Ambassador April H. Foley (2006-2009)
"Trans-Atlantic Issues in a Time of Transition"
Széll Kálmán Foundation, Budapest
May 15, 2008
Köszönöm szépen. És köszönöm a meghívást. Nagyon örülök, hogy itt lehetek ma este. I am honored to address this distinguished group. This is an excellent opportunity for me to share the thinking of the U.S. Embassy on several key issues. And I’m very interested in hearing from you and learning your thoughts at this important transitional time.
I’d like to start by discussing my highest priorities. I believe that working together on these issues strengthens our already excellent relations. Among these are: our joint efforts in NATO, energy security, visa-free travel, the climate for business, transparency, and educational exchanges.
The United States is committed to a strong and constructive bilateral relationship with Hungary – a genuine two-way relationship – with respect and responsibilities on both sides.
We are very fortunate because we have a significant body of shared values. We share a belief in human freedom, in democracy, in justice, transparency, the rule-of-law, limits on the power of the state, freedom of speech, freedom of assembly and freedom of worship. We share a belief that every human being is entitled to dignity.
This concord of values creates a powerful core for America’s friendship with Hungary. The result of these common values can already be clearly seen. American firms have invested more than $9 billion in Hungary since 1989. We are the third or fourth largest investor in your country. Our two-way trade has grown more than 13 percent in the last five years. Last year bilateral trade was nearly $4 billion. There are 1.5 million Americans of Hungarian descent.
My message to you today is: we’ve only just begun. We’ve only just begun to tap into the vast potential of our bilateral relationship. I see our bilateral future as full of opportunity. It is literally brimming with potential.
America applauds the leadership that Hungary is taking to promote freedom. In the NATO alliance, Hungary is gradually but steadily heightening its profile. I just got back last week from a trip to Afghanistan with Minister of Defense Imre Szekeres. As you may know, there is discussion in NATO circles of the risk of having a two-tiered NATO alliance: one tier that does the heavy lifting and one that does not. I was impressed by the commitment of Hungary to be a full spectrum NATO ally. In Afghanistan, Hungary is leading a provincial reconstruction team in Baghlan province. It is helping this strategically critical province rebuild after 30 years of war and chaos.
Many countries have caveats that severely limit the ability of their troops to address the difficult issues in Afghanistan. While Hungary has caveats in Baghlan Province, we salute Hungary’s decision to deploy Special Forces without caveats later this year. Hungary’s Special Forces were trained by Americans. We applaud Hungary’s commitment to prepare and deploy two Operational Mentoring and Liaison Teams without caveats to train the Afghan National Army. A well-trained ANA and a well-trained Afghan police force will be key to ending the need for NATO troops in Afghanistan. It is our ticket out. Hungary will be actively involved in both. One of the OMLT’s is a 50/50 partnership with the Ohio State Guard. I was in Ohio in February, trying to firm up Ohio’s commitment. So Hungarians and Americans will literally be working shoulder-to-shoulder in Afghanistan. Hungary’s heightened NATO profile is exactly what the Alliance needs.
We appreciate Hungary’s continuing contributions to Iraq, from the deployment of troops to the donation of equipment.
We respect Hungary’s decision to recognize Kosovo’s independence. Early recognition enabled Hungary to participate in the International Steering Group on Kosovo. Hungary has a distinctive regional perspective. Because of this, it is critical that Hungary’s advice be heard in the Steering Group. Hungarian forces also play an important role in the KFOR NATO mission in Kosovo.
At the Bucharest NATO Summit in April, Hungary supported the establishment of a new, multi-ethnic Kosovo Security Force.
We appreciate Hungary’s support for the basic objectives achieved at the NATO Summit in Bucharest.
The Bucharest Summit advanced NATO’s transformation. The Summit
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renewed our commitment to operations in Afghanistan and Kosovo;
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expanded the alliance by inviting new members to join, all of whom are in Hungary’s neighborhood, which will contribute to regional stability.
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The summit set a vision of future membership for other key countries, like Georgia and Ukraine;
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It strengthened partnerships far beyond the transatlantic region to countries across the globe;
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and it identified the defense capabilities needed for the future, including missile defense.
We are proud to have Hungary as a NATO ally. Hungary’s offer to host the Strategic Airlift Consortium at the Pápa Air Base exemplifies its strong commitment to the partnership. The Pápa Air Base will strategically strengthen the Alliance. And the Alliance in turn will strengthen the Pápa community. Once the C-17 program is up and running at Pápa, I believe there will be future opportunities to add activities at Pápa, which is being transformed into a top-notch facility.
Hungary and America are joined together in the great cause of expanding freedom – helping others to enjoy the rights all human beings were intended to have.
Hungary stands out as an example to countries, such as Cuba and Belarus, where the people are still shackled to systems of government that epitomize the bad, old days. President Bush has praised Hungary for its efforts in Cuba and asked other countries to be more like Hungary. Our transatlantic partnership is a positive example of how people on different sides of the ocean can work together, even in the face of old-think governments.
Economic and political questions converge when we turn to the question of energy security.
Hungary’s heavy dependence on Russia for its energy supplies exacts a financial cost, especially when it comes to natural gas. Our experts estimate that in 2020 it could be 40 percent cheaper to produce and deliver gas from the Caspian region to Hungary via the Nabucco pipeline than through the Gazprom-backed South Stream pipeline. The higher costs of South Stream will be passed on to businesses and to the consumer. They will negatively impact Hungary’s competitiveness. Worse still, there is a potential political cost. Russia’s heavy-handed approach with neighboring Ukraine and Belarus are a cause for concern. The questionable intermediary companies that accompany Gazprom deals are often a mark of corruption. Corruption also negatively impacts competitiveness.
