Prime Minister Ferenc Gyurcsány’s speech at the 4th Conference of Honorary Consuls
(Unabridged full version)
“Ladies, gentlemen, dear friends,
I’m very grateful to you all for the opportunity to greet you here in Hungary. My gratitude extends even further for everything you do at your stations. What you do and how you do it stands in the service of Hungary. It serves, naturally, your own countries, too. Many of you are not Hungarian citizens. Many of you have Hungarian roots, while others feel deep affection for Hungary. What you do amounts to the excellent will to act and to help, a beautiful example of co-operation between nations. Again I am very grateful because you undertake such a significant role, tirelessly and selflessly. I ask that you bear it with strength, diligence and, oftentimes, with love. I ask you to preserve your perseverance and capacity to act, as well as your friendship for Hungary.
I’m glad for the chance to speak to you all today, primarily about Hungary; mainly about domestic politics. Madame Minister will speak to you about foreign policy. You should see that, today, this is really a complex subject. In the spirit of the friendship between us, in a friendly manner, I’d like to speak to you frankly.
Hungary’s regime change passed more or less unnoticed. It can be said, peacefully. Not like in Prague or in Berlin, or Bucharest, with calmly conferred agreements. The ordinary person, the man on the street, noticed very little of it. Why this happened this way is the subject of a longer socio-historical analysis which I shan’t go into here.
But it is undoubtedly the case that in a historical and political sense, time snapped in an instant in 1989. There is no connection—I’ll say this once again— in the historical and political sense between the third Hungarian Republic, that is today’s democratic Hungary, and the Hungary of 1989, which was based on the old and defunct constitution. The man of the street, my parents, my relatives and my acquaintances, didn’t have the chance to pin one particular moment onto what actually happened. Things didn’t happen as they did in Prague, where, in Wenceslas Square, the citizens of Prague rattled their keys, where the strong, democratising common experience for many showed that something had passed and something other had begun. It didn’t happen as it did in Berlin, where after weeks and months of ferment – in this Hungary played a special role in opening the border – a hundred thousand democratic wills, and the thirst for freedom, broke out, while later, the Berlin Wall was dismantled. Everyone was clear about the new beginning. The old could not endure.
In Hungary, for millions, this experience was not created. I believe that in this respect we are lucky. I say we are lucky because the third republic of Hungary was created without conflict. But for this fortune, just as for almost everything in life, there is a price to pay. This fortune, too, comes at a cost. This price is something we’ve been paying in the past few years.
What is this price? This price is what many millions of Hungarians are very gradually facing up to: what the new rules of the third Hungarian republic are; how a social-market economy, a democracy works in practice from day to day; how competition and solidarity figure. How do patriotic pride and an open Hungary sit alongside one another? What does co-operation mean within a democratic framework sitting alongside competition? How much of which is good? What does the responsibility of private ownership mean in the marketplace? What do the state, societal responsibility and what is the scope of state redistribution? How responsible is the state and how responsible are we for ourselves? How is it possible to feel national pride at the end of the 20th century and at the start of the 21st century in such a way that an open, democratic European order should not turn into nationalism? How can we, as European citizens, behave in such a way as to avoid being rootless world citizens and strong and proud patriots instead?
These are the biggest questions for us all. These are the questions that the majority of our Hungarian compatriots, with compelling strength, face; questions that other countries of the region – precisely because of their different changes of political system – do not.
This is precisely the reason that Hungary is struggling with the dilemma of how to mix this one-time artificial security provided by Socialism – I should add apparent security which went alongside restrictions on freedom – with the freedoms and democracy of the new market economy. Most of the time we’d like to have a bit of everything. More freedom, less responsibility: this is a real big societal, historical, political, cultural dilemma. We have been trying to solve this dilemma over the past few years together. Our arguments and conflicts at home in Hungary are rooted in all this. It is these deep social and historical dilemmas that are embodied everywhere – in everyday politics, in social conflicts and economic difficulties.
