Viktor Orbán's Speech at the Hungarian-Slovakian Economic Forum. (Budapest, 16 November 2012)

Mr. Prime Minister, Ministers, Chamber Presidents. Ladies and Gentlemen!

Things are going well with regard to the thematic of today's conference, as we have heard two excellent ministerial reports that have provided us all with a clear image of the Slovakian and Hungarian economies and, through the ideas presented by the speakers, of the way of thinking in economic policy that lies behind these economies. Thank you very much! I also found these reports very exciting and illuminating. And in addition, with regard to Slovakian-Hungarian relations, these speeches told of a much greater level of integration and interdependence than simple and mortal Prime Ministers such as myself usually think of.

Ladies and Gentlemen!

We cannot listen to the speech made by Slovakia's Minister of the Economy without stopping to take note. We Hungarians, that is. Because the question of how it is possible that the Slovakian economy is capable of economic growth in excess of 2%, while we are unable to achieve this, requires an answer. Similarly, we cannot listen to the fact mentioned in the Minister's speech regarding the issue of how not too long ago Hungary's national debt was at 82-82%, while today it has fallen to 76-77%, without asking the question, how is it possible that one of our neighbours was capable of keeping this figure under 50%. These are important questions, to which Hungarian economic policy must furnish a reply. I will not provide an answer now, I would just like to indicate that we Hungarians must be aware of and think on the question of why one of our neighbours is more successful than we are. An answer must be found to this question. An answer that is placed within a timeframe, an answer that is based on history, an answer that involves economic structure, and perhaps some form of economic policy comparison might also be prudent. I do not wish to begin this work now, because you have not come here to take part in a small Hungarian cabinet meeting at which I discuss these issues with the Minister of National Economy, but instead what I mean in relation to this issue is what we Hungarians should think about the success of Slovakia. And I mean that not in a professional way now, but emotionally. Meaning how we should process the fact that out neighbours have performed more successfully over the past eight to ten years than we have. And with special attention to the fact that even under communism the Hungarians were proud of the fact that under the circumstances we could be viewed as perhaps the most open country in the region, the ones who were most integrated into the western economy, and in general the ones who were most receptive to reform. It is an unusual experience for Hungarians that in addition to Austria there is another country that we can now say has for decades been managing their economy much better than we Hungarians have. First of all, I would like to make it clear that it is in Hungary's interests that we have successful neighbours. And so we should be glad of our neighbours' success. A successful, growing neighbour who has a bright future ahead of it through work is always better than a poor, weak neighbour who does not believe in itself and is not prepared to work too hard in the interests of its own future. This is just as true in everyday life, whether we're talking about the neighbour across the fence in a village or the people next door in an apartment complex. This truth, as in real life, is just as applicable to states who are neighbours. For this reason I think Hungary must be glad that Slovakia has performed so excellently in recent years. And if we feel that it is unacceptable that we are behind in this regard, then we should not be rooting for things to go badly for them, but instead we need to root, and act, to be able to perform our own task better. I think that, with regard to Slovakian-Hungarian relations, this is the message that the Hungarians should recognise.  We do not want to successfully compete with a neighbour who makes mistakes, but instead we need to compete with a talented and successful neighbour, because we want to be competing in Formula One, not Formula Two or Formula Three. Even if it is perhaps easier to climb onto the podium in Formula 2, but this is no reason to lower the bar. We must certainly compete with our successful neighbours, something which I think is also in the interests of our neighbours, because this is the competition that Central Europe needs, the competition that brings stability, peace and cooperation between the peoples who inhabit the region.

Ladies and Gentlemen!

I had not planned to talk about these issues. I only mention them because the Slovakian Minister of the Economy's speech clearly highlighted the points in which Slovakia has performed excellently in recent times, and I think it is important that, as I have just tried to do myself, the Hungarian Government and the Hungarian people relate to the success of their own neighbour. What I had planned to talk about is not this, but something else. I wanted to say that there is an old Chinese curse that goes like this: May you live in exciting times! As we can see from this, far-eastern culture prefers quiet contemplation to excitement. In contrast, this saying is more of a good wish in western civilisations, because the western way of thinking is no stranger to exciting situations, and in fact sees them as a challenge; something that motivates us rather than deters us. Well, we can't complain now, we have plenty of excitement to cope with. This is perhaps even a little too much of a good thing. One often feels that a little far-eastern quiet contemplation would do one good occasionally.

