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Quest Means Business
Fed Raises Rates 0.25 Percent To Highest In 15 Years; Russia Claims Ukraine Tried To Kill Putin In Drone Attack; Hungarian Lawmakers Pass Judicial Reform Law; Dow Falls After Fed News Conference; Hungarian Government Clashes With E.U. Over Sanctions, Rule Of Law; Wizz Air Announces "Multipass" Subscription; Dash To The Bell. Aired 3-4p ET
Aired May 03, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: It is nine o'clock in the evening in Budapest. There is an hour to trade still on Wall Street. The market is
open. This is the way it is looking. It has of course been Fed Day today and that has given the market -- you could see.
I mean, talk about up down. They can't really decide where it wants to go. And we'll get into the reasons why the market is betwixt and between as we
went on the way through our program tonight.
Those are the markets, the things that we'll be talking about tonight. The Fed signals perhaps a pause in rate rises, future decisions will be made
meeting by meeting. There is no general trend ahead.
President Zelenskyy denies an assassination attempt on Russia's President Putin. Meanwhile, Russia claims the drone strike on the Kremlin overnight.
You see the pictures, we will talk about it.
And here in Hungary, the Parliament has passed judicial reforms. Will it be enough to unlock EU funds? I will put that to the foreign minister along
with a host of other questions as we went our way through the program.
We are live in Budapest tonight. It is Wednesday. It is May 3rd. I'm Richard Quest, and of course, in the Hungarian capital, I mean business.
Good evening from Budapest. It is delightful to be here this evening. The weather has been beautiful over the last few days. And I'm hopeful, fingers
crossed that it's going to not rain before the end of the hour.
We are in Hungary because this country stands at the crossroads of so many issues in Europe and the world today. In the crossroads of Ukraine, Russia,
and Western Europe, and it is caught up in many of the region's most bitter dispute, and seemingly, it does not seem to pull back from wanting to get
involved and arguably throw petrol on the flames.
Tonight, the foreign minister of Hungary is with me. We'll be talking face- to-face, nicely, that is down the line. The chief executive of the country and one of Europe's largest airlines, Wizz, is with me. And the former
Central Bank governor, Peter Akos Bod is with me to talk about the issue of inflation. You'll hear why in a moment.
In Washington, the Fed has raised interest rates by a quarter of a percent. That's where we must start tonight. It is the highest level in 15 years.
You've got to go back to before the great financial crisis before you can find these rates.
It is the tenth straight hike. And from the Fed statement, it could be the last for a while. The Fed Chair is speaking now after the decision and
Jerome Powell has told reporters that the last meeting, the anticipated firming. Now, there's been a change in the statement, as he made clear.
(BEGIN VIDEO CLIP)
JEROME POWELL, US FEDERAL RESERVE CHAIRMAN: That sentence is not in the statement anymore. We took that out. And instead we're saying that, in
determining the extent to which additional policy firming may be appropriate to return inflation to two percent over time, the Committee
will take into account certain factors.
So that is a meaningful change that we are no longer saying that we anticipate, and so we'll be driven by incoming data meeting by meeting and,
you know, we'll approach that question at the June meeting.
(END VIDEO CLIP)
QUEST: Rahel is with me. Rahel, this is interesting, because until now, we've had rates are going up. Now, they are truly data dependent. And
frankly, if the data stays as it is, there will have to be more rate rises, because inflation is looking sticky.
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Well, I think that remains to be seen, but I think you're right that it was a meaningful change. I have the
March statement over here. I have the May statement over here. You can see the difference between the statement highlighted here.
I think it really depends, because let's go through some of the factors. Yes, inflation is still elevated, but it is cooling, perhaps not as fast as
many would expect, because remember, Richard, that Jay Powell said not long ago that 2023 was supposed to be the year of significant declines in
inflation. I'm not exactly sure that what we're seeing qualifies as significant.
But we are still seeing robust job growth and that is something you have to consider because even today, we got fresh data from ADP, the private
payroll processor that came in twice expectations that also came in twice what we saw the month prior.
So in many ways, we're still seeing growth, but inflation is slow. And you can't forget of course that we have these banking tremors that even up
until this week, picked back up.
[15:05:05]
And so you really have to wait to see what's the impact of the credit tightening, what's the impact of some of the borrowing costs, which of
course, we know the monetary policy lacks. So, I think there are a lot of factors out there.
QUEST: Oh, to be sure, but the underlying factor, never mind headline inflation, if we look at core inflation, and if you look at the Fed's
preferred measure, along with services, there is this doubt that enough monetary tightening is there, certainly, to get it down to two percent, and
that is another issue completely, but the Fed says it remains strongly committed to two percent.
SOLOMON: Yes, I mean, to your point, core PCE definitely accelerated in the last report, and that is certainly not something that Powell wanted to see.
The challenge, however, Richard, of course, as you know, is the bank tremors, the banking crisis that we are still in the midst of and Jay
Powell said, as I was walking to the camera, he said that we can't be precise in terms of the type of impact that will have on lending standards.
