Positive Direction and Dialogue

As Hungary celebrates the 15^th anniversary of its membership in the European Union, the Ambassador of Ireland, Pat Kelly recalls to Diplomacy&Trade’s Irish Focus that it was his country’s EU Presidency in 2004 that welcomed Hungary and nine other new member states to the Union. He also talks about issues of common stance and those of differences that the two countries hope to resolve through dialogue.

Touching upon the main issues that characterize Irish-Hungarian relations, Ambassador Kelly starts by recalling that Hungary’s accession to the European Union – the 15^th anniversary of which is celebrated this May – happened during the Irish presidency of the European Union in 2004. “We hosted the leaders of all the ten new member states at that stage to Ireland on the ‘Day of Welcome’. We were happy to welcome them and develop our relations with this part of Europe. Hungary and the other countries have become important EU partners. We have been closely together on many issues since. We have similar views on several matters such as competitiveness or taxation.”

He adds that “as far as Brexit is concerned, we work very closely with the Hungarian government and we appreciate very much the solidarity we receive from them. This April, the Hungarian Minister of State for EU Affairs, Szabolcs Takács was in Ireland and he visited the border between Ireland and Northern Ireland just see for himself the issues involved, so we have had excellent cooperation on that. I believe that overall, the relations are very good. There are occasionally differences that were discussed when our Prime Minister was here last year, for instance, but we feel very much that Hungary is a country, which has gained from this EU membership and certainly, I think there is still very strong support among Hungarians for what the European Union has brought. Our overall desire is to do our best to ensure that Hungary can realize the full potential of its EU membership.”

Hungary in the EU

As regards Hungary’s development as an EU member state in the past 15 years, the Ambassador stresses that “as we can see from the opinion polls, support for the European Union in Hungary still remains very strong. Hungarians share many values of the European Union, they value the four freedoms – particularly, the freedom of movement which allows Hungarians, just like the citizens of other countries, to move to another member state and seek employment opportunities there. Ireland, the United Kingdom and Sweden were the only three countries that from the very start granted this freedom of movement to people from all ten new member states. I think economically, Hungary is progressing very well, the economy is doing well. I know that sometimes people in Hungary and in some of the other V4 countries feel that the gap has not closed sufficiently between East Central Europe and Western Europe. I think your patience is required. Ireland supports the idea of continuing to have strong provisions in the EU budget for the cohesion fund as well as for the common agricultural policy to further close the gap that exists. Ireland was able to hugely benefit from those policies in the past, so, the countries of East Central Europe should be able to do just that, as well. There was a major recession that hindered efforts to close the gap but overall, I believe that on the whole, it has been a positive development.”

Brexit

The European issue currently most debated in Ireland is obviously that of Brexit. Ambassador Kelly agrees: “For us, Brexit has been a major preoccupation. Of course, we welcomed the fact that we were able to avoid the situation of Britain leaving the European Union without a deal at the end of March as it was a possibility at one stage. That would have been the worst possible outcome. Now, we have an extension until October 31. We believe very much that the withdrawal agreement that was negotiated between the British government and the European Union is the very best way to ensure what we call an ‘orderly Brexit’: Britain leaves the EU with a transition period during which the future relations can be negotiated. So, we very much hope that that withdrawal agreement can still be somehow secured in the UK Parliament. This is a matter for the UK government and the UK Parliament - the ball is in the court of the UK.”

