From Golden Hands to Golden Heads

1|2017 1(10)|2017

ISSN 2084-8250 | GBP€4.99 | EURO€6.00 | PLN 16.00

From golden hands to golden

www.visegradinsight.eu ISSN 2084-8250 10 The future of prosperity in Central Europe 9 772084 825077

VI 10 cover.indd 1 10.05.2017 12:09 WOJCIECH PRZYBYLSKI MARTA POŚLAD Res Publica, Chairman, Google, Head of CEE Public Policy Visegrad Insight, Editor-in-chief @MartaPoslad @wprzybylski Teams and individuals listed Today is already tomorrow – on New Europe 100 are the best New Europe 100 challengers are examples how digital empowerment the proof that the future can be helps social and economic growth driven by great people

DANUTA DOBRZYŃSKA-SCHIMMER ADAM MALCZAK NE100 Project manager Google, CEE Public Policy UPCOMING @NewEurope100 @AdamMalczak 2017 Through this project we met The community of New Europe 100 fantastic people and were amazed is perhaps the most vibrant digital by their big ideas. Already in crowd I have ever encountered in my 2014 we knew the number of our professional career THEY DESIGN CARS AND ROBOTS. THEY RE-INVENT BUSINESSES challengers will grow exponentially AND CITIES. THEY TRANSFORM SMALL COMMUNITIES AND WHOLE COUNTRIES. THEY ALL USE DIGITAL TECHNOLOGIES TO CHALLENGE BEATA JACZEWSKA HENRY FOY STATUS QUO. AND THEY ALL COME FROM CENTRAL AND EASTERN International Visegrad Fund, Director Financial Times EUROPE. @BeataJaczewska @HenryJFoy Visegrad Group needs to bring The project is intended to raise the forward creative ideas, challenging profile of world-leading innovation innovations and to have courage to in emerging Europe and to build challenge the status quo. That’s what connections among those who are New Europe 100 list is all about leading that drive

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editor-in-chief Wojciech Przybylski (Res Publica, PL) twitter: @wprzybylski

assistant editor Anna Wójcik (Res Publica, PL) twitter: @annawojcik

senior associate Marcin Zaborowski (Res Publica, PL) twitter: @MaZaborowski

language editor Galan Dall (PL)

online content editor Gabriela Rogowska (Res Publica, PL) [email protected]

economy Martin Ehl (Hospodářské noviny, CZ) twitter: @MartinCZV4EU

intelligent mind Éva Karádi (HU) Marta Šimečková (SK)

books Julia Sherwood (SK)

contributing editors Katarína Kucbelová (SK) Máté Zombory (HU) Marek Sečkař (SK) Juraj Čorba (SK)

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Visegrad Insight is an analysis and opinion journal led by accomplished editors from the Visegrad Group countries: the Czech Republic, Hungary, Poland and Slovakia. Its aim is to provide a platform for high profile debate on the perspectives and challenges for cooperation of the Central European governments, business and communities.

ThoughT provoking EDITORIAL

The V4 economies have muddled through the last few years of the financial crisis, but they are now short of the social energy needed to bounce back to the previous levels Lasting of growth. A diminishing trust in the rule of law, corruption, the active measures taken by Russia as well as the disappointing levels of public and civic participation, all are predicaments that must be addressed in the new strategies of economic growth trust of Central Europe. is earned, The Czech, Hungarian, Polish and Slovak economies are growing steadily but not as much as ten years ago when GDP was 7-10% higher. Today, the V4 grows only at the not bought pace of Sweden and just a bit more than Germany. That means it is not catching up. PIOTR BEKAS PIOTR The current political risks – including the ever-more polarised public opinion, the

low level of social capital, Brexit, the Russian threat and the abuse of democratic legitimacy for personal gains – are like millstones around our necks. In a way, it is a miracle the region is staying afloat with the speed of the geo-political and socio-economic currents being what they are, and the burdens we carry with us.

In the end, the region may abandon the grand narrative of transformation, which would confirm the theory of the looming middle income trap. Fortunately, the ambition to finish higher in the race has not yet faded away.

In order to succeed, it is not enough to have more effective supply chains for exports; breaking through the middle income trap requires deeper impulses.

The recent Legatum Institute Central and Eastern Europe Prosperity Report shows that the region requires a serious investment of social capital. This resource is certainly not cheap and no less volatile. According to the report, only Estonia has been answering that demand employing a mix of social and digital long-term policies. The rest of the region has been overlooking this dire challenge, leaving prosperity trends adrift.

Moreover, if the current political trends continue, the region will be at risk of a wholesale political rollback. This risk is compounded by the Kremlin’s deliberate efforts to undermine liberal democracy in Europe, particularly on its Eastern flank. What can WOJCIECH PRZYBYLSKI be done to combat these tactics? Editor-in-chief One obvious answer is the democratic resilience of public opinion. There is a good chance that you will hold this copy of Visegrad Insight at one of many cutting-edge THERE ARE SERIOUS RISKS OF A PO- conferences that take place in Central Europe. The range of topics that are debated LITICAL ROLLBACK ACROSS CENTRAL here this year represents a vibrant public sphere. Regardless which one it may be, ask EUROPE WHICH WOULD HAMPER yourself this one question: how are we going to be better off tomorrow than today? THE FUTURE OF PROSPERITY IN THE REGION Be it at Globsec in Bratislava, Wrocław Global Forum, Brain Bar Budapest, Prague European Summit, European Forum Alpbach or at one of a dozen more gatherings of great minds and ambitious change-makers, take time to ask them about the future of prosperity in Central Europe, and inform us of your insights or findings.

We are always looking for informed opinions to share and challenge the ideas we have presented here in this 10th issue of Visegrad Insight and in our previous publications. You may write your own op-ed for the online edition, drop us an email or engage on Twitter - we are eager to spur the debate on what prosperity is today – and what it may look like tomorrow – in our dynamic and influential region of Europe.

5 CONTENTS

ECONOMY PROSPERITY IN CENTRAL EUROPE 8 Survey: How can we encourage social trust in Central European countries? What can we do to deal with the dissatisfaction of the economic standing in the V4? How can we combat brain drain? Iveta Radičová, András Inotai, Olga Grygier-Siddons, Petr Zahradník, Aleš Chmelař [SURVEY] 14 A Breakdown of the Legatum Institute PROSPERITY IN Report on Central Europe CENTRAL EUROPE. 16 The Great Leap Forward? Moving How to encourage away from the cheap labour model in CE social trust? Tim Gosling PAGE 20 Changing Minds: Economic Models 8 in CE

An interview with Petr Teplý Gomulicki: Golden Shower, Warsaw,Maurycy 2016. Krzyżanek by Photo Marek 22 Closing the Wealth Gap in CE Maciej Kisilowski 26 Debt and democracy Dorothee Bohle 28 The Good, the Bad & the Ugly Dalibor Rohac 30 Modern Banks in CEE: Between Foreigners and the State Daniel Rząsa 33 The Future of Prosperity Andreas Triechl 34 Central Europe in Five Years-Time: Scenarios Martin Ehl, Anna Wójcik, Wojciech Przybylski 36 Extreme Isolation: A Report from Eastern Slovakia Ben Cunningham 40 Micro perspectives: The effective altruists of Central Europe and how THE GREAT LEAP to fund them Ondřej Liška, Julia Itin, Tim Gosling Ewa Konczał, Réka Matheidesz FORWARD? PAGE VISEGRAD ABROAD 16

FRAYING BONDS Jacek Ambrożewski Illustration: 44 Flexible solidarity, intergovernmentalism and ALLEGED CZECH differentiated integration Zsuzanna Vegh 47 Alleged Czech Discomfort with DISCOMFORT the Visegrad Group and the Cynical Reality Vít Dostál with the Visegrad Group 50 Germany and the Visegrad states cannot afford not to cooperate and the Cynical Reality closely Jőrg Winterbauer 52 Poland's Foreign Policy. The Slow Dismantling of Alliances Michał Kokot 54 From Cinderella to Sleeping Beauty Joanna Kędzierska 56 Is Europeanization losing its sex appeal? Adam Reichardt Vít Dostál PAGE 47 6 VISEGRAD INSIGHT 1 (10) | 2017 58 Playing the Trump Card: What Central Europe can expect from an increasingly unpredictable administration in Washington Marcin Zaborowski 62 Chinese Investment in the Four Visegrad Countries Tamas Matura 66 Get ready for New Europe 100 in 2017

EU SECURITY 68 Finding Their Way Out of the Woods Dániel Bartha Tamas Matura INTELLIGENT MINDS Illustration: Jacek Ambrożewski Jacek Ambrożewski Illustration: OVERSHADOWED AND UNSUNG 70 The Canary in the Coal Mine: What the proposed closing of a university in Hungary’s capital means for the region as a whole A discussion PAGE between Michael Ignatieff and 62 Wojciech Przybylski 74 When Europe prepares fot the current role of the province An introduction and excert from Samanta Stecko’s essay on Jerzy Stempowski, translated by Aleksandra Małecka 76 Civil Society and Conflicting Narratives: The pitfalls of attempting to carve out a Central European A discussion Identity Jan Kubik interviewed by between Anna Wójcik Michael Ignatieff CULTURE and Wojciech FEAR AND POTENTIAL Przybylski 78 Revival of the Red Infiltration: The Kremlin and its friends aim for PAGE 70 a power grab in Central Europe Jakub Janda 80 Fear-mongering in the Czech Republic and Slovakia Ivana Smoleňová 82 We, the Visegrad Citizens, Neighbours and Allies Olga Gyárfášová 86 EU benefits according to young people 87 Rebranding the Visegrad Group with PR expert: The Untapped Power of Regional Politics An Interview with Szymon Walkiewicz by Vojtěch Boháč 90 Sticking together: Mittleuropa for travellers Franciszek Bojańczyk BOOKS WEALTH in the Czech Republic and Slovakia 92 Prosperity in literature Julia Sherwood, Pál Závada, Jiří Hájíček, Ondrej Štefánik, Natalia Fiedorczuk Ivana Smoleňová PAGE 80 7 ECONOMY PROSPERITY IN CENTRAL EUROPE

[SURVEY] 1 The prosperity index is higher in countries where the GDP growth matches a more cohesive society. How can we encourage social trust in Central European countries in order to meet the demands of economic growth and build-up their prosperity further?

2 Despite good economic indicators, Visegrad societies have voiced dissatisfaction with their economic standing. What can we do about it?

3 Central Europe has built up its prosperity by moving from low-skilled jobs to more complex services. But today, it is facing the problem of brain drain. How can we address this issue?

8 VISEGRAD INSIGHT 1 (10) | 2017 PROSPERITY IN CENTRAL EUROPE ECONOMY

wages. How does one assure the raising the wages? We could introduce a pilot basic income program, something akin to what Finland does, but we are not as rich as Finland. Another option is consistent investment in education and research to boost innovative potential and create jobs with added value. Higher education is the pathway to social mobility. The ugly truth is that if you have a low level of eeducation and are out of luck, your social mobility prospects are very limited. And if we want to eliminate these pockets of poverty, we must invest IIVETA RADIČOVÁ in of the society as a whole; we cannot focus only on selected Former Prime Minister of Slovakia groups. The second challenge is the rule and law, which I see a The political transformation in Central Europe in- precondition for entrepreneurship. There is no room for en- volves three stages: regime change, the democra- trepreneurship without a well-functioning justice system and tization of institutions and the consolidation of limited bureaucracy. Our problems are an overregulated state, 1 democracy. This last element, the consolidation, has a public administration which certainly does not functioning not been successfully accomplished – the low adherence to perfectly, the misuse of public finances and high levels of cor- values such as solidarity, social trust and trust in institutions ruption and fraud. These are true barriers to entrepreneurship suggest that, in this area, the transformation has not ended. and obstacles for improving the everyday life of many people. The process was recently complicated by external factors: the The third challenge is assuring better quality of key pub- global financial crisis, debt crisis and overall feeling of insecu- lic services, especially healthcare, the educational system and rity resulting from the refugee crisis. social safety net. In addition to external factors, there are internal trends The worst-case scenario is governments’ inactivity. The that prevent us from achieving greater social trust. First, free- perceived economic stagnation coupled with the sense of in- dom is still understood as limited welfare support from the justice and dissatisfaction with basic public services is a recipe state. Second, politics has been reduced to providing security for social unrest. and the management of economic and social matters, without providing any real values. Third, the rule of law is weak, Brain drain itself is not a problem. The problem is and there is the perception of social injustice, resulting from when talented and educated people are leaving for- flawed judicial systems. Fourth, social stratification processes ever. If it is a part of your professional career – to have led to new types of social inequalities. Fifth, when the 3 have more experiences, to be involved in international fragile middle class weakens, the levels of trust drop down, and teams – then it is an added value for your country once you re- there is no guarantee of political stability. Sixth, the political turn. For highly qualified professionals, mobility is a welcomed scene is unstable. As a result, citizens are deeply dissatisfied part of their professional careers. The tragedy starts when such with the state of affairs. people do not wish to return. Central European governments This gives space for fringe, radical movements to become are trying to lure the brightest people back, offering them jobs mainstream. New political entities – which are not based on in the state administration. But income is not the only source common values, but rather on dissatisfaction, fear and re- of motivation, what counts is also the work culture. I wonder sentment – are gaining ground. They are moving further and how fast state administrations can improve in the latter area further away from centrist politics, as we suspected would be and if it has energy to effectively attract this segment of the the case, but they are also unpredictable. The rise of populist population back. After Brexit and in case more mobility re- politics all over Europe is a result of a decade of inadequate strictions are introduced within the EU, some workers would responses to the real problems of the citizens. This has allowed be forced to come back to Central Europe. No matter positive populist parties to grow by offering rhetoric, simple truths and or negative incentives, some of the lower and higher qualified simple solutions to complex challenges – which will not magi- people will certainly return; we can only speculate about the cally solve all the problems, and which will further polarize our numbers and proportions. societies instead of bringing more social trust and prosperity. In this difficult political climate, I am convinced that the way to improve social cohesion and social trust is the hard and boring work of continuing to reform our economies on micro and macro levels by providing more quality jobs, continuing to democratise institutions and improving the functions of the judicial system. Without these elements, there will be no trust.

We need to address three interconnected challenges to overcome this dissatisfaction. The first one is dealing with the socio-economic situation of the citizens. 2 The first part of this transition has been finalized. Our homework now is to implement a second step of the transition and move from our current model of economic growth, based on low-wage labour, to economic growth based on higher

9 ECONOMY PROSPERITY IN CENTRAL EUROPE

which is stable, predictable and in which they can continue investing and expanding. This brings us to the societal contribution of large companies. Companies share responsibility for our future. Not only by providing growth, but also by mitigating negative impacts of growth production and capital accumulation, and we should hold them accountable for that.

Dissatisfaction is the root of political and economic ANDRÁS INOTAI instability. The sources of dissatisfaction are un- Economics Professor at the College of Europe derstandable. Everywhere there is globalisation – 2 which in my view is also the only way of survival for Economists often argue which indicators measure re- the smaller nations – creating much better possibilities and ality the most accurately. It appears that prosperity is prosperity for several hundred million while, simultaneously not that much related to income growth as it is to the widened the gap between the rich and the poor. This may un- 1 increase of wealth. Simply put: it is easier to be liv- dermine the pillar of democracy since a sustainable democ- ing from an accumulated inheritance than from labor, which, racy needs a sustainable middle class. clearly, provokes a sense of injustice and dissatisfaction. A Dissatisfaction is partly psychological and emotive. great postwar enrichment occurred in Western Europe during During the transformation in Central Europe people often ex- the three generations living the later-half of the previous cen- pected that everything will become better without our own, tury; moreover, it was almost uninterrupted by crises of war efficient contributions. The systemic change obviously did not or finance. Our region did not enjoy the same luck. Of course, automatically result in reaching the living standards of richer, in Western Europe the capital was not accumulated evenly neighboring countries, nor could we expect this to come to within the societies and among the countries. After more than fruition in the next few years. However, most countries of the a decade of EU membership, we can see that the countries of region are now closer to their living standards than in many Central Europe have also developed at different paces: while, periods of our history. for example, Poland and Slovakia have greatly improved their Democracy itself does not produce higher living stand- performances, Hungary and Slovenia are stagnated. ards. An everyday effort is required to fight for democratic The future of prosperity depends on investments: both in standards and to work towards greater prosperity. I would not material capital and human capital. A future-oriented society, like to overemphasize the role of personal feeling of dissatis- with wealth-bounded hopes on continuing the path to even faction, but, on the other hand, constantly blaming the envi- greater prosperity, is a crucial ingredient. Social capital is gen- ronment is counterproductive as well. A paralyzed, resentful, erated through education, research and development plus a hostile and backward-looking society is not going to increase new element added in recent years – investment into creating its prosperity, to the contrary. an innovative society. Innovation is a social terminology. Only So too, the media is also partly to blame for the dissatis- countries with innovative, future-oriented societies, which are faction of citizens. Very few explain to the society as a whole not only focused on the past, will be able to withstand the that we need generations to reach for the same levels strived challenges of the 21st century. Innovative societies are built on for by the more developed Western Europe. We need to in- the values of solidarity and social cohesion. The key issue now crease the quantity and quality of dialogue, not only among for Central Europe is how to combine the relatively high levels different groups in our society, but also across borders, if only of competitiveness with the critical mass of social cohesion, to better understand the various experiences of citizens in and redistribution is crucial. The people should be supported, our region as well as those neighbours living farther afield in not only by direct help, but also through instruction, training Europe. and the conviction that they also are responsible for their own individual as well as shared future. Emigration is an important element. Many people To what extent should institutions be stable or flexible? I who do not see their futures secured within their na- think basic principles have to be clear and the rule of law must tive countries have decided to leave in hopes of find- be guaranteed. The institutional framework cannot change 3 ing better alternatives. Many of those who leave are every day. On the other hand, the legal framework is often skilled, flexible people who can easily adjust elsewhere. The lagging behind the changes and should adapt faster. You can prospects for prosperity are not great in countries where a tal- only answer challenges in the correct way if the institutions ented generation leaves rather than stays to create and develop are looking towards the future and not dwelling on the past. A their own society from within. Brain drain is dangerous when highly skilled, efficient, transparent public administration – in it is unilateral. Some people come back after a period of time an ideal world, with zero corruption – should set the example and use the knowledge, network, and capital gained abroad to for the society. While trust in volatile political institutions is better the situation in their home nations. We see young peo- declining, the legal and the institutional framework must be ple are often leaving with their families, and it is difficult for reliable; people must trust their judiciary and their adminis- them to come back. The challenge is how the government will tration. A precondition for prosperity is also a stable, predict- incentive them to maintain a network of social ties with their able legal base, which is crucial for investors. International home country. Remittances from abroad are a short-term so- companies need not only a highly skilled and reliable work- lution to improve local living standards, but, in the long term, force or market for their services, but also a legal environment they do not balance out the negative impacts of brain drain.

10 VISEGRAD INSIGHT 1 (10) | 2017 PROSPERITY IN CENTRAL EUROPE ECONOMY

cial cohesion, if we don’t feel we can trust one another, people will not want to stay as part of that community. They will go to a place where maybe they’re not going to be as well off economically, but where they will get those other aspects that are more available. How to build social cohesion? The problem, I think, is that in our part of the world people have a tendency to stick to what they can achieve by themselves rather than by working together.. That comes through very clearly when we do our OLGA GRYGIER-SIDDONS surveys. Business people want to focus on the issues that they CEO, PwC Central and Eastern Europe can solve. Politicians want to solve the things they can solve. Academics want to stay in their world and focus on the chal- The low level of social trust is an issue that impacts lenges that they have. But actually, to make a really big impact, negatively on all of us and on businesses every day in what we need is these three groups and many others to work Central Europe. In the UK, where I was brought up together to improve the environment. 1 professionally, everybody trusts you unless there is a In this increasingly divided world, we need to meet, con- reason not to, and when there is a reason not to, you know nect with people and solve problems together. When it comes why. Generally speaking, in normal day-to-day dealings you’re to the Visegrad countries, I think we can gain so much more by given a lot of trust. This approach is incredibly important, for working together in business, politics, and academia, to work instance, when you have new businesses starting up. We see to the benefit of our societies. it as one of the main reasons that attracts start-up companies to the UK, not necessarily the availability of more capital. It’s There are two aspects to brain drain. I see young not that the hard infrastructure is that much better, but what people genuinely wanting to move around and ex- they find is that it is a lot easier for small businesses to operate perience things, to get the best experience that they and to be taken seriously, to be trusted – despite their lacking 3 can in order to build the foundation for their career. of both a recognisable brand name and a big balance sheet. I believe this willingness to study or gain work experience Public trust has a large impact on every single area of life, in- abroad is a positive thing, which makes young people from cluding how business is conducted, the interaction between a Central Europe incredibly valuable and will make them in- business person and say a public servant, or even a taxpayer credibly successful in the future. Young people here are gifted and a tax collector. and determined. I believe we have moved forward in building trust in This openness of our young people to work hard and Central Europe. Yet, in my view, the movement has not been learn is building our social capital. We then need to ensure continuous – not only because of local factors, but also be- that we are providing great opportunities for those people to cause of global challenges. For example, there are still ques- return and to work for businesses that are based here in our tions surrounding our trust in technology. In fact, trust in Central European market and not necessarily just national technology is higher here than in countries such as Germany businesses; a lot of young people enjoy being part of the global and Sweden. I think businesses need to explore how they can community and envision a global career. It is about the jobs we leverage that digital trust to create more of the face-to-face create for people in our markets that will either enable them kind. It’s really important that all stakeholders – and by all to work locally if they want to, or to work globally if they so stakeholders I mean governments, politicians, academics and choose. business people – that everybody realizes how important trust Our focus needs to be on creating more opportunities is to building prosperity and that unless we work together, our here in Poland, Hungary, Slovakia and the Czech Republic. labour is in vain. We all have the responsibility to build and to It’s impossible to stop the most talented people from leaving nurture trust. Trust is fragile and once it’s broken, it is very if they cannot develop and grow in line with their ambitions. difficult to re-establish. We are in a very tenuous moment in Long gone are the days when they can take your passport away. terms of society trusting business, and business leaders are It is our responsibility to improve the environment here, both reacting to this challenge. I’m seeing a move from Corporate in terms of hard infrastructure – the technology backbone – Social Responsibility understood more as PR to genuine inter- and also the right soft infrastructure, that is trust and social est in changing corporate culture, and awareness that business capital. We need to be thinking what can we do to attract that is responsible not only for the wealth of its shareholders, but talent back. also for societal outcomes. Given the rise of technology, business leaders are looking for people with good problem-solving skills, with high levels of Companies are often concerned with storytelling, but leadership ability to make sense of all the data that computers what is needed is dialogue and the understanding of are generating. You can automate a lot of the standard and varying worldviews. In our society, do we view the routine tasks, which generates an even greater need to be able 2 world as incredibly divided and in a permanent state to interact with a human being. This is why emotional intel- of disagreement, or do we view our society as one that has ligence is so highly valued by employers. We have an impres- a common purpose and values, despite some disagreements sive number of IT graduates in our region who speak several around the edges? I think it is important to have a sense of languages, have strong communication skills and the ability to identity as to what type of society we live in. No matter how get along with people. These are our strengths, and we should good the economic indicators are, if we’re not feeling that so- play to them.

11 ECONOMY PROSPERITY IN CENTRAL EUROPE

Perhaps, over the last several years, the situation has changed. In all Visegrad countries, the post-crisis development has been accompanied by strong private 2 consumption as well as a very high consumer confidence, which could gradually lead to an elimination of general dissatisfaction. Owing to their post-communist heritage, the people living in the V4 still have a rather strong attachment to materialism, and this sense of ownership needs to be con- tented before any other kind of social satisfaction is developed. PETR ZAHRADNÍK They undoubtedly need to increase their self-confidence, and Project Manager and Consultant this could be done through appropriately communicating with at the EU Office of Česká spořitelna the public using best practice examples, to proudly display those good figures and achievements and compare them with It is undoubtedly true that in the long-run, there is a those from other EU countries. This also involves being more very strong correlation between the GDP per capita open with our neighbours. Central Europeans travel a lot, but indicator and the rate of personal satisfaction, or some there are some prevailing conservative habits and communi- 1 other rather socially oriented benchmark. This is also cation with their regional partners is still limited. Educating confirmed in countries where the redistribution of the newly the populaces could help with this issue, but, generally, it is accumulated wealth is provided fairly, correctly and transpar- true that some form of scepticism, or pessimism, is part of the ently. But this is the issue of long-term development which is natural character of V4 citizens, more so than for those from not interrupted by fatal political and societal changeovers, like Western countries. those occurring in the CEE territory. On the other hand, it's been almost 28 years since the velvet revolution, a sufficient It is true that when comparing all the convergence period of time has passed to establish some standard socio- flows and processes (real ones as well as the nomi- economic relations in these countries as well. nal), the adjustment of wages – to the EU average, There is no doubt that, over the last 25 years, the real 3 or rather to German, or Austrian benchmark – is the convergence track record in all the CEE countries, includ- slowest segment. For example, in 2016, the Czech Republic ing the Visegrad ones, has been substantial. There is also no stood at 89% of GDP per capita of the EU, it is at 77% of the doubt that the qualitative and quantitative parameters for liv- EU average price level, but only slightly more than 50% of the ing standards have approved dramatically. But the initial gap EU average wage (in comparison with Austria or Germany, it between the West and the East was surprisingly so deep that is about 30%). 25 years were not enough to bridge it totally. We simply need Therefore, a wage adjustment has to be a very substan- some more time to complete this real convergence game and tial and integrated part of the next convergence strategy. The to get closer to our benchmarks set in 1989. policy of higher wages undoubtedly represents an element Another parameter connects the acceleration of income to increase the self-confidence and eliminate the process of differences among different social groups and territories, a brain drain. But the high wages have to be based on labour point which is not broadly accepted by substantial parts of productivity and long-term sustainability. They have to be in the population. line with the macro-fundamentals and not erode the business The next steps have to be based on finalising the remain- competitiveness of the region. The strategy has to be based on ing and still necessary reform steps accompanied with better the improvement of business indicators where the Visegrad communication between the national leaders (not only politi- countries are still deeply lagging behind. It has to be based on a cians, but also natural and politically independent authorities) quantitative progress in the production value chains closer to and the population as a whole. In the Visegrad countries, com- the final costumer on the market. This is undoubtedly a move prehensive regional development also has to be reformed. The in the right direction, but it is not easy at all; it will take a lot already mentioned correlation between prosperity and social of time and considerable effort. Perhaps, this will be one of trust is starting to become visible in the capitals, or more gen- the biggest challenges for these countries since the transition erally in urban areas, but its presence is lacking still in much of period, which started almost 30 years ago. the countryside. The rural areas must be intensively included into this process, much more than they currently are. In the Visegrad countries, there is still a huge difference in the level of prosperity and social reflection between the cities and the villages, which is not the case in Western countries.

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There is also this proposal of one of the coalition parties to additionally raise the banking tax, which is partly relevant to the issue of the increasing wage 2 gap. The main goal of this measure, for better or worse, would be limiting the possible outflow of capital from the country which in the Czech Republic can climb as high as 8% of its GDP. In other countries, this rate is usually counter- balanced by the freedom of movement, people going abroad and bringing back money for consumption. But Czechs are not that mobile compared to other EU countries; they rarely decide to go work abroad, and thus cannot easily alleviate this ALEŠ CHMELAŘ income outflow. The chief EU analyst at the Czech Also, the FDI return in the Czech Republic is, depending Government Office and a Head of its EU on the model, from 2 to 3 times higher than in other European Strategy and Trends Unit Union countries on average. It is disheartening for people to see themselves generate value and receive no real compensa- We have worked on creating a picture of what can be tion. This corresponds to a feeling common among the general done since 2014; I will jump directly to the conclusion public that a portion of the wealth generated in the country and only then explain how we got there. We found is vanishing abroad. Usually globalisation takes the blame 1 out that the Czech economy has a dualistic corporate and, by ricochet, the EU; this has led to more and more of sector that leads to the middle-income trap. That is, there is a the Czech population becoming sceptical towards the union. large sector of finalizing companies with foreign direct investment (FDI) and rather high added value and apart from that Tax rates will not affect the phenomenon of brain- there is another sector of domestically owned companies that drain. The first thing to consider is that even after are in most part subcontractors in the middle of the produc- proposed tax changes, the Czech Republic would still tion chain, with significantly less assets. The thing is that when 3 suffer from this tendency when compared to neigh- you have only one labour market it tends to level the wages bouring countries, especially so when compared against the to the point that the wages in the latter sector drag down Western countries. Also, I do not believe that taxation is usu- the wages in the former. Therefore, the way to get out of this ally a motivating factor for leaving a country unless it goes stagnant situation is through focusing on the subcontracting absurdly out of proportion. The motivation for leaving the sector, and particularly on certain parts of the research and in- country is not that the tax rate is one or two percentage points novation sector. This can be done through structured support lower than in the country of origin, but rather that the wages of applied research in the companies, basically creating an of- are two or three times higher where one is headed. We ran fer targeted at small and medium enterprises in cooperation a study on the divergence of wages in particular sectors and with a development bank. It should lead to a higher retention professions, and we saw that the difference in earnings of the of the value from the FDI companies and increased competi- managers between European countries are larger than in pro- tiveness. Hopefully, what we will end up with are higher wages fessions which traditionally earn less. This points to a broader distributed evenly across the economy. problem, not limited to just specific parts of the economy. As to social cohesion, we have visited many countries in Brain-drain, however, does not affect Czechs that much Central Europe to offer tax policy recommendations for less as they are not a very mobile nation. There are instances of progressive systems. Now we can witness a worrying divide course, like in the medical profession, but it is a marginal phe- in the Czech Republic, there is only about 5 to 10% of the nomenon, unlike Poland, the East Balkans or Bulgaria where Czech population that belongs to the European middle class, virtually anyone who has any chance of succeeding abroad ei- and the rest can at best be ascribed to the Czech middle class ther thinks about or decides to leave the country. and those are two strata of society that diverge. There are real As to the risk of companies fleeing abroad in the aftermath problems with communication between those groups, and so- of introducing a more progressive taxation, I would not fear cial media has only made it worse, which has led to a growth that. When a country has this high return on investment it of distrust. It was particularly visible in the last presidential means the value is not generated in manufacturing or other election when the two camps were basically Prague’s elite vs. traditional industries, it is in the local consumption-based the rest of country. And one of the effective ways to fight such sectors, like energy or banking, and those cannot move away dangerous stratification is a very old one, i.e. work on progres- because the clients are there and there only. And we are not sive taxation. One of the paradoxes of the Czech tax system a country of traders and stock exchanges, we do not provide is that there is a limit for social contributions and thus the international financial services. Our financial sector is inward effective tax rate starts dropping when your income reaches looking, focused on local companies and households, and thus four times the average salary. I think it is high time for Central ready to comply. Companies leaving because of slightly higher Europe to drop the flat rate experiment and develop a standard taxes is, therefore, unlikely. progressive taxation system.

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THE LEGATUM PROSPERITY INDEX AUSTRIA AND V4 RANKINGS 2016

GLOBAL PI ECONOMIC BUSINESS SAFETY & PERSONAL SOCIAL COUNTRY GOVERNANCE EDUCATION HEALTH ENVIRONMENT RANK QUALITY ENVIRONMENT SECURITY FREEDOM CAPITAL 15 Austria 11 20 15 11 25 9 23 15 12

27 Czech Republic 26 30 34 24 27 27 28 78 32

34 Poland 37 45 36 33 47 21 39 85 46

36 Slovakia 46 49 48 30 46 23 43 86 34

47 Hungary 52 56 46 38 50 38 46 114 93

The Overall Prosperity Index Score ranges from 1st to 149th

SEVEN TAKEAWAYS FROM THE PROSPERITY REPORT

At the end of April 2017, the The prosperity level in CEE is much higher Legatum Institute – a London based 1 think tank known for their global than just the countries’ income level Prosperity Index – published a special report on the region. Here 2 The remarkably low levels of social capital is Visegrad Insight seven-point pulls down Central Europe and hampers summary of the report: prosperity

Improving the social capital level is a Full Central and Eastern Europe 3 Prosperity Report available at www.li.com condition for further improvement of public and www.prosperity.com services and governance

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GLOBAL PI ECONOMIC BUSINESS SAFETY & PERSONAL SOCIAL COUNTRY GOVERNANCE EDUCATION HEALTH ENVIRONMENT RANK QUALITY ENVIRONMENT SECURITY FREEDOM CAPITAL 15 Austria 11 20 15 11 25 9 23 15 12

27 Czech Republic 26 30 34 24 27 27 28 78 32

34 Poland 37 45 36 33 47 21 39 85 46

36 Slovakia 46 49 48 30 46 23 43 86 34

47 Hungary 52 56 46 38 50 38 46 114 93

4 The younger generations from the region are demonstrating higher levels of social capital, most likely gained from their experience abroad. That is why a “brain drain” – the permanent emigration of people in their 20s and 30s – is a challenge to confront

5 CEE should learn from the Estonian experience of improving bureaucratic culture by introducing the digital revolution, along with a simplified and user friendly experience

6 Civil society can do a lot more to boost active participation and overcome citizens’ apathy. It needs a predictable and rules-based environment to grow. In turn, it would be expected to shoulder more responsibilities and increase a cohesive society on domestic and international levels

7 A lot of promising potential in émigré diasporas that offer talent, experience and already a significant amount of economic power, and if their relationship with their country of origin is nurtured, it could boost prosperity

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f Maurycy Gomulicki: Golden Shower, Warsaw, 2016. Photo by Marek Krzyżanek, courtesy of Zachęta National Gallery of Art

THE GREAT LEAP FORWARD?

