Did the new structure prove itself?

The numbers speak for themselves. In the first two full years – 2015 and 2016 – of the new structure the Hungarian foreign trade broke all previous records. In both years we were able to achieve great results with regard to exports, the trade surplus and foreign direct investment.

But can these results be explained with the reorganisation of the ministry?

Those who support us say that this has to do with the new structure, our opponents claim the exact opposite and firmly believe that the results would have come even if everything were left the same as it was when I took over. I can only say with certainty that since the first complete year with the new approach, all relevant foreign economic parameters have been able to achieve new records. These are the facts.

Due to its small size, Hungary is a country which must place foreign policy fully at the service of its economic objectives. We cannot afford not to make the most of our potential. The reorientation of my ministry has been criticised and is still criticised by many, but I believe in the numbers and that they speak a clear language.

Was there an international model for the new structure?

No, not to the extent as we did it. Only in Hungary is the foreign ministry assigned so many economic tasks. In some countries there is a separate Ministry of Foreign Affairs and a Ministry of Foreign Trade. Foreign trade, however, is more than just exports. It also includes export stimulation, export financing or investment promotion. Because of how close these areas intertwine, it makes sense to coordinate them centrally.

Did other countries express interest to adopt the Hungarian model?

Yes, absolutely. Many of my foreign counterparts envy us because of our organisational structure and have already asked for a detailed description of it. Several European countries have already analysed our structure. All countries are of course different, but I can only encourage those who are thinking about the introduction of such a model. For us the new structure has proved to be very good.

Good enough that you would keep it intact if Fidesz wins the election again in 2018?

Should we earn the trust of the voters once again, I would believe it to be sensible to maintain the current format.

Everything? Even the way tasks are allocated?

The main advantage of this structure is that export stimulation, export financing and investment promotion are coordinated centrally. This is the way that these areas can work at their most optimal levels and this is how they can bring the most for the Hungarian economy. These three areas are closely linked. For example, an investment promotion sooner or later will lead to additional exports and from these exports further investments can be made. This is one of the reasons that makes the handling of these areas together obvious for me. I do not believe that the three things should be thought of as one single entity, because they are too different for that. But to organise them as part of a single ministry makes perfect sense.

How about fine-tuning possibilities in the relations of the ministry, the investment promotion agency HIPA, the Eximbank and the national trading houses?

I am yet to see a system where there is no room for improvement. Of course, we are always investigating where and how to further optimise the system. Not to mention the fact that the world around us is constantly changing and we have to react to these changes. This is a continuous process. At the moment, however, I see no acute readjustment requirements.

You can hear a lot from the HIPA. Its president Róbert Ésik is very present among foreign investors. His name or the name of the organisation came up in conversations we had in connection with the expansion of the Mercedes factory in Kecskemét or the Budapest Airport. The same, however, cannot be said of the national trading houses.

This has a lot to do with the fact that their area is less visible. It is not about a few major investments but about a bunch of smaller projects. The trading houses have the task of supporting several thousand Hungarian SMEs and contributing to their success in the foreign markets. There are many successes but they are considerably smaller in size than in the HIPA, which is accompanied by few investments but in some cases these are worth billions. Last year, 71 large investments were brought to Hungary with the assistance of HIPA. The national trading houses fulfil an important role because out of four Hungarian SMEs only one has enough export expertise. In 2015 and 2016 the Hungarian export broke all records and the national trading houses have a significant part in this.

Let’s talk about Germany, arguably the most important trade partner of Hungary. What kind of potential do you see in that relationship?

German companies operating in Hungary are of fundamental importance for our gross domestic product. This is already a great success story but the economic relations between the two countries are still developing dynamically. There are about 6000 companies with German ownership in the country and these firms employ more than 300,000 Hungarians. A quarter of all foreign direct investment comes from Germany, 27 percent of Hungarian exports go to Germany.

It is easy to see that the CEE region has now become the growth engine of the EU. The volume of foreign trade between Germany and the V4 countries is currently twice as high as the volume of foreign trade between France and Germany. The fact that the CEE region has practically become the hinterland of modern German industry benefits both sides. For this, the close German-Hungarian economic contacts are essential.