Common ground

Following his talks in Dublin, the Hungarian Minister of State for EU Affairs, Szabolcs Takács said that Ireland is also against the curtailment of the European Union’s cohesion fund for the next financial framework, and similarly to Hungary, it is a supporter of national fiscal policy. As regards these issues and the future of the EU, Ambassador Kelly highlights that negotiations are underway on the next budget, which will start on January 1, 2021. These are very crucial and difficult talks. Of course, part of difficulty is that the UK is due to leave the EU and if it does, it will leave a big hole in the common budget. Some member states believe very much that given the UK departure and consequently less funding, the EU perhaps needs to reduce its expenditure or member states will have to contribute more. In Ireland, we are quite flexible on this issue. We don't want to see any dramatic decrease in the EU budget but at the same time, a modest increase may warrant us to pay for the other priorities of the proposed budget. For us, cohesion policy remains an important EU instrument. As I said we have benefited hugely from it and we believe that it is only fair if this opportunity is given to other member states, as well. For us, the common agricultural policy is also of great importance and Hungarians also appreciate it. Generally, on matters such as taxation, Ireland and Hungary would have very similar view. We very much feel that taxation at the end of the day should remain a national competence. As part of the Eurozone, Ireland is very much committed to cooperation and integration within the European monetary union but, at the same time, we do very much feel that taxation is ultimately best left in the hands of each member state. All these matters were used fully discussed during the visit of Mr. Takács to Ireland and these are issue that we will continue to work on in the future.”

Differences

The Ambassador reminds that “there is an Article 7 procedure going on against Hungary and Poland in the European Union. This has been discussed in the General Affairs Council on two or three occasions at this stage. We have flagged that we have some concerns here in Hungary particularly in relation to areas such as civic society, laws relating to non-governmental organizations or the uncertain situation of the Central European University in Budapest. So, these issues have been raised by Ireland and quite a few other member states during discussion in the General Affairs Council. At the moment, there is a dialogue going on between Hungary and the other member states concerning these issues. We certainly very much feel that dialogue is the only way to advance on these matters. There are also some concerns, which relate to certain recent legislation adopted here in Hungary and we want to work with the Hungarian government on these matters because, again, we feel that dialogue and a common approach within the European Union is always the best way to discuss issues. For instance, Ireland is not directly impacted by the migration problem but it is one issue where we try to demonstrate solidarity with those most affected: we have agreed to take quite a large number of refugees and asylum seekers who have come to Europe in the recent years.”

Overall direction positive

The Ambassador believes economic relations between Ireland and Hungary are pretty active at the moment: the overall level of trade, both services and goods, continues to grow with “the figure heading towards EUR 2 billion per annum, which is a very respectable level of trade. We certainly are happy to do even more in that area and we take some steps here at the Embassy, as well. This year, we have just launched a new Ireland Hungary Business Directory, which sets out how many Irish companies are active in this country. The directory’s overview of the businesses and entrepreneurs who make up the Irish economic presence in Hungary lists 57 companies.”

He adds that there has been quite an amount of investment from Ireland into Hungary, which is a confidence in the Hungarian economy and the economic opportunities that exist in this part of Europe. The main Irish industries in Hungary are listed as information and communications technology, machinery, automotive, tourism, electric machinery and equipment, chemicals, food processing, pharmaceuticals and metallurgy. Statistics show that in 2017, when the figure of EUR 1.5 billion was recorded for total goods and services, Ireland exported EUR 488.7 million of goods to Hungary, a growth of 9.5%. Ireland imported EUR 195.8 million of goods from Hungary. “Of course, we would always like to see more trade. We work closely with our sister agency Enterprise Ireland to promote more Irish exports to Hungary and certainly, the number of companies coming to Hungary from Ireland is also gradually increasing – with more and more exports and more and more jobs being created. Obviously, we would like to see more Hungarian investment in Ireland and certainly there is some positive development in that area, too. I know that a major investment is taking place right now by the Hungarian investment agency Concorde that is opening an office in Dublin. We very much welcome that kind of investment in Ireland. Of course, there is more to be done but the overall direction is very positive. This is particularly important in terms of Brexit that we are actively involved in promoting trade. It is because the reality is that once Britain leaves the European Union – hopefully, it will be with an agreement but still there is a possibility that it might be with a ‘no deal’ outcome – then, that will make trade with Britain more difficult for EU member states. We are trying to identify new markets so that companies could exploit such a situation,” Ambassador Pat Kelly concludes.