As you and I have talked about, Richard in the past, that is essentially the equivalent of a rate hike. The pullback and tightening that we're
likely going to see from some of these banks, the small, medium-sized banks, perhaps even some of the larger banks.
And so I think the reality is, is we still don't know what the impact of that will truly be on the economy. And there is a real risk here, make no
mistake, there is a real risk here of the Fed overdoing it.
QUEST: Rahel, thank you. We're grateful for that. We'll talk more about interest rates in just a moment.
We must turn to our other major story that we're following tonight.
Russia claims that Ukraine tried to assassinate President Putin by using drones to attack the Kremlin. Now, the video has been shared by Russian
state media. It appears to show two separate drone attacks within minutes.
The first exploded over the Senate Palace and starting a fire on the roof. The second drone appeared to explode in the air. Moscow claimed Ukraine
unsuccessfully made an attempt on the President's life, which would have been somewhat of an achievement since he wasn't even in the building.
It hasn't given any evidence to support the accusations.
On a state visit to Finland, President Zelenskyy denied that Ukraine had anything to do with it.
(BEGIN VIDEO CLIP)
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: We don't attack Putin or Moscow. We fight on our territory. We are defending our villages and cities. We
don't have -- you know, enough weapon for these. That's why we don't use it anywhere. For us, that is a deficit. We can't spend it and we didn't attack
Putin.
(END VIDEO CLIP)
QUEST: Nic Robertson is in eastern Ukraine this evening.
Well, there you have it. Moscow says it was the Ukrainians, Ukrainian says, it wasn't us. What and where are we left?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Russia doesn't have a lot of credibility when it comes to claims about what Ukraine is doing,
Russia has used what is called false flag operations, where it has claimed something to then use that as a pretext to do something else. And that, of
course, is a concern in Ukraine; if the Kremlin claims that these drones were Ukrainian drones, and they claim that Ukraine despite the President
saying not the case, claim that these were trying to assassinate the President Putin, then it appears as if Moscow is creating a pretext for
some kind of reaction and response.
We know that the state media, certain commentators in state media -- really hard, tough. commentators on state media, who have already over the months,
been calling for President Putin to ratchet up his war in Ukraine and finish off the Ukrainians.
It is embarrassing to say the least for the Kremlin that these drones should get so close to the heart of government. It's so close to a place
that's going to be the focus of the country for the Victory Day Parade in just a couple of days, which commemorate the huge losses, tens of millions
of Russians lost in the Second World War.
So a humiliation and their response is, this was an attack on the president. So will there be a reaction and what will that reaction be?
And of course, this comes at a time when Ukraine is preparing for a counteroffensive. It leaves a lot of questions unanswered -- Richard.
QUEST: So, Nic, yes, and another one that I think -- I'm not sure you'll be able to answer directly, but assuming -- I mean, we don't know who did
launch them, but if it was Ukraine, did they launch them from Ukraine?
ROBERTSON: Judging by the videos that we've seen and the videos do appear to show drones, they don't show any connection that these were intended to
assassinate President Putin.
[15:10:07]
The drones appear to be relatively small. Now we know that Russia has already scaled back part of the Victory Day Parade, that it is not going to
have the big flyby, the traditional flyby you have all the military hardware that rumbles across Red Square with the President and all of his
men and defense chiefs all lined up looking on.
The aircraft that normally fly low over the Kremlin, the fighters, the bombers, all of that won't be happening. Is it because the Kremlin fears
that there could be people there, partisans who can launch a drone from just outside the Kremlin walls? Drop something and explode it above the
Kremlin?
Could they also be afraid that those same operatives could potentially have equipment, shoulder-launched surface-to-air missiles to target those
planes? Is this what the Kremlin's concern is? We don't know.
But again, go back to this very simple context. There have been a number of attacks on Russia's supply lines, inside Russia, close to Ukraine this
week, at a time when Ukraine is about to launch an offensive.
Ukraine would like to find a way to disrupt the Kremlin's thinking and strategy, so that they can pull off this offensive, which is going to be
difficult.
QUEST: Nic Robertson in eastern Ukraine. Nic, thank you.
With me now is the Hungarian foreign minister, Peter Szijjarto. Minister, good to see you. We've got lots to talk about.
PETER SZIJJARTO, HUNGARIAN FOREIGN MINISTER: Good evening.
QUEST: But before we get to what we're going to talk about elsewhere, let's just talk about this attack in the Kremlin. Do you think it was the
Ukrainians?
SZIJJARTO: Look, Richard, I have no idea. I have no idea what has happened. But I know one thing for sure that the longer this war takes, the more of
such kinds of events can take place and the more of such kinds of events take place, the bigger the risk of escalation is.
So as a representative of a neighboring country, which is being in danger, because of a potential escalation, I urge -- I urge this war to be stopped
as soon as possible. Once it is being stopped, such kind of events don't take place, and we have a bigger chance for saving lives of the people.
QUEST: But the Hungarian government has been less than full throated in its support of NATO and the military activity, by your own admission when
we'd spoken before.
