17 January 2014

Gábor István Kis: It's four minutes past seven thirty a.m. and I have sitting here next to me Prime Minister Viktor Orbán, good morning!

Viktor Orbán: Good morning and hello to everyone listening.

GIK: Let's begin with the Russian-Hungarian, Hungarian-Russian agreement on energy cooperation. I'd like to summarise the most important subjects of interest in four or five points; let's go through these. We can call these concerns with regard to the agreement. By far the most important part is the participation of the Russians, because the Russians have come out as winners and what will it be like to negotiate with them? Have they fallen out of the habit of using imperial logic yet? Let's leave this until the end. My first question is, is what we are seeing here the root of what you said in India a few months ago, that within four of five years Hungary could have the cheapest electricity in Europe? 

VO: That is the goal, yes.

GIK: Are you counting on the fact that the shutting down of nuclear power plants in Germany will lead to a restructuring of the energy market throughout Europe; does the agreement and this power plant construction project include a concrete strategic agreement with relation to this fact?

VO: We have taken it into account, but it is not part of the agreement.

GIK: Will there be a guaranteed electricity price on the basis of which the operation of a nuclear power plant can truly be calculated in advance for several decades?

VO: The price of electricity is dependent on a number of factors, as you know, and our objective is clear: we want to provide cheap electricity to both households, and we can refer to this as the public utility battle and the reduction in public utility charges, and to enterprises that operate the economy. Parliament has made a decision on this issue; the National Assembly has stated that without the renewal of the Paks Nuclear Power Plant, it will be impossible to generate cheap, safe and clean energy in Hungary, and it has given the government the task of achieving this goal. There can be no Hungarian economy without the Paks Nuclear Power Plant; the situation today is that simple, or rather without the Paks Nuclear Power Plant, Hungary can only have a poor, downtrodden and uncompetitive economy.

GIK: 3000 billion forints [just under 10 billion euros] for 30 years, taken on with 20 percent own participation. Who is taking on this loan and how does this fit in with the logic according to which the Government was previously fighting a war of independence against the IMF with relation to a roughly similar sum? And now we have a loan agreement with Russia concerning a nice round number.

VO: It's worth knowing your chalk from your cheese. The IMF said that we must reduce pensions; it said we cannot tax the banks and we cannot tax the multinationals. Well, no issues of that nature were even mentioned with the Russians. We will be agreeing on the financing of a development project with the Russians.

GIK: The result of which, if I understand correctly, will be the construction of two new nuclear power station blocks that will be Hungarian owned, built with significant Hungarian involvement and at a calculable price.

VO: To keep things absolutely clear and simple, what will happen is that we will be maintaining the current state of affairs. As things stand, in view of the fact that the Hungarian economy is not capable of operating competitively without Paks, it is in the interests of Hungary for things to remain as they are. Meaning that Paks should continue to be capable of generating 40-45 percent of the country's energy usage in the long term. This requires that we maintain the previous agreement, the cooperation agreement on nuclear energy, that came about between Hungary and the Soviet Union, except that it is now Hungary and Russia who must preserve this relationship.

GIK: What guarantees have been incorporated into this agreement, which is due to be discussed by the Government and adopted by Parliament? Have you calculated with possible changes in public opinion with regard to nuclear energy: late performance, penalties, operation, fuel? Will Hungary be in a vulnerable position at all or not?

VO: Hungary will be in no different a position to the one it is in today. This whole issue has no effect whatsoever on Hungary's independence or dependency, because our goal is for the state of affairs that exists today to remain in existence in future for several decades, and so in this respect there is no change with regard to the issue of dependence or independence.

GIK: Negotiating with the Russians in 2014, in view of Hungary's 20th century history; we have spoken about this before on this show and you said that it is in itself quite a success that a Hungarian prime minister travelled to Russia sand was allowed to come home; I don't want to make a joke of things, but this has to be thought through and you, leading Fidesz politicians have also voiced previous concerns and critical points of view with regard to the Russian party. What is the situation now?

VO: Our relationship with Russia is not easy for Hungary or for the Hungarian people. My view is that one cannot change the past, but one can change the future, and it is worth doing so. We have a clear image of the future; we want a strong Hungary, a country that is strong enough to be an equal partner to other countries; not a subject, but an equal partner. And it may be true that in the past we have been occupied by both Germany and Russia, but with regard to the future we want to build an equal relationship with both Germany and Russia. This is what we have always wanted, and we have now succeeded. As things stand today, Hungary is an equal partner to Russia, to Germany and to the world's other states. This is what mutually beneficial cooperation agreements must be founded on. This is the essence of our politics. Russia is a huge economic power centre and a huge market. A year ago, I agreed with President Putin on the development of Russian-Hungarian economic relations based on mutual advantages. Today, with relation to this agreement, I can tell the Hungarian public that the Russians have kept to their side of the bargain. We agreed that the Hungarian economy would have access to the Russian markets and we agreed that we would be able to export more products to Russia, and we achieved significant growth last year. We concluded a separate agreement that Hungary would significantly increase the sales of its agricultural products in Russia. This has occurred, and exports will continue to grow in the upcoming years. And so my opinion is that today, Russian-Hungarian relations are doing well.

