Hungary: changing development model – changing relations with the EU

Hungary is a country where the clearest contrast can be observed in recent years in comparison with the previous decade in terms of economic policy, international economic and political relations, and managing EU affairs. The strong support behind and the overwhelming parliamentary majority of FIDESZ-KDNP coupled with marginalized opposition forces since 2010 made it possible to put into place a completely new program relative to previous years. Using its strategic orientation, rhetoric, and the changes in the electoral system, in April 2014, the government again won an overwhelming (two thirds) majority of the parliamentary seats in the general elections. It seemed that the master plan of Prime Minister Viktor Orbán was finally achieved. He had positioned his party in the middle of the political arena and himself as the defender of democracy against the far-right party Jobbik. After winning the parliamentary elections it was anticipated that the government would not be facing any major challenges in the coming years. However unexpected it was though, a growing sense of dissatisfaction with the government had soon started to grow. This change in attitude was fundamentally caused by three events: political mistakes committed by the ruling parties on the domestic scene; increasing international pressure on the government prompted by its authoritarian politics; and the emergence of sharp dividing lines within the governing elite. Given these significant and unexpected changes since the 2014 elections, the political context for the next years has become much more obscure than anyone could have anticipated. The political fight between FIDESZ-KDNP (governing parties), JOBBIK (the far-right) and the Left (traditional and “new” left) will be extremely fierce in the next 2-3 years, which without a doubt will severely disturb the relations between Hungary and the European Union. (Click on the picture)

(A slightly different version of this analysis has been publiched in: Eleanor E. Zeff and Ellen B. Pirro (eds) The European Union and the Member States, Third Edition. Lynne - Rienner Publishers, Boulder, Colorado, USA, ISBN: 978-1-62637-256-6 pb, pp. 279-298. August 2015. https://www.rienner.com/uploads/55b14cb0e6953.pdf)

The future of the Eastern Partnership: Strategic changes or continued drifting

In 2009 the EU launched the Eastern Partnership as the Eastern Dimension of the European Neighbourhood Policy. Russia also initiated an ambitious integration project (after several integrational attempts from the mid-nineties) with the final objective of creating the Eurasian Economic Union. These two initiatives seemed to be increasingly competing with each other to attract post-communist countries of the East prior to the Vilnius Summit in 2013. Catherine Ashton, High Representative of the Union for Foreign Affairs and Security Policy at that time, said that the Vilnius summit would “open a new chapter” in the EU’s relations with its Eastern partners.  She was right, but most probably she was anticipating a different kind of change. Independently of the causes behind the current difficulties in the Eastern Partnership region, the EU is facing a fundamental dilemma. If at this point it wants to make an impact and at the same time preserve its attractiveness for third countries, strategic decisions have to be taken.

The analysis is available at the web page of Österreichische Gesellschaft für Europapolitik:

http://www.oegfe.at/cms/uploads/media/OEGfE_Policy_Brief-2015.17_01.pdf

Report on the ISA Annual Convention and EUSA Biennial Conference – from a Central European Perspective

The annual Convention of International Studies Association on Global IR and Regional Worlds: A New Agenda for International Studies (18-21 February – New Orleans) and the European Union Studies Association Fourteenth Biennial Conference (5-7 March, Boston) were held in the past few weeks. The ISA annual conventions are among the most important events of scholarly research on global IR (at least in the Western hemisphere) dealing with the most important theoretical and practical issues of contemporary international relations and sharing recent research results. The EUSA concentrates on a specific region, i.e. the European Union. The EU’s internal dynamics and challenges, its role in international power relations including its ability to influence developments in its neighborhood and to cope with the challenges of a changing global economic and political framework are discussed in detail at EUSA events. CentralEuropeNow attended both conferences and was very much interested in finding out how the current issues of the Central and Eastern European region would be discussed at such major events. (Click on the picture.) 



The Madman Theory

Three weeks after the Budapest visit of the Russian president Vladimir Putin, there is a whole range of political opinions circulating in Hungarian media on the actual purpose and meaning of the meeting. The majority of such considerations focus on the question of why the talks were so important for the Hungarian Prime Minister and the Russian leader. The Madman Theory offers a credible explanation for those who are not familiar with the Eastern European realities. (Click on the cover.)

