The twin forces tearing apart Central-Eastern Europe

In the V4, resentment over the post-communist consensus and the decline of the EU’s soft power have produced a potent mix for political contestation, resulting in a populist upheaval. Can it be contained?

Photo: © European Union 2013 - European Parliament

The success of Central-Eastern Europe’s transformation from communist dictatorships to capitalist democracies has been epitomized by much of the region being accepted into the world’s most prestigious club of nations, the European Union. Yet recent developments are a cause for great concern.

The current government in Poland swiftly moved to politicize the judiciary and crack down on media freedoms. Slovakia has MPs who wear fascist uniforms, organize anti-Roma marches and glorify the wartime puppet-state that sent tens of thousands of its own citizens to their death.

Czechia and Slovenia witnessed their previously stable party systems overhauled by non-orthodox political forces. And Hungary, once a pace-setter in democratic reform, has been relegated to the “semi-consolidated democracy” status by Freedom House, posing an unprecedented challenge to the European values-based community. 1

The culmination of long-term domestic and international developments, a revolt against moderate elites and established truths and ways of doing things is sweeping Central-Eastern Europe. Left unchecked, the region’s liberal democratic path is at serious risk of being permanently derailed.

The post-communist consensus

Problems associated with the democratization of Europe’s formerly communist states emerged early on. Hungary’s first democratic government led by József Antall revived the rights of Hungarians in neighboring states, a highly sensitive issue for Slovakia and Romania; the persistence of an unreformed communist party in Czech parliament with zero coalition potential heralded weak or minority governments and ruled out decisive reforms; Slovakia’s near slip to authoritarianism and international isolation after the government of Vladimír Mečiar temporarily reversed a budding democratic order; while economic and political crises in Bulgaria and Romania in the 1990s reflected deep societal divisions.

Before long, however, nascent civil societies, emerging middle classes, and the EU’s force of attraction translated into the world’s greatest exercise in democratic conditionality and ensured that liberal democracy carried the day.

A broad consensus structured around competitive party systems, independent judiciaries, professional state bureaucracies, and a free civil society and media became entrenched. Free and fair elections, bureaucratic capacity surpassing that of the Southern European states, 2 and lively political debates justified more than cautious optimism. Marked improvements in corruption and transparency scoreboards were noticeable, while the region’s private media was, in some cases, freer than their Western counterparts. 3

This consensus had an economic dimension. By the late 1990s, foreign-led re-industrialization emerged as the default economic strategy, as large swathes of economic activity from the Baltic to the Black Seas became dominated by foreign multinationals – much like in the first era of globalization.

Transplanting the WTO and later the EU trade and investment rulebook, Central-Eastern Europe reclaimed its earlier status as one of the most economically open regions of the world, successfully leveraging one of communism’s rare positive legacies – high levels of human capital.

Admitted to the EU, OECD and NATO, Central-Eastern Europe’s break with its authoritarian past seemed complete and the gains irreversible. A golden age of capitalism, characterized by high growth rates and growing employment, reinforced the virtuous circle, as the region began catching up with the West. It was when the region became freer, more prosperous and secure than it had ever been in its history, that serious cracks began to appear.

The unravelling of the post-communist consensus

The post-communist consensus had a darker side. Elections not only came to determine the distribution of political power, but also the allotment of state-controlled resources – those in power would enrich their sponsors and cronies with impunity, while the political opposition would insincerely contest the practice, patiently awaiting its turn. Indeed, fundamentally corrupt states that formally exhibit high institutional and bureaucratic capacity are one of the paradoxes of post-communist transformation. 4

The successful adaptation of communist-era nomenklatura and the prevalence of informal corrupt practices after 1989 was rooted in communism’s celebrated peaceful overthrow. As Ivan Krastev wrote, the decision “to integrate the old elites instead of persecuting them turned out to be, at once, the revolution’s lasting achievement and its ultimate Achilles’ heel.” 5 The people’s yearning for justice could only be postponed, not eliminated; and the longer this yearning was postponed, the more grievances accumulated.

The economic strategy was convenient for governments, because by giving up control they also gave up responsibility; it also compromised the democratic process, because the electorate was choosing governments, but not economic policies. 6

No serious debate about how the countries should escape the middle income trap ever materialized, even if only a few countries succeeded in this endeavor over the last hundred years. Indeed, the region’s inferior position in foreign multinationals’ global value chains was ripe for political exploitation.