GIK: This is one half of the negotiating table, but why is this worthwhile for the Russians? The successful export of their own technology is at most a question of prestige, is it not?

VO: They do not want to lose Hungary. The way you should think about it is that an agreement was concluded in 1966 according to which a significant proportion of Hungary's energy production would be derived from Paks, where Hungary will construct a nuclear power station built on Russian technology; this is what happened. If we do not continue cooperating with Russia, that would be a loss from their point of view. I would not like to suffer a loss and neither would President Putin; the Russians don't want to suffer a loss and neither do we. So the reason they are making us an offer that is more favourable than anyone else would make is that they do not want to suffer a loss where they are already present.

GIK: So ultimately we have heard one key issue or rather key statement, that Hungary is continuing an existing agreement on nuclear energy that was concluded in 1966. But are there any linked provisions to the contract, such as long-term gas purchase agreements? As the owner of gas reservoirs in Hungary, the Hungarian state conducted direct negotiations with Gazprom, didn't it?

VO: No there aren't; this is very important. When I held negotiations with President Putin a year ago, we also decided on the question of whether we would discuss issues relating to Russian-Hungarian economic relations in packages during the upcoming period, or separately, as separate topics. And one year ago we decided to discuss all issues separately. We will not be linking any issues to any other issues.

GIK: All right. Let's have a look at the future then. Let's take a look at another perspective within the same issue, that the average person usually encounters electricity when they turn on the vacuum cleaner t home, through the plug; they know that it is important to them…

VO: For now, this is the case for the moment. But I would like to remind the listeners of the fact that in 2011, the Hungarian Parliament came to a decision on Hungary's energy strategy for the next 30-50 years, and it ordered the Hungarian Government to implement this strategy. This is a document of over 150 pages, and it is worth examining, and among others it states that over one hundred consultations were held with social organisation and business organisations prior to Parliament adopting the Hungarian Energy Strategy, and in this energy strategy is clearly states on the one hand that the operations of the Paks Nuclear Power Plant must be maintained, but it also includes an interesting sentence in view of which the people of Hungary will encounter the issue of electricity more often in future. Because it states that putting road transport onto electric foundations must also be achieved using nuclear energy. And so Parliament has made a decision according to which not just rail transport, and this is nothing new, we have of course seen electric trains before, but also road transport must be based on electricity, and the required energy must be produced in Paks. And so, although I don't want to start saying things that seem like they are from a science fiction novel, but in the upcoming years the people of Hungary will be increasingly encountering pieces of news about how we need to replace vehicles that operate using petrol an what attempts we are making to base Hungarian road transport on the use of electric vehicles that require electricity.

GIK: I will also refrain from entering the realms of science fiction then, but does this mean that negotiations are possibly underway with some of the larger car manufacturers in relation to this?

VO: Yes, this is what I mean; this is what I have just referred to.

GIK: And how true is the hallway gossip that, following the closing of Germany's nuclear power stations, we will begin talks with the Germans on their acquiring cheap nuclear energy from Hungary?

VO: For the moment, Hungary's objective must be for the maximum possible amount of electricity used in Hungary, for the maximum possible amount of energy used in Hungary, to be generated in Hungary, because demand is still covered by imports today. So the primary economic objective is to provide families with cheap electricity; this is the basis for the reduction in public utility prices. To families and to enterprises. And this requires that we import the least possible amount of energy from abroad and generate the maximum possible amount of energy here at home, and only after this is achieved can we consider the question of whether we produce more than we use, and only then can we begin to think about how we should market the surplus. But this is not a question for today, but only for the day after tomorrow.

GIK: All right, but since you have mentioned this energy strategy, how does it impact the use of fossil fuels? How does it affect the use of renewable energy sources in Hungary?

