July 20, 2013

Prime Minister addressed annual ambassadors’ meeting

Prime Minister's Speech at the Meeting of Hungarian Ambassadors (17 July 2013)

Good morning to all of you, Ladies and Gentlemen and an especially respectful greeting to our guests from India.

We have achieved our first success; we have averted the danger of the Minister of Foreign Affairs holding his Prime Ministerial speech. János [Martonyi] and I go back a long way. If I understand correctly, my job here is to make a short, provocative speech to launch the debate, after which there will be time for consultation. János, have I determined the genre correctly? And if necessary and questions arise that require the competence of the Minister of Foreign Affairs, we will also ask János to not hesitate in also taking part in this short consultation.

Ladies and Gentlemen,

How do we usually begin these things? We usually begin with the Prime Minister providing a short review of the state of affairs in Hungary. This is not necessarily a rational decision, because you know very well what the situation is in Hungary. But it is part of the ritual to provide a summary and some kind of interpretation of what is happening, where we began from, where we are heading, in what direction we will continue, and so this is what I shall do. I will of course provide a review of this kind. After that we usually choose a topic that is of special interest for some reason. Last time we discussed the opening towards the East, and I think this time it would seem justified to include a chapter relating to the European Union, after which we will continue on the basis of the questions put forward by our respected ambassadors. We have agreed with János, or rather the Minster of Foreign Affairs, that I will be holding a relatively short introductory speech, meaning we will then have more time for consultation, if you too are so inclined. And so, if on the basis of the past three years we must determined what we have achieved, then it is perhaps worthwhile conjuring up an image of the fact that after 2010 we had to reverse many bad processes, and the question was whether we would be successful in reversing these bad processes and beginning good processes. Let us have a look at what these bad processes were, that can be categorised as processes of crucial importance to a national economy and a nation state, and at to what extent we have succeeded in reversing them.

The first bad process was increasing government debt. We had to reverse growing government debt and turn it into decreasing government debt. We are doing well in this respect at the moment. There are only five countries within the European Union who have been capable of decreasing their government debt, and on top of things, we have succeeded in doing this for three years in a row, and if the internal discussion that is ongoing within the government with regard to the prepayment of the IMF loan that was taken on earlier comes to a close, and let's say we decide in favour and effect prepayment, then the reduction in government debt will become absolutely obvious, because of course a reduction in our net position, because we currently have a huge amount in the till, if we pay this back then the gross figures will also be in order.

The second thing: we had to transform the increasing budget deficit into a reduction in budget deficit, and this, we might say, is our most spectacular success. Because it isn't just us patting our own backs, but the European Union is patting us on the back too in the form of having lifted the excessive deficit procedure. This indicates that we have succeeded in setting the high level of budget deficit to a low level of deficit. This is the third year we have been under three percent and we have every chance, provided we don't throw our common sense out of the window, to keep the budget deficit under three percent throughout the upcoming years, because structurally, the performance of the Hungarian economy is currently capable of permanently keeping the deficit under three percent.

The third such trend-reversing change was about standing on our own two feet versus living off aid. The country was standing on the financial crutches of the IMF in 2010, and we succeeded in reversing this; today, the country is to all intents and purposes standing on its own two feet financially, because we are succeeding in maintaining the country from the financial markets. And so, if we decide not to draw on resources from an international financial institution to finance the Hungarian economy, as is the case today, but wish to do so purely from the markets, then we are capable of doing so. Not to mention the fact that the internal ratio of resources required for the monetary financing of the country have also changed favourably in that a significant proportion of personal savings are also moving in that direction. I may not be quoting the numbers exactly, but Hungarians owned around 600 billion forints worth of government bonds two years ago, and this number is now somewhere around 1,300 billion. This is no accident; this restructuring is the result of determined government policy.