Growth rates in Central-Eastern Europe were high but not high enough; the region came to reflect Western production profiles, but not Western living standards. And in the post-2009 period, economic dualism, the widening gap between lavishly subsidized, foreign-owned, export-oriented conglomerates and the backward indigenous companies serving the domestic market, worsened. 7 Hungary and Czechia have yet to reach their pre-crisis levels of economic activity  8 and even Poland, Europe’s star performer by most economic indicators, did not resist the appeal of a message of economic failure.

The inflow of billions of euros from EU structural funds often worsened both problems – providing a source of enrichment for the well-connected few, while destroying a level-playing field for the rest. No serious study ever demonstrated the funds’ positive long-term economic benefits, although wasteful projects were periodically ridiculed in domestic media. 9 Indeed, a tale of great caution, the largest recipient of the EU’s development capital, Greece, had in 30 years developed neither a competitive economy nor a functioning state.

A growing resentment and a belief that the post-communist consensus was fundamentally rigged, benefiting the few insiders who often formed part of the pre-1989 repressive state apparatus, while the rest have been condemned to struggle in modern transnational fiefdom, boiled over. It is no longer just the communist past that haunts the region, but also the post-communist realities.

The waning appeal of the West

Much has been written about the populist backlash in Eastern Europe following the region’s EU accession, as strict conditionality disappeared. 10  Most accounts portray East European elites’ resistance to internalize liberal democratic norms as revealing evidence of their true colors. 11 Less attention has been given to the declining appeal of the EU and of belonging to the West, although the superiority of both had been a foundational myth of young East European democracies. Mired in multiple crises and linked to failures, the destruction of the EU and the West’s infallible auras has had far reaching consequences for the region.

The inability to solve Europe’s seemingly never-ending crises – Eurozone, sovereign debt, Greece, migration – has seriously compromised the EU’s attractiveness. Despite their formal obligations, few of the post-communist countries are now keen on joining the Eurozone, even if some, such as Poland and Czechia, fulfill the Maastricht criteria. Hungary will soon hold a referendum on European refugee quotas, with the government pushing an anti-EU line. And it would have been unthinkable just a few years ago for the Slovak government to sue the European Commission or the leader of the Slovak opposition to openly criticize German Chancellor Merkel and the EU on prime time German talk shows.  12 Where the prospect of further integration once seemed like an asset, it is now seen as a liability.

Some of the EU’s actions and inactions have severely damaged its credibility. Many of the original Eurozone members never fulfilled the strict Maastricht criteria, yet were still accepted into the currency zone. The robust and reinforced European fiscal governance framework has been broken dozens of times by different member states, but none were ever sanctioned. The flouting of common rules and the non-enforcement of sanctions sent signals that reneging on earlier commitments went unpunished. Some East European governments simply assumed that what had been true in economic and monetary affairs would be true for affairs much more delicate.

Crucially, the Eastern Europeans feel that Brussels often ignores their interests and particularities. Despite being poorer and some implementing draconian fiscal adjustment programs,  13 the Baltic states, Slovakia and Slovenia have been engaged in costly transfers to the Eurozone’s South. They arrived to the Euro party late, only to pick up the bill. 14

In the context of the current migration crisis, Germany’s unilateral policy push to open borders and impose (instead of discuss) a European relocation scheme, caused outrage. The recent proposal by the Commission to fine countries not willing to comply with this, further exposed the limits of the EU’s pursuit of a liberal cause in an illiberal way.  15 Where the Eastern Europeans once felt welcome in Europe, many now feel alienated.

Over the last decade, the EU’s image as a successful, rules-based community of prosperous states has been seriously compromised. The question of who will fill the growing void left by the once powerful anchor of post-communist transformation has now gained new significance. 16

The renewed contestation

The twin macro forces – resentment over the post-communist consensus and the decline of the EU’s soft power – along with other idiosyncratic factors have produced a potent mix for political contestation. Economic under-performance and the high-profile scandals compromising the moderate elites often supplied the proverbial spark, causing the fickle electorate to demand a break with the past. Trust in a gradual evolution gave way to hopes for a radical revolution.

In Hungary and Poland, leaked recordings exposing alleged corruption and decadence irreparably damaged the incumbent moderates. 17 With Hungary becoming the first casualty of the global economic turmoil of the late 2000s, and the economic realities of many Poles being contrary to the official narrative of success, large segments of the two historic nations have judged the post-communist transformation a political, economic and moral failure. Twenty-five years ago Hungarians wanted a revolution to achieve liberal democracy; 20 years later, they sacrificed liberalism for a decisive break with post-communism. Inspired by the Hungarian example, Polish reactionaries have secured an unprecedented mandate to purify politics and escape “neo-colonial” economic relations. 18

While Hungary looked eastward and Poland inward, neither have looked to the EU; rather, both have directly challenged what the EU stands for.