Central Europeans need to move away from the model of a cheap labour force and become leaders in innovation if they want economic prosperity to continue.

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TIM GOSLING

he Czechs are by far the happiest in the Viseg- state control of the economy. Hungary’s Prime Minister Viktor rad region, according to the World Happiness Orban is concentrating on regaining his constitutional majority Report 2016 anyway. They sit 27th in the world, at next year’s elections using his usual toolbox – a mix of con- which is topped by the usual Scandinavian and servative nationalism, cronyism and short term economic strat- Antipodean suspects. Around 20 places lower egy that has just seen corporate tax slashed and wages hiked. mope the Slovakians and Poles. Hungarians are Slovakia is still catching up with its peers on the basis of found sulking in the 91st position. the old model, and therefore has less motivation to rip up the It may be true that money can’t buy hap- strategy for the meantime. However, Bratislava has adjusted piness, but it’s unlikely mere coincidence that the (relatively) its tax policy to encourage higher-added value investment in Thappy-go-lucky Czechs have led the region in terms of eco- recent years, and is now working on schemes to help channel nomic prosperity since communism was cast off. The coun- state funding to entrepreneurial start-ups, mentioned Michal try’s GDP is close to 90% of the EU average. Polak from the country’s finance ministry. Some look far into the past for the basis of the Czech “The tendency of these governments [is] to run looser lead. Developed during the Habsburg Monarchy, industrial (more “populist”) fiscal policy,” notes Neil Shearing at Capital concentration made the western reaches of Czechoslovakia Economics. “Depending on the particular circumstances, this one of Europe’s leading manufacturing economies by the time can lead to a burst of growth; albeit one that is short-lived. In the of the First Republic in the early 20th century. long run, however, economic growth will inevitably suffer, for There are many other potential factors that may well two main reasons. The first is the perception that increased cen- play a role: geography, infrastructure or culture for instance. tralisation of power tends to undermine judicial independence However, the most convincing is stability, whether in terms of and can erode property rights; the second is that overseas in- institutions, policy, fiscal management or banking. vestment is deterred by the more hostile stance towards foreign “It would be hard to find a more stable economy in capital. Both of these factors will tend to depress investment.” the entire world,” suggests David Marek, chief economist at Andrej Babis is the best illustration of the political space Deloitte Czech Republic. the Czechs enjoy. The likely next prime minister is perhaps It’s no coincidence that investors simply ignore the com- the only populist leader in the world selling a form of austerity mon corruption and crises that have earmarked the Czech rather than handouts – no matter that he vehemently denies it. political scene over the past 25 years. The president may have While rival Bohuslav Sobotka is starting to aim at easy targets all but orchestrated a 6-month coup in 2013, for instance, but such as foreign investors and wages and pensions, Babis has Czech bond remained at record low yields. Compare that to been making hay from fiscal consolidation. the reactions of investors to controversial political events in Yet at the same time, an election year is no time for sys- Hungary and Poland in recent years. temic reform. The stability of Czech institutions, finances and Stability is the key factor that has separated the Czech banks is well established and does not look at risk, but whether Republic from its Visegrad peers, and by extension is the main the Czech government can take advantage of the uncertainty driving force behind the country’s lead in economic prosper- stalking its regional rivals to take a real leap ahead by modern- ity over the past 25 years. Given the current populist climate ising the economy looks far less certain. across the globe, that should be a huge competitive advantage going forwards, if policymakers can harness it to help main- GOLDEN HANDS tain that lead and accelerate convergence with the EU. Steps towards modernisation are becoming more urgent. The evident disappointment amongst Visegrad populations with the SPACE benefits of EU membership is just one of the mounting signs Visegrad has spent the last 25 years seeking to catch up with that the old economic strategy is progressively unable to deliver. western Europe based on one simple economic model: selling “The increasingly apparent labour shortages demon- cheap labour to foreign investors to assemble goods for ex- strate that the growth model based on cheap skilled labour port. It’s time for an update, and not only because protection- and FDI is largely coming to an end in Eastern Europe,” states ist policy is rising across the globe. Evghenia Sleptsova at Oxford economics. Looking longer term, the shift in global economic power Ironically, given the hostility to immigration across that was flagged by the crisis sparked in 2007 has not gone away. Visegrad, the response thus far has been to import labour from The traditional leading nations in North America, Western Ukraine. It’s a solution that’s clearly short term, but how to Europe and Japan will continue to lose their advantage over leap into the modern age when you’re still catching up with emerging markets. Meanwhile, technology and automation is most of Europe? undermining traditional industry and labour markets. Some issues are obvious and headline click bait: develop The Czech Republic has the strongest base in Visegrad to the e-economy and digital infrastructure. But ask Estonia, ride that wave of change. It also has the most political space, which suffers from perhaps CEE’s most acute labour shortage which is a pre-requisite to roll out the necessary long-term despite having crafted a reputation as a global tech hotspot, strategy. Systemic reform is the antithesis of the populism tak- how that’s worked out. ing hold across Europe and the US. The details are more prosaic, longer term, and harder to Poland’s PiS government is busy building a nationalist pin down, especially for electorates yearning for a higher qual- project centred on handouts to the population and increased ity of life.

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Further than that, the necessary revolution means coun- second highest on the continent, total retail turnover, infra- tries need to adapt traditional ways of thinking about them- structure and other vital building blocks are lagging. selves. The Czech Republic’s success over recent decades Prague has now appointed a coordinator for the digital could hold it back. economy, but Tomáš Prouza must split that role with his job “The country has a strong industrial pedigree, and is right- as Secretary of State for European affairs. SPIR complains that ly proud of it,” suggests Gunter Deuber, head of CEE research the development of the high-speed internet is stunted, with at Raiffeisen Bank International. “That tends to mean the coun- just 7% of companies connected to a network that rarely ven- try is too focused on classical industry. It’s an intellectual chal- tures far from the major cities, while access to mobile data is lenge they need to overcome to move forwards. Does the Czech pricey and e-government remains in its infancy. Republic need to concentrate resources on twentieth century physical infrastructure or e-connectivity?” TAXATION WITHOUT INNOVATION That’s a debate going on right now in Germany; a country Policy at national level is the key, and there are several obvious whose supply chain provides a huge chunk of the export de- but mundane obstacles to pushing the economy up glamorous mand that keeps Czech factories – and the economy - running. global innovation rankings. “Central Europe’s great dependence on German trade Tax, labour and pension policy is perhaps the most com- and investment poses risks for economic development,” writes mon issue mentioned by analysts. “It’s not just the stronger base Konrad Popławski at the Centre for Eastern Studies (OSW). that is making Czech convergence with the EU slower than its “First, Germany specialises in exporting capital goods based on peers,” claims Marek. Prague should take note of tax and pen- traditional industrial companies. German companies have still sions reform in other countries of the region, he suggests. not shown any significant successes in the IT sector, which may In particular, the Czechs could consider shifting the tax determine the strength of the economy in the future. Secondly, burden away from labour to indirect taxes such as VAT and the role of Central Europe as an assembly plant for German excise. “Indirect taxes are less evil for the economy,” Marek companies is linked in the medium term with the risk of losing notes. “High taxes on labour or capital can create negative that position to countries with lower production costs.” motivation for work or entrepreneurship.” That’s a key point. Not only does the Czech Republic Czech income tax sits in the middle of the European need to shift its strategy if it wants to catch up with countries scale at 15-22%, while the average salary of $21,689 in 2015 to the west, but it risks losing ground as its competitive advan- stood around half that in the OECD. Corporate tax sits at tage is usurped by the east. 19% - not the lowest, but still 2 percentage points below the “We need to add more working heads than hands,” states European average. Marek. In other words, “golden Czech hands” must give Yet companies don’t worry so much what employees take way to “clever (golden) Czech heads”. home, but what they cost. The Czech Republic tacks 28% in social insurance onto that average wage, and the overall tax IN SPITE OF THE STATE wedge on labour is the third highest in the EU. The likes of Indeed, Prague can’t change the structure of the economy Slovakia have already made moves to shift some of that burden overnight, but it needs to add continually to what it’s already to indirect taxation. good at by evolving the model of the 20th century. But again, While the Czech labour tax wedge still sits lower than that’s a tough political move. Despite the relatively strong France and Belgium, the country can’t compete with Western economy, the political climate couldn’t be more hostile to Europe in terms of modern infrastructure and technical ad- questioning tradition. vancement. That leaves the Czech Republic lagging in terms of Prime Minister Bohuslav Sobotka has hinted he could the competitive advantage it can offer to attract higher added introduce special taxes for certain large, foreign-owned com- value investment. panies, similar to those in Hungary, Poland and Slovakia. It The high relative cost of labour makes it harder for com- seems likely that such talk is little more than pre-election rhet- panies to justify basing higher paying, more skilled jobs in the oric, but it still dents the country’s image for investors seeking country. That’s especially the case if they have to pour money a home for higher added value operations. into training ill-prepared employees. Several analysts suggest However, the PM also announced in December that a tax breaks or subsidies should be on the table for companies long term economic strategy is finally on the way. The Czech ready to do just that. Republic will have to leave the growth model based on foreign Tax incentives could also be offered to companies ready investment and low wages, and enhance domestic businesses, to invest in R&D rather than the simpler assembly operations in particular SME’s, he stated. that dominate FDI in CEE. At the same time, local innovative But Prague is also wary. A recent report warned that SMEs and entrepreneurs could do with more encouragement. Industry 4.0 – essentially automation and digitalization – Prague might do well to look to the Nordic coun- could cut 140,000 jobs by 2025, and the country has some way tries, which crowd into the top ten of the 2017 Bloomberg to go towards any modern industrial revolution. Innovation Index. “The incentives are there and the tax system The Czech Republic stood 17th in Europe in the 2017 favours [innovators],” claims Magnus Henrekson, director of Global Innovation Index, and even those segments that are Sweden’s Research Institute of Industrial Economics. making progress claim to be doing so in spite of the state. The Association for Internet Development (SPIR) said HUNTING ANGELS in January that although Czech companies are amongst the Czech innovators also need better access to funding. While the biggest users of the internet in Europe and online sales are the country improved in several other categories in the World Eco-

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nomic Forum’s European Innovation Scoreboard 2016 – such curriculum by nationalist governments, education in the as patent revenues - venture capital investment dropped 30%. Czech Republic is also going backwards. The banks are not a great source of finance for innovative Surveys reveal declining results at schools, and no gov- companies. The stability of the Czech banking sector has been ernment since the fall of communism has taken education a major boon for the economy over the past 25 years, and the reform seriously. The Czech Republic advanced three places country is regularly described as the perfect banking market: overall in the 2017 Bloomberg Innovation Index to 28th out of “boring”. But such sobriety only makes it even more difficult the world’s top 50 innovative economies, but still trailed both for small and innovative companies to borrow. Poland and Hungary, and placed a lowly 38th for education. That leaves the EU to step into the breach. The European “Today, in the ICT sector, there are around 140,000 peo- Investment Bank announced on January 17th that it will make ple working,” Prouza says. “That number is rising very fast as €100m in financing available to Czech SMEs to promote in- Czech companies digitalize and modernize and as start-ups novation, with another €160m to be spread across CEE. begin to develop and grow. All that means that we are going to “The operation will allow for a significant increase in fi- need a much bigger workforce and a different type of qualifica- nancing to innovative companies to fund their working capital tions and capabilities than what we have been used to in the and long-term investment needs, particularly in the areas of past. Everyone knows that we are lacking tens of thousands research, development and introduction of innovation in proof IT experts.” duction,” the development bank notes. The American Chamber of Commerce in the Czech “Innovation is a driver of economic growth,” EIB Vice Republic called for several measures in education reform as President Vazil Hudak points out. “Yet access to finance is well as training incentives in a recent paper. “Innovation in scarce in this particular segment.” manufacturing could be assisted by providing training subsi- Slovakia – ironically the one Visegrad economy to see dies or tax breaks for retraining the existing workforce when incoming investment maintain a healthy level in 2016 – seems improving or expanding production lines,” the document to be grasping the point. Speaking at an event hosted by Erste reads. Meanwhile, the government should put its still con- Bank to boast of a new ‘social banking’ unit that will seek out siderable role in the economy to work, the paper continues. entrepreneurs to fund, the finance ministry’s Polak joined the Public research money should be allocated to basic and ap- scepticism displayed by business incubators that commercial plied research related to the development of the next genera- banks can take on the necessary risk. Contrary to the calls of tion of company products. This research will likely require the the bankers present, he insists the state must take the lead for import of leading researchers who will both conduct research now on channelling funding to smaller projects. and educate graduate students. Bratislava is on the same page. The government says The issues stem not only from the government side, it sees the problem, and wants to put EU and state funds to however. The PwC survey notes that old school management work. The economy ministry is “thinking about introducing approaches dominate in CEE. “[B]usiness leaders also face a new, previously unused forms of help, such as support via an- challenge that’s human, not technical:” the report states, “the gel investors or non-financial aid” for innovative start-ups,” need to address the different motivations and ways of working reads a report discussed by the cabinet in January. embraced by employees from the Millennial generation.” Still, governments need to stimulate private funding. Managers in CEE need to become more comfortable Financial markets in CEE remain under-developed, meaning with employees that have the skill sets needed, but may be venture capital and angel investors are scarce. Reform is need- outside the office or even the company, the survey says. A full ed to improve legislation on setting up venture capital funds 86% of regional CEOs report that it is “somewhat … or very says Marek, and again, incentives should be offered. difficult” to recruit people with leadership qualities. Reflecting that old-school approach, the Deputy OLD SCHOOL Chairman of the Czech Association of Exporters, Otto Danek, Financing matters little, however, if investors can’t find skilled recently called for prejudicial state poliwcy. Students of engi- staff for innovative operations. neering disciplines should continue to enjoy free university, A worrying 76% of CEOs in CEE cited availability of key he said, but those working in “unnecessary fields” should pay. skills as the top threat to growth prospects in a recent sur- The suggestion illustrates the difficulties of systemic- re vey by PwC. “As technological change drives changes in the form. It’s a short-term reaction to a tricky, long term challenge. way companies work, automating old processes and creating The Czech economy needs technical graduates right demand for new skills, the war for talent is intensifying,” the now, and companies persistently complain about a lack of report reads. qualified candidates. But there are two potential problems in A growing labour shortage is already viewed as a ma- elevating one strata over another, rather than improving the jor threat to investment and economic growth in Visegrad. quality and the relevance of education to a modern economy Unemployment in the Czech Republic dropped to an EU-low across the board. of 3.6% in 2016. On the one hand, who can pinpoint the specific require- However, governments are wary of embracing the chal- ments the economy will have in the coming decades? On the lenge. Sobotka has admitted education needs to react to other, state education should aim to turn out skilled critical changes on the labour market, but he also warned that if new thinkers in all disciplines; anything less could produce a far jobs are not created, “the processes of robotisation and digita- bigger problem than a labour shortage; a vicious circle in tion may threaten employment”. which economic stagnation and increased inequality puts the While the country has avoided the teachers protests fundamentals of liberal democracy at even greater risk. across the rest of Visegrad against the dumbing down of the

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CHANGING MINDS ECONOMIC MODELS

PETR TEPLÝ FOR VISEGRAD INSIGHT

What What are the real reasons for the very sensitive to business cycles. Besides other along the value chain. The concept economic stability and growth in the this low sectoral diversification, the Czech will affect two main areas of develop- Czech Republic over the last few years? economy is also facing low geographical ment: intelligent factories (based on Since there have been no recent internal diversification since two thirds of exports Cyber-Physical Systems) and the service imbalances in the Czech Republic, this has go to the Eurozone and one third to Ger- sector (big data technologies, the Inter- lead to a stable economic environment. many. Czech exporters are reacting to this net of Things and Internet of Services This positive trend has been influenced by situation and are looking for new trade etc.). Obviously, this is a long-term plan. the following conditions. First, the increase opportunities in “emerging” territories At the same time, several Czech in household consumption is being fuelled such as Africa or Latin America. At the companies are able to withstand fierce both by the growth in employment as well company level, many firms have set up global competition and are showing oth- as more supportive fiscal measures. Sec- innovation hubs to find new growth op- ers the possibilities for future growth. ond, exports are increasing due to the solid portunities. For instance, ŠKODA AUTO, AVG, a security software pioneer, and economic performance of Czech trade a famous Czech car manufacturer, estab- Avast, a company offering antivirus partners and by the weak value of the Czech lished the ŠKODA Digital Lab last year in software, are the country’s two technol-

INNOVATING THEIR WAY TO THE FUTURE, THE CZECH REPUBLIC’S STRONG ECONOMIC PERFORMANCE MAY NOT BE A DECADE-LONG BUBBLE BUT A SIGN OF THINGS TO COME crown. Third, there has been solid growth order to follow recent developments in ogy unicorns. Moreover, Jablotron, a in the rate of fixed investments mainly due the automotive industry (diverse mobility, company producing security devices to a higher absorption of EU funds. Fourth, autonomous driving, electrification and and mobile phones, and Linet, a major expansionary fiscal policy has contributed connectivity). European manufacturer of hospital and positively to economic growth. In 2016 The Czech economy is a small, open nursing beds, have been expanding into alone, the domestic and external demand and export-oriented market primarily international markets successfully with- was favourable for local industries (mainly based on skilled, low-cost manufacturing. out any significant government support. for the manufacturing industry). All these It is not a sustainable business model and Last but not least, Delong Instruments factors are supported by sound public fi- this comparative advantage will not last and TESCAN are top-ranked global sup- nance and a stable banking sector, which is forever. The economy needs to upgrade pliers of electron microscopes. well-capitalized, liquid and profitable. in the global value chain: either through higher value added production or moving Is, according to your opinion, the Czech Is the Czech economic dependence towards the service sector. Consequently, economy too dependent on Germany’s? on the manufacturing and automotive the Czech government has reacted to this Yes, one third of Czech exports go to industries dangerous? Do you see any situation and approved the “Industry 4.0” Germany, which is a high percentage attempts to find new sources of growth concept in August 2016, which follows the and understandable for several reasons for the future? German “Industrie 4.0” concept reflecting (proximity, socio-cultural factors, etc.). Yes, it does pose a risk as having such high the ongoing Fourth Industrial Revolution. The Czech economy, like many others, dependence on any one industry can be is small, and therefore cooperates with a double-edged sword. On one hand, the Where would you see such possibilities stronger partners, who have opened the Czech economy is well integrated into the for future growth? Where might be new global market for Czech exporters. Let international (German) production chain areas of development? me mention one paradox that happened and the auto industry with a share that is The above-mentioned Industry 4.0 con- during the 2007-2009 crisis. Many Ger- approximately 20% of total exports serv- cept encompasses the digitalisation of man exporters reacted by implementing ing as an engine of growth recently. On production processes based on devices strategies, most notably through cost sav- the other hand, it makes our economy autonomously communicating with each ings, and demanded more supplies from

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“cheap” Czech exporters, which para- Germany while Czech labour productiv- Can innovation help Central European doxically helped the Czech trade balance. ity is about half of their western neighbour. economies leapfrog from being cheap The Czech Republic reports a high This gap should close in time (in econom- sources of labour to mature economies share of industry (38%) and a low share of ics we call it beta-convergence). Math- on par with other, more established services (60%) on Gross Domestic Product ematically, if we assume that wages in countries in the EU? (GDP), which makes it more vulnerable to Czech Republic grow by 2% faster than in Yes, innovations might help to change economic shocks compared to the better- Germany, such a gap will close in 35 years the pending low-cost business model of diversified German economy. Some read- (a 5% increase would close the gap in 15 Central European economies. In terms ers might be surprised that the Czech years). These calculations –although sim- of innovation, most Central European economy is more similar to the Polish plified since assuming constant productiv- countries are rated by the European economy rather than the German one ity growth in both countries- illustrate a Commission as Moderate Innovators im- (based on the Landesmann index meas- long-term horizon of closing the gap. plying their level is below the EU average uring structural similarity of economies). innovation performance. However, many This also implies a higher risk of asym- There is growing criticism in Central Eu- Central European scientists are neither metric shocks resulting from the single rope of foreign companies which take, properly motivated for closer coopera- monetary policy in the Eurozone. This according to some opinions, too much tion with businesses through applied re- relatively low structural similarity of the money out of daughter companies and search nor for developing innovations. Czech economy compared to the Eurozone countries in the region. Finance is then The system of research and develop- consequently brings another potential risk missing when considering future local ment (R&D) financed in many countries with regards to adopting the Euro. investment and can also contribute to needs to be updated. Fortunately, there lower wage levels. Are countries like the are several government and non-gov- Currently, what is the biggest danger for Czech Republic giving too much too eas- ernment initiatives to spur innovations the Czech economy? ily to foreign investors in this sense? and to shrink the innovation gap in these The current key risks are external since I Foreign investors invest abroad in order economies. For example, the Technology don’t see any significant internal imbal- to make money. If they see profit poten- Agency of the Czech Republic (TACR) ances of the Czech economy yet. A global tial in a company, these investors reinvest has been administrating the Innovation slowdown or changing growth patterns in the profit. If they do not, they ask for the capacity 2014+ (INKA) project that maps key export partners would negatively af- invested money back (usually through the national innovation landscape. Based fect Czech exports through value chains, dividends). Let us have a look at the case on this project, the TACR can identify however. As a result, GDP growth could of the Czech Republic, where capital out- demand for research results in the busi- deteriorate. flows are estimated at EUR 11 billion (6% ness sector – indicating what kind of re-

INNOVATING THEIR WAY TO THE FUTURE, THE CZECH REPUBLIC’S STRONG ECONOMIC PERFORMANCE MAY NOT BE A DECADE-LONG BUBBLE BUT A SIGN OF THINGS TO COME

Apart of these external risks, one of GDP) annually. There are three main search should be performed and which theoretical internal risk might material- reasons. First, the Czech Republic used instruments of state support are most ize. In 2017, the Czech National Bank´s to serve as “The Gateway to The East” for suitable. Moreover, the South Moravian foreign exchange intervention – which investors from Western Europe, which is Innovation Centre (JIC) based in Brno was launched in November 2013 to meet not the case anymore. On the other hand, initiates cooperation between research- the 2% inflation target – is expected to the Czech Republic has served Chinese ers and companies, which will be the way end. If the withdrawal of the stimulus investors as “The Gateway to The West” for the future. Sometimes these universi- is sudden and not fully absorbed by the in recent years. Second, some investors ty-industry-government relationships are markets, the Czech crown might become suffer from labour market shortages called “the Triple Helix”,. very volatile for a short period of time and skill mismatches, which pose risk Besides supporting innovations, and cause uncertainty. Moreover, a sig- for medium-term growth prospects. Fi- structural policies addressing the labor- nificant appreciation of the crown against nally, some investors can achieve higher market shortages and raising productiv- the Euro would hurt exports and hence profits in other countries than in Czech ity are needed (e.g. expanding childcare, the GDP growth of the Czech Republic. Republic. increasing incentives for business R&D, It is also a political issue. Politicians and reducing entry and exit barriers for How long can the Czech Republic and may impose or increase various taxes that firms). We cannot expect that Central other Central European countries rely make capital outflows less favourable (e.g. European economies will change their on lower wages as the main attraction sectoral tax or higher tax on dividends). model immediately, but they can create for direct foreign investment? To illustrate this let me mention that the a business-friendly environment that will It’s difficult to say, but let me take a stab at Social Democrats, a Czech political par- encourage adapting to future innovations it. As discussed earlier, the recent model of ty, proposed a sectoral tax on banks this and trends. Central European countries – which has February. A dividend outflow worth EUR been based on skilled, low-cost manufac- 17 billion in last 14 years from banks in Petr Teplý is an economist and lecturer at turing – is not sustainable. In comparison, the Czech Republic to their parent com- Charles University and University of Economics the current wages in the Czech Republic panies in Western Europe was listed as in Prague. are approximately one-fourth those in one of the reasons.

21 ECONOMY PROSPERITY IN CENTRAL EUROPE CLOSING THE WEALTH GAP IN CENTRAL EUROPE

f Maurycy Gomulicki: Midas, Warsaw, 2016. Photo by Marek Krzyżanek, courtesy of Zachęta National Gallery of Art

22 VISEGRAD INSIGHT 1 (10) | 2017 PROSPERITY IN CENTRAL EUROPE ECONOMY CLOSING THE WEALTH GAP IN CENTRAL EUROPE

MACIEJ KISILOWSKI FOR VISEGRAD INSIGHT

What path of development should Central Europe choose once the flow of European funds is cut or severely reduced? But why should we resign ourselves to thinking it must be cut? If our primary aim, our national or regional interest, is for our economies to catch up with the West, then we should do everything possible to prevent the funds from being cut. Ob- viously, this requires a less confrontational foreign policy. At some point, we should ask ourselves what we – Poles, Czechs, Slovaks, Hungarians – really want. Do we want Western-style prosperity or is our true ambition to become the “messiahs of Europe” ushering in new alternatives to liberal democracy? You cannot do both these things at the same time. Looking at the political debate in our region, I am shocked that its participants – from the left to the right – have so little genuine interest in economic development. Politicians and journalists do mention the need for growth, but it is clear they feel so much more at ease debating social, ideological, cultural or even constitutional issues. Meanwhile, the average Central European family earns over 3.5 times less than the average German family! All other areas of our policy debate should be subordinated to the strategic goal of dealing with this monstrous chasm.

Let’s talk about the economy then. The European Commis- sion’s prognosis for the Polish GDP growth rate in 2017 is 3.2%. For Hungary this rate is 3.5%, for Czechia 2.6%, and remaining close to 3% for Slovakia. Should we be satisfied with these numbers? What growth rate does Central Europe need to really push forward? Well, it is surely better than zero [laughter]! Seriously, the glass is always half-full and half-empty. But let us keep in mind that our geopolitical situation is perhaps the best in our entire history, that we receive tremendous amount of aid from the EU, that our societies are educated and hard-working. Taking it all into account, we should aspire to more than a growth rate satisfactory for the developed economies of Western Europe. We should aspire to closing the income gap between us and West- ern Europe within one generation! This would mean growth that we saw in Ireland or South Korea – from 6 to even 9–10 % per capita. This, however, would require enormous political and social mobilisation. It is no wonder that a jump in growth is usually achieved by small countries – Singapore, Ireland, Israel – that can effectively align their societies around their development strategy.

23 ECONOMY PROSPERITY IN CENTRAL EUROPE

It is also worth noting that starting the discussion with ferent myths or paradigms, like the conviction that it is good the GDP growth figures is actually not particularly reasonable. to support small and medium-sized enterprises in each and High growth is only a consequence of an attractive and inter- every situation. From a strategic management perspective, nally consistent strategy. This is not only the case with coun- our favourite regional pastime of copying individual Western tries, but also with successful corporations. Bill Gates or Steve practices is particularly problematic. Specific policy solutions must fit your overall strategy, which means what will work in one country may not work in another.

When we look at it that way, we may face Does the same apply to strategies for metropolitan even more fundamental questions. areas? Of course. Every town and city in our region can and should work out its own consistent, competitive strategy. Jobs did not start by declaring “I want to be very rich.” They Sibiu in Romania is a good example. A little more than a dec- began with a compelling idea for adding value to the global ade ago it was one of the poorest Romanian cities. But under economy – for developing something people will want to buy. the leadership of mayor Klaus Iohannis, currently the presi- Becoming rich came almost as a by-product of this creative dent of Romania, the city and its surrounding county decided strategic idea. Our countries must think the same way: what to take advantage of Sibiu’s German roots to redesigned itself is it really that may make Poland, Czechia, Slovakia, Hungary as the Romanian “little Berlin.” Together with Luxembourg, competitive – beyond cheap labour? Sibiu was the European Capital of Culture in 2007. The his- When we look at it that way, we may face even more fun- torical centre was meticulously renovated, and a new airport damental questions. In case of Poland, for instance, perhaps terminal was constructed. The city invested a lot into organ- the country is simply too large and too economically and so- izing cyclical cultural events, occupying the niche of so-called cially heterogeneous to have just one development strategy. event tourism. Other Visegrad countries may, in this sense, be better posi- Of course, in such a model you must do something with tioned to repeat the success of Ireland or Singapore. Of course, the new hotel base that is being constructed. So the second, this is said assuming that their governments concentrate on synergic leg of Sibiu’s strategy has been to attract German in- developing and supporting a compelling strategy for building a dustrial investments. There were less than 1% native Germans high-end, knowledge-intensive economy – and not on pursu- in Sibiu, but it had a German school and theatre. The city used ing exotic political projects like illiberal democracy. these institutions to promote itself as a place with good living Meanwhile in Poland, the only way out of the current conditions for German-speaking expats. Today Sibiu is one of stalemate may be through creating a basket of mutually sup- the richest cities in Romania. The local airport does not have portive regional strategies. A strategy may be written for an a flight connection with Bucharest, but Lufthansa flies there area that has common values, popular support for a given de- from five cities in Germany. velopment path and of an adequate size for creating a globally The example of Sibiu shows that, obviously, a good strat- attractive innovation cluster. egy has to build on the unique resources of a given city or region, and also that it can be directed in very different ways. So, is it worth to pursue thinking about development of mili- For instance, Warsaw has a relatively well developed finan- tary production in central Poland or creating an aerial valley cial sector and a highly convenient city airport, and a popula- in the south-east of the country? tion that is able (and willing!) to speak English. Could this be This is a question for industry experts. In “Administrategia,” the basis for building a strategy of attracting headquarters of my recent book about strategic management in the public- Western corporations, for example from London? Perhaps, sector institutions, or during workshops with central and local but this would require steps like introducing English as the government officials, I am careful to avoid questions in the second working language of public administration in the city vein of “What should be our strategy?” Strategic management and investing in local cultural infrastructure accessible to ex- is a set of practices that help experts formulate and implement pats. Kraków, Prague and Budapest could strive to become the effective strategies. It is a fishing rod, not a fish. Central European academic centres. Of course, in the case of Thus, what I can say is that a good strategy is not a silver Budapest, we are seeing the reverse trend, connected with the bullet, one “great idea,” but rather a puzzle of mutually sup- intensive efforts of the government to chase my own, global portive elements that add up to a compelling story. Ireland university, CEU, out of Hungary. That is a poignant example decided to become the best location for European headquar- of how we, Central Europeans, often undermine our own de- ters of American corporations. Almost every are of Irish pub- velopmental opportunities. lic policy – from tax system to education and the way they spent the EU money – was aligned with this strategy. Israel Indeed. What about the characteristics of the region? Dur- bet on small and medium-sized enterprises developed in ing the recent Visegrad Innovators Summit, Professor Mari- close connection with enormous military spending. When anna Mazzucato played first fiddle. She argued that there building development strategies, you must contend with dif- was a need for a more active role of the state in the econo-

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my, but the examples she cites are all from Western Europe something that is not broken and leaving really broken things and the USA… alone. That is a textbook example of how not to do strategic Mazzucato is obviously right, but the context in which she innovation. makes her argument is indeed very different. In the UK and But governmental innovation goes beyond an individual the US, public sector institutions are generally very well man- type of public service. It is about creating a consistent, smart aged and the challenge is mostly to convince the societies environment for businesses to grow and be competitive. It that government should play a more active role in people’s is about Sibiu reinventing itself as “little Berlin” and taking lives. That’s what Mazzucato does, and very aptly. In Central hundreds of initiatives, big and small, to support this vision. Europe, however, the situation is precisely the opposite. For We need a lot more of such bold visions if we really want our Poles, Czechs and Hungarians, partly because of our socialist children to live in a second Ireland and not only in a campaign legacies, an active state is not so much a controversial aspira- ad about second Ireland. tion. We may want better public health care or education, or less bureaucratic regulations, but very few Central Europeans For the moment, we are witnessing the centralisation of want to experiment with wholesale privatisation of key public state power. The subsequent governments will not resist services or with aggressive deregulation. So, when she speaks this temptation easily. in Warsaw, Mazzucato is largely preaching to the choir. The We need to work at the roots here. Politicians and civil serv- key problem is not to convince people to the entrepreneurial ants are by and large rationally self-interested creatures. This state but to improve our governmental institutions so that is why, our key task is to convince them that strategic govern- they can actually get there – to become modern, knowledge- ment is not only in the interest of our nations or the region, intensive organisations. but also in their personal interest. My co-author and I recently In “Administrategia,: we argue that just focusing on ef- trained a group of elected leaders of local governments. Our ficiency – faster, better, more – is not enough. Using modern message was not about what I just told you – the fate of our strategic management tools is key. Only with a clear direction children. Instead, we simply said: “Strategic management will and the courage to select priorities you can create a context in allow you to run in the next election with a campaign slogan which creative ideas emerge. more concrete, more original, more meaningful, and ultimately more effective than the omnipresent »Let’s make our town So, what does it mean for a country to be innovative in Cen- friendly!«. Even if you lose, a strategy that you have success- tral European practice? fully developed and implemented will become your personal On the one hand, this is about a radical improvement of the brand and help you find a well-paid job outside government.” quality of our public services. We need innovative thinking In short, we must convince politicians that if we have not only here because we want good schools, courts, and hospitals, just a little larger cookie but maybe a whole cake to share, eve- while having at our disposal only a fraction of the funds richer ryone will benefit. countries can spend in these areas. The importance of strategic choices is clearly illustrated in the Polish example. Poland The conversation was originally held in Polish struggles with problems in many areas of public service. On and translated by Aleksandra Małecka. the European Health Consumer Index, the Polish health care system ranks fifth in Europe… Fifth from the bottom! But our Maciej Kisilowski is an Associate Professor of Law and Public Manage- general education is actually one of the better systems in the ment at the Central European University and the co-author of the book OECD. So, what did our government decide? They focused Administrategia, published in Poland by Studio EMKA, in Hungary by HVG almost all their energy on a highly ideological, disruptive re- Kiado, and in Romania by Curtea Veche. form of… general education. They are, in other words, fixing

25 ECONOMY PROSPERITY IN CENTRAL EUROPE &

DEBTDEMOCRACY

In the current phase of capitalism, democracies’ biggest challenge is to cope with multiple debt crises under the terms set by creditor states. In this situation, the democratic centre does not hold.

