Gergely Gulyas – Photo: MTI

Gulyas: EP new migration pact ‘bad decision’

The European Parliament has made a "bad decision" by endorsing the new migration pact, the head of the Prime Minister's Office said on Thursday.

Gergely Gulyas told a press briefing the fact that the legislation had passed “with only a 55-56 percent majority in the EP where 70-80 percent of lawmakers are pro-migration” showed “how extremely bad the proposal” was.

“Central Europe shouldn’t have to suffer the mistakes of western Europe’s social development,” Gulyas said, stressing that Hungary will not accept any European decision that would “shift this problem onto central Europe and Hungary”.

He said Hungary was backing Polish Prime Minister Donald Tusk, who, he noted, had made it clear that Poland would not take part in the redistribution or relocation of migrants, and neither would it pay compensation for refusing to take in migrants.

Hungary rejects the mandatory redistribution of migrants and the rule of having to pay compensation instead, Gulyas said. “This decision can’t be implemented in its current form; it won’t help Europe or the societies suffering from migration,” he said.

Gulyas said Hungary would challenge any European decision with a view to protecting itself from the harmful effects of migration.

Meanwhile, he said that at its meeting on Tuesday, the government assessed the international political and military situation. “We are in a very dangerous moment,” Gulyas said, adding that developments in global politics in the next six months would be crucial in deciding whether the world and Europe would be heading towards war or peace.

Gulyas said that even leading European politicians were now talking about sending troops to Ukraine, “even though this was a clear red line before, even for the countries that were sending weapons to Ukraine”. He said sending troops to Ukraine would greatly increase the risk of involvement in the conflict.

Meanwhile, Gulyas said it was “concerning” that NATO had also “shifted its policy direction” on the war.

He said NATO before had only been commenting on developments in the war but had not become “an active participant” in the conflict. The alliance had also rejected the possibility of intervening in the war, citing a risk of a third world war, he added. “But there has been a sharp and negative shift taking place” in NATO’s policy, said Gulyas.

The draft of a planned NATO-Ukraine mission, he said, had become known to the public, suggesting that NATO would “get involved in the conflict on Ukraine’s side”. NATO plans to set up a 100 billion dollar fund to support military training and coordinate weapons deliveries, Gulyas noted.

“Hungary, as a NATO ally, is seriously concerned about the matter because Hungary considers NATO a defence alliance,” Gulyas said.

Hungarian foreign policy, he said, would stick to the stance that NATO must not take any steps that lead towards another world war. He added that Hungary was therefore exploring the possibility of abstaining from any such steps in a defence alliance based on unanimous decision-making. The government will do everything possible to limit the threats facing Hungary, even in the case of decisions by other countries or NATO that increase the risk of a world war, he added.

Meanwhile, Gulyas said the prime minister has appointed Marcell Biro chief national security advisor. The defence of Hungary’s national security requires coordinated preparation, he said, adding that the chief national security advisor would be responsible for coordinating the work of the military, security services and other government bodies, as well as for defence coordination within the government.

The government believes there is no military solution to the war in Ukraine and urges a ceasefire and peace talks, Gulyas said. However, the government has assessed the effects a prolonged war would have on the economy, he said, arguing that wartime required a fundamentally different economic policy than peacetime.

“Today we can say that the most important decision concerning the future will be made by the Americans on November 5,” Gulyas said, referring to the US presidential election. He argued that a Donald Trump presidency would result in “a completely different scenario in terms of war and peace” than if the current administration remained in power. The government will therefore hold off on submitting the 2025 draft budget to parliament until after Nov 5, he said.

Finance Minister Mihaly Varga said that the government expected Hungary’s economy to grow by 2.5 percent this year and by 4.1 percent in 2025.

He said that given the war situation, the EU had been emerging from the crisis at a pace slower than expected, the German economy had been ailing for quite a while and export markets were also weak, which is why Hungary had planned its macroeconomic path for such a situation. He said Hungary’s economy would return to a growth path this year, with the country’s GDP expected to increase by annual 2.5 percent, adding that economic growth was expected to accelerate in the second half of 2024, favourably impacting the central budget. Next year’s growth forecast of 4.1 percent was well-founded, he said.

Varga said further reducing the deficit and state debt were of primary importance. The deficit is projected to come to 4.5 percent of GDP, and fall to 3.7 percent in 2025 and 2.9 percent in 2026, he added. To achieve that goal, the government has decided to reschedule state-funded investments, to save some 675 billion forints, he said.

The ministries will have their own financial framework and decide which investments they will postpone, he said, stressing that those investments would not be cancelled.