The supposed hijacking of the young democracies by the by-products of the post-communist transition, with politicians as mere puppets, became part of the political discourse in Czechia and Slovakia. Indeed, the public domain has often resembled a special branch of private business. And after the heirs of Masaryk and Havel reduced politics from a duty to uphold norms and values to a purely transactional business, a billionaire businessman, Andrej Babiš, was contracted to reign in the state-sponsored leeches. Although devoid of ideology or higher principles, the hope that he was too wealthy to be bought or driven by personal enrichment was enough to turn him into a kingmaker.

In Slovakia, the Gorilla scandal revealed the true bankruptcy of the system that nationalist-leftists, neo-liberal modernizers, and benign populists had erected. 19 And when anti-establishment forces had blended with the establishment they were elected to displace, extremists vowed to deliver what their predecessors had failed to achieve.

And while the EU once empowered Czechoslovak reformists, now its existence has almost been forgotten.

Was the current political contestation inevitable? Only if key actors’ decisions at critical junctures were pre-determined. Would a more robust civil society have prevented the implosion? Unlikely, as can be seen in Slovenia, where despite the strong institutional representation of social interests and a tradition of consensual decision-making, a political start-up upended established structures when it was discovered that it was not the euro or global capitalism that were the principal makers of Slovenia’s economic ruin, but the collusion of domestic business and the political elite. 20

Had the European project continued successfully, the malaise in the East may have been diagnosed differently. Perhaps the problem would not be liberal democracy, but that it had not gone far enough; not foreign ownership, but domestic incompetence; not the pooling of national sovereignty but the lack of a strong collective will. But now that the damage is done, moderate forces need to unite, regain trust, and create a new narrative that will resonate with disillusioned publics, just as the Western integration narrative once did.

For this, Central-Eastern Europe still has important assets. The publics are overwhelmingly pro-European, and most simply want to live with dignity in a meritocratic state. 21 And the new champions, who promised to eradicate corruption sometimes merely brought it to new heights. 22

Through confronting their past mistakes, addressing the electorates’ real grievances, and devising credible plans for the future of their countries – and of the EU – the region’s liberal democrats can contain the populist upheaval and win a renewed battle for the hearts and minds of Central-Eastern Europeans.

Notes:

  1. Nations in Transit 2016, Freedom House, accessed on June 10, 2016, http://bit.ly/1TOkngD.
  2. Laszlo Bruszt, Visnja Vukov, “Making states for the Single Market. European integration and the reshaping of economic states in the Southern and Eastern peripheries of Europe,” manuscript draft, accessed on June 10, 2016, http://bit.ly/1riw3fP.
  3. “Corruption Perceptions Index,” Transparency International, accessed on June 10, 2016, http://bit.ly/1cdgWMM; “World Press Freedom Index, Reporters Without Borders,” accessed on June 10, 2016, http://bit.ly/1YGtJug.
  4. Abby Innes, “The Political Economy of State Capture in Central Europe,” Journal of Common Market Studies 52, no. 1 (2014), 88-104.
  5. Ivan Krastev, “Walesa, Gorbachev and Freedom’s End,” New York Times, March 13, 2016, accessed on June 10, 2016, http://nyti.ms/1UbSkXb.
  6. Ivan Krastev, “The Strange Death of the Liberal Consensus,” Journal of Democracy 18, no. 4 (2007), 56-63.
  7. A crude indicator is the divergence between post-crisis increase in exports and stagnation in domestic consumption.
  8. Eurostat data, accessed on June 10, 2016, http://bit.ly/1vbibQq.
  9. As an example, see: Aleš Tůma, “Top ten potrhlých dotací – najděte šílenější!/Top 10 Silliest Subsidies – Find out the Wackiest one!,” Finmag, September 4, 2013, accessed on June 10, 2016, http://bit.ly/1U6QgTs.
  10. A special October 2007 issue of the Journal of Democracy has been dedicated to this topic. As an example see: Jacques Rupnik, “From Democracy Fatigue to Populist Backlash,” Journal of Democracy 18, no. 4 (2007), 17-25.
  11. As an example, see: James Dawson, Seán Hanley, “What’s Wrong with East-Central Europe? The Fading Mirage of the ‘Liberal Consensus’,” Journal of Democracy 27, no.1 (2016), 20-34.
  12. Andreas Thewalt, “Warum ist der slowakische Merkel-Hasser so oft im TV?” Bild, May 19, 2016, accessed on June 10, 2016, http://bit.ly/2314K7T.
  13. Daniel Kral, “The Political Economy of Crisis Adjustment in Central-Eastern Europe,” SSEES Economics and Business Working Papers, 132 (2014), accessed on June 10, 2016, http://bit.ly/1XgE0QB.
  14. That this bill is formidable can be viewed here. Euro Kríze. Projekt INESS, accessed on June 10, 2016, http://bit.ly/1Un8HBt.
  15. Craig Winneker, “Price for Rejecting Refugees: €250,000 per Head,” Politico.eu, May 4, 2016, accessed on June 10, http://politi.co/1rUbnw6.
  16. PM Orbán’s infamous speech where he urged Hungarians to look eastward to the, “international stars… Singapore, China, India, Turkey, Russia” and to build an, “illiberal democracy” has to be understood in this context. For full speech see: Csaba Tóth, “Full text of Viktor Orbán’s speech at Băile Tuşnad (Tusnádfürdő) of 26 July 2014,” July 29, 2014, accessed on June 10, 2016, http://bit.ly/1Un9Fha. Worth noting, today Slovaks are more likely to trust Russia than the US. See: Oľga Gyárfášová, Grigorij Mesežnikov, “25 Years of the V4 as Seen by the Public,” Institute for Public Affairs, Bratislava 2016, accessed on June 10, 2016, http://bit.ly/1szYOG8.
  17. Namely, in Hungary the 2006 “We lied speech” by incumbent PM Gyurcsany. See: “Hungary PM: we lied to win election,” The Guardian, September 18, 2006, accessed on June 10, 2016, http://bit.ly/1U6RC0l. For Poland see: Marcin Sobczyk, “Polish Government Roiled by Leaked Recording,” The Wall Street Journal, June 15, 2014, accessed on June 10, 2016, http://on.wsj.com/1WJJqU8. See also: Michael E. Miller, “Secret recordings, posh restaurants, Cuban cigars and intrigue finally catch up to Polish government,” The Washington Post, June 11, 2015, accessed on June 10, 2016, http://wapo.st/1UszqIR.
  18. Maciej Ruczaj, “Poland a colony? The new face of an old dispute,” February 8, 2016, V4Revue, accessed on June 10, 2016, http://bit.ly/1XfXIMi.
  19. See Gorilla scandal, accessed on June 10, 2016, http://bit.ly/1toN3D6.
  20. See Alenka Krašovec, Tim Haughton, “Having Won Slovenia’s Election, Political Newcomer Will Have to Make Difficult Decisions if He Is to Bring Stability to New Government,” LSE Europp Blog, July 18, 2014, accessed on June 10, 2016, http://bit.ly/1S0jv2G.
  21. See Eurobarometer surveys, accessed on June 10, 2016, http://bit.ly/IKpY6P.
  22. Hungary’s Central Bank Governor, who is fully backed by PM Orbán’s, has over the last three years funnelled $1 billion to his family and cronies. See: Zoltan Simon, “How Hungary’s Central Banker Funnelled Funds to Friends, Family,” Bloomberg, May 23, 2016, accessed on June 10, 2016, http://bloom.bg/1sMBrJP. Even Czech Republic’s billionaire finance minister Andrej Babiš has recently found himself in the middle of a scandal concerning illicit subsidies. See: “Kriminalisté vyšetřující Čapí hnízdo našli v kanceláři odposlechy. Dobře načasované, reaguje Babiš / Criminalists, investigating the Stork Nest, found themselves wire-tapped in their offices. Perfect timing, Babiš reacted,” Aktuálně.cz, May 7, 2016, accessed on June 10, 2016, http://bit.ly/1ZGY2C0. See also Peter Müller, Andreas Wassermann, “Das Netzwerk des Ministers,” Der Spiegel, 24/2016, accessed on June 13, 2016, http://bit.ly/1UarrGd.
Daniel Kráľ

Daniel Kráľ

is Alumnus of UCL’s School of Slavonic and East European Studies (SSEES), who has written extensively on Slovak politics. He is currently writing a book on how East European political economies adjusted to the recent financial crisis.