Europe from a Central European Perspective

NANCY BRINKER: Welcome to today's Council on Foreign Relations meeting.

Please completely turn off, not just put on vibrate, your cellphones, BlackBerrys and all wireless devices to avoid interference with the sound system. As a reminder, this meeting is on the record. And before we begin today's program, the council is pleased to announce an upcoming breakfast meeting on Tuesday, October 23rd, "Assessing Iran: Sanctions, Riots, Rial and the Regime" with Gary Hufbauer And Suzanne Maloney. So for more information on upcoming events, please refer to the insert on the back of today's program.

Well, I want to welcome you, Mr. Minister, to Washington. We're delighted to have you visit. And we celebrate with you in this year, 2012, which marks the 56th anniversary of the 1956 Hungarian Revolution, a time period that served as a turning point for freedom and democracy for your country. We also celebrate our 91st year of diplomatic relations, although I wasn't here when we did it -- (inaudible) -- established in 1921 between Hungary and the U.S.

And on this important occasion, I just mention the hand of friendship that you extended to me during my tenure as ambassador during my posting, a position that scheduled my arrival date to Budapest on September 11th, 2001. And though it was pushed back a few weeks because of the terrorist attacks, when I did arrive in the country, I saw firsthand the warm greeting, the friendship and the genuine concern for those we'd lost on that solemn day. It was clear to me that Hungary was a country willing to help us in taking on the risk in their own backyard. The minister has been personally involved in these efforts, among many others. And today we're privileged to have him here with us for this session.

Janos Martonyi is a well-respected European diplomat, having served in this position previously between 1998 and 2002 and can attest personally to his deep commitment to his country, to Europe and -- as well as to the trans-Atlantic and Central European ideas.

Minister Martonyi is a lawyer, a professor of law. He still teaches law at his alma mater in Szeged. He served in various positions of increasing responsibility in foreign trade before joining the foreign ministry in 1991 as state secretary. After a brief but important detour into private business, he returned to the ministry as the ministry of -- as the minister for foreign affairs in 1998.

During his first tenure, he led Hungary into NATO in 1999. His parallel effort to tie Hungary firmly to the European community culminated in Hungary's joining the EU in 2004. With these two milestones, an important and consensual goal of Hungarian foreign policy was achieved. Hungary is now irreversibly a part of what the elder President Bush called "a Europe whole and free." Under his able stewardship since 2010 for the second time, Hungarian diplomacy has become an important and reliable to the U.S., both regionally and globally.

I'd like to invite the minister to the podium to give brief remarks, after which we will begin our Q-and-A. Thank you. (Applause.)

MINISTER JANOS MARTONYI: Good afternoon, ladies and gentleman. Thank you very much, Nancy, for this very, very kind introduction.

I also have to apologize for the length of my CV. In compensation for that, I try to be very brief in my introductory remarks. I understand it was planned to have this more of a discussion of conversation or a dialogue, so I try to restrict myself as much as I can. That's not always easy, but hopefully, I can manage, because the subject -- as he indicated, it's about Europe and Central Europe and the interaction between the two, what can be the role of Central Europe as such in the European construction or integration process.

But of course, my preference will be to start with the world. It would be a very long subject to speak about the world, but you know, it's very difficult to speak about Europe without making at least one or two remarks about the world, because the European turbulence, sometimes uncertainty, a little bit of confusion, at least as it is perceived from the outside -- it's just a reflection of the turbulence what we have in the world.

So we do live now in a turbulent world. It's not just a crisis. It's also that many of the tenets of conventional wisdom are now falling apart, be it economics, be it security policy, be it many other things. So we are living now in a changing world, no doubt. Nothing new about that. But what perhaps can be termed as relatively new phenomena is an acceleration of the processes and also an increasing degree of unpredictability and the uncertainty resulting therefrom.

Speaking about conventional wisdoms, it's now -- the IMF leadership which underlines that -- be careful with fiscal adjustments; pay much more attention to growth and jobs and employment. Austerity can be futile or, even worse, damaging. That's a completely new language.

European Union is awarded Nobel Peace Prize. It's very good. We do have peace and stability and relative prosperity also in Europe. But at the same time, global powers seem to get in a standoff because of a couple of barren rocks in the middle of the ocean.

So just to pinpoint one or two factors of this -- of this turbulence, and then I haven't touched on the consequences and the aftermath of the Arab Spring and the Middle East and Iran and so on and so on. So if we live in such a rapidly changing and turbulent world, we need to have some stability. We need to have some anchors that do not change. And what are these things? I believe it's not easy to answer this question because these are all variables.

And anything can change except for our fundamental values, provided we stick to them in every respect. And that's, I believe, the main raison d'etre of the Atlantic alliance. So what I really try to underline here again, that we are fully committed to the Atlantic alliance and all the values this alliance represents.

Just a couple of days ago we had another anniversary, another celebration in Budapest. We celebrated the 20th anniversary of the establishment our own Atlantic Council. Interesting speeches, looking back to the last two decades, and different political families were all represented.

And what we all agreed was that yes, indeed, for Hungary, the Atlantic alliance is a cornerstone. It's our basic anchor for our values but also -- also -- nothing to hide about -- our security. So Article 5 of the Washington Treaty is still the basic factor of our security, of our national security, collective defense; no longer -- I mean -- (inaudible) -- there's no doubt, this is for us the most important thing.

So now if we look at Europe, as I said, it's a reflection of all that. And we understand very well that there are now lots of concerns, doubts, suspicions about the future of, first and foremost, future of eurozone, or indeed the future of Europe. Both are strictly interconnected. So it has been said many times -- I myself also repeated couple of times that if eurozone for whatever reasons might implode or collapse, that would be a fatal blow to the European integration process as a whole.

So the mere fact that, for instance, my country is outside of the eurozone, together with a number of other countries, at least for the time being, doesn't mean that we would not be affected by any serious development within the eurozone. So we are integrated in the system. Seventy-five (percent), 76 percent of our exports go to the European Union; much of that, of course, goes to the eurozone. So we are strictly and closely intertwined with the eurozone -- not speaking about the fact that, of course, we are also legally obliged to join eurozone. When exactly, that's of course another question. Maybe this is not the time to set a date for that now. But in any case, eurozone and Europe as such cannot be split.

Now, speaking about -- maybe one or two words only about eurozone. I have fairly good news to you. I think we are now, eurozone is coming out of the trouble. It's not yet finished, there's still a long way to go, but the developments of the last couple of months, I believe, are more refreshing and give us more optimism.

I of course have no time to list all the measures that have been taken. In a concise matter, I would only say that what we have to do now -- I mean eurozone, especially -- is to use all the devices that have already been adopted, introduced, but perhaps not yet fully implemented.

Now, you know, most people discuss about the future of -- future of Europe is now a very fashionable subject, how we'll have to develop different types of unions, especially a political union. But at the same time, perhaps, not enough attention is paid to the urgent matters and to the urgency.

Now, the urgency is indeed stabilize the euro and stabilize eurozone and to do everything possible so that the imminent risks jeopardizing this structure that is -- (inaudible) -- should be eliminated, at least extinguished.

But we know very well that those or more changes will be needed. We have, of course, an order of the priorities; what we always keep saying is that it's very important that, if we want to change things, let's try to do those changes which can be done having the framework of the presently existing legal structure that is within the treaties as they exist.

