Presentation at the Economx Money Talks 25 business conference
Ladies and Gentlemen!
Welcome to you all at this midday hour! The title of today’s conference is Money Talks. Americans like to add that when money talks, there is no need for an interpreter. And indeed there is not, simply because it would look strange in front of a Hungarian audience. Yet, I am taking on the role of interpreter to a certain degree today. My task here today is to interpret between the language of politics and the language of business. I am attempting to walk the fine line between politics and economics, to outline what the process taking place in the United States of America means for both domains, and what it means for us Hungarians.
Without wishing to go on any longer than necessary, I have prepared my points for today’s speech, and if you will allow me, I would like to keep to them and leave time for the panel discussion that will follow.
So, in the following minutes, I would like to start by talking about the five lessons of the transition in the United States, followed by identifying four strategic advantages for Hungary, and to conclude, I would like to draw attention to three strategic challenges. So, first five points, then four, then three. I suggest we get started.
The election of Donald Trump is a sign clearer than any strategy paper or international analysis: it says that the neoliberal world order is over. The result of the election reveals not only the state of domestic politics in the United States of America, but also how the entire Western society perceives the performance – and the limits – of the former neoliberal global model.
If this is to be taken seriously, it is worth analysing not only the result of the American election, but also the reasons behind it, because these lessons will help us to navigate the increasingly complex multipolar world we are facing.
The first and perhaps most crucial lesson is that the economy is still structured on a national basis. Previous neoliberal thinking ignored the link between economic performance and the nation. It is a link that we tend to overlook in today’s increasingly globalised world. And yet it is precisely these connections, among others, that the original liberal economics was based on. Adam Smith spoke of the wealth of nations when he argued that the main function of the economy is to produce the common good, or rather the common virtue, from private interests.
To put it the other way round, if we separate the future of a community from its economic performance, we deprive it of its own values and achievements. Where the economy has foundered, the nation itself has become more vulnerable.
Neoliberal thinking, by contrast, has insisted that the place of national economic output is secondary, and that a service-based growth model is sufficient. We know the expression all too well: “We innovate, they produce”. But as it turns out, this formula doesn’t work quite like that. Production and innovation cannot be separated, and industrial capacity is a precondition of national sovereignty.
The numbers speak for themselves. In 1980, Europe and North America accounted for 58 per cent of global GDP adjusted for purchasing power parity, according to IMF data. Today this figure has dropped to just 39 per cent. Over the same period, Asia’s share has risen from 27 to 49 percent. According to OECD data, economic growth in the Euro zone has been virtually stagnant since 2010, at around 1.5 per cent per year, while Asia and the US have continued to gain momentum.
The picture is no better in the technology race: China registers more patents annually than the next nine countries combined – including the US. Twenty-two of the world’s fifty largest technology clusters are now located in Asia. The Western economic policy has fallen into its own trap. Over-regulation, coupled with the dismantling of some public functions, public fiscal self-limitation and the outsourcing of industrial capacity, have simultaneously weakened sovereignty and economic performance.
Today, the IMF, the World Bank and the OECD are more nuanced in their discussion of the neoliberal model, recognising the role of the state in dealing with inequality and instability.
Success in the next world order will not come to those who adapt well to the old structures, but to those who are able to redefine the structure of their own economies – and to back it up with a strong state, modern and revitalised industrial capacity, technological autonomy and strategic flexibility.
The second major takeaway from the end of the neoliberal decades, that is, from Donald Trump’s victory, is that a foreign policy built on a purely moral basis has failed on a moral level. By this I mean that the Western world has long believed that it was sufficient to justify foreign policy decisions on moral grounds only -–regardless of the outcome.
The problem is that reality refused to align itself with this principle. The US intervention in Iraq has led directly to the strengthening of the Islamic State. The intervention in Libya caused a humanitarian disaster and turned a key country in North Africa into a territory without a state. And the Arab Spring has in fact only set the Middle East ablaze.
These developments have had global as well as local consequences. Among other things, they triggered migratory waves that ultimately pushed the European Union into a crisis.
All of this is a clear indication that the foreign policy doctrine of the past is not enough. It is not the moral aspects that need to be eliminated, but rather the consequences themselves should be taken just as seriously in moral terms. Responsibility is not a matter of intention, but a matter of results.
This is the core of the Hungarian government’s foreign policy approach: whatever serves the security, stability and prosperity of our community is morally right. This mentality will become increasingly valid in a multipolar world order – and there is no contradiction between good intentions and good results.
Migration has become one of the major political fault lines in the Western world.
