{"id":11543,"date":"2024-10-14T14:25:16","date_gmt":"2024-10-14T12:25:16","guid":{"rendered":"https:\/\/www.direkt36.hu\/?p=11543"},"modified":"2024-10-23T15:00:14","modified_gmt":"2024-10-23T13:00:14","slug":"harc-folyt-a-fidesz-lelkeert-orban-es-a-megtorpano-gazdasag-iii","status":"publish","type":"post","link":"https:\/\/www.direkt36.hu\/en\/harc-folyt-a-fidesz-lelkeert-orban-es-a-megtorpano-gazdasag-iii\/","title":{"rendered":"Orb\u00e1n and the economy, part 3: A tool for staying in power"},"content":{"rendered":"

Viktor Orb\u00e1n isn\u2019t nervous when he has to speak behind closed doors to members of the Hungarian parliament. It\u2019s a lower pressure than speaking in public. Orb\u00e1n regularly holds such meetings before EU summits that the MPs call the \u201cEU Grand Council,\u201d where the prime minister briefs senior members of parliament, including several opposition MPs, on what to expect at the next meeting of member state leaders in Brussels.<\/span><\/p>\n

One such grand council occurred in March 2023. At this particular meeting, according to sources, Orban spoke at length about economic issues. Seated in front of the ornate podium in the Parliament’s Delegation Hall, he explained how the Germans, with Hungarian help, were trying to loosen an EU agreement to ban the marketing of internal combustion engines starting in 2035.<\/span><\/p>\n

The prime minister explained that they planned to finesse an exception for engines powered by synthetic fuels that do not emit harmful substances. Orb\u00e1n added, with some pride in his voice, that one of his former ministers, L\u00e1szl\u00f3 Palkovics had “conspired with the Germans to smuggle a half-sentence into some document” that would allow for the exception.\u00a0<\/span><\/p>\n

Orb\u00e1n noted here that the development of synthetic fuels had been previously advocated for by Adolf Hitler, but the subject was dropped after Hitler lost the war.<\/span><\/p>\n

The prime minister went on to say that whatever the fate of the 2035 ban, the government must do everything in its power to preserve the Hungarian car industry. “I cannot imagine how it would be possible to replace it, at the same scale, with other industries at the moment,” Orb\u00e1n said. Car factories make a major contribution to Hungary’s GDP and exports while providing 300,000 jobs.<\/span><\/p>\n

Orb\u00e1n said that since the 2035 ban could not be overturned, the only way to preserve the automotive industry in Hungary was to start producing electric cars components like batteries.<\/span><\/p>\n

\u00a0Hungary is struggling with a labor shortage but Orb\u00e1n had ideas about how they would source the necessary workers for battery production. According to the prime minister, Hungary has an untapped labor force of 200-300 thousand people concentrated in the eastern and southern regions of the country, where battery factories are being built. “There is still enough workforce here, we just need to train them. There are many gypsies among them, no question about it,” Orb\u00e1n said.\u00a0<\/span><\/p>\n

He added that he also saw women as potential workers. Especially “if we could somehow do this part-time employment program more skilfully. It is very difficult for Hungarians to accept.\u201d He regretted that “women are not responding very well to it yet, and our regulations are too complicated.\u201d<\/span><\/p>\n

He also said that he would also count on Hungarian nationals from neighboring countries coming to fill the open positions. “I don’t see anything wrong with Hungarians from Satu Mare coming over to us when there is no Hungarian workforce,” Orb\u00e1n said.<\/span><\/p>\n

The prime minister also addressed critics of his plan that argued the economy should be developed through higher-skilled sectors rather than battery factories. Orb\u00e1n swept this off the table, saying “I cannot imagine a society without people with oily hands and people with dirty hands.” He said it was not worth talking about how skilled a particular worker was, and better to encourage the lower middle class.<\/span><\/p>\n

“There is no shame in picking up trash. Why should there be? It has to be paid properly and it has to be done,” <\/span><\/p><\/blockquote>\n

the prime minister said. He said that if these types of jobs are not incentivised, then Hungarians will not want to do them, and then “we will be pressured to bring in all kinds of foreigners.” Orb\u00e1n said that this could lead to “social distortions familiar from Western Europe”.<\/span><\/p>\n

Orb\u00e1n has strong ideas on fundamental economic issues, from the car industry to the labor market and vocational training. According to sources who have known the prime minister for a long time, this is another area – like foreign and domestic policy – where he is the government\u2019s main decision maker.<\/span><\/p>\n

While earlier in his political career he would listen to qualified economists he looked up to, from 2013 onwards the range of professionals he consults with has gradually narrowed. Political interests became more important to him than technocratic opinions on his planned economic decisions. Although Orb\u00e1n has made personal efforts to educate himself in economics and is surprisingly familiar with certain technical concepts, the economists who meet with him often notice his shortcomings.<\/span><\/p>\n

Orb\u00e1n\u2019s attitude of self-sufficiency has also played a role in Hungary\u2019s subpar economic performance in the last decade and a half. Although the Hungarian economy has improved in many respects, it has, contrary to government propaganda, underperformed compared to other countries in the region. A number of statistics show that Hungary’s neighbors, including Romania which has long been despised, have benefited more than Hungary from the largely favorable global economic environment of the past decade and from ample EU support.<\/span><\/p>\n

