Huge Economic and Trade Potential

In the recent months, political discussions between Italian and Hungarian officials have become more active. According to Ambassador Rustico, Italy and Hungary have been holding a very good relationship for several years. “A concrete momentum has been put in place, of course, with the 5 Stars/League government taking office in Rome in June 2018 and since then the dialogue between the two capitals has dramatically improved. This is because of the awareness of the two countries of the huge economic and trade potential to be developed. The high-level visits held in the past few months were therefore aimed at fostering further ideas in strengthening the economic cooperation.”

Like-minded countries

He is of the view that Italy and Hungary could be considered like-minded countries in several matters, mainly related to the EU and NATO domains. “More specifically, Rome and Budapest are working hard in making the debate on the EU Multi Financial Framework for the period 2021-27 fruitful, by sharing several views on the top priorities that the EU Presidency and Commission should take into consideration. Our countries are, also, having an ongoing dialogue on the management of the migration flows, by expressing in most of the principles, the same values, such as the protection of the EU external borders. Moreover, Italy and Hungary are in good position to exchange the views on the future of Europe.

Rome and Budapest belong to the Euro-Atlantic family, where they share the need for regional stability, the fight against the international radical terrorism and the program for a strengthening of the national armies.”

He adds that to the EU and NATO matters, Italy and Hungary are both committed to the protection of the persecuted Christians around the world, especially in the Middle East; have excellent relations within the major United Nations Agencies and the Central European Initiative; and boast also a really good military cooperation within the Multinational Land Force Initiative (along with Slovenia, Austria and Croatia).

Tackling migration

Although abating, illegal migration is still a problem on the shores of Italy. Ambassador Rustico says that the Italian Government has been proposing for years a solution that should be European-wide, and not only the responsibility of the border country, which has to deal with the arrivals of migrants. “In Brussels, Italy is asking for a balanced approach of responsibility and solidarity: a common European responsibility in managing huge flows of migrants arriving by sea because countries that are the first point of entry to the EU cannot always afford taking care of all these people, and solidarity from other European countries in accepting migrants that are allowed to enter Italy while it is not prepared economically to provide for them.”

He also stresses that “at the same time, Italy is holding a tough policy towards those organizations that are suspected of being involved in illegal migrant trafficking and to this end, a more efficient sealing-the-ports policy has been put in place. The Government of Italy, finally, is working on one hand to eradicate the reasons of the migration flows, by financing development programs to some of the transit and origin countries, and on the other hand to strike agreements with origin countries in order to repatriate illegal migrants.”

Growing trade

Italy is now Hungary’s third largest trading partner after Germany and Austria with the annual volume of bilateral trade reaching EUR ten billion. The Ambassador says he is “particularly pleased” with the figure of EUR 10.1 billion. This is an increase of 5.2% compared to 2017. Previously, Italy was the fifth commercial partner, third customer country and eighth supplier country of Hungary. This result was achieved thanks to a continuous growth of exchange that in the last 3-4 years, has accelerated due to the increase in purchasing power by the Hungarian population and to the appreciation of ‘Made in Italy’, he says.

It is a common belief that Italian food products constitute the essential part of Hungarian imports from Italy but in terms of value, these products constitute only 6.1% of imports, while in first place are manufactured products, which account for 52.8%, followed by machinery and means of transport which account for 38.8%. “I cannot fail to mention that Italy is the second European manufacturer and the eighth in the world. Italian industries produce high quality and high technology products. The excellence of ‘Made in Italy’ is in the high diversification of its specifications, which are mainly based on the macro-sectors of the ‘4A’: Food-wine (Alimentari-vini), Clothing-fashion (Abbigliamento-moda), Home-furnishings (Arredo-casa) and Automation-mechanical-rubber-plastic (Automazione meccanica). Italy is one of the five countries in the world that have a manufacturing surplus exceeding USD 100 billion and is also the leading pharmaceutical producer in the European Union. In the fashion sector, we are the world's second largest industry in terms of market shares after China,” Ambassador Rustico points out.

