Transcript: Viktor Orbán — the EU’s chief disrupter

This is an audio transcript of the FT News Briefing podcast episode: ‘Viktor Orbán — the EU’s chief disrupter’

Marc Filippino
Good morning from the Financial Times. Today is Thursday, February 1st, and this is your FT News Briefing.

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The Federal Reserve is, once again, keeping interest rates on hold. And Boeing’s January ended the same way it started, with some not-so-good news. Plus, the bad blood between the European Union and Viktor Orbán is nothing new, but now things are getting serious.

Ben Hall
I think he sees himself as the vanguard of a movement for a very different kind of EU.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

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US interest rates seem to be on cruise control right now. Yesterday, the Federal Reserve decided to keep its benchmark rate right where it was at between 5 and 5.25 per cent, and Fed chair Jay Powell had some bad news for investors, chomping at the bit for rate cuts. They’re probably not coming at the next meeting.

Jay Powell voice clip
I don’t think it’s likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that.

Marc Filippino
Powell reminded everyone that the Fed’s inflation target hasn’t changed. It’s still at 2 per cent. The last reading had inflation clocking in at 3.4 per cent. So the Fed still has some work to do.

Jay Powell voice clip
We just need to see more evidence that sort of confirms what we think we’re seeing and that tells us that we are on a path to, a sustainable path down to 2 per cent inflation.

Marc Filippino
Markets weren’t super happy with the news. Treasuries rallied and the S&P 500 fell 1.6 per cent.

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The European Union is locked in a battle with Hungary’s prime minister, Viktor Orbán. For months now, he’s refused to back a plan that would send aid to Ukraine. And in response, the EU is looking for ways to bring him in line. And it really all comes to a head today at an emergency summit in Brussels. Ben Hall is the FT’s Europe editor, and he joins me now to discuss. Hey, Ben.

Ben Hall
Hi, Marc.

Marc Filippino
OK, so this summit, Ben, what exactly is the EU hoping to accomplish here today?

Ben Hall
So what the EU wants to do is persuade Orbán to agree to, or at least not to veto, its proposed €50bn, four-year economic aid plan for Ukraine. This plan is essentially an add-on to the EU budget, and such matters are decided in the EU by unanimity. But it may well be that Orbán once again vetoes this fund, in which case the remaining 26 countries will have to come up with their own solution, which could be problematic.

Marc Filippino
OK, so Orbán’s blocking this issue, and it’s obviously causing a lot of headaches for the EU. Is it just the aid for Ukraine where he’s creating problems for the bloc, or are there other things too?

Ben Hall
He has been a thorn in the side of the bloc for many years on many, many fronts. First of all, for what he’s done domestically in terms of exerting tight political control over institutions and essentially turning Hungary into what he calls an illiberal democracy. That’s a major problem. But he’s also blocked routinely EU decisions on things he doesn’t like. And then he has played the sort of renegade, if you like, in terms of courting powers that the EU might regard as rivals or even adversaries. So he’s cosied up to Vladimir Putin. He’s also dependent on Russia, for example, for nuclear power in Hungary.

Marc Filippino
So he’s certainly not shy about voicing his concern in the European Union and throwing his weight around, basically. Why do you think he’s doing that, Ben?

Ben Hall
I think EU officials and European diplomats think he’s looking to extract concessions from Brussels, whether it’s over money or whether it’s to sort of weaken controls over what he does at home. I think Orbán himself presents it in more ideological terms. He sees himself as the sort of champion of a different kind of Europe that is true to more conservative Christian values, but also is a Europe of nation-states that is less integrated, where the EU institutions have less authority and interfere less in the lives of Hungarians or Poles or whatever. So I think he sees himself the vanguard of a movement for a very different kind of EU.

Marc Filippino
So going back to today’s emergency EU summit, Ben, what happens if they can’t get Orbán to agree to sign off on aid to Ukraine?