The fourth negative tendency was the foreign currency loan system and handling the problem of foreign currency debtors. The burdens of people who had taken on foreign currency-based loans were rising continuously, and our task was to reduce these burdens. To this end, we applied three instruments. Early repayment in the case of private individuals, followed by a cap on exchange rates, and now the National Bank has launched a programme for enterprises that converts foreign currency-based loans into forint-based loans, so the weight and proportion of foreign currency-based loans within the national economy has fallen significantly.

The fifth bad tendency was increasing unemployment. We have all seen the figures for the past four-five months; unemployment in Hungary is decreasing. Parallel to this, while the level and rate of employment was once decreasing, the level of employment is now growing.

The next bad tendency was the tendency of decreasing wages. Those who make a living from salaries and not from capital, including state employees, suffered a continuous reduction in real term income in the three years prior to 2010. We have succeeded in reversing this tendency such that this year, incomes in both the private sector and the public sector have increased in real terms. The level of this increase is somewhere between 3 and 5 percent, depending on the number of children people have; families with children have experienced a more significant increase in income. The situation is similar for pensions. There was a continuous decrease in pensions until 2010, and as a result of three years of hard work we have now reached a stage where we have retained not only the purchasing power of pensions, but they have also enjoyed an increase in real terms this year. And then there's the issue of cuts in public utility rates. As we know, the continuous tendency in Hungary was for living costs to increase, and through cuts in public utility rates we have succeeded in setting the cost of living on a decreasing path. And as a final piece of data, the economy was shrinking in 2010, with GDP decreasing continuously. And now, in the first quarter of 2013 we see the first signs of GDP growth, and the situation will be similar in the second quarter, and in fact according to analysts it would be very surprising if the positive trend didn't continue throughout the year with a spectacular increase in the fourth quarter, and with economic growth increasing to an extent that will perhaps do even a little better than putting us on the podium in regional comparison.

And so in summary I would say that Hungary has made an extreme effort during the past three years. As a result, we have succeeded in transforming the bad tendencies into positive trends. This does not mean that no effort will be required in the upcoming years, but it does mean that extreme effort will no longer be necessary. Extreme effort is always required to reverse a trend, then when it is already on the right track that doesn't mean we don't need to work on things, but once it has been reversed it is enough to only work as much as normal people do. During the past three years we have had to work three times as hard, and not just us, not just you, but Hungarian labourers, Hungarian skilled workers and the Hungarian intelligentsia too. And so in summary the task, now that the country is on the right track and good tendencies are prevailing, is to keep the country on track. This is a task for the administration, and not an impossible task, including the upcoming elections.

And now please allow me to say a few words about the situation in Europe! I would like to say a few things about European politics. There is a decisive issue here, to which there is no clear answer at the moment. And this question goes like this: is the economic crisis, that began in America in 2008 but which, taking Europe hostage, is now putting a halt to the performance of the European economy, or at least decreasing its performance, a recession of the kind that is familiar from the history of the cycles of the world economy, and as such a short, transitional period – and the people of Central Europe have often been the victims of the illusion of nature that surrounds the question of what constitutes a short or a long time: occupation, stopover, temporary stopover, we are all familiar with these things, and so the question is whether the economic crisis that began in 2008 is a short, temporary period, and it has lasted five years now, we are into the sixth, or are these the first five years of a historically long period from the perspective of the European economy? In other words, is this a temporary recession or are we talking about a restructuring of the global economy, global politics and global power, that will keep Europe on a continuously declining path in the long term? People are not used to talking about this issue so openly, because political correctness has somehow become so prevalent that it has become difficult to even put forward questions rationally. But this is the truth, this is the true dilemma. If we view European politics from this perspective then it is clear that the ability to manage the crisis within the European Union from the point of view of the consequences of the financial crisis is, despite our wishes and interests, increasingly obviously falling apart into two groups. There are those in the eurozone, and those outside the eurozone.