Hungarian exports to Italy comprise 38.7% of machinery and means of transport and 35.3% of manufacturing products. Exports of agri-food products are also growing, with a surplus for Hungary. We note instead an increase in imports of cereals by Italy, for the subsequent transformation into finished products.

The main investments include those in the financial sector with Unicredit, CIB (Intesa San Paolo) and Generali. “In manufacturing, we have Prysmian, Kometa 99, Dunastyr, Nidec GPM Hungary, HUMAN BioPlazma, Serioplast Hungary, Mapei, Flame Spray and many others. I would say that the trend is stable since the great transformation of industry 4.0 is underway in the manufacturing sector and governments are financing the innovation of companies that are incorporated in the national territory,” he adds.

Italian presence

According to statistics, there are some 2,500 Italian companies in Hungary. Ambassador Rustico notes that their presence began in the 1990s and “undoubtedly, the current economic growth, the increase in purchasing power, the development of the construction sector, the flat tax, the favorable fiscal environment are factors that influence the choice to invest in Hungary. I would also mention the work done by the Hungarian agency HIPA, which I consider an efficient tool in attracting and promoting new investments in the country. The Italian operators present in Hungary mention to me the lack of labor that ultimately affects all economic operators as one of the obstacles to the development of their companies. This is associated with another negative factor in the labor market, namely, the increase in wages that could jeopardize the operations of some SMEs. Entrepreneurs must therefore take all these factors into consideration, when making their investment decisions.”

In the heart of Europe

It is not only Hungary’s geographical location in the heart of Europe that is attractive for Italian investors but also its assets in agriculture, he says. “Our two countries share an excellent agricultural tradition that continues today and provides for our food needs. The added value for hectare in Italy is more than double the EU28 average and young people play and important role. Italy tops European rankings for farms run by people who are aged under 35. Our knowledge gained over centuries can be useful for Hungarian farmers, as well. There are excellent examples of collaboration, such as the production of cheeses involving Italian cheese masters and Hungarian milk producers. Agricultural cooperation is also well demonstrated by our already mentioned trade in food, beverages and tobacco, which exceeds EUR 1 billion a year. Italian agricultural machinery is widespread in Hungary, but there is still room not only for the supply of a wide range of high quality products at competitive prices, but also for new technologies aimed at reducing the impact of agriculture on the environment and climate, increasing soil health and lowering costs for farmers.”

Cultural ties

Ambassador Rustico stresses that cultural relations between Italy and Hungary are traditionally very intense. Their development is also ensured by a framework outlined by the 1965 Cultural Collaboration Agreement and its Executive Program. The latter identifies the Italian Cultural Institute in Budapest and the Hungarian Academy in Rome as the main institutions responsible for promoting and developing bilateral cultural relations. A Scientific and Technological Collaboration Agreement is also active since 2006, together with its executive Protocols.

“Many are the cultural sectors where cooperation has proved to be very fruitful, due to the keen interest in Hungary for Italian theater – the most recent collaborations have taken place between the Hungarian National Theater and the Piccolo Teatro of Milan; Italian music – as confirmed by the constant presence of Italian artists in the main Hungarian festivals; Italian cinema, literature – Umberto Eco’s opera omnia, for example, has been almost completely translated into Hungarian; and Italian art, about which the vast Hungarian museum network offers great possibilities for cooperation,” he highlights.

As for the knowledge and diffusion of the Italian language in Hungary, the Embassy aims to encourage the teaching of Italian at both school and university level by ensuring that the contributions, scholarships and teacher training courses offered by the Italian Government are usefully assigned. A report from the Hungarian Ministry of Human Resources (i.e. Culture) shows that in the academic year 2017-2018, almost 14,000 students studied Italian in the country, involving a vast network of schools and universities. There are about 35 agreements for student and teacher exchanges between 80 Italian and 17 Hungarian universities. “We are convinced that our mutual commitment in the field of cultural collaboration is destined to give excellent results and to open up new perspectives in Italian-Hungarian relations,” Ambassador Massimo Rustico concludes.