© REUTERS/Radovan Stoklasa

The year 2019 marks a double-anniversary of two interconnected historic events: 30 years since the fall of the Iron Curtain, and 15 years of EU eastern enlargement.

In 1989, democratic revolutions from East Berlin to Bucharest toppled local communist regimes and buried the Cold War international order. For the societies in Central and Eastern Europe, the annus mirabilis, the miraculous year of 1989, generated many hopes and expectation; it also led to many disappointments and brought a lot of pain.

Fifteen years later came the accession to the EU. It gave the Central and Eastern European countries a special boost, including financial support in the form of Cohesion Fund inflows, as well as a political anchor. The economic development that followed is remarkable. It’s worth recalling that with the exception of the Czech Republic and Slovenia as well as the western parts of Poland, Hungary, and Slovakia, the region used to be long-term economic underachievers. Disadvantaged by frequent political disruptions, border changes, and social upheavals, they were stacked at Europe’s periphery. Poland’s per capita GDP, for instance, from the 17th century until recently was almost always below 50 percent of Western Europe’s average level. Now it’s only 25 percent below the EU average, and the gap keeps narrowing.

Former World Bank economist Marcin Piatkowski in his ground-breaking book Poland’s New Golden Age showed that after 1995, the country became the fastest growing economy in the world among larger countries at similar levels of development, beating even South Korea and Taiwan. Next to South-East Asia, there is hardly any other region that has benefited so much from globalization as the new EU members in Central and Eastern Europe, at least in statistical terms.

Of course, this development also greatly benefited Germany, and Europe as a whole. Incorporating new markets of more than 100 million people and their fast-growing open economies into international value chains helped Western European companies to expand, reduce costs, and stay competitive globally.

Can this continue?

Root Causes and Limits

Even if the pace of catching-up with Western Europe has slowed down since the financial crisis of 2008, some basic factors of the economic success will not change, such as geographic proximity. The combined trade volume of the four Visegrád countries (Poland, the Czech Republic, Slovakia, and Hungary) with Germany last year was €290 billion, far ahead of China (€199 billion) or the Netherlands (€189 billion). Poland alone is set to overtake the United Kingdom and Italy and will likely become one of Germany’s top trading partners this year or next. The volume of German-Hungarian trade is larger than German-Russian trade, and German trade with Slovakia, the smallest of the Visegrád countries (and a member of the eurozone) is twice as large as what Germany trades with G7 member Canada.

The German automobile industry, in particular, has turned the country’s eastern neighbors into a manufacturing hub. The knock-on effect was felt in December 2018 when a strike in an engine factory in Györ, Hungary (supported, by the way, by the German trade union IG Metall) forced Audi to shut down production at its headquarters in Ingolstadt, Bavaria, for several days. Interestingly, Audi’s Hungarian employees demanded a wage raise to put them on a par with workers at other Volkswagen/Audi facilities in Central Europe, not with what their German colleagues earn.

This illustrates several things: There is successful economic convergence, but the benefits may not be evenly distributed. Wage convergence in particular has not been as strong as that of GDP per capita levels, reflecting that much of the profits generated in CEE markets are taken out by foreign companies.

Yet political convergence, or that of democratic institutions, has been much slower. In some parts of the region, notably in Hungary, it has even gone into reverse. The EU institutions have proved ill-equipped for combatting such backsliding. Furthermore, they haven’t managed to limit creeping state capture or corruption. Political tensions between EU institutions or Western EU members and the newer eastern members will therefore remain high, but this is unlikely to harm their economic development.

At the same time, given the level of interconnectedness, isolationist policies in Central and Eastern Europe will not work anymore.  Hungary’s leader Viktor Orbán always knew this; his Polish counter-part Jarosław Kaczynski in recent years had to learn it the hard way. What is missing, however, is greater interest and a willingness to engage by the other side: with the exception of those two trouble-makers, Poland and Hungary, the rest of the countries are still largely taken for granted by Germany’s political class.

What Next?

Looking ahead, as the saying goes, the future is no longer what it used to be. There are six key determinants in particular that will likely shape Central and Eastern Europe’s future course.

First, there is the future of globalization. After 1989, the region greatly benefited from the liberal world order and the expansion of free trade. Current winds are blowing in the opposite direction. Conflicts over trade and technology between the United States and China fuel a broader process of de-globalization. Europe is caught in the middle, defending multilateralism and depending on both giants. The small, export-oriented economies of Central and Eastern Europe with their heavy reliance on manufacturing are especially vulnerable to a recession in Germany or a global slowdown. So far, the countries have not been tested by a prolonged downturn.

Second, there is the question of whether the countries are capable of upgrading their business model, as the old one is coming under huge pressure. Instead of high unemployment and cheap labor in abundance, there are now acute labor shortages. At the same time, as research by the Vienna Institute for International Economy (WIIW) shows, a large part of production ranges at the bottom of the value and supply chain, and this is limiting the region’s potential to further catch up with Western Europe. Morphing into a more automated and digital economy will likely add to the problem, unless it is offset by more diverse growth and higher levels of public investment in research and education.

Third, and related, the impact of technological transformation on key industrial sectors, including the switch to electric cars and artificial intelligence, will be huge. There is also the transition to cleaner, low carbon energy. German industry and energy companies have already started this process, and it is not clear what consequences it will have for their suppliers and partners in Central and Eastern Europe.

Fourth, the countries have to manage demographic decline. EU accession has opened the doors to a dramatic emigration from the region. Many countries have already lost a large share of their population of productive age to Western Europe. Many Central and Eastern European societies are aging rapidly, while the workforce is shrinking, as young and skilled people continue to leave. Last year, Germany’s population reached a record high of more than 83 million people, with net immigration of some 400,000; more than half of the new arrivals came from Central and Eastern Europe (Romania, Croatia, Bulgaria, Hungary, and Poland topping the list of countries of origin). As a consequence, the countries themselves will need to become more open for migration. In spite of the current government’s anti-migration rhetoric, Poland has quietly become a global leader in accepting seasonal workers (some two million from Ukraine, and also an increasing number of Asians). However, there is little policy planning for those who decide to stay after their permit expires, while Poland’s labor market is projected to be short of an additional 1.5 million people by 2030.

A Call for Good Governance

Fifth, the countries need to keep their societies inclusive. A large part of Central and Eastern Europeans are living in the countryside. Fewer than 60 percent of Poles, Croats, Romanians, Slovaks and Slovenes are citydwellers (the EU average is around 75 percent), which gives political strength to rural voters. In the post-1989 period, large cities were usually the breeding grounds of economic development, while the countryside felt more disconnected and abandoned. The urban-rural divide deepened after the financial crisis of 2008, as rural areas became strongholds of populist leaders. Government policies and public investment into infrastructure and social policy programs will determine to what extent these aging and changing societies can be kept open and inclusive. This applies also to ethnic minorities and the Roma population, which is projected to rise to 20 percent of the populations of Hungary, Slovakia, and Bulgaria by 2050.

The sixth and crucial factor is quality of governance and the future behavior of political elites. As the challenges become more complex and multifaceted, policy responses formulated in capitals from Prague to Sofia will require more engagement on all levels of the state administration, economy, and society. The alternative model is the top-down approach pushed by authoritarian leaders in Budapest and Warsaw. However, quality, transparency, and inclusiveness of policy-making are likely to improve with younger generations. Over the next decade, we are likely to witness a more diverse region emerging.

Time to Reengage

A new generation is now coming to power in Central and Eastern Europe. Many of them are too young to remember 1989, but they will nevertheless reconnect with the ideas and political legacy of its proponents. They lack experience and EU networks, but are largely guided by a strong sense of EU togetherness and co-ownership.

This is also a chance for Berlin to reengage with this neighboring region. What is still lacking 30 years after is a stronger political partnership, based on permanent dialogue platforms between Berlin and Central and Eastern European capitals (preferably outside of closed diplomatic channels) that would structurally connect political and economic aspects of their bilateral relationship. It would be a great achievement if the upcoming celebrations of these anniversaries would generate a new purpose of working together for a more cohesive EU.

The post The Next Chapter appeared first on Berlin Policy Journal - Blog.

