Hungarian Prime Minister Viktor Orbán with Uzbekistan’s President, Shavkat Mirziyoyev in Tashkent, October 2022 (Photo: Miniszterelnöki Sajtóiroda/Zoltán Fischer)
Flórián Hecker
15/02/2023 05:00
“When we see geopolitical powers shifting, energy prices soaring, inflation ever increasing and the dynamics of world economy changing, it has become extremely important to maintain existing and working economic and commercial relations,” said Szabolcs Veres, a researcher at the John von Neumann University Eurasia Centre when we asked him. He also pointed out that the geopolitical situation that created more than one year ago by factors such as the coronavirus epidemic, the withdrawal of US forces from Afghanistan and the Russia-Ukraine war now forces not only Europe, and Hungary together with it, but also the whole world to face some unprecedented security challenges.
“Against this background, we can see now why Hungary considers economic cooperation with Central Asian countries a priority, which is clearly reflected in the work tour by Péter Szijjártó, Minister of Foreign Affairs and Trade in May, as part of which he visited three Central Asian countries (Kazakhstan, Kyrgyzstan and Uzbekistan),” emphasised the researcher.
However, the road to achieving the current status of these relations has been a long and arduous one. The first step was the Széll Kálmán Plan 2.0 which was approved by the Government of Hungary in April 2012. This document describes the new external economic strategy, one of the key objectives of which was to diversify Hungary’s export activities geographically. This meant that Hungarian foreign trade had to find ways to enter markets unknown or less known to it previously, and only that, but also to stay and trade on such markets. Later, this external economic strategy became known by the public as the “Opening to the East”.
From 2012, this external economic strategy made it possible for Hungarian export to expand into Asian countries with upcoming, fast developing economies. Here we must stress that the strategy of opening to the East is not an attempt at restructuring foreign trade to the detriment of relations with Western countries, rather the goal was to increase the room in which Hungarian external commerce and trade can manoeuvre. The strategy also included plans of further improving traditional economic and trade relations with new EU Member States.
The external economic strategy launched in 2012 employed three systems that facilitated the diversification of Hungarian foreign commerce. On the one hand, efforts in economic diplomacy had to be stepped up towards the new foreign trade destinations, while on the other hand the external economic specialised diplomacy needed to be reinforced. While the new Hungarian external economic strategy emphasised the importance of the Chinese and Russian markets, it also focused on the potential of the Central Asian countries. Four years later, in 2015, the Opening to the East was extended to include the external economic strategy of opening to the south which meant reinforcing African and Latin American economic relations.Hungary has always had good relations with the Central Asian countries. Hungary’s name was already known to the general public in Uzbekistan even before the strategy. When Uzbekistan was still part of the Soviet Union, many Hungarian products were exported to this Central Asian country, and the high quality of these products left a good impression in the Uzbeks’ memory.
Once the Opening to the East was launched, the economic relations between the two countries were taken to a whole new level, including the opening of a Hungarian embassy in Tashkent. It was a sign of the bilateral economic and diplomatic relations becoming more dynamic when, at the end of March 2021, the Hungarian Prime Minister, Viktor Orbán went on an official visit to Uzbekistan where he met and talked to the President of Uzbekistan, Shavkat Mirziyoyev.
At the meeting in Tashkent, the Hungarian and the Uzbek Prime Ministers signed a joint statement about the strategic partnership of Uzbekistan and Hungary, and about the cooperation programme between the two countries for 2021–2023. They agreed that as part of this programme they would reinforce the cooperation between the two countries in the field of industry and launch several joint projects, for example within the pharmaceutical industry, in agriculture, in the field of animal husbandry and potato production.
Péter Szijjártó visited Uzbekistan at the beginning of May this year to help maintain the dynamic improvement of the bilateral relations that we saw as a result of the agreement. The delegation from Hungary took part in the meeting of the Uzbek-Hungarian Intergovernmental Commission on Economic Cooperation where the current issues of the commercial, economic and financial cooperation between the two countries were discussed by meeting participants.
Nuclear energy was one of the key areas discussed at the meeting. The Hungarian Minister of Foreign Affairs announced that Hungarian cooling technology may be used in the nuclear power plant Uzbekistan was planning to build. The budget for the project is approximately EUR 300–400 million. Péter Szijjártó also said during his visit to Tashkent that as a result of an agreement concluded with Uzbekistan on education, Hungary would be offering not 100, but 170 grants to Uzbek students who wished to study at Hungarian universities.
