Tag Archives: Eurasian Economic Union

Viktor Orbán misunderstands Donald Trump

Unfortunately, Viktor Orbán’s speech delivered this morning at a conference organized by the Hungarian National Bank is still not available in its entirety. Nonetheless, I will try to cover it as fully as possible because of its importance.

First, a few words about the conference itself. György Matolcsy established the Lámfalussy Prize, to be awarded to someone in the field of economics and finance who has done outstanding, internationally recognized work. Alexandre (Sándor) Lámfalussy was a Hungarian-born Belgian economist and central banker, known as the father of the euro, who died in 2015. The first Lámfalussy Prize was given to Ewald Nowotny, chairman of the Austrian central bank, in 2014. A year later the prize was awarded to Benoît Coeuré, a member of the executive board of the European Central Bank. Last year it was the Bank for International Settlement with headquarters in Basel that was honored. These prizes are handed out at the Lámfalussy Lectures Conference.

It was on this occasion that Viktor Orbán shared his latest ideas on the state of the world. I consider this speech especially noteworthy because it was Orbán’s first major speech since the inauguration of Donald Trump as president of the United States.

If I had to point to the most frightening message of the speech, it is perhaps the following sentence: “Unipolar Europe must be transformed into a multipolar entity.” Add to that: “We have received authorization from the highest secular place that we are free to put ourselves at the head of the line. What a great thing, what freedom, and what a great gift.” To my mind the first sentence can mean only one thing: the end of the European Union and the return to a divided Europe of smaller and larger nation states. As for the meaning of the second sentence, it is hard to find words to describe my disgust. So, from here on Orbán with the backing of Vladimir Putin and Donald Trump will destroy Europe? Is this his plan? I’m afraid so.

In the speech he pretty well describes what he is expecting of the new constellation after the arrival of Trump in the White House. First of all, “the end of multilateral trade relations has arrived and the age of bilateral treaties has come.” As a result, “national interest will be at the forefront” of each bilateral negotiation. Each country will be able to follow its own ideas as far as economic policy is concerned. I found a quotation that is fitting in this context. “Isolation and egoism fell on that day of the Treaty of Rome.” Orbán’s ideas aim to bring back the Europe that existed before 1957.

One of his first suggestions is the immediate abandonment of the negotiations on the Trans-Atlantic Trade and Investment Partnership (TTIP). Viktor Orbán will not have to wait long since all details about the TTIP were wiped from the White House website shortly after Trump was sworn in as president. Orbán’s idea is to replace TTIP “with something else,” without explaining what this something else will be. His reason for abandoning multilateral trade agreements in favor of bilateral ones is their unwieldiness. Moreover, it is hard to harmonize national interests within such a huge trade agreement.

I’m afraid, however, that Orbán doesn’t understand what the new American administration’s objection is to multilateral trade agreements. If one can believe Trump’s press secretary, his government “will pursue bilateral trade opportunities with allies around the globe.” What is the problem from the American perspective with multilateral agreements? The press secretary put it bluntly: “When you’re entering into these multi-lateral agreements you’re allowing any country, no matter of the size … to basically have the same stature of the US in the agreement.” Keep that in mind and good luck, Viktor Orbán.

Orbán’s criticisms of the European Union are well known, and it is not worth rehashing them here. There was, however, one criticism that deserves notice. He pointed out that none of the goals of the European Union that were promised at the time of Hungary’s negotiations with Brussels has materialized. He specifically mentioned “a Eurasian economic area all the way to Vladivostok.” Clearly, Orbán is still working on a possible Russian-European Union common market.

Another point Orbán made, which should be mentioned, is the EU’s security policy. He seems to be taking NATO’s collapse for granted because he reflected that “Europe would not have been able to defend itself without American help.” The creation of a common EU defense force “mostly depends on a German-French military agreement, which is easier said than done since it has no precedent.” I must admit that I don’t know what Orbán is talking about because post-war Franco-German cooperation is based on the Élysée Treaty, which was signed by Charles De Gaulle and Konrad Adenauer in 1963. This treaty contained a number of agreements, extending even to military integration.

