Page 4 - CE Outlook Regions 2022

Executive summary

Central Europe faces a critical year in 2022, with a key election in Hungary
in April in which Prime Minister Viktor Orban, the region’s high-profile

strongman, is seeking a fourth consecutive term, while rumbling political
instability in Poland and Slovakia could lead to early elections. This could
be a make-or-break year for the region's radical right-wing political forces,

which will have an impact right across the EU and the Balkans.

These potential political changes come as the region, especially the Baltic
states, faces a much more dangerous geopolitical environment, as
neighbouring Russia menaces Ukraine and tightens its grip on Belarus.

Central European states – which already have some of the highest deaths

per capita from coronavirus (COVID-19) in the EU – are also bracing for
the sweeping eastwards of the Omicron version, at a time when
businesses are already struggling to recover, government budgets are

under huge strain, and people are increasingly ignoring restrictions or even
marching against them.

Political instability and social unrest could also be worsened by rises in
inflation, energy prices and interest rates. These will hurt living standards –

which have stagnated since the global financial crisis – and slow down
Central Europe’s already protracted convergence with Western European
levels.

International politics

The radical right-wing governments in Budapest and Warsaw remain

locked in conflict with Brussels over a range of issues sparked by their
attempts to consolidate their rule – notably by limiting judicial

independence – and pursue populist culture wars against sexual minorities
that violate EU values. Orban’s Hungary is also in the dock for rampant
corruption and its failure to prosecute it.

The European Commission finally seems to have found a credible weapon

to fight the populist contagion by threatening to hold up financial flows if the
rule of law is breached and EU money put at risk. Unless the Commission
cravenly backs down, it is difficult to see a solution to this impasse until
there is political change in both countries, something that still unfortunately

appears uncertain.

Warsaw and Budapest have also become more isolated in the EU following
the electoral defeat of populist governments in Slovakia in 2020 and in

4 CE Outlook 2022 www.intellinews.com