Roses and Trucks – Prosperous Turkish-Hungarian Relationship

The main event of the visit of Turkish President Recep Tayyip Erdogan in Budapest was the formal opening of the reconstructed tomb of Gül Baba, the Father of Roses. The Rózsadomb district is named after the memory of the Turkish poet. The name stands as a symbol of the prosperous relationship between the two countries.

Since the Hungarians settled down in the Carpathian Basin, the nation always determined itself in the system of relations with the surrounding great powers. These powers were the Slavs in the south, the Germans, and the Byzantines who conquered the Balkans before the Turks. During the two-day meeting, Viktor Orbán recalled that the situation of Hungary was always the foremost when the country found balance between these powers. The interest of Hungary is to find our own way between Berlin, Moscow and Istanbul. That is why it is important for Turkey to be present in the Hungarian market and our presence in the Turkish market is just as essential for Hungary.

This initiative is increasingly being implemented. Although trade is still lagging behind, it is growing dynamically, and the economic ties between the two countries are getting tighter. Budapest is the heart of Europe. The Hungarian capital is important for Turkey, not only in the perspective of logistics. However, the presence of Turkish logistic companies is already significant in Hungary and that can be a gateway in the direction of the V4 countries as well as the west. This is why it is important that the number of Turkish-owned companies in Hungary is growing rapidly. According to the report of the Opten Informatikai Kft., the third of 298 companies were established in the last one and a half years. Based on the analysis submitted to the MTI, 136 companies with Turkish background were founded in Hungary since 2016. The economic impact of these companies is already significant. The last year’s revenue of these companies has reached 85 billion forints, and they paid 2.3 billion in taxes. The number of employees exceeded 1.500.

As it was said by Turkish President Recep Tayyip Erdogan, there is still room for further development. He said that during the Hungarian-Turkish business forum on Tuesday. The event was organized by the Hungarian National Trading House.

An important instrument could be the new agreement concluded between the two countries' Exim Banks. The agreement, which aligns with the government's Eastern Opening strategy, promotes deepening cooperation between the two export credit agencies and effectively contributes to strengthening bilateral economic relations. In the framework of the cooperation, Exim and Türk Eximbank regularly exchange information on the economic situation and business opportunities of the countries. The utilization of this agreement can be profitable for companies in both countries. Another priority area is the solution of bank financing of Hungarian-Turkish joint investments and the search and establishment of joint business cooperation in the markets of other countries.

The Long-time Sick Man of Europe

Following the entry into office of the government built on the coalition of the League and the Five Star Movement, the Italian economy has come into the focus of the European policy once more, the matter of the vulnerability and the difficulties of the financial system and public finances. Despite the fact that the GDP of the Euro-zone’s third greatest economy and second greatest exporter is still ranked eighth in the world, the structural problems of its society and economy have not yet made it possible for Italy to make use of the chances to improve competitiveness offered by the Euro-zone to the fullest and thus put itself on an orbit of sustainable growth. Italian society has got tired of the austerity and crisis management characteristic of the past decade. It is not by accident that, according to the results of the elections, it was basically the movements on far right and far left of the political spectrum who were able to form a government.

The GDP growth of Italy has been consistently behind the rest of the Euro-zone states due to its competitiveness indicators, which have been constantly deteriorating since the 90’s. Consequently, the focal points of the economic policy of the consecutive governments was to kick start economic growth, to restore the financial balance of the country, as well as to improve its international role and perception in world economy. After years of economic stagnation and downturn, a slow economic growth only began in 2015, when the GDP grow by 1%. This positive trend was 0,9% in 2016 and 1,5% in 2017. To reduce government debt, however, even in medium terms, an annual 2% of GDP growth would be necessary.

Major element preventing economic growth, however, is the proportionally huge government debt – 2300 million euros to be precise (123% of the GDP in 2017). It is best perceived by saying that today, every Italian carries a burden of approximately 37 thousand euros in debt on their shoulders.

Despite all this, from the focus of Italian financing, it is a significant fact – considered to be a factor of confidence – that Italy possesses the fourth largest reserve of gold in the world (after the USA, Germany and the IMF), which is scattered in four countries (the USA, Switzerland, the United Kingdom and Italy) and amounts to 2452 tonnes in total.

In 2018, during the planning of the 2019 budget, the financing of the government debt has come up, and with it, the possibility of Italian exit from the Eurozone. Even though there truly is not much of a chance of this, the planning, which would increase budget deficit, still caused great stir on the financial market, increasing the yield of Italian government securities by a large margin.

Despite the fact that previous governments (headed by Matteo Renzi and Paolo Gentiloni) have been able to produce tangible results, reforms requiring austerity measures have made the Italian population weary. It isn’t happenstance that the victors of the 2018 elections were the Five Star Movement and the League, both of which have ardently criticized their predecessors. The promises of the yellow and green coalition – which would increase budget deficits and the government debt – pose a threat to the reforms which have already been put in place. Consequently, they can greatly lessen the chances of maintaining the trend of tentative but, positive changes.