Hungarian foreign policy was for a long time a successful part of the international efforts that related to the fact that yes, it is an undoubted fact of life that there are those who have a common currency and those who do not belong to this group, and it is clear that the conditions are totally different when existing with a common currency than when existing in the background of an independent national currency. Our aspiration was that this undoubtedly extremely important reality should be expressed to the smallest possible extent within the institutions of the European Union. Meaning that the situation should not arise – so as to make fun of our historical aspirations – whereby we are continuously attempting to belong to the European mainstream from the periphery, and when we finally do succeed in becoming part of the European Union then we feel that we have finally entered the core from the periphery, or at least are close to it, only for another structuring and categorisation to occur in the aftermath of which what we thought was the centre slides to a different position, such that although we are in the EU, we remain in a peripheral situation. Hungarian diplomacy has worked very hard to avert this situation during the past, let's say ten-eleven years or so, hasn't it, and I must say that things have been developing favourably. Whether this is related to our efforts or not is a much more difficult question; I think we could probably defend a position that states that there is a relationship, although we cannot be sure in this respect. However, as the crisis becomes increasingly deeper and drags on longer and longer, so our attempts become increasingly futile and the aspirations among countries who are members of the eurozone that they would rather solve their own problems among themselves and with their own institutions appear with increased force. If someone paid attention to the latest French-German discussions, then they will have already seen a clear example of this, although undoubtedly the real brutality of this new era will only gain full strength following the German elections, for obvious reasons. But we must also count on the European politics that holds separate talks and establishes separate institutions and procedures for the eurozone also gaining strength as far as the Basic Treaty will allow, that is to as great an extent as possible without the amendment of the Basic Treaty. Most recently it was during negotiations on the seven-year budget that the danger appeared on the horizon, it did not materialise into a concrete danger, but it appeared on the horizon, that perhaps the eurozone countries should have their own, separate budget. Luckily this did not become reality, because it would have posed a significant risk for us if the budget for the eurozone countries might possibly have decreased the funding available to non-eurozone countries within the financial framework. This is a very realistic assumption. And accordingly it is not in our interests for there to be two, separate budgets and we managed to keep it as an occurrence for the distant future, it didn't happen, but it is a good indication of the fact that we are standing on the brink of an internal regrouping. The eurozone will become increasingly institutionalised. And just between ourselves, this would seem rather logical, because we have spent years trying to explain to ourselves and to the world that it is possible to be part of a common currency without having a common budget, that it is possible to be part of a common currency without having, let's call it a common system for financing social inclusion. The truth is, that this is not unimaginable, and when there is prosperity in the global economy it is also possible, but the moment this prosperity disappears and a more difficult period ensues for the global economy, the maintenance of this state of affairs becomes impossible, that we may have a common currency, but we do not have a common budget, with all its consequences. Because if we have a common budget, then we must make joint decisions on our pension system and on our social system. There are thousands of consequences. And so in view of the fact that the crisis that arrived here from the United States was not over in two or three years it is obvious that the eurozone, if it wants to retain its currency, which is in everyone's fundamental interests, ours too, not just theirs, if it wants to retain its currency then it must implement an increasingly deepening integration within its economic policy. When we hold out prime ministerial summits in Brussels, a significant part of the discussions basically concern this topic in direct or indirect form. And so what I would say to us, to Hungarian foreign policy thinking, is that we must count on the institutionalisation of the eurozone being one of the determinative processes of the upcoming years, and that it will move forward with bigger steps than it has until now.

Whether this will lead to a successful eurozone, or if despite the integration the present crisis situation remains in place in the long term, is a question that nobody can answer, because of course the bureaucrats like to think that if they have established integration then that will mean immediate success. Whereas in fact it is just a prerequisite for success. All it means is that we can be competitive. But whether we will in fact be competitive depends on concrete economic policy, on concrete tax policy, on concrete investment policy, on the ratio of redistribution and market-generated income and on similar factors that affect competitiveness. But we are all aware of this, there are many here who were once part of the intelligentsia, and perhaps I can include myself; we always have an assumption that if we succeed in transforming a structure, it will lead to success. Whereas in fact structural change is only a prerequisite for success, because the real work begins afterwards. A system of regulations that enable competitiveness does not equal competitiveness. That still requires a lot of work from both the private sector and the public sector, and also from the financial sector and many other economic operators.