Ladies and Gentlemen!

However, exciting times have two unique qualities. One of them is uncertainly, and the other is opportunity. And I would like to talk about the opportunities that these exciting times bring with them. About what opportunities are opening up for Hungarians, Slovakians and Central Europeans, what opportunities open up for us in these troubled and exciting times. To be able to exploit these newly opening opportunities, the first requirement is that we recognise these opportunities. We must see past the uncertainly, the tumultuous uncertainty that characterises the whole European economy these days, and we must find a few certain starting-points from which to formulate our economic strategy that will lead to the exploitation of opening opportunities, just as the captain of a ship would do if his ship is caught in a storm. It is of course also important that lightening is striking, and that it's raining and there's thunder in the sky, but our sights should after all be on the horizon, looking towards the lights and signals of the lighthouse. What certain starting-points can help us understand the current situation?

The first thing that Hungarian economic policy views as a certain starting-point of this kind is that this uncertain and changing situation which we all simply call the European crisis will remain with us for a while yet. Accordingly, the Hungarian Government does not agree with those opinions that say that the eurozone will be capable of getting to grips with the current crisis situation within a short time, and in fact regards them as an illusion. This is why we feel that this is a crisis of the eurozone, from which exclusion is a refreshing dash of colour, and a refreshing dash of colour of this exclusion from the crisis happens to be Slovakia. This clearly shows that not all countries within the eurozone are in crisis. So, the reason we think that this crisis will not pass as quickly as many believe is that it is not just one or two parts of the system that have malfunctioned, but the whole system itself has broken down. Accordingly, the current situation cannot be understood in the way a person whose car has broken down would usually think, that he'll call the mechanic, who he naturally thinks knows what he's doing, and in a European comparison there are already problems in this regard, and then the mechanic opens up the bonnet, recognises the problem, fixes a few things and the same car will start running again like before. This is not state of the current situation. Because an economic system that has broken down will never work again. And so those who think that that after handling the crisis we can go back to where we were before the crisis broke out, and that the important characteristics of the European economy will be the same, and the pillars of the European economic structure will the same after the crisis as they were before the crisis, misunderstand the situation. European life, the European economy, and within them our own lives are no more and will never again be the same as they were before the crisis. For this reason, we shouldn't try to repair the car, but instead we must design a new car.

Ladies and Gentlemen!

It is therefore clear that according to the Hungarian Government's view of the situation, and I grant you that what I am now saying may sound a little like a verdict, this may be understood as one of the standpoints voiced within this continuous discussion throughout Europe. But neither I nor the Hungarian Government have the philosopher's stone in our pocket. I can't tell you that things are precisely the way we see them. All I can tell you is that we are continuously thinking, continuously analysing, continuously discussing and reasoning, and we feel that the image I am trying to describe to you is the image that becomes clear in the eyes of someone with common sense who also incorporates in his thinking the history of the European economy, which does not mean that if a person from Germany of France were standing here today, they wouldn't describe to you a different vision of the future of Europe. Accordingly, what I am talking about is the Hungarian Government's understanding of the current situation in Europe. Our belief being that this is not simply a crisis, but the end of an era in Europe. So, this era that began after the Second World War and which lead to the establishment of welfare states and economic systems in Western Europe has come to an end. There are of course people, we can hear such statements and behind these there perhaps also still lies a firm belief, who claim they wish to repair the welfare state system created during the previous era. We wish them good luck, but we do not believe in the least that this is an enterprise that is bound for success. Instead, Hungary believes that we should not be striving to build a welfare society that was built in an era that has already ended, a welfare society that was never really established here, and I will say a few more words about that in a minute. In any case, this is an issue for domestic policy debate between Hungarian politicians. We should instead strive to create a work-based society. We should not be endeavouring to build a welfare society, but instead a workfare society. This is what we are striving to build here today, in Hungary.