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Direkt36 has published a three-part series of articles on the evolution of Orb\u00e1n’s economic policy. In the first two articles, we have described how Orb\u00e1n’s relationship with his former top economic adviser Gy\u00f6rgy Matolcsy<\/a> evolved. We also covered the rise of M\u00e1rton Nagy<\/a>, the prime minister\u2019s new talent, and detailed how he came to be Matolcsy\u2019s replacement. In the third and final part of the series, we tell the story of how Orb\u00e1n came to be the primary decider of economic policy and how the economy has made the economy into a tool for staying in power.<\/span><\/p>\n

We sent a detailed list of questions to Viktor Orb\u00e1n’s office about his non-public speech in Parliament and the information relating to him in the article, but we received no reply.<\/span><\/p>\n

I. OPENNESS<\/h2>\n
\"Chik\u00e1n

In 1998 Attila Chik\u00e1n became Orb\u00e1n’s first minister of economy Photo: Corvinus Egyetem<\/em><\/p><\/div>\n

Viktor Orb\u00e1n held an unusual meeting in September 2011. The prime minister decided to invite a few economists to discuss issues facing the country, a break from the normal practice of adopting economic measures without any consultation. .\u00a0<\/span><\/p>\n

A total of eleven guests were invited to the meeting, which was held in a chamber of the parliament. Among those seated around the table were well-known economists who had previously supported or sympathized with the Fidesz party in some way, such as Zsigmond J\u00e1rai, who served as finance minister during the first Orb\u00e1n government, \u00c1kos P\u00e9ter Bod, who was head of the central bank during the Antall government, Gy\u00f6rgy Szap\u00e1ry, who worked as chief economic adviser to the prime minister, and L\u00e1szl\u00f3 Csaba, a professor at CEU.<\/span><\/p>\n

According to several participants, all economists were free to express their views during the meeting, which lasted more than three hours. Although Gy\u00f6rgy Matolcsy, then the minister of national economy, and P\u00e9ter Szijj\u00e1rt\u00f3, then the prime minister’s spokesman, were present in the room, almost only Orb\u00e1n spoke on the side of the government. “It was clear that Orb\u00e1n was interested in what was important to him, and he went deeper into things there,” said one participant, who said Orb\u00e1n not only listened, but sometimes even took notes.<\/span><\/p>\n

Orb\u00e1n mostly asked the economists about the opportunities facing the Hungarian economy. While the economists answered these questions about the future, they also commented on the government’s decisions in the past. By then, the Orb\u00e1n government had introduced a number of controversial economic measures. One such measure was the single-rate personal income tax for higher-income earners with several children, which the government hoped would boost economic growth.<\/span><\/p>\n

When it came to the effects of the one-rate tax, Orb\u00e1n, according to one of the sources present, called it “honest” and “fair” that everyone is taxed at the same rate, but several economists in the room criticized the measure. They said that, in addition to ‘horizontal fairness’ – that all wealth classes are taxed at the same rate – there is also ‘vertical fairness,\u2019 whereby lower incomes are disproportionately hit harder by the single rate.\u00a0<\/span><\/p>\n

According to those present, Orb\u00e1n did not respond to such comments, nor did he try to convince the economists of his own rightness, but merely listened to the criticisms in a polite and respectful manner. The prime minister was still curious to hear the opinions of the traditional economists on whom he had relied heavily at the beginning of his political career.<\/span><\/p>\n

In the mid-1990s, when Orb\u00e1n was preparing to govern, he surrounded himself with experienced economists. Among them were Attila Chik\u00e1n, professor of economics, and L\u00e1szl\u00f3 Urb\u00e1n, who worked for several financial institutions and played a key role in the development of Fidesz’s first economic programmes. Orb\u00e1n also regularly consulted Gy\u00f6rgy Sur\u00e1nyi, among others, who headed the central bank in the early and mid-1990s.<\/span><\/p>\n

He chose a similar group of economists to form his government following his election victory in 1998. For example, he asked Chik\u00e1n to be minister of economy. He eventually dropped Urb\u00e1n, who had long been considered a contender for the finance ministry but had proved too self-serving, and chose Zsigmond J\u00e1rai, who had a background in banking and the stock market.<\/span><\/p>\n

However, it became clear relatively quickly that Orb\u00e1n was frustrated by the thinking of economists. According to a source close to the prime minister at the time, Orb\u00e1n said <\/span><\/p>\n

“I don’t like economists, because they always tell me what I shouldn’t do. I was elected to do things.\u201d <\/span><\/p><\/blockquote>\n

According to the source, this criticism, which the prime minister later repeated, was primarily directed at Chik\u00e1n, whom he dismissed from the government in December 1999 after a year and a half.<\/span><\/p>\n

Chik\u00e1n was replaced by Gy\u00f6rgy Matolcsy, who won Orb\u00e1n’s trust by tending to depart from the then mainstream pro-market economic thinking and being more open to state intervention (too much so, according to his critics, as the first part of our series of articles showed). According to a former government official, Orb\u00e1n argued in one of their one-on-one conversations that he needed an economy minister who had ten different ideas a day, nine of which could possibly blow, but one that could do something.<\/span><\/p>\n