This and other similar economic, diplomatic and educational results are the true signs of the developing relations between Hungary and Uzbekistan. In addition, Hungarian companies and banks, including OTP, have concluded some successful business in Uzbekistan. The Uzbek-Hungarian Potato Research Centre that was opened last year in Tashkent has also achieved some excellent results in crossbreeding potato species that could better adapt to the climate of the Central Asian country.Much like the Hungarian-Uzbek relations, those between Hungary and Kazakhstan also underwent some major improvements recently. For example, Hungary was able to increase its import of crude oil from Kazakhstan which now satisfies about 16% of the Hungarian demand.
In his statements, the Prime Minister of Kazakhstan, Mukhtar Tleuberdi often refers to Hungary as a reliable trade partner. The two countries have economic cooperations in many areas, like commerce, agriculture and the energy sector, in particular the renewable energy sector, finance, food and construction.
The Prime Minister of Hungary visited Kazakhstan in May which offered a great opportunity to reinforce relations that had been taken to a whole new level. During his visit to the capital of Kazakhstan, Astana (known as Nur-Sultan at the time), Péter Szijjártó met the President of Kazakhstan, Kassym-Jomart Tokayev, and they discussed the commercial, economic and cultural aspects of developing the strategic partnership between the two countries. Since 2005, investments from Hungary in Kazakhstan have been worth USD 269 million, and currently there are about thirty Hungarian companies in the Central Asian country, including Mol and Richter Gedeon which by now have gained a prominent position within the economy of Kazakhstan.
The fact that according to the data processed by the Hungarian Statistical Office, the value of trade between the two countries has gone from HUF 101 billion in 2020 to HUF 127 billion in 2021, which means an almost 25% increase in value, despite the coronavirus pandemic, is a very good example of how fast commercial and economic relations between Hungary and Kazakhstan develop. While the Kazakh news agency, Kazinform, reported that the value of trade between the two countries between January and June this year amounted to USD 64.6 billion. Kazakhstan exported goods worth USD 7.9 million to Hungary, while the Hungarian export to Kazakhstan was worth USD 54.7 million. In the last 16 years, USD 270 million in direct Hungarian investments were made in Kazakhstan’s economy.
Despite and as a consequence of the political crisis in Kazakhstan this January, we are seeing some serious political and economic reforms implemented, such as the referendum on amending the constitution, and the launch of the economic project called “New Kazakhstan”. As one of the key results of Hungarian-Kazakh relations, Prime Minister Tokayev announced in May that he had been invited by Viktor Orbán to visit Hungary in the near future.Relations between Bishkek and Budapest have been quite active. The Kyrgyz capital recently hosted the second meeting of the Kyrgyz-Hungarian Strategic Council that helps bilateral commercial, economic and cultural cooperation. Participants of the meeting discussed the future plans of the Hungarian-Kyrgyz Development Fund. As a result of the talks, they agreed that the capital of the Hungarian-Kyrgyz Development Fund, which currently stands at USD 16 million, would be gradually increased to USD 50 million, and that regular flights between Budapest and Bishkek would be launched. The value of trade between the two countries in 2021 exceeded USD 12 million which was a positive surprise for both parties.
At his last official visit to Kyrgyzstan, Péter Szijjártó met President Sadyr Japarov and Minister of Foreign Affairs Jeenbek Kulubaev. During its visit to Bishkek, the Hungarian delegation signed another two documents, one of which defined the schedule for bilateral cooperations between Kyrgyzstan and Hungary for the period 2022–2025. The other document was a memorandum in which the parties agreed to facilitate cooperation between the two countries in the field of culture, education and youth policy in the same period.
As you can see, as a result of the Opening to the East, Hungary managed to establish strong economic and commercial relations with the countries of Central Asia, in particular with Uzbekistan, Kazakhstan and Kyrgyzstan. While new divisions are emerging in world politics and the world economy, this strategy which was conceived long before these changes, brought stability and development opportunities for Hungarian foreign trade, and keeps the gates and roads open for Hungarian companies that want to expand into foreign territories.