Gulyas: Recession avoidable

Ministers will step back from boards of asset management foundations of universities from February 15, and the government expects lesser government officials to do the same, Gergely Gulyas said.

Justice Minister Judit Varga, Energy Minister Csaba Lantos, Finance Minister Mihaly Varga, Agriculture Minister Istvan Nagy, Foreign Minister Peter Szijjarto and Regional Development Minister Tibor Navracsics have resigned from seats on the boards of universities which participated in a government-led reform in the past years. The European Union had earlier raised concerns of corruption regarding the foundations.

The Hungarian government has always been ready to meet the EU halfway in “rational compromise”, Gergely Gulyas said. The government “has even supported requests without any legal basis if they did not harm the country’s interests,” he said.

“The European Commission should only be allowed to pose us demands based on community law, but we are way past that,” he said.

Regarding the war in Ukraine, Gulyas warned that “tens of thousands have died on both sides” since the war started almost a year ago. “Saving lives is only possible through an immediate ceasefire, peace talks and peace,” he said.

The biggest danger is that the conflict will escalate, Gulyas said, adding that avoiding a world war was in everyone’s interest.

Hungary is and will remain committed to peace when it comes to the war in Ukraine, he said.

It has condemned Russia’s aggression from the start and has provided financial and humanitarian support to Ukraine, welcoming refugees without an upper limit, Gulyas said.

Hungary’s position is only unique in the sense that it does not send weapons to Ukraine, Gulyas said, noting that this could only be done via the country’s Transcarpathia region. But Transcarpathia has so far not been involved in the war, “and it is our interest — also because of the Hungarian community living there — that this remain the case”, he said.

Gulyas noted Hungary’s opposition to sanctions, particularly those on energy, arguing that they were “hurting us more than they are Russia”.

Growing energy prices have been the biggest factor driving the “outrageous economic harm” and inflation of the past year, and so “common sense and rational policies are of primary importance, even if they are up for debate in Europe”, he said.

Gulyas also touched on Hungarian rescue efforts in earthquake-hit Turkiye, saying that Hungarian units have saved 27 survivors so far and found dozens of dead in the rubble. He expressed his sympathies over the victims of the earthquake, which killed at least 5,000 people in Turkiye’s Hatay region and Syria on Monday.

Hungary’s embassy is in contact with all 16 Hungarian citizens in the region, and all are well, he said.

Since Wednesday evening, a total of 156 people and 26 dogs have been working in Hungarian missions in the Turkish area of the disaster, he added.

Turkish authorities and civil organisations started rescue operations on Monday, with some 110,000 rescuers, soldiers, policemen, health-care personnel and volunteers on the scene, he said. Nearly 5,700 people from 50 countries are also helping the mission, he said.

From Hungary, the National Disaster Management Authority (OKF), the Eletjel rescue mission, the Baptist Charity, the HUBA Rescue24 organisation of firemen and rescue teams, the charity of the Hungarian Reformed Church and the Pest County Rescue Mission were the first to arrive. OKF’s volunteer rescue organisation has 31 people and six dogs on the scene since Wednesday, and an 18-strong unit of counter-terrorism centre TEK joined the efforts on Thursday, he added.

On a three-day cabinet meeting held in Sopronbanfalva, in western Hungary, Gulyas said that besides deciding on specific issues, government members had also reviewed strategic matters.

Meanwhile, Gulyas said that in spite of the economic crisis affecting the whole of Europe, Hungary’s government was delivering what it had promised to pensioners and workers. Despite high inflation and the sanctions imposed in response to the war, real wage growth as a nationwide average is several percentage points higher than the inflation rate last year and in the case of pensioners, the 15 percent pension increase that took place on January 1 could even be higher than inflation in an optimistic scenario, he said.

Gulyas noted that the 13th month pension is also being disbursed. He said that while the governments of Ferenc Gyurcsany and Gordon Bajnai had scrapped the 13th month pension during the 2008-2009 economic crisis, the current government restored it, maintaining the 13th month pension and increasing it in line with inflation.

He said the government’s top priority for 2023 was to reduce inflation, protect jobs and avoid a recession.

