Hungary and Norway: a win-win partnership

“The main reason for Norway to maintain an embassy in Budapest is because both countries are members of NATO – something very important today in the light of the Ukrainian situation. Another reason is that Hungary is a member of the EU, which is in the European Economic Area (EEA) to which Norway, Iceland and Liechtenstein belong. Also, both Hungary and Norway are members of the Schengen zone of common borders,” the Norwegian Ambassador in Budapest, Tove Skarstein explains in an extensive interview in a recent issue of Diplomacy & Trade.

“I came here after spending five years at my previous posting, Bulgaria. I was pre-occupied with the differences I would see here. One might have the uniform idea that all the countries of Eastern Europe are the same – once behind the Iron Curtain and now new EU members – and that all face the same challenges. However, that is not true – they are just as different as the countries of Western Europe. What they do have in common are these five decades of communist past. Although, historically, it may seem like a short time but the communists made such a strong impact on society, transformed people’s minds and penetrated far into the private sphere," Ambassador Skarstein points out.

She says she found Hungary a very advanced country but “the modern challenges are the same in Bulgaria: adapting to a multi-party system, having people interested in politics while many are disillusioned, many have lost the sense of security they had before and many of them are not able to adapt to the competitiveness of the modern era.”

1956: from sympathy to integration

The Ambassador adds that she was first aware of a country called Hungary in 1956 “as a small kid when a group of Hungarian refugees arrived in our neighborhood. Norway received 1,000-1,500 of them at that time. They were met with enormous sympathy and I think most of them have been successful in integrating well into Norwegian society, many becoming doctors, engineers – they became a well-integrated group of much resource.”

Currently, there are some 800 Norwegian students in Hungary, most of them studying medicine, dentistry and veterinary science. “It is really a win-win situation because we always have a shortage of professionals in these areas. In Norway, there are just five million people but there are enormous distances: if you travel from Oslo to the north, it is as long as from Oslo to Rome, Italy. Thus, it has always been a challenge to cover these huge areas with health professionals. We don’t have the capacity to educate all these people, so, by buying places at Hungarian universities, the Norwegian state can provide its students with the traditionally high-level Hungarian medical education in English. This money also comes in handy for the Hungarian universities with reduced budgets,” the Ambassador explains.

She adds that Hungary’s Foreign Minister János Martonyi has recently been in Norway, participating in a seminar celebrating the 15th anniversary of Hungary joining NATO, and also conducting bilateral talks in Oslo. Further political exchanges are expected once the newly elected governments are set up in both countries. Hungary had elections this April while the Norwegian elections took place last fall, resulting in a change in government. Both countries have been present in the peace missions in Afghanistan but in different geographical areas within that country.

The main aspect of bilateral relations is the Grant Program, comprising half of her work and that of the Embassy staff, as well. The framework is purely political. It is an agreement between the EEA and the European Commission. “We are enjoying the benefits of the single market but we are not contributing to the cohesion funds of the EU. Instead, the EEA is contributing bilaterally (with Norway providing 97% of the money) to countries eligible for the cohesion funds. This is a unique opportunity for us to establish bilateral relations. I think it was a very good decision even though, it entails a lot of work for us. We help these countries, including Hungary, to integrate more into the EU and adopt EU standards better. The principles of the distribution of the funds (totaling EUR 156 million for a five-year period) are discussed with Brussels as well as on the country level,” she says.

‘Too modest’ business ties

When it comes to economic relations, the Ambassador immediately remarks that ‘they are too modest’, so it is one of her priorities to increase the volume of trade. “I have been wondering why the figures are so modest. We are not located that far away from each other. For businesses today, distance is not the biggest issue, anyway. I think the reasons include the mutual lack of knowledge, Hungarian businesses focus on the older EU countries, like Germany, which is also an important trading partner for us.” Now, she has initiated a small survey conducted by a research company in Hungary to find out what the obstacles are and where the potentials are. She suspects one obstacle to be the high price of Norwegian goods. “Perhaps, another obstacle is the lack of information about each other or the amount of bureaucracy in Hungary that makes it difficult to get into the market – we’ll see once the results are in, Identifying the actual reasons will help remove the obstacles.”

Several sectors hold huge potential for Norwegian businesses, like in the area of seafood. “I know that Hungarians are not as used to fish consumption as we are but fish is very healthy food. Many Hungarians say they do not like fish which I very much understand because they probably have not eaten what I call real fish prepared as it should be,” she adds. “We had an event just before Christmas when we invited the chefs of several Hungarian restaurants  and brought chefs in from Norway to show them the possibilities so that they can put more fish on the menu. If people find good fish on the menu, perhaps, they will begin to like it and eat more in the future. We will probably approach the health authorities in Hungary who can make recommendations as to what is healthy for people to eat. In the EU, we believe people should be educated how to eat well, in a healthy way and within limits.”

