Hungary to build second line of border defence

Prime minister Viktor Orbán said in this regular radio interview  today that  Hungary is going to build a new, “massive, serious defense system” on its Southern borders to defend against a possible surge in the number of migrants.  “The fortified barrier will be able to stop several hundreds of thousands of people if, for example, Turkey allows the millions of migrants to leave for Western Europe.”

He suggested that Austria should help defending the Serbian-Hungarian border, or preferably the Macedonian-Greek border, together with the other Central European countries, instead of  focussing on the Austrian-Hungarian border.

The Hungarian government announced last week that they will employ 3000 more policemen to defend the border. The recruitment will start in September and, after their fast track training, they will be deployed already next spring.

After the morning interview, PM Orbán left for Warsaw where he and other V4 leaders will meet German Chancellor Angela Merkel.

The prime minister said that “people  who claim there’s no connection between the migration and terrorism either haven’t the foggiest or they try to conceals clear-cut facts for some reason.  Terrorism has increased in Europe because hundreds of thousands uncontrolled migrants appeared places where the Western world is regarded enemy. There’s a semi-war situation in Europe and you cannot risk people’s safety under such circumstances”.

Mr. Orbán also said that the European leaders should reject the forced migrant quota idea of the Brussels bureaucrats. The V4 leaders want change and the question is if Angela Merkel would be a partner to V4 this afternoon.  He said that the result of the meeting hangs in the balance.  There are several issues where the viewpoints are not known. “I myself haven’t unfolded all my cards either”.

“The October 2 referendum will mean that a European nation won’t accept the decision of the Brussels bureaucrats. So that will not result in a negotiating position.  That will result in a final, solid Hungarian stance. This may rally many other countries to Hungary’s side as well”, he added.



Orbán’s “Schengen 2.0” proposals

Yesterday Mr. Orbán visited German ex-Chancellor Helmut Kohl in his home in Germany .  The visit made the whole German press very agitated. Every major newspaper and TV channel reported on it and they were speculating about an “anti-Merkel conspiracy”.  🙂



The two politicians issued a statement after the meeting, emphasizing their full agreement on the issue of Europe’s migration crisis.
Orbán told the German media  that “Hungary stands by Berlin and will continue to support Chancellor Merkel  with initiatives like the “Schengen 2.0” plan which is  aimed at protecting the European Union’s external borders.”

So these are PM Orbán’s proposals to solve  the migration crisis, with some explanation.

1. The Schengen rules have to be enforced strictly by each member state, according to the signed treaties. When a Member State is unable to fulfil its Schengen duties, the European Border Protection Agency must intervene, and in the “absence of an agreement, the state’s membership in Schengen should be suspended.

2. All outer borders must be protected with biometric identification measures.

The above two points are obviously aimed at Greece and Italy which both fail to protect their borders from the invaders.

3. The Dublin System needs to be completely reinstated, and needs to be completely enforced. Failure to implement this agreement must result in penalties being applied to the offending state.

This is aimed at all Western and Northern European countries but especially at Germany . Merkel unilaterally ditched the Dublin System by her invitation to the Middle Eastern migrants.

4. Any applications for asylum must take place outside of the EU, at places set up and designated by the EU.

This would obviously stop the “asylum seeking” sham.

5. All agreements on deportations must be concluded in the countries of origin and transit of the “asylum seekers” and they must be enforced in cooperation with them.

As it’s well-known, most originating nations (in North and Black Africa, Afghanistan, Bangladesh, etc.) are simply refusing or ignoring all requests to take back their illegal migrant nationals.

6. Illegal migrants should be sent to safe countries of their origin or they should be transited back to their countries of origin.

7. The EU’s foreign, security, visa, and “development” (that is foreign aid) policies must be tied in to the EU migration policy objectives. The willingness of migrant originating countries to cooperate must be conditional on the granting of aid.

8. The EU must make resources available to the current entry hotspots and to the western Balkan nations so that they could cope with border security.

9. A list of safe third countries must be drawn up and this must be taken into consideration when asylum applications are considered, as must the number of safe countries the asylum seekers have crossed to get to the EU.

That’s because you’re an illegal migrant, not an asylum seeker, if you cross multiple safe countries to get somewhere in order to maximize the benefits you could get.

10. All “demographic and labor market challenges and responses” are to be reserved for “sovereign national decisions.”

This is about rejecting that the EU would have the right to “allocate refugees” to the member states. There cannot be any kind of mandatory distribution or automatic mechanism to distribute the “refugees.” by the EU. If Merkel really wants Muslim migrants for her Germanistan dream then she’d have to send charter flights to the Middle East to transfer them to Germany.

Principles first, choosing persons second

Today PM Orbán flew to the EU summit in Brussels and he gave a press conference.  He stressed that the questions of principles must come first before choosing persons for the various positions . (German Chancellor Angela Merkel said before the summit that the latter type of decisions may not be brought today at all.)

Orbán insisted that taxation has to remain on the national level. Moreover he’d want to clarify  if EU is willing to let member states to regulate energy prices on the national level.  He added that it become a practice in the last five years that EU institutions, openly or covertly, reduced national powers and this has to be put to an end.

The member states are protecting their rights and if an imperial centre, like what Brussels is, want to breach them then that’ll generate conflicts.  New European politics doesn’t need more conflicts, it needs more consensus.

Answering a question,  he said the Hungarian government would nominate its EU commissioner when elected president Jean-Claude Juncker would officially request that. He added he had a discussion with Juncker prior to the summit. Commenting on the situation in Ukraine, Orbán said the sanctions against Russia must not proceed to the next (third) stage because that would not be in the interests of either Europe or Hungary.