Inflation is expected to be “extremely high” in the first few months, but the government is doing everything it can to bring it down into the single digits by the end of the year, he said. Gulyas said what mattered most was maintaining economic growth, preferably at a rate exceeding the EU average. He noted that the Hungarian economy had grown by 4.7 percent under similar circumstances last year.

Hungary’s economy is expected to avoid recession and grow by 1.5 percent this year, Gulyas said.

Long-term growth requires ongoing industrial and agricultural development, and energy is key to that process, he said.

The government focused on energy strategy in a recent three-day cabinet meeting, he said. In the national energy strategy until 2030, presented at the meeting by Energy Minister Csaba Lantos, nuclear energy will continue to have a key role in Hungary, along with the development of solar energy and energy networks, Gulyas said.

If the government can reach an agreement with the EU and gain access not just to the non-refundable grant from the post-pandemic recovery payments but also the mechanism’s loan component, it intends to spend those funds on energy upgrades, Gulyas said. This would entail upgrades to the electricity and natural gas networks as well as the digitalisation of the electricity grid, he said. It would also mean digital upgrades at state-owned transmission system operator Mavir and energy company MVM, along with the installation of one million smart meters by 2030, he added.

Investments ensuring the security of gas storage facilities are considered a priority, as is the expansion of the capacity of the Adria oil pipeline, Gulyas said. If oil deliveries from Russia stopped today, Hungary would get its oil via the Adria pipeline, though it is operating at a capacity of 70-80 percent, he said. Gulyas also underscored the importance of energy efficiency-related developments at the public water works.

As regards industrial upgrades, Gulyas highlighted the importance of developing green production capacities and the use of green technologies aimed at cutting greenhouse gas emissions.

Raising the ratio of alternative crude blends that can be refined at oil and gas company MOL’s main refinery in Szazhalombatta, near Budapest, is also important, as are energy efficiency developments at companies, hydrogen production, energy research, innovation and support for pilot projects, Gulyas said.

The government also wants to boost Hungary’s energy sovereignty, which requires an increase in domestic hydrocarbon production, he said, adding that this would happen in cooperation with MOL and MVM.

The energy efficiency upgrades of public buildings should also be accelerated, he said, adding that the government did not want another winter that required the kind of regulations aimed at energy conservation that were introduced last year.

Gulyas also noted the need for the electrification of Hungary’s railway network, the procurement of electric buses and support for electromobility.

Concerning talks with the EU on asset management foundations set up for various public functions, Gulyas said it would be easier to conduct those talks “if Brussels made it clear what it wants, but that’s not how the consultations go”. He added that there was nothing stopping the government from making further changes to the conflict-of-interest rules of foundation boards.

The university foundations will no longer have politicians in them, and if necessary, the government is prepared to abolish the life tenure of the foundations’ board members, he said.

Responding to a question about whether a meeting between Prime Minister Viktor Orbán and Volodymyr Zelensky was possible, he said that the Ukranian prime minister’s itinerary at the European Union summit was being kept under wraps for security reasons. In respect of the war in Ukraine, Gulyas said Hungary’s government was working on a support package for Hungarians living in Transcarpathia.

Regarding Ukraine’s NATO membership aspirations, Gulyas said the country’s accession depended on the support of all member states and whether Ukraine could meet the conditions that current members had met when they joined the alliance. “Right now, Ukraine’s immediate integration would mean a world war,” he said, adding that it was hard to predict what Europe’s security architecture would look like after the war.

As regards Ukraine’s EU membership bid, he said that whereas Hungary supported Ukraine’s EU candidacy, it would not ratify its membership until progress has been made on the issue of its ethnic minorities. “It is now hopeful that Ukraine has heard these complaints,” he added.

Regarding recent statements made by the US ambassador to Hungary, Gulyas said envoys were tasked with promoting good relations between governments, and hopefully the US ambassador would strive in this direction. Asked whether the Hungarian foreign minister’s comments about the US ambassador had been “unfortunate or over the top”, Gulyas said it would be “unfortunate if diplomats serving in Hungary made false statements regarding the position of the Hungarian government”.

