Interviews / Prime Minister Viktor Orbán on the Kossuth Radio programme “Good Morning Hungary”

Prime Minister Viktor Orbán on the Kossuth Radio programme “Good Morning Hungary”

Zsolt Törőcsik: Two very important pieces of economic data have come out in the last ten days. It’s emerged that inflation continued to slow down in July, to 17.6 per cent. And this week we also learned that in the second quarter Hungary’s economy’s output fell by 2.4 per cent compared to the corresponding period last year. What can the Government do to get the economy back on a path of growth? And how are the sanctions against Russia and the Russo-Ukrainian war affecting economic trends? These are some of the questions I’ll be asking our guest in the studio, Prime Minister Viktor Orbán. Good morning.

Good morning. Greetings to your listeners.

Minister Márton Nagy, the Minister for Economic Development, has listed fourteen targeted measures with which the Government is helping to strengthen the economy and bring down inflation. Will these be enough to put the Hungarian economy back on a path of growth and further reduce inflation?

In the situation in which the European economy – and we Hungarians within it – find ourselves today, we must take a series of mutually reinforcing steps in order to avert economic difficulties. Even now, we’re unable to attack the root of the problem. The root of the problem is the war. And until there’s peace, the wartime economy will remain, the wartime economic conditions will remain. It seems to me that the bureaucrats in Brussels don’t want to lift the sanctions, although that’s what we’re pushing for. So not only will the war remain, but the sanctions will also remain; and so the very difficult environment in which the European and Hungarian economies are operating today will remain. So if the war were to end, if the parties were to come to their senses and make peace, or if the Americans were to announce that they’d no longer support the war, the environment in which the European economy is operating today would change in a matter of moments. It would also greatly benefit the opposing sides, because the war is becoming increasingly brutal, with ever more people dying, the intensity increasing, and an increasing number of ever more advanced weapons being used. So a sudden peace would also be good for them, because we wouldn’t be losing hundreds and thousands of lives every day. But it would also be good for the European economy; because in a normal environment, without war and sanctions, the European economy and the Hungarian economy would be able to show their best form. But we can’t do anything about that yet. Of course I wouldn’t underestimate what we can do – even if the key to the solution isn’t in our hands, but in the hands of the big boys. But the right political and moral position to take is that we must focus on peace and not war, and that we must make efforts to create peace. We must keep it alive, because for the time being this position hasn’t been convincingly represented by anyone other than ourselves and the Vatican. So this is also important, even if we cannot change the course of the war, even if we cannot convert war into peace. Now, if this is the case, the question is what can be done; because our problems will not be solved by what cannot be done. So in such a situation we cannot – and we must not – pass the buck to someone else and cross our arms: we must take action. In such a situation there are three things to be done. The first is to protect jobs. In this respect we aren’t doing badly; in fact, I see that in Hungary there are still tens of thousands of unfilled job vacancies. We have between seventy and eighty thousand job vacancies; they’re demanded by the economy, and the work has to be done by someone. But the bottom line is that for the time being the Hungarian economy is primarily providing jobs for Hungarian people, and we’re in a good position to maintain the situation in which anyone who wants to work can do so. The second task has been to bring down inflation. That’s been a harder nut to crack, but I feel that now we’ve grabbed it by the scruff of the neck, because we’ve moved to what I could call a more radical position. We’ve tried to keep inflation under control, to pull it down, to stamp it down with our own more subtle means, but over the course of a month or two it became clear that this wouldn’t be enough. And then we had to use more forceful measures and clearly announce the policy of forcing the price gouging multinationals to stop raising prices unnecessarily. Every price increase is caused by the war and the sanctions, but what we’ve seen – and everyone has seen the conditions in the shops, our supermarkets and the malls – is that the level of price increases is higher than that which can be attributed to the economic situation. I call these unjustified price increases and price gouging. The multinationals have been at the forefront of this. And we’ve had to show strength, we’ve had to say that this can’t continue. I don’t think anyone – including the Government, but no one in this country – objects to traders and multinationals making fair profits. This is a grown-up country, it’s an educated, economically sophisticated country, and everyone understands how things work. They know that in the shops you have to pay, that things have a price – a production price, a cost – and that the trader has to make a living, and a fair profit is an inevitable part of the economy. But enough is enough. This had to be made clear, and so the price cap had to come in, we had to rule on price competition, and we had to bring in the Competition Authority. This is just as it should be. And we’ll achieve the target of single-digit inflation by the end of the year. It’s fallen a great deal, we’ve pulled down hard on it, we’ve cut inflation hard in the past month; but I think the really good result will be seen in August, and then there will be the slowly emerging widespread belief that the Government will succeed, and that it can achieve single-digit inflation by the end of the year. I think that by the end of August this will be a general opinion and a legitimate hope backed up by facts. Having successfully fought inflation, the next thing after that is that we’ll have to fight for growth. “Growth” also probably sounds abstract to your listeners, but in our thinking growth has to be linked to wage increases. If there’s no growth, there can be no wage increases. And the two ways to defend against high prices are to beat inflation and to raise wages. Because, after all, we’re not fighting an abstract macroeconomic battle: we want to protect families. So the question is, how can families bear the burden of higher prices? Partly by curbing the unfair practice of price gouging, and partly by increasing wages. This requires growth. If there’s no growth, there are no wage increases. This is why it’s important for the Hungarian economy to get back on the road to economic growth as soon as possible after the shock of the war. This is what we’ve been used to over the last ten years. People are used to seeing rising wages, stronger families and a country that’s developing well. The war has taken us off that track, and we need to get back on it. And now the real issue is growth. This is what the Minister of Economy said yesterday and the day before yesterday. The number that we’re seeing now isn’t good, and in the second quarter economic growth fell quite badly. But the good news is that this is the number for the second quarter; so it’s behind us, it’s done, it’s over, and we’ve survived it. And the third quarter that we’re in now is already noticeably better than the second quarter was; so when the aggregate and the analysis comes out for the third quarter, we’ll see that we’re back on the growth path that the war took us off. To that end, the Government has also taken a number of decisions. You can see that life and work doesn’t stop in the summer, in such a difficult economic climate holidays aren’t permissible for some key ministers, and so we’re working. And I’m sure that, just as with inflation, by the end of the year we’ll have succeeded with economic growth. The third and fourth quarters will be about the data for finally getting back on track.

