On a groundbreaking trip last week, Hungary’s Foreign Minister Péter Szijjártó injected new life into his country’s economic relations with Ecuador, Mexico, and Chile. A Hungarian trading house was opened on Friday in Santiago, Chile, following the inauguration of one earlier in the week in Mexico City. Hungary will reopen its embassy in Ecuador in a month or two and then establish a trading house there by August. Szijjártó also requested Hungary’s admission to the Pacific Alliance, a pro-market trading bloc of Mexico, Colombia, Peru, and Chile, as an observer.
Here, Hungary is following an explicitly independent foreign policy that places trade and economic links at the forefront. Sometimes this is controversial, such as a huge $10.8 billion nuclear power deal with Russia that has brought Hungary much criticism. While Hungary remains in the Western camp (meaning it is not blocking E.U. sanctions on Russia over Ukraine, for example), it is actively looking for economic opportunities beyond Europe.
In particular, Hungary places much importance on its exports, which grew 4.2% in 2014 to nearly $92 billion, giving the country a prized trade surplus of nearly $7 billion. This was aided by the government’s successful “eastern opening” strategy that saw foreign projects in Hungary increase by 14% in 2014. Of the government’s 55 signed strategic agreements, 11 are with companies based in these Asian countries. These companies’ projects now total $6.4 billion and they have created 4,900 new jobs for the Hungarian workforce, according to Szijjártó. “For Europe the future means Western identity and Eastern activity,” Prime Minister Viktor Orban wrote in 2013.
Encouraged by that success, Hungary’s next step is a “southern opening” to Latin America and Africa. Earlier in March, Szijjártó announced that over the next four years Hungary will open four new embassies, in Ecuador, Ethiopia, Ghana, and Angola, as well as six Hungarian trading centers, in Ethiopia, Angola, Chile, Ecuador, Peru, and Kenya.
Latin America is a growing market for Hungarian trade and exports, yet it has been largely neglected until recently. Hungarian exports to Mexico, its most important trading partner in the region, increased 17% in 2014 to $640 million, but the last visit of a Hungarian foreign minister there was 23 years ago. Hungary closed its embassy in Chile in 2009, (along with those in Venezuela, Malaysia, and Luxembourg, and 8 consulates around the world), as one of many cost-cutting measures undertaken while the country was being battered by the global financial crisis. The embassy in Chile reopened in 2013, contributing to a 62% increase in Hungarian exports there in 2014 that totaled nearly $60 million. And while the current annual bilateral trade of Ecuador and Hungary is comparatively low at $6.6 million, it will likely increase as Hungary expands its presence in the country.
The trading centers aim to help Hungarian small- and medium-sized companies operate successfully in the host country, and Hungary’s Eximbank will support this by opening lines of credit- – including $299 million to finance the cooperation of Hungarian and Chilean companies, and $287 million for Hungarian and Mexican companies.
Next year expect to see Orban travel to these “southern opening” countries to solidify these new ties.