This blog is provided by the Common Sense Society of Budapest as an online, English-language platform for the publication and exchange of diverse and differing perspectives about Hungarian politics, economy, and culture. The views represented here are those of the authors and do not necessarily reflect the opinions of CSS. The Common Sense Society does not receive funding from any government entity or political party.
POLITICAL, ECONOMIC, AND DEFENCE DIMENSIONS OF
A joint conference of The Common Sense Society and Political Capital Institute,
supported by Friedrich Ebert Stiftung
HUNGARY’S EASTERN OPENING
Date: March 11, 2015, 9.30-15.10 (Central European Time)
Venue: Duna Palace, 1051 Budapest, Zrínyi u. 5
Language: both English and Hungarian (with continuous interpretation)
Full Agenda available here.
Ukraine Crisis: New Impetus for Transatlantic Security Cooperation?
Botond Feledy, foreign policy scholar, St. Ignác College
Zsolt Molnár, chairman of the National Security Committee of the Parliament
Zsolt Németh, chairman of the Foreign Affairs Committee of the Parliament
Péter Siklósi, Deputy State Secretary for Defence Policy and Planning of Ministry of Defence
Moderator: Péter Krekó, Director, Political Capital Institute
Feledy: Hungary-U.S. relations are improving recently, and there seems to be a clear change in attitudes. In terms of attitudes, it is important to note the penetration of Russia into European politics and civil society. It is very deep. You see an example of it with PEDIGA.
Nemeth: Hungary-U.S. relations are important and have hope for improvement. It was an important step for the Hungarian government to restart the gas transfer to Ukraine after stopping it last September. Also, the new U.S. Ambassador Colleen Bell has done a good job since arriving in Budapest a month ago. TTIP and security cooperation against ISIS represent a few of the opportunities for further Hungary-U.S. cooperation.
Péter Siklósi (Deputy State Secretary for Defence Policy and Planning, Hungarian Ministry of Defence): How realistic is the concept of a European army? In 2014, there were two distinct trends: The US pivot to Asia and a continuous reduction in defense spending of NATO member states. The reduction in defense budgets has continued as a trend since the end of WWII, but sped up after the 2008 economic crisis started. These trends were very clearly perceivable by 2013. These trends weaken the vision of NATO.
When 2014 came, there were two important challenges. First, an aggressive Russian presence and intervention which was not accepted by the West. Second, the incredibly quick spread of ISIS. It became clear in Europe that we cannot exclude possible military conflicts within the border of Europe.
The NATO summit in Wales in September 2014 was one of the most important summits that have taken place. Regarding NATO readiness: NATO member states who feel most threatened by Russia should get proper reinforcement from other NATO member states and NATO. It is necessary to reinforce the military posture of NATO, which should be adapted to shifting challenges. Even though the military capability of NATO surpasses Russia several times over, member states must attempt to meet the defense investment pledge which is approximately 2% GDP. This is smart defense. Hopefully, Germany, Italy and UK would increase or at least did not decrease their defense budgets.
Putin’s operation in Ukraine has improved NATO cohesion. Russian actions have seriously challenged NATO as a military alliance.
Zsolt Németh (Chairman of the Hungarian Parliament’s Foreign Affairs Committee): “We need to develop a new security strategy in Europe.” At the Riga meeting, it was decided that there would be a harmonization of security among EU member states. The EU neighborhood policy has come into focus, given events in southern and eastern Europe.
It’s necessary to react to global threats. This is why Hungarian involvement in Iraq will be discussed in Parliament on a plenary level as early as April. We will discuss the issue of the new Hungarian mission on the territory of Iraq.
Looking at the crisis in Ukraine, it is a freedom fight and the biggest contribution is not necessarily military support but the EU should provide clear membership prospects to countries such as Ukraine, Georgia and Moldova.
This entire Ukraine issue very closely related to nation building aspects of Ukraine. That also concerns matters of coexistence of nationalities, minorities in Ukraine. Minsk two doesn’t speak about autonomy, but rather decentralization and special status. Linguistic concession does not equal political concession. We are committed to Hungarian community self governance because of our Constitutional Law. The only guarantee of survival for Hungarians living beyond Hungary’s borders is autonomy and community self-governance.