SZIJJARTO: Sure.
QUEST: Isn't that simply weakening the position that NATO is in this all the way now, and you're not?
SZIJJARTO: Now, come on? There has been a decision made by the NATO Council, the foreign ministers.
QUEST: Including yourself.
SZIJJARTO: Yes, yes, saying that NATO is not a party to the conflict and we have to do our best in order to prevent NATO from becoming part of the
conflict and coming into direct confrontation with the Russian Federation.
So we stick to this decision of NATO, and hope that this decision will be enforced in the future as well. Because once again, if NATO -- if NATO gets
directly involved into this conflict, that brings the threat of the outbreak of the Third World War, and this is something that neither of us
would want, I am pretty sure of that.
QUEST: But so far -- so far, this country has been -- has not involved itself in the military side, including the transshipment or overflight.
SZIJJARTO: Right. Right.
QUEST: You have agreed with all the sanctions that have been put forward, but at a price. At a price. You've extracted a price for agreeing,
and you're now being difficult about the possibility of Sweden joining NATO.
So the effect is, you look like you're being halfhearted.
SZIJJARTO: Look, this country, and the people in this country have paid an extremely high price for this war. There's a skyrocketing inflation,
skyrocketing energy prices, skyrocketing food prices in this country, and we have made our best in order to help the Ukrainian people in this war.
We have received more than a million refugees in this country.
QUEST: Right.
SZIJJARTO: More than 1,300 schools and kindergartens are enrolling Ukrainian kids and students. We have done our best in order to help the
Ukrainian people. But one thing we are not going to do, we would never make any kind of stuff, which would bring a bigger risk of a potential
escalation.
Please understand that as a neighboring country and as a member of a nation, members of which are dying in this conflict, we do our best in
order to stop this war. This is the most important issue.
QUEST: Let's us to turn matters domestic.
SZIJJARTO: Okay.
QUEST: The Parliament today passed judicial reforms after huge pressure from the EU. The EU Commission says it's not enough, we will get your --
SZIJJARTO: We think it is enough.
QUEST: Hang on. We will get --
SZIJJARTO: Nothing is enough, I know.
QUEST: We'll get your reaction in a moment. Because first of all, wherever we look, it seems the Hungarian government is at odds with the EU.
[15:15:04]
(BEGIN VIDEOTAPE)
QUEST (voice over): Every family has its problems, and in the EU family of nations, the problem child is Hungary.
Relations with Brussels began to sour following the election of Prime Minister Viktor Orban in 2010. In its first few years, his right-wing
government passed dozens of laws that radically changed the country's constitutional makeup.
Brussels says the reforms undermine core European values. They threatened the independence of Hungary's judiciary by politicizing the appointment of
judges.
The changes jeopardized the freedom of press by taking control of the state media and putting ownership of other news outlets in the hands of
government-friendly entities.
And more recently, they've targeted the LGBT community, effectively banning adoption for same sex couples.
Leaders in Brussels have watched on with dismay.
URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: The Hungarian bill is a shame. It goes against all the values, the fundamental values of the
European Union.
QUEST (voice over): The EU is piling the pressure on the Orban government to reverse course, and the stakes for Hungary are very high.
Brussels is withholding about $15 billion in funds, equivalent of roughly one-tenth of the country's entire annual GDP.
ALEXANDER DE CROO, BELGIAN PRIME MINISTER: The European Union is a club with rules. You can get access to financing, and that's good, that's to the
benefit of everyone, but you cannot just pick and choose.
QUEST (voice over): With such a threat bearing down, there have been some signs of progress. Hungary says it is nearing an agreement to unlock the
frozen EU funds. But new arguments over Hungary's treatment of migrants and the Orban government's ties to Russia, mean this family feud is unlikely to
be resolved anytime soon.
(END VIDEOTAPE)
QUEST: Now, the foreign minister is still with me.
All right, Hungary's democracy, I am not for a moment expecting you're going to say, you're right, Richard. We are anti-democratic. We have
changed things. I don't think you're going to say that at the moment.
But when the economists says how Viktor Orban hollowed out Hungary's democracy. The Parliament describes you as an electoral autocracy. Others
say you are a partly free country. I mean, are they all wrong?
SZIJJARTO: They insult us. They insult us on a continuous basis, Richard, I have to tell you, because I see -- I understand their problem.
Their problem is I think that here, there is a government, which is clearly anti-mainstream. This is a right-wing government. This is a Christian
democratic government. This is a very patriotic government.
This government goes against international liberal mainstream on many important issues. And in the meantime, this government is successful,
because don't forget one thing, winning an election is very complicated, but winning elections in four continuous occasions is a huge gap -- a huge
gap. It is very complicated to do that.
QUEST: Well, I am glad you mentioned about winning elections, because the OSCE says that in this country, you fail to provide a level playing
field, there's significant media bias towards toward the ruling -- for the ruling party, misuse of state resources and a lack of transparency with a
bias and lack of balance.
SZIJJARTO: With all my due respect, I would like to invite you to a note, let's say to an exploration and if you look at the reports, if you look at
the reports of OSCE, there's a tendency.
