Interview 05 April 2018

“The German Car Industry Has to Stop Allowing Itself to Be Used by Viktor Orbán”

by Thorsten Benner               Süddeutsche Zeitung

SZ: Mr. Benner, what are the implications of the upcoming election in Hungary for the EU?

Thorsten Benner: Sunday will decide whether Viktor Orbán will be able to continue his project of building what he calls an “illiberal state” in the heart of Europe, where the rule of law and other key norms of liberal democracy are disregarded. If his Fidesz party gains an absolute majority or even a supermajority of two-thirds of the seats in the Hungarian parliament, he can advance his agenda. This would be a terrible signal for the EU since Orbán is a sort of pioneer and role model for many authoritarian-nationalist forces in Europe.

SZ: Of the four largest companies in Hungary, three are subsidiaries of German multinationals: Audi, Bosch and Mercedes. Doesn’t this show that borders matter less and less, and that European integration works well?

Benner: Hungary is a success story for German industry, which uses the country as a cheap production site. Hungary’s workforce is well-trained, trade unions are weak and the logistics connections are very good. The Orbán government has rolled out the red carpet for German industrial companies by granting them tax reductions and subsidies as well as privileged access to top decision-makers. But I am convinced that these companies have a special responsibility in Europe and that they should not just stand by while the rule of law is being dismantled in Hungary. The German car industry should no longer allow itself to be used by Viktor Orbán.

SZ: How does the Hungarian Prime Minister use Western companies?

Benner: Foreign investors are currently used as sources of legitimacy by the governments in Budapest and Warsaw. Poland’s current Prime Minister Mateusz Morawiecki told Handelsblatt in 2017: “Investors vote for our policies with their money.” Orbán regularly shows himself in public with the heads of German companies, stressing how successful his economic policies are. These are the kinds of PR opportunities — provided by German companies — that are important for Orbán given his vulnerability to charges of economic mismanagement. During the recent election campaign, we have seen frequent revelations of corruption in the Orbán government.

SZ: What would German companies gain from distancing themselves from Orbán?

Benner: At the moment not much, except a better conscience. That is exactly the problem: there is no public pressure in Germany that demands an end of companies’ complicity with Orbán. This needs change urgently. Investments within the European Union should be subject to special standards. Hungary’s attraction for Audi, Daimler and Bosch stems from its integration into the EU and the common market, which is embedded in a set of liberal democratic values to which all governments have committed themselves. You cannot cherry-pick which freedoms you want and which ones not. This is why investments in Europe are different from investments in China or Russia.

SZ: A lack of knowledge about the situation in Hungary cannot be an explanation for the behavior of these companies; carmakers have high-paid workers with deep political knowledge. At Daimler, the former minister of state in the German chancellery Eckart von Klaeden is responsible for government relations…

Benner: …and Orbán publicly called him “my friend” during a Daimler PR event in Budapest. Industrial groups are obviously well-informed. But a very simple cost-benefit-analysis tells someone like Mr. von Klaeden: “We do great business in Hungary. Why change something if we benefit without paying a public price?” There is no campaign by NGOs demanding that von Klaeden stop cozying up to Orbán. I am really surprised that this important issue is being ignored in Germany; it would make for an easy campaign by NGOs committed to the values of an open society. Even German politicians who otherwise criticize developments in Hungary don’t mention this situation and challenge business leaders to change course.

SZ: Would Hungary’s Prime Minister Viktor Orbán be impressed if German top managers criticized his policies or if there were no more PR pictures of openings of production plants?

Benner: Whether this would shake him to the core is another question. However, importantly, Orbán would lose an important fig leaf to bolster his legitimacy because he would no longer be able to point to key international investors as his cheerleaders. Only Hungarians can bring about political change in Hungary. But if international corporations distanced themselves from Orbán, it would be an important signal, especially to those in Hungary who are standing up for liberal democracy. Currently, they can only have the impression that Daimler, Audi and others have sold themselves to Mr. Orbán.

SZ: Could Western companies do anything against rising corruption in Hungary and the dismantling of the rule of law?

Benner: Audi bankrolls a new multi-purpose arena close to their plant in Györ as part of its “corporate social responsibility” efforts. Orbán has been building such arenas all over Hungary because panem et circenses, or “bread and circuses,” is a key element of his approach to governing. Why Audi supports this in the name of social responsibility is beyond me. It would be much better if international companies established a fund that supports initiatives strengthening independent media and civic engagement. Western firms could join forces and pool their resources. That would shield them from being vulnerable individually, although that should not be much of a concern anyway given their importance to the Hungarian economy.

SZ: Since Orbán took office in 2010 many Western firms were pushed out of the market. Why was this not the case with German industrial companies?

Benner: It is true that Orbán has put pressure on many foreign companies in sectors such as telecommunications, media, retail or banking. All of these have one thing in common: domestic companies could take over their spot, which is not possible in the case of the German car industry. There are, however, German companies that decided to show a more responsible behavior even when confronted with pressure. Bertelsmann refused to sell the private TV station RTL Klub even though special taxes and similar impediments were announced by the Hungarian government. The channel even expanded its critical coverage. This shows that a different type of behavior is possible.

... 

This interview was conducted by Matthias Kolb for Süddeutsche Zeitung. A German version appeared on April 5, 2018.

Commentary 15 September 2018

Der Preis der Offenheit

by Thorsten Benner
ZEIT ONLINE

Article 04 September 2018

UN ohne Ordnung

by Philipp Rotmann
Aus Politik und Zeitgeschichte

Commentary 03 September 2018

Neuvermessung zur richtigen Zeit

by Thorsten Benner
Tagesspiegel Causa

Commentary 31 August 2018

Europe’s Quest for Financial Independence

by Thorsten Benner
Foreign Affairs

Commentary 30 August 2018

A Way Out of the Turkish Currency Crisis

by Bilal Bağ, Tayyib Demiroğlu
Berlin Policy Journal