The third conclusion: the wider context is that the neo-liberal world order has undermined the very social stability reserves that used to guarantee the viability of Western states. Tensions between native communities and immigrants, particularly as a result of illegal migration, have developed into a structural problem in several countries.
According to the Heritage Foundation, around 4.5 million immigrants have arrived in Europe every year for the past three years, of which around one million have entered illegally. According to the Hoover Institution, close to 29 million migrants have reached the continent since 2015 – both legally and illegally. More alarmingly, according to the European Commission, deportation efficiency is only around 20 per cent, meaning that eight out of ten people who are legally deported remain in the EU.
The economic arguments are also untenable. For a considerable time, the liberal position had been that immigrants would solve the labour market challenges, with a joint report by the German Labour Office and the OECD revealing that five years after the 2015-16 migration wave, less than half of all refugees were employed. According to the Gatestone Institute, in certain cities in Sweden, unemployment among non-Western migrants is as high as 70-80 percent, meaning that many are relying on social welfare instead of self-sufficiency.
The unexpected social effects are also supported by crime figures. All this makes it clear: the lax migration policy of the neoliberal era has failed. It has not solved economic problems, instead it has created new social and security tensions. In the future world order, this mistake cannot be repeated.
Fourth lesson: without military power, it is impossible to become a global political factor. After the Cold War, Europe collectively decided that it no longer needed to defend itself. History was “over”, they thought, and war between liberal democracies was unthinkable. This illusion had serious consequences.
According to the Stockholm International Peace Research Institute, defence spending as a percentage of GDP in NATO member states has fallen from 3 per cent to 1.5 per cent. Germany’s army of 500,000 now stands at 180,000. Meanwhile, the US has barely cut its defence spending – and this difference tipped the transatlantic balance.
Europe has essentially outsourced its security – either overseas or to the international legal system. But if you outsource defence, you also delegate the right to make decisions. This dependency has been particularly evident in the Russia-Ukraine war: at the beginning of the war, Europe essentially followed the US proxy war approach – even if it was clearly at odds with the continent’s long-term interests.
Now that Washington has changed direction and is pushing for a peace agreement, Europe has remained on the front line – without any political or strategic leverage. The lesson is clear: defence cannot be exported. Those who entrust their security to others will sooner or later lose not only their military power but also their freedom of judgement.
The fifth lesson of Donald Trump’s victory is that trust in international institutions has been shaken, whether we like it or not. It is true not only on the periphery of the world, but also in Western countries. These institutions have a dual role: to maintain order in a period of stability and to manage disputes. In times of transition, however, their role is to facilitate a peaceful and fair change of course. As it happens, we are in such a transitional period – the old world order is no longer operational, while the new one is still taking shape.
By contrast, a large number of organisations are still preoccupied with defending the status quo. And yet, when an institution runs out of the cover of reality, its legitimacy evaporates. According to the World Values Survey, trust in international organisations has been steadily eroding since the 1990s.
The same thing is happening with the International Criminal Court. The ICC was originally set up for the just resolution of conflicts, but now it is more of a political actor, defending the liberal status quo. This logic does not fit in with the current transition. Only those institutions will survive in the future that support rather than hinder the transition – that do not impose ideology but establish a framework.
With this, I have finished introducing the five takeaways.
It is now also worth considering the strategic advantages for Hungary arising from what happened in the United States, and from the world order that is now taking shape. I would like to briefly mention four such advantages.
The first advantage is the very fact that the neoliberal world order has come to an end. This is a turning point of historic proportions. For Hungary, this is a positive development, because the previous world order substantially limited our room for manoeuvre.
The ill-fated privatisation of the post-communist era, along with the outsourcing of state functions, and the ensuing dependency relations, weakened our country’s ability to act. A significant part of our strategic sectors was taken over by foreigners, and the financial cost of regaining them was significant.
But even after 2010, the liberal world order has greatly reduced Hungary’s room for manoeuvre. Just think that since the outbreak of the migration crisis, we have spent roughly €2 billion on border protection, while the European Union has reimbursed less than 1% of this. If they did not want to drive the masses to our borders, we could have spent this money on other things, for instance on further economic development.
The second strategic gain is that Hungary has an answer to the challenges of the new multipolar world: it is known as the strategy of connectivity. This approach does not see the world as opposing blocks, rather as networks of connections. The aim is to build functional and strategic relationships with all major power centres – China, Turkey, Qatar, Germany and now the United States. Not only is there an opportunity to do this, but also a political will. Prime Minister Viktor Orbán is one of the new American President’s most important European allies. There is a regular, constructive dialogue – all the foundations are there for a strong bilateral agreement.