If Donald Trump delivers what he has been promising for months, and he seems to be doing it at record speed, Viktor Orbán might not be such a happy man as he seems today. He may come to realize that “America First” means just that. Trump will treat other nations, especially smaller ones, accordingly. Then we will see what Orbán will have to say.

January 23, 2017

Viktor Orbán on a diplomatic mission in Mongolia?

Hungarian opposition papers usually have a jolly time making fun of Viktor Orbán’s slim pickings when it comes to making fancy state visits to countries that, from the vantage point of Budapest, don’t seem especially important. Certainly not important enough to visit with an entourage of sixty or seventy people, including five cabinet ministers and about fifty businessmen. This was certainly the situation when the prime minister’s office announced on January 18 that Viktor Orbán would spend three days in Ulaanbaatar, Mongolia’s capital.

For Hungarians, Mongols will always be associated with the visit they paid to Hungary in 1241-1242, with devastating consequences. Their brief conquest of large parts of the kingdom is considered one of the many tragedies that have befallen Hungary over the centuries. Otherwise, most Hungarians know little about the country, except perhaps that there are more horses than people in Mongolia. This vast country has only three million inhabitants. Although 30% of the Mongols are still nomadic herders, in recent years the country’s extensive deposits of copper, coal, tin, tungsten, and gold have emerged as a driver of industrial production. Mining now contributes 22% to the GDP and agriculture only 16%. Yet Mongolia is a poor country where 22% of the population lives on less than $1.25 a day. In 2011 GDP per capita was $3,100. Because of the boom in the mining sector, Mongolia had high growth rates in 2007 and 2008 (9.9% and 8.9%), but since then, with the world financial crisis and the commodity bust, its economy has slowed substantially. In 2015 GDP growth was only 2.3% and inflation was 8.9%. As for the future, analysts are not exactly sanguine. They predict slower growth due to drought-affected harvests and tight monetary and fiscal policies. The country is riddled with corruption and graft is endemic. The judiciary is vulnerable to political interference. In brief, it is a country where Viktor Orbán would feel at home.

After the announcement of the impending visit of the prime minister to Mongolia, 444.hu reported that Viktor Orbán had signed an agreement for Hungary to lend $25 million to Mongolia through the state-owned Eximbank. The money will be spent on the reconstruction of the Songino Bio Kombinat, which apparently Hungarians built back in the socialist period. The Bio Kombinat produces veterinary medicine, which is of vital importance to Mongolia’s livestock. This “financial assistance” package met with mixed emotions in Hungary. 444.hu wondered why Mongolia would need a loan from Hungary while others felt that this money could be used more profitably at home.

A quick look at Hungarian-Mongolian relations in the last couple of years indicates that the Orbán government has far-reaching economic plans as far as Mongolia is concerned. In October 2014 a Mongolian Cultural Institute was established at ELTE in Budapest, which was opened by President Tsakhiagiin Elbegdorj. On January 1, 2015 Hungary reopened its embassy in the Mongolian capital, and in April President János Áder visited Ulaanbaatar. In May, after a visit of Péter Szijjártó to Mongolia, Magyar Hírlap triumphantly announced that “Mongolia will be Hungary’s new technological target country.”

On January 25 the large Hungarian delegation arrived at Genghis Khan Airport. The temperature, a bone-chilling -32C, didn’t prevent the usual military fanfare, part and parcel of a state visit, from taking place. After meeting with Prime Minister Chimedin Saikhanbileg, Orbán as usual was full of praise for both the host country and Hungary which, according to him, has been thriving in the last few years. In fact, it, along with other eastern European countries, is the engine of the European Union’s economic growth. Both Mongolia and Hungary are successful countries which should join forces. “We have returned,” he said, referring to the earlier closing of the Hungarian embassy in Ulaanbaatar, because Hungary under his guidance has created an entirely new social and economic regime. He specifically noted that 400 Mongolian students have studied in Hungary. I assume that this number includes those who spent time in Hungary during the socialist period. In turn, the Mongolian prime minister welcomed the reopening of the embassy, a gesture that shows that “Hungary considers bilateral relations with Mongolia important.” From his speech we learned that Hungary has doubled the number of scholarships to Mongolian college students, from 100 to 200.