Some people, of course, raise the issue of treaty change, amendment of the treaty. Some people even speak about a possible new treaty or a new, quote-unquote, constitutional framework. Maybe, but this is not imminent. We all know that changing the treaties would be an enormously cumbersome and lengthy process, with all the challenges and difficulties and referendums and so on, so let's concentrate upon what can be done now. Lots of things can be done now. Also, based upon the present treaties, I don't want to list you all the articles which could we used. Enhanced cooperation is certainly one of those possibilities.

From our perspective, from a Central European perspective, there is one thing which is extremely important, and this is that we must not build permanent walls separating different groups of the member states. That refers primarily to the 17 and the 10, but not only, not only, because there are some other possible walls as well, and that's why our main approach is that, yes, eurozone should do everything in order to save euro and the zone as such, but eurozone should do nothing which would create, as I said, permanent walls or which would widen and institutionalize the gap, the rift between the two groups of member states.

There will be differentiation. There will be flexibility, no doubt, and we have to recognize that. We have to use the legal devices which can be used, but we have to be very careful not to widen, not to deepen the gap, because that might result (if not ?) fragmentation or indeed dismantling of the whole construction. That's why we say that please keep the flock together. Don't leave any land outside of the flock, because there could be a danger for them; in fact, also for the others. So -- and don't establish permanent separation among different companies or member states.

Of course, we do not know what is going to happen in the future, but we have to see clearly what is or what will be the role of what we now call Central Europe in this whole exercise. And Central Europe has become much more relevant and important recently. I think we all perceive that, inside and also outside of Europe. Very few people knew about the Visegrad Four, for instance, a couple of years ago; now it has become an important factor. It has an important political and also an increasing economic weight within the European Union and also outside.

One feature about Central Europe has always been that Central Europe, for evident reasons, is more committed to the trans-Atlantic alliance and to the Atlantic system as such. We all know what the reasons are, be they historical or geographic or anything else. And I think this specific feature of Central Europe still applies.

On the other hand, if you look at Central Europe, most of these countries, they have a relatively dynamic economic development. They are not to be mistaken for Southern Europe, even if most of these countries are still outside of the eurozone, but they do not perform badly even if they are also affected by the crisis now. But Poland was the only country which could still grow also in the last two or three years. And in fact, the economic and the financial situation of these countries is -- on the whole, I would say, one could say it's better than the average.

For instance, indebtedness ratio is, in general, lower, except perhaps the indebtedness ratio of my country, Hungary. But also, in the case of Hungary, I have to add that from 82 (percent) or 82.5 percent of indebtedness ratio, we went down to 77 (percent), 76.5 (percent). So there is an improvement or so in this respect, not speaking about the fiscal deficit, which is now also (complete ?).

So what we see here is that Central Europe's role in the European construction will be, in the upcoming years, more important than it has been until now. And that's why we believe that the Central European factor should also be better perceived from the outside. Of course, some people might ask the question, what is Central Europe? Where are the borders of Central Europe? And if you ask me, where are the borders of Central Europe, I have to be quite frank: I have no answer for that, because Central Europe is not a geographic concept, maybe partially.

But Central Europe is a cultural concept. It is also a spiritual concept. Central Europe is a feeling. Central Europe is history. Central Europe is culture. Central Europe is diversity. Central Europe is tolerance. Central Europe is inclusion. Central Europe sometimes tension, a little bit of nervousness. Central Europe is also creativity and many other things. And I think that now we recognize more and more that, yes, of course we may have some disputes on some issues among ourselves, but our common interests and our common Weltanschauung, our common culture, is enormously more important than our differences. And that is, I believe, which could be a real contribution also for the future European construction.

Nancy, I think I was speaking already too long -- (scattered laughter) -- so I stop here. I understand that you also want to ask some questions. And also, our friends present would like to do the same. So thank you for your attention. (Applause.)

BRINKER: Thank you for that. Many of us here, as you know, are strong supporters of the U.S.-Hungarian relationship. I think back to the '80s, when Hungary pulled away from the Soviet orbit, and the U.S. helped Hungary establish a democracy. We've always enjoyed strong relations since then, and I'm proud of our strong ties. And many in this room are, I know.

But since friends can be honest with each other, we also need to be candid and recognize that people in the U.S. and Europe have some deepening concerns about Hungary's direction. You've heard the concerns about the checks and balances, religious freedom, the issues of judicial independence and freedom of the press. But -- and the nonpartisan Freedom House recently warned that the "Putinization" of Hungary was occurring. What can you share with us today to address these concerns and speak to what some of us see as a democratic regression in Hungary?

MARTONYI: Well, you listed a couple of things. On the whole, of course, all these concerns, I believe, are basically unfounded. Some of the criticism may be well-founded. And what we proposed right from the beginning is to have a constructive, frank and open dialogue on all these issues. And for that, of course, our condition is that the facts be well-known, or if not, they have to be clarified. It's not so difficult, after all, because the legislation is accessible; the -- most of the legislation also has been translated into English. It's on the Net, so anyone can read that. But without some knowledge of the basic facts and the texts, it's very difficult to have a frank and open and constructive dialogue.

Of course, I don't criticize your questions, but you also mentioned religious freedom. Religious freedom in Hungary is in doubt? I mean, this is certainly not serious. What is now disputed a little bit is that so-called official churches have to be recognized either by legislation itself or by the parliament. And some people ask the question, so why it is not the judge, what -- that recognizes an official church.

Now, at present I don't know how many official churches we have, 34 or 33 or (3)5, I don't know. I think it's the highest number in Europe, anyway. In some European countries, you only have two, three, four, five official churches. But I mean, this is not fair, your question. These official churches represent 99.99 percent of the population. One or two churches have not yet been recognized because they have no past and they have a very small number of people. They will also be recognized, of course, this year, next year and so on.

So -- but this is just the status of the official church. Religious freedom is a completely different thing. I don't need to join a church to have -- to enjoy my religious freedom. So just maybe it seems to be a nuance, but it's important because recognized -- to be recognized as an official church and recognize religious freedom are two different things, despite the fact the even official churches now cover practically the whole population, and especially in a country which is often blamed or criticized because we give too much room for family; we give too much room for motherland; we even mention -- imagine, we even mention in the preamble of our constitution the name of God, which is -- which is really something unbelievable in some countries in Europe.

We mention the name of God in our preamble because we quote our national anthem, which we all sing, including anyone, even, of course, the most obstinate communists. They were always singing -- (laughter) -- the anthem, "God Bless Hungarians." I mean, this is our national anthem, and the poor poet Kolcsey who wrote this line in the early 19th century, he would have never imagined that the word "God" will be something on a blacklist in early 21st-century Europe. But -- so that's about religion. Of course, there are many other subjects.

But let's look at the present situation, because that's more important than anything else. Most of the issues have now been ratified. The media law was amended at least twice, first upon the propositions of the European Commission, mainly on technical or quasitechnical matters. Then the Hungarian Constitutional Court intervened and narrowed the number of provisions. So the parliament had to amend it. Amendments had been adopted.

Council of Europe scrutinized the text, and there is still one or two outstanding issue. One will be tackled. So we adopted the commission's provision with respect to some rules on the content, and there will be a single issue which is still there, and this is the composition of the so-called media council. So that's about the media.

But while we are discussing about media law, and correctly amended it, as I said a couple of times, nobody paid much attention to the existing situation of the media in Hungary. And of course, it's very difficult to encourage you to follow it and to read it because most of that is in Hungarian. (Laughter.) I tried to do it. And I know very well that as far as the Net is concerned, 85 percent is a vibrant, if not violent -- sometimes even violent, opposition and that the daily national papers also -- I mean, 65 (percent), 70 percent is opposition. So our -- maybe I still -- more on the opposition side than on the government side, which is -- which is -- I believe is all right.

