Think Tank
Visegrad Insight Breakfasts
Event: Visegrad Insight Breakfast – Economic security in Central and Eastern Europe
4 October 2024
2 April 2024
The war waged by Russia is not universally recognised in the EU as an existential challenge to the West. Hence, the EU has not fully mobilised its potential in the defence industry and military preparedness. Given the rise of isolationist voices in the US and the proliferation of disinformation in the EU that amplifies pro-Russian radicals, the challenge to European democratic security is on high alert.
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The following overview of specific areas has been prepared based on our weekly outlooks that monitor democratic security developments in the CEE and a survey of experts – Visegrad Insight fellows from CEE countries.
As the year turned, the future of US military support for Ukraine emerged as a partisan issue with little prospect for immediate change. Furthermore, Donald Trump’s provocative remarks on European security guarantees have instilled a sense of urgency in the capitals of European NATO members. These developments underscore two crucial factors that will shape scenarios for democratic security in Europe over the next five years: a) The state of Transatlantic relations and b) the extent of support to Ukraine in the war with Russia.
Against this background of funding, European support for Ukraine has become the main driver of Central European political initiatives – especially in Czechia and Poland. While the EU plan to produce 1 million artillery ammunition pieces by March failed, the Czech initiative bypassed this shortcoming. “A clearing-house initiative by the Czech government – that facilitates a connection between suppliers of ammunition for Ukraine with financial contributors – has shown a way how to coordinate defence funding from member states – a good practice to be followed by other matching mechanisms in the EU not just in defence area,” comments Jiří Schneider, former Czech deputy foreign minister and a senior fellow at Visegrad Insight.
On the other hand, Poland launched a new political initiative that helped coordinate with France and Germany on the future direction of EU defence efforts under the Weimar Triangle umbrella. European Council’s decision to establish a new fund for Ukraine worth 50 billion euros managed to bypass Hungarian opposition and demonstrate an effective combination of consensus and QMV voting on CSDP policies – a compelling mix preferred by the new leadership in Warsaw.
Meanwhile, Hungary vocally opposed military support to Ukraine, dragging its foot on Sweden’s NATO membership, and folded its cards with no obvious gains.
While 10 billion euros of EU cohesion funds were partially released to Hungary (with 55% of the allocation, including RRF, still frozen), Poland gradually released all of its allocated 137 billion euros due to changes in justice reforms and ministerial plans. Unlike Budapest, Warsaw has made robust changes to its judicial institutions to eradicate partisanship and restore a broad consensus across civil society on the issue. Meanwhile, in Hungary, public outrage led masses of people to the streets after political meddling in the justice system and an earlier paedophile scandal were revealed, sending a ripple effect across the political establishment.
At the same in Slovakia, the civil society fears further political interferecnce from the Robert Fico government. Bratislava’s state capture attempts are for now contained or delayed by surprisingly resilient action by the outgoing president and the Constitutional Court, which prevented some changes in the judiciary and the civic mobilisation that elevated the chances of Ivan Korčok, a presidential candidate of the opposition, who surprisingly won the first round of the presidential race.
Importantly, for many years, Slovakia has been flagging mass-scale disinformation, and the new government seeks to undermine public media. These critical gatekeepers were also met with stark opposition from demonstrators, unseen during Fico’s previous term.
Meanwhile, security agencies in Czechia, Poland and several other countries targeted Kremlin-sponsored disinformation networks prevalent across Europe and particularly pronounced in CEE. Their main online platform operated under the disguise of Voice of Europe, linking some far-right advocacy groups in the region and making payments to an undisclosed number of European politicians. Oligarch Viktor Medvedchuk, Putin’s close ally, bankrolled the operation.
The trajectory of the Russian war in Ukraine dominates the policy research in CEE, with reports on the conflict dynamics and the new security structure that Ukraine’s integration into the West will usher in. In a wider context, think tanks discuss the expansion of NATO, the integration of Finland and Sweden and several other defence topics to define the Alliance’s 75th-anniversary meeting in July. Also in the spotlight is the impact of the Weimar Three on future European security cooperation.
Ukraine’s integration was also pertinent to research on EU governability. In addition to the “geopolitical awakening” the war has sparked within the EU, enlargement emerged as a central topic of discussion. Reports highlighted the need to maintain meritocratic scrutiny in this process and to prepare for the hidden obstacles that could hinder successful enlargement.
Prominent report topics also included the future of the EU’s economy – both about Ukraine’s integration and wider developments – and possible scenarios for the upcoming EP elections including expectations for and the public debate around EU climate policies.
