Presidency stands up for stronger economic governance

Invoking the proverb “better is the enemy of good”, the Hungarian Premier claimed at his press conference on 5 February. The Franco-German idea of economic policy coordination “goes way beyond the package of six legislative proposals”, aimed to reinforce economic governance, the implementation of which is the Presidency’s main goal. “You can think about a better idea, but you should first carry out the good one”, Mr Orbán said and added, “We should not be confused by an idea which is better than good: the coordination of the economic policies of 17 member states.”

Radical Franco-German proposal

Mr Orbán mentioned the plan to set up a common retirement age, a uniform corporate tax rate and the incorporation of fiscal constraints in member states’ legal and constitutional systems, as key elements of the German and French idea, referred to in the annex of the conclusions of the European Council’s meeting of 4 February. “These are more radical measures than those included in the six-piece legislation package advocated by the Hungarian Presidency”, the Prime Minister insisted.

“In summary, Eurozone prime ministers probably concluded that they could not manage the Eurozone crisis in the framework of 27 member states, therefore, they proposed unusual steps that have so far been absent from European economic governance”, Mr Orbán stated. “While economies were flourishing, the lack of a common economic policy underpinning the single currency did no harm, but now it is clear that the Euro needs a common fiscal and economic policy.,Therefore, the strong countries have decided to create one.”

Hungary to oppose tax harmonization

Mr Orbán noted the promise “that countries outside the Eurozone may also join” the new initiative called Pact for Competitiveness “should be considered with due reservation”. The premier talked about an imminent storm, and said “there is no single common ship any longer, but a fleet” and “everyone needs to strengthen their own ship.”

“The Hungarian Government does not object to the 17 Eurozone states making decisions for the sake of stronger economic coordination within the European Union”, but Mr Orbán ruled out that Hungary will contribute to tax harmonisation. “As long as I am Prime Minister, the Government of Hungary will never support tax harmonisation”, he declared, and argued that harmonised tax systems would deprive Hungary of the opportunity to catch up with the more developed countries. Mr Orbán went on to say that “Hungary must never participate in any cooperation that involves the harmonisation of tax systems, because that would be tantamount to Hungary capitulating. We have to work more, and need a better tax system than developed countries.”.

No threat of two-speed Europe

“We are happy that the Euro will be saved, but we must follow our own path”, the Prime Minister admitted. In this context, he evaluated the chances of Hungary adopting the Euro: “with the present constellation, Eurozone accession is inconceivable before 2020.”

At the same time, Mr Orbán stated, in response to a question, „there is no threat of a two-speed Europe and the continent torn in two, since the 17 member states may not make any decision in violation of the Treaty”. He admitted that closer economic cooperation among the 17 member states “will radically alter the rules of accession to the Eurozone with the obligation to adopt a common fiscal policy”.

Breakthrough in European energy policy

Mr Orbán called the European Council’s energy policy decision made at its meeting on 4 February, a breakthrough and a historic move. He underlined that the EU will establish a single energy system, and will eliminate energy supply islands. In other words, there will be no country or groups of countries cut off from Western European systems.

The EU aims to eliminate external energy dependency, to make every member state supplied by at least two independent sources. In a few years, Hungary will be linked to the Baltic, the Black Sea and the Adriatic Sea, with access to the Italian and North African gas markets via Slovenia. Mr Orbán said, „Hungary will be able to connect to every market and to purchase gas at the most favourable prices, by increasing its storage capacity.”