Whenever a rightist party wins an election, you read such kind of report; whenever a liberal party wins an election, everything was fair, everything
was fine,. everything was clean, everything was transparent. So this is clearly a politically biased statement.
The international --
QUEST: Are you against everybody? I mean, you seem to be against --
SZIJJARTO: Come on.
QUEST: The MEPs, the OECD, the OSCE.
SZIJJARTO: What OECD?
QUEST: Well, the OECD --
SZIJJARTO: What do they say?
QUEST: They say that Hungary has to make significant progress in addressing recommendations on bribery and corruption.
Now, you are the worst country in the EU, number 27 on transparency according to Transparency International.
SZIJJARTO: Let's --
QUEST: Another organization?
SZIJJARTO: I am serious. Let's speak about the facts because it's very, very important.
Look, what I understand is that if there is a country with a clear growth path regarding all kinds of difficulties, including COVID, including the
war in the neighborhood, including not receiving the EU funds, we are still on a growth path. The economy is growing year by year. We break the records
of investment year by year.
Would you think it would be possible if there was a systematic corruption? In case there is a systematic corruption, there is no growth. Investors are
not coming. They don't bring their money here.
So this is a clear accusation again, as the -- you have been here for a long time. Why haven't you asked the investors here? The big companies
coming from Germany, France. US, wherever.
QUEST: But you are still --
SZIJJARTO: Did they experience something like this? They say no. That's why they invest.
[15:20:08]
If there was a systematic corruption here in Hungary, they wouldn't reinvest in this country.
QUEST: So the OECD is wrong?
SZIJJARTO: Do you agree with me?
QUEST: Well, let's move to another subject.
Are you prepared to condemn tonight, the new anti-gay law in Uganda, which has been passed by the Parliament, which has the most draconian, as you all
know, you know, has the most draconian punishments including the death sentence in certain circumstances.
So Minister, recognizing that your own party and government has had some issues with this, are you prepared to come out clearly tonight, and ask the
president of Uganda not to sign that bill.
SZIJJARTO: I have not been aware of this law, but what you say I can give you the following reaction.
If anybody is being threatened, for believing in something, belonging to any kind of community, falling in love with anyone, if he or she is being
threatened for that, even with a death penalty, I definitely do condemn, because here in this country, regardless, whoever you fall in love with,
regardless what kind of community you belong to, you are safe, and you are saved by the constitution.
And as long as this government is in place, no one has to be feared. No one has to be afraid belonging to any community, falling in love with anyone.
QUEST: Right.
SZIJJARTO: Okay.
QUEST: So what did you mean in a speech last week when you talked about ungodly forces?
SZIJJARTO: This week.
QUEST: Oh, this week. But I am sure, it was two weeks ago, you said --
SZIJJARTO: Yesterday.
QUEST: Was it really? Well, there we go.
You're opening a school, a religious school, and you said, you were against NGOs and ungodly -- or certain ones -- and ungodly forces. Doesn't this
suggest if you're not a religious believer, then somehow you don't fit in?
SZIJJARTO: No, I didn't mean that. What I have meant was the following. There are clear tendencies which condemn the religious organizations which
think that being religious is being kind of retrograde which, which -- who say that being religious is something bad. That's what I meant.
Because, you know, I am a believer, I do believe that religion is very important, and the religion must be respected. And you should know, we
should be aware of one issue for sure, that Christianity, unfortunately, became the most persecuted religion on earth.
And you know, this country has a more than a thousand-year long Christian status. So we really do feel responsible for the Christian communities all
over the world who are under persecution and we are going to continue to help them as it was recognized by His Holiness who has visited us during
last week.
QUEST: Where indeed you were privileged to welcome him off the plane. What a wonderful view.
SZIJJARTO: Yes, you see it?
QUEST: What a magnificent view it is here.
SZIJJARTO: You have a good taste that you came here.
QUEST: I'm very glad you invited me to come here.
SZIJJARTO: Great to see you, Richard.
QUEST: And of course, we were delighted to come here and to be with you. There are the pictures of you and the Pope.
Thank you very much.
SZIJJARTO: Do it on more occasions.
QUEST: Well, we look forward to the next occasion.
SZIJJARTO: All right.
QUEST: Let's just say that.
I've eaten more noodles than I think is --
SZIJJARTO: I hope you enjoyed
QUEST: And the goulash is great. We've got some deserts there. Thank you.
Coming up, as we continue on QUEST MEANS BUSINESS, where country's policies have created tensions, we can take a look at the Prime Minister of Hungary
in a moment, next.
(COMMERCIAL BREAK)
[15:26:05]
QUEST: Welcome back.
It is QUEST MEANS BUSINESS tonight live in Budapest. Busy program as you can imagine, and haven't even got started yet.
Now in Atlanta, in Georgia, in the United States, there is a gunman that is on the loose. The police have identified a 24-year-old person, Deion
Patterson, considered armed and dangerous who opened fire at a medical building. A person has been killed and four people have been injured.
