A leaked European Commission audit and the Czech Supreme State Attorney' decision to reopen an investigation have brought Prime Minister Andrej Babiš under renewed fire. New protests are certain to take place in Prague, in anticipation of the official publication of the Commission's audit.

 

Systemic dismantling of Hungarian media

This week, an international coalition of journalists and investigative reporters published its findings of a joint mission to Hungary to gather evidence about the situation of media freedom and pluralism. The initial report, based on interviews with a wide range of journalists, the spokesman of the Hungarian government and the recently elected mayor of Budapest, revealed major failings to protect media independence. The international coalition particularly criticised the government’s attempts to silence the critical press, introduce content control and the construction of a pro-government media empire.

Among its findings, the team noted a heavy concentration in media ownership, either directly in the hands of the government or through pro-government investors. This confirms earlier reporting that Hungarian media serve as an instrument of influence over the public rather than holding the government to account.

The international coalition remarks that the government’s strategy to retain a minimal amount of independent media, albeit heavily curtailed in its resources and impact, permits it to claim the existence of a free press. The reality, however, is that independent media are competing “against dozens of pro-government media outlets, many of which are supported by market-distorting practices and combine to dominate the market.”

While the report notes the absence of the EU when it came to intervening more forcefully at crucial moments when media pluralism was dismantled, many of its recommendations urge for the Union and its member states to recognise the gravity of media freedom. The coalition suggests to make full use of competences under competition and state aid law to rectify past indifference: “This must include addressing the two existing complaints to the Commission for unlawful or incompatible state aid in the area of public service broadcasting and state advertising as well as prioritizing the handling of future complaints, as well as giving priority to future complaints.”

In response to the launch of the report, on 3 December, the Hungarian government’s spokesman Zoltan Kovacs denied the accusations and tried to question the independence of the coalition on Twitter.

Governance in transition

The latest report of the European Bank for Reconstruction and Development (EBRD) is dedicated to the impact of governance on countries’ transition to well-functioning, mature economies. The EBRD emphasises that poor governance can have detrimental effects on sustainable investment, fair competition and equal market opportunities. The report targets a number of countries in the region, among others Poland, Hungary and Slovakia (note: Czechia is not included).

In Central Europe, the EBRD notes diverging economic prospects. While Poland and Hungary are characterised by an impressive economic performance, GDP growth and investment has lost momentum in Slovakia. Much of the strong economic performance in Poland is driven by domestic consumption whereas Hungary receives substantial foreign direct investment.

There are a number of challenges concerning governance with need to be overcome in the next years. Hungary should focus on both the transparency and governance of how EU funds are absorbed in the country. In Poland, the controversies to judicial reform are seen as an obstacle to increased private-sector investment. The EBRD recommends Slovakia to pay attention to schooling and the healthcare system. The first needs to improve on matching labour demand and supply, while the latter requires a higher degree of efficiency to enable additional investment.

A costly state affair

The Czech media outlet Respekt reported on a leaked European Commission audit that confirms the conflict of interest of Andrej Babiš regarding the use of EU subsidies for his company Agrofert. In the confidential document, Czechia is instructed to pay back around 11 million euros of funding provided by the EU to Agrofert.

Since Babiš became Czech Prime Minister in 2017, his business empire (including Agrofert) has been placed in trust funds. If the details of the leaked audit are confirmed, them any funding received by Agrofert since 2017 will need to be paid back in full by the Czech state to the EU. The final bill may yet increase due to payouts of other subsidies to Agrofert in the past.

Soon after, the story was followed by renewed calls for the Czech prime minister to resign and the state to reclaim the funds from Agrofert. Meanwhile, Babiš said he sees no reason to step back over an ongoing audit.

In what appeared to be an increasingly bleak week for Babiš, the Supreme State Attorney also overturned an earlier decision by the Prague state attorney not to investigate another case of the alleged use of illegal subsidies concerning  “Stork’s Nest” farm. While the investigation no longer targets the prime minister’s family members, both Babiš and his close business associate remain suspects in the case.

As of today, it remains unclear how long the prime minister will be able to defend his embattled position. For now, it appears that the audit will not be published officially before the approval of the European Commission. This moment of reckoning should take place in the near future, as anti-government protests are set to continue in Prague.

Dr Quincy R. Cloet is Managing Editor of Visegrad Insight


Eastern European Futures

In 2009, the European Union and six of its Eastern neighbours launched the Eastern Partnership (EaP) with the stated aim of building a common area of shared democracy, prosperity, stability and increased cooperation. A decade on, however, progress has been mixed.

Visegrad Insight is published by the Res Publica Foundation. This special edition has been prepared in cooperation with the German Marshall Fund of the United States and supported by the International Visegrad Fund.

Download the report in PDF