The only thing what can be sometimes raised is that, OK, fine, but the public television perhaps is not that much of an opposition, and I would recognize that even if they try to balance a little bit.

But again, few people knows that the so-called public television has a ]2 or 3 percent market share because 92 percent of the market is for the commercial television channels, which are all private and foreign -- and foreign-owned. So no one can say that they are not free, I mean, and even less so they are pro-government.

So we have an extremely vibrant media, which is very good. And the government is attacked on a daily basis, which is again very good.

Now to say that the freedom of expression or the freedom of press is in any way whatsoever restricted in Hungary is just not serious.

So (probably ?) we can go on and go on -- judiciary -- there again there were a lot of propositions made by the Venice Commission. Practically almost all of them were followed, and now the picture is quite clean, except perhaps one thing. This is the compulsory retirement age of the judges. The European Court of Justice will adopt a judgment early November and thereby the situation will be completely clarified. So let's have a frank dialogue on that.

But as I said, what we have to avoid -- and this is not always followed, especially by some, let's say, analysts or indeed some media -- if we just insult each other, it wouldn't help. And that was the problem with the campaign; that because of the unfounded attacks and accusations and defamations and distortions, of course some anti-Western feelings developed in the population. And this is damaging. This is damaging especially for my political family and also for people like myself who are deeply and fully committed to the Atlantic alliance, to European construction and so on and so on.

So that's why I believe that people should be more careful. And I think they will be more careful after the history of the last two years. And my only humble, let's say, advice or demand is that whoever is interested should read the texts, should also read perhaps the seven or eight or nine reports that were prepared by the Venice Commission. If somebody takes the trouble and reads all through these reports, which are fairly lengthy, and then we will -- will ask himself or herself so that was what it was all about, all these technical legal details; that's why this country is now -- is going backwards in field of democracy -- and that's nonsense. That's really nonsense.

But at the same time, what I said many times -- whenever we had (recent ?) propositions or recommendations and we found that that was justified, and also our own system valid, because we have a Constitutional Court, which is -- which is very strong and which intervened I don't know how many times; they did it before, but the last 20, 22 years the constitutional court always intervened; I don't know how many times altogether -- so when they did it, of course Parliament had to comply and legislations were amended. And they will be also amended in the future if the Constitutional Court finds that something is not fully in line with the basic values and constitutional principles.

So I'm open for dialogue. That's why I got into all these details. Maybe I was a little bit too long again. But with all due respect, I think we have to make a difference between criticism and between putting our democratic commitment in question. In the first case, we enter into dialogue and have a frank and open and useful discussion. In the second case, the only thing what we can do is to reject, because that's insult, and no one can insult not only an individual but also a community or a nation. I think that is the dividing line, and I think we all have to be careful about that.

BRINKER: Thank you.

Last week, Prime Minister Orban in Europeans' -- Europe's democracies -- said that Europe's democracies may not be up to coping with the economic crisis they face, and he said a presidential form of leadership has allowed him to drive through tough reforms at home. Are the -- in your opinion, are the democracies of Europe unable to fix their own financial crisis? And what do you believe, Minister, is a pro-growth approach for Europe? What is your perspective on that?

MARTONYI: I mean, the prime minister didn't question democracy at all. He was hinting at the possibility that maybe in the long run, also for Europe, a kind of semi-presidential or a presidential system would be more efficient. We have semi-presidential systems in some of the European countries. The best example is, of course, France. Another one is a little bit Romania, although they might change it.

In most European countries, we have a so-called weak presidency. A typical example for that is Germany or Italy or also Hungary, where we have a symbolic presidency, after all, not entirely, because he still has the right of the so-called political veto; he can send back legislation to the Parliament; but if the Parliament then adopts it again, then the president is obliged to sign it.

So I -- on this point, whether for Europe a presidential system, even French style, or perhaps even American style, would be more efficient, personally I disagree. I don't think that a presidential system would be more efficient in Europe or indeed in Central Europe or whatever Europe because of traditions, because of constitutional, let's say, evolutions. I do believe that in our system, this kind of classic parliamentary democracy is efficient.

By the way, people now complain about the efficiency of the Hungarian system because we have two-thirds majority in the Parliament. Germany has a very efficient political system, but also sometimes they have discussions among themselves. The constitutional court also intervenes in Germany very frequently. But it works all right. And indeed, if I were to be very frank, the power of the German chancellor or indeed the power of the Hungarian prime minister is extensive. I'm not sure that, depending upon the situation in the United States, the possibilities of the United States president are larger than those of a German chancellor, depending upon also, of course, the majority that they have in the legislature.

So with all due respect, I think that our traditional European system, with a weak head of state, a strong government, a strong chancellor or prime minister, is efficient enough, and that's why I don't believe that we should think about introducing even semi-presidential systems.

By the way, coming back to the accusations, I remember very well in the first month of our government a couple of journalists representing very well-known Western European left-wing papers, they came to me and they told me, ah, you want to introduce a presidential system, and Mr. Orban wants to be president. In the best-cases scenario he wants to be the president; in the worst-case scenario he wants to be the king. (Laughter.) Then I said -- of course, there were some, let's say, so-called literature here and there. But then I said, no, no, no, no; I don't think so; we know very well that our system is all right; our new constitution will not change it; the structure will remain exactly the same; the presidential powers will not be increased, although some people suggested it that maybe the president should have the right of, let's say, appointing somebody.

But there'll be no change because our system in this respect, the relationship between the president, the parliament, the government, the ministries and so on, it will remain the same. And nobody believed it. They said, no, no, no, no, no, no, you want to change your system, and at the end of the day, you'll introduce a presidential system because that would better fit Prime Minister Orban. I said, no, no, no, believe me, the present system fits very well the prime minister because he has a vast majority in the parliament, so that means that in fact, he has very wide possibilities. So that's about the different systems.

By the way, another subject is another kind of accusation that sooner or later we want to introduce monarchy. I mean, that's nonsense -- (scattered laughter) -- because the new constitution, under fundamental law, said the name of Hungary is not "The Republic of Hungary" but "Hungary." If you ask me, Nancy, I fully agree with that, because Hungary is Hungary; Romania is Romania; Hungary is Hungary. OK, but next line -- next line, the form of the Hungarian state is republic. That's in the constitution. So if somebody tells you that we want to have a king -- or a queen; why not -- (laughter) -- at a later stage, don't believe it.

BRINKER: (Chuckles.) Minister, let's turn now and ask some questions. I know many of you have questions. (We've brought ?) the microphone, and I will ask you, in respect of time, please state your question clearly, and then we'll be able to answer more.

Yes, you had your hand up first.

QUESTIONER: My name is James Kirchick, and I write for the New York Daily News, among other publications. A few months ago Elie Wiesel rejected the highest honor that your government has to bestow, and he cited the speaker of your parliament honoring a dead fascist writer, Mr. Jozsef Nyiro, in neighboring Romania, which caused a diplomatic crisis between your country and Romania. He also cited the introduction of fascist writers into the Hungarian national school curriculum and the veneration of Miklos Horthy, statues going up in towns across the country. I've discussed these issues with Hungarian officials, and they've said exactly what you said, that the more criticism that comes to Hungarians from the West, then you're just essentially encouraging people in Hungary to vote for Jobbik and to fall into the far right. I find that, frankly, disingenuous when the speaker of your parliament, a member of your party, is standing alongside Jobbik officials honoring a dead fascist member of the Arrow Cross. So could you please explain to us what your government policy is on the Horthy era and combating anti-Semitism and modern-day fascism in Hungary? Thank you.