Scholars, Politicians and Oligarchs

The 2015/2 issue of CentralEuropeNow Commentary has just been released. This short paper collects opinions about Viktor Orban’s regime, 2011-2015 (Click on the picture)

The real threat to Europe

CentralEuropeNow has published the first issue of its new series "Commentary".

The central and east European region is in flux, with some countries having weathered some turbulent economic storms and others having to face considerable challenges. New security uncertainties have also arisen, prompting many observers and policy makers to wonder about the region's future.

With this in mind we launch this series to analyse current challenges and developments. (Click on the picture)





 

Sustainable Unsustainability – The Economy of Bosnia and Herzegovina

From among the Western Balkan countries Bosnia and Herzegovina has been experiencing the most unfavourable economic and political developments. Analyses of the economic developments in Bosnia and Herzegovina can be prepared from two profoundly different perspectives. The first variant of economic research concentrates on the macroeconomic trends, external and internal balances (GDP growth, fiscal deficit, public debt etc.) and attempts to identify the underlying long-term processes and the most likely directions they may take in the future based on economic calculations and models. Economic policy recommendations and proposals are formulated in the context of economic growth and stability against this background. The other type of analysis however would rather concentrate on the political economic framework and place emphasis on the particular political, constitutional and economic circumstances under which the country operates and which render normal economic decision making difficult or even impossible. A political economic analysis like the latter one must examine the international political and security policy interests and the domestic political relations in a multidisciplinary and complex way. The country cannot be properly described using the terms of a standard economic and political framework. (Click on the picture!)





Cikkeink a hazai sajtóban / Our articles published in the Hungarian press

Az alábbi linkeken találhatóak a magyar gazdasági sajtóban az utóbbi időben megjelent rövid elemzéseink. (Short analyses published in the Hungarian press recently - in Hungarian).

Novák Tamás: Az Orbán-modell természetrajza (Tamas Novak: The economic philosophy of the Orban regime) Figyelő, 2014. június 5. /June 5, 2014 http://figyelo.hu/cikkek/404810-az-orban-modell-termeszetrajza

Milyen jövő vár Közép-Európára? (What future awaits the Central European region?) HVG, 2014. július 22. / July 22, 2014 http://hvg.hu/velemeny/20140722_Milyen_jovo_var_KozepEuropara

Novák Tamás: Stabil növekedési kilátások vagy összeomlás előtti állapot? Törökország gazdaságáról. (Tamas Novak: Turkey’s economic perspectives.) Világgazdaság, 2014. szeptember 2. / September 2, 2014 http://www.vg.hu/velemeny/publicisztika/stabil-novekedesi-kilatasok-vagy-osszeomlas-elotti-allapot-434402

Novák Tamás: Uniós és orosz szankciók – Ki veszít a végén? (Tamas Novak: Russian sanctions – Implication for the CEE member states.) Napi Gazdaság, 2014. szeptember 22. / 22 September, 2014 (A detailed analyses will be published on this website in early October) http://www.napigazdasag.hu/cikk/23483/

A New Political Economy of Central Europe

In recent years the global power shift has often hit the headlines and Europe has regularly been featured as a declining region that is expected to lose economic and political importance in the decades to come. But despite negative public opinion, the EU has remained one of the most important economic and political powers in the world. The EU has successfully undergone several phases of transformation in its history. One of the greatest of such transformations was the “big bang” enlargement in 2004. After 1990 Central European countries embarked on a road of economic and political transition, which took place at different speeds. The states concerned began integrating into the EU and joined NATO, but after twenty five years of economic and political integration most of these countries are still heavily marked by distinctively Central European characteristics in comparison with Western Europe and North America. This paper hypothesizes that one of the most important reasons behind the prevalence of these distinctive Central European characteristics lies in the fact that economic and political institutions are interconnected differently in this region. (Click on the picture!)

Call for papers - Forum for VISEGRAD+ STUDIES

A Call for Papers from The Jagiellonian Club, Krakow

The aim of the project is to expand and spread the knowledge regarding the Visegrad+ countries by
publishing 25 papers on V4+ cooperation.

The authors will be selected based on the abstracts (1500-2000 characters) to be sent by 30th September to the address papers@visegradplus.org. The selected authors will be informed by 3rd
October and the final versions of the papers will be due by 3 rd November.

Click here for further particulars.