Eastern Ukrainian regions are as important as western Ukrainian regions. We should support Ukraine integration in Europe.
As regards military solutions, it’s important that the crisis in Ukraine should be solved through diplomatic, political measures. A ceasefire in Ukraine is in progress. If this military conflict continues in eastern Ukraine, there is a huge risk of “a Russian corridor emerging.”
Very important that NATO and EU military and Hungarian armed forces be looking ahead to what may come. There is a need for an European army, which should not be regarded as beings against NATO, but it should be within the framework of NATO.
Regarding extreme Islamic terrorism, military action on short term is unavoidable.
Zsolt Molnár (Chairman of the Hungarian Parliament’s National Security Committee): In Ukraine we do have Hungarian minorities: issues of double citizenship and security of the Hungarian minority there. In the crisis, Hungarian defense and diplomacy should follow that of Europe. No other direction can be followed. But the one that comes from EU membership and NATO membership.
Russia was ready to cooperate with NATO and EU member states. But this has changed in last 1.5 years. Eastern Ukraine is a new phenomenon. Hungary, Romania, and Bulgaria were pushed into middle of focus as a result of the crisis. These days, our region is becoming increasingly important. This doesn’t mean that Hungary should be considered an operative land.
In relation to Russia, Hungary is a transit country, for example with natural gas, and is therefore a matter of national security for others countries. The correct solution in the long run requires addressing long-standing problems in Ukraine. When Ukraine was created, certain problems of autonomy, Russian minority within Ukrainian territory, etc. were not properly handled. The primary goal is to achieve a result via talks, not arms. The ideal solution is that all problems are negotiated at a round table. “We do not have information of Hungarian national people who take part in the Ukrainian war. No evidence of that.”
Botond Feledy (foreign policy scholar, St. Ignác College): The Ukrainian crisis is not something that occurred from nothing. Between 2003 and 2005, Moscow started a communication war. Russia opened new communication channels for western viewers in order to promote the Russian viewpoint.
Jean-Claude Juncker’s statement on Sunday calling for a common European military and defense budget is a clear reaction to the crisis. The move also seeks to remedy the lack of a harmonized defense policy among EU members states.
From Hungary’s perspective, the Ukrainian crisis creates a problem related to its military activity, Hungarian minorities in Ukraine, and communication issues given the propaganda war going on in Europe. “We are responsible for those Hungarian minorities living in Ukraine.”
Peter Krekó (moderator): What opportunities does the Minsk agreement offer Europe?
[Panel Two] The Politics and Economics of TTIP: Should We Want It?
András Schiffer, co-chair, LMP
György Szapáry, former ambassador to the U.S.
Zsuzsanna Szelényi, Member of Parliament, Együtt
Moderator: Joshua Dill, Pannonius Fellow, Common Sense Society
Szelényi: “I disagree with Andras [Schiffer] that the West is in decline, in a downward spiral.” Social problems and strong euroscepticism are playing out in the conversation on TTIP.
Szapáry: As a result of global economic trends, the relative dominance of the west will be reduced along with prevalence of international trade rules and norms. “TTIP will help keep us alive; help better retain our positions in this world.”
Szelényi: “I hope the whole process will be made more democratic. But if slowed down or postponed, it’s very bad.” A free trade agreement should be run in a democratic way.”
Schiffer: “I hope it won’t be successful. I hope the Hungarian government and other European governments will be brave enough and support [Greece’s] Tsipras government and stand against TTIP.”
Dill: What do you think the outcome of the agreement will be? An ambitious agreement or mini-agreement? Is TTIP an agreement of decisive global importance?
Szelényi: In this process over TTIP, “isolated countries will not be successful countries.” Those countries that are taking into account world development, making shifts and adjustments, will be successful. Important to have the right attitude when evaluating an agreement.
“There is a huge competition in the world. Globalization is a reality. Hungary is a very small country.” What role can it actually play in globalization?
