The experts attending the MCC Budapest Summit have called for unified action and cooperation at the European level in order to mitigate the effects of the crisis.

As Europe and Hungary are facing serious challenges and trials, radical changes will be needed to address the economic problems caused by the war and sanctions, participants heard at the two-day conference hosted by the Mathias Corvinus Collegium (MCC) in Hungary’s capital. 20 international speakers and experts from ten countries and 15 from Hungary shared their views at the 4th MCC Budapest Summit between 29 September and 1 October. The conference was attended by around 800.

Recent history decided the theme of this autumn’s MCC Budapest Summit, with the focal point being the Russia-Ukraine war and its ensuing economic effects. Numerous experts contributed to the two-day event, which kicked off with a presentation delivered by Tuomas Malinen on Thursday evening, MCC’s statement reads.

On Friday, participants offered their thoughts in four panel discussions. The first of these looked at the relationship between wars and sanctions, coming to the conclusion that only a fraction of sanctions imposed throughout history have actually been effective.

Christopher Davis, professorial research fellow at the Oxford Institute of Population Ageing, Howard J. Shatz, senior economist at the RAND Corporation, John Laughland, lecturer in political science and history, visiting fellow at MCC, and Geza Sebestyen, head of MCC Economic Policy Centre shared their views on the EU’s sanctions policy.

Mr Laughland highlighted that the punishing of someone requires having power over them, which we do not have over Russia.

Mr Davis has spent decades studying the impacts of sanctions. When it comes to sanctions, you have to look not only at the impact on the target country, but also at the consequences they will bring for those imposing the sanctions, as well as at their global impact, he emphasized. He noted that the EU did not act with sufficient prudence regarding the introduction of sanctions, and also drew attention to a consequence of the West decreasing reliance on Russian gas and orientating towards liquefied gas: causing gas supply shortages in the third world, MCC pointed out.

Mr Shatz noted that sanctions can be effective when a large state imposes sanctions on a smaller one. The expert cited the example of when the Netherlands imposed sanctions on independent Indonesia the punitive measures failed. He pointed out that sanctions sometimes work against rouge states – as he put it – such as North Korea or Iran, therefore, the efficacy of sanctions is rather varied.

Heated debate on food supply

In the panel on food crisis, which saw some heated exchanges, participants drew attention to the fact that at the moment, there is no, or only a sporadic food crisis, with access to food and the quality of nutrition being the primary problem and not necessarily the quantity of food available. The experts on the topic were Amanda Martinez, economic risk analyst of the UN World Food Program, David Laborde Debucquet, senior scientific associate of the International Food Policy Research Institute (IFPRI), David Mezei, head of the division responsible for Agricultural and Union Relations at Takarekbank Zrt, Magyar Bankholding Group, and Tamas Tarpataki, deputy state secretary responsible for the agricultural market at the Hungarian Ministry of Agriculture.

Amanda Martiez pointed out that problems with food production and supply, such as availability and sufficient nutritional value, are arising in numerous countries across the globe. The reasons include climate change, and are exacerbated by the war and its consequences.

David Laborde Debucquet said that the current situation is a perfect storm:

The climate shock is combined with bad political decisions and the consequences of the war.

The issue of rising energy prices also received special attention at the MCC Budapest Summit. Europe made a grave mistake, said Dr Tuomas Malinen, managing director of GnS Economics, during the first presentation on Friday afternoon. According to Malinen, it is questionable whether restoring Europe’s gas supply after the war is in Russia’s interest, and conclude that we are unfortunately on the losing side in that. Economist Dr. Zoltan Acs, professor at the London School of Economics and guest lecturer at MCC, agreed with the statement that inflation in Europe is caused by drastically rising energy prices, which was one of the important propositions made earlier at the conference.

The war could transform not only Europe’s economy in the long term, but also our everyday lives, the presenters said. Energy efficiency may be extremely important, but people’s consumption habits will also change.

Experts urge united action and cooperation at the European level

The participants at the opening panel of Saturday’s MCC Budapest Summit called for united action and cooperation at the European level, which they said is the key to Europe being able to deal effectively with the looming crisis. The political direction that made the German economy dependent on Russian energy carriers had a huge role in the development of the current situation, said Fritz Sollner, head of the department of the Ilmenau University of Technology, adding that German companies and people are also paying the price of the war and the sanctions.

“This is the seventh crisis that I have experienced in the past thirty years and we have recovered from all of them. This needs cooperation, creative ideas and a unified position in Europe. Europe can only stay strong if we stand united,” said Thomas Narbeshuber, Vice President of the Central and Southeastern European Division of BASF.

Based on the events of the past few days, the war is headed towards escalation, and its effects will be felt for many years to come, said the experts on the panel which was attempting to assess how long the war in Ukraine will last.