Viktor Orbán and Chimedin give a press conference after their talk

Viktor Orbán and Chimedin give a press conference after their talk

On the surface, these conversations seem to have been dull, but we learned from Péter Szijjártó that Viktor Orbán and his foreign minister Péter Szijjártó wanted to achieve something more than expanding business opportunities in Mongolia. They would like to use Mongolia as an intermediary between Russia and the European Union. While the two prime ministers talked about the economic successes of their countries and the advisability of cooperation, Szijjártó had a conversation with Foreign Minister Lundeg Purevsuren. After the meeting Szijjártó revealed that the two men had discussed the chances of “pragmatic cooperation” between Russia and the European Union. Mongolia could be a great help. According to Szijjártó, it is in the interest of Europe to develop cooperation between the European Union and the Eurasian Economic Union. “The earlier concept of a free trade zone from Lisbon to Vladivostok was never more important than now.” Mongolia signed a partnership agreement with the European Union and is in the middle of negotiations with the Eurasian Economic Union (EAEU) for a similar partnership. Therefore Szijjártó asked his Mongolian colleague to use his good offices between the EU and the AEEU. I consider this opening gambit by Szijjártó a naïve move leading nowhere.

As for the actual business deals, the results are meager. While Hungary lent $25 million to Mongolia, the Hungarians signed business ventures amounting to $40 million. But there were many future plans that may or may not materialize. Miháy Varga, minister of national economy, held conversations with the Mongolian finance and industrial ministers. According to him, “decidedly good cooperation may develop in food processing, construction, transportation, alternative energy, and even in mining.” They specifically talked about selling Hungarian buses to Mongolia. Earlier attempts at increasing trade and business opportunities with other Central Asian countries brought no results. Perhaps Mongolia will be different, but I doubt it.

January 26, 2016

Difficult passage: Orbán’s ferrying between Moscow and Brussels

Endre Ady (1877-1919), one of Hungary’s greatest poets, also wrote an enormous number of political essays during his lifetime. After all, he made his living as a journalist. He was a sharp-eyed observer of Hungarian politics from an angle conservative Hungary considered to be radical. His criticism of his country, which he loved dearly but also feared for, could be harsh and often prophetic.

Some of his descriptions of Hungary at the turn of the nineteenth century are applicable even today. One of these is the famous label he stuck on Hungary: “a ferryboat country.” Like a ferry, the country keeps crossing the river back and forth. With every crossing it ends up not on the side of progress  and democracy but its opposite, stultifying reaction and with it tyranny. It cannot decide whether it belongs to the East or to the West.

Today Hungary has a prime minister for whom this disturbing aspect of Hungarian reality that Ady wrote about causes no sleepless nights. On the contrary, he considers it a plus that will allow his country to become a negotiator of sorts between East and West. He is convinced that Hungary will reap enormous benefits from his ferrying between the two worlds.

It seems, however, that Viktor Orbán’s ferry is drifting farther and farther toward destinations like Putin’s Russia, Lukashenko’s Belarus, and Yanukovych’s Ukraine.

Observers often comment on Viktor Orbán’s incredible luck. In the past four years political and economic analysts predicted that Hungary’s unorthodox policies would bring certain collapse, and yet he managed to keep his head above water. People admire his skill in playing a double game with the European Union. One day, people predict, the European Union will have had enough of him. And yet, even though he compares Brussels to the Moscow of the Soviet Union, money continues to pour in from Brussels.

Occasionally, however, things can go wrong. Only a couple of months ago he decided to strike a deal with Vladimir Putin that put Hungary solidly in Russia’s economic sphere. Moreover, the enormous loan that Putin made available to enlarge the nuclear power plant in Paks can be used by Putin as leverage against Hungary if need be. According to people close to Orbán, Putin made a good impression on him. Yet Putin is a foxy fellow who is most likely using Hungary to move Russian money and power into the European Union. As one Orbán critic put it, the ferry set anchor in Putin’s harbor.

