Weak Hungarian economy seriously hit by the crisis

Hungary
Institute for World Economics of the Hungarian Academy of Sciences
 
In Hungary, the focus of current public discourses is the country’s critical situation due to economic recession. In fact, Hungary is extremely vulnerable because the economy has already been in bad shape for the past couple of years. Contrary to all other new member states, Hungarian growth, real convergence and gross fixed capital formation has been sluggish since accession; unemployment and inflation as well as interest rates were rising, and public debts have been increasing (diverging from and not converging to the Maastricht limit of 60 percent of GDP). In parallel, a huge public deficit was accumulated in 2006 (above 9 percent) which the government started to cut back via restrictions on the expenditure side but without any major reform on the revenue side. The restrictions and now the effects of the crisis are seriously felt by the majority of the population. Layoffs are reported every day, and the great number of citizens who are indebted in foreign currencies find themselves now in huge trouble, as the exchange rate of the Euro skyrocketed from 230 Hungarian Forint ( in August 2008) to well above 300 in February 2009.
 

Hungary a champion of further EU enlargement strengthening regional stability

Hungary
Institute for World Economics of the Hungarian Academy of Sciences
 
Hungary continues to be committed to the enlargement of the European Union – primarily integrating the countries of the so-called Western Balkans. According to the new Hungarian External Relations Strategy “deepening co-operation among the countries of the Western Balkan region, their long-term stability, security, democracy, and their road to a market economy”[1] belong to the core of Hungarian national (geopolitical) interests. The Strategy underlines that “the most effective way to achieve this in the long-term is to secure the Euro-Atlantic integration of all of its countries”.[2] Hungary supports the ‘individual merit’ approach whereby the countries well prepared for Euro-Atlantic integration “should not suffer because of lagging behind of others”. On the contrary: “their progress should serve as an encouraging example to the countries left behind, showing that effective preparation brings about the desired outcome”.[3]
 

Dynamic French Presidency – benchmark for the Czech Republic

Hungary
Institute for World Economics of the Hungarian Academy of Sciences
 
According to the opinion of the Hungarian government[1] the French Presidency successfully fulfilled its commitments concerning the presidency priorities: reaching agreement on the Energy-Climate Package and the health check of the Common Agricultural Policy, adoption of the European Pact on Immigration and Asylum, strengthening the European Security and Defence Policy, and launching the “Barcelona Process: Union for the Mediterranean” initiative.
 
Although the original priorities were overshadowed by a number of unforeseen crises and unexpected situations – such as the Irish rejection of the Lisbon Treaty, Russia's invasion of Georgia, or the global financial and economic crisis – France nonetheless played an active role at the EU level in all these matters. Its dynamism and effectiveness was very well demonstrated during the management of these situations so the Union was able to act together and find rapid and reasonable solutions. The French Presidency also managed to insure the unity of the European Union on the international scene, and to prove that the Union does play a global role in many areas with global responsibility and commitment.
 

Global crisis – fragmented answers

Hungary
Institute for World Economics of the Hungarian Academy of Sciences
 
The financial crisis hit the EU member states in different ways therefore the reactions to it have not been uniform either. In fact, a joint supranational approach could not be applied due to the fact that economic policies belong to national competences – only their coordination is effectuated at the EU level. These are the reasons why the EU does not have a single strategy to fight the crisis. The European Economic and Recovery Plan of 200 billion Euros proves this fact very well: 170 billion is originating in the national budgets, while 15 billion would be set aside from the EU budget and 15 billion could come from the European Investment Bank. Such a significant amount of money injected into the troubled economies of Europe may quickly entail the increase of budget deficits in the Eurozone countries threatening the Euro’s stability and also showing a bad example to the member states still outside the single currency area. So all in all, this is far from a genuine European response to the problem – and this criticism is shared by many Hungarian experts.[1]
 

Balanced and fruitful EU-US ties

Hungary
Institute for World Economics of the Hungarian Academy of Sciences
 

A strong pro-Lisbon and future-oriented stance

Hungary
Institute for World Economics of the Hungarian Academy of Sciences
 
According to the official standpoint of the Hungarian Ministry of Foreign Affairs, although Hungary regretted the outcome of the Irish referendum in June 2008, it supported the view to respect the decision of the Irish people.[1] It is important to emphasize that this was not the first time when the Union had to face a negative vote on a treaty. After the Irish ‘No’, it is of utmost importance to find a solution that is legally and politically acceptable for Ireland, the other 26 member states and the EU as a whole. Political and economic issues in the second semester of 2008 proved that there is a real need for a coherent Union that can react to challenges quickly and that is close to its citizens.