Page 3 - CE Outlook Regions 2023

Executive summary

The two most important events in Central Europe in 2022 were, first,
the invasion of Ukraine by Russian dictator Vladimir Putin, and,
secondly, the long-awaited hardening of the European Union ’s stance
towards the breach of its values by the radical right-wing regimes in
Poland and Hungary.

The invasion boosted the significance of the region (particularly Poland)
through its role as a supply base for Ukraine, its sheltering of many
refugees, as well as for its foresight in long warning of the threat from
the Kremlin during a period when many in Western Europe were
continuing to counsel appeasement.

However, the region struggled to cash in this new potential clout inside
the EU and Nato because of the deepening rift between Brussels and
Budapest and Warsaw.

Many expected – and Viktor Orban counted on it – that the EU would
give up prosecuting Hungary and Poland’s flagrant breaches of the rule
of law because of the need to present a united front to Russia.

Nevertheless, the bloc has stood firm and will withhold both Recovery
and Resilience Facility (RRF) and Cohesion Funds until both countries
fulfil a series of key reforms this year. Orban has blinked and agreed to
the EU’s demands; Poland has yet to do so amid infighting within the
ruling coalition.

By threatening to hold up financial flows if the rule of law is breached
and EU money put at risk, the European Commission finally seems to
have found a credible weapon to fight the populist contagion.

In Hungary, despite winning re-election in flawed elections in April,
Orban ended the year isolated within the EU and even within the
Central European Visegrad Group because of his continuing links with
Putin and his refusal to give significant help to Ukraine. As Russian
influence in Europe has collapsed, Orban has cut a lonely figure as one
of Putin’s last remaining friends, together with Aleksandr Vukic’s Serbia.
Even the election of radical right-wing allies in Italy and Sweden last
year has so far done little to ease his isolation because they do not
agree with his stance on Russia either.

This year will show whether Hungary can continue to balance its EU
membership and its close relations with the Kremlin or whether it will
finally have to make a choice as the war drags on.

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