DOROTHEE BOHLE

THE ROLE OF DEBT IN RECONCILING either by material compensation for the losers through the CAPITALISM AND DEMOCRACY expansion of the welfare state – as it happened mostly in the The relationship between capitalism and democracy has al- Visegrad countries and Slovenia, or by identity politics char- ways been a problematic one. In a recent book, Wolfgang acteristic for the Baltic States. Streeck has argued that it was only under the exceptional cir- Both solutions were however precarious: countries that cumstances of the post- World War II period that the tensions expanded their welfare states risked becoming heavily indebt- between the market logic with its relentless pursuit of profit ed, and in countries where governments relied on identity and private gains and the collective logic of democracy with its politics, the social question came to the fore. From the 2000s concern for safety and security of citizens could be reconciled. onwards, we see therefore also a major expansion of private This was because markets were tamed through wide-spread debt, mostly in form of mortgage debt. regulations, and democratic polities were including citizens not only as voters but also as producers in corporatist settings. THE DEBT CRISIS TURNS INTO Since the crisis of this model in the 1970s, politicians have A CRISIS OF DEMOCRACY mostly been “buying time”. States took up public debt to fi- Consequently, the global financial crisis ushered a major nance increasing popular needs for welfare services, or ena- debt crisis in many countries in the region, and it is this bled citizens to take up private debt, this way allowing them debt crisis and the ensuing creditor-debtor relationship that to consume more than their meagre wages would allow. The provide fertile ground for democratic backsliding and rising recent global financial crisis has put an end to this, and it is populism. unclear how democratic capitalism will survive. The Hungarian case is a good example. In 2010, Fidesz Streeck made his argument for Western democracies, came to power with a promise to end IMF imposed austerity. but it travels well to East Central Europe. As Claus Offe has Soon, this stance developed into a debtor’s revolt. In his 2011 argued early on, these countries have faced a particular di- State of the State address, Prime Minister Orbán declared lemma, as they needed to create capitalism and democracy “war against government debt” with the aim to get out of the simultaneously. He was therefore very pessimistic about the EU’s excessive deficit procedure. The government also severed prospects of democratic capitalism in the region. Yet, until its ties with the IMF, and staged a major fight against the banks recently, democracies in East Central Europe have been more in order to end “debt slavery” of millions of people who had resilient than assumed. How could the tensions between capi- taken out mortgages in foreign currencies. talism and democracy in the region be bridged? The debtor’s revolt occurred in the name of the peo- Interestingly, in a very similar way as in the West. Thus, ple and national sovereignty. For instance, in a speech at the the breakdown of socialism and the transformational reces- National Assembly in 2013, Viktor Orbán declared: “The sion of the early 1990s led to a dramatic weakening of organ- banks… must get used to the new situation. Now we are the ized interest groups, and located the struggle between markets stronger ones and they must adapt to the Hungarian people. and distribution solely in the electoral arena. Democratic le- Nobody is going to gain extra profit at the expense of the gitimacy of the capitalist project could initially be maintained Hungarian people ever again. The era of colonization is over.”

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FIGURE 1: PUBLIC AND HOUSEHOLD DEBT IN FIGURE 2: PUBLIC AND HOUSEHOLD THE VISEGRAD STATES AND SLOVENIA DEBT IN THE BALTIC STATES

70 70

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50 50

40 40

30 30

20 20

10 10

0 0 2011 2011 2010 2010 2012 2012 2001 2001 2007 2001 2007 2002 2003 2004 2005 2006 2008 2009 2002 2003 2004 2005 2006 2008 2009

public debt household debt

and their supporters as forces allied with creditors, and thus The above figures show the two patterns characteristic for East as enemies of the people. Central European countries. In Slovenia and the Visegrad countries, Thus, the Fidesz rhetoric seeks to cement the unity of public debt somewhat decreased but stayed on a high level and the Hungarian nation by a relentless propaganda against household debt has increased moderately over the 2000s. In the “Brussels”, foreign banks, non-governmental organizations three Baltic States, public debt which was very low to begin with (NGOs) and the Socialists, who are blamed with being respon- decreased further, while household debt skyrocketed. sible for the debt crisis. Third, a debt crisis can offer a welcome opportunity to

Percentage of GDP, data for public debt Eurostat, challenge external checks and balances. If creditors and in- for private debt: European Mortgage Foundation ternational organizations impose harsh and arguably unjust conditions on debtor countries, then surely other areas of intervention and conditionality also come under scrutiny and While the debt crisis does not explain Hungary’s dem- can easily be discredited. ocratic backlash, it has provided fertile ground for it. I see A debtor revolt, like what happened in Hungary, does three reasons for this. First, debtor-creditor relations pit however not necessarily have to be anti-democratic. The at- states against states (or the EU). The creditor countries or tempted Greek revolt under Syriza is a good case in point. International Organizations impose strict conditions on in- While Syriza is often labelled a populist party, in contrast to debted countries, which have dire consequences for large parts Fidesz, it is not anti-democratic. In this context, it is interest- of the population and are often also humiliating. Under these ing to note that while the EU has so far tolerated Hungary’s conditions, entire populations are mobilized against each revolt and its democratic backsliding, this was not the case other: in creditor states, the “lazy Southerners” are blamed in Greece. The Greek revolt was crushed, and with it a hope for their fate, while in debtor states, a heightened sense of vic- that democratic forces can change the humiliating conditions timization can evolve. In this way, intra-country distributional of debtor states. struggles and responsibilities can be projected into the inter- Of course, debt can also be paid back, and conditional- national arena, as happened in Hungary. ity be embraced, as was the case in Latvia. However, this was Second, and closely related, a debt crisis provides for ex- only possible because of the exclusionary nature of Latvian de- ternal and internal enemies that can cement the imagined uni- mocracy, where the political party that opposed austerity was ty of the “real” people as against a democratic understanding always excluded from government because of the country’s of citizenship. As Jan Werner Müller argues, populists claim ethnic divide. Overall therefore, I conclude that in the cur- that they and they alone represent the real people, and not all rent phase of capitalism, democracies’ biggest challenge is to citizens are part of the real people. In addition, political com- cope with multiple debt crises, under the terms set by creditor petitors are turned into enemies of the people. The definition states. In this situation, the democratic centre does not hold. of who is the “real people” is also always a moral one. Debtor- creditor relations can give substance to these claims, as they The author holds a chair in social and political change at the Department can easily be turned into a fight against the “bad”, or “arrogant” of Political and Social Sciences at the European University Institute, Flor- creditors in the name of the “good” or “heroic” people while ence. Her research focuses on the comparative political economy of pe- simultaneously allowing to denounce political competitors ripheral European countries.

27 ECONOMY PROSPERITY IN CENTRAL EUROPE

Past excellence does not guarantee &future prosperity DALIBOR ROHAC

y any metric, the Czech Republic, Slovakia, Hungary and Poland have witnessed extraordinary progress since the fall of their communist regimes at the end of the 1980s. Real per-capita income in Poland, for example, has almost tripled since 1991. Life expectancy in the Czech Republic has gone up by seven years, from 71 years in 1990 to 78 years today. And even if air pollution in Warsaw is still bad, the region has become incomparably cleaner and eco- friendlier than it was in the 1980s. If one believes that the economic transitions that have taken place in this part Bof the world should have proceeded differently – more gradually perhaps – it is only necessary to look east (towards Ukraine, Moldova or Belarus) to see an alternative to Visegrad’s “shock therapy” with its rush to join the West. And today, the region’s economies offer a few additional reasons for optimism. All four economies are growing. All have falling, single-digit unemployment rates. Their public finances are mostly sound and in good standing, with budget deficits well within the limits imposed by the Maastricht criteria.

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IT’S NOT ALL ROSES munist era. Since 1989, all four countries have made dramatic But that does not mean that all is well in Central Europe. For strides towards becoming liberal democracies, upholding the one, the current rates of economic growth, while positive, are rule of law and protecting economic actors from arbitrary disappointingly low. From 2005-2008, Slovakia’s economy ex- and unpredictable policies. By and large, those efforts were panded at an annual rate of 7.8 percent. Between 2013 and successful, unlike in other parts of post-communist Eastern 2016, it was a meagre 2.7 percent. Similar slowdowns can be Europe, most notably Russia. seen elsewhere, with the exception of Hungary, where the Yet those institutional advances cannot be taken for growth rates in the second half of the 2000s were low to begin granted. In fact, the current political trends in the region sug- with – in part due to the severity of its financial crisis. gest that the good rules of the economic game, built painstak- The four countries face similar structural challenges as ingly after 1989, might in be in danger. well. First, the long-term demographic trends are not favour- With the advent of authoritarian populism in Hungary able and are going to be further exacerbated by the outflows of and more recently in Poland, the Visegrad countries have seen the young and well-qualified in search of better opportunities a gradual deterioration of the rule of law and a rise in cor- abroad. Second, the four countries have seen a fall in invest- ruption. The World Bank’s Worldwide Governance Indicators ment rates, which are now below the EU average of 28 percent (WGI), for example, show that in absolute terms the quality of GDP. Even Poland, where the last year’s Morawiecki Plan of rule of law declined in Hungary between 2005 and 2015. promised a boost to both public and private investment, saw a ‘Control of Corruption’, another measure of institutional fall in investment as a proportion of GDP to just over 18.5 per- quality from the WGI dataset deteriorated across the Czech cent. In the Polish case, a part of the blame can be attributed Republic, Slovakia and Hungary between 2005 and 2015. to the new tax imposed on bank assets, which has incentivized There are indications that those trends might continue. banks to restructure their portfolios away from investing into The Czech Republic is holding an election in the fall of this the private sector and instead towards just sitting on a growing year. There is a good chance that Andrej Babiš, a successful pile of government debt. businessman and the largest private-sector employer in the Finally, the future of the global economy might not be kind country, will lead the next government, creating an extraordi- to Visegrad. According to a recent OECD study, Slovakia and nary conflict of interest unseen in European politics. Although the Czech Republic are leading in the share of jobs that are at – unlike Fidesz in Hungary and the Law and Justice party in risk of being lost to automation, with almost 50 percent of all Poland – his amorphous political movement, ANO (meaning workers facing medium-to-high risk of being displaced by ro- “yes” in Czech), cannot be described as nationalist, Mr. Babiš bots. Slovakia with its large industrial base organized around appears to have little patience for the traditional constraints automobile manufacturing, will face a challenge of not becom- presented by democratic politics, which he sees as preventing the Detroit of the European Union. The challenge is not only ing high-ability individuals from “getting things done.” And automation but also the advent of driverless cars, which will like many other authoritarian populists, Mr. Babiš represents likely place the traditional automobile industry on the defensive. a personified stream of politics, in which good policies are di- The Visegrad countries are not doing a satisfactory job rect results of extraordinary ability of highly successful people of investing in the necessary human capital for their labour (in this case, himself), rather than of good and stable rules of force to thrive in the globalized and increasingly-automated the political game. world economy. While Poland’s PISA scores have been steadily Neither is Slovakia immune to the temptations of au- growing, placing the country above the OECD average in sci- thoritarian populism. First, Robert Fico himself – currently ence, reading and mathematics, the same cannot be said of its restrained by coalition politics – has entrenched high-level neighbours, which have seen a fall in their performance. This cronyism and corruption in Slovakia, not unlike that prac- is especially pronounced in the case of Hungary and Slovakia, ticed by Fidesz in Hungary. The perception of government as which have both seen dramatic declines in their test scores, being simply a vehicle for special interests has contributed to placing both countries well below the OECD average in each an atmosphere of nihilism that fuels support for anti-systemic of the three subjects. (‘We Are Family’) and Neo-nazi (Kotleba – People’s Party Our Slovakia) political movements, which can be expected to grow WEAK INSTITUTIONS in importance ahead of the country’s general election sched- UNDERMINE GOOD GOVERNANCE uled for 2020. While the challenges related to low investment rates, poor de- If the current political trends continue, the region as a mographics, and the future of industrial manufacturing are real, whole will soon be at risk of a wholesale political rollback of they are not the most serious problem facing the region. The the progress achieved since 1989. This risk is compounded by long-term prosperity of nations, a large body of research shows, the Kremlin’s deliberate efforts to undermine liberal democ- is determined by the quality of institutions – the rules of the eco- racy in Europe, particularly on its Eastern flank, by the shift of nomic game. Societies that reward economic activity, entrepre- the focus of US foreign policy away from the region – which neurship and innovation outperform societies where substantial predates Donald Trump’s presidency but will likely be acceler- resources are dedicated to rent-seeking, finding loopholes ated by it – and by the genuinely difficult political decisions around cumbersome legal rules or to predatory behaviour by that the four countries will face if they want to remain in the self-seeking political actors. In short, good, inclusive institutions integrated ‘core’ of the European Union. Hopefully, it is not in both the economic and political spheres are the most funda- too late to reverse course. mental prerequisite for growth and shared prosperity. Needless to say, such institutions are anathemas to the The author is a research fellow at the American Enterprise Institute in way economic and political life was organized during the com- Washington DC.

29 ECONOMY PROSPERITY IN CENTRAL EUROPE

MODERN BANKS IN CEE: BETWEEN FOREIGNERS AND THE STATE

DANIEL RZĄSA

he current Polish and Hungarian governments have been pursuing agendas of creating national banking systems in their respective countries, but the history of CEE shows that the presence of foreign capital has been intrinsic to the creation of the modern banking industry in the region. In his address to guests at the ceremony honouring the start of the 2017 business year, Viktor Orbán laid out the rationale for focusing on decreasing the foreign ownership in Hungary’s banking system. “Although money has no smell, its owners do,” the country’s Prime Minister told the audience attending the Hungarian Chamber of Commerce and TIndustry’s event. Orbán was referring to the drain of capital from the country in the wake of the 2008 financial crisis. In his view, the outflow happened because the foreign banks, which owned the majority of Hungarian banks, repatriated the money back to their home countries to shield the parent banks from the financial storm. Regardless of whether Orbán was correct in his assertion, the fact remains that the banking systems of the V4 countries have been largely dominated by foreign owners. In the history of the Visegrad Group countries, this is nothing unusual: independent, domestic bankers were never critical players on the market. However, at certain times, their governments were.

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MODERN BANKS IN CEE: BETWEEN FOREIGNERS AND THE STATE

x Nicolas Grospierre: Bank, Warsaw, 2011/2016. Photo by Marek Krzyżanek, courtesy of Zachęta National Gallery of Art

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FOREIGN BEGINNINGS STATE CONTROL The very first banking houses in the V4 were set up in the Mid- At the turn of the century, the majority of the shares of Hunga- dle Ages by parties from all walks of life, such as local Jews or ry’s largest banks were foreign-owned. The same was true for the Catholic clergy. the Russian-annexed Polish territories whereas in the whole of However, it wasn’t until the XIX century when the mod- the Habsburg Empire, Austrian capital dominated. ern banks were created. All in all, the modern banking system This arrangement was disrupted by the two world wars; in what are now the Visegrad countries was created mostly after which, communism rewrote the rules. For instance, in by foreign investment, according to Ivan Berendt, renowned communist Poland four banks (including Handlowy) were al- CEE historian and professor of history at the University of lowed to exist but only because they were state-owned and California in Los Angeles. served different parts of the economy; essentially, the system In 1819, during the Austro-Hungarian Empire, a group of became a state monopoly, with only a few minor differences. Austrians from different backgrounds came together and set After the period of the communist rule, the V4 coun- up the first savings bank in the region. Erste Österreichische tries saw many local banks being sold to European and in- Spar-Casse, today known as Erste Bank, opened its first branch ternational financial conglomerates, such as Austrian Erste, in the church of one of the poorest districts of Vienna. From Italian Unicredit and Belgian KBC. Bank Handlowy, which there, the bank expanded into almost every corner of the vast had existed continuously for 131 years, was sold to the US Empire. In only 10 years after its birth, it had offices in such giant Citibank in 2001. cities as Győr, Brno, Bratislava, Jarosław and 50 other towns This selling spree led to a spike (again) in foreign owner- and cities. And almost 200 years on, Erste is still among major ship in the CEE banking sector. In 2015, the average foreign players in Hungary, Slovakia and the Czech Republic. ownership ratio in Poland, Czech Republic, Slovakia, Hungary But the region’s first joint-stock banks (i.e. the ones and Slovenia stood at 62%, returning to the end-of-the-XIX- which most closely resembled the banking institutions as we century levels, according to the study CEE Banking Sector know them today) started to be created only in the second half Report published by Raiffeisen Research last year. of XIX century. However, this has been slowly changing due to the unu- The first ‘real’ bank in CEE was again born in the Austrian sual market activity of Polish and Hungarian states. Since the capital but originally the idea came from Frankfurt. Raiffeisen study took place, the market saw a major takeover. It all started when the Jewish banker Mayer Amschel The troubled Italian banking giant UniCredit agreed to sell its Rothschild decided to send his five sons to five different -cit stake in Bank Pekao, the second largest lender in Poland, to ies in Europe to help establish local branches of his growing the country’s and the region’s top insurer PZU for €2.5 billion. banking empire. The family – which is today best known for Poland – with its agenda of ‘re-polonising’ banks that assembling probably the greatest wealth in history – was rep- was set up by the previous government and continued by the resented in Vienna by Mayer’s second son, Salomon. current one – has been slowly decreasing the sector’s foreign Similarly to his other four brothers who operated from ownership. It is following in the footsteps of Hungary, where, Frankfurt, Paris, London and Naples, Salomon achieved under Victor Orbán’s rule, domestic ownership of the banking tremendous success. Not only did he create Credit-Anstalt sector has gone up from around 30% to well above 50%. Both – which for a decade was the only universal banking institu- current governments of Poland and Hungary believe that for- tion operating in the Austria-Hungary Empire – but, in 1867, eign ownership of local banks is harmful to their economies. he also set up the first modern bank in Hungary – Magyar This is a striking contrast with other V4 members, the Általános Hitelbank. Czech Republic and Slovakia, where foreign ownership ratios Through Credit-Anstalt, the Rothschild family heavily still stand at 82% and 98% respectively. Contrary to Victor influenced the economic development of the region. The most Orbán’s belief, this doesn’t seem to affect their economies, striking example is perhaps their financing of the first ever which are now healthier than those of Poland and Hungary. railroad in the Habsburg Empire which used steam engine Nevertheless, the recent attempts of the two countries locomotives. Constructed in the 1840s and 50s, it connected to increase control of their banks has only been met with lim- Vienna with the now-Polish city of Bochnia. ited success as it was both governments who have taken over After Salomon Mayer’s bold start, several joint-stock ownership of parts of the banking system (for instance, insurer banks were established across the region. Just three years af- PZU’s controlling stake is in the state’s hands). ter the Rothschilds created a similar institution in Budapest, Therefore, their key goal of increasing local ownership of Leopold Kronenberg set up the first modern bank in Warsaw, the banks is not exactly working out, and the bank ownership Bank Handlowy; a considerable feat for a Polish entrepreneur structure might soon resemble a mix of the XIX century mod- to accomplish as Warsaw, at the time, was under the rule of el with the communist mock-up. Will there ever come a time the Russian Empire. Only a year later, Handlowy registered its when the local private businesses will get seriously involved? first ”successful” contribution to the history of Polish banking which sparked competition: Kronenberg’s largest business The author is a London-based financial journalist. rival, the Epstein family, did not want to fall behind so they decided to open Bank Dyskontowy Warszawski. However, even these two institutions, set up by local Varsovian Jews, were largely under the influence of foreigners: Handlowy was closely connected with the French Credit Lyonnaise and Dyskontowy with Deutsche Bank, following the established regional pattern of relying heavily on foreign capital.

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ANDREAS TREICHL

sk any typical US Pres- ident what mattered when it came to winning elections and the answer used to be as predictable as it was comfortable. ‘It’s the economy, stupid’ was for decades, the safest way to the White AHouse. Fast forward to a post-comfortable, post-predictable world and for the Central and Eastern European region at least we need a better indicator of peo- ples’ prospects in 2017 than abstract macroeconomic metrics. In CEE, it needs to be qualitative, not just quantitative. Prosperity – as defined in The Legatum Institute’s report, which Erste Group is proud to have sponsored – does just that, but raises a more fundamental body else is too, that hard work brings question – what’s happening under the rewards and that the rule of law will be bonnet? Prosperity is not the same as applied fairly and on this shared agree- wealth. It’s not enough for a country to ment great countries are built. Not just be wealthy if it doesn’t also deliver a good countries where a few get wealthy at the quality of life for its citizens. This index expense of many who don’t. And here measures metrics that we care about, we need to be concerned, because while like the strength of social bonds, access there are some beacons of good practice, to infrastructure and credit, perceptions our region as a whole has the largest so- of meritocracy, effective governance, and cial capital deficit in the world and this is quality of education. All told, the nine holding back its future prosperity. ‘Pillars of Prosperity’ provide a 3D pic- So why would we be interested in ture of the wealth and health of a nation, this? First, because trust is equivalent to compared to the 2D GDP-per-capita, credit – so it cuts to the heart of what we most economists point to. do. When we give people credit, we give Seen through this lens, CEE has them more than just financing – we show done remarkably well in terms of catch- we believe in them to achieve their goals, OSPERITY ing up with the rest of Europe. We’re not build a better life and also pay that credit there yet, but the gap has been closing back. Second, because as one of the largest faster than the income gap. That’s the banking institutions in CEE, we can only good news. Not so good is that they’ve thrive if people, communities and busi- only managed this by exploiting advan- nesses we serve in this region thrive too. tages of starting from a low prosperity The imbalances and bottlenecks in our so- base and benefiting from the external im- cieties aren’t something outside our scope petus of the EU and global markets. From as a bank – they influence our ability to do

this point on CEE countries will have to our work well and be profitable. FU TURE create prosperity under their own steam So we care about prosperity more – a much harder feat. than in a ‘corporate citizenship’ way; we Key to the region’s ability to deliver care because it is fundamental to who we PR further prosperity is the measure of so- are and how we have been operating for cial capital – the mutual trust that defines almost two hundred years. For us, it never the bonds holding people, communities, was and never can be just the economy. businesses and institutions together. This is something that we at Erste focus on Andreas Treichl is CEO of Erste Group Bank AG. because trust is the real game-changer. Create consensus that playing by the This issue of Visegrad Insight was prepared in OF rules pays off – because almost every- partnership with Erste Group. THE

33 ECONOMY PROSPERITY IN CENTRAL EUROPE

CENTRAL EUROPE IN FIVE YEARS

Visegrad Insight has drafted four possible As goes the EU, so too the V4. While the reality scenarios outlining how political and of a multi-speed Europe already exists today, it economic developments may unfold in this has the potential to develop in several ways – region over the next five years. None of these some of which were outlined recently by the EU scenarios are meant to offer a complete or Commission. coherent sequence of events. Rather, what we are proposing is intended to act as incentives for imagining a world beyond the usual short- term perspectives, and we welcome your feedback

SCENARIO 1 VERY AGGRESSIVE GROWTH

The V4 will outpace the EU average in terms of the economic value added. Political risk will GDP growth, but the economy will be detached decrease, but it will remain noteworthy due to from politics, and economic growth will be ac- fringe parties occupying significant parts of the companied with political stagnation hampering political spectrum. the well-being and even distribution of wealth. Germany will seek to build a political and eco- EU countries will decide to dramatically in- nomic consensus on pro-growth reforms across crease defence spending – both domestically and the EU especially between France and the V4 within the union – and this will help to boost countries. the economies as military public procurement projects tend to benefit domestic producers. The EU will not notably change; NATO, led by the USA, will continue to provide basic stabil- Digitally driven reforms in public administra- ity, and global trade will open up the Chinese tion and the civil society, re-empowered by EU market to the outside world. If the US trade and support, will gradually improve the V4 stand- security policies do not change significantly, this ings in the prosperity index. will allow for V4 exports to continue to grow at The Czech Republic will adopt the euro; Hunga- the current pace. ry will also move closer to that decision, and Po- land will start a bi-partisan debate on the same The V4 economies will be able to start other issue, which will bring the country closer to mak- engines of economic growth based on domestic ing the required changes to the Polish Constitu- R&D projects and patents, which will increase tion to allow for such a currency substitution.

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SCENARIO 2 SHORT TERM FIXTURES

Slovakia will be drifting more away from the V4 due Hungary will wade through the period with just to Eurozone membership. Its economic policy and above average economic output, which will be general decision making will tend to follow the Ger- hampered by a gradually-progressing political man lead because, in this muddled atmosphere, all capitalism – this will be coupled with a takeover actors will be looking for some improvement of their of national assets by political protégées of the gov- positions, and Slovakia’s economy would continue ernment. Far right and liberal fringe parties will to grow as one of the fastest in the EU. gain more influence but not enough to change the course of the country. The Czech Republic and Poland will remain very close to their German economic partner, but as EU funds for V4 countries will be reduced due to non-Eurozone countries, they will set themselves Brexit but not significantly. The political risk will outside of the political core of the EU. Eventual- remain more or less the same as it is now. Russia ly they will be satisfied with mid-level economic will remain a predictable disruptor with Putin re- growth allowing for some political drift to occur. maining in place. Defence spending will grow a bit Poland will experience a steady “brain drain” but not to the level demanded by the USA. Defence to Germany while both countries will host more policy will adhere to directions moderated by Ger- low-skilled labour from Ukraine. The continuing man leaders. dependency on cheap labour will be a waste of ambitious investments for innovation.

SCENARIO 3 GREAT STAGNATION

The EU common market will be shaken up by Brexit aftershocks and the inability of France to drive itself out of economic and political stagnation. Slovakia will be pushed more towards the Eurozone core, and the other V4 partners will degrade their political significance as they will be unable to overcome the middle-income trap nor an increased dependency on cheap labour. In turn, fringe parties will gain more momentum by addressing social frustrations and preying on the low-level of social capital. EU funds will be reduced significantly because of political corruption and centralization, hampering any prospects of modernisation to public services and economic growth.

SCENARIO 4 RECESSION

The region will only increase its dependency on the automotive industry and German export performance. Global trade wars or another financial market crash in the tech sector will hit Central Europe hard with an increase in both economic nationalism from other EU members and border protectionism. Decreased social capital due to centralization and corruption will make V4 less resilient than during the 2008 crisis. The eurozone will not sustain the burden of the least successful countries and will collapse.

EU funds will be cut deeply and will stop to play the role of one of main engines for investment and growth.

Russia will try to use EU volatility to test increased energy policy pressure or even limited military operations. NATO will become weaker with the US Martin Ehl withdrawing from its defence commitments because of a conflict around Anna Wójcik South-East Asia. Wojciech Przybylski

35 ECONOMY PROSPERITY IN CENTRAL EUROPE Photo: Vladimir Simicek/ Dennik N. Photo: EXT REME ISOLA TION 36 VISEGRAD INSIGHT 1 (10) | 2017 PROSPERITY IN CENTRAL EUROPE ECONOMY

As in much of the industrialised world, economic and political disaffection pushes Central Europeans to look beyond traditional institutions and political parties to address their grievances. EXT REME ISOLA TION 37 ECONOMY PROSPERITY IN CENTRAL EUROPE

BENJAMIN CUNNINGHAM

us number 11 is the only public transit directly serving the Luník IX Indeed, the same housing estate on the outskirts of Košice, Slovakia’s second largest forces that drive city. Home to an estimated 6,000 people, official state policy designat- ed this collection of prefabricated apartment blocks as a Roma ghetto Trump, Brexit and in the 1990s. It borders the city dump and white plastic bags dangle from branches of the adjacent forest like Christmas ornaments. Le Pen fuel the likes The windowless apartment buildings and general urban squal- of Zeman, Kaczyński or – “when it rains outside it rains inside,” one resident put it – make Luník IX a popular spot for media, diplomats and politicians to take pictures and Orbán as they B(the U.S. ambassador was set to visit a few days after me, as was an Al Jazeera film crew). Slovak President Andrej Kiska stopped by on April 8th last year to commemorate rail against the International Roma Day. “He promised me that I would not have to pay for kindergar- establishment (even ten,” – a pledge Mr. Kiska, as head of state, would have no way of keeping – “but I still pay €20 per month,” says Jolana, a 43-year-old mother of eight. if they are now the Such unfulfilled commitments are part of cycle that breeds distrust of high level politics and politicians. “They bring some apples, or some food to get people to vote establishment) for them during elections,” says Jolana’s husband Vojtech. “But they are not interested in Luník IX.” In other cases, top political leaders don’t even pretend to address community needs. “Roma realise that [Prime Minister Robert] Fico will not help them,” says Marcel Šaňa, mayor of Luník IX and a long-time resident. Meanwhile substantive Roma representation in the national parliament in Bratislava remains a long shot. “Roma political parties have virtually no chance to succeed in the elections” to parliament, concludes research by Tomáš Hrustič at the Slovak Academy of Sciences. “The only chance for Roma candidates is if candidates run from a high position on the candidate list of a big political party… which is for now unlikely.” Though the term “marginalised community” often serves as a euphemism for Roma and the signs of being cut off from the political system are most stark in a place like Luník IX, similar isolation from power – which often parallels the proverbial contrast between the haves and the have-nots – is apparent throughout the Visegrad region. The result sees those who feel secluded increasingly withdrawing from the mainstream politics and institutions – either by disengaging altogether or opting for the politics of disruption. Indeed, the same forces that drive Trump, Brexit and Le Pen fuel the likes of Zeman, Kaczyński and Orbán as they rail against the establishment (even if they are now the establishment). In Slovakia, where Mr. Fico has long held sway, such resent- ments have given rise to the neo-fascist Marian Kotleba who draws surprising support from disaffected young people. Whereby his People’s Party Our Slovakia (ĽSNS) received 8 percent of the votes in the March 2016 parliamentary election, a study by the Bratislava-based Institute for Public Affairs found that by the turn of the year, 23.5 percent of Slovaks aged 18-39 supported the party. Though the Roma of Luník IX have it worse off than most, their fellow Košičani also lag in comparison to Slovaks living elsewhere in the country. With an annual income of just €14,600 per capita per year, adjusted for purchasing power parity residents of eastern Slovakia earn less than one-third the salary each year as people living in and around Bratislava, who average €51,200. Similar disparities persist throughout the Visegrad Group. In Poland, residents of the Masovian Voivodeship, which includes Warsaw, more than double (€29,800) the earnings of those who live in the Lublin region (€13,000). Those in central Hungary earn €47,500 as compared to €17,200 in northern Hungary. Lower salaries are often matched with higher unemployment rates, weaker infrastructure and decreased access to quality education and health care. Such statistics parallel patterns in much of the industrialised world, where rural areas and so-called rust-belts in northern France, northern England, America’s up- per Midwest and the old East Germany have all proved fertile ground for Le Pen, Farage, Trump and the right wing Alternative for Germany (AfD), respectively. In the 2013 Czech presidential election, Miloš Zeman handily won every region of the Czech Republic except Prague, underscoring the increased estrangement between the capital and the rest of the country.