© REUTERS/ Piroschka Van de Wouw

Let’s start in Prague. Even for the scandal-tainted Czech prime minister, the billionaire-turned-politician Andrej Babiš, it was a bizarre turn of events. In mid-November, local media broadcast the shocking testimony of his 35-year old son, who claimed that last year, associates of his father had forced him to go on an “extended holiday” to Crimea. The purpose was to prevent him from testifying in a criminal investigation into charges that his father had committed an EU subsidy fraud. The fraud charges are part of a notorious case involving a conference center near Prague formally owned by Babiš’ children, who are now also implicated. The police want to close the investigation by the end of the year. Prime Minister Babiš has repeatedly denied any wrongdoing and argues that the accusations are part of an orchestrated political smear campaign.

Amid the scandal, the opposition parties forced a no confidence vote. The social democrats, a junior partner in Babiš’ minority coalition government, decided to leave the chamber during the vote: they did not have confidence in the prime minister, but they also did not wish to vote against their own government. Their proposal to follow “the Slovak model”—in neighboring Slovakia, the discredited Prime Minister Robert Fico was replaced by his deputy Peter Pellegrini in March 2018—was vehemently rejected by Babiš. “I will never resign. Never! You should all remember,” Babiš declared in the parliament. As the Czech ruling party ANO is closely controlled by its founder and chairman Babiš, replacing him as prime minister against his will simply would not work.

Babiš had reason to be defiant. Because of the parliamentary mathematics in the 200-seat Chamber of Deputies, the two extremist parties, the communists and the anti-migration party of Tomio Okamura, were always going to determine the balance of power. Babiš rode out the crisis by showing the social democrats that Okamura’s party is ready to replace them in government and that the communists will continue to support him regardless of the investigation. He was also helped by Czech President Miloš Zeman, who publicly declared that, even if Babiš were to lose the vote of confidence, he would ask him to stay on as prime minister and form another cabinet.

What Price Power?

Babiš paid for the support of both the extremist parties and pro-Russian President Zeman by granting, for instance, some minor budget handouts to organisations that are politically close to them. But what will be much more important in the medium term is the political boost they have gained from the deal: like the president, both extremist parties are pro-Russian as well as anti-EU and anti-NATO. In fact, they are proposing limits to Czech contributions to NATO missions, and insist on a tough, uncompromising migration policy.

The alleged conflicts of interest around Babiš and his business empire have become so toxic that they have not only paralyzed Czech domestic politics but also damaged the country’s position within the EU. On December 13, the European Parliament adopted a resolution expressing concern about the Prime Minister’s conflict of interest and the use of EU funds in the Czech Republic. Most allegations focus on Agrofert, Babiš’ large business conglomerate, which is now formally owned by two trust funds and continues to be a major recipient of EU agricultural subsidies in the country. These new developments are likely to push the Czech government into a corner in the ongoing negotiations about the new EU budget. Under pressure from Brussels, Babiš will now find it more difficult to pull off the balancing act by which he cultivates ties with western EU leaders while also embracing Hungary’s populist leader Viktor Orbán.

Meanwhile, neighboring Slovakia was shaken by a different kind of political crisis. As in Belgium, the ruling coalition in Bratislava was deeply split on the Global Migration Pact. After 18 months of negotiations, the legally non-binding document on the treatment of migrants was agreed at the UN in July by all member states except the United States. At that time, Slovakia’s Foreign Minister Miroslav Lajčák was president of the UN General Assembly. The pact was formally endorsed at the UN intergovernmental conference in Marrakesh on December 10-11, but not before several countries had publicly withdrawn their support, including EU members Austria, Italy, Hungary, Poland, Latvia, and the Czech Republic.

“Populist Race to the Bottom”

The dispute within the three-party coalition government in Bratislava burst into the open after a junior partner, the pro-Russian populist Slovak National Party (SNS), demanded that Slovakia reject the migration pact, too. Foreign Minister Lajčák defended the document, criticizing its opponents for making false statements and leading a “populist race to the bottom.” He also threatened to resign if his opponents prevented Slovakia from taking part in the UN conference in Marrakesh. This was about the country’s credibility in Europe and its approach to multilateralism, he argued. If politicians have objections to the UN migration pact, they should allow diplomats to take them to Marrakesh.

Lajčák was hoping for political support from his own party, Smer-Social Democracy (SD), but he miscalculated. Weakened by recent country-wide protests against corruption, Smer-SD was careful not be outflanked on migration by the SNS. Prime Minister Peter Pellegrini said Slovakia would “never” accept a pact that described migration as a generally positive phenomenon, a position that contradicts Slovakia’s will to distinguish between economic migrants and refugees. So the tide turned against Lajčák. After a strongly worded parliamentary resolution opposing the pact was passed—supported by Smer, SNS, and the neo-fascist Kotleba party—the foreign minister tendered his resignation on November 29.

Lajčák’s U-Turn

But it took him only one week to rescind it. He said he had received guarantees from both Prime Minister Pellegrini and Robert Fico, now the chairman of the Smer party, that Slovakia’s foreign policy will not change. The real reason for his change of heart could be something different—Bratislava is full of speculation. If Lajčák left the cabinet, Robert Fico would try to return to the government, thus threatening both the fragile balance of power and the position of Prime Minister Pellegrini. Or perhaps Lajčák is simply waiting in his post until there is a new top international job available for him—distancing himself from Slovakia’s position on the migration pact might improve his chances.

In any case, despite guarantees of foreign policy continuity, the SNS feels emboldened to pursue its agenda. Its new target is the country’s new security strategy. Having been approved by the government, it was supposed to be debated in the parliament. However, the SNS asked to change its wording by further watering down references to Russia as a threat. Pellegrini offered a procedural way out, emphasizing that, as the government has already approved the security strategy, it is bound by it even without the parliament’s confirmation.

What Europe Should Do

So, what do these recent Czech and Slovak political crises have in common?

Both show that as political elites tainted by corruption cling to power, they increasingly have to turn to the pro-Russian extremists for tactical support. This shift also has foreign policy implications. First, as the main ruling parties decline, fringe parties are going to grab more seats in the European parliament elections. Second, this weakens the more pro-European governments within the Visegrád group, which also includes Poland and Hungary. This means that Hungary’s leader Viktor Orbán will gain more space within the group to expand his populist, anti-Brussels rhetoric (though he himself has come under pressure by wide-spread civic protest at home). Third, the Czech Republic in particular risks to undermine its relatively strong negotiating positions in the debate on the new EU budget and the future of cohesion policy. Fourth, if the conflict between Russia and Ukraine escalates, Prague and Bratislava will become even more vulnerable to Russian disinformation.

Overall, the outlook for 2019 is more instability, as domestic politics continue to drift into turmoil. What does this mean for their partners in Europe, first of all for Germany, both countries’ most important interlocutor? As the antagonism between the EU’s East and West continues to grow, Berlin cannot take for granted that Prague and Bratislava will continue their pragmatic approach to important EU issues. While insisting that both countries address issues of corruption and conflict of interest, Germany should also enlist France’s support to anchor their governments in the pro-European camp. At this point in time, both the Czech Republic and Slovakia need help to consolidate their strategic consensus and resist both internal and external pressures for further radicalization.

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© REUTERS/Radovan Stoklasa

At the end of February, the murder of Slovak investigative reporter Ján Kuciak and his fiancée Martina Kušnírová shocked the country. Within days it sparked mass street anti-corruption protests that toppled populist Prime Minister Robert Fico and pushed his center-left ruling coalition to the verge of collapse. For now, it seems that a snap election has been avoided—but the implications carry a powerful message beyond this small Central European nation.

Let’s start with the killings. This is the second high-profile murder of an investigative journalist in an EU member state, the first being that of Daphne Caruana Galizia. Like her, Kuciak was probing not only financial crimes in his home country, but also local links to international crime schemes and tax evasion exposed by the leaked Panama papers. He was only 27 years old, but according to his colleagues ahead of the others in data mining, and was deep into an advanced collaboration with colleagues in the Czech Republic and Italy. Slovak authorities have set up the largest investigative team in the country’s history, and are being assisted by Italian and Czech colleagues, as well as by Europol and the US Federal Bureau of Investigations (FBI). Meanwhile, a joint international investigative team has been demanded by the protest organizers, who do not trust Slovak police.

Kuciak’s murder is a tragic reminder that, in some EU countries where state law enforcement bodies are not doing (or not allowed to do) their job, it is up to fearless reporters to risk their lives. This makes peripheral eurozone countries with weak state structures and histories of political cronyism attractive for money-laundering. In this context, fearless, skillful “lone wolf” investigative journalists, plugged into international investigative networks, present a bigger threat to organized crime than meets the eye.