MARTONYI: Well, my government's policy with respect to different historic periods is very simple. We are not going to rehabilitate Miklos Horthy or his regime. We are not going to erect official statutes (sic) anywhere. Of course -- (inaudible) -- local governments can do what they want, but this is certainly not the official policy.

If you are interested in Hungarian history, of course, there is plenty of Anglo-Saxon literature on that. So I don't want to get into this debate about the 20 or so years between the two world wars, about the responsibility of this or another person. It would be a long subject. But to cut it short, the only thing what I can say, that because of Horthy's role of the events in Hungary, 19th March '44, Horthy will never be recognized and rehabilitated, notwithstanding what he did before, which could be, of course, issue for a historic debate for historians.

Now, the writer's case -- first, this is a writer who is practically unknown in Hungary. Now he is much more known -- (laughter) -- since this -- the story. As far as his works are concerned, of course, some experts have to be consulted. About the -- what his works are concerned, there is no fascism in there. But there is something.

This person remained to be a member of the Hungarian parliament after the 15th of October, '44. This is unacceptable and unforgivable, for me or for any decent Hungarian, because that was the worst period in the history of my country. It was the so-called Arrow Cross government. After 15th of October -- I don't know how much you are knowledgeable about this -- the 19th March was the German occupation, and then there was an ambivalent period. But the -- (inaudible) -- Jews in Hungary were deported precisely in those months, and Horthy didn't stop it. In fact, the Hungarian gendarmerie contributed to that, and that's why we accept responsibility for that, despite the fact that the country was already occupied by the German troops. Well, I and many other politicians of my country, before president of the republic, other people recognized responsibility for that, and not just political responsibility but legal responsibility as well, because we of course are still paying compensation for the survivors and their families.

But coming back to this Nyiro case, it is a fact that this person, he remained to be in the parliament after -- even after 15th of October, and that's why I agree that the -- as a politician, he is absolutely unacceptable. One might even say that to serve the Arrow Cross government under German occupation was even worse.

So his reburial would have been a private matter. I don't know to what extent the speaker was aware of all this background, but certainly the government didn't intervene. And what happened was that the reburial didn't take place. And we regret very much that Elie Wiesel rejected this award. A couple of days later, one or two weeks later, our president of the republic went to Israel. It was a very good visit. He met with everyone. The whole situation was fully gratified. We have the best possible relations with Israel. I'm going to visit Israel in a couple of weeks. We have all friends around.

And if you speak about the domestic side, of course, that would be a long story. I don't want to get into that. But never before -- never before in the last couple of decades we had such genuine Jewish renaissance in Hungary than now. And we will continue that. Each year -- each year I light the candle for Hanukkah outside of the -- (inaudible) -- which is a big square, lots of people around. I do the same each year, and so on and so on. And whoever now infringes upon the law in this country, there is law and order. Legislation has been strengthened, and implementation of legislation has been strengthened even more.

BRINKER: We have just a few minutes left.

Yes.

QUESTIONER: I'm Karen Donfried with the National Intelligence Council. First, Mr. Foreign Minister, thanks very much for coming to the council.

I wanted to ask you about the extent to which you think Hungary's challenging economic situation and the indebtedness you mentioned is influencing Hungary's foreign policy. And I ask that because last month, when Hungary transferred a convicted murderer to Azerbaijan, there was some speculation that that may have been one of the reasons behind it, to the dismay of Armenia and certainly to the dismay of many of your NATO allies, and I wonder if you could help us understand the government's decision on that case. Thank you so much.

MARTONYI: Well, first, the economic situation -- I think the economic, especially the financial, situation improved significantly in the last couple of months or more. Just one example: CDS for Hungarian foreign -- I mean sovereign debt early this year was around 700, 720 or (7)50. Last week it went down to 260.

The forint is now very strong -- too strong, to my taste, but can't influence it, really.

So the financial situation is dramatically improving. The state deficit is now well under 3 percent. The indebtedness ratio goes down, as I said before. So I am not saying that we do not have challenges. We still have a quite large degree of fragility, but the situation is improving.

Now despite all that, I believe that we have to come to an agreement with the IMF and the EU, and I hope very much that this will be done in the upcoming weeks or months. Adjustment packages have been adopted in the last couple of days. The last one was adopted this morning -- I mean, at least in the form of a -- of a -- of a -- of a possibility, because if the commission feels that we are still not completely safely under 3 percent and we can still increase the revenues for next year, these are just the latest developments.

All in all, I think that as far as the conditions of coming to an agreement with the EU and IMF, they will be met. And I very much hope -- indeed, I trust -- that this agreement will be made.

Refinancing is assured, apart from that, and we said many, many times that we do need the IMF-EU agreement, not because it's indispensable for the refinancing but because it would offer us a very useful safety net and in addition to that the refinancing cost would be significantly lower with such a safety net in the background, which would be the IMF-EU agreement. So I don't think that we need any financing from anybody else.

This Azeri, let's say, sovereign bond purchases is absolute nonsense. We already refuted it a couple of times. And I don't think that anybody took it seriously because any serious financial entities knows very well that the Azeris would never want to buy sovereign bonds from us, and they will never do that. So you will see.

The Safarov case -- it is perhaps more controversial. We got very clear commitment from the Azeris that the enforcement of the life sentence will be continued. They violated this immediately. We protested. We condemned it. And in fact most European institutions also condemned it, including European Parliament. European Parliament said quite clearly that Azerbaijan violated the commitment or undertaking which they gave to Hungary, and thereby everybody recognized that there was such an undertaking.

My fellow ministers in the Foreign Affairs Council fully accepted this.

I would disagree that many NATO countries expressed their dismay. There was at least one country -- this is United States -- who expressed disappointment because of the effect of this upon the Minsk process, but of course we discussed it frankly. Also this morning I discussed it with Secretary Clinton. And what we are doing now is to try to re-establish the suspended diplomatic relationship with Armenia.

But one thing is certain. There was no economic or financial deal in the background. The guy committed an absolutely horrible crime. He got a life sentence. He spent eight years in prison. All through these years, the Azeris were demanding the transfer. It is our practice, and we followed in each case, in the case of any crime, the practice of transferring those criminals.

The only case where we at first refused this was the Safarov case because we didn't have an undertaking, a commitment, that the enforcement will be continued. When they gave us this undertaking in writing that they will continue the enforcement, and the possibility of provisional parole will only be opened after 35 years, then we said, OK, then we followed the practice and -- take Safarov. Same day, they, of course, violated this undertaking, even decorated him and so on, but that's also the -- (another ?) story.

Thanks for raising this because at least I could enlighten a little bit the background of that. That's useful because, again, this is a case where I see lots of false perceptions are lingering around in the world, like this Azeri, let's say, financial package, which is nonsense.

BRINKER: Thank you very much, (Foreign ?) Minister, for your frankness today. And we appreciate very much you being here.

Do we have time for one more question? No, we don't. We all want to ask you everything. But thank --

MARTONYI: Next time we'll speak about foreign policy. (Laughter.)

BRINKER: Yes. (Laughs.) Thank you very much.

MARTONYI: It's been a pleasure. (Applause.)