7. Zöld Nyári Egyetem (2014. augusztus 22-24.) // 7th Green Summer Academy (22-24 August 2014) - Budapest

First panel: Risks and Oportunities of the TTIP (Transatlantic Trade and Investment Partnership).

A public discussion on the impacts of the planned US-EU comprehensive trade agreement.  

Web: www.greenacademy.hu

Program: www.greenacademy.hu/program-2014

Facebook: https://www.facebook.com/events/1514776925419441/

The Impact of the TTIP on the V4 Region. Trade and Investment Opportunities

None of the impact assessments is capable of fully forecasting the implications of the TTIP, and even less able to anticipate unexpected political and economic changes, not to mention the unpredictability in the reactions of third countries. The case of the EU internal market – and experiences of other FTAs (Free Trade Agreements) – prove that less developed countries may lose with the liberalization and the opening up of markets. The case of Greece and other southern countries of the EU clearly prove that problems with free-trade agreements and other integration initiatives can be numerous. Less developed countries of the European Union, or those that are not competitive enough, might not gain as much as forecasted; what is more, the risk of losing in international trade is not negligible. Despite the remarkable growth performance in international comparison and the major advances in catching up with developed countries in the last two decades, the peripheral/semi-peripheral position of the V4 region has not changed significantly. The way a country in the CEE region integrates into the international economy is crucial from the perspective of its economic development path. From the point of view of the international division of labor, the region itself became the supplier of foreign-owned manufacturing firms, most importantly in the automotive and closely related sectors while preserving traditional elements and old social structures. The very large exposure of the vehicle industry in the region’s exports may normally be very risky. Given that the TTIP's most beneficial trade impacts will probably be felt in this sector, export dependence this time may lead to increased industrial output or exports, thus contributing to faster economic growth. Most importantly, the positive impact on German vehicle imports is likely to propel the region’s production of parts and components as well. (Click on the picture!)

Publication date

28 August 2014

Csaba Moldicz: A new Political Economy of Eastern Europe

 

By introducing the market economy framework and adopting the principles of democracy, it was believed that countries in Eastern Europe would automatically enter upon a path leading to a rapid convergence with the richer countries after a relatively short transitionary period. It has not been the case for most of them. Recently several attempts have been made to theoretically describe the political and economic systems that have developed in the Central European region. But the explanations are not satisfactory. We try to frame a new political economic approach in order to understand the current and the future developments. It is of utmost importance since the next decade in the Central and Eastern European region can be described by challenges that are on a par with those of the early nineties. 

Tamas Novak
CentralEuropeNow
https://www.facebook.com/centraleuropenow

 

 

 

 

Economic Cooperation and Integration in Central and Eastern Europe

Prospects for reconciliation through economic integration vary a great deal in Central and Eastern Europe. The conditions and the characteristics of economic integration are different between the already EU member Central European countries and those in the post-Soviet area. An additional perspective relates to the economic relations between Russia and the “new” EU member states. Many countries openly express their fears of Russian influence in trade or through capital relations, regarding both direct investment and business loans. In the post-Soviet region, Russia’s intention is to achieve economic reintegration. This policy is not without success as seen in the creation of the Eurasian Economic integration and the (temporary?) failure of the Eastern Partnership policy of the European Union. The post-Soviet region, except for the Baltic States is increasingly bound to Russia. In this integration, the key factor is the power with which Russia can assert its interests, while its allies remain corrupt, autocratic local leaders. The problem in Central Europe is that the slow economic convergence of several countries in the region and the sluggish income growth has led to an overall dissatisfaction with the applied economic and political models and with the economic integration in the European Union. Although the EU created a uniform regulation and a single market for each of its new members, this has not been able to eradicate all the suspicions and problems within the accessed countries. Problems are appearing from time to time in different relations and are mostly related to ethnic minorities, economic interests, or national political interests serving economic objectives. (Click on the picture!)
 

Central Europe at the Crossroads. What Future Awaits the Region?

Today the Central European region faces challenges that many had thought already resolved. The future is far more vague than it was at the beginning of the transformation or upon entering the European Union. I intend to elaborate on the most important trends from the recent past in the Central European region. These will serve as a basis for framing predictions of the region’s future. The focus is on the four Visegrad countries (V4). But other countries will also be referred to where relevant. The objective of this analysis is to draw attention to Central Europe’s uncertain future from an economic and geopolitical perspective. (Click on the picture!) 