An EU Challenge

But let’s not fool ourselves—this is not only about Malta or Slovakia. There are several countries in the EU with similar corruption problems and weak law enforcement.

Therefore, this is also a challenge for EU institutions. The European Parliament sent an ad hoc delegation to Bratislava last week, which published a solid report. Its findings, and the safety of journalists across the Union, were discussed in the European Parliament on Wednesday. But it’s not clear what the next steps are. Members of the EU delegation were shocked to find widespread distrust of the state institutions, notably the police and the law enforcement agencies; this stands in sharp contrast to the external perspective from Brussels, where Slovakia was passing under the radar.

Perhaps this tragic case should be a catalyst for a more systematic approach at the EU level, including a new mechanism to support journalists and civil society organizations working on corruption or rule of law issues, especially in member states with high distrust in law enforcement. This is a chance to fulfil the “more Europe” demands voiced by protest organizers, and supported on paper by the embattled but still pro-EU government in Bratislava.

Second, the murders of Kuciak and his fiancée stoked a huge amount of public anger over corruption and the government’s lack of effort to tackle it. Within days, this rage erupted into the biggest street protests since the end of communism. If the reported numbers do not look significant from the outside, think proportionally: Bratislava has a population of half a million, so a crowd of 40,000 people in the main square would be like 200,000 people in nearby Vienna or Budapest.

Organized by grass-root activists, last Friday’s protests spread out to some 50 towns throughout the country, and symbolic gatherings of Slovak expats even took place around the world, from Vancouver to Munich. Their main demands: a decent country, independent institutions, and stronger rule of law. This is a very encouraging sign in our times of political apathy. But will it be enough to achieve lasting improvement and a decent country?

Third, the deep political crisis in Slovakia is still evolving. Protests that started as strictly apolitical eventually turned against the government of Robert Fico. His populist Social Democrat Smer („Direction“) party has been in power for most of the last twelve years. Although serious concerns about corruption existed before, the scale of scandals and conflicts of interest involving the Smer leadership have reached unprecedented levels. And yet none of them has been properly investigated.

This paradox was summed up by The Economist recently: just six of the more than 800 people convicted and sentenced for corruption since 2012 were public officials, and the highest-ranking of those was mayor of a town with fewer than 2,000 residents. These numbers translate into falling support for the ruling party. A fresh poll by the Focus agency a few days ago showed 20 percent support for the government, a five percent drop from last month before the protests started, and 62 percent of Slovaks wanted Fico to leave.

A Former Star

Fico was once seen as one of Europe’s most successful center-left leaders. Back in 2012, Smer won a huge 45 percent share of the vote, allowing him to form a single-party government. To Fico’s credit, he was careful not to follow the steps of Viktor Orbán’s Hungary in democracy backsliding and curtailing civic or political freedoms. At the same time, even as many partners in the EU and at home sighed with relief, his party machine took control of public money flows and became more entrenched with big business than any government before. It was just a matter of time before the shady corruption bubble would burst.

On March 4, Slovak President Andrej Kiska called for either a major government reshuffle or early elections. The combative Fico responded with an accusation that President Kiska had conspired with American philanthropist George Soros—already to favored target of a vicious Orbán campaign. This went too far even for members of the junior coalition party, the liberal Most-Hid (“Bridge”). Snap elections were seen as the only credible solution to quell the mounting protests around the country, and government parties started talks about possible dates.

On Wednesday evening, Fico announced that he had negotiated a last-minute deal to save the three-party ruling coalition, and that he was prepared to step down as Slovakia’s Prime Minister. He submitted his resignation the next day, but only after President Kiska agreed to allow Fico’s Smer, as the largest party, to nominate the head of the new government. The newly designated Prime Minister is Peter Pellegrini, one of Fico’s deputies and a former speaker of parliament, who so far has kept a relatively clean track record.  In reality, Fico—who is staying on as Smer party chairman—will continue to pull the strings from behind the scenes. His discredited governance model, based on cronyism, will stay in place, just with better PR. Will this be enough to calm the situation?

New protests are announced for Friday evening, March 16. The vote of confidence in the old-new Slovak government is expected next week, but it will only be a formality; on Thursday Pellegrini presented the president with a list of signatures of 79 lawmakers guaranteeing a narrow majority in the 150-member parliament. One thing to watch will be the 14 MPs of Most-Hid—its popular minister refused to continue in the new government, but she will stay as MP and vote with the ruling coalition.

So what could have swayed the party’s position on the snap elections?

The rumor has it that Fico threatened the veteran Most-Hid leader Bela Bugár that he would unleash a harsh Slovak nationalist campaign with fake news, Soros-type accusations, and anti-Hungarian undertones should the party support a snap election, pushing ethnic Hungarian votes into the hands of conservative nationalists from SMK/MKP (4 percent), Most-Hid’s rivals. As a de facto local branch of Orban’s Fidesz party from neighboring Hungary, SMK/MKP would also get funding and Hungarian state media support for the campaign. Such a strategy would play into the hands of Slovak extremists, further weakening the non-Smer alternative.

Devilish but effective. But what would you do if you had to choose between maintaining your grip on power or losing it, and thus risking that your people would get a call from empowered and independent prosecutors finally allowed to do their work? The latest developments are a worrying sign that this is a transitional period for Slovakia, and throughout Central and Eastern Europe. With the exception of illiberal stalwarts Poland and Hungary, it is very hard to say what politics will look like in 2020.

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© Agencja Gazeta/Slawomir Kaminski via REUTERS

On Friday, February 16, German Chancellor Angela Merkel will host new Polish Prime Minister Mateusz Morawiecki. In her own words, it will be an occasion to open “a new chapter in German-Polish relations.” However, she acknowledged “divergent views on some issues,” though in her weekly podcast she declined to comment on a new Polish law that makes it illegal to accuse the country of complicity in Nazi atrocities, saying she did not want to wade into Poland’s internal affairs.

Such reticence from the German chancellor is understandable considering how important it is for her to set relations with Poland on the right track. And in the person of new Prime Minister Morawiecki, appointed only two months ago, Merkel might have the best partner she could hope for from the current ruling camp in Warsaw. In fact, the recent government reshuffle in Poland and Morawiecki’s promotion to the office of prime minister indicate two things:

First, on the domestic front, the traditional conservative Law and Justice (PiS) party is focused on moving the party toward the political center—at least in terms of its image—and winning over new voters, and its efforts are already paying off: the ruling party’s approval numbers have recently been over 45 percent. It seems as though the PiS is trying to avoid rocking the boat in the hopes of winning another convincing mandate in the 2019 elections.

Second, PiS leader Jaroslav Kaczynski wanted to improve Poland’s position in Europe. In light of the sanctions procedure initiated under Article 7 of the EU Treaty in December 2017 and the upcoming negotiations concerning the next EU budget, Warsaw has been using a much friendlier and more constructive tone with Brussels and Berlin. Polish Foreign Minister Jacek Czaputowicz paid a fence-mending visit to Berlin in mid-January. When he stated that the debate concerning war reparations that PiS hard-liners started last year should not undermine bilateral ties, it was widely noted, even sparking criticism back home.

Reviving the Dialogue

And while the PiS government is visibly trying to revive its dialogue with Berlin, it is still not clear how much space to maneuver Prime Minister Morawiecki and his Foreign Minister will get from Chairman Kaczynski; after all, Poland’s ruling party is sticking firm to its own political priorities as well.

Warsaw and Berlin have different expectations of the relationship. We initiated a series of commentaries on the state of play of German–Polish relations in the Tagesspiegel and Rzeczpospolita to set the agenda for a possible rapprochement. Poland’s expectations were expressed very clearly by Marek Cichocki, a professor at the Collegium Civitas in Warsaw and former EU advisor to the late Polish President Lech Kaczynski (brother of the PiS Chairman): rather than find fault with Polish policy, he appealed to the Germans to recognize and respect Poland’s economic significance and its security concerns and come off their normative high horses. Cichocki complained above all about the lack of a “common European agenda” between the two countries, which remains absent many years after the the EU expanded eastward.