VO: These issues are also all determined by Parliament's 2011 decision, which states, determines, that renewable energy is of course important, but that it is currently more expensive that all other options. This means that increasing the popularity of renewable energy sources is currently only possible through the injection of huge amounts of public monies. This is why Hungary must do a good job at scheduling the otherwise extremely important issue of developing alternative energy sources, because technology is developing rapidly and we must remain up-to-date, and when the level of development is such that alternative energy no longer requires huge amounts of public monies to fund it, then it will be worth putting greater quantities into commission within the Hungarian energy network. With regard to fossil fuels, the Strategy states that Hungary's existing lignite assets must continue to be utilised and that issues relating to clean coal energy must be researched. Accordingly, I do not view the issue of coal as belonging to the past in Hungary, but see it rather as being used in conjunction with modern technology, including mining, in the future.

And here are two facts regarding what the future will bring, as food for thought. At the end of 2012, the International Energy Agency examined the state of the world's energy requirements, and stated that the Earth's total energy demand would increase by 35 percent by 2034, of which demand for electricity would increase by 70 percent, which certainly puts a plant that generates electrical energy in a favourable position.

Let me also say that this long term energy strategy for Hungary, which was adopted in 2011, is a rare document because it spans 30 years, places Hungary among world tendencies and also includes an outlook for the next 50 years. And so today I can safely say that the interested organisations of Hungarian society have, with relation to the decision of Parliament, debated and decided what the direction of energy development realised within the Hungarian economy should be during the upcoming 30-50 years. And this is a good decision in my opinion. Of course, room must be left for life and there will I'm sure be changes, especially in the field of science, which we will have to incorporate into the Strategy, but Hungary knows exactly what it must do, and in addition not simply does its government know, but its Parliament knows, meaning that the required decision was made by the heart of our democracy. And what I recommend to the people of Hungary or rather to ourselves, is that it is worth behaving like a serious country, and if we have debated something and come to a decision on it, then it is worth implementing it. Because the Hungarians have always been good at debating things and decisions were also made here and there, except that no detailed work began the morning after. Our Government, the Government that I am the leader of, would like to be different from its predecessors in that if we have debated and decided on something then we will go ahead and do it. The best example of this is the reduction in public utility charges, which everyone talked about for over twenty years until we debated it, decided on it and did it.

GIK: We will move on to that in a minute, but first a final question that partly belongs here, to what you are saying, I think; the issue of transparency. Will these contracts be searchable; will we be able to see what calculations the Government used, whether it has taken into account late performance, depreciation etc.? Will it be transparent?

VO: Of course. There will be no need to search, because Hungarian legislation clearly defines the procedure in such instances. The Government was given a mandate to enter into and continue negotiations and the Government will assess the signed agreement at its next meeting, and this by the way conforms exactly to the mandate that I personally received from the Government, after which the contract will be put before Parliament, where it will be the subject of open debate; we must submit the text itself so that Parliament can put its stamp on it, so to speak. Parliament must register the inter-governmental agreement into Hungarian legislation. And so everyone who is talking about transparency and the lack of publicity probably has no clue at all about the essence of Hungarian legal procedure. Parliament gains full knowledge of the text of inter-governmental agreements, after which it places its stamp on it; otherwise it cannot become a part of Hungarian legislation.

GIK: Public utility charge decrease 3.0, and if I understand correctly, then closely linked to it there will also be a third phase, which the working group is currently developing. Looking at the dates, it would seem that the working group lead by parliamentary group lead Antal Rogán will have just about received the studies it ordered. What can you tell us, what percentage decrease will the next phase mean? Will it happen before or after the elections and what areas will it affect?

VO: I can give you an answer to the question of what fields it will affect.

GIK: Earlier statements mentioned electricity, gas and district heating, or perhaps all three.

VO: Bingo. Full marks. That's the situation. Our parliamentary group will meet to decide on the level of the reduction next week, and I cannot make any statements regarding any figures until that time.

GIK: Minimum-maximum?

VO: This will also be a hefty reduction, that's all I can say for now.

GIK: And do you count on their being any energy providers who leave Hungary for good because of the reductions so far, or perhaps in view of the latest round of reductions? I read somewhere that some companies are preparing to close shop throughout Europe, in fact.

VO: Look, it's a pity that this is such a short programme and we can't discuss the whole world, so let's stick to Hungary, shall we? As things stand, not long ago we repurchased a very significant gas service provider, Főgáz, in which the Germans owned only a minority share, but the full management rights, the full rights to managing the company, belonged to them; this is what we bought back. And so I can now tell you that Főgáz currently belongs to the Municipality of Budapest and to the State, meaning it constitutes part of Hungarian public property at this time. My standpoint has always been, and this is what I have learned during the past twenty years, that it may be true that the private sector has several virtues in comparison to state ownership, but when it comes to a monopoly, then a privately owned monopoly is much worse that a state-owned monopoly. If monopolies are in private hands they rob people; this is the lesson of the past twenty years. And accordingly, where there is a monopoly I refuse to accept that private monopolies should be able to remain in existence in the long term and instead I endeavour to ensure that public property should be established wherever a monopoly exists. A significant part of the energy sector is like this; not all of it, for example energy production isn't, but service distribution and marketing to the public is. The state must increase its role in this sector, and in fact this is also prescribed by Parliament's previously mentioned energy strategy document and decision. It states that it is right if this occurs. For example, the purchasing of the gas reservoirs was also indicated in advance by Parliament as part of the energy strategy. I will repeat: we debated it, we decided it, and I am implementing it.