As you’ve mentioned wages, what’s also important in addition to keeping jobs is how much people earn; and in recent months there’s been a fall in the real level of wages, partly because of high inflation. Can this be reversed, and when can it be reversed? And another interesting question related to inflation is about what the Government expects in the longer term. Single digits is the target now, but what about in the longer term? 

The first quarter was difficult for everyone. But the Hungarian economy has held up well, and I have to say that the people have also fought well. Employment figures haven’t fallen back, people want to work, they feel that they have to keep their jobs, and that the struggle they’re engaged in isn’t hopeless, but that we can get through this difficult phase. This ability, mood and determination is present in the economy. I talk to many people, but I also talk regularly to the major players in the economy, and I see that they haven’t given up. So they haven’t taken flight, they haven’t been downsizing, they haven’t closed down, but they’re preparing for the future – even if the situation is difficult. So I have to tell you that, in terms of growth and real wages, I’d like to see a “positive zero” by the end of the year. Well, the Prime Minister isn’t allowed to make predictions, so I’m being cautious, but I’d like to see such a positive zero. In the first half of the year price rises were so brutal – we saw it in the shops, everyone could calculate it – that wages couldn’t keep up. Now we’ve brought inflation down or cut it back, and wage increases in the economy are ongoing, so in the second half of the year wage increases may offset everything bad that happened in the first half. Even within the Government there are debates about whether this will be straightened out or whether it will remain a “negative zero”: whether it will be slightly above or slightly below zero. There’s no consensus on this, but I think that the prediction is less important – what’s important is that we have to fight to increase wages and bring inflation down. Because when reality dawns and everyone can see that inflation dropped into single digits sometime between October and December, it won’t mean that we can sit back, because it will still be very high. The budget year 2024, which has already been passed by Parliament – or rather the budget for 2024 – assumes inflation of 6 per cent. That’s high, but it’s the minimum that we need to achieve, so we mustn’t do worse than that. But I hope that if we can continue to fight inflation, if we can continue to monitor the price gougers, if the Competition Authority does its job well and if the Government makes it clear that it won’t allow unjustified price increases, then 6 could be 5. So we could go lower. Inflation next year of 5 per cent would be a tolerable rate – especially if there’s a parallel fall in the interest rates on the loans that are needed to keep the economy operating. Then the conditions for economic growth will be in place, then we can start to move upwards, then wage increases will come, and we’ll get back on the track on which we were progressing so well right up until COVID.

Experts say that economic growth can also be boosted by events such as the World Athletics Championships, which start tomorrow and are the biggest sporting event that Hungary has ever hosted. What’s the significance of Hungary being able to host this event in such an uncertain and crisis-ridden period?