While Orb\u00e1n drew the vividly imaginative Matolcsy close, he continued to rely heavily on Zsigmond J\u00e1rai, his more conservative finance minister, who was wary of excessive interference in the market. “Zsigmond J\u00e1rai was his god,” said a former government official. The trust was mutual. J\u00e1rai wrote in his autobiography that Orb\u00e1n, a sharp-witted lawyer with little knowledge of economics, had a knack for getting to the heart of the matter. According to J\u00e1rai, Orb\u00e1n at the time approached economic issues very soberly, in a frugal and measured manner.\u00a0<\/span><\/p>\n

This dichotomy – Orb\u00e1n\u2019s attentiveness to both conservative and unorthodox economic advice – would characterize the prime minister for a long time to come. <\/span><\/p>\n

II. FIGHTING FOR THE SOUL OF THE FIDESZ PARTY<\/h2>\n
\"Orb\u00e1n,

Orb\u00e1n, Matolcsy and Szijj\u00e1rt\u00f3 in 2011 Photo: Orb\u00e1n Viktor \/ Facebook<\/em><\/p><\/div>\n

After Fidesz’s landslide election victory in 2010, Matolcsy, who was appointed minister of national economy, was one of the most important economic decision makers, but was not the only one in charge. Orb\u00e1n has created a complex system for devising economic policy. University professor L\u00e1szl\u00f3 Csaba, who was one of the economists Orb\u00e1n met regularly at the time, says that after 2010, a circle of experts offered advice on economic and political policies. Orb\u00e1n decided which expert to listen to on every specific measure.<\/span><\/p>\n

The best known figure in the political camp was Matolcsy, who represented the unorthodox line with often populist ideas. Other experts were economists with conservative economic views, such as Zsigmond J\u00e1rai, who was chairman of the Fiscal Council starting in 2011. He oversaw the transparency of the state budget. Other members of the expert group included Gy\u00f6rgy Szap\u00e1ry, who became Orb\u00e1n’s chief economic policy adviser from 2008, and P\u00e9ter \u00c1kos Bod.\u00a0<\/span><\/p>\n

According to L\u00e1szl\u00f3 Csaba, government economic policy in the years after 2010 was characterized by the different mentalities of the experts offering input: <\/span><\/p>\n

“unorthodox tools” were used to achieve “orthodox goals.\u201d <\/span><\/p><\/blockquote>\n

In other words, after the 2008 economic crisis, various extraordinary measures were taken to achieve conservative goals such as maintaining solvency, reducing public debt, and independence from international financial institutions.\u00a0<\/span><\/p>\n

According to L\u00e1szl\u00f3 Csaba, while discussing various economic policy decisions, Orb\u00e1n held informal, separate consultations with members of the circle of experts and economists he formed in September 2011. It was at this meeting that some participants criticized the introduction of a single-rate tax. The government made these meetings public, and Orb\u00e1n met the eleven economists again in November 2011.<\/span><\/p>\n

However, in July 2012, the prime minister only met with a group of six people. According to the government’s statement at the time, the members of this select group were Zsigmond J\u00e1rai, P\u00e9ter \u00c1kos Bod, L\u00e1szl\u00f3 Csaba, Gy\u00f6rgy Sur\u00e1nyi, K\u00e1roly Sz\u00e1sz, the then president of the Financial Supervisory Authority, and P\u00e9ter Gottfried, who was Orb\u00e1n’s senior adviser on EU affairs. Unlike in the past, the heads of several financial institutions were not invited to this meeting. According to a source outside the circle of invitees, this could have been because the prime minister did not like the criticisms voiced by the former invitees.<\/span><\/p>\n

The political and professional circles around Orb\u00e1n also competed with each other. According to a former government official, Orb\u00e1n used his meetings with economists to create competition for Matolcsy. At the November 2011 meeting, for example, Istv\u00e1n Hamecz, then CEO of OTP Fund Management and one of the founders of Fidesz, said that international investor confidence could only be regained if there was a “change of personnel” in economic governance, indirectly calling for Matolcsy\u2019s firing. According to one participant, Matolcsy, who was present in the room, “turned red as a beetroot” as Orb\u00e1n listened to Hamecz’s comments on the subject, but did not comment.\u00a0<\/span><\/p>\n

During this period, “there was a fight for the soul of Fidesz”, said L\u00e1szl\u00f3 Csaba.There were disputes not only on economic matters but also on foreign policy. In foreign policy, the people vying for influence were, among others, foreign minister J\u00e1nos Martonyi and P\u00e9ter Gottfried, who was the chief adviser on EU affairs. According to the economist, the stakes of this battle were to what extent unorthodoxy would prevail and whether the country would move towards an illiberal system.<\/span><\/p>\n

This question was settled towards 2013, when most of the economists around Orb\u00e1n had been cut out, and the consultations ceased. J\u00e1rai, for example, resigned from his post as chairman of the Fiscal Council in early 2012, and days later said that an economic policy turnaround was needed because “Matolcsy was pretty worn out in the market”.<\/span><\/p>\n