Well, what I mean by this is that the idea, which in my view is not just a by-product, but a necessary implication of the welfare state, the fact that the false idea that it is possible to create increasing prosperity with less and less work, well, I think this idea has lost its validity. And for this reason I think that not only Hungary, but some other countries around the world are also starting to come to their senses and are beginning to understand that the winners and losers of the coming decades will be those countries who are the are quick enough to enter the race for the conversion of their own welfare systems into work-based societies. Those who enter the race in time will be the winners. Those who enter the wrong race, appear in the wrong gear or misunderstand the rules will, I think, not have a chance of winning within the following ten to twenty years. All that I have mentioned also equates to a competitive advantage for Central Europe. Namely, because I would not like to talk about the economy now, and let us for a moment call our profession political management, as business management and political management are two different professions, and why it is that not many people in Hungary know this, and why they think that if someone is a successful business man, and therefore capable of good business management, then he will be a good politician and will be capable of providing good political management, because this is a popular misconception in Hungary – I don't know if the situation is the same in Slovakia – and in contrast every time we have entrusted a businessman with politics, the country has gone bankrupt, or at least reached the edge of bankruptcy. Because running a business well and running a country well, managing a corporation well or managing a country well, are two different professions. And so all I would like to say now is that from the point of view of political management, meaning how to persuade our people and convince them; how to involve them in the work regarding the fact that we must transform our own nation so that it will be a winner in the future and not a loser, well, this professional field and this step also has its own professional ins and outs. It requires specialist knowledge. My view is that to deconstruct a well-developed welfare system such as exists in several Western European countries and to build a work-based society in its place is a more difficult task from the point of view of political management than it is to establish a work-based society in Central European societies that have been muddling around ineffectively for the past twenty years after freeing themselves from the communist system, and that have left the planned economy behind them, but have been incapable of creating a welfare state. It requires fewer conflicts, fewer arguments and the breaking up of a less air-tight structure here, than in the West. I would in no way like to make comparisons that would provide a negative opinion of Western European societies, but it is perhaps worth thinking about how it is possible that on Wednesday, or this morning, the Hungarian Government decided that the deficit should be 2.7 instead of 2.9 so that we can be free of the excessive deficit procedure, meaning that we have brought decisions on improving our budget balance in recent days, when in the meantime in Western Europe, millions are out on the streets. Why is it that there is no strike or people's movement in Slovakia that might endanger political stability? There are no such movements in Hungary either, while in Western Europe, political instability is continuous. The issue isn't that Slovakians and Hungarians have a better nervous system than the Spanish or Italians. That isn't the correct answer, but instead that in this part of the world people understand clearly that when they prepare for their future they have nothing to protect, because the system we live in cannot be protected. And so although it hurts here too, it is unpopular here also and people do not throw their hats high in the air here either, they know exactly that if they do not work together with their political leaders to transform their countries, then there is no chance of a future. This mind-set is not so common and evident to the west of us. And in this, I think that Central Europe has a significant competitive advantage compared to Europe as a whole when it comes to political opportunities for building a work-based society.

Ladies and Gentlemen!