The economic gap, which could be detected in the past years, is also evidenced if we compare the Italian GDP/person rate to the average within the European Union on a purchasing power basis. While this rate used to be 108% in 2008, it has decreased to 96% by 2016.

All this also means that the relative situation of the Italian government in EU terms has been greatly impaired and Italy seems to be falling behind its more important competitors (Germany 123%, France 104%, the UK 107%, etc.) 

In addition to the structural problems in the economy, the anomalies characteristic of the political structures amount for a bad environment from the standpoint of GDP growth. Due to the frequent changes of governments, so far there has only been a slight chance to successfully and completely implement and enforce the necessary reforms.


Welcome to North Macedonia!

In Europe, the events of the past years have once again proven that referendum is a two-edged sword. It can be used to obtain great legitimacy for a cause, but it is easy to fail – in the past years only, David Cameron’s or even Matteo Renzi’s example show just how much so. Zoran Zaev took a risk, nearly failed, but in the end, he triumphed. Soon, the country will be officially renamed North Macedonia, and its road to Europe will open.

The stakes were high. Had the referendum produced a clear result denoting that the majority of the people of Macedonia support changing the country’s name, and by this, resolving the dispute over it with Greece, the doors to Europe would have opened wide for Skopje. But this was not what happened. 36,87 percent of people entitled to vote voted in the referendum, answering whether or not they supported Macedonia’s EU and NATO membership by accepting the treaty concluded by Macedonia and Greece. Ninety-one point forty-eight percent of voters voted yes and only 5,64 voted no. This result could be interpreted to mean a triumph on the basis of everyone’s values. 

Hristijan Mickoski, president of The Internal Macedonian Revolutionary Organization – Democratic Party for Macedonian National Unity (VMRO-DPMNE) already said the following on the evening of the vote: Macedonians have made their choice, and they want the country to maintain its name; he counted those who abstained from voting among those who voted no. Zoran Zaev – unsurprisingly – interpreted the results in the exact opposite way: beforehand, he had spoken about the likelihood of resigning if the referendum failed, but by Sunday, his discourse was re-centered around the fact that they will not take into consideration those who abstained from voting and will focus only on whether the participants voted negatively or affirmatively.

After announcing the preliminary results, he declared that the overwhelming majority of the participants voted yes, and he will therefore initiate the amendment of the constitution and the change of the country’s name; if his opposition refuses to accept the decision of the majority of the voters, and if in the parliament there will not be the required two thirds majority  for the amendment of the constitution, he will initiate an early election, which could be held as soon as November.

This means that Zaev had great chances of failure by initiating a referendum, dragging with him the treaty with Greece regarding change of the name of the country. After all, the left side of the political spectrum does not have the support of two thirds majority of the Parliament, not by a long shot. Even if we count the parties of the Albanese community, they still only have 71 representatives, while 80 are needed to obtain a two thirds support. The right side had already let them know that they would not even participate in a debate. The vote, however, took an unexpected turn of events: in the end, 80 members of the 120-member parliament voted in favor of changing the country’s name, while 39 voted against the amendment of its constitution. 

Eight members of the opposition simply switched the position. VMRO-DMPNE had signaled, since the very first minute, that it was against the treaty, the change of the name and the amendment of the constitution required for it, because, in their opinion, this would have meant a loss of the Macedonian identity. Coming to vote at the referendum, however, they encouraged Macedonians not to vote negatively or to boycott it, but to vote by their conscience – which might have signaled that there was a split within the party.

Nobody expected the open opposition concerning the party policy. Members of the central committee of VMRO-DPMNE immediately gathered and within hours after the vote in the parliament Mitko Yanchev, the party’s vice president, as well as several high ranking leaders who were for amending the constitution, were dismissed. Simultaneously, the process of the expulsion of the politicians from the party began. The Macedonian right – unexpectedly – is now facing an even greater crisis than they could have foreseen; not only did the cases of corruption and tapping weaken the party, but there was a split resulting from their attitude with regards to the Union. 

Even if the constitutional amendments might take several months, thanks to the Macedonian vote in the parliament, the last obstacle in the way of Skopje’s Euro-Atlantic integration had been averted. While the Greek parliament still has to ratify the related Macedonian-Greek treaty concluded in June, certain experts consider this to be a mere formality, as amending the constitution in Macedonia was the hardest fight. Other analysts, however, think that an equally heated debate is to be expected in the Greek parliament as in its counterpart in Skopje, and the outcome of the vote is just as uncertain. 


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The GLOBS is the only magazine in Hungary that focuses on foreign affairs and trade. The topics cover the different aspects of social life, business and culture (especially business culture), research and development, investment opportunities, charity initiatives, and the everyday life of the diplomatic delegations.
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