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Russian Ambassador Alexander Tolkach | Dávid Harangozó

Building on dynamism and pragmatism

Russian-Hungarian relations today are not burdened by any serious problems. They are calm, business-related and pragmatic relations. This is the gist of the article the Ambassador of the Russian Federation to Hungary wrote for Diplomacy & Trade.

In January this year, the President of the Russian Federation, Vladimir Vladimirovich Putin met with Hungarian Prime Minister Viktor Orbán in Moscow and they agreed on strengthening strategic relationships - especially in the economic sector - that is in the interests of both parties. Russia still remains committed to the intensification of mutually beneficial relations with Hungary and is ready to develop economic relations in this area along other issues on the agenda. This position was confirmed in May of this year during an official visit to Budapest by Russian Foreign Minister Sergei Lavrov.

The leaders of the two countries keep regular contact at high – ministerial and other official – levels. There is a successfully operating Hungarian-Russian Intergovernmental Commission for Economic Cooperation (IGC) whose framework is suitable to solve any problematic issues that may arise in bilateral economic relations. Its latest meeting was held on September 17-18 in Budapest. The top-level meetings greatly contribute to the positions of Hungary and Russia getting closer, be it views represented in matters raised during the bilateral relationship or issues comprising international matters of common interest.

I make no secret, however, of the one issue that casts a shadow on our relations. It is a matter of historical memory. It should be noted that the falsification of history led by political interests is characteristic even today of several Central and Eastern European and Baltic countries. It is clear that some political forces are trying to revise the achievements of World War II and discredit the Soviet Union's wartime and post-war policy.

Some malign scholars and political scientists attempt to extrapolate some of the ‘dark spots’ of history to today's Russia. However, we must admit that most of Hungary’s renowned historians do not share this attitude and firmly take a stance in favor of an objective approach to the events of World War II and the history of post-war international relations.

Economic and trade cooperation

Trade and economic partnership between Russia and Hungary have a long history. It was due to the stable dynamism and pragmatism – the latter building on reciprocal utilitarianism – of this relationship that bilateral relations would be interrupted due to the economic crisis.

As regards the volume of foreign trade, which amounted to EUR 8.9 billion in 2012, Russia confidently occupies a position among Hungary’s three main trade partners, and a leading position among the non-EU partners.

It is not only the export-import trade that is developing rapidly between the two countries. In the 21st century, deeper forms of corporate and investment cooperation have particularly important significance. In connection with this, I am delighted to note that each other's markets are considered both in Russia and Hungary not only as export territories, but also as a working capital investment arena.

The Russian market offers real opportunities for foreign capital for diversification and risk reduction. It is noteworthy in this regard that the subsidiaries of such companies in Russia as MOL, Richter and OTP Bank have provided their mother companies stable yield during the crisis and laid the foundation for growth. In contrast, stagnation and deteriorating economic indicators were common in Hungary and other countries.

Hungarian firms successfully operate in several Russian regions, being actively involved in the implementation of infrastructure projects of public and private sector funding, which include the construction of hospitals, residential areas, municipal facilities and hotels. Experts estimate that the total cost of the potentially ready projects in these areas exceeds EUR 500 million. Hungarian experience is of outstanding importance at companies engaged in utilities and housing construction as well as in the production and use of modern technology, energy-efficient products.

There is successfully developing cooperation in the agricultural sector, too. Hungarian exports of agricultural products to the Russian market in the past two years have increased by 30%. The Hungarian side strongly recommends its technology and know-how for the Russian regions in the field of animal and poultry husbandry, crop and fodder production, fruit and vegetable processing. In addition, this segment happens to be the most active in the relationship between the relevant ministries. I emphasize here that the Russian co-chairman of the Intergovernmental Economic Commission is the Russian Agriculture Minister, Nikolai Vasilyevich Fedorov, himself.

Russia and Hungary regularly participate in thematic conferences, fairs and exhibitions. It is of symbolic significance that Russia was the guest of honor at the ‘OMÉK 2013’ Hungarian food industry exhibition on September 18-22 this year.

The arrival to East Central Europe of Sberbank, which is Russia's largest financial institution, and is in second place as far as the capitalization of Europe is concerned, may not play a less important role in making our trade and economic relations closer. The management of Sberbank has a declared aim of lending money to SMEs as its primary and most important task, which is fully in line with Hungarian economic policy objectives and interests. Other firms targeted by the Russian financial institution include those who want to foster closer relations with Russian companies, in particular with priority to the agriculture sector and the energy sector. For that matter, ‘Volksbank Hungary’, owned by the Russian bank could play a role as active participants in the targeted loan programs of Eximbank and the National Bank of Hungary.