Well, this is roughly what is happening within the eurozone. We are not currently part of this zone; our position is outside this zone. And so what is in our interests? The first and most important thing that it is good to keep in mind is that the success of the eurozone is in out interests. The life of the eurozone countries and those countries outside the eurozone, including Hungary especially, are linked by so many factors; if you look at the export figures, if you look at import figures, investment data, you can see that a successful eurozone means a much greater chance of success for the Hungarian economy, and an unsuccessful eurozone significantly reduces the successes of the Hungarian economy. We must say so modestly, because we have much to be ashamed of prior to 2010; we joined the EU in 2004 and we ourselves caused a lot of trouble within the eurozone and for the eurozone prior to 2010, but the fact it that today, the unsuccessful nature of the eurozone is having a negative effect on the Hungarian economy. This is something we couldn't have claimed before. What we always used to say was that the eurozone and our links to the eurozone provide a significant upthrust to the Hungarian economy; today it is pulling us back. However, we are linked to it by so many strands that these cannot be severed. And so the question is: will the eurozone become successful, and therefore also contribute to our success, or will it remain a crisis-ridden zone, in which case the region which is responsible for 70-75 percent of our export-import will continue to have a negative effect on a Hungarian economy that would otherwise be capable of developing at a greater pace. This is not just a Hungarian dilemma; this is the dilemma of the whole of Central Europe.

If you take a glance at the economic figures then it is clear that if Central Europe were not a member of the European Union today, then there would be no economic growth in the European Union. In fact there would have been a very significant continuous economic recession for the past several years. The fact is that it is the Central European states that are keeping European economic performance in the positive range with regard to growth, which, having mentioned the fact that we must occasionally also relate to politics as members of the intelligentsia, is I think clear proof of the fact that the European Union made a strategic mistake after the wall came down in 1990 by only allowing membership to the countries of Central Europe in 2004, and by doing so it kept a huge potential for growth outside the borders of the European Union. Because if let's say in '95-'96, which would have in fact been possible, if there had been the political will the process could have been accomplished, so if Central Europe could have joined the European Union already in '95-'96, then the economic performance that Central Europe is today adding to the performance of the European Union would have appeared much sooner and more quickly. I would even go as far as to speculate that it is quite possible that a Europe that had already included the Central European economies for ten or fifteen years would have survived the 2008 economic crisis with much greater ease, but this is now a question for historians.

Getting back to our business, our primary interest as a consequence of our coalescence with the countries of the eurozone is that the eurozone be able to solve its own problem. The overstrung attention to the essence of things, which is so characteristic of Hungarian diplomacy and the Hungarian intelligentsia, naturally always includes the temptation to believe that we are capable of influencing it. I would ask you not to believe this. Whether the eurozone will be successful or otherwise is totally independent of what we do. So we can only pray and pass on our best wishes; we must deal with our own business and only the eurozone, if it can, is capable of putting itself in order. At the prime ministerial summits, we, with my colleague Péter Gottfried, repeatedly declare that we are on the positive side with regard to the deeper integration of the eurozone and the measures required to manage the crisis within the eurozone; we will not stand in the way of anything and will provide any help that is needed. What is generally needed is that we do not stand in the way of anything, because the complicated decision-making process could even make that possible, and so this is the most we can do for the success of the eurozone.