The annual volume of bilateral trade exceeds EUR 160 million while direct Norwegian investments in Hungary amount to over EUR half a billion. The flagship of Norwegian businesses in Hungary is, of course, the telecommunication company Telenor, while the Ambassador also mentions the defense industry firm Kongsberg that “has a big order with the Ministry of Defense here for military (NATO compatible) crypto radios, a long-term contract with which there have been problems in the past but the issue has now been settled.”

Investors concerned

When asked about how satisfied Norwegian investors are with the Hungarian business environment, she says “there are problems.” She believes that “the fact that the government introduced new taxes during the crisis in 2010 was understandable. However, the taxes levied in certain areas of the economy came too fast, leaving no time for the companies concerned to prepare, not to speak of the fact that the taxes were said to be temporary but they are still here with the crisis gone. Telenor is among the top ten taxpayers in Hungary and if their profit is cut short by these government taxes, they will have to find the money somewhere else.”

Ambassador Skarstein is of the view that it is very important to have a predictable tax system. The lack of transparency is another problem for Norwegian and other foreign companies. “Being from a Nordic country, we are very sensitive to this issue, transparency is one of our treasured values, Nordic businesses are not comfortable where there is a lack of transparency. Also, we have strict rules for corruption. A Norwegian company is liable to fines by the Norwegian authorities if it is found to have gone into corruption practices – even it happens abroad. Our society is very strict in this respect and there are strong sanctions. Fighting corruption is a value in the European Union, as well. Transparency and corruption-free environment are also European values. This is what we would like to see more of here in Hungary, too.”

Nordic is a good brand

The four Nordic ambassadors in Budapest and their embassy staff meet regularly, exchanging experiences, having seminars, film days and other cultural programs as they have a similar cultural background in Scandinavia.

This March, the Royal Norwegian Embassy took part in organizing the Nordic Seminar to celebrate Nordic Day. “Hungary is the president of the Visegrád (V4) cooperation that sees the value of regional cooperation and the V4 looks to the Nordic cooperation as a model. Of course, you cannot simply take this seven-decade cooperation of Scandinavian countries and transplant it into Central Europe. However, I think there are lessons learned and experience to build on, like that of the Nordic battle group that serves as an example for the V4 battle group to be set up. Nordic is a good brand, people associate good things with it. We are all part of the European family and the European Union is looking very much to the north for solutions as it is rather the southern part of the EU that has been hit by the economic crisis while the north has been more stable. It has to do with the way you organize your society, the values and the practices you have,” Ambassador Skarstein points out.

The cultural mission

“It is a part of my mandate to promote Norwegian culture – classical and modern – in Hungary. We support the translation of books into Hungarian by professionals. Norwegian is a small language and otherwise these works would probably never be translated. We donate these books to public libraries that have limited resources in Hungary,” the Ambassador stresses, adding that “this year, we’ll have a stand at the Budapest Book Festival.”

There has been a Norwegian film festival recently and we had the visit of Jon Fosse, the most prolific contemporary drama author and the jazz musician Eivind Aarset. The travel costs are paid by the Norwegian state as a means of promoting the spreading of the country’s culture. “Of course, there are artists like the jazz musician Jan Garbarek who do not need this sort of promotion. Neither does Jo Nesbø, a crime novel writer who sells a book on the world market every 45 seconds,” she adds.

Discovering the country

“I have not seen the whole of Hungary, yet. In general, I’m very interested in history and if possible, I go to historic places in the country. I recently visited Székesfehérvár, which I learned, is a former royal town. It was interesting to see the historic center that is being rehabilitated. My next destination will be Kaposvár, whose college has links with a Norwegian university. We have a lot of students at the University of Debrecen in the east; the northeastern part of Hungary I have yet to discover,” Ambassador Skarstein says.

Concerning Hungarian food, she hopes to see more Hungarians eating more fish. For her, Hungarian food is “very good, although, it can be quite heavy for us, especially that we are not so much meat eaters. As for the taste, it is rather spicy but I like to have a little every time I walk my dog at the week-end and I stop at a stall that sells sausages. That – with a little draft beer – makes up my lunch on Saturdays.”

She admires Budapest, which is “a fantastic city. I’m happy to see that all the historic monumental buildings are taken care of, restored, it must be one of the most beautiful cities in the world. The Royal Norwegian Embassy and the Ambassador’s residence is in a historic setting, next to one of the gates of the Buda Castle, and “sometimes, I can hear Norwegian tourists walking up there. Many of them are ‘dental tourists’. “They come on Thursday, have dentist consultation in the afternoon, dental care on Friday, sightseeing on Saturday and Sunday, and last check-up Monday before getting on the low-cost flight back home,” the Ambassador observes.

(The interview was made before Hungarian government complaints regarding the use of Norwegian funds surfaced)