The police are actively searching and are warning the public, do not approach and call the emergency services.
And another dreadful shooting, this time in Belgrade, in Serbia at an elementary school, if you will. Eight children and a security guard were
murdered. I mean, it couldn't get worse. The 13-year-old suspect is now in custody. Yes, you heard me right, 13-year-old suspect. His parents also are
under arrest.
CNN's Scott McLean reports.
(BEGIN VIDEOTAPE)
SCOTT MCLEAN, CNN CORRESPONDENT (voice over): Handcuffed with a jacket over his head, a teenager is whisked away by police. He is the suspect in a mass
shooting that's brought Serbia to a standstill.
The 13-year-old was accused of using his father's handguns to kill at least eight children and a school security guard at a renowned elementary school
in an upscale part of Belgrade.
Serbia's interior minister says the boy had the code to the safe where his father locked the weapons. In the immediate aftermath, worried parents
rushed to the school anxiously waiting for news their kids were okay.
The ones who do emerge are shellshocked or overwhelmed.
Some parents were called their children seeing the attack right in front of their eyes.
ASTRID MERLINI, MOTHER OF BELGRADE ATTACK SURVIVOR (through translator): She heard shots before that, but thought those were firecrackers. When she saw the security guard fall, she immediately rushed back to class. She
was scared.
She told her teacher there is a shooting upstairs.
MCLEAN (voice over): Police and ambulances quickly rushed to the scene to treat victims. Six students and a teacher were taken to the hospital, some
in stable condition, others fighting for their lives.
DR. SINIAA DUCIC, CARETAKER DIRECTOR, UNIVERSITY CHILDREN'S CLINIC TIRSOVA (through translator): It is very difficult surgery because of the severe
brain injuries. The child is out of operation room and is vitally endangered and it is in an intensive care units. Always, station procedures
are performed.
MCLEAN (voice over): Belgrade Police said the teenager waited to be arrested in the school yard after calling police himself to confess what he
had done.
VESELIN MILIC, BELGRADE POLICE CHIEF (through translator): Upon arriving at school, he immediately pulled the pistol out of his bag and shot DB (ph),
the security guard. He then went past the on-duty staff member and sat down at his desk like he did nothing wrong.
MCLEAN (voice over): Despite one of the highest rates of gun ownership in the world, mass shootings in Serbia are rare. Police said the attack had
been carefully plotted for more than a month.
While the precise motive is unclear, the education minister and this high school student blamed violent video games and media.
LUKA, STUDENT AT NEARBY HIGH SCHOOL (through translator): This demonization and popularization of violence and crime through public and media, through
art, through everything that can popularize it and this example of violence is a consequence of that.
MCLEAN (voice over): Police have cordoned off the scene and continue to investigate. And while answers may bring clarity for families, they won't
bring back the young lives taken far too soon.
Scott McLean, CNN.
(END VIDEOTAPE)
QUEST: Now coming up after the break, we're going to be returning once again to the question of interest rates.
Joining me is Peter Akos Bod who will be -- well, he was the former governor of the Central Bank here in Hungary. He will put into context the
US rates and Hungarian rates, which are much higher, in a moment after the break.
(COMMERCIAL BREAK)
[15:30:00]
(MUSIC PLAYING)
QUEST (voice-over): Welcome back. QUEST MEANS BUSINESS this evening, live from Budapest. Sensational, spectacular views, the parliament building, you
can see over there, magnificent.
Our top story this evening, U.S. interest rates are going up. They've gone up by a quarter of a percentage point. And the market doesn't like what it
is seeing. Take a look at the Dow and you will see it was choppy for the entire session.
And then I'm guessing this is the result of what Jerome Powell has been saying in the last hour. He's obviously been pouring cold water on the idea
that there is more than just a pause coming along and rates may go higher still. That's why we are seeing this fall.
The Fed is facing growing risks, not only inflation but now the issue over regional banks. Three of them have already had to be resolved. That is a
polite way of saying taken over. JPMorgan took over First Republic and the labor market may be softening, which is a good thing for inflation.
Job openings are falling to the lowest in two years, the higher probability of a recession. Remember, an economist suggests that might happen. Peter
Akos Bod is with me, former Hungarian central bank governor and professor at Corvinus University.
Good to see you, sir.
PETER AKOS BOD, FORMER HUNGARIAN CENTRAL BANK GOVERNOR: Good to see you, thank you.
QUEST: Do you think the Fed has got more work to do?
Do you think they're done?
BOD: Well, their job. But certainly, inflation is high. It's not as high as here. Here, we have the unfortunate record of 35 percent. The Fed is
doing what the textbooks says it should do, increase the interest rate.
QUEST: But this question of whether the banking crisis has in itself created a further tightening through credit.
[15:35:00]
And Jerome Powell has said we really don't know about the monetary lag and about these other matters.
BOD: Well, if the Fed waits too much, then we get the message there is a big trouble with the banking industry. So if there is a scale and you
follow the scale, I think that is the central banker's job.
