Orbán Tells EU to Fight ‘War Inflation’ With Peace

Government

American combat vehicles at the Ádám Vay Training Base of the 5th István Bocskai Rifle Brigade near Hajdúhadház on June 15, 2022. U.S. and Hungarian soldiers have been mounting a joint patrol in the Hajdú-Bihar and Szabolcs-Szatmár-Bereg counties bordering Ukraine.

Photo by Zsolt Czegléd / MTI.

In a recent interview on public radio, Prime Minister Viktor Orbán decried the impact of higher prices stemming from the war in Ukraine and the European Union’s sanctions policy, instead advocating that “peace must be financed, not war.”

Orbán told Kossuth Rádió on June 10 that government-mandated price caps had kept five-to-six percentage points off headline CPI but added that those measures could not contain external inflation.

“Because this is war inflation, it can’t be stopped only in Hungary. As long as the European Union finances this situation of war […] inflation will continue to rise,” Orbán said. “The easiest way to stop war inflation is peace,” he added.

Calling for a shift in EU strategy, Orbán claimed that his government is “practically the only one in all of Europe that is not talking about sanctions and war but about the need for peace.” If that strategy does not change, “we’ll ruin ourselves with war inflation,” he warned. Following the ban on importing Russian seaborne crude, Orbán said introducing an embargo on Russian gas is “not a sensible European policy.”

Earlier, the Minister of Foreign Affairs and Trade Péter Szijjártó urged for a “pragmatic” approach to the matter of secure energy supply, which he said had become “over-politicized,” at the 27th Baku Energy Forum on June 2. While debates focused on how to stop using Russian energy, there is little conversation on how to replace those resources, Szijjártó pointed out.

He said Hungary is committed to diversifying its energy supply, but that would first require a more significant amount of European Union funding, commitment, and programs necessary to develop delivery routes to bring that gas to Central Europe. Earlier, Hungary had successfully opposed the complete blockade on Russian oil, brokering an exemption for pipeline deliveries, an effort Szijjártó said “was worth it.”

Sector Slowdown

At a Traders Conference hosted by building material wholesaler Mapei Kft., a survey of about 70 representatives of the building materials trade who were present revealed that 95% expect a crisis. While home renovation subsidies have stunted the sector’s slowdown, unfavorable international economic developments, such as the prolongment of the Russo-Ukraine war and declining municipal investment, point to difficulties in the construction industry.

Yet, a majority of Hungarian companies believe that the conflict may end this year, around 54%, according to a survey conducted by K&H among large companies. However, 61% of companies say it will take at least two years for the world economy to reach its pre-war performance. According to the survey, the economic relations of domestic companies with those in Russia and Ukraine may only recover after a similar amount of time. While 12% believe that such pre-war growth could be achieved this year or the next, another 17% think it will take at least another five years before those levels are seen again.

Hungarian Interchurch Aid delivered another shipment of medicine worth HUF 10 million to Ukraine, the organization’s chairman and director László Lehel told news channel M1 channel on June 6. Lehel said that the Hungarian Interchurch Aid, as an “international consortium,” was coordinating the delivery of donations from the Netherlands, England, Denmark, Finland, and Sweden to a hospital in Berehove, in Transcarpathia.

While it was mostly food and hygiene products that were required in the first months of the war, medical supplies are now in greater demand, as refugees have started returning home and their local medical needs are being assessed.

This article was first published in the Budapest Business Journal print issue of June 17, 2022.

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