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THIS IS A RUSH TRANSCRIPT.

NANCY BRINKER: Welcome to today's Council on Foreign Relations meeting.

Please completely turn off, not just put on vibrate, your cellphones, BlackBerrys and all wireless devices to avoid interference with the sound system. As a reminder, this meeting is on the record. And before we begin today's program, the council is pleased to announce an upcoming breakfast meeting on Tuesday, October 23rd, "Assessing Iran: Sanctions, Riots, Rial and the Regime" with Gary Hufbauer And Suzanne Maloney. So for more information on upcoming events, please refer to the insert on the back of today's program.

Well, I want to welcome you, Mr. Minister, to Washington. We're delighted to have you visit. And we celebrate with you in this year, 2012, which marks the 56th anniversary of the 1956 Hungarian Revolution, a time period that served as a turning point for freedom and democracy for your country. We also celebrate our 91st year of diplomatic relations, although I wasn't here when we did it -- (inaudible) -- established in 1921 between Hungary and the U.S.

And on this important occasion, I just mention the hand of friendship that you extended to me during my tenure as ambassador during my posting, a position that scheduled my arrival date to Budapest on September 11th, 2001. And though it was pushed back a few weeks because of the terrorist attacks, when I did arrive in the country, I saw firsthand the warm greeting, the friendship and the genuine concern for those we'd lost on that solemn day. It was clear to me that Hungary was a country willing to help us in taking on the risk in their own backyard. The minister has been personally involved in these efforts, among many others. And today we're privileged to have him here with us for this session.

Janos Martonyi is a well-respected European diplomat, having served in this position previously between 1998 and 2002 and can attest personally to his deep commitment to his country, to Europe and -- as well as to the trans-Atlantic and Central European ideas.

Minister Martonyi is a lawyer, a professor of law. He still teaches law at his alma mater in Szeged. He served in various positions of increasing responsibility in foreign trade before joining the foreign ministry in 1991 as state secretary. After a brief but important detour into private business, he returned to the ministry as the ministry of -- as the minister for foreign affairs in 1998.

During his first tenure, he led Hungary into NATO in 1999. His parallel effort to tie Hungary firmly to the European community culminated in Hungary's joining the EU in 2004. With these two milestones, an important and consensual goal of Hungarian foreign policy was achieved. Hungary is now irreversibly a part of what the elder President Bush called "a Europe whole and free." Under his able stewardship since 2010 for the second time, Hungarian diplomacy has become an important and reliable to the U.S., both regionally and globally.

I'd like to invite the minister to the podium to give brief remarks, after which we will begin our Q-and-A. Thank you. (Applause.)

MINISTER JANOS MARTONYI: Good afternoon, ladies and gentleman. Thank you very much, Nancy, for this very, very kind introduction.

I also have to apologize for the length of my CV. In compensation for that, I try to be very brief in my introductory remarks. I understand it was planned to have this more of a discussion of conversation or a dialogue, so I try to restrict myself as much as I can. That's not always easy, but hopefully, I can manage, because the subject -- as he indicated, it's about Europe and Central Europe and the interaction between the two, what can be the role of Central Europe as such in the European construction or integration process.

But of course, my preference will be to start with the world. It would be a very long subject to speak about the world, but you know, it's very difficult to speak about Europe without making at least one or two remarks about the world, because the European turbulence, sometimes uncertainty, a little bit of confusion, at least as it is perceived from the outside -- it's just a reflection of the turbulence what we have in the world.

So we do live now in a turbulent world. It's not just a crisis. It's also that many of the tenets of conventional wisdom are now falling apart, be it economics, be it security policy, be it many other things. So we are living now in a changing world, no doubt. Nothing new about that. But what perhaps can be termed as relatively new phenomena is an acceleration of the processes and also an increasing degree of unpredictability and the uncertainty resulting therefrom.

Speaking about conventional wisdoms, it's now -- the IMF leadership which underlines that -- be careful with fiscal adjustments; pay much more attention to growth and jobs and employment. Austerity can be futile or, even worse, damaging. That's a completely new language.

European Union is awarded Nobel Peace Prize. It's very good. We do have peace and stability and relative prosperity also in Europe. But at the same time, global powers seem to get in a standoff because of a couple of barren rocks in the middle of the ocean.

So just to pinpoint one or two factors of this -- of this turbulence, and then I haven't touched on the consequences and the aftermath of the Arab Spring and the Middle East and Iran and so on and so on. So if we live in such a rapidly changing and turbulent world, we need to have some stability. We need to have some anchors that do not change. And what are these things? I believe it's not easy to answer this question because these are all variables.

And anything can change except for our fundamental values, provided we stick to them in every respect. And that's, I believe, the main raison d'etre of the Atlantic alliance. So what I really try to underline here again, that we are fully committed to the Atlantic alliance and all the values this alliance represents.

Just a couple of days ago we had another anniversary, another celebration in Budapest. We celebrated the 20th anniversary of the establishment our own Atlantic Council. Interesting speeches, looking back to the last two decades, and different political families were all represented.

And what we all agreed was that yes, indeed, for Hungary, the Atlantic alliance is a cornerstone. It's our basic anchor for our values but also -- also -- nothing to hide about -- our security. So Article 5 of the Washington Treaty is still the basic factor of our security, of our national security, collective defense; no longer -- I mean -- (inaudible) -- there's no doubt, this is for us the most important thing.

So now if we look at Europe, as I said, it's a reflection of all that. And we understand very well that there are now lots of concerns, doubts, suspicions about the future of, first and foremost, future of eurozone, or indeed the future of Europe. Both are strictly interconnected. So it has been said many times -- I myself also repeated couple of times that if eurozone for whatever reasons might implode or collapse, that would be a fatal blow to the European integration process as a whole.

So the mere fact that, for instance, my country is outside of the eurozone, together with a number of other countries, at least for the time being, doesn't mean that we would not be affected by any serious development within the eurozone. So we are integrated in the system. Seventy-five (percent), 76 percent of our exports go to the European Union; much of that, of course, goes to the eurozone. So we are strictly and closely intertwined with the eurozone -- not speaking about the fact that, of course, we are also legally obliged to join eurozone. When exactly, that's of course another question. Maybe this is not the time to set a date for that now. But in any case, eurozone and Europe as such cannot be split.

Now, speaking about -- maybe one or two words only about eurozone. I have fairly good news to you. I think we are now, eurozone is coming out of the trouble. It's not yet finished, there's still a long way to go, but the developments of the last couple of months, I believe, are more refreshing and give us more optimism.

I of course have no time to list all the measures that have been taken. In a concise matter, I would only say that what we have to do now -- I mean eurozone, especially -- is to use all the devices that have already been adopted, introduced, but perhaps not yet fully implemented.

Now, you know, most people discuss about the future of -- future of Europe is now a very fashionable subject, how we'll have to develop different types of unions, especially a political union. But at the same time, perhaps, not enough attention is paid to the urgent matters and to the urgency.

Now, the urgency is indeed stabilize the euro and stabilize eurozone and to do everything possible so that the imminent risks jeopardizing this structure that is -- (inaudible) -- should be eliminated, at least extinguished.

But we know very well that those or more changes will be needed. We have, of course, an order of the priorities; what we always keep saying is that it's very important that, if we want to change things, let's try to do those changes which can be done having the framework of the presently existing legal structure that is within the treaties as they exist.