It seemed that in the battle for the soul of Fidesz, the representatives of the previous line had lost. For Orb\u00e1n, this change was made easier by the evolution of international politics.<\/span><\/p>\n

III. THE ORANGE THREAD<\/strong><\/h2>\n
\n
\n
\n
\n<\/picture>\n
\"Orb\u00e1n

Viktor Orb\u00e1n and Jos\u00e9 Manuel Barroso in 2013 Photo: European Commission<\/em><\/p><\/div>\n<\/div>

<\/figcaption><\/figure>\n<\/div>\n<\/div>\n

Orb\u00e1n arrived in Brussels on 30 January 2013 with high hopes, despite the fact that his relations with the European Commission were not smooth. The body, led by the Portuguese Jos\u00e9 Manuel Barroso, was harshly critical of several measures taken by the Orb\u00e1n government.<\/span><\/p>\n

Orb\u00e1n wanted to ease tensions with this visit. He wanted the European Commission to lift an EU measure against Hungary. The EU had launched the so-called excessive deficit procedure, against Hungary because the country\u2019s budget deficit had exceeded the EU’s requirements for several years. The situation was so serious that Hungary was in danger of having part of its EU funds frozen by Brussels.<\/span><\/p>\n

At the meeting, Orb\u00e1n seemed to have convinced Barroso that the Hungarian government is serious about the austerity it has embarked on in recent years and is working hard to correct its deficit issues.The fact that the two politicians held their joint press conference after the meeting in a friendly atmosphere, laughing, was a sign of this. Orb\u00e1n spoke of a “very good meeting”, while Barroso said he was pleased with the open and friendly cooperation with the Hungarian government.<\/span><\/p>\n

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 <\/p>\n

In the months that followed, the Hungarian government did its utmost to meet the deficit target. A series of austerity measures were successful and Hungary was lifted out of the excessive deficit procedure in June 2013. Orb\u00e1n claimed this as a huge success, saying shortly afterwards that “never since we joined the EU have we been on such solid ground”.\u00a0<\/span><\/p>\n

But Orb\u00e1n’s joy was about much more than he revealed to the outside world. According to economist L\u00e1szl\u00f3 Csaba, who was still in contact with government politicians at the time, the Commission praised the Hungarian government’s handling of the crisis after 2010 during the Brussels talks. The European Commission appreciated that Hungary was able to manage the crisis on its own and, unlike Greece, did not need a financial rescue package.<\/span><\/p>\n

According to Csaba, the European Commission had rewarded this success by essentially telling the Hungarian government “do whatever you want to, we don’t care” by ending the excessive deficit procedure. According to the economist, this gave Orb\u00e1n a free hand in managing the Hungarian economy. <\/span><\/p>\n

“This was the start of a policy-driven economic policy,” <\/span><\/p><\/blockquote>\n

the economist said. From then on, political considerations became more important in economic decision making.<\/span><\/p>\n

One example of this was the government’s order to lower utility tariffs for the public from 2013. In the years that followed, the reduction of utility bills became one of the government’s most important political products and played a major role in Fidesz’s two-thirds electoral victory in 2014. However, the government no longer paid attention to the longer-term effects of the cuts. (For example, as a result of these measures Hungarian society was later caught completely unprepared for the energy crisis of 2022, when gas and electricity prices skyrocketed.)<\/span><\/p>\n

The reduction in utility prices is just one example of many of economic policies made purely for cultivating political power. Over the past decade and a half, there have been a number of government measures that have put businessmen close to the government or Orb\u00e1n personally in advantageous positions, from L\u0151rinc M\u00e9sz\u00e1ros to Istv\u00e1n Garancsi and the prime minister’s son-in-law Istv\u00e1n Tiborcz.<\/span><\/p>\n

According to a former government official who has known the prime minister for decades, these decisions showed that there was an “orange thread” in Orb\u00e1n’s thinking. By using the color of Fidesz’s logo, the source implied that Orb\u00e1n was treating the economy as a tool to achieve his power goals. Thus, according to the source, <\/span><\/p>\n

the prime minister has always subordinated long-term economic considerations to his current short-term political and personal priorities.\u00a0<\/span><\/p><\/blockquote>\n

According to people familiar with the matter, this does not mean that Orb\u00e1n ignores the economic profession. Many argue that the prime minister, originally a lawyer by training, has accumulated considerable knowledge of economic policy over the decades. But this knowledge has its limits.<\/span><\/p>\n

IV. SHORTCOMINGS\u00a0<\/strong><\/h2>\n
\n
\"Rog\u00e1n

Antal Rog\u00e1n is helping the centralized governing Photo: Orb\u00e1n Viktor \/ Facebook<\/em><\/p><\/div>\n<\/div>\n

<\/div>\n

Here are some of the limitations to Orb\u00e1n\u2019s economic knowledge that economists experienced at his meetings between 2010 and 2014.\u00a0<\/span><\/p>\n

At the meetings, the prime minister put forward several ideas on how to increase the competitiveness of the Hungarian economy. On one occasion, for example, he argued that US manufactured goods are more competitive than Hungarian products because energy is cheaper in the US. If energy prices were lowered in Hungary, the Hungarian economy could also benefit, the prime minister argued, according to one of the participants in the meeting.\u00a0<\/span><\/p>\n