The second thing I would like to say today, and which we must identify in order to fully understand our chances with regard to the future, is our relationship with Germany and to the German economy. This is of course an indelicate topic, because we are speaking about a country who is not present, and who has not registered as a speaker at today's conference. Because as we know, the Germans are everywhere. They are present in Slovakia. They are present in Hungary and they are present in Poland. But this remains an important issue, because Germany is clearly the prominently powerful engine of the whole European economy. For this reason, the future of certain countries is significantly influenced by how and within what structure it connects to this engine. And there are countries who during the past thirty years have established points and methods of linking between themselves and Germany as a result of which now, in time of crisis, if German exports increase, then their balance of payments becomes worse. When the German economy grows, they must face and combat a by-product of the process. In our case, and I am no expert on the Slovakian economy, but having seen the numbers it would seem to be true in their case also, when German exports are booming, we thrive too. And the reason for this is that Central European countries connect to the German engine in a way that is advantageous to us from a national point of view. National radicals of course always look at only one side of the coin and complain that this is good for Germany. Yes, it is, but it isn't bad for us either. In fact, it is good for us too, say the civil forces, meaning us. For this reason, it is my opinion that with a view to the future it is a significant competitive advantage and opportunity for Central Europe and for Hungary that, based on the criteria of national interests and economic rationality, we connect to the German economy in a way that is optimal, or at least approaches optimal. It is when we examine the system of relations established between Germany and other, non-European countries that we may really understand the significance and weight of this. Today's state of affairs is a huge competitive advantage for Hungary.

Ladies and Gentlemen!

And now please allow me to also draw the conclusion that if the tendencies presented by Minister Matolcsy in his speech, and those thoughts which the Slovakian Minister for the Economy shared with us, are valid, and Hungary's view of the future is also correct, then, not in one or two year's time, but during the next one to one-and-a-half decades, there will be a gradual shift in performance within the whole European economic area, namely that it will be Central Europe and Germany who contribute to the greatest extent to the growth of the whole European economic area. This is a significant change within the European Union, as other economic power centres have provided the majority of economic performance and therefore the majority of growth in the past. A delayed but obvious effect of EU accession, and of our joining the European Union, is that it remodels the relation between economic power centres within the European Union. And it remodels it in a way that is advantageous to us. It is for this reason that it is not overstretching the truth to tell investors who come to Hungary or Slovakia that the future is here with us. I will not now go into the question of whether there will be growth in Europe, because the President of the Slovakian Chamber of Commerce has put the question of whether the continuous economic growth-orientated political and economic way of thinking is still valid for the future with surgical precision. Let's not discuss this now; it is a very important concept, and a thought that deserves a separate conference, but whatever the case, if there is growth within Europe, then the majority of it will come from this region in the coming period.

Ladies and Gentlemen!

Accordingly, the significance of this will become apparent within the whole European architecture after a few years of transition. I would like to make it clear, Ladies and Gentlemen, that we of course have not lost our minds. We are not trying to say that everything I have just talked about means that life in these parts is better that in Western Europe, which is currently suffering from huge economic problems. This is not true. This is not how matters stand. Western Europe has begun slipping lower from a higher standard of living and a higher quality of life, but life in those countries is still at a higher standard than in Central Europe. It is important to make this clear, otherwise our voters will think we have lost our minds. No, we know precisely that an average Hungarian worker, a Hungarian worker with an average income, earns about 700 euros-a-month. We are fully aware of the fact that a Hungarian pensioner receives a monthly pension of around 250 euros, and we see clearly that a Western European worker probably receives several times this amount, and pensioners receive more too. We are therefore clearly aware of the difference in the standard of living, which is still higher in Western Europe than it is here. I'm not saying that this has disappeared. What I am saying is that from the point of view of the challenges we face over the coming ten to twenty years, it is obvious that this state of affairs will change. It will change so that – as the term used by György Matolcsy described to us – the Central European region will catch up, for the moment only with regard to macroeconomic indicators, for the moment with regard to economic structure, and looking at the Slovakians for the moment with regard to economic growth, but this will have its effects on wages, on pensions, on the standard of living and on the quality of life. Because we will catch up in these areas too, and in fact would like to overtake them in the coming period.

Ladies and Gentlemen!

