Page 38 - bne Magazine February 2023

38 I OUTLOOK 2023 bne February 2023
premier Robert Fico could return to power at snap elections sometime in the middle of the year, but his left-wing nationalist Smer party will struggle to
find allies.
In Estonia, the radical right-wing EKRE party is expect- ed to do well in April’s general election, but Kallas’ Reform Party is still far ahead in the opinion polls.
In Czechia, polls indicate “centrist populist” Andrej Babis would lose the run-off of this month’s presiden- tial two-round election to either of the two main govern- ment-supported candidates.
Moreover, this cost of living crisis may not necessarily benefit the existing radical right-wing governments in Hungary and Poland, precisely because they are the ones that are struggling to cope with it. Populist governments such as Hungary's were among the worst performers in the COVID-19 pandemic, and they are now being found wanting by the current cost of living crisis.
In fact the country facing the gravest economic chal- lenge is Orban’s Hungary itself, with the forint the worst performing European currency last year.
POLAND
"Every year is like no other but some years are even more like no other" is perhaps the best summary of what is to come in 2023. A war next door, polycrisis at home, and an election to top it all off are nearly certain to result in a year rife with volatility and uncertainty.
Politics will trump everything else in Poland in 2023, as the ruling right-wing coalition of the Eurosceptic United Right – made up of Law and Justice (PiS) and its more radical partner United Poland – will scramble to secure an unprecedented third straight term in office.
Should they win, further consolidation of power and more democratic backsliding are in store. In fact, governance could deteriorate well before the actual election, as the ruling camp will not hold back – or so it is feared – from anything to make sure it defeats the opposition.
A win for the opposition will not, of course, magically bring Poland back to the pre-PiS era (which had so many problems that it proved a fertile ground for PiS to win in the first place). A new government will face a PiS-linked president until 2025 and a PiS-linked head of the central bank, to name just two centres of power that will remain under the influence of the incumbent government.
Orban is now in a very weak position to protect Hungar- ians’ living standards because his pre-election spending spree had already pushed up inflation and blown out the budget deficit.
According to ING, “high levels of public and net foreign debt, combined with fiscal and current account deficits potentially raise concerns about medium-term sustainability, especially in an environment of rising interest rates”.
Hungary’s future economic stability will now depend on fulfilling the milestones to release EU funds, the flow of which will narrow the budget and external deficits and boost the economy and international confidence in the forint. But if the European Union maintains its surpris- ingly tough stance and the milestones actually work properly, these reforms will also start to undermine Orban’s semi-authoritarian regime, making the coun- try’s future political ‘stability’ much more interesting and the next elections potentially much fairer.
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Economy-wise, Poland is in for a year of faltering growth and still elevated inflation, both of which could dent PiS’ chances to win. On the other hand, if analysts’ prediction of a returning economic rebound in the second half of 2023 prove true, the ruling party may well try to sell the “we have got you through the worst safely” story in the campaign.
A big question mark is Russia’s war in neighbouring Ukraine. The winter months could increase the inflow of refugees to a country struggling economically and in which political acrimony is only set to intensify ahead of the election.
On the EU front, the government must scramble to make sure that billions from the bloc’s pandemic recovery fund finally start flowing. That will be subject to much politicking – including possible tactical support from the opposition for legislative changes necessary for the funds to arrive.
If the funds are lost, a bitter blame game will ensue and could strengthen the currently small anti-EU sentiment in the general population.
In a country where polarisation matches that of the UK or the US, an election year will only give rise to more polarisation and accompanying acrimony. The actual vote will not take place until around October – the exact date will be set by
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