The health of the financial sector is always an issue if the interest rate changes so fast. So I understand. But that is for the Fed. We have other
worries here.
QUEST: Right. Let's talk about your worries: 25 percent inflation, 40 percent food inflation plus; interest rates, anywhere north of 15 percent
to 18 percent.
Why is the economy not on its knees?
BOD: We have a recession, probably. We see the figures coming out. But the last two quarters was definitely a recession. And the inflation, as you
have said, is extremely high. The problem is if we are not in the Eurozone, so we are talking about the HUF inflation behind Hungarian inflation
because Hungary is not a member of the Eurozone; don't ask me why.
QUEST: But is this -- I know there's a variety of reasons. Some of it is from higher fuel prices but that will fall off the index. Some of it is HUF
inflation. Other of it -- it is not demand inflation, it's supply inflation, which suggests interest rates won't really work.
BOD: Last year, there was a demand side in the election year and then the government poured out a lot of money into the Hungarian families and
businesses. But this year, it is not. But it is the momentum, it's still on. But a particular Hungarian story is the exchange rate because Hungarian
forint is volatile and this --
(CROSSTALK)
QUEST: There is no way that Hungary could join the euro even if it wanted to anytime soon.
BOD: First, you want to do that. If the government doesn't want to do that, then it will never join. But right now, we don't meet any of the
entry conditions, unfortunately, because inflation is too high, the interest rate is too high, the deficit is too high.
(CROSSTALK)
BOD: -- too high and then we have not joined the (INAUDIBLE).
QUEST: Good to see you, sir. Thank you very much indeed. I can't say (INAUDIBLE) where -- what was inflation when you were the governor?
BOD: It was 17, well, two digits.
(LAUGHTER)
QUEST: There is no answer to that. Thank, you sir.
QUEST MEANS BUSINESS tonight, we want to know whether we actually use the bell. Yes, we do. QUEST MEANS BUSINESS continues in a moment. The man who's
at the top, Viktor Orban and the power he wields. We'll talk about it after the break.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
[15:40:00]
(MUSIC PLAYING)
QUEST: Welcome back to Budapest, it's a delightful evening. It's not too cold. And the rain has held off. Here in Hungary, the policies that are now
being followed by the administration seem to be at odds with those of the historic allies, disagreements over the E.U., the rule of law, the Russian
sanctions.
And the U.S. is even considering sanctions over corruption. There's a whole raft of issues. The government, of course, is dominated by one man, the
prime minister. He's been in power, this time, since 2010, Viktor Orban.
(BEGIN VIDEOTAPE)
QUEST (voice-over): Europe's longest serving leader is now one of the biggest thorns in its side. Since he reclaimed power in 2010, Viktor Orban
has ruffled feathers in Brussels. His stance on issues, like the separation of powers, has made him both powerful and lonely in Europe.
The former European Commission president, Jean-Claude Juncker, once humorously said to his face what many of the leaders were thinking behind
his back.
JEAN-CLAUDE JUNCKER, PRESIDENT, EUROPEAN COMMISSION: The dictator is coming.
Dictator.
QUEST (voice-over): But the whole issue has got a great deal more serious since Russia invaded Ukraine. The divides have gotten deeper. Viktor Orban
has become the closest thing Russia has to an ally in NATO and the E.U.
He's refusing to let Western weapons pass through Hungary on the way to Ukraine or indeed, allowing overflight of weapons. And even though Hungary
has ultimately agreed to all the E.U. sanctions packages against Russia, he's done so often begrudgingly. He dropped his opposition to an oil
embargo only after securing exemptions for Hungary.
It is a far cry from the early days of Orban's career, when he stood in Heroes' Square in Budapest and called for the Soviet army to leave Hungary.
Now he's seeking to export his brand of conservatism abroad. He spoke at the American Conservative Political Action Committee, CPAC, in Texas, last
August.
VIKTOR ORBAN, HUNGARIAN PRIME MINISTER: You have to defend your country.
QUEST (voice-over): He's appeared on a guest on the right wing television channel, FOX News. And famously, in a speech in 2014, he described Hungary
as an illiberal democracy.
Orban has had great electoral success. For instance, last year, he won a landslide, even though the country has the highest inflation in the E.U.
and the economy is slowing down. It was 53 percent of the vote. Viktor Orban showed his allies and his enemies alike he's not leaving yet.
(END VIDEOTAPE)
QUEST: Now the clashes with Europe have put him firmly in the center and, indeed, seems to be getting worse. I spoke to the journalist Marton Dunai,
who's been covering Hungary and Central and Eastern Europe, who thinks that Viktor Orban needs to change. But we shouldn't hold our breath waiting for
him.
(BEGIN VIDEOTAPE)
MARTON DUNAI, "FINANCIAL TIMES" CORRESPONDENT: Orban has his own certain brand of politics, which has diverged from the European mainstream
substantially. If Europe thinks that is unsustainable, they shouldn't be worried, because it's not changing.