Research on disinformation and media focused on two strands: AI and Russia. The former highlighted the unpreparedness of governments to deal with new technology, even with the recent ratification of the AI Act and how AI could affect the upcoming elections.
The latter analysed trends in Russian propaganda, drawing on test cases such as traditional propaganda in Belarus and disinformation via Telegram in the Czech Republic. Reports also assessed how effective sanctions have been, how big tech could help break Putin’s censorship and how Ukraine’s integration into the Digital Single Market could provide added cybersecurity. It was argued that an overall deterioration in independent research on Russian academia is now reinforcing Russia’s propaganda internally.
Unsurprisingly, China was the other significant actor engaged in malign foreign interference. Aside from research on wider corruption and kleptocracy in the EU, reports focused on China’s increasing economic control in the Union through its Digital Silk Road and via electric vehicle and battery production and supply chains, especially in the Visegrad 4.
The new Polish ruling coalition completed its 100 days in power, marked by vigorous steps to prosecute abuses of power and reverse state capture by the previously ruling Law and Justice (PiS) party. Investigative committees in parliament have exposed new evidence of irregularities during the planning for the 2020 presidential election, as well as the use of Pegasus spyware to tilt the playing field in favour of PiS.
Prime Minister Donald Tusk’s most significant success has been the unblocking of EU funds frozen over the rule of law disputes, even though President Andrzej Duda has hampered the government’s ability to pass relevant legislation.
When unblocking the funds, the European Commission cited executive decisions removing pressure on the judiciary, restoration of the primacy of EU law and Poland’s accession to the European Prosecution Service as justification.
Opinion polls show Tusk’s Civic Coalition party has made modest gains since winning 28% of the vote in October and edged ahead of PiS as Poland’s most popular grouping.
This places Tusk ahead of local polls on 7 April to solidify his hold on the country, while the other coalition parties seem to struggle to build up support.
Lower house speaker Szymon Hołownia’s Third Way coalition has been hurt by his refusal to allow a bill liberalising access to abortion to enter the agenda. Women’s rights remain a key issue, with a majority of Poles supporting liberalisation after PiS all but banned termination of pregnancy.
PiS has struggled to find internal cohesion following its defeat. Several PiS candidates for mayors have dumped the party label. In contrast, the fight over who will replace party leader Jarosław Kaczyński led to acrimony between ex-PM Mateusz Morawiecki and PiS hardliners.
PiS sought to exploit farmer protests over the Green Deal, Ukrainian food imports and falling grain prices, but surveys show most Poles blame the European Commission and the Morawiecki government for sparking the crisis.
In Hungary, Orbán suffered a series of blows in early 2024. He was forced to retreat at the February EU summit over aid to Ukraine and pushed into defence on the home front over a child sex scandal that is still rocking his Fidesz party.
“The resignation of President Katalin Novák and Justice Minister Judit Varga has shifted the Orbán government’s disinformation machine into a higher gear. As the regime has never faced a comparable threat to its credibility in 14 years, its media empire spent hundreds of millions of forints to redirect attention from the paedophile scandal to the ‘paedophile’ opposition and the ‘corrupt warmonger’ European Union,” thinks Edit Zgut-Przybylska, a Visegrad Insight Fellow from Hungary and a professor at the Polish Academy of Sciences.
These setbacks may not be enough to undermine Orbán’s grip on Hungary in the near term, thanks to his capture of state institutions and the creation of the Sovereignty Protection Office that may further stifle dissent.
But his room for manoeuvre has shrunk along with his image of invincibility. The Hungarian leader hopes to regain domestic and EU momentum after the EP elections in the second half of 2024. He hopes the vote will strengthen his far-right allies in other EU member states enough to allow him some breathing space going into the next EU cycle.
Hungary’s access to frozen EU cash is unlikely to change any time soon, with The European Parliament suing the European Commission over its December disbursement of 10 billion euros despite concerns over the rule of law.
Meanwhile in Slovakia, Prime Minister Robert Fico has followed the Orbán playbook in seeking to subjugate law enforcement, courts and the media to party control.
Feeble resistance by the outgoing President Zuzanna Čaputová may soon be replaced by full cooperation by her potential replacement, Peter Pellegrini.
However, in a surprise to many, opposition candidate Ivan Korčok took the lead in the first round of presidential elections on 23 March, beating the parliament speaker and leader of the co-ruling Hlas Party, Pellegrini, 42% to 37%. The two men will face off in the second round on 6 April.