How do we stand in 2008? I regard 2008 as a turning point in Hungary’s economic life. The country stands after a very difficult couple of years. In many respects, facing up to and confronting after two years. What is it that we’ve had to face up to? That the 5-6 years of unchanged politics preceding 2006 could not endure. The politics of those years tried to build on the state, on providing greater welfare while continuously burdening the common budget; and this kind of politics created its own limitations. There came a moment when it was no longer possible to go forward along this path: when Hungary – thanks to earlier enacted welfare and modernisation programmes – had to face a budget deficit like no other in our region.
Just as a reminder: we hiked the salaries of certain civil servants by 70 percent and the wages of public servants by 50 percent. And we gave an extra month’s pension to pensioners, plus an extra month’s worth of family benefits. And meanwhile we doubled the motorway network in Hungary in 4-5 years. I shan’t carry on giving examples.
No one needs to be an economist to imagine that, at such a riotous tempo, in the end, for every 100 forints that the state got from the budget it spent 110 forints. Anyone who spends 110 forints for every 100 is forced to say after a while that now is the time to intervene in the process. This happened to us too. And while the rise in earnings brings feelings of wellbeing, the rise in social welfare brought conflicts; and that’s when we said, well, now we must stop. And this is true even if we know that the purchasing power of the average wage has increased by a third and the purchasing power of pensioners has risen by 40 percent, even after last year’s cuts. This is incomparable both in terms of the preceding decades and of the region. But when one must stop amid such a pace then certain significant tensions appear.
That is why the last two years have concerned how it is possible to readjust the belt. Not just once, but how to create the kind of structured transformations which makes the more efficient operation of the state sustainable. So we embarked on a series of transformations in public administration, in higher education and health care.
I can safely say that the electorate’s reaction in Hungary was typical of the rest of Europe. Last week in Paris I was with Nicolas Sarkozy and I confronted the fact that a year of a reform presidency was sufficient for the French right wing to lose every single town ballot, with the exception of two towns, in the local government elections. But I also see the example of Prodi, who for two years tried to launch less invasive reforms compared to Hungary and after that point was unable to maintain a governing coalition, and was then unable to govern in a minority. The end result was early elections. Or let’s look at the example of Gordon Brown: when world economic growth grounds to a halt, when big risks came into play as they did then, the one-time finance minister, who was so highly regarded, has so quickly wavered as prime minister under the current political and social circumstances.
Looked at in this perspective, it is not possible to disentangle the fate of Hungary’s reforms and European reforms or how a country reacts to health reform. Let’s compare the Czech Republic and Hungary now. In the Czech Republic the Constitutional Court annulled one or two reform measures. Now Czech unions are preparing to mount big demonstrations.
I think we are proceeding well if – while we try to transform the country – we of course take into account the electorate too, and understand that from time to time the fate of reform processes either pick up speed or come to a halt.
I can tell you that despite all the arguments of the past two years, all in all, in an economic and social-political sense, we have been successful. We have partially created the conditions for a good, modern, competitive Hungary. It is also true that, meanwhile, a very strong – let’s say anti-reform society and political majority – dictated how far we could go. But everything which has happened in the state economy is irreversible. Everything that has happened in higher education is irreversible. And so is the basis for Hungarian health insurance, which has been put in place so that today everyone knows that they must have valid insurance when they go to the doctor. The drugs market has become freer. These are all built into Hungarians’ everyday lives.
It is also true that after two years we can see very clearly, after obtaining the results and seeing the visible limitations, that the issue is no longer that of balance but of growth. How to reach a growth by 2 percent above the European average and maintain it at around 5 percent? We must apply ourselves in this direction. The government is working on this too.
Domestic political arguments naturally largely concern that there are those who would not like change, or at least openly in their politics, those who say that we should preserve everything as it is. I for one don’t agree with them. There are those who think that in order to change we must bring about further marked sacrifices in frontline services of the Hungarian welfare system. I do not for one find this acceptable. I think that we must find the kind of solution in Hungary which is all about a national compromise for the future that at once preserves the current level of social security while turning sources of growth to making Hungary stronger and more competitive both in terms of society and the economy.