Ben Hall
Well, this is a long-standing question in the EU, which is how does it deal with countries that don’t respect kind of fundamental values and the rule of law? He seemed to be doing Russia’s bidding, frankly, in blocking aid to Ukraine. And they really don’t have many levers to pull him into line beyond the sort of ultimate punishment, which is what the EU calls their Article 7 procedure, which can lead to Hungary losing its voting rights. That’s the sort of maximum punishment that’s allowed. Many consider it a kind of nuclear option, a drastic step. There are, though, people who say it’s necessary now to send a message to Orbán that his behaviour is not acceptable.

Marc Filippino
All right, we’ll keep an eye out for what’s going to happen in today’s summit and what will happen with Orbán in the EU. Ben Hall is the FT’s Europe editor. Thanks, Ben.

Ben Hall
Thanks, Marc.

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Marc Filippino
Boeing was pretty tight-lipped yesterday about how a mid-flight incident in January will impact the company’s finances. The aircraft manufacturer did not issue a financial forecast for this year. Instead, Boeing said it needs to focus on safety after a door plug came off one of its planes. I’m joined now by the FT’s Steff Chávez. She covers Boeing. Hey, Steff.

Steff Chávez
Hi, Marc.

Marc Filippino
All right, so how significant is it that Boeing decided not to release its financial forecast for the year?

Steff Chávez
It’s ultimately not surprising given the chaos that’s been going on with the company. But it is significant. Boeing is a publicly traded company, and those companies tend to provide an annual forecast at the start of each year. So when a company pulls its guidance, or in this case, delays it, clearly something is up. It has to be very significant for a company to do that.

Marc Filippino
Yeah. And companies usually give financial guidance for the year when they report their fourth-quarter earnings like Boeing did yesterday. Steff, when you listened in on the earnings call, were you able to glean anything regarding Boeing’s current financial situation?

Steff Chávez
Boeing did not give any sense on its call yesterday about how much the Max 9 incident will cost. Now that the FAA has limited the number of Maxes it can produce per month, the Max production is really key for Boeing to hit its longer-term financial and delivery targets. The biggest takeaway was that Boeing was trying to project that safety is their absolute priority right now. CEO Dave Calhoun struck an apologetic tone during the earnings call.

Dave Calhoun voice clip
I know that these moments that impact delivery schedules can frustrate our customers and our investors. But quality and safety must come above all else.

Steff Chávez
You know, he said that Boeing caused the issue and that Boeing needs to restore confidence.

Dave Calhoun voice clip
We will simply focus on every next aeroplane and ensure we meet all the standards that we have, all the standards that our regulator has and that our customers demand.

Steff Chávez
And the other thing that I think they’re trying to do is the company, since 2018 and 2019 when there were two fatal crashes, like that was an absolute catastrophe. You know, at the time, they initially tried to blame the pilots of their, of the planes that crashed, for example, and that CEO was eventually booted out of the company. So I think that Boeing and Dave Calhoun are trying to stand in contrast to that response.

Marc Filippino
So the other thing I found really interesting was Boeing’s share price. I mean, it was up nearly 6 per cent at one point yesterday. Why were investors so enthusiastic, considering all the bad stuff that’s happening at the aircraft maker right now?

Steff Chávez
I mean, it seems like they were receptive to Calhoun’s messaging, ultimately, and, you know, the company’s messaging. I think investors are just also betting, in the long run, that Boeing will come through. It’s going to take a lot of time. If you think about it, they still weren’t fully recovered from the 2018, 2019 crash crisis, and now they have this next crisis. So it does take a long time, but they’re probably betting that in the end, Boeing will pull through.

Marc Filippino
What comes next for Boeing? Anything that you’re keeping an eye out for?

Steff Chávez
The next big thing is the report from the National Transportation Safety Board that could come any day now. That should detail what exactly caused that door plug to blow out of the plane while it was at 16,000ft. It should be able to tell us where the production mistake happened: under Boeing’s direct watch or whether it happened under the watch of Spirit AeroSystems, which is the Boeing supplier that makes the fuselage for the Max planes?

Marc Filippino
Steff Chávez covers Boeing for the FT. Thanks, Steff.

Steff Chávez
Thanks.

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Marc Filippino
You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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