In Czechia, opinion polls show the populist ANO party of billionaire ex-Prime Minister Andrej Babiš firmly in the lead, with the Kantar poll putting ANO ahead to 38.5% and the Median poll at 31%. Regular elections are scheduled for autumn 2025.
The reshuffle within the Visegrad Four has seen Poland and the Czech Republic taking vigorous steps to shore up Ukraine’s defences.
Czech President Petr Pavel’s initiative to purchase up to 800,000 much-needed artillery shells for Ukraine from third countries won enormous financial support from several NATO allies, with France abandoning its insistence that such purchases had to be made in the EU.
Security of the eastern flank and the risk of Russia’s attack on the Baltic states has been the focus in Warsaw and across the region in the face of the faltering Ukraine defences and the failure of the Biden administration to persuade Republican-controlled Congress to back the extension of military aid.
Donald Trump rattled the region with his statement that he would allow Russia to “do what it wants” with NATO allies who fail to meet the two percent military spending commitment, renewing doubts about the US future willingness to defend its eastern allies.
The issue was discussed during a much-publicised visit by Polish President Duda and PM Tusk to Washington in March, where both leaders demonstrated unity by warning the Republicans that abandoning Ukraine would shatter wider peace in Europe and harm US security interests.
Polish Foreign Minister Radosław Sikorski went as far as to suggest that US allies in Europe and in Asia may be tempted to seek their own nuclear deterrent if they lose confidence US security guarantees are rock solid.
Poland suspended participation in the Conventional Forces in Europe Treaty, reflecting the country’s rapid re-armament in the face of Russian threats. in response to the Russian escalation.
Hungary was finally forced to accept Sweden’s NATO entry as the last alliance member, caving in to pressure from increasingly angry Allies.
Romania is gradually enhancing its position as a key pillar in NATO’s eastern flank as a key base in the country is set to become the largest in Europe.
Romanian President Klaus Iohannis confirmed his bid for the position of NATO Secretary General, evoking Romania’s stability and role as a regional security provider, the allocation of up to 2.5% of GDP for defence and support for Ukraine.
The EU Commission pushed ahead with the plan to boost the defence industry by adopting the European Defense Industrial Strategy on 5 March, along with a draft regulation aiming to grant the sector better access to financing and resources and reduce regulatory obstacles.
The EU is also pushing for reversing a ban on financing defence projects by the European Investment Bank.
“Without new money being put into the common EU basket, there will be no EU defence funding to speak of,” commented Martin Ehl, Chief Analyst at Hospodářské noviny and a Visegrad Insight Senior Fellow from Czechia.
New Polish Prime Minister Donald Tusk swiftly moved to bring Poland back into the heart of EU decision-making after eight years of self-imposed isolation by the previous eurosceptic government.
Tusk’s key objective was to reinvigorate tripartite dialogue with France and Germany under the long-dormant Weimar Triangle formula while also pursuing stronger ties with the Baltic nations and the new NATO members in the Nordics.
Tusk and other CEE leaders made clear, however, they were not eager to change the treaties to remove individual member states’ veto power, treating the necessarily protracted institutional reforms as a distraction from challenges that need addressing in the short term.
“Donald Tusk has closed the (internal) discussion on the treaty reform and this is being communicated by European affairs minister Adam Szłapka. There is some space for manoeuvre with regard to expanding Qualified Majority Voting, as suggested by Foreign Minister Radoslaw Sikorski,” said Michał Matlak, a Visegrad Insight Fellow from Poland.
Tusk’s summit with President Emmanuel Macron and Chancellor Olaf Scholz on 15 March sought to project a united front and reaffirm the commitment to arm Ukraine after splits appeared between France and Germany.
Macron’s sudden hawkish stance on Russia was seen as vindication across CEE, but some sceptical voices suggested it was yet another example of the French leader’s penchant for grabbing attention.
“Instead of more grandiose Macron speeches and Berlin rebuttals, I would prefer actual European leadership, Paris-Warsaw-Berlin, that delivers weapons for Ukraine and prevents a looming Russian breakthrough – not attention seeking rivalling leadership claims while UKR barely holds,” Council on Foreign Relations expert Liana Fix wrote on X.
Tusk also made clear to Hungary’s leader Viktor Orbán and Slovak PM Robert Fico, that the future of the Visegrad Four format hung in the balance due to the two countries’ pro-Russian stance.
