow, Washington, Budapest and the 1956 Hungarian Revolt (2006) and editor of  Zbig: The Strategy and Statecraft of Zbigniew Brzezinski (2013).

* * *

Orban and putin5

Soon after he became Hungary’s Prime Minister for the first time, in 1998, Viktor Orbán visited Washington. On October 7th, at a luncheon organized by Freedom House, Mark Palmer, a former ambassador to Hungary who knew the guest well, and I jointly welcomed Orbán to Washington, calling him a young, promising leader of democratic Hungary. According to notes taken by a member of the audience, Orbán responded by praising both Palmer and me for the role we had played in hastening the collapse of communism in the 1980s. Then he added that “whatever I know about contemporary politics and history I’ve learned from Professor Gati.”

I re-read these words with considerable embarrassment after I watched on YouTube and then read the full text of Orbán’s 35-minute speech of July 26, 2014 about the terminal decline of liberal democracies and the bright future of five countries he held up as examples for Hungary to emulate: Singapore, China, India, Turkey, and Russia. (Why he included India, a functioning democracy, is unclear.) In any case, the speech affirmed what many Hungary-watchers have known since 2000-2001, or at least since Orbán’s second term that started in 2010 and his third term that started this year: that he is no democrat and he is neither a good friend nor a good ally of the West, including the United States. His speech is a surprising admission from the leader of a country in Central Europe that is a member of both NATO and the European Union, and from a politician who in the 1990s was deputy head of that deeply pro-Western group of political parties known as the Liberal International.

Orbán has now dropped his democratic mask. His speech confirms what his domestic and foreign critics have said for years about his managed democracy and what until now his propagandists and loyal followers have heatedly denied. For he has now publicly, and proudly, declared his preference for an “illiberal state.” “Breaking away from dogmas and ideologies recognized in Western Europe,” Orbán said the ideal state should be based instead on something he called “national foundations.” He made no mention of the separation of powers or checks and balances or freedom of the press or minority rights. Quoting a supposedly highly regarded (but unnamed) American analyst, he noted that liberal democracies, as in the U.S., were marked by corruption, lawlessness, sex, and drugs.

The analysis Orbán used to reach these conclusions was quite poor and confused, to say the least. One part of the presentation did not lead to or follow another. Some of the information he cited was inaccurate. And it was not a question of the quality of translation; the original Hungarian text was as unstructured and as rambling as the English version. If an American undergraduate had submitted such a long-winded and pretentious paper for an introductory course on international relations, his grade would have been an “F.”

However, the speech as a political demagoguery worked. The underlying themes almost certainly fell on fertile soil, for Orbán successfully reassured his domestic supporters that he remained ready to “stand up” against Hungary’s enemies, such as the European Union and Western banks. It echoed the same nationalist message his audiences regularly hear on government-dominated radio and television about Western conspiracies against Hungary’s independent existence: That in the aftermath of World War I the victorious Western powers, led by President Woodrow Wilson, robbed Hungary of two-thirds of its territory. That after World War II, at Yalta, Hungary was sold out to the communists. That in 1956, the West did not assist the Hungarians against their Soviet overlords. And that since the collapse of communism, the European Union and Western-financed non-governmental organizations have sought to deprive Hungary of its sovereignty. Thus, in this speech, Orbán offered his audience a simple message as he also promised an end to Hungary’s humiliation and victimhood.

The main reason Orbán believes Hungary should seek a new system of governance has to do with his interpretation of the 2008 financial crisis. “If we look around carefully and analyze the things happening around us,” he said, “[we find] a different world from the one we used to live six years ago.” He blames the United States and liberal values for the uniqueness and global consequences of the crisis. He maintains that Americans, including the President of the U.S., were so frightened by 2008 that they resorted to “ideas that were impossible to talk about only six years ago.” Orbán does not specify what these ideas are or were, but he argues that the defining issue of our time is “to invent a state that is most capable of making a nation successful.” Then he adds: This is why Hungary needs to adopt political and economic systems “that are not Western, not liberal, not liberal democracies, maybe not even democracies, yet making nations successful.”