The last major challenge in this relationship happened about two and a half years ago, when the poorly coordinated and unprepared introduction of the EKÁER freight-handling system caused excitement among German investors for several months. Since then there have been no problems of this scope. Did the coordination with market participants become better?

The introduction of the EKÁER was preceded by consultations with the most important economic players, including, of course, the Germans. We obviously did not want to introduce any measures that would harm Hungary's competitiveness. That is why it goes without saying that before all major measures we coordinate with those concerned. This was also the case at the time when EKÁER was introduced. There are also ongoing discussions between the ministry and the affected parties regarding planned measures.

More and more German investors are struggling with labour shortage issues and every announcement of a new investment is a cause for concerns about not being able to find able workforce. What does the government do to help this issue?

The current situation of the labour market is indeed a real challenge. The unemployment rate is particularly problematic in two cases: if it is too high and too low. We are currently experiencing a low unemployment rate. With a general unemployment of 4.5 percent, virtually full employment is prevailing in some parts of the country. If we always bring new investors to Hungary, we must, of course, be increasingly concerned about how this additional demand for labour can be satisfied and the government has already launched numerous measures. We provide tax cuts for investments in increasing mobility as well as transport and accommodation of workers. We have also made good progress with the expansion of the dual vocational training and we are tailoring the university-level education more to the needs of the labour market in order to alleviate the tense situation. I am sure that we will be able to deal with this problem.

So the country is ready for additional investments?

Of course. We still have an unemployment rate of 4.5 percent and in Budapest alone, 28,000 students leave the universities and colleges every year. This ensures a constant supply of specialist labour.


Let's talk about the other area of your ministry, the foreign policy. What are the basic principles of the Hungarian strategy?

It is essentially determined by the fact that we are a member of NATO and the EU. At the same time, however, we are also striving for pragmatic cooperation with all countries in the world, which can be important for us. Our main focus is on five countries: Germany, USA, Russia, China and Turkey. It is crucial for us that these countries are interested in Hungary's success or at least not the opposite. In the last few years we have pursued a policy by which we have achieved exactly that.

What exactly is the strategy concerning Russia?

Looking at the history of not only Hungary but all former Eastern bloc countries, we have an interest in a balanced relationship between the US and Russia. Our historical experience teaches us that Eastern Europe has drawn the short straw whenever there was a conflict between these two powers. So if we look at the matter rationally, it is clear that it is best to have good relations between the US and Russia. That is why we very much hope that the two presidents will be successful with their efforts and that they can establish more pragmatic cooperation than before. However, we are equally keen to see a more pragmatic cooperation between the EU and Russia, because Moscow plays a key role in the energy supply of Hungary and it is an important part of our foreign trade. Since the introduction of the sanctions we have lost an export volume of USD 6.5 billion. This money is missing from the Hungarian economy and the creation of new jobs. So it is easy to see why it is in our best interest that the relationship normalises again.

We have made it clear that we are supporting the sanctions. Despite the fact that we consider them to be economically and politically wrong. After all, there is nothing more important for Europe than unity.

Certainly not an easy decision to be economically irrational for political reasons…

Exactly. But it is clear that all European countries are looking for ways to expand their economic cooperation with Russia, even if the sanctions continue to exist. Last year I was at an economic forum in Saint Petersburg where more participants spoke German than Russian...

When is the first meeting with the new US President?

If you look at the national and international challenges that President Donald Trump has had to face since he took over the presidency, it becomes clear that he is currently dealing with quite different things. We do not press. If it becomes necessary that both statesmen talk to each other personally, then they will. The consultations on the lower levels are excellent and continuous between the two countries. If there are things that need to be decided at the level of the Foreign Ministers, then I am talking to my US colleague. It already happened once, when the conversation was about the fight against terror.

Before you took over the ministry you were mainly active in the field of communication and business. Diplomacy is a big career change for you.