Getting back to ourselves, there is, however, one special interest for which we must fight day in day out in European politics. And in this case we do not need to fight nation states, we have a mine and debate field such as that too, but let's leave that until later perhaps, but we are up against Brussels and the bureaucrats. The idea that we must continuously fight Brussels about is that it is impossible to formulate uniform economic recommendations for the countries outside the eurozone, or to request or dictate a uniform economic policy. It is absolutely obvious that for instance Sweden, which is not a member of the eurozone, and Hungary face different challenges. And so our goal number two is that while the eurozone is becoming increasingly integrated, we continue to receive, or manage to retain, or succeed in expanding, depending on what is needed, the room for manoeuvre of our economic policy that is afforded to countries that are not part of the eurozone to decide on their own instruments of economic policy. Countries within the eurozone do not have this opportunity, because there a new system of economic instruments, an economic mix, has an immediate effect on other countries, but this is not true in our case. And accordingly it is a totally legitimate claim on the part of Hungary, that since we are not members of the eurozone, we should have the greatest possible room for manoeuvre to develop our own economic policy. This is a matter of continuous debate. Not because Brussels wants to repress us, that could be the topic of another lecture, but because there is a logic to bureaucratic thinking. People like to think, and this is true both within the framework of a nation state and within an international framework, that if they have an idea which they think will solve a problem, and they push forward with this idea, then they think that if only everyone understood this wonderful idea then nation state economies would clearly also work in a much better way. But we don't want to understand it, because from our point of view we think that this is not a good idea for us. For instance, if we take a look at the Commission's last recommendations for Hungary, then we can see that they made six or seven recommendations of which three were good, but three would have been catastrophic had we accepted them, and so in this respect we, against a tide of opposition that, not out of malice but because of a bureaucratic way of thinking that wants to squeeze everything into a uniform framework and interpret everything in a similar way, must continuously state with a national mentality: folks, the theory has been preceded by the facts. This is a key issue. Theory has been preceded by reality. Here is the reality of the Hungarian economy, and the following measures follow on from these facts, and not something that approaches the issue from a totally different perspective. We have our theories and we want to force them onto the world, no matter that the reality is totally different in Hungary than it is in Sweden. And when in fact we are both outside the eurozone. We must represent this way of thinking, that it certainly is legitimate and will remain legitimate during the next decade to eke out, maintain and protect room for economic policy manoeuvres for countries that are not members of the eurozone, forcefully in Brussels, because otherwise we will have economic policy measures forced on us that go against the interests of the people of Hungary and against the interests of the Hungarian national economy.