GIK: I've just remembered that you were unable to, or didn't want to, reply to the opening question regarding the reduction in public utility prices. About whether it would occur before or after the elections.

VO: I was unable to answer the question because that will be decided by the parliamentary group, and I cannot pre-empt the decision of the group at this moment in time. And one of the reasons I am sorry that we can't discuss the whole world is because look at how the Americans are performing better that we Europeans during a period of economic crisis, at how they are extracting themselves [from the crisis]. The United States has made energy cheap, and if Europe is unable to offer European businesses, including Hungarian enterprises, energy prices that can compete with cheap American prices, then we will be unable to compete with the United States. This means that apart from political issues, the greatest challenge facing Europe is the question of how and through what instruments will it be capable of setting European energy prices that can complete with America's energy prices.

GIK: Clearly, but in this respect what is important to Hungary is, or rather it is important to know that the region has a different make-up. What I mean is that one of the potential take-off points for Hungary, or rather one of the take-off points for the region could be to induce foreign companies to invest in Hungary through a favourable tax environment and good business conditions, while this is already given in America and people are standing in line to invest.

VO: This is true, I agree, but let us not disregard our own resources either. The loans programme for small and medium sizes enterprises launched by the Central bank of Hungary is very important because without the strengthening of the small and medium sized business sector we cannot be competitive. In addition to the issue of energy, one of the other lessons of the current global economic crisis is that we must make Hungarian small and medium sized enterprises crisis-resistant, meaning we must significantly increase their numbers, for which they require capital and credit. This is now provided by the cooperation between the Government and the Central Bank,

GIK: Let's take a look at a few figures. The year ended very recently and 2014 has only just begun, so let's have a look at some of the most important economic indices and discuss the state of Hungary's economy in a few sentences. The budget deficit is in hand, it would seem, and accordingly we are seeing increasingly fewer reports in the press about the fact that the deficit will remain under 3 percent. I'm sure you also remember that when this was not the case, then this is what was on billboards everywhere. It would seem that the deficit is in order now. How is economic output in your view, and what do you think of the latest employment figures?

VO: Look, I follow the debates of the economic experts and I am sometimes involved in such meetings myself, but I am after all fundamentally a prime minister and am always searching for points at which I can turn bad things into good things. And what is true in sports is also true in politics: the most important issues are decided in your mind. The mind and the spirit are very similar, so if a decision is made in the mind, something is also decided in spirit. And I am positive that overcoming the great Danube flood in 2013 was the turning point. Because the prerequisite of all economic policies is that a question be decided in the mind, meaning the question of whether we are capable of achieving the goals we have set ourselves. And the country was given such clear proof of the fact that if the Hungarians work together they are capable of overcoming any difficulty, that it created the spiritual and psychological foundations of economic success. The good results began arriving after this point.

GIK: So what you're saying is that this isn't something like Ibrahamovich's award-winning goal in that it cannot only be achieved once?

VO: This [success] didn't appear out of thin air; things had to be prepared for it. Meaning that for the athlete to be able to decide in his mind that he is going to win, he has to have spent the previous ten years training. During the past three years, the Hungarian Government has performed the tasks it needed to perform every day, and when the great flood came, or the great economic crisis, then the Government organised the solidarity which enabled the Hungarians to be successful. This is what we have enjoyed and are currently enjoying in the economy today, and I think things will remain like this in the upcoming years, except we must be careful not to destroy its psychological foundations. There is no such thing as a perfect country, or a perfect government or a perfect people. And so I am sure both the Government and the people have made and will again make mistakes that they should not have made, but that’s life, this kind of thing happens. This isn't what's important. What is important is that we must not lose the spiritual and psychological foundations that make us winners today. They exist today. Today, Hungary is a winning country; we must preserve the foundations of this success and this is what we must build our decisions on. The country is in a good state from this point of view, I think.

GIK: You have been listening to Prime Minister Viktor Orbán. Thank you for accepting our invitation.

(Prime Minister's Office)