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Whereby Prague residents earn about 173%of the EU’s zens rise so steeply that we all of the sudden realise that they per capita average, calculated with purchasing power parity, will be able to vote for their own mayors,” Mr. Fico has said, those who live in North Bohemia earn just 63% of the mean. as if that is a bad thing. At the same time, just one of the 41 Pavel Paroubek, a 53-year-old former construction worker seats in the Košice city assembly is filled by a Rom, this despite from Cheb now on a disability pension, says he used to vote Roma accounting for about 10% of the population. social democratic but has not cast a ballot for the past two Such discouraging interaction with politics and other general elections. He did, however, vote for Mr. Zeman in the forms of officialdom – schools, media and banks – leads last presidential election and probably will again. “He is one of many Luník IX residents to look outside traditional institu- us,” Mr. Paroubek says. tions for upward mobility. On a recent Thursday afternoon, a Like Mr. Zeman, Hungary’s Viktor Orbán and U.S. handful of families gathered at the local community centre to President Donald Trump revel in denigrating political correct- meet with representatives of ETP Slovensko, an NGO that has ness that is generally associated with established elites. This started a savings and micro-loan program to help people build makes them vehicles for voters that feel aggrieved – in many their own homes. “If we want to make a better life, we need to cases legitimately – at being cut out from larger macroeco- do it ourselves,” says Alžebeta, a 67-year-old with “about” 70 nomic successes. In the case of the United States, Trump voters grandchildren and great-grandchildren. come from an environment where GDP has more than doubled Participants must save at least €50 per month for 12 between 1972 and 2015 even as real wages grew just 17 percent straight months (a minimum of €600 total), attend meetings for nonsupervisory workers and 46 percent for all workers. In at least once per month and send their children to school. In Hungary, the political scientist Julia Szalai has mapped the exchange, at the end of a year they are eligible for a €8,000 loan class division between those working for multinational corpo- to put toward building their own house. Marta Kotlárová, a rations and those primarily operating in the domestic sector, mother of three participating in a similar program in the near- with the latter – termed “bricoleurs” – often working on tem- by town of Dobšiná has managed to save between €100 and porary contracts or informally for much lower pay. €150 each month for the past year from just €320 in monthly In addition to hardening class divisions, for Roma com- income, leaving as little as €170 per month to cover family munities racial discrimination has been fully institutionalised. expenses – an ambitious savings plan that belies the cari- Back in Luník IX, Mayor Šaňa receives €39 per person from cature of laziness that frequently accompanies talk of Roma the national government to fund district competencies like communities in the national parliament. education and trash collection. Meanwhile, the neighbouring “The important election here is for the mayor,” says Jan Šaca district, home to a massive US Steel plant and with ad- Fratr, a 36-year-old father of four that is part of ETP’s Luník IX ministrators overseeing the exact same competencies, receives program. “Before he came along there was no electricity here €109 per resident. “You tell me what the difference is,” Mr. for five years, the rest of the politicians just make promises Šaňa says with sarcasm. they don’t keep.” While officials give a variety of bureaucratic explanations for this discrepancy, political disenfranchisement looks a ma- The author is a Prague based writer and journalist. He writes for The jor cause and, in this case, may even remain an establishment Economist, The Guardian, The Los Angeles Review of Books and is an goal. “We have communities where the number of Roma citi- opinion columnist for the Slovak daily Sme.

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39 ECONOMY PROSPERITY IN CENTRAL EUROPE

The key for creating a successful social enterprise ecosystem is developing the communication between THE capital and social entrepreneurs EFFECTIVE ALTRUISTS OF CENTRAL EUROPE AND HOW TO FUND THEM

The sector of social entrepreneurship in Visegrad is, of course, THE SOCIAL still lagging behind the US, UK, Germany and Austria. How- ever, this is a booming sector. The reason for this is the quite ENTREPRENEURSHIP recent change in understanding of both how business can contribute to social advancement and the role of civil society. BOOM IN VISEGRAD In Central Europe, during the 1990s and 2000s, the understanding was that business is exclusively profit oriented ONDŘEJ LIŠKA and civil society organizations are responsible for creating ASHOKA Central Europe Country Director the environment for civic participation, controlling politi- for the Czech Republic cal power and filling in where the state was failing. This has changed. Today, it is increasingly expected that business is also responsible for the advancement of society, for assuring that entral European companies, mimicking the compa- our societies become more democratic and equal. More and nies or headquarters in Western Europe, have been more businesspeople in Central Europe are asking themselves pursuing Corporate Social Responsibility (CSR) ob- questions like: do I only benefit from my country and society? C jectives with considerable success. However, there is Is philanthropy the only way to share my benefits? Are there a radical difference between CSR and social entrepreneurship. other ways in which my business could contribute to the ad- The classic CSR is an attempt of corporations to become more vancement of society? socially responsible. CSR corporations are sharing their prof- Similarly, there has been a change in mindset of civil so- its with the society at large through charity projects, which ciety professionals. Civil society organizations usually finance of course are often useful and admirable. But this is different their activities either from the public budget or philanthropic from social entrepreneurship, which comes from a different sources. With the professionalisation of the sector in CE came need entirely. Social entrepreneurship is the way in which the challenge of focusing on fulfilling strategic missions in- businesses can improve social life by providing products, ser- stead of being distracted by the needs of patrons, be it the state vices and fostering social innovation. Another important char- or private donors with their own agendas. In reality, there has acteristic is that social entrepreneurship can bring systemic been often a mismatch between a cause pursued by a civic changes, not only temporary solutions to local problems. organization and the expectations of grant givers.

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The concept of social entrepreneurship allows civil soci- survey to Slovakia and Poland, so expect a clearer picture of ety leaders to re-think the idea of financing their core mission. the region in 2017. A true social entrepreneur starts from a problem to solve, not One major obstacle is that, until now, very few institutions the source of money, and aims at addressing this problem in a have been educating people with the adequate competences systemic way. In practice, however, social entrepreneurs often (encouraging useful mindset and character traits) for social start by mobilising money from various sources to develop a entrepreneurship. Social entrepreneurship and social innova- social business model that can later monetise the whole activ- tion will thrive in ecosystems providing all forms of support ity. Another solution is the hybrid model of combining philan- and resources: from qualified and driven people with correct thropic private social investment with public money. But the expertise, through to legal support and those with knowledge prerequisite is that resources should not define the mission. It about existing financial instruments. While the discussion is the mission that defines the resources. about social impact is now radically different than even a couple The barriers to further expansions of social entrepre- of years ago, an emerging social entrepreneurship sector in CE neurship include both legal and mental obstacles, and of still needs supportive organizations, which will provide access course those barriers are often country-specific. In the pre- to infrastructure and educate social entrepreneurs on how to vious year, ASHOKA Czech Republic undertook a major re- follow, measure and scale up their social impact on the society. search project which ended up defining nine areas hindering Another element of the puzzle is promoting the idea of collec- the development of social entrepreneurship and social inno- tive impact by involving key stakeholders from business, civil vation in the Czech Republic. This year we are expanding the society and the public sphere together in organised efforts.

sions and then commercial projects followed. The mayor has OPPORTUNITIES COME greatly impacted his village and the region over the past 15 years. There has been an influx of tourists and foreign inves- TO PEOPLE WHO ARE tors and many of Roma children from the community are now university graduates, a previously unheard of achievement. ABLE TO CAPITALIZE Opportunities come to people who are able to capitalize on them. ImpactHub in Bratislava does an exemplary job giv- ON THEM ing young entrepreneurial people skills, a valuable network from which to learn and a space where they can make their JULIA ITIN social business dreams come true. At the same time, the Hub Business Partnerships for LEAF Academy, provides them with excellent role models of businesspeople Boarding School for Future Leadership in Bratislava, who run successful businesses and are investing part of their Slovakia revenues into various good causes: fighting corruption or funding social enterprises. These help the general population learn that social business is not an oxymoron, but a way to t is a truth universally acknowledged that people work- make money and to do good at the same time. ing in non-profits and spending a large amount of their Another example is the LEAF Academy. It’s a boarding working time chasing and maintaining their non-profit’s school for socially engaged and entrepreneurial children from I finances often fail to make their organisations sustainable. CE and a values-based learning community that teaches stu- At the same time, many of them, especially in Central Europe, dents entrepreneurial leadership in the same way it teaches hold deep-seated non-materialistic beliefs and do not aspire them science – with real-life challenges from local businesses, to the ruthlessness often associated with business activity. Af- start-ups and corporations. At the same time, we are making ter years in the non-profit sector, I strongly encourage them the students aware of the great potential and challenges of the to embrace a more entrepreneurial approach, branding their region they are coming from. We hope that, one day, those products and services, and not being ashamed that they are kids will go back to their communities, bring with them social making money or even entering into CSR partnerships with innovation, business and reform the governmental system to corporations. make it more inclusive. Social entrepreneurship requires good-hearted business National and regional governments could support social people who recognize the need and can fill a gap in the market. businesses. Even more so, the local councils are able to do this There are quite a few social gaps to fill in Slovakia. A good -ex via tax reliefs and strategic investments. Development funds ample comes from the mayor of Spišský Hrhov, a community and governmental loans without collateral could also help consisting of only a few thousand people in one of the poorest significantly. If the business idea is right, there should be a Slovak regions. The mayor started a program to integrate the way to raise venture capital - regardless of the social aspect of Roma community by teaching valuable market skills to both the business. However, small regional social enterprises that the local Roma and Slovak youth. Instead of using profession- are far from the needed network of capital cities would profit als from outside of the community, these young people were tremendously from structural investments with a minor or no taught house-building skills. First came municipal commis- matching threshold.

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table the idea of sustainability and strategic development, the NEW FINANCING realization that organizations can fulfil their long-term missions, and that they should not be 100% dependent on external MECHANISMS FOR funding. Any amounts of grants can be used in an organization, but they do not lead to sustainability, unless they are THE GOOD-DOERS spent in a strategic way. What is needed in Central Europe – in addition to the EWA KONCZAŁ changing of the common mindset – is mobilizing external The European Venture Philanthropy Association (EVPA) and local resources, both attracting funding from Western Central and Eastern Europe Manager Europe and encouraging the creation of local investment funds. According to the EVPA investment survey, only 2% of investment resources for social purpose organizations are cur- he venture philanthropic approach, often called the rently allocated in Central and Eastern Europe, while 67 % go social investment approach, is about combining these to Western Europe, and 12% to Africa. humanitarian efforts with the model of operations used In order to attract more investment from Western T in the financial sector, in particular in investment funds. Europe, Central and Eastern Europe needs to fight its per- Venture philanthropy brings three things to social purpose ceived fragmentation - we need to build a different message organizations: first, financial instruments tailored to the spe- around the region and what is happening here for big investors cific stage of development, and the corresponding needs, of to take notice. the social business. Second, non-financial support, including At EVPA, we are really trying to build a sector in the long-term strategic advice on how to grow a social purpose region. Aside from changing the mindset and helping local organization sustainably. Third, a critical element: tools for partners to develop local venture philanthropy funds, we are impact measurement because organizations want to fulfil a also trying to fill the gap in early stage investing in social en- social mission and should be able to measure their activity. To terprises, to allow them to start, grow and later apply for extra put it metaphorically, some charities are giving out fish, there funding. Central and Eastern European Venture Philanthropy are also organizations that are teaching people how to fish bet- Taskforce was developed last year to bring together various ter, helping others improve what they already do, and venture stakeholders in the region precisely for that purpose. philanthropy is about creating a sustainable fishing business. The reality is that actually the money is there. There is a lot of money in different European financial institutions, but the question is how the money is deployed, through what kind of financial instruments. Those instruments, which are available now are not that friendly to potential beneficiaries. The money is in The money is in different places: in big corporate foundations in Western Europe, in private foundations set up by different places: individuals. There is also institutional funding, for example UNDP is interested in social impact investing, and of course there is money from the EU: the European Commission is of- in big corporate fering quite a wide range of financial instruments, distributed by the European Investment Fund or the European Bank for foundations in Reconstruction and Development. The other problems concern communication and ef- Western Europe, in ficiency; even the European Commission has issues with following which department is doing what. Also, policies private foundations on the local level are often complicated. For example, the European Investment Fund has a difficult process of applying for funds, and this renders the funds barely accessible. The set up by individuals Social Business Investment accelerator with 150 million euros has only invested in a few funds because they did not receive enough applications. There are a lot of opportunities that people are simply not aware of. In contrast with more traditional charitable endeavours, And there are the banks. Within the ecosystem, banks venture philanthropy is not about supporting short-term so- are important co-investors. To speak in numbers: Polish banks lutions. On the contrary, it is concerned with long-term en- altogether have overall 600 billion in assets, and they are trying gagement, capacity building and knowledge and technical to allocate resources more efficiently. Banks operating in CEE assistance. The idea is to help organizations to actually be- are catching up with the idea of social investment, including come sustainable. For organizations, which cannot have trad- private banking, micro finance, philanthropy funds and finan- ing revenues, it means that we help at developing a sustainable cial education for clients. And this is a promising development fundraising strategy. For organizations that can generate some which should be encouraged. What is currently missing are revenue, it means that we help them to sustain activity that the hybrid models of financing, small loans which organiza- brings some revenue and, therefore, provides access to addi- tions can actually pay back in 5-10 years, and here banks come tional funding. In Central Europe, this approach brings to the in handy.

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are being developed, and the local venture investment fund is TALLOW SOCIAL under construction. Another positive development, if you are willing to take some risks, is that banks have started to give ENTREPRENEURS tailored loans for social purpose organizations. The problem is that the concept is not yet very familiar to aspiring social TO GROW entrepreneurs. I also believe that the government is hindering the ex- RÉKA MATHEIDESZ pansion of social entrepreneurship by imposing too many Freelance consultant and social entrepreneur restrictions, be it employment restrictions or, for example, a requirement to be connected to one of the religious organizations registered in Hungary in order to receive funding for here is a lot of potential in the social entrepreneurship cooperatives. It is a very hierarchical system. The govern- sector in Hungary, despite the difficult political climate. The biggest threat is that social enterprises are consid- T ered to be NGOs which have become enemy targets of the state. Currently, the Hungarian government is attacking civil society organizations, which receive foreign funding, and The problem this may impair the emerging social entrepreneurship sector. On the other hand, since social entrepreneurship is not is the lack of a household concept, it may become a kind of a new cover for civil society sector activities, at the same time allowing for the investment restructuring of how civil society in Hungary works – simply because there is different legislation for foundations and non- capital for social profits than for for-profit organizations, which operate in -ac cordance with commercial law. The problem is the lack of investment capital for social enterprises, enterprises, especially in the initial stage. Therefore, the capital from abroad, be it from EU funds or donations from inter- especially in the national donors, was hugely useful in the region. The reality is the government is not supportive of any boost to the social initial stage. entrepreneurship sector from abroad. However, despite all the odds, there are some successful examples including Nesst, the first player in this field reaching out to early stage social enterprises by offering mentoring and incubator programs. ment wants to control all financing schemes and does not like More recently, there is also The Badura Foundation, a British- strong, independent, grassroots initiatives – and suppresses Hungarian venture, which aims to develop social enterprises them. Still, I am an optimist and the ecosystem will develop, outside the metropolitan area. Impact accelerators and hubs albeit slowly.

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43 VISEGRAD ABROAD FRAYING BONDS ‘FLEXIBLE SOLIDARITY’, intergovernmentalism and differentiated integration

ZSUZSANNA VÉGH

he refugee and migration crisis has created Solidarity, although nowhere clearly defined in the Lisbon stark dividing lines adding to the pre-existent Treaty, should stand as an expression that a given community centrifugal forces already active across the EU. belongs together and should entail support for one another While divisions are nothing new, this is the first whenever needed. Within the community, solidarity should instance since their accession that the countries not be based on conditions and should be mutual, that is, in an of the Visegrad Group – the Czech Republic, ideal case. Of course, several instances can be cited even from Hungary, Poland and Slovakia – have found the recent history of the EU when the principle of solidarity themselves in direct confrontation with several was overlooked, but precedent cannot stand as an excuse for so-called old member states, among them their long-stand- the V4 to disregard its obligations and commitments laid out Ting point of reference, Germany. The differences culminated in the treaty. around the quota system, the relocation of 160,000 asylum- Given the backdrop of the Visegrad countries’ loud and seekers among the EU member states and the Commission’s often xenophobic rhetoric concerning the refugee and migra- proposal in May 2016 suggesting an automatic relocation tion crisis over the past year, it is no wonder that the proposal mechanism for the emergency situation. The decision about of ‘flexible solidarity’ was widely understood as meaningless the relocation of 160,000 was passed in September 2015 political PR at best, and as Visegradian for no solidarity at against the opposition of the Czech Republic, Hungary and worst. Thanks to the actions of the V4 countries – even if not Slovakia; however, since the vote was under qualified major- all of them identifies with the approach to an equal degree – ity, it is binding to all member states. Regardless, Hungary and the Visegrad brand as such got tainted in the EU and trust Slovakia explicitly refused to implement it and attacked the has been broken among the member states. Nevertheless, decision at the European Court of Justice. giving the benefit of the doubt to the Slovak Presidency of The impasse that unfolded around the quota has been felt the European Council, who put forth the proposal of ‘flexible through multiple facets and is illustrative of the complexity solidarity’, it is worth examining the notion closer. of the crisis the EU is facing currently. Not only that there is The Joint Statement of Heads of Governments of the V4 disagreement on the desired policy goals and outcomes con- Countries published on September 16, 2016, in Bratislava, cerning migration, but the EU member states are not on the states that a migration policy based on ‘flexible solidarity’ same page concerning the decision-making processes on the would enable member states to decide on specific forms of issue, and their take differs even on one of the key principles contribution taking into account their experience and poten- underpinning the EU as a community, that is, solidarity. tial. Additionally, it notes that any distribution mechanism Could, however, the proposal of applying ‘flexible soli- should be voluntary. Thus, the Visegrad countries have again darity’ put forward by the Visegrad countries at the Bratislava questioned a legally binding decision that is already in place. Summit in September 2016 be a way out from the current Nevertheless, the linking of ‘flexible solidarity’ and the dis- standstill? tribution mechanism also suggests that the V4 is ready to

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The way out of the current impasse could involve a reinterpretation of an old, familiar concept Illustration: Jacek Ambrożewski Jacek Ambrożewski Illustration:

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from the Commission’s proposal to reform Dublin in a way that would make the relocation of asylum-seekers automatic if the inflow would be unmanageable for a member state and would demand a 250,000 EUR contribution for each person the country, which should relocate the refugee, does not take. While the latter certainly appears more like a punishment, and the Visegrad proposal is more accommodating, it would nonetheless still need to put a “price tag” on individuals not relocated for the system to be in any way “just”. If the approach the V4 ended up with is in fact so similar to the Commission’s solidarity mechanism, what does the concept of ‘flexible or effective solidarity’ even stand for? At the third level of the proposal, when ‘severe circumstances’ arise in member states, the European Council would be in charge of decisions. That is, the proposal would opt for an intergovernmental unanimous decision. Looking back to the debates and the lack of agreement over the past year, this approach would be anything but effective, and would gravitate toward the lowest common denominator. Such an approach certainly falls in line with the V4 argument of giving less sovereignty to EU institutions, more to national governments and is not alien from the way the V4 has been operating for the past twenty-five years. However, as a group based on an intergovernmental agreement, it can allow itself to only deal with issues where its members agree, whereas the EU as a community of 508 million must address the widest range of propose measures that could be undertaken instead of com- cross-border challenges if it wants to assume its place as a plying with relocation. The presentation of the relatively vague global player. proposal on ‘effective solidarity’, the successor of the ‘flexible Considering that there are no proposals on the table solidarity’ concept by the Slovak Presidency in mid-November that would satisfy everyone, the intergovernmental method draws up a three-level plan for managing incoming migratory would not have the capacity to give substantive answers to the flows. According to this concept, should normal circumstanc- challenges, should a group of willing member states just “go it es deteriorate, a ‘tailored solidarity contribution mechanism’ alone” by introducing means of differentiated integration into would be triggered under which member states could contrib- the field of migration and asylum policy. Whereas in the short ute to the alleviation of the situation not only by relocating term it might seem like an attractive idea just to alleviate pres- asylum-seekers but also by providing financial contribution to sure and get things done, there is a strong argument against it. the affected member state, supporting monetarily a dedicated Differentiated integration is a good approach when it is migration fund, or increasing contributions to the European about opting in; when a group of member states decides to Asylum Support Office or the European Border and Coast integrate further in a certain field while remaining open to Guard to name a few suggestions. others. Introducing differentiated integration under the cur- Whereas the response sketched for ‘deteriorating’ cir- rent circumstances in the field of migration and asylum policy, cumstances lists potential alternatives to the relocation of however, would be in practice rather the case of opting out asylum-seekers, there are fundamentally two problems with for the unwilling. Even if this could potentially bring quicker this proposal. Firstly, the listed alternatives are not viewed as relief to the frontier states, such measures would seriously un- helpful by the frontier states as it has been clearly expressed, dermine the unity of the EU by accepting that the principle of for example by Malta. For solidarity to actually be effective, solidarity indeed does not apply to everyone the same way. the party that needs help should feel its burden lessened by Such a decision would unprecedentedly damage trust among the support given. In case of abrupt and direct need, imme- member states and would destroy the foundations of the EU. diately available capacities should be provided. Some of the Therefore, the best the member states and EU institu- actions that the Visegrad countries had portrayed as proof of tions could do is to hammer out a solution in the Council their solidarity (e.g. the fence in Hungary, support to refugee under qualified majority that contains concessions from all camps outside the EU or the call for addressing root causes) in sides and is acceptable to most, while also finding means to practical terms have no potential to leverage the pressure on ensure the implementation of the decisions. Without the lat- Italy or Greece in the already existing situation. Some of these ter, the rules of the game and hence the EU’s viable existence measures – e.g. humanitarian support for countries hosting are called into question. refugees in the Middle East and Africa – might be beneficial steps in the longer term, but do not make up for the immedi- The author is a researcher at the Centre for European Neighbourhood ate help needed within the EU. If the V4 is so ready to show Studies. Her research focuses on the Visegrad cooperation, the Viseg- solidarity outside Europe, so should it be within. rad countries’ foreign and international development policy, as well as Secondly, the approach of the V4 in replacing reloca- the European Union’s relations with its Eastern neighbourhood (Eastern tion with alternative measures is essentially not much different Partnership).

46 VISEGRAD INSIGHT 1 (10) | 2017 FRAYING BONDS VISEGRAD ABROAD ALLEGED CZECH DISCOMFORT with the Visegrad Group and the Cynical Reality

VÍT DOSTÁL

hen the new government led by the One can easily get the impression that the Czech centre-left social democrats assumed the of- government would now turn westwards, enhance its relation- fice in the Czech Republic in Janu- ship with Germany and loosen its ties with the “nationally ary 2014, among its foreign policy conservative” Visegrad Group. Though, this is far from what priorities was a deepening of coop- has materialised. Any grumbling about the Visegrad Group eration with its neighbours, in par- can only be heard in the corridors of Czernin Palace, the seat ticular with Germany and Austria. of the Czech Ministry of Foreign Affairs, and is not shared by Unfortunately, the past three years other political actors including important social democrats. were anything but calm, and the situation has made long-term Wplanning an onerous, if not impossible, task. Several events have had an effect on the Czech Central-European policy: the Russian-Ukrainian conflict, the refugee crisis and the new Law and Justice-led government in Poland. Mainly, the two latter events have had greater influence on the image of the region. Illustration: Jacek Ambrożewski Jacek Ambrożewski Illustration:

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THE CZECH REDEFINITION sulted in the Slavkov (Austerlitz) Declaration constituting a OF CENTRAL EUROPE new forum of the Czech Republic, Slovakia and Austria. In Petr Drulák, who was then the first Czech deputy foreign min- the recent past, the links between the Czech Republic and ister, said in one interview in June 2014, a few months after Austria were definitely underdeveloped, and this was a good he assumed the office, that our conception of Central Europe opportunity for them to gain momentum for improving their was still constrained by the post-communist thinking and that relations. The historical issues were marginalized: both Vi- we needed some definition which could overcome the Cold enna and Prague were governed by coalitions of Social and War divisions. He also developed the idea of Central European Christian democrats, there was no nuclear power plant under cooperation which would have included the Czech Republic, construction in the Czech Republic and the transition periods Slovakia, Austria, Slovenia and Croatia. for the free movement of workers in the EU had been over This happened during the so-called crisis of the Visegrad since 2011. So there were little constrains for bilateral rap- Group after the illegal Russian annexation of Crimea and out- prochement. Moreover, Hungary – the traditional Austrian break of the war in Eastern Ukraine. The Visegrad Group has partner in post-communist Europe – was becoming less and been often criticized for its inability to act, when the four less attractive. countries held divergent positions vis-à-vis important inter- The trilateral forum aimed at discussing cross-border, national affairs. Edwards Lucas wrote at that time that the regional as well as European issues. Nevertheless, it soon be- Visegrad Group is “grappling with irrelevance” and enlisted a came clear that although the Czechs did not believe in the number of V4’s disagreements. geopolitical role of the V4, the cultural ties shared between the He, and many other commentators, was right that Visegrad Group was definitely missing with neutral Austria. the Visegrad Group was not able to form a strong position Therefore, the cooperation now focuses predominantly on on the Ukrainian conflict. However, the Czechs perceived cross-border and sectoral bilateral issues. the Russian behaviour less nervously than the Poles. Prime The relationship with Germany was marked by the Minister Sobotka said that he was not calling for enhanced launch of the Czech-German Strategic Dialogue in July 2015. NATO presence in Europe; on the other hand, an enhanced Within this Dialogue was the establishment of several bilateral presence of the alliance was exactly what Warsaw urged for. working groups, which cover multiple sectoral agendas and Petr Drulák, in October 2014 during the lecture at the Polish make the communication between the Czech and the German Institute of International Affairs, voiced his concern that the administration easier. Visegrad Group does not hold any geopolitical role. It seemed that the Czech Republic was actually departing from NATO’s “VISEGRADIZATION” OF THE CZECH eastern flank, which was broadly calling for a reassurance of CENTRAL-EUROPEAN POLICY DURING its security. THE REFUGEE CRISIS As the refugee crisis broke out in the summer of 2015, the NEW OPENING TOWARDS Czech Republic took over its presidency of the Visegrad BERLIN AND VIENNA Group. Thus, it was obligation of the Czechs to negotiate a In the meantime, the Czech Republic was strengthening con- common position of the V4 and organize meetings with other tacts with Austria and Germany. The former relationship re- partners in the EU. Although the rhetoric of Prime Minister

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Sobotka was not as harsh towards refugees as that of his Slo- actually been put on paper and presented. However, there vak or Hungarian counterparts, Czech policies were not much are a few additional differences. The Dubrovnik Declaration milder. It opposed relocation quotas and did not treat refugees specifically aims at infrastructure – among the supporters are according to the international obligations and standards they not only countries of the Eastern EU enlargements but also were bound to uphold. Austria – and it refers to European values. In fact, the Czech Republic has held the same position Still, the Czech Republic has a different approach to- as Hungary, Slovakia and from November 2015 Poland as wards the future of the EU. Its position is close to the one well. Prague was repeating that the binding relation quotas of Bratislava and distant to the views of “cultural counter- are meaningless, that the EU has to focus on the control of revolutionaries” from Poland and Hungary. This was visible the borders and assist in the regions where most of the refu- during the preparation of the joint V4 position before the gees are trapped. It supported the closure of the Balkan route Bratislava summit, which in September started the EU’s re- for refugees before the deal between the EU and Turkey was flection process, as all hard-liners’ paragraphs were removed reached, thus leaving their fellow member state Greece in a from the V4’s document. Thus, one can hardly expect that the dire situation. V4 would contribute to the debate on the future of the EU with Moreover, despite the newly opened Czech-German any strong common position. Dialogue, Germany – the broker of the EU-wide solutions during the refugee crises – was viewed by the Czech public THE RESULTS: VERSATILE CENTRAL-EUROPEAN and in political discourse as a problem or a potential threat. POLICY OF THE CZECH REPUBLIC Germany was criticized for its “Welcome culture” and many Will the Czech position change in the near future and will politicians – including the vice-Prime Minister Andrej Babiš Prague distance itself from the rest of the V4? Such develop- from the junior coalition ANO Movement and social demo- ment is very improbable. Neither Prime Minister Sobotka nor cratic Minister of Interior Milan Chovanec, even the Foreign Foreign Minister Zaorálek are willing to change the Czech Minister Zaorálek – often spoke about the Western European policy towards the refugee crisis, which is now the main angle countries inability to “integrate” immigrants, and so de- under which V4 is perceived. The general elections will take fended the Czech (or V4) stance. The popularity of Germany place in less than a year and social democrats are simply not and Angela Merkel significantly dropped among the Czech willing to vehemently fight xenophobic moods in the society population, according to polls. This did not lead to freezing and risk a landslide defeat. The Czech Social Democratic Party of Czech-German relations and the mutual dialogue contin- is getting rid of “liberals” within its ranks. Human Rights Min- ued, yet it harmed the Czech image in Germany as the Czech ister Jiří Dienstbier representing the “idealistic” stream among Republic was not different to any other V4 country. social democrats was sacked in November 2016. As there is no pressure from Germany and the negotia- PROBLEMS WITH THE NEW POLAND tions of the post 2021 EU budget are far from opening, the The refugee crisis did not bring any discomfort with being part Czech Republic has no need to change its position. It will of the V4 for the Czech Republic, as it in fact shares the same pragmatically combine the use of softer rhetoric in front of its view as Hungary, Slovakia and Poland. However, what made Western partners, and so introducing itself as the white sheep Czechs nervous were Polish plans for the new integration for- among many black ones, emphasizing its membership in the mats in the Central Europe. The visions of “Intermarium” or V4 to its domestic public. Because of that behaviour, Prague more specific plans for A-B-C forum have not been attractive is also unable to play a role of an interlocutor between the V4 for Prague, as their main tasks were to push out Russia and and the Wester Europe, since it does not hold a very firm and counterbalance Germany. The latter goal has been unaccepta- well-grounded stance. ble for the Czech Republic. The Czech Republic will therefore continue with its As the Polish unintended conflict with the European in- versatile Central-European policy, which is in reality is less a stitutions broke out and the Venice Commission as well as the “policy” but more an unclear strategy they will have to muddle European Commission started to investigate the constitution- through until the next elections. al order in Poland, the attractiveness of Warsaw’s plans was close to zero. Czechs were aware of the fact that the refugee The author is the Research Director of the Association for International crisis harmed their image and did not want to be pulled into Affairs (AMO) in Prague. He specializes in Central Europe, in particular the “Polish problems” from which it could not politically ben- Poland. He also covers Czech foreign and European policy. efit. As Poland was about to take over the Presidency of the V4 from Czechs in July 2016, Czech diplomacy became uncertain. The unpleasant atmosphere was marred further by the fact that Poland delivered the draft programme of their year at the helm to their partners unprecedentedly late – in May. Yet, the final programme did not include any catastroph- ic scenario, and it was essentially a follow-up to the Czech V4 Presidency, with more stress on the development of infra- structural interconnectivity among the V4 countries and in the broader region. Poland also gave up the plans for the A-B-C forum and embraced the parallel Croatian Three Seas Initiative. Zagreb’s project seems to be very similar to the Polish one, with the notable exception that the Polish proposal has never