The speech includes an almost incoherent outpouring of primitive clichés about the United States. Americans, Orbán observes, live “in a society that is less and less capitalist and more and more feudal.” He asserts that, according to the U.S. president, “America has been engulfed by cynicism.” Alluding to the U.S. whose laws he does not seem to or want to understand, he mocks a “democratic” country where a president is impeached and yet he stays in power. Elsewhere in the speech he claims that the U.S. president “openly speaks about economic patriotism,” and he does so in a way that would have been “unimaginable six or eight years earlier.” Again, one wonders what Orbán had in mind. He makes no mention of America’s gradual if long and partial economic recovery, of unemployment dropping to the six percent level, of the unparalleled global reach of American technology, graduate education, culture, and so on. Unmentioned is that his friend and colleague who wrote Hungary’s new—very restricting and illiberal—basic law or constitution a few years ago did it on his iPad, a product of U.S. inventiveness.

Orbán did not couple his negative commentary about the West by even a single word of criticism of the Russian and Chinese dictatorships, or of Russia’s annexation of the Crimea, or of Putin’s ongoing destabilization of Ukraine. His motive, it seems, was to depict the world’s leading liberal democracy as hopelessly deadlocked—not because President Obama or someone else was a poor leader (Obama’s name was not mentioned by Orbán) but because all liberal democracies suffer from such built-in, systemic problems as their emphasis on individuals rather than the collective. For Orbán, this is the principal justification for Hungary’s present practice of centralized, nationalist authoritarianism.

Looking ahead, Orbán’s speech could anticipate a long-term strategy to introduce even harsher, more dictatorial measures on the pattern of Turkey or possibly Russia. Given past behavior, it is clear that he is capable of radically changing his stances. After all, he was a strong advocate of European integration back in the late 1980s and early 1990s, while he is now an equally strong defender of the inviolability of sovereignty. He once made a name for himself as an anti-communist and even anti-Russian, while he now admires Putin’s “efficient” state. He used to favor capitalism while he is now a foe of banks, foreign and domestic, that are not under his government’s control. He was once an atheist; nowadays he mentions Christianity as his guiding light as often as possible.

If the speech was meant to prepare the ground for another new—and radical—departure, what could it be?

The fact that the speech was delivered to ethnic Hungarians in Romania suggests the possibility that Orbán, thinking of some four to five million ethnic Hungarians living in neighboring countries, is fantasizing about a Greater Hungary. He looks at Russia’s annexation of the Crimea and sees continuing civil strife and war in Ukraine where—at the Hungarian border—almost 200,000 ethnic Hungarians live. Western analysts tend to dismiss the idea that Orbán could be so delusional as to follow Putin’s example by casting his eyes on Ukraine’s westernmost sub-Carpathian region. They are probably right; it is a far-fetched idea. After all, Hungary does not even have a real military; its yearly defense expenditure is around 0.8 percent of its GDP, one of the lowest in NATO. And yet, if Ukraine is destabilized, it is not unimaginable that Orbán’s Hungary would attempt to fish in troubled waters. There is no better way for him to enter Hungarian history books than to begin the reconstruction of Historic or Greater Hungary.

Whether he does so depends on three factors:

First, Orbán must centralize even more power in his own hands. He would have to rewrite the constitution again so that Hungary is transformed into a presidential system after, or perhaps even before, his current term as prime minister ends. Following Putin’s example, Orbán would then promote himself into the Hungarian presidency.

Second, he would have to deepen his friendship with Russia, the country with demonstrated interest in a weak and divided Ukraine. As Hungary is already almost fully dependent on Russian energy for the next three decades, the best way left for Orbán to please Putin is to echo the latter’s anti-American harangues and weaken the European Union from within.

Third, the European Union and the United States would have to ignore what Hungary is doing or might be planning to do. That would encourage Orbán to pursue his historic mission.

If he is indeed on a historic mission to enlarge the “Hungarian space” in Central Europe, Orbán would also need to be contemplating to withdraw his country from the European Union. For basic economic reasons, he probably is not doing so right now. He needs the almost $30 billion the European Union has allocated to finance Hungarian infrastructure projects in the 2014-2020 period. Even if one discounts an estimated 10-15 percent pocketed by corrupt Hungarian officials and their loyal business associates, this is still a vast contribution to the Hungarian economy. Moreover, trade with such EU countries as Germany, Italy, Austria and others sustains the country’s foreign-trade-oriented economy. For these reasons and others, even the current Speaker of the Hungarian Parliament—Orbán’s political gateway to Jobbik, the country’s neo-Nazi far right party—has shied away earlier this year from explicitly endorsing Jobbik’s call for leaving the European Union.