The European Union has come to its senses, so to speak, deploying tools that it hadn't ever deployed before -- withholding money, a lot of money,
up to 30 billion euros, from Orban, conditioning it on improving the system. So now, there's this tug of war between Brussels and Budapest and
it's an ongoing fight. It's going to --
QUEST: Who's going to blink?
DUNAI: I think it's going to be -- they give up part of their illiberal stance and they free up part of the money and then we continue with the
other parts, like on issues like the judicial system. They will change it substantially enough to free up some of the monies connected to them.
But on issues having to do with ideology, the LGBTQ rules in place in Hungary.
[15:45:00]
DUNAI: That's sort of an ideological cornerstone that I highly doubt that Hungary is going to substantially change.
QUEST: And so you end up with this scenario, where there's a fight, a constant fight underway. He's almost reveling in the enfant terrible mantra
and persona.
DUNAI: He is, yes. He thrives on conflict. Also, this message is unique enough inside Europe that it elevates him onto a platform, that makes him
look, appear larger than he actually is. So this platform enables him to punch way above his weight.
QUEST: The policy with Ukraine, to this extent, he has put himself against, as close as you can without going against the E.U. position, NATO
position and against the U.S.
Is he on dodgy ground here?
Or does it see it as another battle that he can win?
DUNAI: I think he has gone as far as he could on Ukraine. This is a long, long animosity between Hungary and Ukraine, way before the war. But the
war, obviously, accentuated this animosity a great deal, to the point, when Orban's loyalty to his alliances, NATO and E.U., have been questioned.
QUEST: So is Orban's policy an anti-Ukraine policy?
Or is it a pro-Russia policy?
DUNAI: I think you have to separate those two. I mean, the Hungary-Russia relationship has always been rooted in interests. Hungary always wanted the
cheap energy, the business cooperation with Russians, which was more favorable to it that he could've scored with other countries.
While in Ukraine, it's been an ongoing strife, mainly over minority rights of Hungarians in Ukraine, which Ukrainians did not fully respect.
QUEST: But the way in which he has leveraged his ability -- I'm thinking of, for example, the sanctions on oil or gas, particularly on gas, he
manages to withhold his consent until he gets something in a classic quid pro quo.
DUNAI: That is his modus operandi, yes.
But on Ukraine, it's not as easy. I mean, the Ukraine war, in some sense, was unfortunate for Orban, because he had a certain relationship with
Ukraine and a certain relationship with Russia. Because those two countries went into war, now it looks like favoring one is disfavoring the other and
the other way around.
(END VIDEOTAPE)
QUEST: When we come back, after a short break, this is Jozsef Varadi, the CEO of Wizz Air. We will be talking flying and Budapest. And I'll take you
up the stairs of Hungary's very distinguished parliament building. It's a long way to the top, I promise you that.
Whoa, that was worth it.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
[15:50:40]
(MUSIC PLAYING)
QUEST: The national airline of Hungary, if you will, is Wizz Air. And today, Wizz Air announced a subscription service. This is interesting. It's
been tried it before elsewhere, but not with great success. But it's been tried before.
It's called MultiPass. Customers will pay a monthly fee. You have to have six months and the routes include domestic routes in Italy and
international to and from Poland.
Will it work? Why is he doing it? Jozsef Varadi is the CEO of Wizz Air. Jozef's with me now.
Why this one? Are you short of passengers or something?
JOZSEF VARADI, CEO, WIZZ AIR: No, actually, we are long on passengers. We have a lot more demand than what we, actually, can satisfy. But we believe
that loyalty matters. And we have a lot of customers that are very loyal to Wizz. And we want to be loyal to those customers.
And we are so focused on operations that, actually, we can afford to offer, like, a MultiPass to these people.
QUEST: It's been a difficult year. But are you now profitable and are you continuing to grow?
VARADI: Yes, we are profitable. And we are growing 70 percent versus pre- pandemic capacity, seven-zero. But if you compare it to the European airline capacity, it's expected to be 95 percent this summer, bigger beyond
that (ph) 70 percent.
QUEST: Right.
But are you going to be -- are you going to be hit this summer by the same sort of air traffic control problem -- or you will be hit by them. I mean,
there's a lot of anger over, for example, striking controllers in France, no single European skies, the difficulties of flying around the continent.
VARADI: I've seen the operating environment, really difficult. I don't know if it's going to be as difficult as was summer, but it is going to be
difficult. But we are a lot better prepared this time around than last year.
I think we learned our lessons last summer. We invested $100 million into resilience, to improve our operating model, to build more buffers, more
spares, more flex in the system. You know, if we are suffering some delays that we see and can't complete the schedule, we don't have to cancel
flights.
QUEST: You're growing eastward, aren't you? I mean, Abu Dhabi, further -- how far afield can you take those 321s?
VARADI: Well, first of all, I think the business model that we have is very genuine and universal versus customer needs. Everyone wants to fly
safe, cheap, hassle-free, and quickly. And I think this is what we are bringing to the market, whether you are in Europe, in Central and Eastern
Europe, or you are in India or Abu Dhabi.
We can fly six hours at the moment. But as of next year, we will start taking deliveries of the XLR, the Airbus A321XLR. That takes us to eight
hours.