On the question of tariff policy, our life is not easy, because trade policy falls within Brussels’ competence under the EU’s founding treaties, and Brussels still does not seem to understand what the United States is doing, why it is doing what it does and how we should respond to it. So far, Brussels has a poor track record, failing to take the imposition of tariffs seriously – even though the entire election campaign focused on it – and then misdirecting the counter-measures by failing to take into account what the US actually intends to do and what negotiating techniques it has used – confirming the dismal assessment by US leaders of the moral state and cognitive abilities of the political elite in Brussels.
It might be advisable for them to finally read up on Trump’s Art of The Deal, they do not have to agree with it, but it will tell them a lot about how those leaders think overseas.
Regardless, we must be prepared for a temporarily volatile situation, but we are convinced that eventually there must be, and will be, an agreement between the US and Europe.
What Hungary can do is, on the one hand, to try to point out the mistakes that Brussels should not repeat in the negotiations and the direction in which it should take – and do it swiftly.
In the meantime, we are working on an agreement that does not deal with customs policy issues, but strengthens economic cooperation between the two countries. I think we can expect news in the very near future that will confirm that the foundations for this bilateral agreement are indeed grandiose.
The third gain is that the ideological pressure is alleviated. The neo-liberal world order has sought to homogenise the world not only economically but also socially – indeed, it has made this a moral obligation. Hungary has always rejected this ideological pressure, but this has come at a price: political attacks, foreign-funded media attacks, NGO pressure, double standards. Now, however, there is a chance that this type of conflict will at least be somewhat contained.
Finally, the fourth strategic advantage is that the current US administration seeks peace in Europe. Washington seems to have recognised that there is no military solution to the war in Ukraine. In recent weeks, there have been successive reports of peace talks. In the past, many people thought that was unthinkable.
We know it will not be an easy ride. As the Hungarian prime minister said last summer and warned European leaders: neither of the two sides really wants peace at the moment – therefore it is up to the mediators to get them to the table. But we also know that in this situation the United States of America is more than a mediator, so if America really wants peace, it will sooner or later be achieved. And this is very good news for Hungary – politically, economically and strategically.
Finally, the picture would not be complete without a discussion of the challenges of the emerging new world order. For while much has moved in a positive direction, the geopolitical map is far from becoming simpler – in fact, in some respects it is becoming even more complex.
The first challenge is that the liberal networks that have lost ground are unlikely to retreat quietly. As they are squeezed out of, and further away from the leadership of the United States of America, they are looking for a new foothold in Europe – and they seem to have found it in the centre of the European Union. The political haven is already there, and since Hungary has been an advocate of changing the liberal status quo, the political pressure from that direction will be even greater than before.
The second element of this point is that it would be foolish to claim, of course, that Trump’s policy of rewriting the world order is without risk. It isn’t. Neither at home nor in the world. Too many interests are being shifted, too many taboos are being broken, too many dogmas are being shattered. It is not impossible that the Western world is facing a period of turbulence. Nevertheless, the essence of the Hungarian connectivity strategy is precisely to seek peace under all circumstances and to extend mutually beneficial cooperation with all the world’s centres of power through the logic of economic neutrality.
That is why the second challenge is the European Union itself. The elites in Brussels do not seem to be sensing the changing times. They still see themselves as the last bastion of the liberal world order and want to forge new policies on that basis.
Europe is facing a series of crises. And in this difficult situation, the European Union is being shaped by the choices that the liberal leadership in Brussels has made in complete agreement in recent years.
The direction is in many ways untenable. The decline in Europe’s competitiveness must be halted. Companies operating within the EU pay two to three times more for electricity and four to five times more for gas than their American or Chinese counterparts. So it is hardly surprising that if the EU were the 51st state of the USA, it would be the third poorest state. Only four of the world’s top fifty tech companies are European. On top of that, the largest European economy, Germany, has been in recession for two years in a row. And as for this years figures? We’ll have to wait and see.
It is obvious that the energy cooperation with Russia needs to be restarted, the tariff war with China and the US needs to be concluded as soon as possible, the green transition needs to be facilitated without destroying industry, borders need to be closed, bureaucratic red tape needs to be reduced and the financial and institutional basis for European military-industrial cooperation needs to be established. None of these tasks is easy, let alone doing them all at the same time. In the meantime, the institutions are still dominated by the same people who made the wrong decisions in the past. No wonder many are sceptical.