On the other hand, there is still a chance, however slim, that punitive measures undertaken by the European Union could prompt Hungary to respond by trading its full EU membership for a limited partnership. Orbán would surely enjoy being the first European leader to “stand up” to Brussels this way.

Would the EU give him such a chance? Would the EU go beyond verbal or written reproaches? In the aftermath of Orbán’s July 26 speech, a Wall Street Journal editorial called on Brussels to take the Hungarian case seriously, stating that “Mr. Orbán’s illiberal candor is a warning that free markets and free societies need more forceful defending.” A New York Times editorial on August 2, 2014 urged the European Commission to treat Hungary “with more than the usual admonitions and hand-wringing.” It urged the Commission to reduce the above-mentioned $30 billion infrastructure support set aside for Hungary. “It should also,” said the editorial, “begin proceedings to invoke Article 7 of the Treaty on European Union, which allows the suspension of voting rights of a member state that is at serious risk of breaching the values listed in Article 2, including the rule of law, freedom, democracy and respect for human rights.” In Europe, the Süddeutsche Zeitung voiced similar views.

While the EU, to repeat, is unlikely to implement such recommendations for the time being, its newly elected leaders could replace admonitions with sanctions in defense of “European values.” In the event, it is at least possible that—under such circumstances—Hungary would then “retaliate” in order to free itself from some or all of Brussel’s much-despised restraints. At that point, Orbán’s popularity would skyrocket. He would be widely admired for following in the footsteps of other legends in Hungary’s tumultuous history by pursuing a heroic and defiant act that may be briefly self-satisfying but ultimately self-defeating.

The issues that divide the U.S. and Hungary have little or nothing to do with security or economics. Hungary is not a particularly active member of NATO, though it sent troops to Afghanistan, and it has privately informed officials in Brussels about its willingness to increase its very modest defense budget every year for the next five years by 0.1 percent of its GDP. Unlike Poland, Romania, and the three Baltic states—and apparently the Czech Republic too—Hungary was initially reluctant to support sanctions against Russia, though once Germany changed its course so did the Hungarian government. (Typically, even the attentive Hungarian public is so engrossed in domestic politics that the government’s foreign policy gyrations are barely noticed.)

From Washington’s perspective, what matters most is the Hungarian government’s growing hostility to democratic values—freedom of the press, freedom of religion, freedom for civil groups to operate. Under Secretary of State Hillary Clinton, the U.S. issued several protests, including a confidential demarche that was leaked to a still-independent newspaper. From Budapest’s perspective, American protests constituted interference in Hungary’s internal affairs. The government unleashed a never-ending series of vitriolic attacks in the government-controlled press on Mrs. Clinton and the United States. The attacks on the U.S. have continued since John Kerry took over the Department of State, but the Secretary—quiet on Hungarian issues—has not been subjected to the “Clinton treatment.”

Meanwhile, Prime Minister Orbán seems eager to alter his government’s image in the United States. With a $15 million budget, he established a lobbying group called the Hungarian Initiatives Foundation in order to bring young Hungarians to Washington where they serve as interns in congressional offices and elsewhere and—more importantly—to influence discussions about Hungary in the city’s think tanks by flying pro-Orbán officials and fellow travelers to the U.S. The group has made grants to several prominent think tanks and plays an active role in shaping the programs it supports.

It was also instrumental in arranging Orbán’s upcoming visit to the United States in mid-October. He is expected to visit New York and Los Angeles, reaching out to Hungarian-Americans and business leaders, but he will not stop in Washington. Apparently, he could not get an appropriate appointment at either the White House or the State Department, and Georgetown University, which invited him for a lecture, insisted on holding an open forum after the lecture.

Whether the Hungarian Initiatives Foundation will be able to continue its activities after Orbán’s July speech is uncertain. Some of its trustees—among them George Pataki, the former Governor of New York and Kurt Volker, the Hungarian-speaking head of the McCain Institute—ought to have a difficult time reconciling their support for Orbán’s Hungary with the prime minister’s anti-American harangue. So should Katrina Lantos—another trustee, head of the Lantos Foundation and daughter of the late Congressman Tom Lantos—who has so far shied away from speaking out in support of her father’s deeply-held democratic values.

What could official Washington do?