From the German perspective, however, this “common European agenda” of both countries was already a reality. Until the the center-right, pro-European Civic Platform (PO) party lost power to the PiS in autumn of 2015, the German-Polish relationship was considered better than ever before, including in the European context. From Berlin’s point of view, Poland left the pro-European course when it chose the PiS government, and its recent judicial reform was merely the most recent outrage in a series of measures that call European values and the rule of law into question, principles Poland committed to when it joined the union.

From Berlin’s point of view, any rapprochement between Warsaw and Berlin must include Polish concessions and cooperation at the EU level, and go beyond mere rhetoric. Warsaw, on the other hand, wants more acceptance, recognition, and understanding for Poland’s interests, especially where the upcoming EU reforms initiated by France are concerned, which it fears might leave Warsaw and other Eastern member states even more marginalized than before.

Confrontation Having Paid Off

While both sides have a clear interest in improving the relationship, each expects the other to make the first move. At the same time, neither country has much political maneuvering room. Poland’s strategic focus is on its national agenda and bilateral relationships, while Berlin is looking at the EU level. These dynamics will only get worse under the new Polish government; so far, Warsaw’s confrontational stance toward Germany and Brussels has paid off politically.

For the new German government, this will be an extremely difficult situation to manage. On the one hand, Merkel has made it clear that “holding together by surrendering liberal values” would mean that the EU was “no longer the European Union.” On the other hand, Berlin has absolutely no interest in an even deeper rift between the EU’s East and West. Especially for Germany, an EU without Poland and the Central and Eastern European states is unthinkable.

In the current draft of the new government’s coalition agreement between the CDU, CSU, and SPD, the value of the German-Polish relationship in the current chapter of the European project is made clear: “The German-Polish partnership is particularly significant for us,” it reads. The new government wants to increase cooperation with Poland, especially with Polish civil society. Furthermore, “We will intensify our cooperation with France and Poland in the so-called Weimar Triangle.”

Securing Cohesion

It will be Berlin’s task to secure EU cohesion and keep the Central and Eastern European states on board during the upcoming European reform process. Poland can play a key role in this, and the German government should use every opportunity for more dialogue and cooperation with Warsaw, taking the new government’s outstretched hand—if for no other reason than because it is not likely to find a better partner in Poland for the foreseeable future.

Berlin should signal to the new Polish government that playing a constructive role in the EU could open many doors in the future. Both sides should try to isolate the sanctions issue and prevent it from escalating in a way that would prevent any future rapprochement. At the moment, Poland’s potential as an important partner to not just Germany but also to non-euro countries like Sweden and the Czech Republic is going to waste. Once the UK leaves the EU, the largest member state outside of the eurozone will be Poland, which gives Warsaw a chance to become a leader of the non-euro club, not to mention its capacity to act as an advocate for countries on the EU’s eastern borders.

If the Morawiecki government wants to influence the next German government’s EU policy, it should try to see Berlin as a potential partner once again, one that could be won over to ideas and projects. The Polish prime minister’s visit on February 16 offers a perfect opportunity. The same goes for the EU level—a country that wants to be part of determining the next phase of EU reform has to work productively in Brussels, and cannot simply retreat behind its national hedge. The keys are thus in both Berlin and Warsaw.

The post A Perfect Opportunity appeared first on Berlin Policy Journal - Blog.

Artwork © Arnaud Dechiron

There’s been a lively debate in Germany recently on the future of the transatlantic relationship. Is the postwar alliance destined for the dustbin of history?
SERGEY LAGODINSKY: I really don’t think it’s possible to replace the transatlantic relationship, its vision and values. And another point that is important to me: you cannot have it all! If Europe does not have a special, close, westward-looking relationship with the United States, then the continent will be drawn toward the East. We Europeans are not strong enough to develop and sustain our own sense of mission. Rather, we will come under pressure from the East.
One thing is new, though, and German Foreign Minister Sigmar Gabriel touched on this recently: For the first time since World War II, we need a foreign policy strategy for the US. The question is, what kind of strategy?

Gabriel also spoke of a vacuum that exists as a consequence of US President Donald Trump’s policies. What if the other player in this relationship no longer shares the same values and goals in foreign and security policy?
LAGODINSKY: You have to keep trying, you have to be inventive, and you have to be interesting to the other party. And the other party is not just President Trump. There are a variety of other players in the US we can work with – on climate change, on refugee policies, and so on. This is something we are doing at the Heinrich Böll Foundation. The underlying idea is that, yes, we have to have a strategy vis-à-vis the present US government, but also one that addresses US society in its complexity and in its diversity, including on the level of the federal states. We should not write the US off as a country just because Donald Trump is making calls we cannot identify with.

Constanze, you are currently visiting from Washington. How does the debate look from your perspective?
CONSTANZE STELZENMÜLLER: Managing the fact that now, there are two completely different conversations going on in Washington and in the rest of the country is incredibly challenging for us Europeans. But Sergey is right to say that we Europeans should do better at reaching out to those Americans—in Washington and elsewhere—who continue to believe their country should engage with the world.
We do also need to see that the hardliners in the current US administration believe that globalization and alliances are bad for America. They want America to make its international relationships transactional and based much more on interests than on shared values. This thinking is by no means limited to the president. It exists not just in Washington but in other parts of the US too—and in some quarters in Europe as well, of course.
For those of us who want to defend the model of a non-transactional alliance, of a relationship that is based on an embrace of globalization and a liberal international order, we have to realize that this dark view is more widespread than we like to believe. So we also have to find ways of countering this dark narrative. There are two ways of doing this: by taking on a greater share of the burden ourselves; and by striving to correct the disadvantages globalization has brought to some groups in our societies.

How does this argument look from a Central and Eastern European perspective? When we are talking about the forces on the rise in the US―is that something that we also see in Eastern Europe?
MILAN NIč: Superficially, yes―there’s a less critical view of the Trump administration. But you have to realize that Central and Eastern Europe is no monolith; it doesn’t have a unified view. So there are the Polish and Hungarian governments voicing general agreement with Trump’s approach, and then you have critical voices – from within Poland and Hungary and elsewhere, like Slovakia where we see a more balanced view.
Overall, people do distinguish between Donald Trump on the one hand and the rest of the administration and Congress on the other. Arguments you hear often include: the US presence at NATO’s eastern flank is as strong as ever; the US effort to counter-balance the Russian threat is not lessening; there’s no decrease in the support for Ukraine, although that might be coming. You may call it delusion or denial, but the fact is that there’s a more optimistic view in parts of Central and Eastern Europe regarding the Trump administration. Some State Department appointments have certainly contributed to this – Kurt Volker, who is a very active Special US Representative for Ukraine, and Wess Mitchell, the new Assistant Secretary for Europe. Both are considered “friends of Central Europe,” and not so critical, if you will, toward the current governments in Poland and Hungary.
STELZENMÜLLER: Does it help the Poles or Polish society if the US government refuses to criticize the fact that the PiS government is rewriting the Polish constitution to undermine political pluralism and the independence of parliament and the judiciary?
NIč: It doesn’t help them, but the fact that the US keeps quiet helps the PiS government. It was no coincidence that Jaroslaw Kaczyński, the PiS leader, decided to proceed with the controversial judiciary reform a few days after Trump’s Warsaw speech last July.
At the same time, people in the Polish government were very nervous before Trump’s speech. They realized that they didn’t have any control over its messages, and they worried that Poland could be used as a platform to divide Europeans. They didn’t want that and still don’t. Unlike in Hungary, Poles are predominantly focused on the Russian threat, and they are concerned that if we are divided as Europeans, and Poland splits from Germany and France, it’s not good for Poland.
Hungary is different. Budapest has a different strategy of working at the margins of the EU and NATO and has its own independent relations with Russia and China. That said, there is still some criticism coming from some quarters of the US administration, especially the State Department, concerning illiberal tendencies in Hungary and Poland.
STELZENMÜLLER: That’s true. The State Department rebuked the Orbán government for the anti-Semitic campaign against George Soros and his organization, as well as for the crackdown on NGOs.
NIč: I think Orbán was caught by surprise, he expected a much smoother ride with the Trump administration. That hasn’t been the case so far. None of these illiberal leaders from Central Europe has been welcomed to the White House yet. In contrast, Romanian President Klaus Iohannis met Trump in the Rose Garden.
STELZENMÜLLER: Yes—but let’s get back to Trump’s Warsaw speech for a moment. He stopped just short of comparing the EU to the Soviet Union. He suggested that the West was under threat—not the West of open, liberal, representative, democratic society, but a Christian West of hyper-conservative values. There was a lot of dog whistling in that speech, and not just against the EU, but also against Germany. Trump repeated similar criticism of Europe very recently, in a speech in Pensacola, Florida.
NIč: Nevertheless, for many Europeans, the calculation runs like this: There is Vladimir Putin, and in the short term he is our biggest threat. Thus we need to keep the Americans engaged in NATO and slow down their disengagement for as long as we can. If Trump tells Europe, “Buy more arms and comply with the NATO goal of spending 2 percent of GDP on defense,” Central and Eastern Europeans are more understanding. But some of them are like many Germans who know that they will not get there that fast.
Poland is among the few NATO members that spend more than 2 percent, but Trump’s transactional approach has not really paid off for them lately. Warsaw wanted to purchase Patriot missiles, but now it seems that the sale will not go through. When Trump was in Warsaw, he promised the US would deliver more liquified natural gas to Poland – but again, there are no contracts yet. In other words, the Trump world view isn’t always based on realities.
LAGODINSKY: The question is: by focusing so much on the US president, don’t we invite our publics to start believing that the US is fundamentally different from us, that the election of Donald Trump heralds an irreversible change?
STELZENMÜLLER: I’m not saying that. But there are other people who are using this turbulent and confusing phase to claim that America is abandoning Europe, and that Atlanticism is over. Including in this country.
LAGODINSKY: That’s why when other German Atlanticists and I published the Transatlantic Manifesto back in October 2017, we stressed that Trump is not necessarily representative of the US at large. We called him a president sui generis.
STELZENMÜLLER: I think all three of us are in agreement that America has not changed fundamentally, and that we Europeans still have allies in America, including in Washington. Take the mayors or governors who want to stay in the Paris climate agreement. But there is another school of thinking that genuinely wants to disengage. And I’m saying that we need to work harder to convince that part of America that this is a really bad idea—bad for us and bad for them.