Despite those measures, some 2,000 billion forints will be ploughed into investments, besides those funded from EU resources, he said. That would keep the country’s investment rate above 26.3 percent, among the best in the EU, he said. That measure, he added, would stabilise the budget and protect previous achievements such as cheap household energy bills, family support programmes and pensions, he added.

Agriculture Minister Istvan Nagy told the same press briefing that the government has decided to introduce a five-point action plan to handle the situation that has developed in Europe’s agricultural sector.

Nagy said the import of goods which are not allowed to be brought in from Ukraine will have to be reported to food safety authority Nebih, no matter what country they originate from. The government has also made arrangements to ensure that area- and livestock-based subsidies would be paid by the State Treasury by May 31 this year. Some 156,000 farmers received 470 billion so far, with 265 billion scheduled to be paid by the end of May, he added.

The government will increase to 90 percent the tax refund threshold on diesel fuel used in agriculture, which Nagy said could leave an annual 1 billion forints of extra support with farmers.

The ministry will also boost investments, he said. Under the strategic plan on the use of funding from the common agricultural policy (CAP), the sector will have 1,500 billion for that goal until 2027, he said. Between April and June, tenders will be called for a 200 billion forint framework to develop the food industry and another 200 billion to upgrading animal farms, he said.

“In the current situation the role of government help will increase in the sector, in areas including increased transparency on imports, subsidies, credit financing and future developments,” he added.

Intervention is needed as a result of the serious excess supply and significant drop in prices in the sector’s market, he said. The reason is a European Union decision made in 2022, under which Ukraine is allowed to export agricultural products to the EU duty-free and without restrictions, he said.

“Ukrainian products have entered the markets of EU countries in large volume, significantly limiting the sales opportunities of the individual member states,” the minister said, adding that “it seems obvious that Brussels and the European Commission have let down European farmers and instead support the Ukrainian oligarchs”.

Meanwhile, Nagy said European agriculture was under “unprecedented green ideological pressure”. “European farmers have lost their competitiveness and vision of the future because of professionally completely unfunded measures.” The European Green Deal “is a dictat for European farmers rather than an agreement,” he added.

Hungary’s government will work to represent farmers, its strategic allies, he said. “We are committed to protecting farmers’ interests and competitiveness no matter where the challenges come from. Secure food supplies are a strategic as well as security interest,” he said.

Varga said that a decision would be made when the budget is submitted in the autumn concerning the personal tax exemption of mothers with three children.

He also said the rules for the pension premium were clear, and the extra pension would only be paid out if economic growth reached 3.5 percent or above.

Concerning a meeting with central bank governor Gyorgy Matolcsy in March, he said the European Central Bank had approved the amendment of the law on the central bank, and further consultations were needed.

He also said that the net price of fuel in Hungary was mid-field in regional comparison. “Instead of discussing taxes, production costs must be reduced in order to further reduce prices,” he said. He also said that efforts were being made to help growth from the side of energy costs.

In response to a question about reducing the excise tax, he said the amendment of tax laws was not on the agenda, adding: “The government will assess all the circumstances but does not plan to change the main structure of tax regulations.”

Concerning the 15 percent increase in internet and phone fees, he said while inflation was continuing to fall, price developments also depended on market trends, but the government would continue monitoring prices.

Concerning hospital debts, he said the government was continually monitoring the issue and consultations were being held with the interior minister.

In response to additional questions, he said that VAT revenues had increased against expectations and current projections showed that household consumption would increase by 2.3 percent and overall consumption by 2.7 percent this year.

In response to a question concerning a projected rise in local government deficits to 108 billion forints overall this year, he said the government had a single task: to ensure the stability of local government finances. Any requests for loans would be assessed by the interior ministry, and the request would be supported if the local government in question were able to repay the loan, he added.

Varga said defence spending in this year’s budget will amount to 1,700 billion forints,

with a view to ensuring that the military is prepared to react to even the most unexpected situation.

Concerning new taxes proposed by EU leaders and the Belgian prime minister, he said taxation was a national competence and all proposals by Brussels would be assessed by member states. “The framework of the Hungarian tax system is firm, taxes on work and income have been reduced in recent years, and revenue for covering public expenses is generated from consumption-related taxes,” he said.

Meanwhile, Istvan Nagy, the minister of agriculture, said he did not expect growth in agriculture to match last year’s level, largely due to the 2022 drought. This year, too, drought is affecting the southern Great Plains, he said, adding however that he trusted last year’s level could be matched this year.

In response to a question concerning Ukrainian food exports, he confirmed that trade agreements signed so far excluded grains, which had caused the greatest damage. “Hungary will maintain the border seal with Ukraine” as long as wheat is not regulated, he added.