  • It could actively encourage the European Union—which still vividly remembers its failure to deny a place for Joerg Haider’s extremist right-wing party in the Austrian government in 2000—to put the question of Hungarian membership in the EU firmly on the agenda.
  • It could let the U.S. Senate know that there is no urgency in giving final approval to the ambassador designate, Colleen Bell—a capable but not necessarily knowledgable enough political appointee. If necessary, the Obama administration could send a Hungarian-speaking professional diplomat in her stead.
  • It could downgrade diplomatic relations by reducing the size of the unnecessarily large U.S. Embassy in Budapest and by assigning a relatively low-level American diplomat to conduct business with the Hungarian ambassador in Washington and his staff.
  • It could proudly but politely continue to engage in a cultural war against the anti-American thugs who write and pontificate in the country’s official media. In the process it could reach out, even more than now, to America’s friends among intellectuals and the political elite.

Except for what the EU could do, these are but small, symbolic steps. Soon enough, however, most Hungarians will appreciate that we kept hope alive.

Viktor Orbán feels at home in Iran, Azerbaijan, and China

It’s time to move on, although the saga of the Holocaust Memorial is far from over. Let’s look outside of Hungary to see what Hungarian foreign policy is up to. The first news item is from yesterday; I discovered it on the Iranian news agency’s website. The highest Hungarian dignitaries–János Áder, president; Viktor Orbán, prime minister; László Kövér, speaker of the house; and János Martonyi, foreign minister–tried to outdo each other in sending separate congratulatory messages on the occasion of “the anniversary of victory of the Islamic Revolution.” The news agency naturally mentioned that “Hungary has been a member of the European Union” ever since 2004. It also reported that in addition to the Hungarians, dignitaries of Kyrgyzstan, Azerbaijan, and Tajikistan also sent greetings to the Iranian leaders.

Today another piece of news arrived from which we learned that a delegation of Hungarian journalists and film makers from MTV arrived in Azerbaijan. They are looking for a proper setting for a film about the “atrocities committed by Armenian troops” in the Nagomo Karabakh region. According to the Azerbaijan news agency, the Hungarian television crew will make a documentary about the town of Khojaly that was attacked by Armenian forces and where several hundred Azerbaijani were killed. The Azerbaijanis are certain that “the film will tell the truth to the world about Karabakh.” So, as you can see, the Orbán government finds kindred souls in Iran, Azerbaijan, and yes, China.

Because Viktor Orbán is in China right now where he keeps boasting about the Asiatic origin of the Hungarians. Not long ago he called his people “half Asiatic,” but by now it seems they have become completely Asiatic. He added that “Hungarians were ridiculed many times for their Asiatic origins” but by now that origin has become an asset because it is clear that “the center of gravity of the world economy has shifted from west to east.” I just hope that Orbán didn’t mention anything about the alleged relationship between the Huns and the Hungarians because the Chinese built the Great Wall in order to save themselves from the ferocious Hun invaders.

In Beijing, similar to other foreign visits/trade missions, the program started with a speech by Orbán before an audience of business people that included about 100 Hungarian business men who accompanied him. As usual, the speech was full of falsehoods about Hungary’s economic performance. It is hard to believe that Chinese businessmen who are known for their acumen are so ignorant that they believe that “whoever makes a business deal with the Hungarians will have a direct relationship with the economic engine of the European Union.” Or, “Hungary is Europe’s most competitive economy where a considerable production center came into being in addition to an important research-and-development network.” Furthermore, he outlined the future economic prospects of Hungary as outright rosy: a 4% economic growth year after year and 3-4 % unemployment, which is considered to be full employment.

In addition to the country’s economic prospects, he stressed “the political stability” in Hungary which is such an advantage when it comes to economic growth. In this respect the Hungarian situation is very similar to that of China, he said, adding that he very much hoped that “the Hungarian people will vote for political stability” in the coming election. This particular claim made quite a splash in Hungary where a blog writer pointed out that “Chinese political stability in other words means communist dictatorship” and that Orbán actually gave himself away by in effect admitting that Hungary is no longer a democracy.

The Chinese news agency was less effusive than the Hungarian prime minister, although Premier Li Kequiang and Viktor Orbán remembered fondly the 65th anniversary of Chinese-Hungarian diplomatic ties. Again, one just hopes that neither man remembered Mao Zedong’s less than friendly attitude toward Hungary at the time of the Hungarian October Revolution of 1956 when he urged Khrushchev to put down the revolt and show no mercy.