Some people, of course, raise the issue of treaty change, amendment of the treaty. Some people even speak about a possible new treaty or a new, quote-unquote, constitutional framework. Maybe, but this is not imminent. We all know that changing the treaties would be an enormously cumbersome and lengthy process, with all the challenges and difficulties and referendums and so on, so let's concentrate upon what can be done now. Lots of things can be done now. Also, based upon the present treaties, I don't want to list you all the articles which could we used. Enhanced cooperation is certainly one of those possibilities.

From our perspective, from a Central European perspective, there is one thing which is extremely important, and this is that we must not build permanent walls separating different groups of the member states. That refers primarily to the 17 and the 10, but not only, not only, because there are some other possible walls as well, and that's why our main approach is that, yes, eurozone should do everything in order to save euro and the zone as such, but eurozone should do nothing which would create, as I said, permanent walls or which would widen and institutionalize the gap, the rift between the two groups of member states.

There will be differentiation. There will be flexibility, no doubt, and we have to recognize that. We have to use the legal devices which can be used, but we have to be very careful not to widen, not to deepen the gap, because that might result (if not ?) fragmentation or indeed dismantling of the whole construction. That's why we say that please keep the flock together. Don't leave any land outside of the flock, because there could be a danger for them; in fact, also for the others. So -- and don't establish permanent separation among different companies or member states.

Of course, we do not know what is going to happen in the future, but we have to see clearly what is or what will be the role of what we now call Central Europe in this whole exercise. And Central Europe has become much more relevant and important recently. I think we all perceive that, inside and also outside of Europe. Very few people knew about the Visegrad Four, for instance, a couple of years ago; now it has become an important factor. It has an important political and also an increasing economic weight within the European Union and also outside.

One feature about Central Europe has always been that Central Europe, for evident reasons, is more committed to the trans-Atlantic alliance and to the Atlantic system as such. We all know what the reasons are, be they historical or geographic or anything else. And I think this specific feature of Central Europe still applies.

On the other hand, if you look at Central Europe, most of these countries, they have a relatively dynamic economic development. They are not to be mistaken for Southern Europe, even if most of these countries are still outside of the eurozone, but they do not perform badly even if they are also affected by the crisis now. But Poland was the only country which could still grow also in the last two or three years. And in fact, the economic and the financial situation of these countries is -- on the whole, I would say, one could say it's better than the average.

For instance, indebtedness ratio is, in general, lower, except perhaps the indebtedness ratio of my country, Hungary. But also, in the case of Hungary, I have to add that from 82 (percent) or 82.5 percent of indebtedness ratio, we went down to 77 (percent), 76.5 (percent). So there is an improvement or so in this respect, not speaking about the fiscal deficit, which is now also (complete ?).

So what we see here is that Central Europe's role in the European construction will be, in the upcoming years, more important than it has been until now. And that's why we believe that the Central European factor should also be better perceived from the outside. Of course, some people might ask the question, what is Central Europe? Where are the borders of Central Europe? And if you ask me, where are the borders of Central Europe, I have to be quite frank: I have no answer for that, because Central Europe is not a geographic concept, maybe partially.

But Central Europe is a cultural concept. It is also a spiritual concept. Central Europe is a feeling. Central Europe is history. Central Europe is culture. Central Europe is diversity. Central Europe is tolerance. Central Europe is inclusion. Central Europe sometimes tension, a little bit of nervousness. Central Europe is also creativity and many other things. And I think that now we recognize more and more that, yes, of course we may have some disputes on some issues among ourselves, but our common interests and our common Weltanschauung, our common culture, is enormously more important than our differences. And that is, I believe, which could be a real contribution also for the future European construction.

Nancy, I think I was speaking already too long -- (scattered laughter) -- so I stop here. I understand that you also want to ask some questions. And also, our friends present would like to do the same. So thank you for your attention. (Applause.)

BRINKER: Thank you for that. Many of us here, as you know, are strong supporters of the U.S.-Hungarian relationship. I think back to the '80s, when Hungary pulled away from the Soviet orbit, and the U.S. helped Hungary establish a democracy. We've always enjoyed strong relations since then, and I'm proud of our strong ties. And many in this room are, I know.

But since friends can be honest with each other, we also need to be candid and recognize that people in the U.S. and Europe have some deepening concerns about Hungary's direction. You've heard the concerns about the checks and balances, religious freedom, the issues of judicial independence and freedom of the press. But -- and the nonpartisan Freedom House recently warned that the "Putinization" of Hungary was occurring. What can you share with us today to address these concerns and speak to what some of us see as a democratic regression in Hungary?

MARTONYI: Well, you listed a couple of things. On the whole, of course, all these concerns, I believe, are basically unfounded. Some of the criticism may be well-founded. And what we proposed right from the beginning is to have a constructive, frank and open dialogue on all these issues. And for that, of course, our condition is that the facts be well-known, or if not, they have to be clarified. It's not so difficult, after all, because the legislation is accessible; the -- most of the legislation also has been translated into English. It's on the Net, so anyone can read that. But without some knowledge of the basic facts and the texts, it's very difficult to have a frank and open and constructive dialogue.

Of course, I don't criticize your questions, but you also mentioned religious freedom. Religious freedom in Hungary is in doubt? I mean, this is certainly not serious. What is now disputed a little bit is that so-called official churches have to be recognized either by legislation itself or by the parliament. And some people ask the question, so why it is not the judge, what -- that recognizes an official church.

Now, at present I don't know how many official churches we have, 34 or 33 or (3)5, I don't know. I think it's the highest number in Europe, anyway. In some European countries, you only have two, three, four, five official churches. But I mean, this is not fair, your question. These official churches represent 99.99 percent of the population. One or two churches have not yet been recognized because they have no past and they have a very small number of people. They will also be recognized, of course, this year, next year and so on.

So -- but this is just the status of the official church. Religious freedom is a completely different thing. I don't need to join a church to have -- to enjoy my religious freedom. So just maybe it seems to be a nuance, but it's important because recognized -- to be recognized as an official church and recognize religious freedom are two different things, despite the fact the even official churches now cover practically the whole population, and especially in a country which is often blamed or criticized because we give too much room for family; we give too much room for motherland; we even mention -- imagine, we even mention in the preamble of our constitution the name of God, which is -- which is really something unbelievable in some countries in Europe.

We mention the name of God in our preamble because we quote our national anthem, which we all sing, including anyone, even, of course, the most obstinate communists. They were always singing -- (laughter) -- the anthem, "God Bless Hungarians." I mean, this is our national anthem, and the poor poet Kolcsey who wrote this line in the early 19th century, he would have never imagined that the word "God" will be something on a blacklist in early 21st-century Europe. But -- so that's about religion. Of course, there are many other subjects.

But let's look at the present situation, because that's more important than anything else. Most of the issues have now been ratified. The media law was amended at least twice, first upon the propositions of the European Commission, mainly on technical or quasitechnical matters. Then the Hungarian Constitutional Court intervened and narrowed the number of provisions. So the parliament had to amend it. Amendments had been adopted.

Council of Europe scrutinized the text, and there is still one or two outstanding issue. One will be tackled. So we adopted the commission's provision with respect to some rules on the content, and there will be a single issue which is still there, and this is the composition of the so-called media council. So that's about the media.

But while we are discussing about media law, and correctly amended it, as I said a couple of times, nobody paid much attention to the existing situation of the media in Hungary. And of course, it's very difficult to encourage you to follow it and to read it because most of that is in Hungarian. (Laughter.) I tried to do it. And I know very well that as far as the Net is concerned, 85 percent is a vibrant, if not violent -- sometimes even violent, opposition and that the daily national papers also -- I mean, 65 (percent), 70 percent is opposition. So our -- maybe I still -- more on the opposition side than on the government side, which is -- which is -- I believe is all right.