The summit is mainly about haggling top jobs and that’s rarely a simple matter…  However the deepening crisis in Ukraine makes the choice of a successor to British EU Commissioner Catherine Ashton, as head of the European External Action Service,  an even more sensitive issue  than usual since the USA  has been pressing the  EU recently to toughen sanctions against Moscow.   The United States indicated yesterday they could go alone with increasing the severity of the sanctions against Russia.  Poland and  Baltic countries want a tough stance against Russia but Italy and Germany, which have major economic ties with Russia, are reluctant.  So is Hungary.


Anyway, it sounds like Orbán is in combative mood… 🙂  Go, Viki, go!



Eastern EU countries were the main reason for the blockage. They argued that no decision could be taken on the two senior positions before they knew what portfolios would be assigned to “their” national commissioners.

Only the anti-Russia sanctions were extended somewhat  Another extraordinary summit will be held on the 30th of August.



Hungary and the Euro

There was general consensus among all the parties and economic analysts in 2002, when the first Orbán government was still in power, that Hungary could and should introduce Euro as her currency in 2007.  Then  MSZP-SZDSZ came and their catastrophic economic policies utterly destroyed the chance for this.  They increased the public debt of Hungary from 54% of the GDP in 2002 to around 80% in 2008 and Hungary  “de facto” defaulted when the global economic crisis hit. This manifested itself  in the  IMF giga-loan in 2008 .  The leftliberals and IMF carefully timed the repayment of this 25 billion euro loan between 2010 and 2014,  as a kind of booby-trap, knowing well Fidesz would win the next elections. (Such SBA agreements usually have a seven year repayment period.)

What was seen to be a bad thing at that time  seems to turn out to be more and more of an economic advantage for Hungary now. The Euro has had quite a few victims so far in Europe, these are commonly mentioned as the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) and  Slovenia is going to be the next one:   “Euro-area dynamics did the rest. As banks have to be saved by individual member states, Slovenia found itself in a catch-22. It needed to raise more money but due to soaring costs of debt refinancing, the country found its access to international financial markets barred at a time it was most needed.”  PIIGSS!

Let’s note that Prime Minister Orbán, who is very likely to be re-elected in 2014,  has ruled out Hungary’s joining the Euro zone any time soon:  “When we think of joining the eurozone, we do not speak of next year, but about the next decade or two decades or three decades. If the euro still exists by then”  He also added that if Hungary had been a member of the euro zone in the past three years then it would have been unable to take unorthodox economic measures. And those economic measures now do seem to work. (See also my earlier posts on  the Hungarian economy.)

An American commenter (“Southerner”) pointed out in a comment to this post:    “from my Western perspective the EU currency creation was the beginning of conflict the likes of which are no different in the intended outcome and objective than in WWI & WWII. That is; Germany in control but not responsible for the economies in the EU. And from that perch, will ally with other historic partners to dominate larger and larger regions. None of this is evil, just good business.”

So let’s see what introducing Euro means for a peripheral European economy (such as Hungary, the PIIGS countries or Slovenia):  you lose the freedom to control two important  macroeconomic variables at the same time:  the monetary base and the base rates set by the national bank of the peripheral economy.  Apart from controlling inflation, the major task of a central bank is providing fiscal stimulation in times of recession and providing fiscal control in times of economic booms.  What do the peripheral economies get in return for losing their ability to influence their own business cycles?  Strong coupling  to the business cycles of the central economy (Germany), which may not mean  synchronization!, and a significant loss of economic freedom.  In fact German Chancellor Angela Merkel herself admitted  openly that  the European Central Bank “should  really increase the base rate now if they considered only Germany’s interests”, that is she observed the conflicting interests of the core economies and the peripheral economies. Removing the economic options of devaluing one’s currency in order to boost exports and inhibit imports or inflating debt away is really a huge blow for the latter ones.   It will inevitably result in the peripheral economies being endebted to the core economies  as we could already witness this.
A common currency for countries with vastly different economies, where there don’t exist such cohesion forces such as a common language and common culture, is a surefire recipe for increasing political tensions both domestically and internationally. People will say  “Why should we pay for those lazy bastards out there?” in the core economies and they will say “Those rich bastards are colonializing us!” in the peripheral economies.  This will show eventually on the international scene as well:  Germany may not be able to oversee always that there should be a docile political leadership in Greece.   There are some cracks visible even already on the German-French “tandem”!

In the long run and from a global perspective, there could be two outcomes: either the political considerations will prove to be stronger than the economic ones and this will eventually drag down Germany, too. (Assuming Germany would have the political will and means to force their ways, of course. One must still  keep in mind that Germany doesn’t have the military projection power at all the US has which still keeps the US dollar afloat despite their exponentially growing debt and their huge trade balance deficit.) This will result in a less and less significant Europe in global politics.  If Hungary manages to ride the waves then this will mean a relatively stronger Hungary though.

Obviously the other outcome is the break-up of Euro.  This would mean a turmoil all over Europe which would severely affect Hungary, too, and I don’t  know what the long term outcome for Hungary would be.  Perhaps, in relative terms, Hungary could be still better off.  This break-up could have two forms: either Germany would adopt a dual-currency system or the endebted peripheral economies would.  (A variation on this is less fragmentation, i.e. splitting the Euro into two classes: prime and subprime Euro.) The global implications are less clear but one thing is sure: the disappearance of the Euro would significantly delay the inevitable collapse of the US dollar.

Then, of course, going alone is riskier than tying your boat to a big ship. There is the very real possibility that Hungary would not succeed with these “unorthodox economic measures” and keeping her national currency (Hungarian Forint) would lead eventually to an economic-political crash. This could happen in either cases outlined above as well.  There are hungry sharks and sharp cliffs out there…  I’ll leave exploring the chances of this and the pro-arguments  for the interested reader who disagrees with me about that the Euro  would be harmful for Hungary in  the long run.

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