Meeting the strategic challenge to diversify energy will require political courage. The Nabucco pipeline is critical to a secure future. Hungary’s commitment to Nabucco as the priority project creates important benefits. It
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creates a competitive energy market,
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it protects Hungary from disruptions of supply,
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it increases transparency in the energy sector,
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and it promotes competitive pricing.
But sequencing is important. Nabucco should come first. I am happy to see Hungary appointing a Nabucco Ambassador to address and overcome the challenges of the Nabucco project.
Let me turn to another priority – to strengthen the bonds of friendship between Hungary and the U.S. through more people-to-people contacts.
I’m frequently out in the Hungarian countryside speaking to Hungarian students about the value of studying in the United States. I’m a firm believer that this will pay dividends to Hungarian students for the rest of their lives. You, who have studied in the U.S., know what I am talking about.
Right now, American universities want to increase the diversity of their student bodies. They are attempting to create global communities on their university campuses. This will better prepare their students for the challenges of the global marketplace. More Hungarians are needed to balance out the global mix on U.S. campuses.
American universities all have financial assistance packages for foreign students. Some are increasing their average offers, especially among graduate schools.
So for all students, it is a question of finding the right school with the right financial assistance package.
We want your children to think about education in the USA.
Last year our two governments signed a new bilateral Fulbright Agreement. The Government of Hungary stepped up to the plate and fulfilled its promise to contribute.
But these programs need not be limited to government funding. I would be interested in your thoughts about how to raise extra funds from the private sector for the Fulbright program. This program is of enormous benefit to students in both of our countries.
So, what about the visa issue? The "problem" of visas is only a perception. The fact is that 90 percent of all Hungarians who apply for visas to the U.S. get them.
You should know that we are working hard right now to get Hungary into the Visa Waiver Program during the Bush Administration. I am 100 percent committed to this. There is a high probability that Hungary’s refusal rate will be below 10 percent in the year ending September 30. So we’re working to get all the supporting security arrangements in place. If Hungary hits its number, we will be in a position to move quickly.
Turning to the business climate, it’s been a challenging year, both politically and economically. The very commendable reduction in the deficit in Hungary was overshadowed in part by higher taxes, increased inflation, declining foreign direct investment, declining real wages, and stagnant growth. The macroeconomic indicators are not pretty.
And now there is the breakup of the ruling coalition. These factors put Hungary at a crossroads as it progresses through the long transition to a full-market economy.
Increased foreign investment and strong partnership with foreign investors are more crucial than ever.
I don’t have to tell you that investors look long and hard at their options. Hungary’s advantages, such as human capital, excellent physical infrastructure and its prime location, plus 23 billion Euros in EU development funds, are on the plus side. Hungary has adopted various structural reforms, and made improvements in the time it takes to set up a business.
But investors want to know if Hungary is committed to the re-establishing the competitive, predictable, business-friendly environment they seek. What about taxes? Also, what about transparency? What about the rule of law? What about the structural reforms that all of the respected economists are calling for?
Freedom House noted in its most recent report, "Nations in Transit," that a lack of transparency pervades Hungary’s procurement system.
In licensing and regulatory transparency, the World Bank’s "Report on Ease of Doing Business" ranks Hungary as one of the most difficult places in the world for dealing with licenses.
And the World Economic Forum’s "Global Competitiveness Report" identifies the “Business Cost of Corruption” in Hungary as one of the highest in the EU.
These are all problems that have solutions. Hungary is fully able to confront these problems realistically, develop solutions, and implement them. The political parties might productively focus less on transient political advantage and more on big picture priorities.
I think things are starting to move in that direction. I have been working with a group of eight Ambassadors whose investments represent some 80 percent of the Foreign Direct Investment. Together with AmCham and other business groups, we are encouraging the Government of Hungary to adopt laws and procedures that make public procurement and political party financing more transparent. We are encouraged that the government has forwarded revisions to the Public Procurement law that should help shine light into that process.
The Government formed an anti-corruption council that developed an anti-corruption strategy which will be presented to Parliament for consideration. It is intended to closely monitor corruption and to lessen its impact on daily transactions.
American companies have done well in Hungary, and they have also been good corporate citizens on issues ranging from minority employment to women’s empowerment, an issue of particular importance to me. Last October Morgan Stanley, AmCham, and the U.S. Embassy co-sponsored a conference titled, "Making the Business Case for Gender Diversity." It was a big success and has led to more creative thinking on this topic.
Part of being a good corporate citizen is deciding what to give back to the community. I note that AmCham is considering various projects that improve conditions for Roma. I applaud this effort and encourage all of you as business leaders, to consider how to fight for tolerance and against bigotry in your own work environments.
I am concerned about extremism in Hungary. I am concerned about the creation of the Magyar Gárda and other hate groups. I visited Auschwitz two weeks ago. And it made me realize more than ever the importance for all of us in leadership roles of taking responsible public stands against intolerance, against anti-semitism, against the politics of hatred. "Never again" is the theme at Auschwitz. The holocaust must never happen again. As leaders of business and leaders of the community, I encourage each of you to consider how you can take public actions that demonstrate your commitment to tolerance and equal rights for all citizens.
I am committed to sharing our own difficult experiences in order to help Hungary find a solution that works within its own context.
I’ll conclude by saying what I have said so many times before: Hungary is a great country with an illustrious history. I am privileged to be here as President Bush’s personal representative. The relations between the U.S. and Hungary are broader and stronger than ever. I intend to do everything in my remaining time here to make certain that we continue to build on our strengths. Now is the time to renew our progress in making Hungary a competitive, attractive destination for foreign investment and opportunity. Together I firmly believe we can make that happen. We’ve only just begun to realize our tremendous mutual potential.