The only thing what can be sometimes raised is that, OK, fine, but the public television perhaps is not that much of an opposition, and I would recognize that even if they try to balance a little bit.

But again, few people knows that the so-called public television has a ]2 or 3 percent market share because 92 percent of the market is for the commercial television channels, which are all private and foreign -- and foreign-owned. So no one can say that they are not free, I mean, and even less so they are pro-government.

So we have an extremely vibrant media, which is very good. And the government is attacked on a daily basis, which is again very good.

Now to say that the freedom of expression or the freedom of press is in any way whatsoever restricted in Hungary is just not serious.

So (probably ?) we can go on and go on -- judiciary -- there again there were a lot of propositions made by the Venice Commission. Practically almost all of them were followed, and now the picture is quite clean, except perhaps one thing. This is the compulsory retirement age of the judges. The European Court of Justice will adopt a judgment early November and thereby the situation will be completely clarified. So let's have a frank dialogue on that.

But as I said, what we have to avoid -- and this is not always followed, especially by some, let's say, analysts or indeed some media -- if we just insult each other, it wouldn't help. And that was the problem with the campaign; that because of the unfounded attacks and accusations and defamations and distortions, of course some anti-Western feelings developed in the population. And this is damaging. This is damaging especially for my political family and also for people like myself who are deeply and fully committed to the Atlantic alliance, to European construction and so on and so on.

So that's why I believe that people should be more careful. And I think they will be more careful after the history of the last two years. And my only humble, let's say, advice or demand is that whoever is interested should read the texts, should also read perhaps the seven or eight or nine reports that were prepared by the Venice Commission. If somebody takes the trouble and reads all through these reports, which are fairly lengthy, and then we will -- will ask himself or herself so that was what it was all about, all these technical legal details; that's why this country is now -- is going backwards in field of democracy -- and that's nonsense. That's really nonsense.

But at the same time, what I said many times -- whenever we had (recent ?) propositions or recommendations and we found that that was justified, and also our own system valid, because we have a Constitutional Court, which is -- which is very strong and which intervened I don't know how many times; they did it before, but the last 20, 22 years the constitutional court always intervened; I don't know how many times altogether -- so when they did it, of course Parliament had to comply and legislations were amended. And they will be also amended in the future if the Constitutional Court finds that something is not fully in line with the basic values and constitutional principles.

So I'm open for dialogue. That's why I got into all these details. Maybe I was a little bit too long again. But with all due respect, I think we have to make a difference between criticism and between putting our democratic commitment in question. In the first case, we enter into dialogue and have a frank and open and useful discussion. In the second case, the only thing what we can do is to reject, because that's insult, and no one can insult not only an individual but also a community or a nation. I think that is the dividing line, and I think we all have to be careful about that.

BRINKER: Thank you.

Last week, Prime Minister Orban in Europeans' -- Europe's democracies -- said that Europe's democracies may not be up to coping with the economic crisis they face, and he said a presidential form of leadership has allowed him to drive through tough reforms at home. Are the -- in your opinion, are the democracies of Europe unable to fix their own financial crisis? And what do you believe, Minister, is a pro-growth approach for Europe? What is your perspective on that?

MARTONYI: I mean, the prime minister didn't question democracy at all. He was hinting at the possibility that maybe in the long run, also for Europe, a kind of semi-presidential or a presidential system would be more efficient. We have semi-presidential systems in some of the European countries. The best example is, of course, France. Another one is a little bit Romania, although they might change it.

In most European countries, we have a so-called weak presidency. A typical example for that is Germany or Italy or also Hungary, where we have a symbolic presidency, after all, not entirely, because he still has the right of the so-called political veto; he can send back legislation to the Parliament; but if the Parliament then adopts it again, then the president is obliged to sign it.

So I -- on this point, whether for Europe a presidential system, even French style, or perhaps even American style, would be more efficient, personally I disagree. I don't think that a presidential system would be more efficient in Europe or indeed in Central Europe or whatever Europe because of traditions, because of constitutional, let's say, evolutions. I do believe that in our system, this kind of classic parliamentary democracy is efficient.

By the way, people now complain about the efficiency of the Hungarian system because we have two-thirds majority in the Parliament. Germany has a very efficient political system, but also sometimes they have discussions among themselves. The constitutional court also intervenes in Germany very frequently. But it works all right. And indeed, if I were to be very frank, the power of the German chancellor or indeed the power of the Hungarian prime minister is extensive. I'm not sure that, depending upon the situation in the United States, the possibilities of the United States president are larger than those of a German chancellor, depending upon also, of course, the majority that they have in the legislature.

So with all due respect, I think that our traditional European system, with a weak head of state, a strong government, a strong chancellor or prime minister, is efficient enough, and that's why I don't believe that we should think about introducing even semi-presidential systems.

By the way, coming back to the accusations, I remember very well in the first month of our government a couple of journalists representing very well-known Western European left-wing papers, they came to me and they told me, ah, you want to introduce a presidential system, and Mr. Orban wants to be president. In the best-cases scenario he wants to be the president; in the worst-case scenario he wants to be the king. (Laughter.) Then I said -- of course, there were some, let's say, so-called literature here and there. But then I said, no, no, no, no; I don't think so; we know very well that our system is all right; our new constitution will not change it; the structure will remain exactly the same; the presidential powers will not be increased, although some people suggested it that maybe the president should have the right of, let's say, appointing somebody.

But there'll be no change because our system in this respect, the relationship between the president, the parliament, the government, the ministries and so on, it will remain the same. And nobody believed it. They said, no, no, no, no, no, no, you want to change your system, and at the end of the day, you'll introduce a presidential system because that would better fit Prime Minister Orban. I said, no, no, no, believe me, the present system fits very well the prime minister because he has a vast majority in the parliament, so that means that in fact, he has very wide possibilities. So that's about the different systems.

By the way, another subject is another kind of accusation that sooner or later we want to introduce monarchy. I mean, that's nonsense -- (scattered laughter) -- because the new constitution, under fundamental law, said the name of Hungary is not "The Republic of Hungary" but "Hungary." If you ask me, Nancy, I fully agree with that, because Hungary is Hungary; Romania is Romania; Hungary is Hungary. OK, but next line -- next line, the form of the Hungarian state is republic. That's in the constitution. So if somebody tells you that we want to have a king -- or a queen; why not -- (laughter) -- at a later stage, don't believe it.

BRINKER: (Chuckles.) Minister, let's turn now and ask some questions. I know many of you have questions. (We've brought ?) the microphone, and I will ask you, in respect of time, please state your question clearly, and then we'll be able to answer more.

Yes, you had your hand up first.

QUESTIONER: My name is James Kirchick, and I write for the New York Daily News, among other publications. A few months ago Elie Wiesel rejected the highest honor that your government has to bestow, and he cited the speaker of your parliament honoring a dead fascist writer, Mr. Jozsef Nyiro, in neighboring Romania, which caused a diplomatic crisis between your country and Romania. He also cited the introduction of fascist writers into the Hungarian national school curriculum and the veneration of Miklos Horthy, statues going up in towns across the country. I've discussed these issues with Hungarian officials, and they've said exactly what you said, that the more criticism that comes to Hungarians from the West, then you're just essentially encouraging people in Hungary to vote for Jobbik and to fall into the far right. I find that, frankly, disingenuous when the speaker of your parliament, a member of your party, is standing alongside Jobbik officials honoring a dead fascist member of the Arrow Cross. So could you please explain to us what your government policy is on the Horthy era and combating anti-Semitism and modern-day fascism in Hungary? Thank you.

