Hungarian minister Prof. Zoltán Cséfalvay 311.
(photo credit: Courtesy)
European nations must encourage more innovation as a means of creating
sustainable economic growth, and they could learn from Israel’s experience in
this area, a visiting Hungarian minister said Tuesday.
Cséfalvay, Hungary’s minister of state for economic strategy and parliamentary
affairs, met with The Jerusalem Post in Tel Aviv during a three-day visit to
Israel, which included meetings with Science and Technology Minister Daniel
Hershkowitz and Chief Scientist Avi Hasson.
Hungary excels in
technological fields such as medicine, but its companies struggle to turn ideas
into products, Cséfalvay said, adding: “Certainly that is an area where Israel
is far ahead, not just compared to Hungary but to many European
Cséfalvay was in charge of research and development when
Hungary held the European Union’s rotating presidency in the first half of
That was when he realized that most of Europe was suffering from a
lack of focus on R&D. The 27 EU member states spend an average 1.9 percent
of their GDP on R&D, well behind Israel and the United States, which spent
about 4.2% and 2.7% respectively in 2011, he said.
The EU’s seven-year
budget for research and technological development is expected to rise from 53
billion euros in 2007-13 to 80 billion euros from 2014-20 – thanks in part to
Hungary prioritizing the issue when it held the EU presidency, Cséfalvay
Incidentally, Hungary continues to have influence over research and
development policy, as it took over chairmanship of the 40-member pan- European
Eureka network for industrial R&D from Israel the day after giving up
presidency of the EU.
Ultimately the future of the European economy hangs
on whether European leaders can solve the mounting sovereign-debt crisis, and
Cséfalvay said he sees three possible scenarios – all of them with negative
The first solution is for some of the euro zone’s 17
members to return to their old currencies, or what Cséfalvay called the “Hotel
California solution,” because, as The Eagles sang, “You can check out any time,
but you can never leave.” In other words, he said, countries will be reluctant
to take such a step because the cost of doing so is too high.
solution, he said, is for the euro zone to create a fiscal union with a common
finance minister, coordination of taxes and budget policies – a move Hungary,
which still uses its own currency even though it is eventually supposed to adopt
the euro, opposes.
“Our aim is to carry out reforms and create a
favorable business environment,” Cséfalvay said. “If our taxes are harmonized,
how can we attract [foreign] companies?” Finally, he said, European leaders can
continue moving from compromise to compromise without taking any substantive
“That is the European way,” Cséfalvay said, adding that the
uncertainty was hurting Hungary.
The OECD forecasts Hungary’s economy
will contract by 0.6% in 2012, its debt-to-GDP still stands at 80%, and its
credit status has been downgraded to “junk” status by all three major rating
Representatives of the country are in Washington this week
seeking International Monetary Fund funding, or what Cséfalvay called “a safety
net” that would help stabilize growth. Hungary was one of the few European
countries currently operating without a safety net, he said, as the countries
using the euro enjoy the automatic protection that comes with being part of the
Talks between Budapest, the IMF and the European
Commission broke down in December when Hungary’s center-right government
indicated it was not willing to change a controversial law that gives the prime
minister the power to name the central bank’s vice presidents and increases the
number of political appointees to the council that sets the country’s interest
Nevertheless, Cséfalvay expressed confidence Hungary would
eventually receive the funding, saying, “I am certain that we will come to some
kind of agreement.”