The economists, shocked by the suggestion, tried to explain to Orb\u00e1n that this goal could not be achieved by state intervention in energy prices. They told him that Hungarian products could be made more competitive by producing industrial goods that require less energy and by trying to perform better in sectors for which the country has the right capabilities.<\/span><\/p>\n

But Orb\u00e1n is not easily persuaded by such arguments based on long-established economic principles. According to one government official, the prime minister tends to give more credit to those who come up with innovative ideas than to those who are more conventional in their economic thinking. Orb\u00e1n believes that his government can change the status quo and “that there is an opportunity that no one but us can see,” the official said.<\/span><\/p>\n

This does not mean that Orb\u00e1n is only interested in ideas that seem irrational. “His economic knowledge far exceeds that of the heads of government of neighboring countries,” said one government source. Several people familiar with the prime minister’s economic affairs pointed out that he is also “quick-witted” and understands the context almost immediately, although he often looks for “the impact of certain things on his personal power”.<\/span><\/p>\n

However, it is noticeable that he has not had any formal training in economics. According to an economist who used to regularly consult the prime minister, Orb\u00e1n is less at home with intangible issues such as financial markets or the functioning of the banking system.<\/span><\/p>\n

An advisor connected with the government provided examples of the prime minister’s economic shortcomings. According to the source, the prime minister appeared particularly unaware of the details of the unorthodox measures introduced after the change of government in 2010. <\/span><\/p>\n

“He did not have important information, his briefing was very one-sided,” <\/span><\/p><\/blockquote>\n

said the source. Orb\u00e1n had only learned about the damage that certain planned measures could cause from a bank’s analysis, not from the government apparatus. The analysis had an effect on Orb\u00e1n, who had reconsidered some of the planned measures and mitigated their impact.<\/span><\/p>\n

Similar shortcomings became even more prevalent later, especially after the 2018 election victory, when Orb\u00e1n further centralized his power.<\/span><\/p>\n

The prime minister took control of the organization of government work. It was then that an office directly under Orb\u00e1n was created, the Prime Minister’s Government Office. According to a source close to the government, this office informs Orb\u00e1n about what issues and proposals are being worked on in the various ministries. Orb\u00e1n also uses the Cabinet Office to ensure that his specific decrees will be passed through the government system.\u00a0<\/span><\/p>\n

Political governance coordinated by Antal Rog\u00e1n, one of the prime minister’s closest allies, operates separately. Rog\u00e1n, who heads the Prime Minister’s Cabinet Office, interprets the current political directions and the most important communication messages for the political state secretaries of the ministries and the Fidesz parliamentary group. According to the source, the government offices are taking over more and more tasks from the local governments. In 2018 they were still supervised by Bence Tuzson as the state secretary for civil service of the Prime Minister’s Office.<\/span><\/p>\n

“The whole system is about using power to get everything to the bottom of the system,” the source close to the government said. Orb\u00e1n imposes his political will through the state apparatus. However, the source said, feedback within the system does not work well, with those at lower levels not always daring to say when they disagree with a decision or when they are experiencing negative consequences. As a result, some information, such as the unintended consequences of decisions on health care and education, does not reach the prime minister quickly enough.<\/span><\/p>\n

A similar process took place when the government committed itself to building battery factories. <\/span><\/p>\n

V. BRING ON THE CAPITAL<\/h2>\n
\"\"

Orb\u00e1n bets on the e-mobility Photo: Orb\u00e1n Viktor \/ Facebook<\/em><\/p><\/div>\n

In early autumn last year, nearly a dozen people gathered for an important technical meeting in the Hungarian company MOL’s former headquarters, which is now the Ministry of Energy, in the 11th district of Budapest. Some members of a panel of the Hungarian Academy of Sciences explained to minister Csaba Lantos and his colleagues what they thought about the government’s battery factory construction program.\u00a0<\/span><\/p>\n

Although it was a controversial issue, the Presidential Committee on Sustainable Development of the Academy of Sciences tried to be very careful. One source familiar with the workings of the panel said that when they were working on their position paper on battery production, they “really chewed over every sentence,” and were ensuring complete accuracy.<\/span><\/p>\n

However, despite its cautious wording, the draft drawn up by the committee contained serious criticisms. The members of the committee were concerned that it was not clear to the public or the scientific community how the huge energy and water needs of factories would be met. The committee also warned the government to be cautious because it is far from certain that electric cars will dominate transport in the future. They raised the question of “whether it is appropriate to base an economic development program of this scale on a single technology,” they wrote.\u00a0<\/span><\/p>\n

Once the staff had compiled this paper, it was sent to the Ministry of Energy, which is responsible for the area, prior to its publication. Lantos then invited some members of the committee to meet and discuss the paper with him.\u00a0<\/span><\/p>\n

According to sources familiar with the details of the meeting, the minister was surprisingly receptive to the criticisms. In general, he said that he believed that electric cars and their batteries were the future, but he did not contest what was written in the document. After the committee members took the minister’s requests into account, they published their position on the Academy’s website on 10 October last year.<\/span><\/p>\n