Let's take a look at what could be the possible problems. The biggest problem is the problem of selectivity. Although yesterday Péter Gottfried, when I was preparing for this lecture, told me that I should under no circumstances use this expression, because selective means discrimination, he said, and what should I use instead: targeted, you must say targeted. What am I talking about? What I mean is that in times of crisis normative economic policy instruments usually do not work. Whereas when there is no crisis, everyone would love to have normative regulations; ones that do not choose between participants, but are equally true for everybody. But my belief is that in times of economic crisis there is no room for normative solutions. I have never seen an economic crisis from which anybody has managed to climb out of successfully using normative, i.e. not selective, or as Péter would say not targeted, but general measures. So it is my belief that in times of crisis it is legitimate to use a selective or in other words targeted palette of measures and instruments. This is our great debate with the West at the moment. Or rather intellectually I would say that this is what lies deep down at the basis of our arguments. Let me list you a few of the targeted instruments of Hungarian economic policy. The Job Protection Action Plan. The Job Protection Action Plan is a contribution reducing factor. I am sure you are all well aware of the Job Protection Action Plan from the newspapers and from our information sheets. It was launched in January of this year. We are reducing contributions, but not everyone's contributions. We are reducing the contributions of the young unemployed, who begin work, and we are reducing the contributions payable by employers who take on young mothers after being on maternity leave, people who will soon be reaching retirement age and I believe also the long-term unemployed who are returning to the job market. We are reducing their contributions, but not those of everyone else. To give you a piece of defensive logic. And here's some attacking logic: if someone employs, for instance, a research engineer, then after a certain income limit the employer will have to pay a smaller contribution than they would otherwise do for employing more people. This is selective, or rather targeted. I have given you one such measure. It is my belief that in times of crisis non-normative, selective, targeted measures of this kind are the way to move forward. Let us similarly look at things on the other, distribution side, within the tax system. Selectivity must be introduced there too at such times. If we raised everyone's taxes at the same time we probably couldn't have exited the world of a budget deficit in excess of three percent or the continuous increase of government debt. What have we done to achieve this? We have introduced targeted tax increases. We said that this is valid for the bank sector, this for the telecommunications sector, this for the retail sector, and so on. Selectively, in a targeted manner. This is what the West objects to, and especially the western companies who operate here, because their view is that they, who have been so unlucky as to fall into a category that has become targeted, would like the burden that they need to pay to be distributed among the other economic operators so that they have to pay less. And so they, in time of economic crisis, demand a continued normative approach from economic policy, but that is impossible. Because if we provide a normative approach, we will never be able to make our way out of the crisis. It is thus a characteristic of economic crisis that it can only be conquered through targeted economic policy. This is the basis of the argument. And we must defend this policy, which centres on the fact that in times of crisis it is targeted measures that achieve results, in Brussels and in our bilateral relations with other European Union countries. If we took the time to review what measures other states have introduced in times of severe economic crisis, we wouldn't be surprised to find only such measures behind successful crisis management, during the great depression, for instance. But here's another one that I mention only very quietly: the German car bonus of a few years ago. It wasn't valid for all consumer items, only a specific one. And I could list many others, but for them these are exceptions and over there one does not admit to the things I am openly talking about here. And so without saying names, in larger countries with significant economic performance the economic operators would find it very difficult to accept an economic policy that promotes selectivity rather than a normative approach. I must note that the situation would have been the same here, except that the two-thirds majority enabled us to implement a selective economic policy. Without the two-thirds majority I think we would also have bitten off more than we can chew with an economic policy based on selectivity rather than the usual normative approach. However, all of these targeted economic instruments are under continuous attack. I would like to repeat that these must all be defended both individually and as a matter of principle, as a system of tools for managing the economic crisis that have proven successful so far. I repeat, modestly; our successes are not so huge and we have not enjoyed economic success for so long that we can talk to others as if we have succeeded and as if they have not. We are not there just yet. If it were thirty years earlier I would say, 'with modesty, comrades. The time has not yet come for our workers' consciousness to manifest itself in its entirety to the dastardly imperialists, but our time will soon come' [joking]; let us for the moment stick with a modest approach. We require even more results and an economic policy that remains successful in the long term.

And now let us investigate another issue that is the basis of our other, permanent argument with the EU. This is not independent of what I have just spoken about, the issue of normative versus selective. Namely, it is a valid question whether a nation state such as, for instance, Hungary, has the right to apply a selective economic policy of this nature according to the current Basic Treaty. According to the EU, the answer is not generally. And they are visibly trying to bring decisions that otherwise decrease the significance of this. We are in a continuous debate, which the press and patriotic people sometimes describe as a battle for independence. There is some truth in this of course, it isn't a bad expression and includes enough elements of reality for it to be a standpoint that may be spoken and stood by, although it is not really precise. Because what we are doing, while I repeat, it may be referred to as a battle for independence, is in fact simply balance protection. We do not want to break free from somewhere, which would seem a logical assumption in a battle for independence, but instead our aim is to maintain the state of balance in the current situation.  There is a state of balance today between the European Union, as a community, its rights, and the rights and freedoms of its nation states. We do not want this to change. What is happening isn't that we want to break free from this, but what is happening is that newer and newer recommendations keep surfacing – in a way that I in fact feel violates the Basic Treaty – and which represent a stealthy federative policy. And without our really debating them and really thinking them through in light of the Basic Treaty, newer and newer proposals are formulated to disintegrate this balance that exists between community and nation states. The most obvious example, let's say, is what is currently happening in the field of justice. Of course, we look at this from an economic perspective, because we feel it is aimed against Hungary, but there is more to it. To begin with: issues that formerly belonged definitively under the sphere of competence of nation states according to the Basic Treaty are beginning to be examined and evaluated in community space and according to the community's perspective, after which proposals are formulated. By what right? And I could mention several areas of this kind, and lecturers will I am sure be mentioning several such areas in the coming days, with regard to which it can be continuously felt that we have joined a community, that there was a balance, and that openly or implicitly, usually implicitly, they want to shift this balance in a stealthy manner. And so from this perspective Hungary is not fighting for a new independence, but is protecting the balance and the freedom that it was entitled to according to that balance, and we are not prepared to give up, we are ready for a debate. We also do not want to claim that it is not worth considering again and again whether this balance, which we established in 2004, is still justified. This can be considered, it may be talked about. This is a dynamic balance, because the world is changing and so obviously this balance must also adapt. This is something we can hold rational discussions about, but it is something that must be discussed. One cannot use stealth tactics to herd national spheres of competence over to the sphere of community law; that is out of the question. And accordingly we stand firmly by clear regulations, open negotiations and a system of regulations that applies to everyone. An unclear, community-nation state relationship with smudged contours is only good for the powerful, because the powerful can defend against stealthy centralisation; the weak, or the weaker, cannot. And accordingly our interests lie with clear speech, the language of legislation and the strictness and contouring of legal frameworks.  This is what we must aspire to. This is why I say that what we are doing is in fact balance protection. It meanwhile also protects our own independence, but it is intrinsically the protection of the balance. I mention this only because there are certain interpretations that when we speak about a battle for independence and national spheres of competence we in fact wish to do away with an earlier state of affairs and wish to distance ourselves from it. This is not the case, and we are in fact protecting a status quo that was established previously, and insist on open debate.

