Analysis
Economy & Tech
Why Hasn’t Russia’s Wartime Economy Gone Bankrupt? Fuelled by Stimulus, Sustained by Uncertainty
31 January 2025
For some time, there has been a notable disconnect between Brussels and Warsaw. While Polish leader Jarosław Kaczyński might believe any checks against his power are derived from an incomplete revolution, these institutions are actually in place to avoid autocratic rule.
In the wake of Russia’s invasion of Ukraine, it became conventional wisdom that the war was remaking the politics of Europe, moving the continent’s centre of gravity eastwards. No country seemed to reflect this shift more dramatically than Poland, now Europe’s eastern bulwark in the face of Russian aggression. Once an illiberal bête noire, Poland had quickly become, in the words of European Commission President Ursula von Der Leyen, a “shining example” of European solidarity. The country has taken in over four million Ukrainian refugees and plans to double its long-term defence spending target to 5 per cent of gross domestic product — by far the largest increase in Europe, and in marked contrast to the EU’s traditional centres of power, Germany and France.
In recognition of Poland’s outsized role in Europe’s wartime mobilisation, the EU’s European Commission advanced a long-delayed COVID-19 recovery plan for Poland, known as Poland’s National Recovery Plan (KPO), pledging to unlock nearly €36bn in subsidies and grants on conditions of Poland reaching certain “milestones” regarding rule-of-law reforms.
Polish leaders quickly expressed optimism about receiving the first payments by the end of 2022. The goodwill move was seen as a sign of warming ties between Warsaw and Brussels and a potential end to a bitter dispute since 2015 between Poland’s right-wing Law and Justice party (PiS) and the European Union over rule-of-law issues. For a brief moment, what united Brussels and Warsaw seemed to be stronger than what had divided them.