Strengthening Europe’s defences is a prime example. This is an important and necessary goal in itself – from a security, economic and innovation perspective. Europe must be able to guarantee its own security. Moreover, the vast majority of civil innovations actually started as military innovations. Boosting the European defence industry is good for the Hungarian defence industry, and the upcoming German fiscal stimulus is good for the Hungarian economy.
The problem is that some people now see it as arming Ukraine – partially from a joint loan, which it is promoted as “Europe’s Hamiltonian moment”. In US history, the Hamiltonian moment was the moment when the united states of America finally embarked on the path of federalisation by taking on the shared debt. This poses a danger for Europe for two reasons: first, because we would be arming a non-EU country while Europe’s defence capabilities would remain weak. Secondly, because the borrowing and redirection of financial resources that this would entail would push the EU in a federal direction – a direction that most Hungarians do not agree with.
And here comes the third, perhaps the greatest challenge: Ukraine’s admission to the EU. This plan would impose an unbearable burden on us, not only politically but also economically. The Hungarian Institute of Foreign Affairs has calculated that the integration of Ukraine would cost the European Union a total of €500 billion – more than 12 times the EU’s 2025 budget.
According to the data of the World Bank, the reconstruction of Ukraine alone would cost $500 billion, which is a conservative estimate. The Ukrainians estimate the same amount at $1,000 billion. And to keep Ukraine running – which would also fall to the EU, as the Americans have indicated that they no longer want to be involved in the way they have been – this would cost, at the very least, $100 billion a year. In addition, the European Union would, according to currently published plans, expect current Member States to spend 0.25 per cent of their own GDP on strengthening Ukraine’s defences, at an additional annual cost of €50 billion.
It should not be forgotten that the Ukrainian regions are at a much lower level of development than the EU average. This means that, as far as cohesion policies are concerned, only Ukrainian regions could be developed, because everything else will be considered more developed than the European average. EU agriculture would be particularly affected, when roughly 25% of the available agricultural funds would go to Ukraine.
Ukraine’s accession would also put Hungary in a difficult position. According to calculations, the Ukrainian membership would cost Hungary up to 20 thousand billion forints – equivalent to nearly 70 percent of the national budget in 2023. The cost of the proposed loan to Ukraine alone would imply an interest burden of €20 billion. The redistribution of common agricultural policy funds would deprive Hungarian farmers of almost €7 billion in subsidies per year, or around €3 million per farmer.
In fact, according to a recently leaked EU document, the enlargement of the EU to include Ukraine would mean that the current net beneficiaries would become net contributors. That is, they would pay in more money than they receive. So, if Ukraine joins the EU, Hungary will not receive any EU money, and the Hungarian budget will have to finance – along with the other members – the operation and development of Ukraine.
The accession of a state with such a background, with an unstable statehood, with a precarious social and economic situation, acquired by foreign capital, sadly destroyed and devastated in the war, would consume the resources needed to deal with all the other challenges facing the European Union, and would weaken Hungary’s strategic position in an extreme way. How opposition parties in Hungary can say yes to such a plan is beyond me.
The situation is as clear as day. The EU wants to conclude accession negotiations before the end of the current EU institutional term, that is, by 2029. This is obviously to prevent voters from blocking the plan in the 2029 EP elections. The position of national governments will therefore prevail. The current Hungarian government, and the one that will take office in 2026, is the only one that can block Ukraine’s accession to the EU in the Council. Nobody else will have a chance to do so.
Since the opposition has made Ukraine’s accession to the EU part of its agenda, it is particularly important that the Hungarian government gets help to block its plans. That is why the opinion poll Voks 2025 has become one of the most important democratic expressions of will in economic strategy for the coming years. I am firmly convinced that anyone who wants to help Hungary and the Hungarian economy must, in such a situation and under such circumstances, say no to the forced admission of Ukraine. In fact, it is advisable supporting a political force that will make an agreement with the electorate to prevent this with everything it has got.
Finally, please be so kind and let the politician talk now, instead of ‘money’. Because the transformation of the world is not just an economic process – it is also a political issue. And as with all serious political issues, it is crucial who represents the country when major changes of direction occur.
World order change does not happen by itself, nor does it benefit everyone. It is only beneficial to those who are ready – with a firm strategy, partners and a stable leadership.
Here in Hungary, we started this preparation years ago. And now that the world order is truly at a turning point, it is time for our voice to be heard even louder.
Because it may be that money talks. But the political future will still be decided by those who speak their minds in time and with clarity, and act together.
Thank you for your attention!