Is there a fact that justifies what I have just said? I have picked two facts which I think sufficiently corroborate this policy of balance protection. The transposition of community decisions into the national legal system; as far as the ratio of incorrectly transposed community regulations is concerned, this is 0.6% in Hungary. The ratio of incorrectly transposed regulations is 0.6%! This is in the midfield within Europe, one cannot say that everyone else always transposes community regulations into their national legal systems correctly except for Hungary; this isn't the case. This figure means that we only transpose 0.6 of them incorrectly or differently, and initiate debates on the subject, and this places us at about the European average. The other fact that shows that we are in a balance-protecting position is the issue of the implementation of the rulings of the Court of Justice of the European Union. Experience here shows that while the rulings of the Court are implemented in Hungary within an average of 6.8 months, the EU average is 17.6 months. So if I take a closer look it takes on average almost three times as long for a decision of the EU Court of Justice to be included in legislation within the European Union than it does in Hungary. This is a clear indication that we have an interest in European regulations. We have an interest in uniform, clear and transparent European regulations that apply to everyone. And here is a third piece of data that I wrote down for myself, that when the European Commission formulates these country-specific recommendations each year it usually makes a total of 150 or so recommendations, and according to the EU's own statistics they only receive a factual reply to 15 percent of them. Countries don't implement them, far from it! The Commission only receives a factual reply to 15 percent out of 150 recommendations. And so while here in Hungary we have developed a psychosis that if we do not act immediately we will be told off like naughty little boys, and that every single unorthodox step, even the very smallest, will receive punishment, that truth in fact is that of the 150 recommendations sent to the 27 member states only 15 percent receive a factual reaction or any reply at all, no comment whatsoever is made with regard to the rest. As if nothing had happened. Hungary does not behave in this manner. Hungary provides a factual, professionally supported reply to every single country-specific recommendation; we react 100% of the time. This means that we must deduct the Hungarian 100% from the EU average of 15%. This is how the full extent of the carelessness appears clearly before us in its full entirety. And so what it boils down to is that the stealthy amendment of the Basic Treaties is unacceptable, the stealthy amendment of the Basic Treaty will almost certainly lead to double standards because of the strength of the more powerful [countries], and will basically lead to the establishment of a bureaucratic empire in Brussels. And for this reason we must oppose this process openly, courageously and clearly.