Despite the multi-vector nature of common projects, the basis of Russian-Hungarian economic relations today is still formed by the traditional energy industry, which makes up the lion's share of mutual trade. Russia, just like it used to be, is a reliable and predictable supplier of European energy markets, guaranteeing transportation to the consumers. In this area, the increase of the investment component contributes to the construction of the Hungarian section of the South Stream pipeline, which means a huge injection of capital and jobs, and thus, major profit for Hungary as a transit country. Measures for the realization of the project are on schedule with the maximum co-operation of Gazprom's partner, the Hungarian State Holding Company and the government. According to the schedule, construction work is to start in March 2015, while the transport of gas will start in January 2017, at the latest.

Another flagship of investment projects in the energy cooperation between Russia and Hungary could be the participation of the Russian state company Rosatom in the construction of new blocs of the Paks nuclear power plant once built with Soviet technical assistance. Russian participation in the project does not only mean flexible financing options and large-scale localization, but also a top-quality technology, including safety and continuity.

However, in addition to all the importance of this sector, the diversification of bilateral trade is essential in order to maintain the positive dynamics of trade relations. In the future, the increase of the high-tech and investment components could be the priority of our economic co-operation by which the parties could increasingly realize benefits. Russia's WTO membership could play a determining role in this. The bound tariffs, the obligation to protect intellectual property, and the standardized norm regulation of foreign trade provides further opportunities for the two countries in the traditional and new sectors of the economy to increase the level of cooperation as well as the exports and imports of services, to develop scientific, technical and investment cooperation – all this based on WTO mechanisms, among others.

In summary, Hungarian-Russian economic relations have a good perspective.

Cultural cooperation

Hungary’s relationship with Russia has a dominant place in its international cultural policy. There are regular cultural exchanges. Between 2011 and 2013, Budapest and several Hungarian cities saw the performance of the Bolshoi Theatre Orchestra, the Igor Moiseyev and Alexander Alexandrov ensembles, the Moscow City Theater, and Hungary also hosted the concert tours of the great Russian pianists, Denis Matsuev, Grigory Sokolov and Evgeny Kissin. At the International Budapest Operetta and Musical Festival this spring, a St. Petersburg formation also displayed its talent. On September 5-7, 2013, Siófok hosted the 6th Finno-Ugric World Congress where bands from the Komi Republic also paid their respect.

Just recently, the products of Hungarian Book Publishers have been widely presented at the Moscow International Book Fair. The guests of honor of the fair were present with a very solid delegation headed by Hungary’s Deputy Prime Minister and Minister of Public Administration and Justice, Tibor Navracsics. This shows the honest interest of Russians in Hungarian literature and culture, as well as the need for the broadening and developing of our cultural-humanitarian relations.

Playing an important role in the development of bilateral humanitarian relations is the Tolstoy Association for Hungarian-Russian Cooperation, founded in 2011, which is actively and successfully working together with the Russian NGO called ‘For friendly relations with Hungary’ in the promotion of the achievements of Russian culture. Thanks to our close cooperation and the support of the Municipality of Budapest, a bust of the famous Russian writer Lev Nikolayevich Tolstoy was inaugurated on September 16 on a promenade named after him.

This cultural-humanitarian cooperation has also been successfully supported since 1945 by the Hungarian-Russian Cultural and Friendship Society founded by Nobel laureate Albert Szentgyörgyi.

We ourselves experience an increased interest by Hungarian youth in Russian culture and the Russian language. Language courses launched by the Russian Cultural Center enjoy great popularity. The number of those who are learning the Russian language has significantly increased at Hungarian universities and institutions.

On the other hand, Hungary is popular among Russians (one in every three tourists in Hungary is Russian). I would like to point out a specific example: I was recently in the spa town of Héviz and was surprised to hear Russian words more often than Hungarian. So, it is not surprising that Russian tourism as a factor – according to the mayor himself – plays a role in shaping the town’s budget.

In short, we have great potential for further development of cooperation in all areas. The current task is the successful realization of this potential.

Russian Ambassador Alexander Tolkach

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