China-Orban

The Chinese seem to be interested primarily in building roads and railways. We heard about the Budapest-Belgrade railway line earlier, but now it seems to have become a reality. China also expressed an interest in expanding investment and local currency swap agreements. China will provide assistance to Hungarian companies to invest in China while Hungary will help Chinese businessmen acquire visas and working licenses and will provide them with health insurance. In addition, representatives of Huawei Technologies Hungary and the Hungarian government signed an agreement to establish an innovation center in addition to two Huawei Europe supply centers, one in Pécs and another in Komárom. What is really new is that Li called for Chinese-Hungarian cooperation on nuclear energy and hinted that it  could be accomplished jointly with a third party.

This last item sounds rather intriguing. Is it possible that Viktor Orbán realized in the last month or so that the Russian loan might not be quite enough to build the new nuclear power plant and that he is also soliciting Chinese money and know-how? What will Russia think of such an arrangement?

Another item of note is the establishment of a regional center of the Bank of China. While the Orbán government does everything in its power to get rid of western banks, the prime minister welcomes the Bank of China with open arms. I am curious what kinds of guarantees he offered the Chinese to prompt them to establish the Bank of China’s European regional headquarters in Hungary. Without some guarantees I can’t imagine that any banker in his right mind would choose Hungary.

The rest of the agreements are less exciting: the usual cultural centers, more bilingual Chinese schools, and additional scholarships for Chinese students to study in Hungary. It seems there is money for foreign students even as the government sharply reduced the money available for Hungarian higher education in general and introduced very high tuition fees for Hungarian students.

The question of a direct flight between Budapest and Beijing came up again. When there were such flights they operated at a loss. Of course, if Chinese business is substantial enough in Hungary, such flights might be feasible. At first glance, however, it is hard to tell how extensive Chinese economic penetration will be as a result of these agreements.

Sólyom Hungarian Airways

Sólyom Airways, a start-up that was initially treated as a joke, is actually recruiting employees, including pilots. Considering that it currently has but one plane, it is looking to hire only 35 employees. But it took out a full-page ad to recruit them.

Let’s go back to the beginning. It was sometime in early June that news spread that unknown investors are launching a new Hungarian airline. When it turned out that the airline’s CEO in a display of nationalistic zeal was thinking of calling the new company Sólyom Airways, the jokes on Facebook began to pour in by the hundreds if not thousands. Most of the jokes were about the name of the company. After all, no foreigner will be able to pronounce the name, and the meaning of “sólyom” (falcon)  will also be wasted on them. Here is a funny video taken by a reporter for Index. The reporter holds up a large piece of paper and asks tourists at the Budapest Airport to pronounce the word “Sólyom.” Most of them settled for something that in Hungarian orthography could be written as Szólium or Szóliom.

Another wave of jokes began to circulate when the Hungarian public learned that the first leased plane of Sólyom Airlines will be called “Álmos.” You may recall that Álmos was Chieftain Árpád’s father who was allegedly sacrificed by his own men just when the Hungarian tribes entered the Carpathian Basin. Not a good omen, if you ask me. I would also be worried about the current meaning of the word: “sleepy.” The planes will look like this:

Solyom plane2

Back in early July when the mysterious Mrs. Németh, minister of national development, was asked what the government thinks about this new company, she announced that the whole enterprise “lacks seriousness.” I think that the majority of Hungarians would have agreed with her.  Most people would have called it a pipe dream. Starting a new airline is an expensive and very risky undertaking. The public knew nothing about the founder and had no idea whether there were serious investors behind him or not. Why would a serious investor believe that another Hungarian airline could conquer all the difficulties that grounded Malév?

Sólyom will be unmistakably Hungarian, not just in name but also as far as cuisine and hospitality are concerned. Foreign travelers will be welcomed in Hungarian: “Isten hozott!” which Hungarian-English dictionaries translate only as “welcome!” But perhaps the Austrian-Bavarian “Grüß Got!” would give a better sense of “Isten hozott!” Apparently upon landing in Hungary the pilot will announce “honfoglalás,” the Hungarian word for the Hungarian tribes’ occupation of today’s Hungary.

All this sounds a little crazy, but the mysterious CEO, József Vágó, gave a press conference on July 24 and announced that the airline will become a reality very soon. Álmos, the first of the six planes he intends to lease, will take off on September 1. Where is it going? Well, that’s not so clear. He refused to be specific but indicated that the airline will first concentrate on western Europe. His airline will offer full-fledged premier flights at low prices, so he will be able to compete with low-cost carriers like Wizz Air, another Hungarian airline serving 30 some countries in Europe and the Middle East.