The divergence in V4 is unlikely to be bridged soon, with Orbán doubling down on his anti-EU and pro-Russian rhetoric. Orbán was the only EU leader to congratulate Putin on his “victory” in the sham presidential election.
Amid trouble at home, Orbán rubbed shoulders with Donald Trump at Mar-a-Lago in March and endorsed his bid for re-election, telling reporters later that Trump was a “man of peace” who would bring the war in Ukraine to an abrupt end by starving Kyiv of US assistance.
President Biden used Orbán’s foray to denounce him as a leader who “doesn’t think democracy works and is looking for dictatorship.” Hungary reacted with fury, with Foreign Minister Szijjarto saying the country was “not obliged to tolerate lies, even from the president of the United States.”
The Czech government of Petr Fiala hosted the long-delayed V4 summit, where doubts about the viability of the format resurfaced.
This was highlighted by the Czech government suspending regular joint sessions with the Slovak cabinet in response to a meeting between Slovak Minister of Foreign Affairs Juraj Blanár and his Russian counterpart Sergey Lavrov as well as to earlier pro-Kremlin statements by Fico.
A Russia-linked company has invested millions in renewable energy plants in southeast Poland, with the previous government turning a blind eye, according to an investigation by the Polish Newsweek. The new government said it would investigate the affair.
Czechia led a group of CEE countries in a challenge to Germany’s new tax on gas transit, which may hamper the region’s efforts to switch off Russian deliveries completely.
Polish internal security agency, the ABW, searched the premises of Poland’s state-controlled oil major Orlen in March as part of an investigation of its takeover of a smaller rival, Lotos, which involved selling off a third of the latter to Saudi Aramco.
Prosecutors are investigating whether the deal was waved through by officials, including the head of the competition agency, in violation of a law on controlling foreign investment from outside of the EU. Prosecutors are also probing whether the assets were sold on the cheap.
The Czech government excluded Westinghouse from a nuclear power tender, saying the US firm’s offer submitted last October did not meet the criteria.
French EDF and South Korean KHNP are now invited to submit offers for up to four units by 15 April. PM Fiala said that the construction of four units appears to be economically more advantageous.
Westinghouse remains involved in the Polish nuclear project, although details of its financing remain under discussion.
The EU moved towards “sustainability” product certification, which could impact supply chains by probing human rights and environmental issues from third countries, including China. It also adopted a proposal on plastic packaging from third countries, which could impact Chinese exporters.
Amid escalating government pressure on the Hungarian central bank to help revive the sagging economy and starved of EU funds over the rule of law issues and democratic backsliding, the forint fell close to the 400 mark against the euro, 26% down from highs around March 2019
The forint’s underperformance versus the Polish zloty showed increasingly divergent investor confidence in the two countries’ risk perception. The forint fell to 91 per zloty, 10% down from September last year and a stunning 75% fall from 52 forints to the zloty when both countries joined the EU in 2004.
Fearing a currency crisis, the government halted a bill increasing political control over the central bank, which the bank called an attack on its independence.
Meanwhile, Poland’s ruling coalition moved ahead with plans to put the country’s central bank governor, Adam Glapiński, before the State Tribunal, a special court that probes abuses of power by the top officials.
PM Tusk and other coalition leaders accuse Glapiński of violating the constitution by politicising the bank and making it subservient to PiS during its time in power.
Inflation decelerated strongly across CEE in the first quarter thanks to falling food and energy prices.
The European Commission announced it would start releasing up to 137 billion euros in EU funds to Poland, which is estimated to help accelerate economic growth next year to around 4% after 2.5% expected for this year.
Hungarian PM Orbán touted the Chinese investment to build an electric car factory, which constitutes his bet on keeping the economy going on the back of Chinese money while risking making CEE open to Chinese political coercion – a topic raised during our recent online event.
The EU adopted the Media Freedom Act to protect journalists from political pressure and spying. One of the most contentious issues from the point of view of the CEE experience was the issue of state surveillance that targets journalists.
The law comes as the Slovak government moved to revamp the governance of public TV and Radio governance to increase political control, reminiscent of the Polish and Hungarian takeover of public media. In Poland, the new government moved in the opposite direction.
The European Broadcasting Union’s (EBU) Director General Noel Curran described the Slovak plans for the public broadcaster as “a thinly veiled attempt to turn the Slovak public service broadcaster into state-controlled media”.
“One should watch closely what kind of editorial policy is applied by foreign media owners in Slovakia (PPF – CME – Markíza) following the new government’s assertive stance towards the media. Not to mention that the future of the public broadcaster in Slovakia, its editorial and financial independence, is in question,” said Jiří Schneider, senior fellow at Visegrad Insight.