49 VISEGRAD ABROAD FRAYING BONDS GERMANY and the Visegrad states cannot afford not to cooperate closely

JÖRG WINTERBAUER

he victory of Donald Trump in the US elec- there are also unwanted ideological ramifications. With the tions has made it abundantly clear that it is USA potentially leaning in an antidemocratic, racist direction, not enough for Europe to let the US take the it will be important for Europe to be more independent and main responsibility for the defence of the “old stand up for our values. continent”. We don’t even have to think of distant, unlikely scenarios. We don’t know where the US under Trump In the recent past, there have been numerous examples where is going as of now there are only uncertain signs. dependency on the US has led to political mistakes and mis- But what we know for sure is that the Americans steps for many countries of Europe; all because they obedi- are less and less willing to pay for the defence of Europe – ei- ently followed the leadership from across the Atlantic. Tther with Trump or with other future presidents. The Polish left wing SLD government, for instance, ac- During his campaign in spring, Mr. Trump, who obvi- cepted CIA torture sites in Poland. ously has an extraordinary instinct for discerning the will of So too, all four of the Visegrad states participated in the the average American, called Nato “obsolete”. This summer he Iraq War. The war later turned out to be a blunder, conse- stated that allies that don’t “reasonably reimburse” the U.S. for quences of which we are still having to deal with today. The so- the costs of defence should expect to be told, “Congratulations, called “Islamic State” (ISIS) is a product of the destabilization you will be defending yourself.” Later Trump spoke more of the region. As a potent reminder, one of the major reasons positively about Nato – still, Trump stands for a policy of given for the Iraq War, the weapons of mass destruction, were isolation. never found. Besides, for some countries in Eastern Europe, Trump’s The USA has already moved partly away from the values declared intent to improve relations with Russian President they historically have stood for. With Donald Trump support- Vladimir Putin is considered a cause for concern. ing torture (“I like waterboarding a lot, but I don’t think it is Politicians of the European Union have sensed this con- tough enough “), things are not likely to improve from a liberal temporary shift in the zeitgeist and have been speaking more perspective. about a common defence strategy since Donald Trump’s elec- Please don’t get me wrong: despite all the problems and tion. The subject has also been of considerable interest in the mistakes made in the last years, close ties to the US has been V4 states: in August, Hungary’s Prime Minister Viktor Orbán extremely beneficial for Europe since the end of World War even made a call for the creation of a European Army, a view- II, especially for Germany, and continued good relations with point shared by Jaroslaw Kaczynski, the President of the Polish the US are still extremely valuable. The EU should not do any- Law and Justice Party (PiS). Europe should become a “super- thing to deteriorate the relations with the USA under Donald power”, Kaczynski stated in June, soon after Brexit. Trump. Also, a total independence of the US and their nuclear In 2014, the GDP of the European Union was about 14 weapons is not realistically within reach. trillion dollars, which was more than the GDP of the USA. As Still, Europe needs to be prepared for the moment where an economic superpower, Europe has a great deal of potential it might be left to fend for itself, starting to decrease its de- to defend itself, but still it depends on the United States. The pendence now seems like a prudent course of action. Likewise, main problem is a lack of unity and cooperation, which would we have to keep in mind that the interest of the United States be necessary to make quick, unified decisions. is not always necessarily the interest of Europe. The dependence on the US might not only have danger- Within a couple of years, the world has come to a state ous security consequences – regarding the uncertainty of how most of us could not have imagined ten or even five years ago: long the United States is going to be willing to defend us – but there is a war going on right next to the border of the EU,

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Illustration: Jacek Ambrożewski

Putin’s Russia seems more and more aggressive, the migration crisis has created new challenges for Europe, and the USA are not as predictable as we were used to. In this situation, Germany and the Visegrad states cannot afford not to cooperate closely The benefits of the freedom that we still have in Germany as well as in Poland and the other V4 states – to say what we think and to live the way we want to – are still huge in com- Also important to mention is that the V4, despite the parison to many other countries, and we need to protect these efforts to appear as a unit, have very different policies. A com- values. mon position in the migration crisis is not enough. Whereas Sure, things are not perfect. In Germany, Chancellor Hungary, the Czech Republic and also Slovakia are trying to Angela Merkel broke European agreements, allowing refugees have close relations to Russia, Poland very clearly condemns to come to Germany nearly uncontrolled. With this behaviour, the Russian aggression in Ukraine and supports sanctions she gave many Europeans a feeling of insecurity which in turn against the Russian Federation. For example, Hungary plans garnered support for European far-right parties and even con- to let the Russian state owned Rosatom build two new reactors tributed to Brexit. for its nuclear power plant Paks, and heightens, in this way, In Poland, the government does not want to accept the its enormous dependence on Russian energy deliveries, as the separation of powers and fights constantly with the consti- nuclear fuel rods will have to be delivered by Russia. tutional court. Moreover, public television has become lit- In order to cooperate closely and fruitfully, mutual trust tle more than a propaganda channel for the ruling PiS. In between the V4 countries and Germany should be restored by Hungary, similar authoritarian tendencies can be observed. certain specific measures: Germany should increase consider- Nonetheless, the common values that the people of the ation for the concerns of its eastern partners. A good example five countries believe in are stronger than the problems that for how these have been ignored is the project of Nord Stream divide them. 2, which Poland and Slovakia strongly opposed. With regards To stay with the example of Poland: despite numerous to the migration crisis, more consultation with the Visegrad unnecessary problems the PiS-government created, cer- states should have been necessary. tain borders have not been crossed and most likely won’t be Admittingly, a large contributor to mutual distrust and crossed. Critical journalists and politicians of the opposition anger was made by the Polish government when they can- are not being thrown into prison and the private media is still celled the the €3 billion helicopter deal with Airbus at the last working freely. Poland is not like Turkey – even though sev- minute. The defence ministers of Germany and France, Ursula eral liberal Polish commentators like to make the comparison. von der Leyen and Jean-Yves Le Drian respectively, protested Still, mutual trust has been damaged by numerous ac- against that decision with an angry letter, stating that it “questions from both sides. Now it is high time to rebuild this trust, tions our propositions of a partnership, not only for our three which is the base for a common security strategy, as there is states, but also for the defence of Europe.“ probably no field in which trust plays a role as important as in cooperation for security. The author is a journalist at Die Welt. The V4 states, being situated at the border of the European Union (except for the Czech Republic), should have The article is a part of a series created in partnership with Eastern Europe an especially strong interest to have good relations with their Network of Fellows of the Konrad Adenauer Foundation on the occasion Western European partners, particularly the economically and of ‘Germany and the Visegrad States: Potentials and Challenges of Co- politically most influential country: Germany. operation’ conference in Warsaw, 25-27 November 2016.

51 TYTUŁVISEGRAD DZIAŁU ABROAD ROZWINIĘCIE FRAYING TEMATUBONDS Illustration: Jacek Ambrożewski Jacek Ambrożewski Illustration:

POLAND’S FOREIGN POLICY The Slow Dismantling of Alliances

MICHAŁ KOKOT

ne year after the victory of the Law and Justice (PiS) party in the parliamentary elections, Po- land is facing a multitude of problems many of which stem from the incoherent foreign policy of the ruling party. Whether it be attempting to forge stronger ties with neighbours in the region or trying to assert its “growing” power in Europe, the Polish government seems to be misstepping in every direction. All this has led to the loss of one of Poland’sO greatest assets: the perception that it could develop into a political and cultural bridge between the East and West.

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Tensions with two of Europe’s biggest powerhouses came Worse still, the rejection of Airbus may threaten Poland’s to a head in April when the Polish Minister of Foreign Affairs, position in the wide-ranging plan to create a common defence Witold Waszczykowski, declared the Weimar Triangle - a co- system. Similar to the Sikorsky bid, Airbus was to relocate a operation between Poland, France and Germany - to be “dead”. meaningful share of its Caracal production to Poland, which He went on further to rule out any close or permanent alliance would have remained operational even after finishing the con- with Berlin or Paris in the future. Then, four months later, he tract with the Polish Ministry of National Defence. This fac- retracted the statement reversing his position completely, pro- tory was meant to become one of the main links in a chain claiming a great “need” for the Weimar Triangle to continue; comprising the European defence system. of course, the damage had already been done. Needless to say, choosing the American offer may turn Contrary to Poland, the Czech Republic, Slovakia and out to have unpredictable outcomes as well, given Donald Hungary (Warsaw’s greatest allies) are not interested in ruin- Trump’s views on the North Atlantic Alliance. Mr. Trump ing their relationships with Germany. They are too dependent sees NATO as a “relict of the cold war” and has hinted at the on the German economy to afford a political fight with Berlin, possibility of America not fulfilling its obligations to defend and they don’t understand what the Polish officials are trying some nations would they be attacked by Russia. For almost to accomplish when they declare a need to “counterbalance” every Polish government, including the current members of Germany. The political approach of PiS appears to be keep- the PiS cabinet, the possibility of Russian aggression has al- ing both their friends and foes alike guessing what their next ways been a feasible scenario to be avoided if possible through move might be. the development of a strong national defence and meaningful alliances, both of which have been put into question by the CASE STUDIES OF MISMANAGEMENT recent foreign policy decisions. So far, these tactics have not been very effective. Firstly, let us examine the short-lived partnership with Great Britain. CLOSER TO HOME London was meant to be a Polish ally who would support This threat from the east is another situation where Poland Warsaw`s desire to pressure Brussels in loosening govern- finds itself surrounded by many opposing views in Central and mental control and return some powers of sovereignty back Eastern Europe; only Romania is convinced Russian aggres- to the nation states. Evidently, the Eurosceptic British decided sion is just a matter of time and has urged Bulgaria, together to leave the EU outright, angering many of the “old guard” and with Ukraine and Turkey, to create a common defence system leaving Poland ally-less once again in their cause. in the Black Sea basin. But the cooperation has never been set Secondly, and of far more importance, the recent trou- in motion due to Bulgaria’s reluctance to provoke the Russians. bles with France over a reneged military contract which A similar situation can be seen among the V4 coun- caused President Francois Hollande and the French Foreign tries. Poland and Hungary were in favour of having additional POLAND’S Minister, Jean-Marc Ayraul, to postpone their long-planned NATO troops – the so-called rapid response force – on their visits to Poland. territory, but even in Budapest there has been controversy Here, the details are rather straight-forward. In October, about establishing a NATO command centre in the country. Poland halted talks with the French company Airbus to buy 50 More definitively, the Czechs and Slovaks immediately reject- of its Caracal helicopters at a price totalling more than 3 bil- ed the offer, arguing their citizens still have negative connota- lion euros. Officially, the Polish Development Ministry reject- tions from the housing of foreign troops in the past, meaning FOREIGN POLICY ed Airbus` offer because it found the deal had little value for the bloody Soviet invasion of 1968. Poland. But there were numerous indications that the current These disagreements are hardly surprising. Since 2004, Polish government was against this contract from the very there have only been two issues all four countries from the beginning. While in opposition, many senior politicians of Visegrad Group have agreed on: first, to put more pressure PiS, including the now Minister of National Defence, Antoni on the Western European members of the EU to increase Macierewicz, demanded that Poland withdraw from the talks structural funds for those in more need; and second, to with Airbus. Alternatively, they favoured an American com- garner support for their migration policies which involve a petitor - Sikorsky Aircraft, a subsidiary of Lockheed-Martin rejection of the refugee quota system. Apart from these mat- - who offered Black Hawks helicopters and which were meant ters, the Visegrad Group does not hold any geopolitical role. to be produced in Mielec, Poland. While the circumstances Regardless that all the countries are EU and NATO members, leading up to the troubles are rather clear, it seems the re- there are several issues (e.g., Russian sanctions, energy policies percussions of the government’s decision was obvious to all and an increased military cooperation) which make a stronger except them. regional coalition impossible. With their divisive and unpredictable policies, Warsaw (UN)FORESEEN CONSEQUENCES has strained their alliances and put into doubt their future role For years, Poland has been clamouring to become a larger in the continent. Their actions have created a political vacuum voice in the region, specifically with regards to the on-going between the Western and Eastern parts of the Europe, and it Ukrainian Crisis. However, to achieve this they need help from cannot be ruled out that another V4 country will step in and their estranged fellow member states, France and Germany, as build the bridge Poland tried so long and hard to assemble. Poland’s attempts to get involved into the negotiations have failed mainly due to Russian hesitancy. With their current re- The author is a journalist at Gazeta Wyborcza. lationship status, it is hard to expect any support coming from Paris or Berlin to bring Poland in on the talks.

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From Once courted as a Western Balkan gem, Cinderella today Albania’s potential to is being challenged Sleeping by low-levels of cooperation with its Beauty neighbours

JOANNA KĘDZIERSKA

lbania is the poorest Bearing in mind all these exter- imports from Poland is at about €63 mil- country of the Western nal and domestic factors, such as the lion annually, according to the central Balkan region and one extremely high level of corruption, the bank and INSTAT data. of the poorest in Eu- chance of Albania joining the EU in the The total Czech export to Albania in rope; however, it does near future is not very high. 2014 was only €24 million with imports offer a lot of opportu- not exceeding €9 million. The level of ex- nities, which seem to A COUNTRY IN NEED port with Hungary has even decreased go unnoticed, espe- But even with Albania staying out of the recently. cially by the close-by Visegrad Group. EU, the Visegrad countries could coop- At the same time, Italy is the first ex- AIn fact, the Visegrad Group (espe- erate with it more intensely. Tirana is port and import destination for Albania, cially Poland) have neglected the whole desperately seeking foreign investment, closely followed by Spain, China and region, often limiting its engagement to and it imports more than it exports. Germany. Occasional visitors to Albania expressions of support for the Western With raising labour costs in the Visegrad cannot escape seeing the Italian Conad Balkan countries’ European ambitions. countries, local companies are increas- supermarkets where people can buy Today, we know that the membership ingly looking for more affordable labour mostly Italian products, although local prospects for the Western Balkans, in- markets. At the moment, they tend to re- agriculture and weather conditions are cluding Albania, are rather uncertain as locate some of their production to China, perfect to produce home-grown com- they have to contend with potentially le- even though Albania is closer and would modities. But Albania does not have the thal combination of enlargement fatigue make a more obvious destination for re- resources to invest in agriculture, so only and Brexit. The issue is further compli- locating Central European businesses. a part of its soil is being cultivated. The cated by the lack of mutual understand- The V4 are also looking for new export government is trying to attract investors ing and political proximity between the markets and this is another area where who would like to buy farming terrain, V4 members. both sides could complement each other launch production and provide jobs to In addition, Albania has to imple- capitalizing on existing opportunities. the local population. ment judicial reform without which it As for now, V4 economic coopera- Albania has also the second largest cannot even start the EU membership tion with Albania is not very impressive. oil deposits in the Balkans and the larg- negotiations. Yet, the reform proposal For example, the Polish foreign di- est onshore oil reserves in Europe. As for has been recently rejected by the opposi- rect investment in Albania is estimated at natural gas, its resources are limited and tion, preventing its adoption in the par- only €2 million while the volume of trade not easy exploitable. Still the Albanian oil liament and in effect delaying Albania’s exchange between the two countries, and gas market represents one of the most integration with the EU. overwhelmingly dominated by Albanian promising sectors for the economy. Local

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authorities have attracted a couple of for- treatment as the business sector in terms This spirit cannot be totally re- eign investors, implementing liberal proof fiscal conditions. The Visegrad Group vived by the V4, but it can be constantly visions and delivering easy access to the countries have not offered any compre- encouraged at the very least. Albania market; however, oil and gas reserves still hensive strategy on how to support this needs foreign investments and although remain the property of the Albanian State. sector so far. Particular countries have or- Poland, the Czech Republic, Slovakia and In March 2016, the affiliates of ganized trainings and meetings from time Hungary are not big economic players China’s Geo-Jade Petroleum purchased to time like the Slovaks who taught CSOs like China or Germany, they still are able the drilling rights (from a Canadian members how to deal with problems fre- to be more involved by inspiring their company) for exploiting the oil fields of quently faced by representatives of such entrepreneurs to invest in Albania. This Patos-Marinze and Kucova. They paid organizations. Still, Albania needs more should be especially the case since the lo- €384.6 million, presumably indicating an long-term and thorough support for its cal authorities have been tempting inves- interest in accelerating the process. The nascent civil society. tors by offering easy access to the local Visegrad Group countries are absent in Albania has never built a mature markets, and Albania also benefits from this area as well. democracy nor stable political and social having one of the youngest and relatively systems. For many centuries, Albania well-educated populations in Europe, MODELS AND (MISSED) was caught in between ethnic and tribal which is not to mention the still low la- OPPORTUNITIES conflicts, which were often exacerbated bour costs. Needless to say, a more seri- The political cooperation between Alba- by stronger neighbours like Italy, Greece, ous economic engagement would likely nia and V4 is also rather symbolic and Turkey and Serbia. As a result, Albania have a positive impact on the democra- Albania is not perceived by the Viseg- has never created a strong national iden- tization process in Albania. rad Group in its own right but as a part tity, in effect remaining the compilation Albania is waiting for investments of the Balkan puzzle even though it has of different tribes sticking to different in the areas of mining, hydroelectric- quite a different history; it has never priorities and religions. Strong divi- ity, agriculture as well as the cloth- been a part of Yugoslavia, and it was not sions between Albanians from the north ing industry. According to analysts at directly involved in recent Balkan wars, and south of the country were one of Forbes, as of December 2016, the Gross even though one of the deadliest conflicts the factors leading to today’s situation. Domestic Product (GDP) was growing at in the Balkans, concerning Kosovo, was To address this, Albania needs struc- 2.8%. However, the country had a Trade indirectly fuelled by Albania. tural support from the EU and other na- Balance of -9.7% and Unemployment was Of course, the V4 countries unani- tions, like those in the Visegrad group, quite high at 17.3%. mously declare that they want to see who, to some extent, have comparable The governments of the V4 coun- Albania as an EU member state and experiences. tries should also pay attention to Albania they support its ambitions. Overall, the Every Polish government since 89’ increasingly becoming an attractive holi- Western Balkan nations see the Visegrad – regardless of political leaning – likes day destination for the CE nations, which Group as a promising example of regional to stress that democracy is a main Polish could be possibly inspiring for decision integration on which they can base build- export. Naturally, the Czech Republic, makers. The country offers beautiful ing their own cooperation. They even Slovakia and Hungary also have reasons mountains, lakes and sea shore with se- decided to establish the Western Balkan to be proud of their roles in bringing com- cluded Adriatic beaches with the cleanest Fund based in Tirana, which is modelled munism to its end in CEE. Surprisingly, water in Europe for much cheaper prices on the Visegrad Fund. Albanians as well whilst Poland was trying to export de- than anywhere in Europe. as other Western Balkan nationals can mocracy to North Africa, it has not been The total increase in foreign visi- apply for and receive grants from the active in this area in Albania, although tors has been dramatic. Albania had Visegrad Fund. both areas were affected by communism, only 500,000 visitors in 2005, while in However, looking at the current the damaging effects of a planned econ- 2012 it had an estimated 4.2 million – an condition of the Visegrad Group and the omy and corrupt social relations. The increase of 740% in only 7 years. Many divisions within it, the model is losing its lessons that CEE nations have learnt in among them come from Poland, Czech attraction for the Western Balkans. their post-communist transitions could Republic, Slovakia and Hungary. Perhaps Whilst the V4 countries have regu- serve as useful case studies transferable this growing sector will be the tipping larly declared their support for the de- to Albania to address some of its struc- point for the governments of the V4 to mocratization process in Albania, they tural weaknesses. take a second look at their forgotten, have fallen short of delivering practi- southern neighbour. cal measures. It is clear that to build a WHERE TO GO FROM HERE healthy civil society it is necessary to have Albania needs the V4 when it comes to The author works at Centre for Social and Eco- an active involvement of NGOs (Non- real engagement, especially with regards nomic Research and was spokesperson of the Governmental Organizations) and CSOs to strengthening its EU membership Polish Institute of International Affairs. (Civil Societies Organizations). The con- prospects, which are not very promising. dition of these sectors remains sadly poor As Minister of Foreign Affairs Ditmir in Albania. There are in total 1858 CSOs Bushati underlined, “the EU enlargement registered in Albania, of which an esti- process is a technical process that has to mated 450 are currently active. The work- do with fulfilment of specific conditions, ing environment for this sector is difficult but it should also have a political spirit, and not enabling, as it receives equal which is missing.”

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ADAM REICHARDT

n late 2008, at the onset of the global economic cri- There was a belief at that time that after the Rose sis which put the European Union, and especially Revolution in Georgia, the Orange Revolution in Ukraine its single currency, at the core, a new approach to and the Twitter Revolution in Moldova, the societies of Europe’s relations with its eastern neighbours was these Eastern European states have arrived at a point where starting to take form. European integration was the next logical step. Further, the It was in December when the idea of the Eastern August 2008 war between Russia and Georgia emphasized the Partnership was officially put on paper. The docu- need for greater focus on European security in the wake of a ment, nonchalantly titled “Communication from the rearmed Russia not afraid to flex its muscle. Commission to the European Parliament and the Council – IEastern Partnership”, laid out a comprehensive framework of THE BEST LAID PLANS cooperation between the EU and its new Eastern neighbours. The V4 success was to serve as an inspiration to the EaP. Its In its opening paragraph, it declared that the EU “has a vital example as a framework of cooperation to achieve European in- interest in seeing stability, better governance and economic tegration (and NATO membership), was the beau ideal for the development at its Eastern borders”. Hope was in the air as a new Eastern neighbours. Hence, a heavy focus was placed not renewed focus on the post-Soviet space seemed like a natural only on bilateral cooperation between the EU and the individual continuation of creating a Europe that was whole, free and EaP states, but also on multi-lateral cooperation between the at peace; and this was embodied in the Eastern Partnership. six Eastern Partners (Belarus, Armenia, Azerbaijan, Georgia, Moldova and Ukraine). A new civil society forum was created ORIGIN STORIES to serve as a platform to learn from each other and serve as a The roots of the Eastern Partnership can be traced back to the voice for the diverse civil society sector of the post-Soviet states. 2004 EU enlargement which brought ten new members into the Fast forward, nearly eight years since that December Union, including the four Visegrad states. The shifting of the EU communique, and the Eastern Partnership is in disarray. Its border meant a shift in its neighbourhood. To reflect this shift, future is uncertain, most directly affected by the events that the updated European Union, which added Bulgaria and Roma- took place, ironically as a result of the EaP, in Ukraine at the nia to the fold in 2007, sought to further its success eastward. end of 2013 and throughout 2014. The multi-lateral dimension By combining its engagement in the South, which was of the Eastern Partnership is practically non-existent. sought by countries like France and Italy, the European In the case of Armenia and Azerbaijan it has managed Neighbourhood Policy was starting take real form. The to solve very little – as evidenced by the Four-Day war which December 2008 European Commission communique an- broke out in April 2016 over Nagorno-Karabakh. Ukraine’s nounced the EU’s intention to launch the Eastern Partnership Revolution of Dignity was in part inspired by pro-European and was positively received – the former Czech deputy Prime moods in the society. Yet, after the illegal takeover of Crimea Minister for European Affairs Alexander Vondra even called by the Russian Federation and subsequent fighting in the East it “the best document the Commission has ever produced”. against Russian-supported separatists, coupled by slow imple- The launch of the Eastern Partnership (EaP) at the mentation of much-needed reforms, Ukraine’s EU path seems Prague Summit in 2009 was symbolic in many ways. Not only to extend to a never-ending horizon. was it a capital of a post-socialist state, it was also a symbol Other EaP states like Moldova have gone from the EaP’s of Visegrad success. This brought subtle undertones that the star pupil to complete dunce after three billion US dollars EaP itself could become a Visegrad of the post-Soviet space. went missing from the largest banks (presumably in the hands

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of its most powerful oligarchs) and mass unrest may swing the can be seen in areas such as banking and finance, police, de- mood away from EU-friendly sentiments. Georgia’s stagnate fence as well as minimizing corruption (though this remains foreign policy declares pro-European integration while finding one of the biggest challenges). A visa-free regime has already space to reconcile and build new relations with Russia. For all been implemented with Moldova and Georgia is likely next, intents and purposes, Belarus remains practically unchanged. while Ukraine is nearing the final hurdles. The V4 countries It would seem that the self-motivation that was characteristic have also played a role in promoting reforms and advising in of the V4 countries’ drive towards certain sectors as decentralization, Europeanisation is seriously lack- when the fantasy of european energy, media and finance. ing in the EaP states. Yet, the experience of the EaP Moreover, the EU itself is membership meets the reality of has highlighted one undeniable faced with its own existential slowly implemented changes truth: the idea of Europeanisation predicament, requiring nearly all is sexy; its implementation, how- of its focus internally. The refugee ever, is a different story. And this crisis and Brexit are at the top of the list. The V4 countries is the real lesson behind the V4 that was totally forgotten themselves are playing their bit in the EU situation, some when it came to the Eastern Partnership. It is also important would argue negatively. As a bloc, it proclaims to offer alter- to recall that the process the V4 countries undertook in their native solutions for the EU’s problems. Europeanisation was a transformation; the EaP countries are Nevertheless, this is also drawing V4 attention away from focusing on reforms. This is more than a difference in -se what is happening in the EaP. This has led to a situation where mantics. The term reform is not systematic. It implies certain there is a great risk that the post-Soviet space will drift for tweaks in the already existing system; something that Western some time in the waters of stagnation. For some states it may countries themselves undertake all the time. A transforma- even mean an eventual return into the Russian sphere of influ- tion, on the other hand, requires a complete system change, ence; naturally depending upon the geopolitical developments and this change is physical just as much as it is mental. in the region. Lastly, it goes without saying that there is no mood inside Europe to promote further integration, let alone acces- BEARING FRUIT sion. This is felt not only in the old EU states but in the new There are some successes, however, and they need to be high- ones as well. This means that an even greater responsibility for lighted from time to time. The signing of the bilateral Associa- Europeanisation lies with the EaP states. For the moment, it tion Agreements (which includes the establishment of a deep looks as though the small-step reform process is the only way and comprehensive free trade area) with Ukraine, Moldova forward. Only time will tell if this approach will be enough and Georgia should be seen as an enormous step in these to achieve the desired end-result. At present, it is very dif- countries’ EU integration. It is enough to recall that the EU ficult to optimistic, but it does not mean all hope should be had signed similar agreements with the V4 countries ten years abandoned. prior to their EU accession. We must also recognize that some positive steps in the re- The author is the Editor in Chief of the bimonthly magazine New Eastern form process, especially in Ukraine, are being made. Progress Europe.

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Playing the Trump Card: Illustration: Jacek Ambrożewski Jacek Ambrożewski Illustration:

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Playing the Trump Card: What Central Europe can expect from an increasingly unpredictable administration in Washington

Like Kaczyński’s attempt to block Tusk’s re-election, more and more seeming impossibilities are becoming realised in this Post-Trump world

MARCIN ZABOROWSKI

entral Europe has had a very good quarter century since the fall of communism. They have regained their sovereignty and their sense of security while stability and prosperity have reached historic highs. The circumstances for this success are numerous, but the relative peace of Central Europe (with the exception of the West- ern Balkans) has rested on the region’s anchoring in NATO and its membership in the European Union. Initially, the transformation of the region was driven by the desire to “return to Europe” as Vaclav Havel famously declared in 1989. Central EuropeansC looked to the West with a sense of admiration and with a clear purpose of wanting to become like their western partners.

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ocratic institutions and the rule of law. Early indications of Trump’s positions on these issues are not very promising although it is also becoming clear that some of the President’s most extreme agenda is effectively moderated by the checks and balances system. Friend and Foe Still, Trump’s rhetoric on the EU keeps changing. It seems that for the first time in the post-war history America has a president who is at best ambivalent about the EU, and this is very troublesome for Europe. Although it does not always remember the early days of the project, European integration came into being with America’s full blessing, financial support in the form of Marshall Funds and persuasion from Western European governments to integrate in the face of the Soviet threat. In other words, there would be no European Community without America’s active support. In the subsequent years, America’s attitude towards the EU was torn between the two roles Europe played – it was both the closest ally but also often an economic competitor – regardless all US presidents understood and appreciated the strategic value of the EU. Although there is little consistency in Donald Trump’s attitude toward the EU, it seems that his presidency may mark a departure from traditional support for the European project. In the first months after the election, Trump had only disparaging words for the EU and earlier he had actively supported the Brexit campaign. The first European politician This translated into a determination to meet the mem- that he met after the elections was the leader of the Brexit bership conditions and criteria set by NATO and the EU, campaign, Nigel Farage, while Marianne Le Pen, the leader of which in turn had a profound effect on the processes of de- the French National Front, paid a visit to the Trump tower. In mocratisation and liberalisation of Central European econo- ensuing interviews, Trump’s views on the EU showed grand mies. In effect, Central Europeans were indeed becoming inconsistency. He shifted between praising Brexit and suggest- rapidly westernised. ing an ultimate break-up of the EU whilst on another occasion he stated that the EU was a “wonderful thing” and that he was “all for it”. That Awkward Stage However, 27 years on since the fall of communism, democracy Things Can Fall Apart and economic liberty still remain immature and fragile in Cen- tral Europe, and as the developments in Hungary and Poland As the EU has already been hit by Brexit, the refugee crisis show, they may still be reversible. and ongoing issues surrounding the stability of the Eurozone, While Central Europeans have achieved their dream of it is clear that the European project is fighting for this sur- joining the West, at least institutionally, these same nations are vival.If Marine Le Pen had won the presidential election in now showing signs of transitional fatigue, and none of them France – an outcome which, for many, was still closer than has developed a stable political system marked by the promi- desirable – it would have been difficult to keep the European nence of main-stream parties and the rule of legal institutions. project together. This is happening at a time of profound crisis for the European The ultimate disintegration of the EU would be cata- project and America’s flirtation with right-wing populism un- strophic for Central Europe, which would be deprived of re- der the Trump presidency. sources for its modernisation and might potentially lose access Central Europe’s fragile stability, since the end of the to the single market. However, the break-up of the EU could Cold War, has been underpinned by America’s involvement be stopped or at least moderated by the active involvement of in Europe’s security and its leadership in promoting a demo- the United States. Unfortunately, there is no indication that cratic narrative. With Trump becoming the 45th President of President Trump would be prepared to take upon himself such the United States, the direction and power of both aspects have a responsibility. Moreover, it seems that Trump’s ambivalence become uncertain although it remains to be seen to what extent. and disrespect for the EU may become a contributing factor To maintain their transformation, Central Europeans in bringing the disintegration of the EU closer. need stability in the European project, security against the Since the end of the Second World War, European secu- belligerent Russia and continuing support in sustaining dem- rity has rested on the direct engagement of the United States.