QUEST: Right. Where is your goal?
Come on, I've known you for too long. You have a vision in mind that you want to fly to there or there. And you're not going to fly to the States.
VARADI: We won't.
QUEST: So where are you going to fly to? Where are you going to put those XLRs?
VARADI: Well, I mean, look at --
QUEST: India?
VARADI: Yeah, no, look at -- look at our footprint at the moment. So we are having an airline in London, we are having an airline in Abu Dhabi, but
we cannot fly Abu Dhabi-London. I mean, that would be, probably, the most obvious route to -- to come off (ph) it.
But inside our region -- I mean, this is a large geography -- we have a lot of dots to join.
QUEST: Lots of dots still to join.
Who is your biggest competitor? Who's the one you fear the most? Is it Johan at easyJet, Michael at Ryanair, Carsten at Lufthansa Group?
VARADI: Well, I mean --
(CROSSTALK)
QUEST: All of them?
VARADI: Well, look, most of our business actually (ph) is to stimulate the franchise of flying. Most of our business is to get people into flying. I
mean, let's not forget that Central and Eastern Europe going further east is not Western Europe. So this is not a -- an already crowded market, we
are trying to get people into the franchise. As people have more money to spend, they can afford to fly. And that's a service likely to (ph)
restimulate the market.
QUEST: Right.
Are you going to suffer from a shortage of planes? I mean, you've got what? You're hoping to get to 500.
VARADI: So we have 180 planes flying at the moment, we have 360 on order.
QUEST: You're not going to get them on -- you're not --
(CROSSTALK)
VARADI: No, we will. No, no, no, we will. We will.
QUEST: -- on time?
VARADI: No, but -- I don't know. This really is not in my hand. I mean, this down to the OEMs to -- to Airbus.
QUEST: Right.
VARADI: But this is 360 aircraft on order. We have to access that capacity. And this is important also because, not only that it's more capacity, but
it is the most economic capacity and this is the most sustainable capacity that you can get.
QUEST: Jozef's never let me forget that after the first interview, the week -- the day that Wizz launched --
VARADI: The very day. The very day.
QUEST: -- the very day you launched, I said to you, thank you very much (INAUDIBLE). Do come back next year or the year after if you're still in
business.
[15:55:02]
And you've never let me forget, 20 years on, that you're still in business.
VARADI: I'm still standing next to you.
(LAUGHTER)
But I actually quite like that you are still in business.
(LAUGHTER)
QUEST: I have a feeling I've just been knifed somewhere in that. Good to see you.
VARADI: Good to see you. Thank you.
QUEST: Thank you very much, indeed.
VARADI: Thank you.
QUEST: If you do fly to Budapest, and why would you not, then absolutely, one of the buildings you must go and visit is the Hungarian parliament.
It's a must see. It's been there since 1902 and, despite all my many visits here, it's the first time I've been inside. And I was given a rare old
treat and a bit of a workout.
(BEGIN VIDEOTAPE)
(MUSIC PLAYING)
QUEST (voice-over): I started to keep count, but I lost it around 60. That's the steps for the day.
Oh, my goodness. Look at that. That takes the breath away.
QUEST: The acoustics are absolutely -- hello?
Brilliant.
(MUSIC PLAYING)
QUEST (voice-over): This is when the playing stops and the real climbing begins.
That's bracing indeed. Something tells me we're not there yet.
We're actually heading up toward there, right at the top. And I have to say, with my fear of heights I'm not exactly relishing the walk up there.
Whose idea was this?
It feels more terrifying than actually it is because it's quite sturdy.
(INAUDIBLE) the most important man in the building, oh, my goodness, I see now, yes, I see.
Whoa!
Ha, ha, ha, that was worth it. Look!
Well, aren't I privileged to see this?
So I'm now at the highest point, from where I have this bird's-eye view of the Danube, the Buda Castle (ph), the whole lot and crucially of course,
the parliament building itself. The scene of so many moments of intrigue and power.
And even today, it's being watched so closely.
(END VIDEOTAPE)
QUEST: Ah, the view from the top and the view from the Marriott Hotel here is really quite spectacular, as indeed is the fine -- how is this
pronounced?
VARADI: Dobos torta.
QUEST: Dobos torta.
VARADI: Very good.
QUEST: Do you like it?
VARADI: I do like it.
QUEST: We've brought you the culture, the politics, the cuisine. Do have a piece, go on.
VARADI: Thank you very much.
QUEST: Just one.
VARADI: Oh, OK.
(LAUGHTER)
QUEST: Now, that will only cost you 45 euros.
It's ancillary payment.
VARADI: I don't think I need it.
(LAUGHTER)
QUEST: We'll have a "Profitable Moment" after the break.
Oh, go on. Have it free.
VARADI: Thank you.
QUEST: Cheers.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: A very quick "Profitable Moment" for you tonight. It's been lovely being here in Budapest. It's an amazing city. But a country with a
politician in the political structure that's got great problems ahead. How they solve it, I have no idea.
END