Regarding the foreign funding of opposition parties during last year’s election campaign, Gulyas said: “The most serious issue facing Hungarian democracy right now is that the opposition is controlled from abroad.” The opposition has broken the law by accepting foreign funding, he said, adding that the issue related to several opposition parties because they had nominated candidates jointly.

Responding to questions about the battery plant planned near Debrecen, in eastern Hungary, Gulyas said the government insisted that the investor, Chinese manufacturer CATL, adhere to the strictest environmental regulations. Gulyas dismissed a press report suggesting that the government’s planned subsidy amounted to 320 billion forints (EUR 820m) as “inaccurate”. He also said that around 70 percent of the plant’s water needs could be supplied from waste water.

Asked whether the plant’s construction could be cancelled in the face of public pushback, Gulyas said investors, local authorities and government organisations should work together to clarify any concerns. “The most important thing is to have clear, straightforward and clear answers to all questions; then there’ll be no pushback,” he said.

Answers should be given to professional questions to satisfy the concerns of “protesters acting in good faith”, he said. At the same time, opposition parties seem to “need another topic every 3-4 weeks which they hope will shake the popularity of the ruling parties,” he said.

Gulyas said he trusted that the plant would employ Hungarians for the most part.

He said Debrecen did not need to be designated as a special economic zone as the city is a much larger settlement than Ivancsa or God, where such plants have been built.

Regarding a corruption case involving a former state secretary of the justice ministry and the former head of the Hungarian Chamber of Bailiffs, Gulyas said “press reports allege” certain appointments were “made under undue influence”. He said “two or three lawmakers were mentioned” in connection with the matter, but “that is not decisive evidence”. Trust in the justice minister, Judit Varga, was “stronger than ever”, he said.

The justice minister regularly meets with the heads of all chambers, he said, adding that her meetings with former head of the Hungarian Chamber of Bailiffs had been kept to a minimum, and “were never held privately, as far as I know”. He rejected the allegation that corrupt practices with regard to bailiff appointments were “common knowledge” in the ministry, and said all government employees should report unlawful practices should they be aware of any.

In response to a question, Gulyas said there was no reason that Judit Varga should bear any consequences if her deputy at the time, Pal Volner, were convicted.

Regarding the EU’s role in border protection, Gulyas said that while Hungary’s government had been “generally condemned” for building a border fence, “now the dispute is about whether the EU should provide financial support or not. The government thinks it should, and Brussels also owes Hungary money for fortifying the external borders,” he said.

Regarding big layoffs in the Hungarian Armed Forces, Gulyas said there had been a “nonpartisan consensus” on the officer numbers being “too high compared with the number of privates”. At the same time, Hungary’s army must remain effective, even if the country is a NATO member, he said.

Gulyas said regulations for wind power will be eased so as to reduce the required distance between the turbine and the bounderies of a settlement. He also said that more than 90 percent of the government’s large-scale energy development plans will be financed through loans. In the absence of EU loans, the government will raise the financing itself, he added.

Meanwhile, he said the minister of economic development has been handed the authority to negotiate with regard to the repurchase of Budapest’s international airport, though, he added, the Hungarian state lacks sufficient resources for this for the time being.

Commenting on sanctions on petroleum products enforced from Feb. 5, he said the country’s supply of petrol was secure.

Concerning eight Russian oligarchs on an EU sanctions list, Gulyas did not confirm whether Hungary would have them removed from the list, adding, however, that rational arguments against the subjects of the sanctions should be made.

On the subject of disputes concerning the display of the Szekler flag in Transylvania, Gulyas said communities in Hungary were free to display their own symbols, and the peoples of Central Europe should understand that they weakened each other by banning the symbols of their own communities.

Meanwhile, he said “specific negotiations” were under way to find a new employer for the Dunaferr steelwork’s employees in Dunaujvaros.

Regarding the project to expand the Paks nuclear power plant, the minister said sanctions were not “making things easier”, neither were they creating an insurmountable obstacle, and the government was committed to implementing the investment in the shortest possible timeframe.