Hungary overcame the Soviet Empire. Now, the best thing for Hungary is to take part in the joint EU effort. When we think about Russia: Putin tried to create the image of a more open country, but then decided to be much more restrictive. Hungarian emphasis of sovereignty echoes what Russia represents.
Although some think that our competitive advantages are in the fields of agriculture, as a progressive small European country, agriculture shouldn’t be our only export focus, it should rather be on human resources, education, research, development. Successful countries focus on these matters. Hungary should too.
TTIP is also about innovation, sharing knowledge, and technological developments. Do we consider Hungary an open European country? Should we remain within our borders, focus on our own sovereignty?
These attitudes will influence the approach we use in evaluating TTIP. It is a question of our vision for our future.
Szapáry: Let’s talk about the details of economic policy. It took years for Hungary to join the EU. Understandable that negotiations such as TTIP drag on for a while. How can we measure the economic impacts of such an agreement? This takes at least 10 years in order to see meaningful economic statistics. We can generate these figures in the future, but our current argumentation should be based on something different.
The automotive industry is a good example of where harmonization of safety standards is a win-win scenario for both the EU and US; where we should really sit together and try to come to a sensible agreement. Suppliers of German car exports, including in Hungary benefit. Yet, there are some clear differences between the US and European markets, which are not deal-stoppers.
Regarding GMO agricultural products for import or export: Every country is free to decide whether or not to produce GMO products.
Regarding public procurement rules: The US is very protective of its public procurement market. Europeans protect it far less and favor more open bids for public projects. As a result, the US submits many more bids into European market, than Europeans do in the US.
Regarding investment disputes: Such conflicts are settled under the auspices of world bank’s international court of investment disputes. Americans regularly ask for arbitration panels to make decisions. According to the stasticis, American companies win the great majority of these disputes.
We must avoid letting these disputes keep us from harmonizing through negotiations over TTIP those issues we don’t agree on. This is hard to do when national leaders in Europe are taking a mostly domestic political perspective. We should not turn TTIP in a major political issue. Especially since the negotiations are conducted by the Commission. It is likely, however, that the issue will become more politicized–we need to prepare for this.
Schiffer: “Analyzing globalism in nonsense, but criticizing globalism does make sense.” TTIP is not just a trade agreement, but a civilization issue. Says these type of agreements allow multinational companies to extort governments on issues such as health care and environmental policies. “No long term peace based on long term exploitation”
“I disagree with Zsuzsa: There is an alternative to TTIP.” We should be promoting and helping local economies, irrespective of national borders. Small producers should be helped to get their produce to market. In their consultations, the EU commissioner spoke with 119 large companies, but only 8 NGO’s. “We need transparency. The independence and sovereignty of Hungary is at stake.”
“TTIP and the Paks deal secrecy have the same magnitude of betrayal”
Hungary should make sure its competitive advantages in trade are in play such as corn and wheat exports. It’s important to keep a ban on GMO products. Hormone treated beef is not civilized. In many areas, the U.S. has a huge competitive advantage so TTIP will bring unfair competition to Europe. There is only one sector that has measurable export to U.S., namely the down feather industry, and this is already tariff free. TTIP is not beneficial to Hungarian economy.
If TTIP brings American corn, poultry, etc. into Europe, then Hungary will be forced out of market. Can’t compete with US on some of these agricultural goods.
“Real goal of TTIP is not to reduce tariffs, but to tear down non-tariff barriers in Europe.” Non-tariff barriers are measures with which European states can protect their citizens’ health and safety, and this is what TTIP would like to abolish, which is one of the greatest arguments against it.
This pact clearly would be good for global enterprises. Clearly, eastern and southern European countries will be losers.
Look at Mexico which was “forced” to join NAFTA. “Look what kind of society exists in Mexico. Do we want that for Hungary?” Rate of people living under poverty line since 1994 is unchanged there. Mexico has a society crippled from crime. “No improvement in Mexico under free trade agreement.” Says, we cannot expect anything good to come out of TTIP.
Dill: The title of this panel is “the politics and economics of TTIP.” How do you think that these two aspects of the trade deal fit together? Is there currently an appropriate balance between the politics and economics of TTIP or does one need more emphasis?