Obviously there’s an economic context here. The economists will calculate this, how many guests arrived, how hotel bookings develop, what’s consumed, and what this brought into Hungary in terms of forints. This is important. Of course with its ten million people, a country like Hungary needs to pick up every forint it can: it shouldn’t waste a single business opportunity. But there’s a bigger issue here than simple economic calculation. We had a grand plan when, in 2010, the electorate entrusted us with the country and with its capital city – which was in a rather run-down condition. Back then we said that of course first and foremost Budapest is the home of the people of Budapest, but that Budapest also belongs to everyone, because Budapest is also the capital of the nation. And, as we said at the time, the capital of the nation should be a place where everyone in the world who’s ever heard of Hungary feels that they must come to a country with such a fantastic capital. But then, for a number of reasons, they’d find out that they couldn’t come here: because there were no hotels, because there was no reason, no occasion, no event, no incentive to come here – unless they were history enthusiasts who want to see a fantastic capital left behind by the Dual Monarchy. And then we set ourselves the goal of giving the capital everything it needed to be able to host any world event. We started with the economy. The first major renovation and investment achievement was the renovation of the Hungexpo congress and exhibition centre, in order to put Hungary on the map of trade fair cities, of business and of exhibitions. Most recently the world hunting exhibition was a good example of the superb success of the renovation of Hungexpo. Today Hungexpo – which is run jointly with the French – is one of the most modern and most outstanding trade fair centres in Europe. Then there were the cultural facilities, because, after all, it’s difficult to welcome guests in a run-down, dirty city. And then came the Várkert Bazár [Castle Garden Bazaar], then the Vigadó Concert Hall – well, of course, everyone knows these classic stories. And then we were able to become the home of cultural events, so that we could proudly welcome the whole world. And the third big step is the world of sporting events. Sporting events are of course very important economically and they bring in money, but they also focus or direct the attention of the world. We started with the World Aquatics Championships, then came the Euro 2020 football championship, and now we have the World Athletics Championships, coming after the Europa League football final. If I’ve correctly understood the statements from UEFA and the Hungarian Football Association, we’re on the verge of hosting a final of the UEFA Champions League, and they’ll bring and direct attention and people to this. So what we can say about Budapest today is that our city is the capital of a nation that must be visited. The world can feel that anyone who hasn’t been here is missing out on something. And the World Athletics Championships fit into this. Organising such a world event is a big job. I’d like to thank the organisers, the stewards, and especially the volunteers. Obviously less is said about them, because everyone’s watching the show and the stage, but in the background working as volunteers are thousands of young Hungarians, and we owe them our thanks.

And on the opening day and on the day of the events, this is why the world’s attention is on the host country. Can the Government take advantage of this attention in diplomacy – even beyond the world of sport?

The way this happens – and I myself am part of it – is that when there’s a major world event, a country invites its friends or welcomes all interested people here. Athletics is the queen of sports, but I’m in closer contact with the king of sports, with football. So a Europa League or Champions League final or a World Cup is also always – more or less covertly – a series of diplomatic meetings. Now the Emir of Qatar, among others, is coming to the World Athletics Championships, reciprocating the visit that I was able to make on behalf of Hungary when the football World Cup was in his country. Over there we started to discuss issues that will lead to announcements in the next day or two related to negotiations here in Budapest. We’ll host the President of Türkiye, we’ll host the President of Serbia, who’s a great friend of ours, and we’re grateful for the honour of hosting the Emir of Qatar – so we’ll have a king here. And we’ll be hosting our friends – our political friends – from the Central Asian region: Azerbaijan and Uzbekistan, where Hungary has major investments now; the Kyrgyz will be here, and the Turkmen will be here. And a lot of business people are coming, because business negotiations are also in progress. People will be coming from all over the world, but mainly from Western Europe and China, so we’ll also be having political and business negotiations. I have more than a dozen official bilateral meetings as a result of the 20th [Hungary’s State Foundation Day] and the World Championships.

Yes, and 20 August, the celebration of the founding of the Hungarian state, will also take place this weekend. Obviously in general this is an occasion to reflect on the fact that we live in a Christian state that’s more than one thousand years old. What is the legacy of Saint Stephen that can still be relevant today, and that can be shown to foreign visitors who come here on this occasion?