60 VISEGRAD INSIGHT 1 (10) | 2017 FRAYING BONDS VISEGRAD ABROAD

This has been marked by the existence of NATO and under- tion that Trump’s team would be written by the presence of US troops in Europe and its secu- prepared to take an equally prin- rity guarantees. Following the election, Trump has criticised cipled stance. NATO, calling it obsolete, whilst his Secretary of Defence In fact, it would seem logi- words about the likelihood of “moderating” America’s com- cal that Trump’s team would mitment to the collective security has rung alarm bells across refrain from criticising illib- Europe. At the same time, Trump retains a strangely positive eral practices in Central Europe. predisposition towards Russian President Vladimir Putin, and Trump made it quite clear during the revelations of his staff’s – including cabinet level – contacts his campaign that he will not be driven with the Russian Ambassador are numerous and worrisome. by values in his foreign policy and would not differentiate between liberal and illiberal regimes. For example, he famously stated that he would consider Angela But the Centre May Hold Merkel and Vladimir Putin as equally valuable partners. Moreover, Trump’s own domestic war with liberal media, Naturally, the weakening of America’s commitment to the such as New York Times, Washington Post and CNN, which security of Europe would have dramatic and negative con- are also critical of illiberal practices in Central Europe, may in sequences for Central Europe, all of which is exposed to the fact suggest that there is a potential for sympathy developing threat from an increasingly belligerent Russia. Nonetheless, between Trump’s team and illiberal rulers in Central Europe. not all news is so negative. Altogether, it seems that Central Europe would be wise As the dismissal of Trump’s pro-Russian national security to brace itself for the arrival of the administration that is at advisor General Flynn suggests, there are effective breaks in the best indifferent to the strategic value of the European Union, American system that are stopping the pendulum from swing- lukewarm towards NATO and uninterested in supporting de- ing too radically in one direction. This was followed by the re- mocracy in the region. instatement of America’s commitment to the European allies In less turbulent times, Trump’s attitude towards Europe as delivered by Vice-President Pence and Secretary of Defence would not need to be of major consequence for Central Mattis at the Munich Security Conference in February 2017. Europe. As argued here, although Trump and his team might Trump also did not halt the US’s and NATO’s deployment have flirted with an idea of undermining European integration to Poland and the Baltic States. As a result, under President and transatlantic relations, there are effective breaks within Trump the Eastern flank of NATO will in effect enjoy the big- the American system that prevent a too radical departure gest presence of the allied forces since these nations joined from the path of continuity. the alliance. In short, whilst Trump made it clear that he is Even though times are tempestuous – there is hope that ambivalent about NATO, it seems that the change in US’s at- America’s new president will refrain from the actions that in- titude towards European security may in fact turn out to be tentionally endanger Europe’s fragile stability. However, there insignificant. is also the strong possibility that Trump’s policies will under- Finally, there is a question mark as to Trump adminis- mine Central Europe’s core interests. tration’s attitude towards supporting democracy in Central Europe. Whilst Obama’s State Department was outspoken The author is senior associate at Visegrad Insight and former director of about the violations of media freedoms in Hungary and the the Polish Institute of Foreign Affairs. questions about the rule of law in Poland, there is no indica-

Forum 2000 Conference Prague, October 8-10, 2017 www.forum2000.cz

61 VISEGRAD ABROAD ENERGY SECURITY CHINESE INVESTMENT IN THE FOUR VISEGRAD COUNTRIES Illustration: Jacek Ambrożewski Jacek Ambrożewski Illustration:

62 VISEGRAD INSIGHT 1 (10) | 2017 FRAYING BONDS VISEGRAD ABROAD

Only after forging stronger political connections will money flow into the Central European region

TAMAS MATURA

ore than five years ago, Budapest had the pleasure to welcome then Premier Wen Jiabao and to organise the first China-Central and Eastern European Countries Economic and Trade Forum, the foundation of the cooperation between Beijing and its partners in our region, or the 16+1 initiative as we know it today. Indeed, Chinese investment has Mbeen high on the political agenda of all CEE countries in the past few years, as it promised financial liquidity and the creation of jobs amid the crisis-ridden economic environment of the European Union. Despite expectations, the level of Chi- nese investment is still relatively low in the region, however, and the relevance of political relations to Beijing has become pretty clear. When it comes to investment relations between China and any other part of the world it has to be noted that it is extremely hard to track the destination and amount of money flows originating from China. Generally speaking, official statistical data on FDI flows and stock are unreliable, no matter whether we speak about American, French or Chinese investment. Since most companies channel their international investments through intermediaries, like tax havens, it is almost impossible to follow the route of financial flows. In the case of China, some two thirds of their global capital export flows through Hong Kong, the British Virgin Islands, the Cayman Islands, Luxembourg or the Netherlands. As a result, there is a major gap between official data on FDI stocks and reality. For instance, in the case of Hungary, official data puts the stock of Chinese FDI around USD 600 million, while most experts and the local Chinese diplomats themselves talk about a figure closer to USD 3 billion. The China Global Investment Tracker

63 VISEGRAD ABROAD FRAYING BONDS

of the Heritage Foundation offers a comprehensive dataset on THE POLITICAL CONTEXT the global FDI stock of China; however, their data is based As it has been mentioned, Hungary has been the forerunner on media resources, thus announced but finally failed or can- in the region. Budapest initiated a very early opening towards celled projects are also incorporated into the final amounts. China in the early 2000’s, and due to the good political re- Still, at least one can get a view on the scale of Chinese activ- lations, and maybe to the considerable Chinese community ity in the Visegrad Four (V4) countries, which is quite modest living there, the country has received the highest amount of compared to the amount received by the EU as a whole as the Chinese investment. However, Hungary has not received any Czech Republic, Hungary, Poland and Slovakia have received new, significant investors from China since 2010. Though less than 5 percent of the total USD 145 billion invested by the some future investments have been announced recently, and Chinese side into EU member states. of course the Budapest-Piraeus railway line may contribute The dissemination of Chinese investment in V4 countries a lot to the regional role of the country. It is Poland and the is uneven both in terms of the amount realised and timing. Czech Republic who have become real competitors; their for- Hungary has received by far the highest amount of Chinese eign policy towards China seems to have a more strategic ap- capital, approximately USD 3.6 billion has flown into the proach, and they provide the necessary means to realize their country, while Poland has attracted 1.7 billion and the Czech strategy. But the real problem is the competition itself. CEE Republic stands at 1.2 billion. Meanwhile, Slovakia is lagging countries or at least the V4 should cooperate vis-á-vis China, far behind on the list, where Chinese investment is almost no matter how hard it would be. non-existent: according to Chinese data it is less than USD A wide selection of international literature proves that 90 million, while the Slovak Statistical Office sets the stock of the quality of political relations has an impact on the quantity Chinese FDI around USD 35 million. The V4 countries per- of investments from China. When it comes to Central Europe, formance is very different when it comes to the peak time of it seems to be indeed true that countries with better political the Chinese FDI inflow as well. While Hungary was indeed ties to Beijing have received a higher amount of capital from the first to attract high amounts of capital from the Middle the East Asian giant. Most experts of Chinese FDI agree that Kingdom, the inflow has significantly slowed down or even investors are more eager to settle down in countries with bet- stopped in the last few years. Meanwhile Poland has slowly ter political connections to Beijing since they see it as some but steadily increased its stock of Chinese FDI, partly due to kind of insurance for their businesses. That is strong political the change of its foreign policy towards Beijing. Although it ties work rather like an indirect incentive, and the Chinese was the Czech Republic which has managed to boost its in- government does not command its companies to invest in vestment relations to China at a rocketing pace, also due to its specific countries. sudden change of attitude towards China. As Zhang Haiyang However, a recent interview with Ye Jianming, the owner of the Antwerp School of Management and his co-authors of CEFC China Energy offers a different, worrisome point of write in their assessment on Europe-China investment rela- view. The political relationship between the Czech Republic tions, the Chinese presence in Slovakia is “weak with negative and China has been traditionally cold until 2014 when the growth”, while in Hungary it has a “strong position with nega- new Czech government and the president initiated a complete tive growth”, in the Czech Republic it has a “strong position diplomatic turnaround vis-à-vis China, in order to facilitate with high growth” and finally in Poland it has a “weak presence better political and economic relations. As a result, Chinese with high growth”.

64 VISEGRAD INSIGHT 1 (10) | 2017 FRAYING BONDS VISEGRAD ABROAD

investment in the Czech Republic skyrocketed from almost ment into the CEE region in the upcoming years. Since the zero to 1.2 billion, mostly due to acquisitions by CEFC China EU seems to reject the market economy status of China, trade Energy. In an interview Mr. Ye, the chairman of CEFC China barriers may invite Chinese investors to set up production fa- Energy, said “we have to look at geopolitics (…) If one day cilities within the boundaries of the EU, e.g. in the fields of the Czech Republic goes against China, we need to pull back automotive industry. our investments to rethink our strategies there.” Statements Following its initial contribution to the foundation of like this one send a direct message that the quality of politi- the 16+1 cooperation in 2011, it seems Hungary will have cal relations may not only improve but could destroy business the honour to organize the China-CEE Summit in 2017. As relations as well. Prime Minister Viktor Orbán announced at the China-CEE Another problem from the CEE countries’ point of view Political Parties Dialogue in Budapest in October 2016, has been the preference of Chinese companies towards acqui- Hungary proposed the establishment of a regional level stra- sitions and infrastructure construction, instead of investing tegic partnership between China and its sixteen partners. into greenfield projects. Although it would be utmost impor- Meanwhile Beijing sees the 16+1 more and more as part of its tant to create new jobs and production facilities in the region, One Belt One Road project, which may offer new opportuni- Chinese greenfield projects are still almost non-existent. It is ties to Visegrad countries as well. The research community, of easy to understand their motivations: Chinese companies are which I include myself, has been recommending the Chinese eager to build infrastructure in the region, in order to ease pay more attention to the V4, as these countries represent the their domestic overcapacity and to get rid of their excess fi- economic and political core of Central and Eastern Europe. nancial capital through M&As. Therefore, they are happy to According to recent news from Beijing, the Chinese govern- buy up anything interesting, which is part of the Europe strat- ment has embraced our idea recently; thus China-V4 relations egy of Beijing. Following the global financial crisis in general may become even stronger in the upcoming years. and the Euro zone crisis in particular, many European companies became undervalued, which offers a great opportunity The author is an assistant professor of the Corvinus University in Buda- to their Chinese counterparts. Thus, there seems to be no pest, and the president of the Central and Eastern European Center for general pattern of Chinese investment nor on the European Asian Studies. neither on the CEE level. Chinese investment targeted mostly the energy sector in Poland, technology and chemical industry in Hungary and the financial sector in the Czech Republic. In the area of infrastructure, Chinese companies have been successful mostly in the Balkans so far, particularly in Serbia, Montenegro and Moldova, probably due to the less sophisti- cated public procurement standards in these non-EU member states. In sum, the Chinese investment activity is still at an early stage in the EU and in CEE countries as well. However, as the cost advantage of China in manufacturing is constantly diminishing, I expect the arrival of more greenfield invest-

65 MEET CHALLANGERS 2016 edition

3estonia 2 latvia 5lithuania poland 22 2 belarus czech republic 16 12 slovakia 5 ukraine hungary slovenia 6 10 10 romania croatia 1 1 3 bulgaria armenia serbia 2

Res Publica together with Google and International Visegrad Fund in cooperation with The Financial Times and dozen of institutions from the region is presenting the New Europe 100 project – a list of outstanding challengers from Central and Eastern Europe.

The New Europe 100 list is about individuals from the region who are changing the world and improving people's lives with ideas that scale up in the digital world. It's about those who – with their courage for innovation, new-tech expertise, unique skills, and social outreach – are having a global impact. This list is both about people and their big ideas. We will seek and bring together personalities whose actions drive them and us to a better future.

66 VISEGRAD INSIGHT 1 (10) | 2017 THEY SPEAK They are based in ON AVERAGE Abu Dhabi / Baku / Bratislava / Budapest / Bucharest / Gdynia / Kadaň / Kolín / Krakow / Kyiv / London / Prague / Riga / San Francisco / Sofia / Tallinn / Usti nad Labem / Vienna / Vilnius / LANGUAGES 2.9 Warsaw / Wroclaw / Yerevan

They have recently read THEY SEE 1984 by George Orwell / Chronicles: Volume One by Bob Dylan / Normal cybersecurity by Warren Ellis / Start-up Nation: The Story of Israel’s Economic Miracle AND by Dan Senor and Saul Singer / The Feynman Lectures on Physics by market Richard P. Feynman / The Little Prince by Antoine de Saint-Exupéry / fragmentation The Rise of the Network Society by Manuel Castells / The Singularity Is AS BIGGEST CHALLENGES Near by Raymond Kurzweil / The Third Wave by Steve Case / Creativity, Inc by Ed Catmull

Apps WHAT THEY HAVE CREATED Things

KIWI.COM iKNIFE Cutting-edge flight search and interactive map A surgical electroknife detecting ne100 challenger: Oliver Dlouhy (CZ) cancer cells and bacteria NE100 Challenger: Zoltán Takáts (HU) TRAFI RIMAC AUTOMOBILI Public transport app designed to plan journeys using real time data, scientific algorithms The fastest electric car out there, straight and machine learning from Croatia www.trafi.com www.rimac-automobili.com ne100 challenger: Martynas Gudonavičius (LT) NE100 Challenger: Mate Rimac (HR) BOOKSY ARCABOARD Book all your grooming services with one app, A personal flying machine, originally from haircut to nail SPA from Romania www.booksy.net www.arcaspace.com ne100 challenger: Stefan Batory (PL) NE100 Challenger: Dumitru Popescu (RO) FIVE GOTOKY Discover the potential of hands sign language Voice communicator and location beacon on your mobile devices connecting people in areas without wi-fi coverage www.fiveapp.mobi www.gotoky.com ne100 challenger: Mateusz Mach (PL) NE100 Challenger: Denis Lončar (SLO)

67 68 A same member states is not yet mirroring this fact. this fact. mirroring not yet states is same member NATO nomatter ifthe publicopinioninthe onstillexists, based is have leaders proven that of which political the solidarity years, two Inthe past onthe yet horizon. noteven is Afghanistan from our withdrawal following Putin), and the existential potential crisis at notafailure all. itwas oneinNewport, previous lthough the NATO Summit inWarsaw, nothing to similar the was On the contrary, to Vladimir (thanks the peak at alliance is its DÁNIEL BARTHA VISEGRADINSIGHT 1 (10) | 2017

Illustration: Jagna Wróblewska SECURITY EU

In Warsaw, we didn’t have to send a The Visegrad countries need to step up their military awareness and strong political statement, member states readiness if they are going to show any sign of force and maturity in rather had to calmly suggest that the work NATO has promised is in progress, that their region and throughout Europe the commitment is strong and it won’t be changed overnight. The implementation of the programs agreed in Wales indeed both Slovakia and Czechia have been ca- During the summit, a special em- have been carried out fully and consist- pable to launch development projects. phasis was put on improving the coop- ently, although it can be disputed whether Although the “V3” was criticized eration with the EU. A joint declaration these security guarantees are sufficient. for reluctantly supporting the response was signed to enhance the ability of both The Warsaw Summit proved that the alli- to Russian aggression in Ukraine, this organizations to counter hybrid threats, ance is capable of detecting its own weak- criticism seems to be unjustified on the cooperate on issues such as migration nesses and is ready to further develop a field of defence. and cyber defence as well as the sharing credible deterrence. Hungary, Slovakia and Poland have of intelligence. A few recent statements NATO has managed to set up its re- decided to setup an NFIU, while the V4 by European leaders about the crea- sponse force (NRF) and also announced countries are probably among the few tion of a European army might be able the setup of the Very High Readiness nations that have sent personnel to most to highlight the real importance of this Joint Task Force (VJTF). After a few of the NFIUs around the eastern frontier. agreement. bumps, the full network of regional in- NATO declared in Warsaw the es- tegration units (NATO Force Integration tablishment of the Enhanced Forward ON THE WAY TO BRUSSELS Units- NFIU) was created to provide re- Presence (EFP), which means the deploy- Still the stakes, from a Visegrad perspec- gional command structures on the east- ment of four battalions totalling about tive, will be much higher in the upcoming ern flank. Member states have pledged 4,000 troops rotating through the Baltic summit in Brussels. By then, a proper bal- forces to the VJTF until 2022. countries and Poland. Although this force ance between the eastern and southern While the level of growth is still in- is not sufficient to balance the gap -be flanks has to be struck, including the nec- sufficient, we must note that, after almost tween the old and new member states, or essary internal agreement of both NATO two decades, this was the first time in even stop a possible Russian aggression, it and the V4. If we fail to find this proper NATO’s history when the GDP level of de- does, firstly, serve as the most important balance, it could do seriously harm to the fence spending rose in most of the mem- tool of reassurance by the United States solidarity of both groups. ber states and increased overall by 3%. (and other contributing Western coun- In this field, probably Polish defence When we note the results, we also tries, such as the United Kingdom and planners have to do more to convince have to mention what was missing during Germany), and secondly, it is sufficient political decision-makers on the impor- the NATO Summit. It seems not only in for the main objective: deterrence. tance of a Polish presence on the south- the EU, but also in NATO we can’t give Visegrad will also contributing to ern flank, but we can only except such as a credible response to threats coming this format with each country sending step if the V3 are finally ready to do their from the south. Although member states a contingency of soldiers (150 -200 sol- homework. noted these problems, the recipe for how diers) on a rotational basis to the Baltics For that, Hungary, Czechia and the to respond to the threats on the southern in three-month shifts beginning in 2017. Slovak Republic have to increase rapidly flank is still missing. The V4 countries are among the their defence spending. There are a num- Further, we have also missed the op- most active countries participating in ber of positives signs, and, as a response portunity to send a strong message to our military exercises, and all of them have to the warnings of the new US President, allies in Georgia and Macedonia. Despite offered support for Ukraine to help trans- there is a strong willingness in the three efforts coming mainly from the civil soci- form their defensive sector although, in capitals to meet the 2% goal earlier than it ety, the Summit’s message was weak and this regard, there is definitely room for was originally planned. In and before the almost indiscernible. The Montenegrin development. Visegrad countries already meeting in Brussels, the V3 are likely to accession is good news, but it doesn’t financially support cyber defence devel- announce new target dates and possibly counterbalance this mistake. opment in Ukraine; however, it is possible plans for procurements. they need as much support to adapt to cy- The V4 has to launch defence mod- THE VISEGRAD IN WARSAW ber threats. ernisation programs and agree on com- Visegrad member states are participating mon goals and projects as well. At a in NATO missions and development pro- THE WAY FORWARD minimum, they have to finally show soli- cesses well over their weight. Beyond the AND THE UNCERTAINTIES darity towards Ukraine and continue to case of Poland, this fact is often overseen Although at the summit NATO recognized support efforts to create deterrence on due to the loud disputes on insufficient the importance of cyber defence, the develop- the East. As the US-Russian rapproche- defence spending. These voices remained ments of the recent US presidential campaign ment seems to be over the importance loud, due to the minimal increase of the and earlier examples suggest we might be be- of a strategy on Ukraine should be even budgets, although all the “V3” (Czechia, hind our potential enemies. Strengthening more among the top priorities. Hungary and Slovakia) created meaning- the level of our capability for both NATO and ful and long-term programs, with legal the V4 might be a crucial way to develop our The author is Director for Centre for Euro-Atlantic guarantees to change this situation, and defence in this area. Integration and Democracy.

69 INTELLIGENT MINDS OVERSHADOWED AND UNSUNG

In an exclusive interview, Michael Ignatieff, President and Rector of CEU, explains how his struggle today is pivotal to the academic freedom in Central and Eastern Europe.

THE CANARY IN THE COAL

What the proposed closing of a university in Hungary’s capital means for the MINE region as a whole

70 VISEGRAD INSIGHT 1 (10) | 2017 OVERSHADOWED AND UNSUNG INTELLIGENT MINDS

MICHAEL IGNATIEFF, WOJCIECH PRZYBYLSKI

(WP): In your book Fire and Ashes: Success and Failure in Poli- students while I am sitting here, writing recommendations for tics you wrote that timing is everything. It is late in the after- my former Turkish students to get into American PhD pro- noon on Friday, we are in your office at the CEU in Budapest, grams so they can escape. everyone is on alert, the phones are ringing, sound of incom- But the legislation proposed by this government marks ing mail bombarding your inbox; do you think you’re in the the first time in the history of modern Europe that a European right moment, the right time? Are you a fortunate person? state has led a direct legislative attack on the academic free- (MI): [Laughing…] Well you do have to laugh, don’t you? I dom of a university. should pick one time, but you know, I seem to have done this I do not know why Mr. Orban wants to be in a club that twice; I worked in Canadian politics, and the night I was elect- consists of Erdogan and Putin, nor why he does not want to be ed, the government I thought I was going to join was defeated. in a club that includes free societies that respect the freedom I took this job in Budapest because I am married to a of institutions. I actually do not understand it. It seems like Hungarian, and I have deep connections to Hungary and love an act of self-harm. It seems politically irrational. What votes the place. I knew the political climate but thought it would does he get by attacking a university? be interesting and invigorating to defend free institutions in a I think that the deeper rationale, maybe, is that he sim- society where... you know, this is a complicated place. ply does not want free institutions standing in the way of his What is it? Is it a liberal democracy, is it a free society? increasing political domination, and that puts him in a club of I knew it would be challenging, whatever you call it. I knew people who think that democracy is a majority rule. defending academic freedom in this place would be challeng- Majoritarian populism is very popular. You can draw ing, but I frankly did not expect this to happen. analogies with Mr. Trump and with other places. But what Most people assumed that he (Orban) would not risk an is interesting is that every American has had a lesson of what attack on an institution which has been part of the scene here democracy actually consists in. It consists in elections, it also for 25 years and poses no strategic challenge to his rule on consists in checks and balances. the political scene. We are not in politics, we cannot change Mr. Trump has just discovered the power of congress. it, (politics) is like the weather around here. And yet, he has Mr. Trump has just discovered the power of the courts. A decided to go for it. So, we deal with everything as it comes. genuine democracy is the place where free institutions bal- One of the enormous advantages of being a free institution ance power against power. with a private endowment, which is almost unique in Eastern The underpinning rationale is that these are the leaders Europe in that way, is that it gives us the capacity to vigorously that very consciously set out to eliminate all obstacle to power resist. I really do feel, I hope it is not pompous to say so, that we in their path, and they do so in the name of democracy and in are fighting a battle not just on behalf of CEU but on behalf of the name of the people. But there is simply no doubt that this academic freedom in Eastern and Central Europe. ends up being deeply destructive to the people in whose name I said this all along, but it has become emotional for these actions are being conducted. me. Just five minutes down the street from here is a plaque of So, to answer your question – yes; there is a wider context. John von Neumann, the greatest mathematician of the 20th But this is not a political campaign against the Orban regime. century. The Hungarian contribution to the intellectual life of I cannot do that, I am the president of a university, not the Europe and the world is enormous. It’s true that my, as well as leader of a political party. I have no interest in challenging my wife’s, favourite poet is Czeslaw Milosz, but pretty close up Mr. Orban. If he had not come after me, I would not be fight- there would be Attila Jozsef. ing back. It’s not my country. What is dismaying to me is that this is a government that But if you come after a free institution, he’s got to learn talks about a national revival but does not seem to respect that free institutions will fight him. That’s what we have to do, its own traditions, does not seem to respect the fact that one that’s what freedom means. of the things that makes Hungary Hungary is an absolutely outsized contribution to the culture of the world. And a pre- So, what is in your arsenal to fight back with? condition for this to continue is to have some kind of freedom Here is what my day is like: I have just sent a note to the Vice- for its institutions. That is the biggest issue for me. Chancellor of Cambridge, an institution which some people consider to be the greatest university of the world, but it is When you were coming here, you may not have been so certainly the powerhouse in European science. Early in the interested in the political scene, but now you are a part day, we announced that the Vice-Chancellor of Oxford has of it. Do you feel like you have a broader perspective? You joined our trustees. have just launched the series on the enemies of open soci- Thirty minutes before that, I was on the phone with the ety, which appears to be an increasing global phenomenon, President of the Hebrew University in Jerusalem, which is a where Viktor Orban is just one example. great institution. He simply phoned me, out of the blue, say- Yes, you can run a narrative that Mr. Putin tried to shut down ing: how can I help? Even earlier in the day, we received notice the European University in St. Petersburg, an institution I that seventeen Nobel prize winners have signed a letter of sup- know well. Mr. Erdogan is closing campuses and imprisoning port along with a 150 other distinguished academics.

71 Photo: Stefan Roch we can think of is willing to write a letter in our support. Mr. aletter to inoursupport. write think willing ofis we can puff and say that everything is wonderful - it is a tough battle.is a -it tough is wonderful puff andsayeverything that to Idonotwant huff and brought notable support. about has have moralauthority,we also certain 48hours which inthe last pay attention. some for him, politically, wise but it would be to think, academics whatcares the President of the Hebrew University orother ment andyoushould climate notdoit. insecure is inthe coal mine-ittells youthatIt the like invest is acanary Hungary, are inaplace shutting where they auniversity? down are well. investmentmunity yougoingto Imean, risk as in demic community, but in the international com business inHungary. isolation lectual and intel ofacademic to the lead increase will of this action tothat understand the notseem ultimate effect does Orban 72 European state has led adirect legislative on the academic attack freedom of government has,themore itknows itisright.This echoes Ignatieff says that it is the first time in the history of modern Europe that a says ofmodern Europe timeinthehistory thatitisthefirst that Ignatieff is clear:hisinstitutionwillnever close,willnever bow down to threats andwill majoritarian populist, it is important tomajoritarian itisimportant populist, realise thatthey see country hethinksisdefending. Therector’scountry messageto theprimeminister continue to teach students. Peter Szijjarto, proudly declared thatthemore enemiesthe I willchallengethispoint-of-view. From theperspectiveofa a university andthatMr.a university Orban's desire for total dominationwilldamagethe the better. ayear Just ago, the Hungarian foreign minister, and the morethemselves they asunderattack, are isolated, INTELLIGENT MINDS OVERSHADOWED AND UNSUNG Every professional association in the academic field inthe academic that professional association Every I know whatI know matters to this man,and I donotthink he To but wedohave divisions, oneofthe popes, paraphrase in the international aca everyone Thatis notonly for - - - - this open society,this open Why that why unpopular? is itso is the peo what itabout is andasks: the turns onus spotlight mocracy that de intheofdenunciation. ritual So, illiberal of engaging Actually, to the flipitaround thing funny Ihave instead is tried But Idonotthink it’s indefinite. out. goingto tell is run to do,andIcannot string himwhenhis in Europe. tell Icannot him what politicians cleverest or three underestimate Mr. He oneofthe is two apolitician. Orban as are goingto say howstupid -just doyouthink we are? orinfront oftheir ofwine televisions, whether overtheir glasses the point at Hungarian people, certain inventing enemies, new byandonekeeps timegoes As but donotthink hegemonic. heis leader,He the is elected authority, legitimate perfectly andhehas seriously. itvery Itake Idonotunderestimate it. support. ter has tactics. versionary to pay attention to them ofconstantly indi instead engaging their want government andthey Hungarians have problems, the thatevade reality not lamps. It does the street notfix does it notbuildahospital, butitdoes allyouwant, mopolitans get alittle get tired. are going to over time, the Hungarian people I think, friends. to rallyyour yourenemies anduse rejoice inyourenemies can There are whenyou moments you know,As inpolitics. Iwas political ideaofilliberalism? Because to metheconcept Have you beenreading closelyorwere you interested inhis seems to bedirectly opposingwhatany standsfor. university the winningstrategies? the enemiesofliberalismhave alongtradition.Whatare andreminds methat the slogansofearly 20thcentury I have been here tothat longenough know I have minis the prime been But this takes time. toI want But this make takes it clear, and I donot You pursuingthe international, keep cos the can liberal VISEGRADINSIGHT 1 (10) | 2017 - - - - - ple do not want to be open but closed off? Why do they prefer my books, called Blood and Belonging, that cosmopolitanism closed frontiers to open ones? is a privilege of those with a passport. In other words, cos- Why is it that they feel that their open societies - and this mopolitanism is a privilege of those with a secured national is very strong theme in Poland - that the transition (from com- identity in a defensible state. munism), their entry into the market economy and the crea- I do not think we have fully accepted how much resent- tion of liberal democracy has resulted in corruption, resulted ment and a certain kind of condescension towards people’s in inequality? Those are the critics on the left, but on the right, deepest allegiances cost liberal society and also cost Europe. I you hear that it has resulted in the loss of national identity and do not think this is a bad time for a liberal democracy, I think the diminution of religious traditions and faiths. the reverse; I think this is a wonderful time to smarten up. There is a lot of very pertinent criticism of open society, and I actually think that the challenge for our university is to What would be your message to Viktor Orban about open reflect honestly about what liberal democracy means and why society? You had meetings with him, but if you wanted to is it that open society is so unconvincing. There is so many make it public, what would be your main message that oth- millions of people who thought this was the way into the fu- ers ought to hear as well? ture. We have to be honest. My message to Mr. Orbán is: anybody who actually loves Last night, Jacques Rupnik was talking at the CEU about Hungary and respects its intellectual and cultural traditions, Europe and why the European ideal is so increasingly unper- who understands what the academics and intellectuals of this suasive. Why it no longer seems a destination but just a kind of country have contributed to Europe, would respect the aca- bureaucratic mess. He made a note about the euro banknotes, demic freedom of its institutions and not seek to destroy them in which, they are simply empty abstract designs omitting for the desire of total domination. That desire will damage the great national champions of culture or science. I thought it country he thinks he is defending. I really do believe that. was a wonderful symbol of the emptiness. Not just of Europe And the other point, just in case there is any doubt, we but also the emptiness of open society. will defend the academic independence of this institution, I have written for 25 years about the dangers of national- come what may. This institution will never close, this institu- ism, but I never underestimated and no personal beliefs and tion will never bow down to threats. progressive values should ever underestimate the emotional This institution will continue to teach students – and I force of faith, the emotional force of a nation, the emotional hope we will teach lots of students from Poland – we would force of language, the emotional force of culture. love to see more of your students come to CEU because they In some weird way, open society has backed itself into will join an absolutely unique community of students from a position where it appears to be hostile to all the things that 120 countries. actually give meaning to people’s lives. This does not make me I have been critical of open society, but go to any of our a conservative. I have always believed this. I am a Canadian, I classrooms, and you will see open society at its best. am not a ruthless cosmopolitan. I said, 30 years ago, in one of

73 INTELLIGENT MINDS OVERSHADOWED AND UNSUNG

Jerzy Stempowski, a lesser-known Polish intellectual, returns as a must-read auteur

WHEN ‘EUROPE PREPARES FOR THE CURRENT ROLE OF THE PROVINCE’ 74 VISEGRAD INSIGHT 1 (10) | 2017 OVERSHADOWED AND UNSUNG INTELLIGENT MINDS

VISEGRAD INSIGHT RECOMMENDS SAMANTA STECKO'S INTRODUCTION TO JERZY STEMPOWSKI'S THOUGHT

n a compelling essay on the elites who could not find remedies for the the significance for European history of life and writings of Jerzy Stem- challenges of their age and in the moral what he termed the “cult of discipline powski, Samanta Stecko weaves bankruptcy of authorities who sold their at all costs”, which from the Napoleonic an intriguing and cogent course souls to political devils of various ilk. times had been “one of the most impor- of intellectual discovery and In the Berdychiv essay, images from tant traits of European civilization … an observation of this forgotten the life of the town serve to draw a por- indispensable condition of the wars for Polish powerhouse. Though trait of fallen Europe. Machnowiecka hegemonic power over the continent and, much less read than many of street, the regulars of which “had no in long-term consequence, what pre- his contemporaries, Stempowski and his greater worries than paying their bills pared Europe for the current role of prov- Iastute notes, letters and essays laid bare on time” and lived “tranquilly, far from ince”. Provincial Europe, in Stempowski’s the political, sociological and economic the main flow of events” is a metaphor eyes, had been the one-time homeland to forces forging Europe during the inter- of the political declassing of the former thinkers, rebels and reformers before it bellum period. These writings accurately world power. The memory of Jewish tai- transformed into a place where “an ocean foretold and criticized the governmental lors reading Marx’s Capital as if it were of blood was spilled, but no significant act and social movements during his own tu- the Bible – “like all devotees, assimilating of disobedience was committed”, where multuous times and those that followed the text not through understanding, but “all people stand in formation behind in the latter half of the 20th century. The through exaltation, elevating its truths their governments – whatever these gov- bulk of Stecko’s work is focused on two above all data drawn from experience” – ernments may be” and where expressing important papers from Stempowski, the will be read by Stempowski not as a fore- any kind of independent opinion is per- Bredychiv and Cassandra essays. The fol- shadowing of the triumph of communist ceived everywhere as untactful… lowing is an extract from Stecko’s piece ideology in the East, but as “a mental When we read the Berdychiv es- evaluating the historical context of the attitude that would become widespread say today, our thoughts run out to the Bredychiv essay, and how lessons from it among the best-nourished population of future. We are becoming increasingly can act as a warning to the current geo- Europe”. anxious about the current, united Europe political situation in Europe. He always condemned all forms turning into a story of wasted potential Excerpts from Samanta Stecko’s es- of “surrender of independent thought and missed opportunity. The continent say Europe between Athens and Berdychiv. before authority”, which he considered is once again haunted by Berdychiv On the thoughts of Jerzy Stempowski as one of the most important traits of spectres, presenting us with a vision of Jerzy Stempowski knew Europe like the era, on both sides of the continent. Europe politically and intellectually di- few others. He was a man educated in However, when this was done by Western vided, separated from the world by a wall European universities and enamoured intellectuals, Stempowski found this to of fear and indifference and deprived of with European culture, a multilingual be an unforgivable sin, a desecration of voice and authority in global decision- cosmopolitan, an attentive observer of the “proud and independent intellec- making. “Nothing can happen here that reality and tireless traveller with exten- tual attitude, the legacy of Socrates and would be of importance for the rest of sive international connections and a Montaigne” that had been cultivated in the world”… We increasingly fear that wealth of professional experience gained Europe for so many centuries. This is why we will be left with a Europe whose es- in the interwar period as a diplomat, a he held in such contempt the French in- sence was hollowed out and which was foreign correspondent and the head of tellectuals who had their eyes fixed on the reduced to a loose conglomerate of faded staff of the Polish Prime Minister. Soviet state and wrote eulogies for Stalin. “capitals”, where the spirit of idealism and In his work, the fundamental prob- In one of his letters to the Polish writer inventiveness has evaporated – a Europe lems which his contemporary Europeans Maria Dąbrowska, he explained that it that the essayist dubbed, in one of his associated with the first half of the 20th hardly surprised him that the commu- texts, potestas clavium and which he be- century – nationalism, fascism, Nazism, nist journals in France represented such lieved had lost its irrevocable authority. communism – are moved to the back- a dramatically poor level of intellectual Stempowski paints a horizon of risks and ground. Consequently, our memory and thought, resembling closely the poetics avoids ready answers; however, he leaves our ideas of Europe are directed towards of a provincial Soviet propaganda mag- no doubt that the way to save Europe is different, rarely penetrated areas. The azine. In fact, he saw it as inevitable, as to reclaim the keys to the vault that can main axis of his narrative about the fate of “the concept of the world with Moscow supply us with the very power that stems the continent in the 20th century is con- in the centre sees Paris in about the same from faith in one’s heritage and the au- stituted not by the triumphs of totalitar- place as Berdychiv, where better texts or dacity of intellectual discovery. ian states and radical changes in Central intellectual movements are probably are and Eastern Europe, but by the political forbidden”. We greatly encourage you to read the full essay: and intellectual downfall of the West, of And finally, the third image, which “Europe between Athens and Berdychiv. On the which he saw evidence for in the cata- was a story the writer heard from his thoughts of Jerzy Stempowski” which can be strophic politics of the democratic gov- brother, who was sent to Berdychiv dur- found at www.visegradinsight.eu ernments in the face of a growing threat ing his military service in the time of the from the East, in the fiasco of Western revolution. It allowed him to understand

75 INTELLIGENT MINDS OVERSHADOWED AND UNSUNG

important to try to solve a problem using approaches appropriate for a given geographical context. The more objective approach would be if we were able to Civil Society show that there has been a historical trajectory of this region that sets it apart both from the East and the West. And that is being done and it can be done, but I think that this is the source and Conflicting of a lot of confusion. I honestly do not see, in my work, a serious difference in the frequency of phenomena when comparing the south to the east Europe. The civil society in Poland is just as Narratives: strong as it is in Portugal or Spain, for instance.