Zsuzsanna Szelényi: TTIP has been on the agenda for 1.5 years; now, finally the discussion has made it into Hungarian public discourse. The stake is not just about a trade agreement. The founders of Europe’s common market understood trade to be a matter of mutual interest for cooperation and a way to help maintain peace in Europe. Commercial cooperation would lead to cooperation in many other fields. If Europe acts on any economic challenge or crisis, the EU should act in European interests. We need a new global approach compared to that of 25 years ago in order to meet new global challenges. Therefore TTIP is an opportunity to rethink European challenges including political and environmental issues. TTIP negotiations then must be treated as a political matter.
Hungary’s overall objective here should be to help conclude a successful TTIP agreement that is in Hungary’s and Europe’s interests. To withdraw from negotiations would miss an important opportunity and would be “unacceptable.”
György Szapáry (former ambassador to the U.S.): Go back in history to the Treaty of Paris, 1951 and the origins of the European Steel and Coal Community which led to the EU. The goal was to contribute to extension of economy and thereby the improvement of standards of living. What it meant practically at that time was a common market for steel and coal. It was the orgins of the common market among members states of the European Union in which the goal is free trade of goods and services. The same in the United States with telecommunications for example where you pay the same price for telephone service across the U.S.
TTIP continues in this general direction but breaks down barriers between the American and European markets. TTIP addresses 1) market access, 2) regulatory issues, and 3) trade rules. The ongoing negotiations are difficult because each party as political constraints. 28 countries with different interests. There is a need to take all interests into account. The U.S. also has varying interests at the individual state level, which factors in.
The goals of TTIP are good and desirable for Hungary and Europe, but an agreement will be difficult.
András Schiffer: We do not need TTIP. Global trade agreements like TTIP, and the Pacific Investment Partnership (TPP), are harmful globally and to Hungary. Jobs are going to be lost. We have a different mentality about the issue: We think free trade leads to an elimination of global natural resources. Says, “600,000 jobs can be lost in the EU as a result of TTIP.”
Joshua Dill: The Transatlantic Trade and Investment Partnership (TTIP) will be the biggest free trade agreement in history. If concluded, TTIP would reduce tariffs and standardize regulations between the United States and EU member states. Opponents of TTIP say that it would destroy health and consumer protection measures in Europe and strengthen the power of multinational corporations at the expense of sovereign governments.
[Panel One] Eastern opening: political, geostrategic and economic implications
János Hóvári, former ambassador to Turkey, former Deputy State Secretary of Global Affairs
István Íjgyártó, former ambassador to Russia, state secretary for cultural diplomacy
József Pandur, former ambassador to Bosnia and Herzegovina
Moderator: Edit Zgut, journalist, Heti Válasz
Pandur: In Hungarian foreign policy, for certain period of time, eastern opening was the only thing that existed. Now, a large part of Hungary’s diplomatic missions are concerned with business relations.
Ijgyártó: Russian-American relations are obviously troubled and need to be improved. Says for Hungary, doesn’t make sense to talk about “right or wrong” in terms of global/eastern opening. Need to focus on the output for Hungary’s national interest. Business is now the main aspect of Hungarian foreign policy. “Ambassadors do business.”
Hóvári: Diplomacy is perhaps above business.
Pandur (former ambassador to Bosnia and Herzegovina): Yes, Russian gas imports are important but solutions for Hungary’s and Europe’s energy supply and security should be found together with the EU and NATO.
Ijgyártó (former ambassador to Russia): Challenges that Hungary needs to face include:
1. Gas supply. Hungarian households widely use gas, almost all residential homes use gas.
2. Inexpensive energy. Important for Hungary to join some kind of comparative advantage, in order to receive cheaper gas.
3. Hungary is and has been a transit country. Recall the Russia-Ukraine gas problem. Hungary has a responsibility as a transit country. Hungary is responsive to Ukraine’s gas demands. Hungary had to restrict gas transportation, then restarted. Way to normalize our relations with the Ukraine. I don’t think there has been a Hungarian government that doesn’t see energy as an important issue.