The road, naturally, runs across a rethinking of the rules of investment, capital projects and labour output. In order to have it more worthwhile to work in Hungary and more worthwhile to make investments in Hungary. This is the main issue. We should create new jobs, stimulate labour output and thirdly we should make as many people as possible more capable of doing high quality work for a good wage. This is what the policymaking of the second two years centres on. For this, there is a need to deliberate over, and transform the tax and contributions system, refasten several elements of the social benefits system, and continue renewing the Hungarian schools and higher education and vocational systems.
These are the key issues: the tax and contributions system, social support and education. Doing so in such a way as not to imperil the equilibrium and provide more stimulation for capital and other investments. In this period one of the most important resources is European Union common development funding – putting a share of the total of our so-called structural and cohesion development funding towards fundamentally renewing Hungary’s intellectual, cultural and physical enterprise infrastructure.
The secret lies in people. Achievements in the first place are fathomed in terms of who is capable of more. This is precisely why Hungary, within the framework of the New Hungarian Development Programme, is implementing a strong social programme, expanding infrastructure. Insofar as this knowledge and these capabilities are given into the hands of people, they should be better capable of succeeding. A significant development programme for small and medium-sized enterprises is evolving and in the meantime there is fundamental renewal of the physical infrastructure, road network and rail tracks while towns and villages are being built.
The political tensions and disputes of the past two years – on one of the sides – have eased. Now the main force of the opposition does not seek solutions on the street but engages in discussion. This is important. This is a positive development. On the other side: the smaller of the parties that formed the coalition, the liberal party, stepped out of the coalition in the past few months. Obviously a matter of great interest is how to go forward.
The evidence before my eyes is that the majority in parliament is interested in continuing the modernisation programme which my government represents. I note that the standpoint and support of the liberal party which departed the coalition is not unconditional, but the essence, in this respect, is clear. All such measures which apply to the renewal of Hungary – boosting competitiveness in the interest of the economy and society while preserving balance – are measures which the liberals support. The precise form of support is secondary.
I find it probable that this government will fulfil its mandate until 2010 on the basis of parliamentary co-operation between the liberals and Socialists – whether this means renewed governmental co-operation or not is a matter for the future. In the final two years, the country’s economy is to grow at an ever quicker pace. I’ll just note that yesterday the central bank amended its growth forecast upwards. In the final two years, inflation is again on a declining path, the budget balance is set on the right course, incomes and consumption are again rising at a reserved and responsible tempo. Hungary will again present a picture of growth and productivity.
Behind this programme stands the kind of renewal of Hungary’s higher education which last took place in the period of Klebelsberg. The 160-billion-forint Hungarian Universitas programme undertook the entire transformation of Hungarian higher education. We are in the second half of this programme. The fundamental transformation of public education has begun with foreign language training, IT, natural sciences and early-learning development at its core.
And we are continuing the renewal of the health-care system with new provisions and new conditions which, for the first time, focuses on guaranteeing a service of better quality and greater predictability.
I know that from afar it has not been easy at times to make these things out. I know that there are too many disputes, and all of you here just see the surface of the arguments much of the time. But in parallel, I see in Hungary a country of great potential. The kind of country which naturally struggles with all sorts of challenges in its own way. It struggles to preserve and at the same time to transcend its own heritage. It struggles with how to integrate into the new world.
But you should all know that there is much for which Hungary and the Hungarian people deserve credit and respect, from afar, too. There is at least one item which almost always figures on the list. Here, in the heart of Europe, exists a people whose language is neither Slavic, Latinate nor Germanic, which has its own culture, which nurtures its independence lost over the centuries; which, moreover, reinforces its statehood, its national togetherness and rises and strengthens over and over again. I regard this as being worthy of respect; a beautiful achievement which entitles Hungary to get emotional from time to time.
The prime minister rarely gets a chance to be emotional. His job lies on the side of struggle rather than sentimentality. You are in a somewhat easier position in this regard. You all can afford to be sentimental.
Do not hold back; dare to love, and love this country with an open heart. And I ask you to help the Hungarian Republic, the Hungarian nation, in the future too!
Thank you for listening.”
(May 27, 2008)