What will remain after Trump, though? The US engagement in the world has changed dramatically since Obama. Do you really think that the US will come back and play its former role again?
LAGODINSKY: No, history doesn’t repeat itself. But there is a good chance that after Trump the US will again be a more active, more internationalist, although maybe not more interventionist. We should not rule it out.

… and as focused on Europe?
LAGODINSKY: I think that despite the demographic change within the US and a changing global landscape, US elites still are interested in Europe, and they are frustrated about Europeans turning away. Obama called for the pivot to Asia, but was still interested in Europe. I have a feeling that in a sense the hasty turn-away from the US by many Germans is not caused by their emancipatory self-understanding, but by their betrayed wish to be loved and taken care of by America. This longing for fatherly love turns into complete rejection of “post-Atlanticist” as soon as reality falls short of their expectations. We need to grow up.

But Europe has lost its “father,” right?
LAGODINSKY: We’ll see – but even if that’s correct, we are still part of the same family. We should not start getting rid of our Western roots and our orientation toward the US just because we aren’t getting the attention we think we deserve. We should not underestimate the risk that our non-Western roots will lead to authoritarianism and populism.

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© REUTERS/David W Cerny

Czech politics have been careening from one drama to another. Andrej Babiš may have emerged victorious after October’s national election, but he is facing an uphill battle to form a stable government. The country’s mainstream parties suffered a big blow, thanks to a large protest vote, and parliament is severely fragmented. The Czech Republic is now facing months of political wrangling that will likely extend into early 2018.

Babiš’s ANO, or Yes, party has won 78 out of 200 seats in the lower house of the parliament with eight small parties sharing the remaining 122 seats. Forming a majority government without the ANO is practically impossible; forming a new government with Babiš is going to be nearly as difficult. None of the other democratic parties appears willing to play the role of junior coalition partner. They also point to an ongoing criminal nvestigation into Babiš on allegations of fraud. The former finance minister denies any wrongdoing and calls the investigation politically motivated. Still, his image has been tarnished.

Ever the shrewd businessman, Babiš will not back down. The only parties willing to entertain Babiš are the far-right extremists and Communists – and he has rejected working with either. Nor will he allow somebody else from ANO to lead the new cabinet. This would run counter to his style as well as his agenda. Instead, he is going to form a minority government, pepper it with some well-known technocrats, draw up a broad, sweeping program, and then try to muster enough votes for a confidence vote in parliament. Expect a lot of back room, eleventh-hour deals.

So when the new parliament opens on November 20 and the outgoing government of Prime Minister Bohuslav Sobotka tenders its resignation, Babiš will be set to take power. To this end, he has made a deal with President Milos Zeman who, in spite of poor health, wants to run for re-election in January 2018. To win, he needs ANO’s voters, so he wants to ensure that the largest party will not come up with its own presidential candidate. President Zeman has already assured the ANO leader that if Babiš cannot win a vote of confidence in the first attempt, he will be nominated for a second attempt.

Who is the Real Babiš?

The Czech Republic’s new strongman is a bundle of contradictions. He presents himself as an anti-establishment leader and an anti-corruption crusader leading the charge against traditional, mainstream parties. He has promised the public he will govern more effectively, or, as his slogan puts it: “run the country like a family business.” Yet he has profited significantly from being part of the establishment during the transition period since the 1990s. Babiš is the second-richest businessman in the country and a media mogul. Moreover, ANO has served as the junior coalition partner in the government of outgoing Prime Minister Sobotka’s. Babiš himself had a decent run for more than three years as finance minister – until he was dismissed this summer over the fraud investigation into EU subsidies for his company.

It is also important to note that Babiš’ business conglomerate stretches across the food, chemical, and media sectors, employing 33,000 people in 250 companies; his Agrofert Holding company spans several EU countries, including Slovakia, Hungary, Germany, and Poland. Even if he were to put his business holding into a blind trust and claims not to have any control over it anymore, Babiš faces many conflicts of interest that will likely constrain him along the way.

Bloomberg or Berlusconi

Babiš’ victory has raised concerns in Brussels; some fear the Czech Republic could now drift in an illiberal, anti-EU direction. Babiš, however, has indicated he is far more interested in domestic policy, and that there will be more continuity in EU affairs than change.

“My name is Andrej Babiš. Perhaps you have heard about me,” he wrote in a letter to EU ambassadors in Prague a few days before the October elections, which was leaked to the media in early November. In the letter, Babiš rejected the description as a “Czech Trump” and similar comparisms. He wanted to be judged by results, he wrote: “So-called traditional political parties say that I am a threat to democracy, since I want to limit parliamentary debates, but I just want to retain German [Bundestag] standards and have rules in these debates’. The letter closes on a personal note: ‘I came to politics to bring transparency. I have not joined politics to enrich myself since I am already rich enough. I came to fight against corruption and waste, clientelism and bring [more] efficiency into governance.”

Babiš points to Michael Bloomberg, the former mayor of New York and successful businessman, as his role model. Perhaps a more appropriate comparison would be Silvio Berlusconi. With Babiš, too, the biggest concern is that his huge concentration of power – and the existence of skeletons in the closet – will cause tensions with the country’s judiciary. This could possibly lead to even more opportunities to exercize political control.

Opportunist, Not Ideologue

However, unlike Orbán in Hungary and Jarosław Kaczynski in Poland, the 63-year-old Babiš is not an ideologue, but a pragmatic businessman. A native Slovak, he cannot be a Czech nationalist; he still speaks a strange and sometimes funny mixture of the two languages. His stakes are indeed in domestic politics, and his interests lie in regulatory policies that may affect his giant business empire. That may also explain why his anti-corruption message lacks depth.

Babiš is eclectic in his rhetoric and actions. He has no strong institutional, cultural, or social connection with his constituency or broader Czech society, and will need to rely on his media and marketing machine to maintain his glossy image and popular support.

His European policy is bound to be pragmatic, non-ideological, and very transactional. There are, of course, there are strong euroskeptic sentiments in the Czech Republic which will limit Babiš’ room to maneuver, but that is nothing new. The previous Social Democrat government was also cautious when talking about Europe. Babiš will probably not improve his country’s EU policy with clear ambitions and strategic consensus, but there are no signs that Prague’s outlook on Europe would significantly worsen.

The ANO’s foreign policy program is underdeveloped, and Babiš has little interest in pursuing it proactively. His instinct is to maintain the status quo rather than deepen EU integration further, and his approach to the current debate on the EU’s future is likely to be rather opportunistic.

