The Visegrad Group countries are in kind of a „semi-frugal“ position. Central Europe wants to keep cohesion in times when many wealthier members are and will be hit much harder.

The story of Visegrad Group countries and the new EU budget for 2021-2027 in coronavirus emergency has become a story of selfishness and misunderstanding. The four countries still need the Multiannual Financial Framework (MFF) which is necessary as a key driver of continued development. But all four countries have already got before the pandemics closer to a situation of becoming payers or frugal nations.

They refused to compromise on the expected money transfers in the new MFF period because leading politicians are aware that might be the last chance to get really big funds before these countries, especially in Czechia, will be rich enough not to qualify for cohesion and other funds.

That puts the four capitals in a position of being somewhere in between the richest countries of the north of the EU and poor countries of the South which are heavily affected by the coronavirus crisis. It might change the equilibrium within the EU from an East-West divide into a North-South one for the upcoming final phase of negotiations around the MFF.

A selfish player

And Visegrad Four is – unfortunately – confirming its image as a not-solidary, selfish, and self-centred player. That picture V4 has gained during the migration crisis in 2015 – with the only one exception: Now, there is less unity of V4 countries and because it is about money, each country has somewhat different priorities.

The common approach remains that Czechia, Slovakia, Poland and Hungary want to get as much as possible without being able to propose anything constructive. They rely on the excuse that their countries still need to catch up.

Only the Polish government was able to produce a proposal to increase the EU budget through a variety of common European taxes which might be interpreted as constructive if an unrealistic attempt to think about solidarity in times of crisis.

A Polish proposal for EU-wide taxes did not get much attention because the French and the Germans do not want them and prefer another way to find the money. But Poland was positive about the Franco-German proposal. “Poland fully supports this idea which is a realistic scenario,” said Konrad Szymański, the Polish minister for EU affairs.

The Czech and Slovak reactions to the Franco-German proposal of 500 billion euro recovery fund with money from markets being backed by the EU budget and distributed as grants, were illustrative of the narrow nationalistic thinking which prevailed in the region during the last years.

„We want our money and only then we could think about the help for the countries the most affected by the coronavirus,“ was the message conveyed by Czech Prime minister Andrej Babiš and his Minister of Finance Alena Schillerova in a series of press conferences and interviews recently.

The Slovak government is portraying itself as the most pro-European in the region but does not have any clear common stance on the budget and recovery fund.

Yesterday, Ursula von der Leyen unveiled a 750 billion euros recovery fund proposal, comprising 500 billion euros in the form of grants and the remainder of 250 billion euros as loans.

From the recent statements of Prime Minister Igor Matovič, Ministers of Finance and Foreign Affairs Eduard Heger and Ivan Korcok and some MPs like Tomas Valasek, one can also create a headline: “There were many more coronavirus casualties elsewhere, but our economy was hit much harder, so we need a lot of money as well.”

And Hungary, led by the very, very pragmatic Prime Minister Viktor Orbán  – as usual – sits and waits. EU funds are a key driver of investment in Hungary and will be needed even more in the upcoming economic crisis which is painted by Hungarian government officials as a very rosy picture.

Just last week, Orban has announced that the economy will spring back much quicker than expected and estimations of how much GDP will fall vary a lot when comparing the EU and Hungarian government numbers: the European Commission expects a 4.5 per cent drop while Hungarian Minister of Finance Mihály Varga thinks minus three per cent.

The German proposal

All four countries will be closely watching a future German proposal, which will have for each of them a slightly different impact. Most closely will be Hungarians and Slovaks for different reasons: Orbán desperately needs the support of governing German conservatives in his numerous disputes with the EU and EPP.

Slovakia is not only tied to the German economy and has euro as currency but it wants as a priority to have EU budget based on more green and transformative features as it is put in a statement of the highest political representatives from the beginning of May about the common EU future.

Slovakia’s Prime Minister Igor Matovič does not have a strong opinion on EU therefore he will not push for any special agenda in comparison to other three Visegrad group members.

But Slovaks, as well as others, will have to make sure that new budget with recovery fund will not help only the South of the EU but that it will be distributed more evenly around. From that point of view, I would expect more nuanced diplomacy from Slovaks, Poles, and Hungarians but not from Czechs, who have a tradition of having strong statements but not having enough understanding of how the EU really works (this is a result of long-term ignorance and rhetorical Euroskepticism).

Therefore, it will be much harder for them to push through their priorities which are too tied with personal priorities of Prime Minister Andrej Babis who is the second-richest Czech businessman. His companies from agricultural and chemical business, parked in a trust fund, are among the biggest recipients of EU subsidies in Czechia.

All four countries for different reasons will be against lowering agricultural subsidies and will be arguing against an increase in the EU budget from the national budgets.

They might have different opinions about the Green Deal but as surprisingly Poland and Czechia have shown recently, they are willing in this topic for some compromises.

Frugal and semi-frugal

The original frugal four – Netherlands, Sweden, Austria and Denmark – recently proposed that the recovery fund would not be in the form of grants, as it is envisaged by Franco-German proposal and in the European position, but favourable loans with the extended use of existing EU instruments. There would also be conditionality attached where the fund could be used like the health sector or R&D, or simply to use the recovery fund to support future growth.

The European Commission’s recovery fund proposal, announced yesterday, goes to some length to meet this request but there are likely to be difficult negotiations ahead over the overall sums of grants and loans involved.

The Visegrad Group countries are in kind of a „semi-frugal“ position. Central Europe wants to keep cohesion in times when many wealthier members are and will be hit much harder. That creates political and moral dilemmas that populist governments of the region are not even contemplating and reflecting.

They expect money as (automatic) solidarity without much will even to debate (new) solidarity with the South which – unlike Greece in the financial crisis of 2009 – did not cause itself. The result might be similar to the 2015 migration debate: the Visegrad Four is being considered as the unconstructive and obstructive members of the EU, placed together in one basket even when the political differences are growing and V4 is not so cohesive as it was five years ago.

The EU should be lucky and grateful that the MFF negotiations should be finalised under the German EU council presidency. Revived by the coronavirus crisis, German Chancellor Angela Merkel possesses enormous authority among the leaders of a region that depends to a great extent on the state of the German economy.

That seems to be the only chance how to reduce the budgetary greed of Central European political representations and at the same time to secure for them at least some money they expect for the recovery.

If only they know how to ask the German chancellor and Brussels officials for it – which does not seem to be the case at least for Czechia.

 

 

This article is part of the #DemocraCE project. Read a French analysis based on this article in l’Opinion.

Martin Ehl is the Chief Analyst at Hospodářské noviny (Economic daily)


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.

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