The announcement of Sebastian Kurz to join the V4 meeting in Prague signals a continuation of the Austrian chancellor's previous interest to act as a bridge between East and West. Symbolic gestures, however, may not be enough to find agreement on sensitive European issues.
The risk of overheating
Inflation appears to be the main challenge for the V4 economies in the upcoming year. After reports about a gradual economic slowdown last year, following weakness of the German manufacturing industry, the latest news brings additional concern for governments, central banks and businesses.
This week, both Poland and Slovakia indicated a higher than expected inflation rate for the upcoming year. The Polish inflation rate for December stood at 3.4 per cent (higher than the expected 2.9 per cent), while Slovakia reported the highest inflation since 2012. Figures are similar for Czechia (3.2) and Hungary (4), with the latter at greatest risk of overheating.
Inflation shocks across eastern Europe have put local central-bank policy front and center for traders, even as officials play down the uptick. @adkrajewski and @martoneder dig into the latest numbers https://t.co/pLgUYS2YSX via @markets #Czech #Hungary #Poland #Romania pic.twitter.com/oojzXQpgiJ
— Balázs Penz (@BalazsPenz) January 16, 2020
As a consequence, economists predict a weakening of the currencies driven by rising inflation and slower economic growth. For instance, the Polish złoty is expected to weaken by 1.6 per cent against the euro.
Czech President seeks distance from China
After Prague Mayor Zdeněk Hřib’s rebuke of China over the invitation of a Taiwanese representative to a reception, Czech President Miloš Zeman distanced himself from the People’s Republic. While Zeman has long been perceived as favourable to Chinese interests, encouraging closer ties, his decision to skip a Beijing 17+1 summit signals a possible change in direction ahead.
— Tim Gosling (@TGosCEE) January 16, 2020
Reportedly, Zeman expressed his disappointment about Chinese investments which have not materialised to date. Aktualne reported the following statement by the president:
“I don’t think the Chinese side has done what they promised… I’m talking about investments. And that means that even though a major political figure, but not the president, is going there, it’s a signal.”
On Monday, the mayor of Taipei visited Prague to sign a sister-agreement between the two cities, another move that undoubtedly will drive a greater wedge between Czechia and China.
Confession of a murderer
The court case surrounding the murder of Ján Kuciak and his fiancee Martina Kusnirova continues to bring new elements to light. Earlier this week, former soldier Miroslav Marček confessed he was hired as a contract killer to kill the journalist and his fiancee. Marček is one of the five people who have been charged for their alleged involvement in the crime.
— Filip Struhárik (@filip_struharik) January 13, 2020
Also, yesterday key witness Peter Tóth singled out Marian Kočner and Alena Zsuzsová as the alleged plotters of the murders. Last week, Zoltán Andruskó already admitted to his role in facilitating the murders of Kuciak and Kusnirova.
The Austrian bridge-builder
The new, old Chancellor of Austria, Sebastian Kurz, announced at the beginning of this week his plans to take part in the meeting between the Visegrad Group leaders in Prague today. After his first visit to Brussels, because of a meeting with Commission President Ursula von der Leyen, the Austrian leader arrives as an envoy with an outstretched hand to Central Europe.
Kurz mentioned his intention to “overcome trenches in Europe” and bring East and West closer. Among others, the five leaders have topics such as the Multiannual Financial Framework, migration and asylum as well as EU enlargement on the agenda. All of these are of great importance to Central Europe, palpable from a joint declaration by the Friends of Cohesion at the end of the last year but also the fact that EU Commission portfolios for enlargement and neighbourhood were assigned to a Hungarian.
While Kurz may see himself as a bridge-builder for Central Europe – after creating a second cabinet with a different partner in Austria – he may stumble upon several obstacles.
First, the ruling parties in Poland, Slovakia and Czechia are not members of the European Peoples Party (EPP), while Hungary’s Fidesz appears set to depart from the European party family. The strategies and preferences of each political family may weigh more than a meeting between heads of government. Second, Kurz’ previous cabinet with the FPÖ elicited differing responses in the V4 region – especially after cosying up to Russian President Vladimir Putin and because of the scandal that brought down the cabinet.
Today’s talks are set to begin with an initial meeting among the V4 which will also address topics such as social policy and energy. Sebastian Kurz is scheduled to join them afterwards for an additional meeting. A press conference takes place after midday and can be streamed or watched again below.