A report from Human Rights Watch said the suppression of independent media in Hungary reached such magnitude that there is virtually no accountability for the government.
This situation was aggravated by establishing the Sovereign Protection Authority with sweeping powers to interfere in public debate and penalise government opponents.
“The new authority, founded by the Orbán government to oversee foreign interference in domestic issues, began its operations. It is led by a pro-government commentator, Tamas Lanczi. Lanczi has claimed on multiple occasions that the penal definition of high treason should be reviewed, as he believes that opposition figures agreeing with the European Commission about Hungary’s frozen funds act dangerously for the nation,” said Iván László Nagy, Visegrad Insight Fellow from Hungary.
Farmer protests were the latest avenue for pro-Russian disinformation campaigns in social media, trying to influence national and the European elections in CEE.
At the end of March, Czech and Polish intelligence agencies said they had unmasked a network of Russia-linked individuals spreading Russian propaganda through the Voice of Europe platform. Both countries said Russian influence operations targeted active politicians in the two countries.
Overall, media freedom in CEE is under pressure from the continued deterioration of the business model that places emphasis on entertainment at the expense of civic debate. This trend is reinforced by the weakening of public broadcasters and the increased power of business magnates using their media ownership to play politics.
“We are observing economic pressure, illiberal political tendencies and oligarchisation of the media sector. This, together with other challenges, including the digital transformation, has caused a new level of pressure,” said Pavel Havlíček, a Visegrad Insight Fellow from Czechia.
Hungarian PM Orbán extended the state of emergency, allowing his cabinet to govern by decree until 7 September, Hungarian media reported. The mechanism, allowing Orbán to bypass parliament, has been in place since October 2016, when it was adopted in response to the “migration” crisis.
Hungary plunged in the corruption perception index of Transparency International to claim the title of the EU’s most corrupt country. Poland also declined under the previous government.
Farmers in Poland paralysed the country several times during the winter, staging road blockades and burning tyres in front of government buildings. Similar protests took place also in Prague.
In Slovakia, thousands took to the streets for several weeks to protest PM Fico’s judicial overhaul.
Protesters also took to the streets in Hungary over the government sex scandal, with former Fidesz loyalist Péter Magyar attracting thousands of people in Budapest as he launched a new political party promising to “clean up” corruption.
Author: Wojciech Przybylski
Contributors
Team: Galan Dall, Katarzyna Górska, Magda Jakubowska, Staś Kaleta, Tomasz Kasprowicz, Anna Kuczyńska, Natalia Kurpiewska, Magdalena Przedmojska, Luca Soltész, Kamila Szymańska, Albin Sybera, Adam Jasser.
Fellows: Radu Albu-Comanescu (Romania), Merili Arjakas (Estonia), Alina Bârgăoanu (Romania), Bohdan Bernatskyi (Ukraine), Marysia Ciupka (Poland), Spasimir Domaradzki (Poland/Bulgaria), Martin Ehl (Czechia), Jan Farfał (Poland), Oksana Forostyna (Ukraine), Ognyan Georgiev (Bulgaria), Jarosław Gwizdak (Poland), Pavel Havlicek (Czechia), Ruslanas Iržikevičius (Lithuania), Krzysztof Izdebski (Poland), Staś Kaleta (United Kingdom), Matej Kandrík (Slovakia), Christine Karelska (Ukraine), Aliaksei Kazharski (Belarus/Slovakia), Viktoryia Kolchyna (Belarus), Ádám Kolozsi (Hungary), Oleksandr Kraiev (Ukraine), Adam Leszczyński (Poland), Paweł Marczewski (Poland), Michał Matlak (Poland), Asya Metodieva (Bulgaria), Adrian Mihaltianu (Romania), Malina Mindrutescu (Romania), Marta Musidłowska (Poland), Mastura Lashkarbekova (Tajikistan/Poland), Iván László Nagy (Hungary), Marco Nemeth (Slovakia), Johanna Patricius (Sweden), Vitaly Portnikov (Ukraine), Jiří Schneider (Czechia), Sandra Sirvydyte (Lithuania), Sigita Struberga (Latvia), Zsuzsanna Szabó (Hungary), Dorka Takacsy (Hungary), Michał Zabłocki (Poland), Marcin Zaborowski (Poland) and Edit Zgut-Przybylska (Hungary)
Think tanks mentioned
Association for International Affairs (AMO)
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