According to sources familiar with the details of the meeting, the Ministry of Energy did not particularly object to the report because, among other reasons, by that time it had been suggested by several people in the government that the installation of battery factories had not been sufficiently thought through. (Although the Ministry of Energy has now told Direkt36 that after the meeting the issued document was “extended with a petition-like summary section” and they disagree with it. The chairman of the committee, evolutionary biologist E\u00f6rs Szathm\u00e1ry, said he was surprised by this because the summary “does not contain anything new compared to other parts of the resolution”. )<\/span><\/p>\n

Despite the concerns that have been raised, there is little sign that the government is seriously reconsidering its position on factory construction, largely because the prime minister continues to firmly believe that factories like these are key to economic growth.<\/span><\/p>\n

According to a businessman formerly associated with Fidesz’s senior leadership, Orb\u00e1n’s thinking is characterized by a lack of interest in various economic indicators. <\/span><\/p>\n

“Orb\u00e1n thinks that capital has to be brought in, because if there is capital, there is growth, and if there is growth, there is wage growth,” <\/span><\/p><\/blockquote>\n

the source said.\u00a0<\/span><\/p>\n

According to the businessman, the prime minister’s historical reading experiences played a big role in the formation of this belief. According to the source, Orb\u00e1n believes that the Austro-Hungarian Empire is not remembered by people for the extent of corruption and economic problems it had, but is seen as a golden age, given the many things that were built in the country at the time.<\/span><\/p>\n

Orb\u00e1n has put this idea into practice. From the moment he came to power in 2010, he advocated an economic policy based on increasing employment and encouraging capital inflows. During this period, the country has received a lot of EU funding and the government has delivered on its target of creating one million new jobs.<\/span><\/p>\n

However, this growth model, which economists call “expansionary,” fizzled out around 2018-2019. It is a model that requires more and more capital and more and more additional work every year to maintain economic growth. By this time, however, labor shortages were becoming an increasing problem for companies in Hungary. This was exacerbated by the fact that in the following years, EU funds dried up as a result of EU proceedings against the Orb\u00e1n government for violating the rule of law.<\/span><\/p>\n

Several economists critical of the government argued that this was the right time for the country to start shifting to a different economic model. They argued that since the labor market in Hungary no longer required the creation of jobs in large numbers, the focus should be on making workers as skilled as possible, thus increasing the value of Hungarian production. They call this the intensive growth model.<\/span><\/p>\n

But Orb\u00e1n has stuck to his original model, despite the circumstances changing. As a result of this, a succession of increasingly large-scale Asian battery and electric car investments have been announced since 2021, with the Hungarian government providing billions of forints in funding. However, as there was no available domestic workforce, the labor needs of the new factories were partly filled by foreign guest workers.<\/span><\/p>\n

“They had to give their own voters something to believe in,” said one economist who has followed the government’s industrial policy closely. In the midst of the economic difficulties following the COVID epidemic, the government was trying to give hope to their voters and pro-government business circles through this industrialisation program.\u00a0<\/span><\/p>\n

Join the Direkt36 supporters’ group and get insight into investigative journalism! Details \u2192<\/a><\/p>\n

The economist said that in many ways the factory building seemed logical. There is an agreement on the EU’s climate protection measures, which would ban internal combustion cars from 2035. “The Chinese connection has also been established,” the economist said, adding that the Hungarian government, which stresses the importance of opening up to the East, can show that Chinese giants such as CATL and BYD are developing in Hungary. The source also says that a government with a two-thirds majority in parliament can deal with protests against the environmental impact of the factories\u2019 operations.<\/span><\/span><\/p>\n

But the picture is much more nuanced than that, and last year many in government started to see it. By this time, a growing number of respected experts were criticizing the battery factory construction. These included, for example, the researchers from the Academy who published their report last autumn.<\/span><\/p>\n

Concerns were further heightened by the fact that by the beginning of this year, sales of electric cars in Europe had fallen so much that the impact was felt in Hungary. By May, battery production in the country had fallen by 32 percent compared to the same month last year. According to a government official with insight into the issue, government leaders were becoming seriously concerned about the situation and calculated that many of the previously announced electric car and battery investments were likely to be smaller than originally planned.<\/span><\/p>\n

But Orb\u00e1n remains determined. This was also clear from his speech in Tusn\u00e1df\u00fcrd\u0151 at the end of July this year, in which he indicated that he still considers the automotive industry to be the driving force of the Hungarian economy. “We must preserve Hungary’s character as a production center, because only here can the domestic workforce find 100 percent employment,” he said.<\/span><\/p>\n

Bence Sz\u00e9chenyi contributed to the translation of this article.<\/em><\/p>\n

Cover picture: Somogyi P\u00e9ter (szarvas) \/ Telex<\/em><\/p>","protected":false},"excerpt":{"rendered":"