Is this from the homogenizing effect of Europeanization or globalization? The pitfalls Probably both. The bottom line would be that when it comes to of attempting to carve out the basic ways of doing things, few alternatives are accepted in this part of the former communist bloc, which has now become a Central European part of the EU. It is just a replication of practices, learned through identity emulation; basically, if you look at some patterns in the region, they are not that different than many other parts of Europe.

The Polish and Hungarian governments have – at least rhe- torically – pushed for a greater cultural alliance between the two countries. Do you think other societies will follow their lead? JAN KUBIK INTERVIEWED BY ANNA WÓJCIK I have always tried to think carefully about the difference between what the governments think, what they do and where In the ever changing political and social landscape of Europe, the public opinion is. On one hand, there are a number of how is Central Europe understood today, and how important issues where the public opinion in this part of Europe is not is it when considering the traditional East/West division? that different than in others, and yet, on the other hand, there The East/West division is stronger than any other idea of amal- are clear differences. Those differences lie in some very- im gamation of states in our part of Europe. Whether it is re- portant layers of culture. For example, the attitudes towards grettable or not, in the perception of European and American gay people, same sex partnership, abortions, immigrants, and publics, Central Europe does not really exist. It is a concept religiosity. As a social scientist, I do not dwell on this or that used by a small elite in political life and a group of intellectuals, result, but I am trying to figure out whether there is something people who professionally study and interact with the region. more general. Whether those various syndromes cohere into Moreover, in academic institutions pivotal to the global under- something what might be called a national culture, I doubt it; standing and knowledge of Europe – located predominantly I seriously doubt that this is a useful concept. in North America, UK, Germany and France – the division People say that Eastern Europeans are this and that, be- of Europe between the East and the West has been extremely cause of a specific issue on which the public opinion differs powerful, and recently these perceptions have only been re- from the majority of Europeans. The truth is that these popu- inforced. As always, the attention span of researchers and relations are split, and the division is quite complex due to the sources are limited, and they are definitely directed towards tremendous diversity of the region. Poland and Hungary are studying the developments in the West. at the moment drifting off in a non-liberal direction, but the societies are not homogenous. In the case of Poland, there is Do you see any dimensions that nevertheless distinguish a cultural war being fought, and it is very hard to say which of the region as a worthwhile area of inquiry? the views represents Poland and its population. There is one thing which distinguishes the region, and it isn’t Another dimension, which I have been rather upset something to give up on: the legacy of communism and the about is the discussions about certain European issues or even methods we used to confront it. In my opinion, this was the global issues in terms of a sharp, symmetric contrast between most defining phenomenon of Central and Eastern Europe in the West versus Russia. This is very serious because the West the 20th century, and we can still feel its consequences. Al- is not monolithic. Second, what do you include in the “West”? though I have often repeated the idea, there was not only one Do you include the Baltics, Poland, Hungary or is it just the communism and one post-communism. It still influences how “classical” West Europe? people organize their life, how they think about themselves. The third thing, the most troubling from the point of view We cannot pretend that the time from 1945 to 1989 no longer of the interest of Central European countries, is that the self- has any meaning. It dramatically reset society, not just politics. understanding of the people in the region has disappeared. At the same time, I believe that the correct method of Shared interests, desires and dreams have all disappeared, and inquiry is to start with the problem, not the area. Say, we the countries are drifting apart, enclosed in narrow national will focus on inequality or transitional justice and look into imaginaries. At the same time, all those countries share a de- it throughout the world. Does it manifest itself differently in sire to be treated seriously, to draw the attention of the world Latin America, Southeast Asia or in Central Europe? If so, it to the fact that they are pretty serious countries, which have

76 VISEGRAD INSIGHT 1 (10) | 2017 OVERSHADOWED AND UNSUNG INTELLIGENT MINDS

very distinct histories and traditions. But they are not communicating this effectively, and the world is not listening.

The current leadership in Poland and Hungary, as well as elsewhere in Europe, is putting a lot of stress on sovereignty and the sense of national pride... There is, arguably, an important dilemma: to make Visegrad countries partners in a pan-European dialogue, while allowing them their sense of distinctiveness. There are ways to solve this dilemma, but you couldn’t decide on a worse way of doing this than what the current leadership has done. I am especially worried about the Polish government’s historical policy, and their using hard measures to impose one official version of Conﬂ ict & Cooperation remembering the past on the populace. This is an incredibly dangerous project, which will lead to a further fracturing of society. This is also a way to promote nonstop conflict within European Forum Alpbach civil society, which has its own visions of the past. If you are going to say, well, there should be one central 16.8. – 1.9.2017 | #efa17 | www.alpbach.org vision and this one is the proper one, those actors in the civil society are not going to give up. The political and social life is very much based on action and reaction. The more you push, the more they will push back unless you suppress them. By Conﬂ ict & Cooperation definition, it is the end of democracy. You need a more skillful way of constructing those policies and strategies, and the goal should be a consensus of some kind, a set of compromises. The European Forum Alpbach principal virtue of democracy is almost by definition a com- promise. In a society of any complexity, you have to figure out 16.8. – 1.9.2017 | #efa17 | www.alpbach.org the way of finding some kind of mutually satisfying solution of various ideas and interests. What is the value of producing one proper vision? A modern state, a modern complex society, is and should be producing a unifying self-image. But it has to come from various sources, and it has to be polyphonic. I see that the current government has an idea of sending out a monolithic message of what Poland is. And it is not working very well for Poland’s reputation abroad.

What is the potential for civil society to produce a counter image, its own narrative? Civil society in Central Europe, particularly in Poland, is not weak. It is just that the strategies and methods and cultures of associating here are partially different than in the West. We don’t have the same intensity of formal organizations, but there are other ways in which people actually work together. Even if we assume that the civil society is not very strong in Poland, it It’s time to break new ground. doesn’t mean that the society is weak. Weak society means an Get a glimpse into Europe’s future together anomic situation of excessive individualism where everything with renowned speakers from across the world. begins to fall apart. Let’s make it clear: the strength of cultural ties, informal and formal, that bind people together varies from Register now: www.alpbach.org place to place. It is wrong to assume that those kinds of ties are weak here. It can be that people are more concentrated in net- works of friends and families, but I think that there is enough research that shows that people do assemble to work on various problems and projects. It is maybe stronger on those informal It’s time to break new ground. ties than in the West, and it is increasingly divided, but is not a Get a glimpse into Europe’s future together weak civil society, and it definitely can speak for itself. with renowned speakers from across the world.

Jan Kubik works on the interplay between power and culture, protest poli- Register now: www.alpbach.org tics and social movements, and post-communist transformations. Most recently has been the Director of the Univerity College London School of Slavonic and East European Studies.

77 CULTURE FEAR AND POTENTIAL

The Kremlin and its friends aim for a power grab in Central Europe

JAKUB JANDA

lmost three decades after the end of the their citizens preferring “neutrality” to any polar adherence. In Soviet occupation, the countries of Central effort to divide the societies further, these already doubtful seg- Europe (CE) are once again at a geopoliti- ments of the population are being carefully targeted by hostile cal crossroads. After successive waves of disinformation operations. If we take into account the actions migrants flowed over the continent in 2015 of political leaders, which Lenin would call “useful idiots”, the and a surge of Islamist attacks struck sev- impact is already measurable. In the Czech Republic, the EU eral Western European cities, the Visegrad membership is at stake. Only 32% of Czechs are in favour of it, countries, in an unprecedented consensus, while the Czech President Miloš Zeman – a long-term Trojan have started to question the immigration policies of many horse of the Kremlin – has already started to call for an EU exit AWestern-European politicians. The underlining strategic referendum. In Slovakia, the NATO membership is the target question is simple: Can CE disagree with Western Europe on with only 30% of Slovaks approving it. This is not to suggest that Islamic migration and still stay a part of the alliance of West- the Kremlin is the cause these calamitous positions. Rather it ern democracies, or will some members of the group reject exacerbates the situations and conditions already causing social the Western approach to Islam so harshly that they will swing strife, such as worsening the migration in Europe by bombing geopolitically to the East? The later situation would surely in- Syrian cities, or, more generally, by fabricating dozens of disin- volve an eager Kremlin, arms spread wide welcoming those formation stories in its “media”. returning to their fold of influence. There is already abundant evidence of how Moscow has USEFUL IDIOTS tried to sway public opinion and manipulate political leaders, Regardless of any propaganda, Putin is not as omnipotent as going as far to breach domestic security systems in CE. Every he pretends to be. That is why his agents and ministers value year, national counter-intelligence agencies warn publicly that the “useful idiots” who act as if their decisions benefit do- intense Russian intelligence operations are highly active in this mestic interests and causes, but just so happen to be in line region. Around 2010, the Kremlin positioned its spy, Richard with what the Kremlin desires. Be it “media” groups running Rachardžo, into the General Staff of the Czech Army, while disinformation projects such as Czech AC24 or OUR MEDIA, the intelligence officer constructed psychological profiles of which are benefiting from the daily fabrication and circula- Czech political and military leaders, later escaping to Russia. tion of disinformation, manipulation and conspiracy theories, In 2014, the Polish counter-intelligence agency, ABW, arrested local politicians – who call for EU exit referendums in order a person within the Polish Defence Ministry on charges of es- to score political points with their home electorate – or local pionage (also relating to Russia) with similar allegations being paramilitary groups with extremist ties, most of these indi- brought against Hungarian far-right MEP Bela Kovacs. viduals are acting for their of personal gains – economic or However, the effect of Russia’s interference is not uniform political – while the Kremlin simply watches, encourages and within the Visegrad group; those most affected are the Czech sometimes steps in to steer the course. Republic, Slovakia, and Hungary as Poland, due to their his- Watching disinformation operations for the past two toric relationship with Russia, is wary – if not outright dismiss- years, we can assess that they have been fairly successful in ive – of any plans coming from Moscow. According to polls assigning false blame, with the US baring most of the brunt. conducted by GLOBSEC Trends, about half the populations of According to the GLOBSEC Trends report, 38% of Czechs say these three countries see their country‘s position in Europe as that Washington is behind the war in the Ukraine, and 50% of something in between the East and the West, with almost half of the Czech public think that the United States is responsible

78 VISEGRAD INSIGHT 1 (10) | 2017 FEAR AND POTENTIAL CULTURE

for the Syrian refugee crisis. In tandem strategically, 28% of success of its collaborators. The Czech President can win his Czechs believe that the Russian military intervention in Syria second term and thus assuring a strong position for his do- has helped to solve the European migration crisis. Worse still, nors until 2023. The Slovak and Hungarian Prime Ministers these ideas and statistics are reiterated by Putin’s political al- might start to play an open “balance game” between Moscow lies in CE – counting in their ranks the Czech President Miloš and Washington-Brussels-Berlin. Radical far-right groups, Zeman, his predecessor Václav Klaus, the former Slovak PM extremists and disinformation businessmen might grasp the Ján Čarnogurský, many communists as well as most of the far-right.

DEMOCRATIC INSTITUTIONS One would ask: (SHOULD) STRIKE BACK A look at the institutional response to the pro-Kremlin disin- how far can the Kremlin formation offensive shows us how unwilling to defend their influence spread in the sovereignty some of Central European governments are. So far in Slovakia. only the civil society is responding to the call. The upcoming years? lone reaction from the government was a 2015 annual report of the country’s counter-intelligence agency, SIS, which point- ed out Russia’s “propagandist activities” and how it attempts to “influence public opinion in Slovakia”. A similar scenario is opportunity of uncertain times and seriously undermine trust playing out in Hungary where openly pro-Russian journalists towards reliable media sources and democratic institutions, are praising Putin and spreading conspiracy theories. paving the way again for political allies of the Kremlin. On the other hand, the Czech Government has reacted It is only a matter of choice whether CE will remain a by naming and analysing the “influence of foreign powers” part of the democratic West, or if some countries will move and “hybrid threats” as two out of eleven major homeland se- towards the direction of those states already deeply penetrated curity threats in its new Audit of National Security. A new by Russian influence. To see our potential future, we need only Hybrid Threat Centre is being established at the Czech Interior to look East. Ministry, which will be directly responding to the lack of spe- We could slowly become Serbia, a country where the cialized expertise on this issue within the public administra- Kremlin projects its influence through dominance in the tion. This is not surprising as the Czech counter-intelligence domestic energy infrastructure and other political tools like agency BIS says that the “infrastructure ({already in place} ...) being forced to essentially host the Russian military. Taking can be used to destabilize or manipulate the Czech society or a longer perspective, CE could become a faded facsimile of political environment at any time, if Russia wishes to do so”. itself, societies run by local oligarchies secretly underneath the As expected, Poland is the leader in responding to the Russian control of strong Russian voices, such as the case of Moldova. threat. The Defence and Foreign Ministries are running their It is highly unlikely, but the worst-case scenario would be strategic communication teams and cooperating closely with when Russia effectively occupies your territory and uses an their Baltic allies. The Polish counter-intelligence agency, organized-crime puppet structure to provide control, such as ABW, dismantled a group of pro-Kremlin far-right politicians in Donbas. While none of these potentialities are definitive, if on suspicion of espionage. the proponents of liberal democracies do not unify and act, all of them are feasible outcomes in the years to come. WHAT’S AROUND THE CORNER One would ask: how far can the Kremlin influence spread in The author is the Head of the Kremlin Watch Program and Deputy Director the upcoming years? More or less, it depends on the domestic of the European Values Think-Tank, based in Prague, Czech Republic.

79 CULTURE FEAR AND POTENTIAL

in the Czech Republic and Slovakia

IVANA SMOLEŇOVÁ

nfortunately for the anti-immigration rhetoric has since been The projection Slovak Prime Minis- mainstreamed.” Marie Heřmanová, pro- ter Robert Fico, very ject coordinator for Migration at Open and exaggeration few immigrants of Society Fund Prague, points to a relatively of a potential Muslim origin can new phenomenon of fear-mongering. be found in Slova- With the migration crisis worsening, poli- threat is a powerful kia, as most of them tics of fear and criminalization of Muslims head to other Euro- has spread around the world like a wild- weapon itself pean countries, such as Germany, France fire. In Great Britain, anti-immigration Uor Scandinavia. Yet, a skilled politician rhetoric and lies dominated the Brexit is never short of solutions; three days campaign and eventually contributed to ahead of the March 2016 parliamentary the country’s decision to depart from the elections, Mr. Fico flew to the Greek- EU. In central Europe, populist parties and Macedonian border just so he could hold politicians such as Viktor Orbán, Robert a press conference with Syrian refugees Fico and Miloš Zeman exploit the legiti- in the background. “I am a person who mate popular fear of Islamic extremism to has seen all kinds of horrors…. But this is win some extra votes and supporters. not [that]… this is danger!” Mr. Fico con- The manipulative potential of fear- fessed to cameras while a number of refu- mongering in politics has been tested nu- gees behind him were visibly distressed merous times throughout history. During by the media attention. the Nuremberg Trials, Hermann Goring “Two years ago, politicians barely claimed that “the common people don’t mentioned migration… [however, now] the want war… but the people can always be

80 VISEGRAD INSIGHT 1 (10) | 2017 FEAR AND POTENTIAL CULTURE

brought to the bidding of the leaders. It is While the goal of alternative pro- Mr. Fico’s party did not score well in the easy. All you have to do is tell them they Russian websites is to erode the public March election. Instead, he succeeded in are being attacked and denounce the pac- trust in democratic institutions, popu- bringing the anti-immigration rhetoric to ifists for lack of patriotism and exposing lists play on a different note. According the centre of the political campaign and the country to danger. It works the same to Roman Maca, a Czech blogger, the goal eventually brought more votes to anti- way in any country.” of politicians is to be elected into office. immigration hardliners, such as neo- Very often, one does not necessar- “This is especially the case for populist Nazi LS NS headed by extremist Marian ily need to be physically experiencing the politicians – they search for their own Kotleba that now occupies 14 seats in the source of the fear to feel endangered; just topic and this is the easiest way to win Slovak parliament. the projection and exaggeration of a po- voters and gain political capital.” In other cases, fear-mongering has tential threat is a powerful weapon itself. In the Czech Republic, such practic- borne its fruits. The ANO party of Czech This is especially true for many Central es have traditionally been used by smaller oligarch and Finance Minister Andrej European countries that saw an upsurge parties on the extreme right that open- Babis, who has been stressing the eco- of anti-refugee rhetoric and the rise of ly defame refugees, organize protests nomic burden of refugees, often through xenophobic populists, even though very against immigration or spread outright unfounded claims such as that most of few refugees have settled there. In 2015, lies and conspiracy theories. However, the immigrants in Germany are unable Slovak authorities granted asylum only to with more people on European borders to work, has recently won the election in 8 people and Czech Republic to 71. and particularly after the deadly terror- regional councils with 21.05 percent of Regardless of the legitimacy of the ist attacks in France, the topic has been the popular vote. According to the most fear and security aspects stemming from exploited by the political mainstream as recent polls, Mr. Babis is also the most a large influx of people into Europe, well. “Immigration has a special place trusted Czech politician. To what extent conspiracy theories and half-truths in the Czech Republic, mainstream par- this popularity can be attributed to his have already begun to spin perceptions. ties like ANO, part of ČSSD or KSČM are vilification of refugees and xenophobic Unfortunately, it is nearly impossible to devoting special attention to this topic, statements remains a question as other assess who exactly is the biggest source of despite the fact that the immigration cri- factors contributed to his success too. anti-refugee narratives. As a recent study sis has not hit the Czech Republic,” Ms. In both countries, the biggest prob- by the Czech NGO People in Need point- Vejvodová commented. lem is the lack of balance in the debate as ed out, hate-speech against immigrants One of the most prominent politi- very little is done to counter the anti-ref- has a cyclic nature – it is very hard to de- cians to criminalize immigrants on a reg- ugee narrative. Long gone are the times termine who is dominant in the media- ular basis sits in the presidential palace. xenophobic voices were ostracized by the politicians-society triangle and what are The Czech President Miloš Zeman has political mainstream. “There is nobody the particular motives of each group. been strongly advocating against immi- among the elites or leaders that would con- The problem has been exacerbated grants, calling for deportation of refugees tradict the rhetoric of fear. People with the by social media and the emergence of and encouraging Czechs to buy weapons absence of critical thinking miss the whole “alternative media websites” as they pre- to protect themselves against incoming picture and are constantly fed by only sent a significant component of the hate- Muslims. On one occasion, he called the one part of the truth, or by outright lies speech debate and facilitate the spreading current immigration crisis “an organized in some cases” warns Monika Svetlíková, of lies and stereotypes. Research from the invasion.” By whom the invasion is organ- specialist on migration and project man- Masaryk University in Brno sheds more ized, President Zeman failed to clarify. ager at the People in Need Slovakia. Only light into some of the most common ma- In Slovakia, xenophobic rheto- the Slovak President, Andrej Kiska, of- nipulative online tactics with regards to ric dominated the political campaign fers some window of hope as the only the refugee crises. By studying 2660 arti- throughout most of the 2015 as well as Visegrad president who speaks of solidar- cles from pro-Russian alternative media the beginning of 2016. In the run-up to ity with refugees and against xenophobia websites, they proved negative emotions the March 2016 parliamentary election, and rise of extremism. play an important role especially when it and in an effort to raise more votes for Words matter and widespread comes to potentially inflammatory issue the ruling SMER party, the Slovak Prime fear-mongering contributes to the grow- of refugee crisis. 32% of articles that dis- Minister regularly held press confer- ing hatred among minorities. “The con- cussed the refugee crisis were negatively ences and staged media appearances in stant search for an enemy legitimates charged - in 52% they incited fear, in 20% an effort to sensationalise the problem. and strengthens negative mood in the hatred and in 19% outrage. He stressed his efforts to prevent the society,” Ms. Svetlíková further point- “By appealing to fear, they are send- creation of a “Muslim community” in ed out. Increased hate-crime and kill- ing a message that the current political Slovakia as well as stop Arab men from ing of a Pole in post-Brexit Britain is a establishment cannot deal with the mi- raping Slovak women, statements in- tragic reminder of the danger stemming gration crisis and does not have the situ- tended to scare rather than reassure his from populist hate-speech, yet very few ation under control,” Petra Vejvodová, electorate. He also most likely attempted Central-European politicians seem to re- a political scientist from the Masaryk to divert public attention from many cor- alize consequences of their words. University and one of the initiators of the ruption scandals of SMER party officials. research, commented on the findings. The political gains of the main- The author is Fellow and Program Manager at the “Feeling secure is one of the basic needs of stream parties that have capitalized on Prague Security Studies Institute. individuals, thus an easy method of mo- anti-refugee anxiety are somewhat ques- bilizing the society.” tionable. Despite the relentless efforts,

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THE VISEGRAD CITIZENS, NEIGHBOURS AND ALLIES

In light of all difficulties facing the EU today, the Visegrad group has the opportunity to showcase its relavance, cohesion and potential, but only if the political elites in the region start leading the way

OLGA GYÁRFÁŠOVÁ

he Visegrad Group is primarily a political pro- ents said they heard of the Visegrad Group and knew what it was ject. But the “flesh and blood” of the living about, compared to 37% of the Czechs, 26% of the Hungarians, organism is given by the civil societies com- and only 17% of the Poles. This fact reflects the high interest of mitments, by the citizens´ contacts and mutual Slovak political representation in intense political cooperation interactions. And what do the citizens of par- within the V4 that can be “traced” back to the period when Slo- ticular countries think about the V4? Do they vakia struggled to return to the road of EU integration after the actually know what the Visegrad Four is, is it a 1998 parliamentary elections. “Slovakia’s road to Brussels goes visible “brand” or not? To what extent do the via Visegrad”, was the popular saying of those years. Visegrad citizens trust each other? What is the intensity of Strategic objectives of Visegrad as they had been set up Ttheir mutual interactions? The answers to these questions, in early 1990´- have been met by consolidating democracy which represent an important dimension of inner cohesion of and joining EU and NATO. Has the Visegrad still any mis- the Visegrad, can be found in the research project “Perception sion? Is it still relevant? Positive response comes from all four of the Visegrad cooperation in V4 countries“, conducted in countries cooperation but its magnitude varies: Visegrad co- 2015 on the initiative of and with financial support from the operation is considered as meaningful and important by 70% International Visegrad Fund. of Slovaks, compared to about 50% of the Czechs and 40% of The project was coordinated by the Institute for Public the Hungarians and the Poles. Still, V4 cooperation actually Affairs in Bratislava. The data from a representative sample of does not have any opponents. adult population of the four countries were gathered by the The public support for V4 cooperation can be compared following research agencies: STEM (Czech Republic), Tárki with data from 2003: Slovakia has kept the highest level of sup- (Hungary), Stratega Market Research (Poland), and FOCUS port, however, in Poland and Hungary the support for and the (Slovakia). The current project is a follow-up to similar public belief in the meaning of V4 cooperation decreased over the last opinion polls conducted in all V4 countries in 2001, 2003, and 12 years, in Poland by as much as 21 percentage points. On the 2011. other hand, the Czech public is more inclined towards the cooperation within the Visegrad Group than 12 years ago (Graph 1). VISIBILITY AND AWARENESS OF RELEVANCE The decreased level of public awareness in Poland and The findings showed that the highest level of awareness of the V4 Hungary may have different reasons. Compared to its part- and Visegrad cooperation is in Slovakia: 54% of Slovak respond- ners within the Visegrad Group, Poland is a regional power,

82 VISEGRAD INSIGHT 1 (10) | 2017 Illustration: Sonia Jaszczyńska

FEAR AND POTENTIAL

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a key political actor, and the Poles can feel that they are in a The simplest indicator of mutual relations among V4 different league. In the past, the destiny of Polish nation and countries (and their relations to other states) is trust and the Polish statehood directly depended on the development of re- feeling of the public that they can rely on the other country. lations between Poland on one hand, and Germany and Russia The strongest level of trust towards other V4 nations can on the other hand (as well as on mutual relations between the be observed in Poland, where they occupied top three posi- two states). The public views of state’s foreign policy have been tions on the scale of trustworthiness: Slovaks ranked first with definitely shaped by the attitudes of a significant proportion of 69%, followed by the Czechs (61%), and Hungarians (61%). Polish political and cultural elite, which attach special impor- Within the Visegrad “sociogram of trust” the highest level of tance to the interaction of Poland and the two countries with trust can be observed between the Czechs and the Slovaks – respect to Poland’s current position. Another influential factor almost four fifths of respondents in the two republics trust can be considered the current global events with active partici- the other country. Over the last few years, the closeness of pation, be it positive or negative, of Germany and Russia. The the Czech Republic to the Slovak public (and vice versa – two countries have recently become visible mainly in connec- closeness of Slovakia to the Czech public) has also been tion with Russia-Ukraine conflict – Russia as an aggressor, and proved by other surveys. In Slovakia, the most trustworthy Germany as a proponent of Western Europe’s firm stance on are the Czechs (78%), Austrians (49%), and Poles (40%), while Russian aggression. Hungarians took only the ninth place (30%). In Hungary, the decrease in the level of public awareness In the Czech Republic, the ranking is quite different: the of the V4 might have been caused by inner political chang- Slovaks (79%) and French (59%) are followed by Poles, Britons es and foreign policy priorities other than those relating to and Austrians (58% each), while the Hungarians with 37% took Central Europe. A common denominator of the decreasing the ninth place. Hungary is the only V4 country, where the trend in the two countries can be the feeling of reduced rel- public shows the highest level of trust towards the country evance of the group compared to the period when the coun- outside the Visegrad Group – Germany (62%). Poland was tries joined their forces to cope with individual milestones of ranked second (58%), while the Czech Republic and Slovakia European integration and the common action within the re- (40% both) share the fourth and the fifth places. gion represented an added value. In general, the level of trust among the V4 inhabitants A different case represents the Czech Republic. In the is rather high. Even the Slovak-Hungarian relations, formerly mid-1990s the Czech society basked in the EU’s favourable the “Achilles’ heel” of the Visegrad cooperation, have never approach, relishing its “star pupil of integration” title. Václav been better. While in 2011 only 16% of Hungarians trusted Klaus, the Prime Minister and later also as the President of the Slovaks, in 2015 this proportion increased to 40%. A slight Czech Republic, repeatedly labelled Visegrad cooperation as improvement can also be seen in Slovakia, where the share an obsolete concept. Today, the situation is quite different. The of those who trust Hungarians increased from 26% to 30% in Czechs’ political elites revived interest in cooperation within the same period. Slovak public still takes a more reserved at- the V4 format is clear, which is reflected in the support of the titude towards Hungary compared to other countries; how- general public. ever, based on the aforementioned indicators, this wariness The aforementioned comparison shows that the public seems to be weakening. The mutual perception of Slovaks and awareness of the Visegrad cooperation and the perception Hungarians have also been positively influenced by the fact of its importance can change easily; it is not given once and that despite ideological differences and previous experiences, forever. The views of citizens respond, to a certain extent, to burdened with tension and confrontation, the current ruling a broader range of global events and reflect current political parties – Smer-SD (Direction – Social Democracy) in Slovakia preferences. Political elites must never stop trying to enhance and Fidesz in Hungary – managed to establish and maintain the public awareness and interest. correct and trouble-free pragmatic relations.

MENTAL MAP OF THE VISEGRAD GROUP PARTNERS AND ALLIES The nations of the Central European region carry a huge his- OUTSIDE THE VISEGRAD GROUP torical burden from their common past. Interpretation of Apart from the V4 countries, the inhabitants in these countries history often reveals that everyone feels they are owed some- trust their significant Central European neighbour, Austria. In the thing, and everybody did harm to someone else at some point. list of trustworthy countries Austria is followed by Germany, the On the other hand, the nations are unified by the closeness of United Kingdom, and France. For a long time, the V4 countries their common destiny which sets the grounds for mutual trust. have had different attitudes towards Russia. Poles feel the high- Based on surveys we see that the Czechs and Slovaks share est degree of distrust of Russia; on the contrary, the Slovaks feel the strongest ties of confidence. This level of trust and above- the highest degree of trust towards this country. While in Poland standard relationship seemed to be the utopian dream until the distrust towards Russia is deeply rooted in historical experi- around the split of the Czechoslovak federation in 1992-1994. ences and encouraged by the current political discourse, Slovaks But recently the commonalities and the joint history represent perceive Russia in a more positive way despite their bad experi- a strong background for good relations – the two nations be- ences, for instance the invasion of Czechoslovakia by the Warsaw came the most amicable of divorced couples. Poles have very Pact armies in August 1968 and the subsequent twenty-year-long balanced relations with the other three nations, and, of course, Soviet occupation and devastating normalisation that cut short the most sensitive is the question of trust between Slovaks and the reform processes launched by the Prague Spring, and brought Hungarians. However, many bridges have been built in recent political repression of a considerable part of population. Based on years to overcome the historically conditioned distrust. Okay, the findings of other surveys, however, one can state that there is but what about the world beyond Visegrad and its allies? no relevant public support for current policy of Putin’s Russia.