Defense and the Euro

However, there is ample room to engage Babiš on EU affairs. He will definitely need good advice and guidance, which is exactly why EU politician Guy Verhofstadt visited Prague in November. The two need each other: Babiš wants a better image in Brussels, and Verhofstadt, as leader of the Alliance of Liberals and Democrats, would like to have another EU leader from his political family. What’s more, Babiš will instinctively try to stay close to Germany and look for new allies in central Europe, like Austria’s Sebastian Kurz.

This could play to the EU’s advantage. It should be possible to convince Prague to get on board and endorse some pragmatic changes. The obvious case is defense and security policy, where it has the support of the public. In fact, all the major parties support Czech participation in the Permanent Structured Cooperation (PESCO), a framework for defense cooperation. But public support can cut both ways: Babiš is also likely to pursue a tough line on migration, refusing any relocation of refugees in the Czech Republic.

Those who advise Babiš on EU affairs within his own party – such as MEP Dita Charanzová – are proponents of the Czech Republic adopting the euro in the longer run. In the short term, it will be interesting to see whether the new Czech government can be convinced to formally enter the euro “antechamber” – the European Exchange Rate Mechanism which limits the floating band of national currencies to the standard fluctuation of plus or minus 15 percent.

An Illiberal Club of Two

On the regional level, the new government is not likely to be very active within the Visegrad Group. Unlike Poland or Hungary, a Babiš-led Czech Republic has no stake in escalating conflicts with EU institutions. The constructive Czech-Slovak tandem within the Visegrad Four is likely to remain in place. As a Eurozone member, Slovakia will gravitate even more toward the EU core, while Babiš will navigate his own path.

So does that mean that Berlin and Paris need not worry? The good news is that the illiberal club of central Europe is still limited only to two members. Yet there is bad news, too: there are concerns that under Andrej Babiš , the Czech Republic will remain a weak and somewhat unreliable partner, mostly absent from the common endeavor to shape EU’s future and overcome East-West tensions.

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© REUTERS/Heinz-Peter Bader

In late August, French President Emmanuel Macron embarked on a diplomatic tour through Central and Eastern Europe. The timing of the trip was curious, taking place a week before he was to unveil proposals to transform France’s rigid labor market – seen as the first big test of his presidency – and amidst a rapid decline in popularity; only months after his landslide presidential victory, one poll has shown Macron’s approval ratings as low as 36 percent, and several reports have confirmed that the president’s team has been busy figuring out how to correct course.

Macron’s destinations, however, were by no means random. He included Austria, Romania, and Bulgaria in his itinerary, three countries that will hold rotating six-month EU presidencies in 2018 and 2019, which will be crucial for Macron’s ambitious EU reform plans. As part of his well-choreographed program, the French president also met leaders of the Czech Republic and Slovakia, which are now constructive members of the so-called Visegrad Group (or V4). The other half of this grouping is the illiberal pair of Poland and Hungary, which Macron criticizes for being at odds with the EU’s democratic values and treating the Union like a “supermarket”.

What made Macron head east at such a sensitive moment? And what have we learned about President Macron’s approach to Central and Eastern Europe?

Improving Access

According to the Agence France-Presse, the whole tour was meant to improve French access to the East. Minister of European Affairs Nathalie Loiseau acknowledged that Paris has ignored Eastern Europe in the past, and cast President Macron’s tour as a signal that this is going to change. “Every European state has its place and its importance in the ongoing discussion on European reform,” she told Euractiv. Indeed, if we recall Macron’s recent meeting with the V4 prime ministers on the margins of his first European Council in June 2017, Macron began his term with two meetings with Central and Eastern European leaders. In an August 26 editorial, the Financial Times pointed out that the two major objectives of Macron’s presidency, the re-invigoration of France’s economy and the relaunching of the EU, are intertwined. In order to secure German support for closer EU integration, Macron must deliver domestic economic reform and win the French people’s support for unpopular changes. He must demonstrate that he is changing the way the EU works. And the market-oriented newest EU member states with low wages and open economies are set to oppose Macron’s initiative to make EU labor rules more restrictive because it would go against the interests of their citizens.

Thus the main short-term goal of his diplomatic tour was preparing the ground for changes in the EU directive on “posted workers.” Macron pledged to protect French laborers against “social dumping” from poorer EU member states in his election campaign, and now needs successful resolution of this issue at the EU October summit.

Playing On Regional Differences

At the beginning of his tour, Macron met with Austrian Primer Minister Kern, an ally on the revision of the EU’s “posted workers” directive. They were subsequently joined by Slovak Prime Minister Robert Fico and Czech Prime Minister Bohuslav Sobotka, social democrats like Kern, and together revived a new regional format called the Slavkov Three.

The new French president was playing on emerging regional differences in Central Europe. By co-opting the more pragmatic half of the Visegrad group, which has quite effectively opposed Western European countries in some EU initiatives, especially migration, Macron was also shunning the other, more hardline Visegrad countries – Poland and Hungary – which are less inclined to compromise on the directive, not least because the Polish in particular are much more affected than the Czechs and Slovaks. There were 450,000 Polish “posted worker” in 2015, almost a quarter of EU total.

A “posted worker” is an employee sent by their employer to provide a service in another EU member state on a temporary basis. It allows a service provider to win a contract in another country and send its employees there to carry out the contract, while continuing to pay their benefits and taxes in their own country for a period of up to two years. Approved in 1996, this measure has only recently become divisive among EU member states. Overall, posted workers represent less than 1 percent of the total EU workforce; but since the Brexit referendum, in which intra-EU migration became an explosive issue, politicians in countries like France and Austria have been giving it more attention.

The EU Commission has tried to stay ahead of the game as well, and in March 2017 presented proposals under which “posted workers” would be subject to pay and working conditions equal to those of local workers. Macron declared himself not satisfied with these new proposals, however; he wanted to make them even more restrictive and protectionist. In any case, he needed to pick a political fight at the EU level to sell it at home. A final decision should be formally made at the meeting of EU’s labor ministers in October, which then needs approval by the European Council and the European Parliament. “We are very close to an agreement. We see October 2017 as a realistic date,” Slovak Prime Minister Robert Fico told a joint news conference after the meeting. Romanian and Bulgarian leaders late added approving noises.

As Natalie Nougayrede, a former editor-in-chief of Le Monde, pointed out in The Guardian, Macron took to battling with Eastern Europe to show he is on the side of French workers, not EU technocrats. But the degree of manipulation wasn’t hard to detect: in a candid moment at a press conference in Salzburg, he almost admitted as much, saying, “France’s problems have nothing to do with posted workers.”

The Sirens of Populism

Essentially, President Macron is being tempted by the very sirens of populism against which he so admirably mobilized large segments of French society in the recent election. He seems to be using this region as a backdrop for his domestic agenda, and to rekindle the “Polish plumber” bogeyman – however, the same trope played a part in French voters’ rejection of an EU constitution project in 2005, and it could now backfire as the EU moves toward deeper cooperation.

Among the Visegrad countries, eurozone member Slovakia is the most willing to move along. Primer Minister Robert Fico has already signaled his support for German-French initiatives beefing up Europe’s common currency.  In contrast, the Czechs, who are not in the euro, will have parliamentary elections in less than two months, which could result in a euroskeptic government in Prague. Before meeting Macron, Czech Prime Minister Sobotka said that he would push the French president to ask French investors to raise the salaries they offered in the Czech Republic to avoid profiting from another kind of “social dumping.” The issue of “posted workers” is thus two-sided, and shows how painfully and slowly the process of convergence between the EU’s East and West has been moving. As Martin Ehl, one of the leading Czech commentators on European issues, has pointed out, pushing too hard to change the “posted workers” directive might help populists and nationalists in Central Europe, and increase the popularity of euroskeptics.

This was illustrated by a bitter exchange of with Poland. Reacting to Warsaw’s refusal to consider the compromises discussed in Salzburg, Macron quipped that that Poland was isolating itself within the EU, and that Polish citizens “deserve better” than a government at odds with the bloc’s democratic values and his plans for EU reform. “In no way will the decision by a country that has decided to isolate itself in the workings of Europe jeopardize the finding of an ambitious compromise [on ‘posted workers’],” he said, adding that Poland was moving in the opposite direction from Europe on numerous issues.