Russia as a gas exporting country has been very reliable. What opportunities would Hungary have without Russia as an energy carrier, given the volatility of the energy market? Russian supply seems to be a reality of European energy markets. We cannot cover the total EU demand from own EU resources.
Hóvári (answering a question about Hungary’s energy policy): It’s quite obvious that in the last few years there has been a new alliance emerging between Russia and Turkey. Germany has its own special approach to Russia. Turkey has an enormous gas consumption, gas demand. Huge country, huge population. Thus, consumption very high, especially if we take into account the strengthening of the middle class. Therefore, Turkey’s approach to Nabuco and energy policy very important. Turkey was very disappointed that EU countries were unwilling to participate in Nabuco. Therefore, willing to solve energy issues through other means, by using energy from the east like Azerbaijan.
Since Southern Stream is not going to be constructed, alternatives have been discussed. Through this pipeline, it would be possible to receive gas from Russia, via Turkey, to Central Europe. Route is debated. First version, through Greece, Serbia, Macedonia. Second version, to follow potential Nabuco route. The current Greek situation is not very helpful to this project. This is how Russian gas can reach Hungary and southern Europe.
Pandur: We’re talking here about Hungarian companies, small, medium sized business primarily, because the large ones in Hungary cannot be described as Hungarian in terms of their leadership/ownership. For the medium sized companies that will be competitive players in terms of trade, we’re trying to teach the representatives of these companies, how to sell their products, how to sell themselves.
Hóvári: Turkey is a very important player in the global economy. We have about 1 billion USD export surplus. Starting to reach level of Russian exports to Turkey. Automotive industry cooperation has emerged and represents more export opportunities for the Hungarian economy. Competition in technologies, can this be mirrored in Hungary? Does Hungary have a sufficient number of well educated people? Says Hungary is looking for new markets but also trying to retain current markets.
Ijgyártó: Hungary is and has been a part of the west and is very integrated into the European economy. However, Hungary also strongly opposes aspects of the EU economy and changes in that economy. It wouldn’t be a mistake for Hungary to try its strengths in different directions. Turkey is an excellent example. There is a great speed of development in Turkey that is catching up with Europe. Hungary has a long term positive balance with Turkey. Export 9 times more than we purchase there. What is the policy when we can no longer increase our performance? The point of the opening process was to generate a stimulus, to show a new challenge to the Hungarian economy.
Pandur: The goal was for Hungary’s eastern opening to be done while maintaining our positions in the west, but this seems to not be working out.
Ijgyártó: As an explanation or context of some scandals including Buda Cash, it’s important to remember that not every country has the same rules and business culture we have in Europe. The impact of western civilization vanishes the farther east we go. Anglo saxon business method vanishes. Farther east, personal contacts become more and more important. Says Hungarian intentions are structured along values and a fair approach in business. The EU presidency was very important for us, garnered a series of invitations to different Asian countries. We could build on those relations very well.
József Pandur (former ambassador to Bosnia and Herzegovina): There is a growing interest in Hungary’s “eastern opening” and in some areas it has caused isolation of Hungary. The shift in policy will need to be addressed based on it’s outcomes and successes, not political impressions. Says it’s revealing that when Vladimir Putin visiting Italy recently there was not a lot of media coverage of the trip. But when Putin visited Hungary last month, there was a huge amount of media coverage in the international press. Says not sure that improved relations with countries like Russia and Azerbaijan can be achieved without Western criticism.
PM Orbán to Hungary’s ambassadors yesterday: “Hungary is part of the Western world, there is no need for ‘westward opening’ Hungarians already voted for EU and NATO.
István Ijgyártó (former ambassador to Russia, state secretary for cultural diplomacy): Hungary has limited resources in foreign policy and must leverage these including with Russia. Need to revive, restructure relations. Russia remains of high economic importance to Hungary. More “classical diplomacy” matters have become more and more dominated by economic considerations. This is true for welfare of Europe, not only Hungary. Relations with Greece not just political, but primarily economic.
