The second Oeconomus Economic Club, held on 20 March, focused on Central Europe, its competitiveness, its relations with the US under the second Trump administration, and possibilities for cooperation between the region’s countries. The most discussed topic was defence, no doubt due to the unprecedented security challenges Central Europe faces.
In his opening speech, Péter Törcsi, the Chairman of the Board of Trustees at the Oeconomus Economic Research Foundation highlighted the fact that Central Europe has all the assets required for closer economic and political cooperation between our region and the United States: a skilled workforce, favourable labour laws, and less ideology than in the West. Although we suffer from bad European Union policies such as uncontrolled migration and forced green transition, in our part of Europe common sense still prevails.
The special guests of the event were Barbara Kolm, Director of the Austrian Economics Center, President of the Friedrich A. v. Hayek Institute, and Member of Parliament for the Austrian Freedom Party, and Lorenzo Montanari, Vice-President of International Affairs at Americans for Tax Reform and the Tholos Foundation, and Executive Director of the Property Rights Alliance. In her speech, Barbara Kolm stressed the importance of international collaboration between centre-right political communities. She pointed out several threats from Brussels which, ignoring the principle of subsidiarity, pretends it knows better in all areas. Specifically, the Digital Europe Programme is a threat to individual and economic freedom, and under the guise of the ReArm Europe Plan, Ursula von der Leyen is actually pushing war bonds.
Lorenzo Montanari admitted in his speech that for believers in free market, the use of tariffs by the new Trump administration is a little concerning. However, he pointed out that tariffs are a policy tool and not a final goal for Donald Trump. At the same time, a new transatlantic trade narrative needs to be created. In addition, the European Union should get rid of the digital taxation of big tech and the global minimum tax. Lorenzo Montanari expressed his hope that with the support of right-wing European leaders like Viktor Orbán and Giorgia Meloni, these goals will be accomplished.
Lőrinc Nacsa, the State Secretary for National Policy at the Prime Minister’s Office underscored the fact that Europe is losing competitiveness and dynamism. During communism, Central European countries were not allowed to build infrastructure between each other because the Soviet Union did not want them to cooperate. Now it is time to build infrastructure between our region’s countries. Hungary and the Central European region can become a meeting point of Eastern and Western technology and capital; we can be bridges between the East and the West. We also need to find a new economic strategy as we are too connected to the German economy, which is losing momentum. This is what economic neutrality is about: it means we need to be open to anyone wanting to do business with us, based on mutual respect and dialogue.
Miklós Szánthó, Director General of the Center for Fundamental Rights said that it was a wise decision on the Hungarian right’s part to bet on Donald Trump. It was in 2016 that Viktor Orbán endorsed Trump, then a presidential candidate, thereby becoming the first leader globally to do so. The fact that Trump has mentioned Orbán more than 100 times in a year reflects their good relationship. Trump has ushered in a new era of global politics in which realism, normality and common sense are back. However, there is also a new geopolitical and geoeconomic reality, and its outcome is not known yet. One possible scenario is a trade war between the US and China, which will hopefully not turn into a real war. Another scenario is that the great powers decide to jointly get rid of the world order that was created after World War II and create a new one.
Several participants spoke about topics related to defence. Central Europe is on the border of East and West, and we know from history that if the East becomes stronger, that poses risks to our region. Ádám Csenger, an analyst at the Oeconomus Economic Research Foundation was among those who highlighted that the Russian annexation of Crimea in 2014 prompted the Hungarian government to start developing the domestic defence industry which had been neglected for decades. The Hungarian defence development program is based on strong relationships, such as the cooperation between the Hungarian state and Rheinmetall, one of the leading European defence companies, that started in 2020. It was emphasised that since defence companies in Central Europe are generally small due to the limits of small national markets, systematic collaboration (and not just occasional cooperation) is needed between regional companies and countries.
The need for more cooperation between Central European countries was highlighted from an economic standpoint too. While 15 per cent of the EU’s economic growth in the last 15 years came from our region, this ratio has not changed in the last 10 years. The reason for this is too much dependence on the German economy. Since there are no quick solutions to Germany’s economic problems, Central Europe needs a new economic strategy, which should focus on boosting cooperation between the region’s countries. For example, Hungary’s exports to four other regional countries only account for 20 per cent of our total exports, so there is clearly room for improvement.
Mihály Tatár, a senior analyst at the Oeconomus Economic Research Foundation pointed out the bleak state of the EU’s competitiveness. For example, 1 MWh of electricity in the US and China costs €40, whereas in Central Europe it costs €100-200, or even €300 for companies in the evenings. The EU has finally realised that there are problems with its competitiveness, but nothing has changed: it increases energy taxes and aims to eliminate fossil fuels with energy regulation; Germany has closed its nuclear power plants. The question for Central Europe is how to avoid the fallout from all this? How to cooperate with international partners to shield our economies?