The government in Warsaw rejected the accusations, saying Macron was inexperienced and arrogant. The fight fit Macron’s strategy, casting the Poles as the main opponent of French proposals. This seemed deliberate: attacking Warsaw nowadays costs Macron nothing, as the ultra-conservative PiS government has few friends on the EU level. On the other hand, it illustrates Macron’s short-term approach to his EU partners. In the fall, the French president was supposed to organize a high-level meeting with Germany and Poland in a revived Weimar Triangle format. These plans are now most likely buried, as Macron’s attacks resonated strongly in Poland and will not be easily forgotten.

In fact, Macron’s spat with Poland could end up causing problems for France’s most important European relationship. Any conflict within the EU – even one meant to serve domestic political goals, like Macron’s fight over “posted workers” – means more problems and more work for Germany, which is pursuing a careful balancing act among various positions and groupings within the EU. At the same time, Macron was conspicuously quiet about Viktor Orban’s Hungary. This could be a sign that Budapest is either open to more talks on labor issues or has some other good news for Macron in stall – like a big contract for French military helicopters.

To a certain extent, Macron has fallen back to traditional French behavior in the EU: the European dimension is useful to him if it allows France to align its partners’ positions with its own. However, Macron will need to adopt a more genuine European spirit toward the EU’s Eastern members if he wants to deliver a relaunched EU, one that serves these countries’ long-term interests and does not increase support for nationalist and populists leaders across the region similar to those already in power in Poland and Hungary.

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© REUTERS/Sergei Karpukhin

After an extended absence, the Western Balkans finally returned to the European agenda at the March 9 EU summit. Traditionally, the region is discussed primarily in terms of its slow progress toward EU accession. This time, however, geopolitical and ethnic tensions are raising alarms about the stability of Europe’s “inner courtyard.” As the region grapples with new sources of instability, Serbia will be electing a president on April 2 – and though polls predict a smooth victory for Aleksandar Vucic, it could be a watershed event for the whole region.

European Council President Donald Tusk warned that some of the ethnic divisions in the region have been exacerbated by destabilizing external influences, a veiled reference to Russia, which has been waging wider disinformation campaigns in Serbia and elsewhere. Tusk also called for EU institutions to take more action. EU foreign policy chief Federica Mogherini, meanwhile, reported on her recent tour of all six Western Balkan countries, undertaken to reassure the region it had not been forgotten. She returned with “profound concerns” about destabilizing external factors. “The Balkans can easily become one of the chessboards where the big power game can be played,” Mogherini said. These warnings were echoed by the chairman of the European parliament’s foreign affairs committee, David McAllister, who thinks that the EU must be much more visible and engaged in Balkan countries to counter Russian attempts to destabilize them even further.

It was a timely wake-up call for Brussels and Berlin, which have been preoccupied by other pressing issues. “The 21^st century in the Balkans is starting to look dangerously like 19^th,” Ivan Krastev observed in the Financial Times. However, he noted one important difference. In the 19^th century, Russia and Turkey were rivals in the struggle for regional influence, while Germany, Austria-Hungary, and Britain played Russo-Turkish divisions to their commercial and political advantage. Today it is the other way around: Moscow and Ankara are united in their efforts to reduce the EU’s influence.

The Moscow-Ankara Axis

Both Moscow and Ankara are thought to be weaponizing renewed Balkan ethnic tensions to play them against the West. So far, Turkish efforts have been subtler and less disruptive, but that is beginning to change. In addition to promoting historic ties and Ottoman cultural heritage throughout the region, Ankara has recently moved into the business of funding (and perhaps also organizing) new political movements among Muslim minorities in several Balkan countries to create its own “zone of influence”. One example is the new anti-establishment ethnic Albanian party Besa in Macedonia, which inflicted heavy losses on traditional Albanian parties in the December 2016 elections.

However, Russia stands out as the most systematic, disruptive and dangerous external factor, and its behavior has raised multiple alarms over the last few months. The real game changer was an attempted coup in Montenegro during parliamentary elections in October 2016. A group of Serbian ultra-nationalists and paramilitaries fresh from fighting in the Donbass was prepared to storm the parliament, cause riots on the streets of Podgorica, and help the pro-Russian, mostly ethnically Serb opposition seize power. This would have meant a dramatic turn in Montenegro’s foreign policy, halting its accession to NATO and withdrawing its recognition of Kosovo’s independence, with huge repercussions within the region.

In February 2017, a special prosecutor in Podgorica overseeing the investigation accused “organs of the Russian state” of taking an active part in the attempted coup. Pro-Russian opposition parties still bitterly contest the entire claim, as well as the implication that two of its leaders were in contact with the perpetrators. The result is a political stalemate in the country – the opposition is boycotting the new parliament. There is hope, however, that things will calm down since the US senate ratified Montenegro’s NATO membership with a nearly unanimous vote on March 28, sending a strong signal of continuity.

Still, of more immediate concern is the deep, prolonged constitutional crisis gripping Macedonia, now the most explosive Balkan country. Macedonia’s troubles have been simmering ever since its EU and NATO candidacies were put on hold due to a dispute with Greece over the country’s name, Moscow was not very active there until last year, when the Russian Foreign Ministry began issuing regular statements on Macedonia. Pro-Kremlin media began to focus on the country, too, and the Russian embassy in Skopje significantly increased its staff. Moscow now openly supports the weakened autocrat Nikola Gruevski, who is trying to remain in power no matter what. It is also challenging coordinated EU-US efforts to find a peaceful, negotiated way to transfer power to a diverse coalition of democratic parties, which pledged to further enhance the status of Macedonia’s large Albanian minority. At critical moments, when Gruevski called for protests on the streets of Skopje, Moscow poured oil on the fire by accusing the EU of trying to create a Greater Albania, and promoted this narrative through its media network across the Balkans.

And as part of a long-term game in Bosnia and Herzegovina, Russia is backing another controversial strongman: Milorad Dodik, the nationalist president of the Bosnian Serb Republika Srpska (RS). Dodik is again pushing for a referendum on RS independence, which would alter the Dayton peace agreement – another keystone of the Western liberal order in the region built after the ethnic wars of the 1990s.

The Return of Geopolitics

This return of geopolitics has in turn benefited Balkan autocrats, according to the latest policy brief by the Balkans in Europe Policy Advisory Group (BiEPAG). It has allowed them to pander to various geopolitical players and investors, expanding their own informal power structures, patronage networks, and control of the media at home.

In this context, as stability is given priority over democracy, Balkan strongmen have become even stronger, less accountable, and more contemptuous of democratic standards. The result of this new paradox – with countries moving closer to the EU but further away from democracy and the rule of law – is growing dissatisfaction among citizens, accompanied by a loss of trust in the EU and further alienation from domestic politics.

Nowhere is this seeming contradiction more clearly displayed than in Serbia, the largest Balkan country and the lynch pin of stability for the whole region. While current president Tomislav Nikolic is a key Russian ally in Belgrade, Prime Minister Vucic represents a younger, pragmatic, and less Moscow-friendly generation in Serbian politics – but not necessarily a shift toward European values. The recent events in Montenegro apparently spurred Vucic to action: In February, following a long period of rumors and speculation, he announced his decision to run in the upcoming presidential elections, and arranged to move the date up to April 2.

Vucic has come a long way since joining the ultra-nationalist Serbian Radical Party (SRS), headed by the notorious Vojislav Seselj, serving as its minister of information during the Milosevic era. A decade later, in 2008, Vucic followed Nikolic, resigning from the SRS over its resistance to Serbia’s EU integration and switching to the latter’s new Serbian Progressive Party (SNS). SNS subscribed to the pro-EU, pro-Western course that has since dominated Belgrade’s geostrategic orientation since the end of the Milosevic regime.

In 2012, when Nikolic became president, Vucic took over the SNS party and led it to form the next government. He became popular for his vigorous drive against corruption, which resulted in several high-profile investigations and arrests, including that of the country’s main oligarch. He also focused on starting EU membership talks and did not shy away from the tough decisions they required. In particular, he proved to be more willing to compromise on Kosovo than the pro-EU liberals before him. In economic policy, he helped the country manage its public debt, which is now under 70 percent of GDP. He also pledged to increase pensions, privatize state companies, and expand the private sector, though so far that has been more talk than action. In the meantime, his governing style has also become increasingly authoritarian, in tune with his shady control of the country’s tabloid media.

Despite the fact that Serbia’s opposition has never been weaker or more fragmented, Vucic now presents himself as a lone fighter against a united front of traitors and crooks, financed by Serbia’s enemies.

