CSATLAKOZZ!
HÍRLEVÉL
2011.06.02

What Hungary can offer Europe and the world

Article of Mr. Navracsics is deputy prime minister of Hungary in The Daily Telegraph.

Despite all the attention that has been given to European debt issues in recent weeks, two other milestones in EU affairs will be marked this month. Hungary's Fidesz government turns one year old; and Hungary will complete its six-month stint in the Presidency of the EU.

It has been an exhilarating, at times torrid, year. It has also been a year in which Hungary has shown its willingness to play a leadership role at the heart of Europe, and to extend the dream of Europe to her neighbours. It has been an honor to lead Europe during a tumultuous time in European and world affairs. When it started, nobody imagined we would witness the events that have unfolded in North Africa.

These events have a special poignancy for Hungarians. Twenty years ago we too found the courage to throw off an oppressive tyranny and stake a claim for our freedom and self-determination. It has been a source of particular pride that we, together with colleagues from Central Europe, have been able to share our experiences with the new democrats of North Africa and offer advice on difficult transition issues.

There is still much we want to achieve in the remaining days of our Presidency. In particular, we will push as hard as we can to ensure that Croatia's accession talks are concluded, giving our close neighbour a vision for joining the EU.

The accession of the Balkan countries has long been a priority for Hungary. The historic tragedy of the region has cast a shadow over of our own national story. The arrest of Ratko Mladic clears a path for Serbia to join and we will press our more recalcitrant EU partners to extend the promise of a more secure and prosperous future to all the people of the western Balkans.

They are policies and priorities that reflect central European realities as much as western European ones; and they are policies that seek to extend the promise of Europe to those at her frontiers in 2011. Just as 20 years ago Hungary dreamt of the security and prosperity that Europe offers, so do our neighbours today. Hungary's goal is to become central Europe's brightest beacon for economic and political advancement.

Another key goal is finalising the European Framework for Roma strategies. Hungarian policy makers have led this work form the start, reflecting our determination to improve the prospects of Roma people and ensure their reintegration into mainstream European life. We have succeeded in convincing our European partners that the Roma communities' social inclusion is crucial to the EU's future.

Our six months at Europe's helm have not been without glitches. We regret the furor over our new media law, which overshadowed the initial stages of our Presidency. And we were happy to enact the technical changes proposed by the European Commission to bring the Act into line with EU law.

Equally, our new Constitution caused concern in some quarters. But we remain unrepentant about its contents and the democratic process for enacting it. Hungary was the only post-communist country in the region that had not reformed its fundamental law following the democratic transition. We now have a new constitution that enshrines both the spirit of the nation and European values in full.

The domestic context to these initiatives is important. In 2010, the Hungarian people gave Fidesz an unprecedented mandate to reform the country following eight years of corruption under the socialists. We have wasted no time and for many the pace of change has been unsettling. But with an economy on the brink of collapse, delay was not an option.

Crucially, we have retaken control of our economy. We are now less beholden to the international financial community. Personal and corporate taxes have come down. Employment is rising and people are returning to the formal economy. After years of catastrophic mismanagement, the Hungarian economy is out of A&E and back on a growth track.

Many commentators expressed concern about our unorthodox approach to fiscal consolidation. But Hungary is deliberately taking a different approach to resolving the economic challenges it faces together with most other nations. We have resisted the wholesale spending cuts and tax rises implemented by others across Europe. Our approach is to encourage growth through job creation and tax reform. It is clear to us those austerity policies not only hinder economic growth but cause social harm.

Jobs are absolutely key to the programme. The New Széchenyi Plan, launched in January 2011, will seek to create 300,000 new private sector jobs by 2014, rising to one million by 2020. We have set out to completely change the country's attitude to work and to bring people back into the productive economy. This goal has been undermined in recent years by punitive taxes, perverse incentives in a corrupted welfare system and a lack of job creation. Without major structural changes, there will be insufficient growth.

We expect most employment opportunities to come from small and medium-sized enterprises. We are introducing a number of incentives to support their development, including easier access to more capital. Our goal is that SMEs will become the engine of Hungary's export-led recovery.

This is not to say that we are ignoring the need to cut costs in parallel. We are acting on our election pledge to tackle structural inefficiency and waste. Our structural changes were set out in the Széll Kálmán Plan in March 2011. The goal is to reduce government debt to a level below 70 per cent of GDP by the end of the government's term and eventually to 50 per cent of GDP, a concept also enshrined in our new constitution.

Our unorthodox approach is beginning to bear fruit. The economy has grown for six consecutive quarters. We have already completed our 2011 sovereign debt issuance at increasingly attractive prices. The Hungarian forint is one of the world's strongest-performing currencies this year, and the cost of insuring against a Hungarian default has plummeted to levels well below Spain.

We have made a good start but there is no room for complacency. There is a lot to do and my Government will not let up the pace of reform. The Government has set out an ambitious legislative programme. Starting in the autumn, Parliament will debate among other things Hungary's new local government structure, the new electoral law that will reduce the number of MPs from 386 to 200, and a reformed judicial system.

The Government promised no easy solution to the country's difficulties: hard work and sacrifice will both be required to make the country the most competitive nation in an enlarged, more secure and prosperous Central and South Eastern European region, which is our ultimate goal.

Tibor Navracsics is the Deputy Prime Minister of Hungary

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