Yes, Orbán has been lucky so far, but this Ukrainian revolution came at the very wrong time for him. There are serious questions at home over the wisdom of such a long-term commitment with Putin’s Russia. It is dangerous to get too friendly with Putin, whose Russia is increasingly harking back to Soviet times. People ask how ferocious anti-communists like Orbán and László Kövér, president of the Hungarian parliament, can get so chummy with a former KGB agent. Fear of Putin’s intentions in Hungary is real. Perhaps this is the most serious complaint in Hungary when it comes to the Putin-Orbán agreement.

And now comes the upheaval in Kiev. Yanukovych hitched his wagon to the Russian troika for a few billion dollars. Ukraine received just a little more money than what Putin promised to Orbán. But there was a price: giving up the idea of Ukraine ever belonging to the European Union. A lot of Ukrainians, however, didn’t want to be part of the Eurasian Economic Union Putin has been dreaming of for some time. He himself stated in November 2011 at a conference organized by his United Russia party that this Eurasian Union would be built upon “the best values of the Soviet Union.” During the same conference a Russian political scientist said that not just former Soviet states but also countries which “have been historically or culturally close to the former Soviet Union” would belong to this union. Hungary was one of them.  As for Ukraine, Russians always looked upon this territory as their very own. After all, Kiev was where Russia was born in the late ninth century. The former Czech president Václav Klaus, calling himself a realist, announced just today that Ukraine is an integral part of Russia; this is where it belongs. Those hot heads in Kiev shouldn’t be encouraged by the politicians of the European Union that it should be otherwise.

Viktor Yanukovych and Viktor Orbán in March 2012 during a short visit to Kiev

Viktor Yanukovych and Viktor Orbán in March 2012 during a short visit to Kiev

So, here is Viktor Orbán’s predicament. As the prime minister of one of Ukraine’s neighboring countries, he should take an active part in the negotiations initiated by his friend Donald Tusk, prime minister of Poland. The Polish foreign minister, Radosław Sikorski, has been instrumental in brokering an agreement between President Yanukovych and the opposition which at least for the time being has resulted in a restoration of the 2004 constitution and the promise of early elections. If the truce holds, it looks as if Putin’s attempt at gaining a foothold in Ukraine will have failed.

But Orbán doesn’t want to offend Putin and therefore he is keeping a low profile. Although leading politicians all over Europe have condemned Yanukovych’s bloody efforts to suppress the revolt, Orbán remains quiet. As he said today in his regular Friday morning radio address, “We are watching the events from the background.” In fact, they are remaining so far in the background that Foreign Minister János Martonyi suddenly became too ill to attend the extraordinary meeting of foreign ministers in Brussels. Hungary was represented by Undersecretary Zsolt Németh.

Well, I’m not quite correct in saying that Orbán did nothing in connection with the Ukrainian crisis. He hopped on a helicopter and visited the Hungarian-Ukrainian border at Záhony. And he made sure that his activities were videoed. As usual, he kept a few pieces of paper in front of him which he studied intently for a few seconds. He looked at the snow-covered Ukrainian terrain where he spotted a couple of deer. Then he rushed to a hospital where he was told that there are plenty of doctors and beds to take care of the wounded. And finally he gave a little pep talk to the border guards for doing their best. I might add that there is nothing in Zaparttia Oblast that would warrant his presence there. But his staff immediately placed the video on Facebook. One blogger described him as “a man who is trying to reap political benefit from the corpse of his neighbor.”

Meanwhile the servile state media feel that they have to take a pro-Russian stance. For example, the centrally edited news called the demonstrators in Kiev terrorists. When called to explain this report, it turned out that one of their sources was the “Russia Today” television station and the other a Russian daily newspaper’s online edition. Gordon Bajnai’s reaction upon hearing the story was disbelief until he himself listened to the broadcast. He bitterly remarked that if the Orbán government keeps going in the same direction as in the last four years “Hungary might become the most western successor state of the Soviet Union.” He added that this is one good reason to vote against Orbán and his party on April 6.