Well, Hungarian history is an exciting history, being both labyrinthine and storm-swept. Since it’s about us, for us it’s also appealing. I advise against always simplifying historical contexts, but if we look at the history of a nation from the right perspective, and that’s what birthdays are for, 20 August is the birthday of the Christian Hungarian state. It’s not the birthday of the Hungarian state, because there was a Hungarian state before Christianity, which was a tribal state; this is the anniversary of the birth of the Christian Hungarian state. So if we look at Hungarian history from the perspective of more than a thousand years, then Hungarian history doesn’t seem so complicated; but it does impose an obligation on everyone who was born Hungarian. We can see that we set out eleven centuries ago, as part of a serious military enterprise. It’s debatable how many of us set out, but we’re talking about tens or hundreds of thousands of people. We gathered, we came here, we selected this place, which was then a barren land, at least according to the opinion of most historians, and we settled here. As aliens. We came from afar, and we have no relatives here. No one here speaks our language. Our culture is only a wonder for us, while for others it is at most a curiosity. So we came here, we’ve lived here as if on an island, we’ve lived here as an island among the Germans and the Slavs for eleven centuries, and what we occupied back then, where we settled, we’ve kept ever since: our language, our culture, our territory. Sometimes it’s bigger, sometimes it’s smaller, but in essence that doesn’t change the fact that we’ve been in control of this Hungarian world in the Carpathian Basin for more than eleven centuries. And the fact that we’ve had this opportunity, that we have something we can hold in our hands, and that we have a tradition in Hungarian history that helps us to survive and remain alive to this day and that allows us to leave a beautifully developing country for our children, is due to the key role played by Saint Stephen. The decisions with which we organised the Hungarian world here – essentially decisions on the organisation of the state, which included the adoption of Christianity, but there’s more to it than that – are the foundations on which we stand today. Of course technology has changed, people have become smarter, and science has advanced, but in terms of the essence of how to organise the country, all these things come from our first great Christian king: how to organise it, how to run it, how to think about running the country, how to involve people in the work of the country, how to unite us in the tradition of the Holy Crown. And in part this birthday is an occasion to thank him, to bow our heads before him, and in part to take to heart the lessons and understand what we need to do in the next few hundred or thousand years to preserve this Hungarian world here in the Carpathian Basin. This is why I say that if you’re Hungarian, you were born with a purpose in life. You have a mission: your task is to ensure that this island, this marvellous linguistic and cultural island of Hungary and Hungarian culture, doesn’t disappear from the face of the earth. Because no one else can preserve it, except us. This is the task of the Hungarians. And if you were born Hungarian, then it’s not good or bad luck, it’s not a lottery: you came into the world with a mission. Some Hungarians understand this in a stricter sense, some more loosely, some with more humour and some with more emotion; but if every Hungarian understands that they’re part of a great process, a great historical process that goes back more than a thousand years, and that their children and grandchildren will also be part of this process, then fine. If the Hungarians understand this, then we’ll have had a good birthday.

Well, part of the practical expression of this task is what’s happening today, as from here you’ll be travelling to Zalaegerszeg for the inauguration of the Rheinmetall military production plant. In such an uncertain situation surrounding us, what’s the significance of this factory and the cooperation with Rheinmetall? 

In the past minute we’ve been talking about the thousand years of Hungarian history, and the lesson is that you cannot survive without strength. You also need strength for peace and strength for survival: you need spiritual strength, you need economic strength, and you need military strength. The truth is that in the chaotic twenty years after 1990 the Hungarian defence industry practically faded away. I’m not now apportioning responsibility among the various governments; I could do that, and it’s clear when the biggest problems occurred, but now that’s behind us, and we must talk about how to rebuild the Hungarian army. And of course the essence of the Hungarian army is the soldier, the warrior; it’s very important that we don’t have employees in uniform, but that we have fighters. These are two different worlds, and I believe that the current Minister of Defence and the new Chief of Staff are also taking the army in this direction, so that we can have fighters and not simply employees in uniform. So of course there’s peace, we want peace and our army’s also an army of peace; but it must be ready to fight, it must be deployable, it must have striking power, and so on. The most important thing is the soldier, and so now the emphasis is on training soldiers, on military academies, and on salaries. But the army won’t stand on its own, on its own feet, if it’s not supported by the military industry. We’ll never have the money to buy the latest military technology. Naturally we’ll always buy something, which we’ll then develop, copy and apply; but without our own production we cannot create a functioning army capable of defending the country. So we need our own military industry. It’s this realisation that has guided us over the years when making very important decisions. We’re a member of NATO, and in NATO there’s an obligation to spend at least 2 per cent of our gross domestic product on the army. This includes the development of weapons. There are appropriate ratios for salaries, for spending on soldiers and spending on equipment. We’ve set this approximate ratio, and now we have a military industry that’s on the upswing. And Zalaegerszeg can be proud of one of the largest military industrial centres, and that the world’s most modern combat vehicle, armoured combat vehicle, is rolling off the conveyor belt of their factory. They’re now starting test production, and we’re handing over the factory today. You can’t build world-class technology from scratch: you have to work with someone. Our most favoured partners by far are the Germans. We’re strong in our cooperation with German industry, and now we’ve built a factory in which 49 per cent of the plant is owned by the Hungarian state, and we’re using the most modern technology in the world, which is German technology. And in the coming weeks and months we’ll be handing over more plants. I think the Ukrainian-Russian war has taught everyone with eyes to see that it’s not just a question of how many weapons you have, but it’s a question of how many you can produce, and whether you can produce them on the territory of your own country. If you can produce weapons you are strong, and for peace you need strength. We want to live in peace, we’ve always wanted to live in peace, Hungarians are peaceful by nature, but they know that there will never be peace without soldiers and the ability to defend peace.

In the last half hour I’ve been asking Prime Minister Viktor Orbán about the Government’s measures to curb inflation, the World Athletics Championships starting tomorrow, and the development of the Hungarian army.


More news