Says that it seems clear that the United Sates as global superpower is focusing more an Asia and Pacific region. It’s understandable for Hungary to adapt in this climate and also shift to eastern regions in its foreign policy priorities. And not just to the east, but also to Africa. Foreign Ministry now has an independent Africa desk separate from Arab world relations. Now has an independent China Department and India department. There was a need to find diplomats who can handle these issues and restructure Hungary’s approach after a long environment of Russia dominated diplomacy following 1989. Still developing its diplomatic approach to the world–an approach that puts Hungary’s national interests at top of agenda.
János Hóvári (former Hungarian ambassador to Turkey and former Deputy State Secretary of Global Affairs): There is a responsibility to talk about what happened between 2010-2014 in the area of eastern opening which used to be called global opening in the foreign policy speak. Hungary’s Foreign Minister did not have energy to make progress and relations in all areas. 2010 was the start of global opening process. Despite a seeming turning inward of Hungary, the United Nations and other international organizations are still seen as forums where Hungary has to have a voice. Interests here similar to other Central and Eastern European countries. But need to establish better relations with Asian countries in order to adjust to new realities in world economy. Hungary needs new markets and must compete with other countries for access to new middle class consumers in Asia.
Hungary did not succeed in becoming member of security council, but became chair of UNESCO. International cooperation coordinated to foreign policy objectives. Foreign Minister consistent in talking about global opening including to China, India, and Brazil–a truly “global” approach that is not really liked by some people. The “pivot to the East” term was used instead of “global opening” primarily by Prime Minister’s office. Hungary has seen position improved in several regions. Even with a “common security” in Europe and NATO, it does not mean that Russia and Serbia would not have a high priority in Hungary’s foreign policy. Says policy of opening needs to roll out in every area.
Peter Krekó of Political Capital Institute notes the important internal political debates about foreign policy that is happening now in Budapest. There is a newly returning trend of international behaviors and forces in Europe that is reminding us of the Cold War. In this environment, it’s an important question who belongs to which part of this contest.
Emese Böröcz of Common Sense Society’s opening remarks:
“The Common Sense Society is an independent educational foundation that promotes civic engagement, entrepreneurship, and the ideals of responsible liberty. Since our founding in 2009 we have been hosting regular debates, workshops, film screenings, and book discussions about the West and first principles and how they relate to current politics. We are delighted to co-host this event with Political Capital and the Friedrich Ebert Stiftung in the spirit of nonpartisan civic cooperation.
At Common Sense Society we strive to be a forum for sensible, respectful dialogue and will continue to be a platform for difficult discussions on pressing matters that are important to the future of Hungary.
In order to fulfill our mission, we also provide publishing opportunities on our blog, PaprikaPolitik for our members, leadership academy alumni and young scholars about political, economic and social issues of the region. In 2014 we launched a 5-month, fully-funded transatlantic fellowship program: the Pannonius Fellowship Program, for young leaders and scholars from the U.S. and Hungary supported by HIF.
Although we continuously aim to promote the values of Western civilization, we have followed the clear rhetorical and policy shift in Hungary regarding our country’s political and economic orientation, which we find rather unsettling. We believe that Hungary firmly belongs to the West, that geopolitical orientation matters because it affects the value-system of a community and that in matters of trade, free people are more desirable partners than unfree people.
We hope that today’s event will shed light on facts and misconceptions related to the topics of European energy security, transatlantic trade, and the Ukraine crisis and will help to orient our thinking when we evaluate Hungary’s Eastern opening and western commitment.
In addition, we hope that after today’s discussion, you will be inspired to continue to follow the commentaries, publications, and future events of the Common Sense Society. This event will be live tweeted @CommonSenseScty and live blogged at PaprikaPolitik.com.We will also be circulating a summary of this event in English tomorrow. I wish you a fruitful and enjoyable discussion!”
Jan Engels of the Friedrich Ebert Stiftung says there is a public debate on the much disputed policy of eastern opening for Hungary. What will be the political and economic outcomes of this eastern opening? We want to better understanding the government’s current foreign policy. It’s important to also understand TTIP which might fundamentally change our economic framework in Europe. Want to better understand how Hungary’s foreign policy choices fit into its national interests and are they the same as the V4 countries.