It is of course also important that we draw another conclusion. Namely, that Slovakia and the other Central European countries have not made the mistake that Western European countries did after the outbreak of the crisis; since the outbreak of the crisis in 2008, the majority of Western European countries have significantly increased their national debt. I'm not quite sure what they wee thinking; they probably thought that we were facing a short-term crisis and that a significant motivation, push, stimulus, as they say, an impulse, a tickle or tweak to the economy paid for by loans would help to exit the crisis more quickly. Unfortunately, there is another country outside Western Europe that made the same mistake. That would be us. This is why in the period between 2008 and 2010 the advantage of the Slovakians, the advantage of the Polish, and the advantage of the Romanians with respect to Hungary has increased. They did not take similar action. Or if they did, their national debt was so low that they were in a position to do so and still keep their debt under 50%. We Hungarians must pay out 1200-1300 billion forints in debt service on previously acquired debt each year. If I divide that by two-hundred-and-fifty or three hundred, than that's equal to three to four billion euros. We transfer 4 billion euros each year out of the performance of the Hungarian economy to cover debts that the country has taken on previously. The Slovakians do not need to transfer so much, and neither do the Polish or the Romanians. Thus, we made the same mistake as those in Western Europe, and those Central European nations that did not make this mistake are standing here before us as successful countries. I would venture to say, and again, I am not speaking in economic policy terms but in political management terms, that those countries who have slipped over 90%, that is 90% of their gross domestic product, their GDP, will be unable to climb back from this level and achieve a level of manageability and sustainability from their own resources. One could say that there are no calculations to corroborate this. That may be true. One could say that there is no economic policy theory that corroborates this. That may be true. But from what I see at Prime Ministers' summit meetings in Brussels and hear from Prime Ministers during bilateral talks, and having seen their figures and trends for the upcoming period, I can safely say that those who have exceeded 90% are unable to return to a manageable debt track. This is why in certain countries there are levels of 150-160%, in others 120, and all the other countries are also slowly slipping higher; many countries within the eurozone are moving up from 80 to 90, from 90 to the 100 range. There is no way back. As the example of the Hungarian economy clearly shows, lenders then take away so much money from the country's performance that there does not remain enough strength within the country for it to achieve a level of productivity that would be enough to pay back its debt. Hungary is very close to this point. We have already looked down in to the abyss. We needed only one more step to fall into it. We have managed to edge our way back from that position and would like to join the club of which Slovakia is also a member, who in this respect may know that their own country is out of harms way. Life may not be easy in Slovakia either, but it may be clearly asserted that the Slovakian economy is more secure because it has less debt. This is the task we face; we are fighting to climb out from under the mountain of inherited debt before it crashes down on our heads. This is what the Hungarian economy is fighting against.

Ladies and Gentlemen!

Since Minister Matolcsy has already listed Hungary's economic successes such as debt, deficit, and so on, and sitting beside him I recalled something a young fellow Member of Parliament of mine, a certain Tamás Deutch once said, who once told me that praising ourselves is such an important thing that we cannot entrust it to someone else, and this task has already been completed by Mr. Matolcsy before me. I will not repeat the successful figures of the Hungarian economy, because these have already been presented. Adding of course, that the Minister has made the gesture towards us and has been correct in also talking about the weak points of the Hungarian economy and clearly highlighting what challenges the growth of the Hungarian economy faces.

And finally, Mr. Prime Minister, Honoured Guests!

I apologise for having perhaps spoken longer than I should, but this was in part provoked by those who spoke before me, and so the responsibility is only partly mine. In closing, I would like to tell you that we will also require a brave, spiritual stance. I – and I grew up in it, so I, who fought to topple the communist system, and for the establishment of a market economy in place of the state economy, and for freedom in place of dictatorship, fighting against the very people who maintained the dictatorship – used to think, and this circumstance was perhaps always comforting during the fight, that we could tell ourselves that what we want is something like what they have in Western Europe. When we talked about the fact that fine, lets topple oppression, let communism and the CMEA come to an end, but what should replace it, then the reply was always that we should connect to the well-functioning and successful Western model. We no longer have this crutch to lean on. In the current situation this is not an answer to the issues that face us. Many look on this as if we have lost something. I, however, refer this to the issue of the freedom of thought: our freedom of thought has been returned to us. Yes indeed, are we now able to think freely about what is good for the Slovakians, without prejudice and free of the weight of historical examples? What is good for the Hungarians? What is good for the Hungarian nation? What is good for the Hungarian people? And it is to this that we can tailor the economic model that we would like to operate. And so I am also welcoming the regaining of our freedom of thought, while talking about the difficulties the world faces.