   

Principles of the Economic Philosophy in Hungary

Since the elections in April 2014, numerous economic and political analyses have been published on what happened and what the future will look like for Hungary. From among the abundant explanations and forecasts the most powerful one to emerge has been the government narrative. After winning the overwhelming majority of parliamentary seats, it seems that the master plan of Viktor Orban has finally been achieved. He can position his party in the middle of the political arena and himself as the defender of democracy against far right party Jobbik. At the same time, the totally fragmented ‘left’, which has been unable to formulate coherent economic and political messages, is far from being able to pose a serious challenge to the government. The aim of the present analysis is to serve as a basis to reveal the fundamental principles behind the government’s economic policy. The understanding of the economic philosophy helps to see economic decisions and measures in their complexity and to judge the long-term economic sustainability of the government strategy with confidence. This strategy may have significant consequences and set a strong framework for the economic and social development of the next decade. (Click on the picture)
 

Implications of TTIP on CEE

Impacts of the TTIP (Transatlantic Trade and Investment Partnership) on Central and Eastern Europe depend on the details of the final agreement. If it develops into a deep, comprehensive agreement, the impacts will be far bigger. In this case Central European member countries of the EU would theoretically gain a lot due to their integration into the division of labor mostly through transnational firms at different levels of their supplier chain. Had the governments of these countries pursued outward looking economic policies and improved business environment, this would attract additional foreign direct investments. However, the risk of inward looking policies in this region is intensifying, which would render the utilization of opportunities even more difficult. Regarding third countries from the region, the strategy Russia chooses to adopt seems to be the most important. The negative implications of a deep TTIP would be intense. The first impact would be related to trade diversion in the short run. The long term implication is, however, much more serious and relates to Russian energy exports that make up around 75% of Russian sales to the EU. As the TTIP would improve the market access of US energy to Europe, Russian energy exports would be seriously hit. To counterbalance these negative implications, in addition to export reorientation towards other countries, this country may want to increase its influence in other sectors through investments into European assets. In an extreme case, the TTIP may trigger stronger cooperation among large emerging countries to formulate concerted efforts to neutralize negative consequences of the agreement.

 

 

 

Economic Perspectives of the Western Balkans

The economic situation in the Western Balkans can be best described with the term “cumulative crisis”. Unfavorable economic consequences of the wars and the disruption of international economic relations in the nineties were aggravated by the problems of transition and reform after the turn of the millennium. This already difficult situation was further exacerbated by the international economic and political crisis in recent years. In order to manage the region’s multiple economic challenges, the solutions offered by international institutions are mostly based on budget consolidation and structural reforms. Austerity measures may be coupled with the privatization of currently profitable firms through the involvement of foreign capital in order to increase budget revenues and because of the scarcity of domestic capital. Based on recent developments across several countries, it is realistic to expect that these measures will significantly increase the risk of hostile attitudes against foreign investors and owners unless the living standard of households improves according to expectations. The same disappointment may easily prompt hostility against the European Union or the democratic transformation resulting in increasing resistance against the current economic and political model. (Click on the picture.) 

 

Gazdaságfilozófiai alapelvek Magyarországon

A 2014. áprilisi választások óta megsokasodtak a mi történt és a mi lesz kérdéseket feszegető politikai és gazdasági elemzések, amelyekből a legerősebb narratíva egyértelműen a kormányzaté. Megvalósulni látszik Orbán Viktor terve, amely szerint politikailag középre pozícionálva a Fidesz a Jobbikkal szemben a demokrácia védelmezőjeként tudja megjeleníteni magát, miközben a szétforgácsolt és mondanivaló nélküli baloldal inkompetenciáját kihasználva komolyabb ellenállás nélkül kedvére teheti, amit akar. Ebben az elemzésben a gazdaságpolitikát mozgató alapelveket mutatom be. Ezek megértése segít átlátni és rendszerben szemlélni a gazdasági döntéseket és azok fenntarthatóságát. A jelenlegi célrendszer érvényesítése komoly hosszú távú következményekkel jár, korlátlan megvalósulása alapvetően meghatározza a következő évtized gazdasági és társadalmi működési környezetét. (Klikk a képre!)