Before you are gripped by the feeling that we are all alone once again, and that is an especially 'pleasurable' Hungarian feeling, isn't it, because on the one hand you imagine it to somehow be a negative feeling, but then again there is a kind of excitement in it too, that it is we who are alone, but before you think that this is the feeling that will soon grip this hall, I would like to indicate that this is not the case. We are not alone. I would recommend to everyone, if you have a little time, read the document published by the Dutch on this topic; it's called the Subsidiarity Review. The Dutch have just formulated it and have presented it to the EU as an official document. To which the reply was hey, this 'ever closer union' thing is over once and for all, and something different is on the menu now. To quote my colleague Péter Gottfried: and they are true believers, and so, lo and behold, even the Dutch, who are true believers have realised that things can't be done this way. And so this stealthy treaty amendment cannot be realised, it must be stopped, and the issue of subsidiarity must be put back on the table, rationally and seriously. And so it isn't even the case that we are alone, but even countries who did not join the EU together with us in 2004, and who do not belong to the new arrivals, the neophyte cases; we are speaking about old members, true believers, the founders, the Dutch after all. This is a very clear indication that there is something wrong within the system. And accordingly, if we find ourselves in and argument and a conflict ensues, and we find ourselves in a heated debate, it is not at all abnormal, but is a fully understandable, justified and everyday situation given the current state of the European Union and the European consequences of the global economic crisis. And so that other Hungarian way of thinking, which we also like very much but which has nothing to do with reality, whereby the world is in order if we are not involved in any conflicts at all, well this Hungarian way of thinking is totally useless. If we are involved in a conflict, then we are where we need to be. Because the nature of the world today is that it is full of conflicts. We shouldn't rush to overtake the Dutch, many have it right there; the roll of cannon-fodder may have its heroic gestures, but it does not pay off. And so in summary we need not rush to overtake the Dutch, but slowly, calmly, there, somehow keeping - those of you who have been in the army will know - keeping interval, nicely together with them and the others, because I mentioned only one, but there are a few more who sense this problem; we must move forward together with them.

Ladies and Gentlemen,

Finally, in closing the review of the past year, I would also like to express my thanks, because in the event, the Hungarian diplomatic corps have stood up and stood fast through difficult times. It has stood up for Hungary, and you have stood fast. Despite the fact that, I know, the Hungarian diplomatic corps is not trained for this field of conflict. I know very well that, for I can't tell you how many years going back, perhaps the older ones among you know better than I do, there has been a culture within Hungarian diplomacy according to which if there is no conflict, then things are as they should be. This is a fallacy! We now find ourselves in a world during the past three years, in which Hungary is standing firmly by its national interests, and this involves conflict. And it is my opinion that in this world, in which conflict is the status quo and not a lack of conflict, a diplomatic corps trained for a different routine has done an excellent job. It has performed well. When needed, and I can recall only very few exceptions, when needed, our ambassadors stood up in proper time, when needed they faced heated debate and stood fast, and so in this environment that is new to everyone, and which most certainly poses a new cultural challenge for you, the Hungarian diplomatic corps has performed well this year and during the past three years.

What I expect from you, respected Ladies and Gentlemen, is that you continue to expand Hungary's economic opportunities during the course of your work. Expand Hungary's economic opportunities within the European Union, and outside it: westerly wind, opening towards the east, in every area. Your most important task is to expand Hungary's economic opportunities and, where necessary, to defend Hungary's sovereignty. These are my two requests, or rather expectations, in your regard. This is not impossible, because Hungary has by now achieved enough results to appear as a strong, proud and confident country on the international stage. But the image of a strong, proud and confident country can only be portrayed by strong, proud and confident people. If someone does not feel the part, if they do not look the part, then they may use the words that I am using but to no avail, they will not give the impression of being the representative of a strong, proud and confident country. I would like to ask you to be brave, be stalwart, face conflicts head on, and where required, to stand up for Hungary's interests! You will be receiving bonus points in the future every time you stand up and show bravery in this fashion.

Thank you for your kind attention.

Prime Minister’s Office