Government spokesperson Eszter Vitalyos announced a programme worth 108 billion forints (EUR 277m) aimed at modernising the energy systems of private homes built before 1990. Under the scheme, grants between 2.5-3.5 million forints will be provided to families to finance the insulation of walls, the replacement of doors, windows and heating systems. Each project is eligible for a non-refundable grant of up to 6 million forints, she said, adding that below-average earners could apply for a higher grant, Vitalyos said.

Responding to questions, Gulyas said Hungary did not wish to participate in re-distribution schemes or to pay to relocate migrants. “This will be a legal debate,” he said, adding that many central European countries were expected to agree with Hungary’s stance. “Cooperation on illegal migration is stable among the Visegrad countries.”

Hungary would only engage in NATO or EU initiatives on the condition that its contribution could not be used to buy weapons, Gulyas said.

On the matter of Chinese police patrolling in Hungary, Gulyas said the country had similar agreements with the Austrian, Slovak and Slovenian authorities. The measure was prompted by large numbers of tourists arriving from those countries, he said, adding that Chinese police were not allowed to take action or use their weapons in Hungary. The number of Chinese tourists has multiplied in Hungary recently, in addition to Chinese already resident in the country, he added.

Regarding the war in Ukraine, Gulyas said the US presidential election would be a key factor in ending the war. “If the US leadership thinks this war should be ended, they have the means to do so,” he said.

Meanwhile, a government report is scheduled to be published on Friday on allegations of graft regarding the reconstruction of Budapest’s landmark Chain Bridge, he said. The report seemed to reinforce the suspicion of corruption, he said, adding that it showed “correlation between public procurement tenders, contracts, the transfer of funds, and suspects’ money withdrawals… The case leads to Budapest City Hall,” he said.

Responding to a question on the budget, Finance Minister Mihaly Varga said budget planning had to respond to changes in the world economy, especially since “the political environment has moved towards war escalation”. The government is not planning to change macroeconomic targets or its plans to cut the public debt, he said. This year’s deficit target would be achievable without further changes to the budget, he added.

Meanwhile, he noted the various approaches of the US presidential candidates to the war in Ukraine. Under the presidency of Donald Trump, Hungary-US ties had prospered, while the Biden administration’s tenure had been marked by cancelling of the bilateral agreement against double taxation, he said.

Regarding postponing investments, Varga said the government had made its recommendations to the ministries. Those postponed involved investments for 2025, but also some stretching out until 2026 or 2027, he said.

The budget deficit came to 2,321 billion forints at the end of the first quarter, he said, with interest payments amounting to 2,100 billion, 600 billion more than the same period in 2023, he added.

On the subject of the state’s purchase of Budapest Liszt Ferenc International Airport, Varga said the funds for the purchase had been set aside and would not influence the deficit. “The purchase is a strategic goal,” he added.

When drafting the budget, the government will have to weigh ways to preserve its achievements such as the high employment rate, family subsidies and the value of wages and pensions, he added.

In response to a question at a government press briefing about Magyar’s entry into politics, Gulyas said that when in 2018 he was asked by the prime minister to head the Prime Minister’s Office and he was looking for a state secretary for European Union affairs, he had told Magyar that he had considered Magyar’s ex-wife, former justice minister Judit Varga, “eminently suitable” for the role and later for the post of minister.

“But not him. My opinion has not changed since,” he said.

In response to a question on whether an internal investigation has been launched to reveal if Magyar had blackmailed persons under national security protection, including ministers, he said: “As for blackmail, nobody has blackmailed me”.

Referring to a message he had received from Magyar, he said: “I do not like being threatened.” He added that the message in question, however, had “not crossed the line of criminal law”.

“I received a single message this year, which was the only one-sided communication involving Peter Magyar…” he said, referring to a chat group which he said he had since quit. He added that Varga had since “published its essential contents”.

In response to a question concerning whether the Sovereignty Protection Office should investigate the funds Magyar received to organise his events, he said the office would make a decision on the matter, adding that he believed in transparency. “When someone organises what looks like an expensive event, they must give account of their circle of supporters,” he said.

Also asked about the audio recordings made by Magyar in connection with the Volner-Schadl case, he said that Varga had mentioned several times to him that Magyar had been blackmailing him, and “either there [had been] such a recording or there [had not]… Whether the threat was real or not, only Judit Varga could [have judged],” he added.

Asked about whether Gulyas still enjoyed the confidence of the prime minister in light of events surrounding Magyar, he replied that he had not noticed any change in his attitude towards him.

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