I have a degree in international relations from the University of Economics with specialisation in foreign trade. So now I'm actually working in the field I've studied.

What has been your toughest challenge so far?

Without a doubt the introduction of looking at things in a different way at the ministry. This new approach is based on the idea that we no longer measure the success simply put based on how many receptions our ambassadors take part in, but on how many new businesses we have organised for the Hungarian companies and how much new investment we could bring to the country. In other words, we are now much better able to measure our success because it is a lot more about exact numbers and business.

Much like your Austrian colleague Sebastian Kurz, you represent a new, rather clear and direct style.

I'm not a career diplomat and that makes things much easier for me. It gives me an advantage to be able to formulate my words more bluntly and sincerely. I am a fan of straight talk. The world is changing faster and faster, which means that more and more problems have to be solved more quickly. Under such conditions, we no longer have time to philosophise about questions of principle over a period of weeks and months. We need clear communication and quick decisions. For this reason the style which I, and undoubtedly more and more other diplomats, use becomes more accepted.

Occasionally you get the impression that the domestic and international communication of your government is not coordinated very well. For example, the "Stop Brussels” campaign abroad caused big misunderstandings. Not to mention that it forced Hungarian politicians to have to reiterate the fact that Hungary still imagines its future within the European Union.

You can misunderstand everything. Especially if you want to.

Could not the campaign have been conceived in a way that causes less irritation among Hungary's foreign partners?

Had the campaign created foreign policy problems, I’m sure I would have heard of it.

In recent appearances of Prime Minister Viktor Orbán in the EU Parliament and in front of the Presidium of the European People’s Party (the group Fidesz belongs to in the European Parliament), it certainly influenced the discussion.

If someone communicates freely, calls the current problems and crises of the EU for what they are and suggests genuine solution alternatives, then they have to expect that these uncomfortable truths will lead to some backlash. But that's just how it is.

The government did opt for a very confrontational foreign policy, which gives Hungary's foreign partners and investors sometimes quite a headache. Would it not have been possible to pursue the goals without making the life of Hungary's foreign partners more difficult than necessary?

Look, if the international media wants to do a smear campaign, then it does not matter what our communication policy actually is. If they want to attack, they attack. I couldn’t tell you how many times I have spoken with international partners about what is really going on in the modification of the Higher Education Act, the National Consultation and the Hungarian migration policy.

Let’s take a look at domestic communication. President János Áder has recently criticised public dialogue in Hungary.

I am travelling abroad a lot. What I have seen and experienced there made me believe even stronger that we have a much worse opinion about ourselves than it would be necessary. The domestic political battles are indeed hard and I will admit that often the limits of good taste are exceeded. There is no doubt about that and it is really a pity that it is so. However, our discourse is by far not the worst of European countries.


How do you see Fidesz' chances at the 2018 parliamentary election?

In 2010 we were part of the European problem. We took over a country with a debt of 85 percent of GDP, a budget deficit of 7 percent, and an unemployment rate of 12 percent. In addition, our hands were partially tied because of certain restrictions resulting from the IMF loan. Today, unemployment is 4.5 percent, the budget deficit is continuously below 2 percent and at the same time debt has fallen to 74 percent. We have the lowest income tax and the lowest corporate tax rate of the European Union. In the past seven years about 700,000 new jobs were created, the utility costs related to housing were drastically reduced. With these and many other facts that are clearly positive for the overwhelming majority of Hungarians, we are looking confidently at the next election campaign.

Let’s say Fidesz wins in 2018. Would you be willing to continue as foreign minister?

There can hardly be any greater appreciation in a person's life than to represent their country in this prominent position. I was lucky. I am very grateful for that and I am trying to do everything so as to benefit my homeland as best as possible.

You represent Hungary at quite a lot of international political and business events. In addition you surprisingly often find time to make an appearance at events of foreign investors. Your work-life balance isn’t something one can envy…

There is a simple solution. When I was with the Benedictines I learned that if you get up an hour earlier you will have an hour more to complete your tasks.

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