József Vágó is a supremely self-confident man, and I hope for his own and his investors’ sake that his bravado is not without foundation.  An interview with him on Egyenes Beszéd (ATV) will give you a taste of his personality. He calls himself a “dragon,” which will also be depicted on the tail of the plane. If we can believe Vágó, he is the only person in the whole world who has developed a model that guarantees rapid profits and expansion.

Initially the airline will  lease only six twenty-year-old Boeing 737-500s which, he admitted, are less fuel efficient than later models. But Vágó emphasized that they are in excellent shape because they flew very little. A European airline used them as VIP planes; they flew between Europe and the United States for a few years. These VIP planes were refitted to imitate private jets in their comforts. He also added that there is a possibility of purchasing outright twenty-two planes in addition to the 737-500s; these will be newer models.

But that’s not the end of Vágó’s business plans. He envisages at least 50 planes flying practically everywhere, including the Far East and the United States. Just yesterday he announced that the Chinese promised 1 million passengers to Sólyom once the company reaches the point of full capacity and has regular flights to China. If I recall, Malév didn’t manage to do well with its Chinese routes but perhaps Vágó will have better luck.

When will Sólyom be profitable? In four months, answered Vágó without any hesitation. Well, I’m an optimistic person. Some of my friends call me Pollyanna after the ever optimistic heroine of a popular American book for girls written in 1913, but even I found it difficult to embrace this guy’s unbounded belief in himself and in the bright future just ahead for him and his company.

It seems that the mysterious backer of József Vágó is Emirates Airlines, which is based in Dubai. It is the largest airline in the Middle East, operating over 3,000 flights per week and serving more than 130 cities in 77 countries across six continents. So, perhaps Vágó has reason to be confident. What I find funny is that the Orbán government has been courting the United Arab Emirates and other Middle Eastern countries for direct investment in Hungary with no tangible results, and here is this Vágó who was an unknown until a month ago who seemed to be able to make a deal with Emirates Airlines. When Olga Kálmán of Egyenes Beszéd asked him whether he discussed his business plans with the government, Vágó made it clear that he wouldn’t have trusted the government with his plans and that he finds governments not fit to conduct business where decisions must be made fast. Governments are far too bureaucratic to be effective partners of private enterprise.

Now we can wait for the airline’s profitability and eventually the one million Chinese tourists.

Viktor Orbán at Tusnádfürdő/Baile Tusnad

I just finished listening to Viktor Orbán’s 56-minute speech at Tusnádfürdő/Baile Tusnad in Romania. He had a large, enthusiastic audience despite the heat. Applause was especially loud and long when Orbán talked about his fight against multinational companies, banks, and the European Union.  In the audience one could see very young children who, though they most likely didn’t understand a word, were enthusiastic nonetheless. It seems, however, that not everybody was equally impressed. The camera stayed focused for a fairly long time on a man who seemed to have fallen asleep, and I heard later that a couple of men threw tomatoes at Orbán on his way out from the camp site.

Source: MTI / Photo László Beliczay

Source: MTI / Photo László Beliczay

Viktor Orbán made sure that his audience doesn’t forget about next year’s election. He began his speech with a reference to it and at the end stressed the importance of his staying in power and continuing the policies that will lead to a complete transformation of Hungary’s political and economic system.

It seems that once Orbán comes up with a pet theory about the political and economic functioning of the universe, and he has a large inventory of them, he simply cannot let it go. In fact, in every new speech that touches on one of these theories he ratchets up his rhetoric and makes increasingly indefensible statements. For instance, his original theory about the decline of the West has by now become a prediction of a political and military clash between the West led by the United States and Asia led by China. By now he makes no secret of his intense dislike of the United States and accuses it of “trying to prevent other countries from catching up with it.”

Or, a few months ago he talked about the dominance of larger member states over the smaller ones within the European Union. By now this observation has morphed into the conviction that the “great powers” actually exploit the small ones by siphoning financial and human resources away from the smaller countries. The chief culprit here is again the United States. Hungary’s goal is to prevent such an exploitation and brain drain. This is in fact the essence of Hungary’s national strategy. To stop the great powers and use this new world’s opportunities to Hungary’s advantage.