MARTONYI: Well, my government's policy with respect to different historic periods is very simple. We are not going to rehabilitate Miklos Horthy or his regime. We are not going to erect official statutes (sic) anywhere. Of course -- (inaudible) -- local governments can do what they want, but this is certainly not the official policy.

If you are interested in Hungarian history, of course, there is plenty of Anglo-Saxon literature on that. So I don't want to get into this debate about the 20 or so years between the two world wars, about the responsibility of this or another person. It would be a long subject. But to cut it short, the only thing what I can say, that because of Horthy's role of the events in Hungary, 19th March '44, Horthy will never be recognized and rehabilitated, notwithstanding what he did before, which could be, of course, issue for a historic debate for historians.

Now, the writer's case -- first, this is a writer who is practically unknown in Hungary. Now he is much more known -- (laughter) -- since this -- the story. As far as his works are concerned, of course, some experts have to be consulted. About the -- what his works are concerned, there is no fascism in there. But there is something.

This person remained to be a member of the Hungarian parliament after the 15th of October, '44. This is unacceptable and unforgivable, for me or for any decent Hungarian, because that was the worst period in the history of my country. It was the so-called Arrow Cross government. After 15th of October -- I don't know how much you are knowledgeable about this -- the 19th March was the German occupation, and then there was an ambivalent period. But the -- (inaudible) -- Jews in Hungary were deported precisely in those months, and Horthy didn't stop it. In fact, the Hungarian gendarmerie contributed to that, and that's why we accept responsibility for that, despite the fact that the country was already occupied by the German troops. Well, I and many other politicians of my country, before president of the republic, other people recognized responsibility for that, and not just political responsibility but legal responsibility as well, because we of course are still paying compensation for the survivors and their families.

But coming back to this Nyiro case, it is a fact that this person, he remained to be in the parliament after -- even after 15th of October, and that's why I agree that the -- as a politician, he is absolutely unacceptable. One might even say that to serve the Arrow Cross government under German occupation was even worse.

So his reburial would have been a private matter. I don't know to what extent the speaker was aware of all this background, but certainly the government didn't intervene. And what happened was that the reburial didn't take place. And we regret very much that Elie Wiesel rejected this award. A couple of days later, one or two weeks later, our president of the republic went to Israel. It was a very good visit. He met with everyone. The whole situation was fully gratified. We have the best possible relations with Israel. I'm going to visit Israel in a couple of weeks. We have all friends around.

And if you speak about the domestic side, of course, that would be a long story. I don't want to get into that. But never before -- never before in the last couple of decades we had such genuine Jewish renaissance in Hungary than now. And we will continue that. Each year -- each year I light the candle for Hanukkah outside of the -- (inaudible) -- which is a big square, lots of people around. I do the same each year, and so on and so on. And whoever now infringes upon the law in this country, there is law and order. Legislation has been strengthened, and implementation of legislation has been strengthened even more.

BRINKER: We have just a few minutes left.

Yes.

QUESTIONER: I'm Karen Donfried with the National Intelligence Council. First, Mr. Foreign Minister, thanks very much for coming to the council.

I wanted to ask you about the extent to which you think Hungary's challenging economic situation and the indebtedness you mentioned is influencing Hungary's foreign policy. And I ask that because last month, when Hungary transferred a convicted murderer to Azerbaijan, there was some speculation that that may have been one of the reasons behind it, to the dismay of Armenia and certainly to the dismay of many of your NATO allies, and I wonder if you could help us understand the government's decision on that case. Thank you so much.

MARTONYI: Well, first, the economic situation -- I think the economic, especially the financial, situation improved significantly in the last couple of months or more. Just one example: CDS for Hungarian foreign -- I mean sovereign debt early this year was around 700, 720 or (7)50. Last week it went down to 260.

The forint is now very strong -- too strong, to my taste, but can't influence it, really.

So the financial situation is dramatically improving. The state deficit is now well under 3 percent. The indebtedness ratio goes down, as I said before. So I am not saying that we do not have challenges. We still have a quite large degree of fragility, but the situation is improving.

Now despite all that, I believe that we have to come to an agreement with the IMF and the EU, and I hope very much that this will be done in the upcoming weeks or months. Adjustment packages have been adopted in the last couple of days. The last one was adopted this morning -- I mean, at least in the form of a -- of a -- of a -- of a possibility, because if the commission feels that we are still not completely safely under 3 percent and we can still increase the revenues for next year, these are just the latest developments.

All in all, I think that as far as the conditions of coming to an agreement with the EU and IMF, they will be met. And I very much hope -- indeed, I trust -- that this agreement will be made.

Refinancing is assured, apart from that, and we said many, many times that we do need the IMF-EU agreement, not because it's indispensable for the refinancing but because it would offer us a very useful safety net and in addition to that the refinancing cost would be significantly lower with such a safety net in the background, which would be the IMF-EU agreement. So I don't think that we need any financing from anybody else.

This Azeri, let's say, sovereign bond purchases is absolute nonsense. We already refuted it a couple of times. And I don't think that anybody took it seriously because any serious financial entities knows very well that the Azeris would never want to buy sovereign bonds from us, and they will never do that. So you will see.

The Safarov case -- it is perhaps more controversial. We got very clear commitment from the Azeris that the enforcement of the life sentence will be continued. They violated this immediately. We protested. We condemned it. And in fact most European institutions also condemned it, including European Parliament. European Parliament said quite clearly that Azerbaijan violated the commitment or undertaking which they gave to Hungary, and thereby everybody recognized that there was such an undertaking.

My fellow ministers in the Foreign Affairs Council fully accepted this.

I would disagree that many NATO countries expressed their dismay. There was at least one country -- this is United States -- who expressed disappointment because of the effect of this upon the Minsk process, but of course we discussed it frankly. Also this morning I discussed it with Secretary Clinton. And what we are doing now is to try to re-establish the suspended diplomatic relationship with Armenia.

But one thing is certain. There was no economic or financial deal in the background. The guy committed an absolutely horrible crime. He got a life sentence. He spent eight years in prison. All through these years, the Azeris were demanding the transfer. It is our practice, and we followed in each case, in the case of any crime, the practice of transferring those criminals.

The only case where we at first refused this was the Safarov case because we didn't have an undertaking, a commitment, that the enforcement will be continued. When they gave us this undertaking in writing that they will continue the enforcement, and the possibility of provisional parole will only be opened after 35 years, then we said, OK, then we followed the practice and -- take Safarov. Same day, they, of course, violated this undertaking, even decorated him and so on, but that's also the -- (another ?) story.

Thanks for raising this because at least I could enlighten a little bit the background of that. That's useful because, again, this is a case where I see lots of false perceptions are lingering around in the world, like this Azeri, let's say, financial package, which is nonsense.

BRINKER: Thank you very much, (Foreign ?) Minister, for your frankness today. And we appreciate very much you being here.

Do we have time for one more question? No, we don't. We all want to ask you everything. But thank --

MARTONYI: Next time we'll speak about foreign policy. (Laughter.)

BRINKER: Yes. (Laughs.) Thank you very much.

MARTONYI: It's been a pleasure. (Applause.)

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