Ladies and Gentlemen!

At the same time, I of course believe that Hungary and Central Europe must also walk its own path to managing the crisis while not leaving Western Europe. This is even more obvious in the case of our Slovakian friends, because the use the Euro. Hungary does not use the Euro; it has its own currency. Whether this is an advantage or a disadvantage in today's world is an issue that will be worth discussing at length in comparison to Slovakian experiences; I would not like to take sides on this issue now, and all I would like to indicate to you is that although we do not have the Euro, we do have our own currency. The future of Hungary is only conceivable together with Western Europe. We are in the same boat and it is a boat that cannot be left. If the eurozone collapses, if it is unable to emerge from the crisis, then it also will drag with it those countries who, as we have seen, have established close links to their foreign trade. We are in the same economic system, and so it is not only the success of Slovakia that is in our interests, but also that of the Southern European states: the success of the Greeks, the success of the Spanish, the success of the Italians are all in our interests, and the success of France will also be in our interests.

Ladies and Gentlemen!

What I am talking about is not the leaving behind of western orientation, but is about the taking of a sensible position within western orientation and integration and about sensible economic policy. In closing, let me also say a few words about Slovakian-Hungarian relations. First of all, let me tell you one thing for certain, because there is a certain sense of surprise between the lines in this case too; Hungary is not going to bury its head in the sand. And although the Prime Minister of Slovakia has not given me a mandate to say anything in his name, knowing him I am sure that he will also not be burying his head in the sand. Accordingly, we are exactly aware of the existing problems and issues of debate between the two countries. We are not here because we have not noticed these issues. We know that we must talk and discuss these problems, and that we must find some kind of solution to them. On the part of Hungary, we certainly hope that we will indeed succeed in finding these solutions; we have no illusions as to the fact that this will be easy, but we feel it is possible. We are here, I at least as the Prime Minister Hungary's am here, at this forum because it is my strong belief that good economic cooperation and the closest possible economic cooperation is possible, includes mutual advantages, and will also help to solve our other conflicts that are not of an economic nature. But it will not solve them alone. I am not falling, therefore, into the appealing trap of economic determinism, thinking that if business is flourishing then every other aspect of life will flourish too. This is not the case, and if it were, there would be much fewer unhappy billionaires. And so the situation is such that we will of course have to solve our non-economic conflicts, or at least manage them, but it is certain that without the establishment of trust, this will not be possible. Economic cooperation, join successes, joint profit and joint development of the economy all help to build trust, and shows that both parties are fully aware of the fact that we will have to live side-by-side here for a good few centuries to come. We must therefore come to some kind of concord with each other. And for this reason I believe that, while Hungary may have a national government that views the issues on which there is no agreement between the two countries as important, we feel that it is at lest as important that the two countries come to an agreement where agreement is possible. I am glad that during the past few months we have been able to establish a cooperation with the Government of Slovakia which is aimed at building trust, and I would also like to express before the full public eye of Hungary that we Hungarians also owe the Prime Minister of Slovakia, Robert Fico a debt of gratitude for also searching for possible areas of cooperation, and in this way providing us the opportunity to solve the difficult issues too. We have agreed on the construction of a joint gas pipeline, and we have agreed on the construction of bridges. We are hoping to establish sixty-four new border crossings along our common border. We are each other's fours largest trade partner – Slovakia is ours, and we are theirs. All this shows that opportunities do exits.

For this reason, Ladies and Gentlemen, I would like to encourage both Slovakian businessmen and Hungarian businessmen to – despite the existing political issues – search for opportunities to cooperate, to form joint enterprises, to think about possible joint investments, to want to cooperate in order to enjoy common economic advantages and to be assured that the Hungarian Government will continue to use all the means at its disposal to continue to support this Hungarian-Slovakian, business-level cooperation in the future.

Thank you for your kind attention!

(Prime Minister’s Office)