Now, in 2022, the cause of economic problems will be the response to the Russian-Ukrainian war, that is, the war sanctions and the rising energy prices as a result many times, Hungarian Prime Minister Viktor Orban wrote on Facebook.
Increasing energy prices increase inflation in every country. These gross energy prices are not caused by economic processes. The drastic increase in energy prices was clearly caused by the sanctions. Therefore, the drastic increase in energy prices is not the economy, but the politics, more precisely the political decisions in Brussels.
The price of natural gas in April 2022, in the second month of the war, was around 100 euros. Before the Hungarian elections in April, the European position, lead by Germany, was that sanctions had to be reasonable. We must not destroy European economies so the sanctions must not apply to energy. This was a common position because sanctions are always worth imposing on economic sectors where we are stronger than the one we want to put under sanctions. In the field of energy, we, Europe, are dwarfs, and Russia is a giant. This is the first time I see a dwarf punishing a giant.
In April, we were right to think that, despite the higher energy levels, the economic conditions would improve planably, despite the war. But in June 2022, economic and trade sanctions, including oil transport sanctions, were adopted in Brussels. In addition, the sanction on the purchase of natural gas was put on the agenda, so starting from June 2022, the price of natural gas doubled in one month and tripled in another month. Because the Brussels rules link the price of electricity to the price of gas, the same happened in the electricity market. The market price of electricity in Europe in April 2022, was 100 euros, today it is between 400 and 600 euros. Meanwhile, US gas and electricity prices are a fraction of European prices. Let’s talk straight: European countries today pay surcharge for oil, natural gas and electricity!
100% increase in energy prices in Hungary causes immediate, general inflation of between 3-5%. In other words, the energy price, which will increase by three to four times today, will immediately increase by 15-20%. This is what we live in today. Let’s say it frankly: if the sanctions were lifted, prices would drop immediately by half and inflation would at least half. Without sanctions, the European economy would regain strength and avoid the threat of recession, wrote Orban.