Although Viktor Orb\u00e1n has amassed considerable knowledge of economics over the decades, he sometimes has serious shortcomings. And he has now become the prime architect of economic policy, while creating a system in which it is difficult to get back to him when there is a problem with an idea. The final part of the Direkt36 series of articles on the Hungarian economy is the behind-the-scenes story of Orb\u00e1n’s economic policy.<\/p>\n","protected":false},"author":25,"featured_media":11551,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"single-telex.php","format":"standard","meta":{"footnotes":""},"categories":[730],"tags":[727,701,735,734,731,733,744,101,737,109,719,732,743,168,205,736,215,722,259,315,681],"ppma_author":[547,545,522],"aioseo_notices":[],"fimg_url":["https:\/\/www.direkt36.hu\/wp-content\/uploads\/2024\/10\/orban_gazd_orban.jpg",2250,1500,false],"authors":[{"term_id":547,"user_id":25,"is_guest":0,"slug":"pufi","display_name":"Andr\u00e1s Szab\u00f3","avatar_url":{"url":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Szabo-Andras.png","url2x":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Szabo-Andras.png"},"author_category":"","user_url":"","last_name":"Szab\u00f3","first_name":"Andr\u00e1s","job_title":"","description":"[:hu]Andr\u00e1s nyolc \u00e9vig dolgozott \u00fajs\u00e1g\u00edr\u00f3k\u00e9nt az Orig\u00f3n\u00e1l, \u00e9s t\u00f6bb \u00e9vet elt\u00f6lt\u00f6tt az Indexn\u00e9l \u00e9s a vs.hu-n\u00e1l is. A Direkt36-n\u00e1l az orosz-magyar kapcsolatokkal, a Fidesz-k\u00f6zeli \u00fczleti k\u00f6r\u00f6k tev\u00e9kenys\u00e9g\u00e9vel, \u00e9s az Orb\u00e1n-korm\u00e1ny d\u00f6nt\u00e9shozatal\u00e1nak folyamataival foglalkozik. 2011-ben G\u0151b\u00f6ly\u00f6s Soma-d\u00edjat, 2010-ben pedig Min\u0151s\u00e9gi \u00fajs\u00e1g\u00edr\u00e1s\u00e9rt d\u00edjat nyert, mindkett\u0151t az\u00e9rt a cikksorozat\u00e1\u00e9rt, amely a Gyurcs\u00e1ny-korm\u00e1ny egyik korrupci\u00f3gyan\u00fas ingatlanelad\u00e1s\u00e1t mutatta be.[:en]Andr\u00e1s worked eight years as a journalist at Origo, a then prestigious online news site, but also spent several years at Index and vs.hu news outlets. At Direkt36 he covers Russian-Hungarian relations, activities of business circles close to Fidesz, and political decision making processes of the Orb\u00e1n government. In 2011 he received the G\u0151b\u00f6ly\u00f6s Soma Award dedicated to investigative journalism in Hungary, and in 2010 he won the Quality Journalism Award, both for a series of articles that focused on a corruption case connected to the former Socialist-led government.[:]"},{"term_id":545,"user_id":29,"is_guest":0,"slug":"patrik","display_name":"Patrik Galavits","avatar_url":{"url":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Galavits-Patrik.png","url2x":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Galavits-Patrik.png"},"author_category":"","user_url":"","last_name":"Galavits","first_name":"Patrik","job_title":"","description":"[:hu]Az NKE-n szerzett igazgat\u00e1sszervez\u0151 \u00e9s nemzetk\u00f6zi igazgat\u00e1si diplom\u00e1val el\u0151bb multikn\u00e1l dolgozott, innen v\u00e1ltott az \u00fajs\u00e1g\u00edr\u00e1sra. Volt riporter \u00e9s m\u0171sorvezet\u0151 a Klubr\u00e1di\u00f3n\u00e1l, podcastot k\u00e9sz\u00edtett \u00e9s cikkeket \u00edrt az Azonnali.hu-n\u00e1l, majd a Forbes Magyarorsz\u00e1g munkat\u00e1rsak\u00e9nt dolgozott. 2019-ben \u00f6szt\u00f6nd\u00edjjal k\u00e9t h\u00f3napot a nyugat-n\u00e9metorsz\u00e1gi k\u00f6zszolg\u00e1lati m\u00e9di\u00e1n\u00e1l, a WDR-n\u00e9l t\u00f6lt\u00f6tt, 2022-ben az Egyes\u00fclt \u00c1llamok k\u00fcl\u00fcgyminiszt\u00e9riuma \u00e1ltal szervezett program, az IVLP r\u00e9sztvev\u0151je volt. T\u00f6bbsz\u00f6r jel\u00f6lt\u00e9k Min\u0151s\u00e9gi \u00dajs\u00e1g\u00edr\u00e1s\u00e9rt-d\u00edjra, 2021-ben az egykori balettint\u00e9zeti vissza\u00e9l\u00e9seket \u00e9s zaklat\u00e1sokat felt\u00e1r\u00f3 cikksorozat\u00e1\u00e9rt Transparency-Soma-d\u00edjra.[:en]Patrik graduated in Public and International Administration from the National University of Public Service. He started out as a private sector employee at multinational corporations before he ventured into journalism. He became a reporter and radio show host at Klubr\u00e1di\u00f3, then he produced a podcast and wrote articles at Azonnali.hu. Most recently he worked at Forbes Hungary. In 2019, he won a grant at WDR, a public broadcaster based in Germany. In 2022, he took part in an International Visitor Leadership Program for journalists, organized by the United States Department of State. He has been nominated for the Quality Journalism Award multiple times. His investigative article series involving abuses and sexual harassment at the Hungarian Dance Academy earned him a nomination for the Transparency Soma Award in 2021.