He is the undisputed front-runner in the presidential election; the only open question is whether he will be forced into a run-off or win an outright majority in the first round. Forcing Vucic into a second round would be a healthy development for Serbia’s embattled democracy, opening more space for liberal opposition and alternative political actors, including authentic anti-corruption social movements that now target and mock Vucic himself.

To keep his power base in Belgrade intact, Vucic needs to win a convincing victory. In order to mobilize his nationalist core constituency, he even traveled to Moscow on March 27 for a photo opportunity with Russian President Vladimir Putin. In a delicate balancing act which went unreported in domestic media, his minister of defense, Zoran Djordjevic, called for joint Serbian-US military exercises. This comes on top of another development:  so far, Vucic has refused to grant personnel at the joint Russian-Serbian humanitarian center in Niš diplomatic status. Insiders say that such move would turn it into a Russian spy outpost for the whole region.

In spite of these setbacks, Russian influence in Serbia is greater than in any other Balkan country. On top of historic ties between the two Slavic and Eastern Orthodox nations, Moscow has been able to play on Serbia’s national sentiment as a humiliated regional power that was forced to accept the Pax Americana. Belgrade lost a series of brutal wars after the break-up of Yugoslavia, and was bombed by NATO during the war over Kosovo (1999). Revisionist, anti-Western rhetoric has thus been very popular in Serbian politics and media.

And Moscow skillfully played this card a decade ago to privatize part of Serbia’s energy industry, which is now owned by Gazprom. Since then, the Kremlin has established a significant presence in the country’s disgruntled media. The local branch of Sputnik, established three years ago, has become the leading news agency in the country, and about 20 other media outlets spread distinctly Russian spin on domestic and foreign developments.

Business as Usual Won’t Work

So, what should the EU do? First, it should build up on the momentum from the last few weeks to demonstrate more attention and reassurance. Several EU foreign ministers could work together on a series of high-profile visits to the region. This might be a good opportunity for new German Foreign Minister Sigmar Gabriel to provide some leadership and initiative for Europe’s political re-engagement in the Balkans. The status quo there is no longer sustainable, and carries considerable risks.

EU foreign policy chief Mogherini and her European External Action Services (EEAS) should be given a new mandate to expand their work in the Balkans, now limited only to Bosnia and the Serbia-Kosovo dialogue. Other dangerous situations, like the one in Macedonia, have become urgent security challenges and cannot be left to the EU Commission’s technocratic approach alone. Instead of playing geopolitics with Balkan leaders, EU Enlargement Commissioner Hahn should return to his task of helping candidate countries prepare for EU membership. He could also improve the way EU funding and other support is promoted among Balkan societies and counter widespread perceptions that Russia is doing more for them.

Once Brussels get its act together, Berlin and a few other EU capitals that still pay attention to the region (a diminishing number!) could reach out to Washington to come up with joint transatlantic effort to calm the Balkan waters. This is a good moment to engage with the new US administration to support a vital interest of Europe’s, one that is closely related to the future of NATO and also fits into American global strategy.

The belated wake-up call at the EU summit a few weeks ago was a reminder that the fates of Europe, NATO, and the Balkans are inextricably tied together. If it is followed by diplomatic action and sustained political engagement, not everything about the EU will look so gloomy in 2017.

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© REUTERS/Laszlo Balogh

Viktor Orbán has been in preaching mode recently. Hungary’s prime minister no longer complains about Germany’s “moral imperialism,” as he did at the peak of Europe’s refugee crisis in 2015. He now enthusiastically frames 2017 as “a year of revolt” within the EU: He sees the upcoming series of crucial elections in Western European countries as a great opportunity to get rid of their old political elites, hoping for an end to the liberal order in Europe – and for a greater role for a new elite, one in tune with his ideas. This new elite, based on the Visegrád group comprising Hungary, Poland, the Czech Republic, and Slovakia, would theoretically be closer to the voters’ needs, moods, and concerns.

Now, neither a win for far-right Front National leader Marine Le Pen in France in May nor the toppling of German Chancellor Angela Merkel next fall is impossible. And even the mostly moderate Czech Republic, which will go to the polls at roughly the same time as Germany in mid-October, might get its own Silvio Berlusconi figure if Finance Minister Andrej Babiš, who also happens to be the country’s top media and business magnate, is elected prime minister.

But take a closer look and the holes in Orbán’s vision become quite apparent. From a distance, all four Visegrád governments can be seen as euroskeptic proponents of an EU with weak institutions and strong member states. In fact, this reading of the situation papers over cracks that have been widening of late.

The coalition governments in Prague and Bratislava, led by Social Democratic parties – at least in name, as far as Robert Fico’s Smer-SD party in Slovakia is concerned – are not interested in the kind of “conservative counterrevolution” promoted by the ruling parties in Budapest and Warsaw. Indeed, Slovakia just completed a surprisingly smooth six-month EU presidency, pursuing pragmatic lines in very difficult times. At the October 2016 GLOBSEC Tatra Summit Forum, one of the main official events of the Slovak presidency, participants discussed how Europe’s open societies can challenge far-right and populist parties. As a eurozone member, Slovakia is also more deeply integrated fiscally and economically with the EU’s core.

Meanwhile, Czech Foreign Minister Lubomír Zaorálek opened the Czech-Austrian Dialogue Forum in November 2016 with a call to protect the tolerant soul of Central Europe. Going further still, Petr Kratochvíl, director of the Foreign Ministry’s Institute of International Relations, recently argued that in the case of a Le Pen win in the French presidential elections, it would be in Prague’s vital interest to keep its close links with Germany rather than side with its partners in the Visegrád group.

This is part of a broader trend: Czech and Slovak diplomats have been quietly distancing their countries from the “illiberal Budapest-Warsaw axis” and Orbán’s hijacking of the Visegrád discourse. Now similar voices are being heard in foreign policy debates in Warsaw. In a recent analysis of Hungary’s ambition to become a regional leader, the Polish Institute of International Affairs called for restoring greater symmetry in Warsaw’s relations with Budapest.

Behind Closed Doors

So far, these growing tensions have been handled behind closed doors. To avoid conflicts spilling into the public domain, the four countries have stuck to a diplomatic formula of coordinating on the EU level and reinforcing regional positions only when they can agree – on issues like the single market, freedom of movement, and a general position vis-à-vis London ahead of the Brexit negotiations. The Visegrád prime ministers and other high-ranking government officials continue to meet regularly and coordinate in Brussels ahead of every EU summit and relevant EU Council meeting. There is a shared concern that open divisions would be exploited by Germany and others to weaken this regional group even further.

But the question has started to dawn on the Visegrád members: What if electoral upheaval in 2017 really leads to an EU that is more variable and looser? In the absence of a common vision and shared understanding of the region’s interests, the result would be a more divergent and fragmented Central Europe.

In fact, what might look like a big opportunity for Hungary is perceived in Poland, the Czech Republic, and Slovakia as a big threat. These three countries have been among the main beneficiaries of Europe’s post-1989 liberal order, which is now under pressure from various directions. A potential deal between future US President Donald Trump and Russia’s Vladimir Putin at the expense of Ukraine would be seen as a humiliating “new Yalta” by most Poles, regardless of political ideology. In contrast, Orbán would welcome it – and likely try to win concessions for ethnic Hungarian minorities as part of the whole package. Czech and Slovak leaders, for their part, will ultimately realize that the populist concept of “a Europe of nations” runs against the vital interest of small states at the EU’s eastern periphery. The prospect of being left on their own in the geopolitical turmoil building up in Central and Eastern Europe pushes them to work with Germany in keeping Europe’s liberal order in place.

Thus, key government figures in Prague and Bratislava are keeping their fingers crossed for Merkel to keep her job in the fall, regardless of how much they hate her stand in the refugee and migration crisis. And unlike governments in Warsaw and Budapest, they do not want to participate in a reconstruction of the region as a counterweight to German dominance within the EU.

In 2017, we will likely see more differentiation in the national trajectories of the Visegrád group over Europe’s future order. One consequence could be the rise of bilateralism in relations with Germany, other EU partners, Putin, and Trump. National narratives, domestic considerations – even Hungary is heading for elections in 2018 – and the personalities of the leaders involved will all shape the agenda of the gang of four. But one thing is clear: Orbán will play a smaller role than he likes to think.

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