After a rather lengthy and debatable historical treatise starting with World War I, he reached his favorite subject, the present financial crisis which in his opinion cannot be solved by the European Union. The institutional framework of the Union, the Commission, the Parliament “are unfit to handle the historical challenges facing us.” Orbán’s remedy is to shift the locus of power to individual nation states because only they are capable of overcoming the present crisis.

Orbán rarely passes up an opportunity for double-talk. This time he quoted a line from Sándor Kányádi, a Hungarian poet from Transylvania who had a line referring not to clear to what that “the dog is the same, only the chain was changed.” Of course, he immediately added that the change that occurred then wasn’t as simple as “left the tanks and came the banks,” as István Csurka claimed in the early 1990s, but “there is something to it.”

Then came a rather confused explanation of the differences between the gross national product (GDP) and gross national income (GNI). GDP is the market value of all officially recognized final goods and services produced within a country in a given period of time. GNI, a less familiar concept, consists of personal consumption expenditures, gross private investment, government consumption expenditures, the net income from assets abroad, and gross exports of goods and services after deducting gross imports of goods and services and direct business taxes.

Hungary’s GNI, Orbán claimed, is greater than its GDP. The difference, some two trillion forints annually, is moved abroad by banks and foreign companies. When national governments are in power, he argued, the difference between the two economic measures shrinks; when the socialists and liberals govern, the gap widens.

Let me stop for a moment. According to data published by the Hungarian Central Statistical Office, this claim is inaccurate. The Budapest Business Journal  wrote in September 2010: “The gap between nominal GDP and GNI widened each year between 2003 and 2007, from HUF 871 billion or 4.6% of GDP to 6.9%, but has narrowed since, dropping to HUF 1,721 billion or 6.4% of GDP in 2008 and to HUF 1,303 billion or 5% in 2009, the figures show.”

Why the gap between the GNI and the GDP in Hungary? According to Orbán the explanation is simple: “We created this wealth and it disappeared” abroad. He admitted that Hungary couldn’t manufacture cars on its own and therefore if Mercedes Benz makes a profit and takes this profit out of the country it is legitimate. After all, they provide job opportunities. But the banks are different. They amassed unreasonably large profits and therefore the bank levies are justified. These banks as well as the utility companies are siphoning money of the country. Again, let’s stop for a minute. It is a well-known fact that the foreign banks have been pumping money into their Hungarian subsidiaries for a number of years. That is the reason they haven’t gone under yet.

After this harangue against foreign companies and banks he listed eleven accomplishments he is proud of. I do not have the space, nor is it even worth the effort, to list them all. However, a couple of points that he made in connection with these accomplishments are worth noting.

One is his belief that if a country’s national debt is 90% or more of GDP there can be no economic growth. This mistaken notion most likely comes from a since largely debunked study by Carmen Reinhart and Ken Rogoff, two otherwise respected economists. The study, called “Growth in a Time of Debt,” claimed that economic growth slowed rather dramatically for countries whose public debt crossed the threshold of 90% of the gross domestic product.  Unfortunately, they made some errors in their calculations. The most serious was their failure to include years of data that showed Australia, Canada, and New Zealand enjoying high economic growth and high debt at the same time. More can be read about the Reinhart-Rogoff study here. It seems that whoever told Orbán about the correlation between national debt and economic growth knew about the study but not about its “Excel coding errors.”

Among the laundry list of accomplishments I found reference to an odd economic theory which even Orbán admitted was unique. As he put it, “as regards this question everybody is on the other side and we are the only ones on this side.” Well, that is frightening enough. So, what was Orbán talking about? Those on the other side claim that economic growth must come first and that this growth will then foster higher employment. But Viktor Orbán is convinced that exactly the opposite is true. First, one creates jobs, and this job creation will create economic growth. He claims that this is precisely what happened in the United States in the 1930s. Alas, it is a well known fact that it wasn’t Roosevelt’s public works program that managed to pull the U.S. economy out of the great depression. But Orbán is convinced that the same strategy will work in Hungary although even he has to admit that the two situations cannot be compared because the United States was rich enough to start building railroads and such while Hungary, being poor, can only employ public workers to dig ditches. How 300,000 ditch diggers can lead Hungary out of the economic crisis remains a well-kept secret.

We might think that these primitive economic notions are frightening, but Orbán received his greatest applause when he said that Hungary is following a road on which he is completely alone. Where that road will take the country I hate to think.