Diplomatically Speaking: German Ambassador Johannes Haindl ‘Solid Fundament’ Underlies ‘Diverse’ Relationship

BBJ: Germany has long been a significant partner of Hungary. How much German FDI has been invested into Hungary since the change of regime in 1989?

Johannes Haindl: The latest available figures show that in 2019 Germany made direct investments in Hungary amounting to EUR 2.1 billion. The total amount of German FDI has risen to around EUR 19 bln, and this does not even include the local investments German companies undertake each year by expanding or modernizing their Hungarian factories. German FDI makes up 20 % of the total foreign direct investment in Hungary and illustrates the significance of the German-Hungarian economic relations. More than a third of this sum was invested in the automotive sector.

BBJ: What are today’s figures for bilateral trade between the two countries? How do you see this developing?

JH: In 2020, despite the coronavirus crisis, Hungary’s trade volume with Germany reached the value of EUR 52.1 bln. Hungary’s exports to Germany amounted to EUR 27.5 bln, its imports from Germany to EUR 24.6 bln. Germany is Hungary’s most important trading partner and, from the German perspective, Hungary occupies 13th place among our global partners, ahead of Russia, Turkey, or Japan. German interest in the Hungarian market stays at a high level. But investors need reliability and the guarantee that the basic conditions for investment, such as legal certainty, will remain.

BBJ: What are the principal Hungarian goods Germany imports? Has this changed at all over the years?

JH: The most important Hungarian export goods over the last years have been motor vehicles, automotive components, and electrical and electronic equipment. Recently, the Hungarian government has been attaching more and more importance to research and development. Therefore, Hungary is increasingly looking for cooperation in this area, also with German companies. And I am delighted that many German companies have already brought state-of-the-art innovation and R&D activities to Hungary, for example, in the development of autonomous driving and other fields of artificial intelligence. 

BBJ: There are several world-renowned German automotive brands in Hungary, with BMW waiting in the wings once its factory is complete. Are there more to follow, do you think?

JH: You are right, three of Germany’s premium car brands, Audi, Mercedes, and soon BMW, have already settled in Hungary or are preparing to do so. However, all of the German carmakers are currently heavily focused on transforming the industry towards sustainable mobility solutions. This will undoubtedly affect their Hungarian units and their suppliers in many areas but will also create new business opportunities. I am convinced that the companies will successfully master these challenges. And provided that the basic parameters don’t change, I am also convinced that Hungary will stay an attractive location for the German automotive industry.

BBJ: Beyond automotive, what are the most important sectors of the Hungarian economy in which German firms play a significant role? What are the fastest-growing sectors attracting German FDI?

JH: German companies are very active in the electronic/optical industry, electrical equipment manufacturing, mechanical engineering, and chemistry. But besides production and future-oriented R&D activities, German companies can also contribute to sustainable economic growth and the realization of ambitious climate goals. For instance, one of our big car manufacturers in Hungary has already achieved a neutral carbon balance. This is crucial if we want to reach climate neutrality in the EU by 2050 and the 55% reduction goal by 2030.

BBJ: In recent years, Germany and Hungary have often been at odds within the EU, especially on matters like immigration. Do you expect a reset in relations? Indeed, is there a need for one following September’s Federal elections and the appointment of a new Chancellor?

JH: Indeed, some topics are being discussed in Brussels on which our two countries have different views. You have already mentioned the problem of dealing with the issue of refugees and migration or the complex debate about the rule of law, which we consider a cornerstone of the European Union. However, overcoming differences and challenges is and has always been part of the European decision-making process. In the end, our common goal should be a strong, competitive, and resilient European Union based on our shared values and the rule of law. Germany will therefore continue to constructively contribute towards achieving this goal, now and in the future.

BBJ: What are the areas of greatest strength and most friction within the bilateral relationship?

JH: Our bilateral relationship is based on a solid fundament. Our strong economic ties have been mentioned. Cooperation in the fields of defense, research, and innovation add to this diverse picture of our relationship. In addition to that, Hungary and Germany are also closely bound culturally. Hungary hosts almost 200,000 people of the German minority. They enjoy special protection under Hungarian law and are an essential link between our countries. In fact, it is the diversity and complexity of our cooperation that makes our relationship unique and robust. More than that, it helps both sides to level up potential frictions in our everyday political discussions.

This article was first published in the Budapest Business Journal print issue of October 8, 2021.