[:]"},{"term_id":522,"user_id":0,"is_guest":1,"slug":"andraspetho","display_name":"Andr\u00e1s Peth\u0151","avatar_url":{"url":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Petho-Andras.png","url2x":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Petho-Andras.png"},"author_category":"1","user_url":"","last_name":"Peth\u0151","first_name":"Andr\u00e1s","job_title":"","description":"[:hu]Andr\u00e1s a Direkt36 egyik alap\u00edt\u00f3ja, szerkeszt\u0151je \u00e9s \u00fcgyvezet\u0151 igazgat\u00f3ja. Kor\u00e1bban az Origo vezet\u0151 szerkeszt\u0151je volt, miel\u0151tt a port\u00e1l r\u00e9sze lett a korm\u00e1ny propagandag\u00e9pezet\u00e9nek. Andr\u00e1s dolgozott a BBC World Service-n\u00e9l Londonban \u00e9s a Washington Post t\u00e9nyfelt\u00e1r\u00f3 rovat\u00e1n\u00e1l is. R\u00e9szt vett sz\u00e1mos nagy nemzetk\u00f6zi nyomoz\u00f3 projektben, k\u00f6zt\u00fck a Panama-iratok feldolgoz\u00e1s\u00e1ban. K\u00e9tszer is elnyerte a legjobbnak \u00edt\u00e9lt t\u00e9nyfelt\u00e1r\u00f3 cikkek szerz\u0151inek j\u00e1r\u00f3 Soma-d\u00edjat. T\u00f6bbsz\u00f6r tanult \u00f6szt\u00f6nd\u00edjjal az Egyes\u00fclt \u00c1llamokban: 2008-ban a World Press Institute programj\u00e1ban, 2012-13-ban Humphrey-\u00f6szt\u00f6nd\u00edjask\u00e9nt a Marylandi Egyetemen, 2019-20-ban pedig Nieman-\u00f6szt\u00f6nd\u00edjask\u00e9nt a Harvard Egyetemen. Andr\u00e1s t\u00f6bb magyar egyetemen is tan\u00edtott \u00fajs\u00e1g\u00edr\u00f3 kurzusokat.[:en]Andr\u00e1s is co-founder, editor and executive director of Direkt36. Previously, he was a senior editor for leading Hungarian news site Origo before it had been transformed into the government\u2019s propaganda outlet. He also worked for the BBC World Service in London and was a reporter at the investigative unit of The Washington Post. He has contributed to several international reporting projects, including The Panama Papers and the Pegasus Project. He plays a leading role in the production of Direkt36\u2019s documentaries, including The Dynasty, the award-winning film on the business empire of Viktor Orb\u00e1n\u2019s family. He won the Soma Prize, the prestigious annual award dedicated to investigative journalism in Hungary, three times. He was a World Press Institute fellow in 2008, a Humphrey fellow at the University of Maryland in 2012\/13, and a Nieman fellow at Harvard University in 2019\/20. Andr\u00e1s has taught journalism courses at Hungarian universities.[:]"}],"tag_names":[{"name":"akkugy\u00e1rak","slug":"akkugyarak"},{"name":"akkumul\u00e1torgy\u00e1r","slug":"akkumulatorgyar"},{"name":"byd","slug":"byd"},{"name":"catl","slug":"catl"},{"name":"chik\u00e1n attila","slug":"chikan-attila"},{"name":"csaba l\u00e1szl\u00f3","slug":"csaba-laszlo"},{"name":"eur\u00f3pai bizotts\u00e1g","slug":"europai-bizottsag"},{"name":"European Union","slug":"europai-unio"},{"name":"fenntarthat\u00f3s\u00e1g","slug":"fenntarthatosag"},{"name":"Fidesz","slug":"fidesz"},{"name":"gazdas\u00e1g","slug":"gazdasag"},{"name":"j\u00e1rai zsigmond","slug":"jarai-zsigmond"},{"name":"jos\u00e9 manual barroso","slug":"jose-manual-barroso"},{"name":"China","slug":"kina"},{"name":"Hungarian National Bank","slug":"magyar-nemzeti-bank"},{"name":"magyar tudom\u00e1nyos akad\u00e9mia","slug":"magyar-tudomanyos-akademia"},{"name":"Gy\u00f6rgy Matolcsy","slug":"matolcsy-gyorgy"},{"name":"nagy m\u00e1rton","slug":"nagy-marton"},{"name":"Viktor Orb\u00e1n","slug":"orban-viktor"},{"name":"P\u00e9ter Szijj\u00e1rt\u00f3","slug":"szijjarto-peter"},{"name":"varga mih\u00e1ly","slug":"varga-mihaly"}],"category_names":[{"name":"Orb\u00e1n and the economy","slug":"orban-es-a-gazdasag"}],"_links":{"self":[{"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/posts\/11543"}],"collection":[{"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/comments?post=11543"}],"version-history":[{"count":8,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/posts\/11543\/revisions"}],"predecessor-version":[{"id":11573,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/posts\/11543\/revisions\/11573"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/media\/11551"}],"wp:attachment":[{"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/media?parent=11543"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/categories?post=11543"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/tags?post=11543"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/ppma_author?post=11543"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}