84 VISEGRAD INSIGHT 1 (10) | 2017 FEAR AND POTENTIAL CULTURE

The Visegrad countries also vary in their attitude towards The second considerable tie exists between the inhabit- the United States. Although all of them are NATO members ants of Slovakia and Hungary, mostly due to the presence of a (the Czech Republic, Hungary and Poland since 1999, Slovakia large population of ethnic Hungarians in Slovakia (when they since 2004), they trust the key country of the Transatlantic were asked about a family member, the proportion of positive Alliance to a different extent. The highest degree of trust -to answers reached 64%, in case of friends 83%). wards the United States is in Poland (50%), the lowest one in The findings of our representative survey focused on in- Slovakia (27%), where less people trust the United States than tensity of mutual visits of V4 citizens also show that the exist- Russia (Graphs 1-4). In the Czech Republic, 41% of inhabitants ence of a high frequency of mutual visits is only an illusion. trust the United States, while in Hungary it is 33%. In general, The only exception is the contacts between Slovakia and the the citizens of V4 countries trust the United States more than Czech Republic – 76% of Czech respondents said they vis- they trust Russia, with Slovakia being the only exception. ited Slovakia as tourists, and 75% of Slovaks have been to the The survey also includes the attitudes towards Ukraine, Czech Republic. This symmetrical tie can be explained by the the neighbour of three V4 countries, which has recently un- common past and the further development of mutual relations dergone a turbulent development. The relation to Ukraine in after 1993. the Visegrad Group is marked by a high degree of distrust; in The second highest share is represented by citizens of neither country the trust prevails. Slovakia visiting Hungary (60%). As for Hungarian respond- Unfortunately, we did not have a chance to explore in ents, however, only 31% stated they visited Slovakia. This more detail the factors affecting the degree of trust/distrust; asymmetry stems from the fact that 71% of Slovakia’s inhabit- most probably they include concerns about political insta- ants visiting Hungary are ethnic Hungarians. The Poles are the bility, inflow of migrants, threats relating to Russia-Ukraine least frequent travellers, though Poland as a tourist destination conflict. Apart from a strong influence of the current Russia- is quite frequently visited by both Slovaks (49%) and Czechs Ukraine conflict, the prevailing distrust towards Ukraine can (43%). also reflect other, more lasting factors. In case of Poland, the The third area in which the survey assessed the frequency causes of distrust can be found in the past, when relations be- of mutual interactions was art and culture. In Slovak environ- tween Poland and Ukraine suffered from sharp conflicts on ment, the Czech culture predominated: 70% of respondents the basis of ethnicity. The prevailing distrust of V4 citizens said they saw a movie, a theatre performance or read a book can also be influenced by a lower awareness of Ukraine, insuf- by Czech authors. Here too one can see the factor of Czech- ficient knowledge of those development trends in Ukrainian Slovak togetherness, nourished by the closeness of languages society that could increase the degree of trust towards this and long-term cultural interactions of the two nations. On the country. In addition, for a long period, anything even remotely other hand, about half of Czech respondents stated they came related to Ukraine has been represented in public discourse in touch with Slovak art and culture. The contact of Slovakia’s of V4 countries (perhaps with the exception of Poland) only inhabitants with the Hungarian culture is practiced mainly poorly, sometimes almost marginally. In fact, Ukraine entered by ethnic Hungarians (71% of ethnic Hungarians living in the policy of V4 countries only in 1992, after the establishment Slovakia said they got in touch with Hungarian art). of independent Ukrainian state. In the past, Ukraine as part of the Soviet Union could only be present in Central European CONCLUSIONS countries in the form of discursive thinking of a small number The V4 celebrates quarter-century of its existence. It became of people (in particular experts dealing with the country, its an example of regional cooperation that guarantees stability history, culture and language on a professional basis) with a and good neighbourly relations. Despite the shifts in the com- minimal influence on the shaping of public opinions. The cur- mitment of politicians to Visegrad cooperation varied during rent distrust of V4 citizens towards Ukraine might also reflect those years, the citizens of the four countries perceive Viseg- the effect of a Russian propaganda machine after the outbreak rad as a relevant and meaningful regional group. of Russia-Ukraine conflict in the spring of 2014. Today, the Visegrad Four as a regional group is facing serious challenges. The political elites of particular countries CONTACT WITHIN THE V4 must do their best to find appropriate solutions to the exist- An important part of the survey was the examination of the ing problems (EU financial situation, migration, terms and intensity scale of mutual contacts (of touristic, commercial, conditions of trade cooperation with the US within the pro- consumer, and cultural character) among the inhabitants of posed Transatlantic Trade Investment Partnership – TTIP) in individual countries of the Visegrad Group. a co-action with EU partners and EU institutions. With their We have also been interested in how many V4 citizens commitment to cooperation and solidarity the leaders of four have family members or friends in other V4 country. Here too Central European countries would send a positive signal to the the above-standard relations between Czechs and Slovaks are public on a continuing significance of the Visegrad coopera- vital – 43% of Slovaks said they had a relative in the Czech tion as well as on a strong tie between historical destinies of Republic and one fifth of Czechs have a relative in Slovakia. Poland, Hungary, Slovakia and the Czech Republic, and the When asked about friends, the proportions were even higher destiny of the united Europe. This approach would certainly – 62% of Slovak respondents have friends among the Czechs, raise the awareness of inhabitants of V4 countries of their re- and 59% of Czechs have friends among the Slovaks. The dense gional solidarity, and contribute to a more positive perception network of relations, inherited from the period of common of cooperation within this remarkable regional format. Czechoslovak state, and further expanded and deepened after 1993, creates conditions for further positive evaluations, for Olga Gyárfášová is a Slovak sociologist, Professor at Comenius Universi- instance in case of the mutual trust. ty in Bratislava.

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EU BENEFITS ACCORDING TO YOUNG PEOPLE

A new generation (aged 15-24) from Visegrad Research is based on a survey conducted The sample design was based on official countries have favourable opinions about through on-line interviews (Computer Assisted EU statistics (Eurostat). Partners of the the European Union, yet they believe that EU Web Interviews – CAWI) in 6 countries: Poland, project: Institute of Public Affairs (Poland), reforms are necessary. Peace in Europe is Czech Republic, Slovakia, Germany, Austria Bertelsmann Foundation (Germany), Institute the biggest benefit of European integration and Hungary. In each country a nationwide for Human Sciences (Austria), STEM (Czech according to the youth from V4, whereas representative sample of 500 inhabitants at Republic), Political Capital (Hungary), Institute terrorism and the refugee crisis are considered the age of 15-24 was interviewed over the for Public Affairs (Slovakia). the biggest problems. Young Czechs, period 30.01-13.02.2017. Hungarians, Poles and Slovaks have negative Łukasz Wenerski, views about immigration, and are against Institute of Public Affairs, Poland accepting refugees into their home countries.

YOUTH AND EUROPE: HOW IMPORTANT FOR YOU PERSONALLY ARE THE FOLLOWING BENEFITS OF THE EUROPEAN INTEGRATION

important

not important AU CZ DE HU PL SK

MAINTAINING PEACE 81% 77% 80% 77% 76% 75% BETWEEN MEMBER COUNTRIES OF THE EU 3% 5% 5% 3% 6% 5%

NO BORDER CHECKS 50% 46% 55% 59% 63% 46% BETWEEN THE COUNTRIES IN THE SCHENGEN ZONE 15% 14% 11% 8% 7% 12%

63% 63% 62% 65% 61% 61% OPPORTUNITIES TO STUDY IN ANOTHER EU COUNTRY 12% 6% 7% 9% 10% 10%

OPPORTUNITIES TO 67% 60% 68% 65% 72% 64% SETTLE AND WORK IN ANOTHER EU COUNTRY 8% 7% 6% 7% 6% 7%

TRANSFERS OF EU FUNDS 41% 37% 44% 49% 58% 39% TO LESS DEVELOPED MEMBER COUNTRIES 14% 12% 11% 11% 12% 7%

VOMMON EUROPEAN EFFORTS 66% 58% 70% 67% 48% 55% TO PREVENT CLIMATE CHANGE AND DEVELOP ENVIRONMENTAL PROTECTION STANDARDS 7% 8% 5% 16% 6% 4%

86 VISEGRAD INSIGHT 1 (10) | 2017 FEAR AND POTENTIAL CULTURE Rebranding the Visegrad Group with PR expert: The Untapped Power of Regional Politics

Vojtěch Boháč: How do you perceive the Visegrad group from your professional point of view? What do you think can be improved?

Szymon Walkiewicz: The main question is: “What is the V4?” In the very beginning, when they set up the group, the task was clear and everybody knew its purpose. However, after the four countries entered the EU in 2004, it should have signalled the end of the V4. That would have been a great success and proof that cooperation and collaboration between countries beyond borders is possible. Since 2004, when I think about the V4, I am not sure whether those countries have the same drive and purpose anymore. From the public relations perspective, it is hard to build a brand if you don’t have the same common values. Those who created the group - Antall, Walesa and Havel - were symbols of freedom fighting for democracy. The values of the current V4 governments are a bit different.

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In 1990, Vaclav Havel said in the Polish parliament: “Now we rope, this will depend on if the governments shift from think- have an opportunity to transform Central Europe from what ing about their global political positions and focus instead on has been a mainly historical and spiritual phenomenon into regional politics. They should develop stronger relationships a political phenomenon. ... Then we can approach the richer between the four countries by expanding the infrastructure for nations of Western Europe, not as poor failures or helpless, exchanging information, money and technology. They should recently amnestied prisoners of the USSR, but as countries have grants and programs for entrepreneurs and students that can make a genuine contribution. What we have to offer alike. Today, students from Warsaw would like to go on ex- are spiritual and moral impulses, courageous peace initiatives, change programs in Spain, and this is understandable consid- underexploited creative potential, and the special ethos cre- ering how easy it is do so and the obvious benefit of increased ated by our freshly won freedom. We can offer the inspiration sunshine. But if they were given scholarships to Budapest, to consider swift and daring solutions.” How can branding the trust me, people would consider going to Budapest. They will V4 help us in such efforts? meet people, make friends, they could actually raise a family I think that those words are very wise. Their strength there. These small connections, multiplied many times over, and truth are motivating and could be the base for an em- will increase the bonds between the countries, and it is not powering, supportive approach if we could implement them just about the students. Businesses and entrepreneurs can tie in the V4. Sadly, they made more sense in the 90’s. When you the countries and their citizens together by incentivizing them are fresh, you have different experiences to with capital and the potential for economic draw inspiration from, you have something betterment. This is the direction V4 should to say. In many ways, we lived up to those The main follow. We can’t fight with the politics of the ideas because the V4 countries worked very EU or compete with the Scandinavian life- hard till 2004. Now, it is too late, you can’t question is: What style. What we should do is build a brand use the same rallying call anymore; you can’t for the place where we live. Globally, we build a brand on something that is 26 years is the V4? In the achieved what we wanted in 2004. Now, we old. In my opinion, it was good at that time, should focus on solving our problems and but not for now. very beginning, bringing our citizens closer together.

Do you see any positive content upon when they set up Do you think that we shouldn’t care which we can start building the V4 brand? whether other countries recognize us or The biggest problem of the V4 is that it the group, the not? hasn’t redefined itself since 2004. Certainly, To build a brand, you need common val- it is a daunting challenge which many in task was clear and ues. If you want to build an international the countries might be timid in attempt- brand on the geopolitical map, you need ing. The reasons are obvious, the countries everybody knew to have consensus from all the members. have different visions of Europe, of the EU Today, this is just impossible. Even if Or- and totally different approaches to society its purpose ban, Sobotka, Fico and Szydło had similar and democracy. Let’s compare two regional mindsets, I still don’t think that it would be identities, the first being CEE - Central and good for developing the block within the Eastern Europe. And if you think of CEE, there is a lot of what EU. These politicians think about their respective countries Havel said: an essence of the eastern soul, a great heritage, first from a national perspective: “we, the people of Poland”, the willingness to fight for freedom, a shared, sad history of or “we, the people Hungary”. The only types of policy they can very hard times from the 50’s to the beginning of 90’s. When agree on are the ones that go against the will of the EU as a you think about CEE, it stands for something. The V4 is little whole. And it is not really smart to build the brand of the V4 bit like CEE, but when you say V4 or Visegrad group, peo- by pivoting against the European Union. Again, to not kill the ple don’t really understand what you are talking about. The V4 outright, I would focus on local politics. You don’t need CEE is for me more like the Scandinavian countries. When to be on the top level in geopolitics to create the sensation of you think about Scandinavians, it stands for something. It is great activity. If you build a highway from Warsaw to Buda- a unique lifestyle, design aesthetic, atmosphere and ecology. pest and have a stronger vision of how to cooperate together, Those are values and aspects which you can build a brand on. people will hear about it, and the word will spread organically. When you say CEE, it is also something; it is the eastern way This is how you build a brand, through long-term coopera- of doing things. It is the approach, the heritage, the strength, tion. It is more about corporate and public affairs and PR, not the belief in freedom, but what is the V4? I can’t recall what top-level geopolitics. The groups managing at this level have the V4 stands for. already cemented their positions, and there is no space for the V4 right now. Do you suggest abandoning the V4 brand and starting with a new one? We have the Erasmus program, which we can use for ex- Well, yes and no. I would probably move back to the Bratislava changes in V4 countries, but for some reason students still declaration from 2011. It states that the V4 is here “to develop choose Spain or France more often than Poland or Hungary. the principles expressed in the values of the four freedoms There are also the V4 scholarships, but people don’t really which open up new opportunities for jobs, economic coopera- use them. How would you encourage the people from V4 tion, trade, investments and contacts among citizens.” While countries to stay within the region? the V4 has the potential to be a great brand for Central Eu-

88 VISEGRAD INSIGHT 1 (10) | 2017 FEAR AND POTENTIAL CULTURE

First, I have to define the problem. Why do people prefer going In terms of common values, Central Europeans do think simi- to Spain with Erasmus than to Budapest? I don’t know of any larly, just from their own individual perspectives. Imagine specific research that supports this, so let’s hypothesize for these leaders coming together on one ultimate goal. For the now. From my perspective, the reason is that moving within past several years, it has been possible, but only because they the V4 only requires a change of address, and the essence of just talk and don’t act, don’t attempt to solve any difficult prob- adventure is limited. In Spain, the changes are more notable: lems. If they would be more strategic with the power of the the sun, the culture, the emotions including even the romantic V4 and focus on the local and regional aspects, that would be notions stemming from flamenco…all of this is really PR. If much easier because there are fewer issues to contend with. you have never been to Prague, Bratislava or Budapest, you just don’t know how beautiful those cities are and there is no What should be the relationship between the V4 brand and way you can imagine it. They have no PR. Prague has the best the brands of each respective country within the V4? Isn’t it image due to their Hollywood connections, several famous a conflict to promote both? films have been set there, so it has been promoted really well. I can give you the analogy of Lipton tea. When you see a com- But the other cities are not that sexy at all. Worst of all is War- mercial for Lipton tea, it always ends with: Lipton, by Unile- saw, a city lacking definition. Warsaw is the capital of Poland. ver. Here, Unilever is the V4, and Poland is Lipton. But if you Wow. That’s it. When you say Krakow, you get more excited. do that, then where is the EU? Is it ok to promote the group This, again, is PR. So, this is first thing I would point out is without the EU? Originally, the V4 was an instrument to join the lack of positive PR within the V4. The second problem is the EU, and we still have not addressed the problem that after that you have to attract people. There are ways to solve this 2004 the V4 is a bit artificial. It becomes more problematic though; say if you come to Budapest as a student, we will pay when you belong to three or four groups because your core your rent. When you bring in students, you bring with them message becomes muddied. It doesn’t matter whether you talk atmosphere and culture. In turn, they will start to promote the about a group of countries or you talk about Lipton tea. The places where they came from. This can cause a snowball effect communication has to be clear and understandable. where more will go on exchange and more PR will follow. Do you see any group of states which have already done it? If you were in power, what would be your first steps to make Which have a strong brand created by a branding agency? change? How do you envisage starting such transformation? When I look at the European Union, I see 100% brand. It has Well, I’ve done some research before we met and in all the a story; it has a corporate identity in terms of a flag and an documents I found one common thing that grabbed my at- anthem; it has certain rules that define it. The benchmark is tention. We talk a lot, we discuss a lot, but we don’t come up the European Union, and the EU has more than one PR agency with any solutions. It is kind of a gentlemen’s club. The first that work on it. step would be: stop talking, and start acting. When we talk about the Nordic countries, it is just a mat- But answering your question, I would say that the crucial ter of time when they will start building the idea of the Nordic thing is to define the role of the V4. The next meeting of the group based on this definition of the Scandinavian lifestyle. It V4 should be about trying to answer one question: what are is a reality worth sharing, and it has an impact beyond their we for? After that decision has been reached, I would leave the borders, beyond any politician’s preferences. Scandinavian prime ministers and start working with department directors means cool, good looking, well-designed, beautiful cars, beau- responsible for education, transport, student exchanges and tiful furniture. You can’t mix the Scandinavian style with any grants. To be successful, we need cooperation on the lower other style; it just is its own thing. levels. Leave the big politics to the prime ministers and just report every half a year or so. Let the people get to work, and Can we do the same with the CEE brand? don’t impede them with blue-sky ideas. The CEE could be a direction for the development of the V4 brand. Maybe the V4 should start talking from a perspective What are the most serious obstacles in building a common of the V4 / CEE. And you start to exchange V4 with CEE more brand? Are they the current politicians? often, and, at some point, the V4 will fade away and the CEE Politicians are in charge of the V4, so in some way the politi- will be the brand. But still, if you want this to happen, you cians are the main obstacle. But when you look at the way need strong leaders. In terms of mentality the CEE is a border in which Orban, Szydło or Fico think about their countries, area. It has a different mindset and lifestyle than Western Eu- they are more focused inward than outward. More focused on rope. Yet, we can bring these two cultures together because we themselves as a country, more focused on building the strength understand our people, our markets. But without the V4, the of the country, the pride and heritage. That is something that CEE won’t happen because you need a leader, someone who makes the space for political cooperation very narrow. will make it happen. However, I want to reiterate that I would Let’s take Poland as an example. If I think about myself focus regionally first. We’ve completed so many projects to- as a “Pole”, it means I have a thousand-year-long history of gether; we have so much in common. We can build the brand fighting the Russians, Germans, Swedes and sometimes also not as a global brand, but as a Central European brand. These the Czechs. But it doesn’t stop there; if I am a “Pole”, it means four countries are cool and sexy. All you have to do is your that I come from the biggest, strongest country in the Central homework: define the problem, find the solution and start act- Europe, and I want to be the leader of all the political activities ing, not just talking. in this area. But Slovaks and Czechs are as proud as we are, and they don’t want the Polish to rule them. Thus, we reach Szymon Walkiewicz is the owner and business development director at an ideological impasse. Walk Group, a Polish award winning full service advertising agency.

89 CULTURE FEAR AND POTENTIAL

Sticking together

Mittelfor travellerseuropa

Following the entry into the Schengen Agreement, borders ceased to be a physical barrier. And yet cross--border regions of Central Europe still have no vision on how to attract tourists.

FRANCISZEK BOJAŃCZYK

here is no other region of the Old Continent as will finally be able to piece Central Europe together. This was fluid and unstable as Central Europe. No other one of the reasons why, after the fall of the Iron Curtain the region would change its location depending on idea of Euroregions came into existence. They were meant to the background and opinion of a researcher, be located beyond border posts, “overcoming the hamstring- moving hundreds or even thousands of kilome- ing national regulations on impermeable borders”. One would tres away and gaining or losing respective coun- think that 26 years after the establishment of Neisse-Nisa- tries. In fact, it is the instable and fluid nature Nysa Euroregion – the first Euroregion covering Poland, the of boarders that makes the definition of Central Czech Republic and Germany – that these local borderlands Europe. After all, it is not without reason that Timothy Garton should be teeming with trails and travellers. It seems, how- TAsh refers to it as “a kingdom of the spirit.” ever, that the enthusiasm was too weak, and Milan Kundera’s It will suffice to visit Łańcut in Poland, Żółkiew in “Maximum diversity in minimum space”, as he once referred Ukraine, Bielsko-Biala in Poland, Ostrava in the Czech to Central Europe, has yet to be translated into a catchy slogan. Republic or Lubań in Poland and Gorlitz in Germany to see Perhaps a mistake was committed at the very outset, at that it is not only the spirit that hovers over political divisions the point of designating the area of “Neisse-Nisia-Nysa”. A in this region. And I do not mean by this the revanchism or the glance at the map of Central European Euroregions will tell will to “return to the motherland” so typical of Central Europe, you that it is not an easy task to determine one principle ac- but rather the idea of piecing together a world shattered by cording to which state boundaries were drawn here. Most of wars and displacement. them are formed by river basins (Neisse, Spree-Neisse-Bóbr, That is to demonstrate that in the times of Schengen, the Neman), mountains (the Beskids, the Tatras), but also refer to Visegrad and “cross border cooperation”, we can still show the certain historical names like Cieszyn Silesia. And so provid- heritage of this region in a consistent way, not forgetting about ing a joint narrative for two (or even more) sides of the bor- its cultural context, and thus make it more comprehensible. der, as well as coming up with a tourist offer based on it turns Indeed, we can speak of Red Ruthenia, Cieszyn Silesia out to be a serious challenge. Let us take as an example the and Lusatia instead of the Podkarpackie Province, the Lviv abovementioned Silesia, which included the Czech Ostrava Oblast, the Moravian and Silesian Region, the Lower Silesian and Polish Bielsk. They are all located within the Euroregion Voivodship or the Land Sachsen. After all, Łańcut, the seat of the Beskidy, even though culturally and historically they lie much Lubomirski family, as well as Żółkiew, which used to belong to closer to Cieszyn Silesia. Or, to pick an example from the same the family of Żułkiewski and Sobieski, are pieces of the same his- area, how can one justify Pradziad and Silesia Euroregions ex- tory of magnates from the Polish-Lithuanian Commonwealth. isting next to each other, hence dividing the lands in Poland For centuries, Bielsko and Ostrava were parts of the same and in the Czech Republic into entirely random entities? Czech Silesia, whereas Lubań and Gorlitz were united into the Thus, sticking together Central Europe through the lens of Sechsstädtebund – the Lusatian League – so as to protect their Euroregions seems like a difficult task, let alone proposing a territories against robbing knights in the Middle Ages. vision of travelling through the borderlands. One might think today, with former border guardhouses It is therefore worthwhile recognising some attempts now operating as libraries – as is the case in Cieszyn – we to use the existing structures for that end. This is the case of

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Germany Poland

Gorlitz Lubań

Bielsko-Biala Łańcut Czech Rep. Żółkiew Ostrava Ukraine

a true Central European empire, i.e. the Polish, Ukrainian, Slovak, Hungarian and Romanian Carpathian Euroregion. Not much needs sticking together in this case as the Carpathians had actually formed natural cultural and national borders for centuries. The mountains themselves constitute a pillar of identity here. This is how the Carpathia brand was established, based on “understanding multiculturality” and the idea of broadly understood “authenticity” aimed at promoting this borderland. And yet, individual towns of the region prove that no process of strategy application can last for years. Take the Museum of Oil and Gas Industry in Bóbrka. The history of one of the first oil wells worldwide is presented developed by the NN Theatre of Lublin in cooperation with on a board funded by the Rural Development Program and Belarusian and Ukrainian partners. next to it you will find another board funded by a program of The shtetls described on the Polish, Belarussian and Polish, Ukrainian and Belarusian cooperation that commends Ukrainian map include also the towns of magnates: Żółkiew local geological characteristics. Only a dozen kilometres away, and Łańcut. Non-motorized visitors might have a difficulty in the Lemko village of Chyrowa one can read information though, trying to go to both towns on one day as travelling about a wooden Orthodox church thanks to Polish and Slovak across central European regions by public transportation is cooperation supported by Swiss funds. Each of those signs hardly possible these days. Or it is in fact impossible, like it is has different colours, they are written in different languages between Poland and Slovakia where the last local bus connec- (sometimes a translation is not provided), which says much tion was curtailed in October last year. And so an equivalent more about the diversity of a given subsidy program than it of the luxurious “EURO NYSA” ticket, allowing for unlimited does about the diversity of the region itself. Additionally, a travelling on the borderland of Poland, Czech Republic and tourist will face the eternal problem of an insufficient num- Germany during one day, is no more than a pipe dream here. ber of roadside signs and maps. Without those the notion of Ultimately, assembling and packaging Central Europe for cross-border nature projects is nothing more than a key word travellers is a challenge to be faced in the upcoming decades. to secure additional credits when applying for funds. It will not suffice to place new signs and print several hundred Still, not all regions have the same power and financial guidebooks. What is needed is deliberation on how we under- means as the Carpathians, whose total area is larger than that stand borderlands and which identity of those lands we want of both the Czech Republic and Slovakia. So why not pick in- to promote. Moreover, we must re-evaluate what “cross-bor- dividual ideas for “tourist products” that could form the axis der” means: merely a method to acquire funds under the EU of promotional activities ideally when they are characteristic Interreg program or maybe it will give us the opportunity to of the neighbourhood and few and far between in other re- spot regional narratives and traditions that lay the foundation gions of the continent? For example, the Lower Silesian spas for this unique, Central-European “kingdom of the spirit.” promoted by “Nysa” as part of the Central European culture of travelling to health resorts, and not only the ones in Karlovy Translated by Dorota Pilas Vary. Or take shtetls, “one-of-a-kind towns formerly inhabited by Jews and Christians of various nationalities” (as the authors The author is a co-founder of Central Europe Company, a travel agency present them) that belong to the “Shtetl Routes”, a special trail specializing in cultural tourism at the borderlands of the region.

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IN LITERATURE

JULIA SHERWOOD

ot so long ago it would have been quite difficult to find literary works by writers in the four Visegrad countries that deal with the theme of prosperity. Indeed, poverty would be a more likely subject of contemporary fiction as many people feel left behind and disen- chanted with the much-touted economic transformation.

YetN the theme is slowly finding its way into literature, albeit sometimes in an oblique way. In his historical novel A Market Day (Egy piaci nap) one of Hungary’s most acclaimed writers, Pál Zá- vada tackles the deeply sensitive subject of the post-war anti-Jewish pogrom in a small Hungarian town to show that a nation that fails to acknowledge its complicity in past atrocities cannot prosper morally and socially. In the third instalment of his loose rural trilogy of “moral anxiety” Rain Stick (Dešťová hůl), bestselling Czech novelist Jiří Hájíček shows how old wrongs – in this case, forced ap- propriations of land by the communist state – can breed new ones, now committed by unscrupulous speculators. The protagonists of Slovak author Ondrej Štefánik’s second novel, My Name is Paula (Som Paula), no longer find their trendy jobs and trappings of prosperity fulfilling and embark on an ultimately futile quest for a more meaningful life. Meanwhile in Poland, in Natalia Fiedorczuk’s debut novel How to Fall in Love with Shopping Malls (Jak pokochać centra handlowe) for a struggling young mother shopping centres provide a sanctuary from the stresses of everyday life, depicted not just as a place of abundance but also as a metaphor of our times.

The author is a Literary Editor at Visegrad Insight.

93 BOOKS WEALTH JUDIT GÖRÖZDI ON Egy piaci nap (A Market Day) by Pál Závada

A novel about our unknown and unacknowledged past

Although Pál Závada’s novels tell stories dealing with vari- when the inhabitants of the village of Kunmadaras in central ous periods of Hungary’s past, they can all be seen as parts Hungary turned on their Jewish fellow citizens. of a single major project that takes on the country’s histori- Závada’s project of social confrontation with the legacy of his- cal legacy. This is particularly true of his most recent books, tory is based on the conviction that society cannot develop suc- starting with A Photographer’s Heirs ((A fényképész utókora, cessfully and evolve from one point to the next, that is, prosper 2004), which focuses on the implementation and impact of in the broader sense of the world, as long as its social awareness the great social projects and ideas of the period between the and collective memory carries a burden of guilt and complicity, two major wars of the 20th century. His next novel, Our For- or a sense of being hurt and offended. For social prosperity is not eign Body (Idegen testünk, 2008), deals with the same thing as economic affluence, in that the ideological and political disruption of the it also includes mutual understanding and sol- country’s natural diversity, with alienation idarity which helps shape prosperity, and that among people of various ethnic and religious is based on an open discussion of relations, backgrounds exemplified by the intellectual the impact of injustices suffered and inflicted, circles in 1940s Budapest. The novel Natural whose roots often reach far back into the past. Light (Természetes fény, 2014), also set dur- The author explained his choice of a post-war ing World War II, portrays historic events (and, let’s not forget, post-Holocaust) pogrom from the perspective of several characters. as the subject of A Market Day by saying: “… Pál Závada’s historical novels aspire to affect this story is so disconcerting that it makes the perception of Hungarian history, trying you feel ashamed, it defies understanding or to shape it by literary means, raising new sub- analysis, it raises the suspicion that there is a jects or offering new insights into old ones. mountain of lies. What I have in mind is our They all seem driven by an underlying moral buried complicity we have tried to suppress, imperative to stimulate a re-evaluation of the all that shameful business of ours that we did comfortable national self-image of the victim Pál Závada: nothing to oppose; on the contrary, we were and a facing up to historical events and Egy piaci nap (A Market Day). the perpetrators, accomplices and conspira- adopted roles. Speaking about sensitive, in- Budapest: Magvető, 2016. tors. You can’t just file away this kind of thing deed taboo, subjects such as the Hungarian in your archive.”2 complicity in the Jewish deportations, war In the novel the story of the pogrom is crimes, and the post-war purges known as recounted by the wife of Sándor Hadnagy, a population exchanges (i.e. forced expulsions of whole ethnic teacher on trial, charged with provoking the event, although, communities) that he deals with in Natural Light, the author in fact, he had nothing to do with the affair. (The teacher in stressed in an interview that inherited traumas can be pro- the “reality” of the novel’s fictitious world had nothing to with cessed by “revealing stories, admitting responsibility, a kind the pogrom, just like the defendant in the real historical case of of national astonishment and atonement.”1 1946 that Závada depicts and reconstructs from period docu- This is also the intention of Závada’s latest novel, A Market ments and testimonies, as well as the work of historians). The Day (Egy piaci nap, 2016), inspired by real events of May 1946, attacks on the Jewish population were instigated by market

REFERENCES 1. MARKÓ, Anita: “Totális trauma” – Závada Pál író. In: Magyar Narancs, 24/2014 (12.06.2014). Available (in Hungarian) at: http://magyarnarancs.hu/ konyv/totalis-trauma-90466 2. ROSTÁS, Eni: Az ország úgy tekint a történtekre, mint egy tömegszerencsétlenségre. (Gábor Zoltán in conversation with Pál Závada) In: Könyves Blog, posted on 26.5.2016 (in Hungarian): http://konyves.blog.hu/2016/05/26/zavada_pal_zoltan_gabor_interju

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traders, women driven by envy and general dissatisfaction, for a proponent of right-wing ideas and labelled as a fascist; cov- which they needed some outlet. However, they didn’t stop at ers the post-war power struggle between political parties in smashing up the stalls of Jewish market traders but went on Hungary and the ideologies they represent; and describes the to persecute and pursue individuals and attack them in their court hearing. From the narrator’s correspondence with a for- homes – by now regardless of profession, age, gender, world mer friend, now the wife of a communist bigwig, the reader view, character and their previous fate – and to beat them up learns of other pogroms in the country and their context. and brutalize them. As the fishwives’ aggression snowballs Mária struggles to piece together the story of the day of into an ideology, more local people join in. the title at the market that unleashed unimaginable passions. Závada’s novel gives a detailed account and an explana- The causes are impossible to uncover because a political inter- tion of how, in a seemingly peaceful social environment, an pretation is imposed on the events from the very start: every innocent group of people can come under attack without un- political interest presents it in a different light, making use of derstanding what’s happening and why. The police testimony it for its own purposes and, as we learn from Mária’s friend, of one of the victims is rather telling: only as he was being anti-Jewish sentiments are actively instigated and provoked by beaten up did he realise he had been attacked not because of some of the parties. his left-wing views but because he was Jewish. By this stage Závada devotes much attention to this particular angle, people were being hunted by a growing angry mob that was startling and unsettling his readers, forcing them to realize beating them up in public view or at their workplace. For the that our history-based stories (but also the way present-day aggression that started in the marketplace had unleashed a events are presented) are subordinated to political interests deeply concealed hatred, rooted in the powerful pre-war anti- and ideological attitudes. Does this enhance our understand- Semitic propaganda as well as traditional anti-Semitism, re- ing of history, its repercussions for us, or our own role in it? hearsing the same arguments and patterns. It was further fed The narrator manages to comprehend it only partially. And by the partisan feelings as well as the material interests of the perhaps we need to be aware of our own limitations in this people who had appropriated the property of Jews sent to con- respect and try to study as many forgotten and suppressed centration camps, something they refused to admit and, more stories as possible, in order to uncover the past without rush- importantly, give back to their original owners. ing to interpret it. This would bring benefits in terms of the The narrative of the teacher’s wife Mária presents the real understanding of the historical experience of others as story from her own, blinkered perspective, as she struggles to well as of our own. comprehend what happened. She is seeking reasons and some context, thus telling a much more complex story. Her account Judit Görözdi is a literature scholar and critic at the Institute of World begins with the political and legal persecution of her husband, Literature, Slovak Academy of Sciences.

MICHAL JAREŠ ON Dešťová hůl (Rain Stick) by Jiří Hájíček

Longing to do "something"

Jiří Hájíček’s success on the Czech literary scene may appear mately resolved in a surprisingly banal and simple way, leaving somewhat puzzling. On the one hand, he has legions of loyal those who are not Hájíček’s fans asking: why all the fuss about fans, who love reading his books. Others are less keen, finding something so straightforward and uninteresting? his writing too bland, conventional, and verbally flat, in sum, There are several answers. Over the years, Jiří Hájíček boring and unexciting. Critics regard him as too ordinary and (1967) has won numerous Czech literary awards (such as banal storyteller who keeps turning out works of almost strik- the Magnesia Litera and the annual poll of the daily Lidové ing stylistic sterility. However, Hájíček’s prose is far from crass noviny) which makes people curious and wanting to “find out and reads well, and his books feature a more or less regular what the winning book is like”. He has been praised for his dis- character type: successful bureaucrats, technocrats even, who passionate and unsentimental treatment of serious subjects find themselves in a critical situation. Their crises are ulti- that often touch upon issues of “national” import. Memory

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and a bond with the soil, with the “Czech” land, which his term coined by the writer Ladislav Stehlík, has a level-headed protagonists often forfeit all too carelessly, has played a key approach to life that is very different from that of the nearby role in his recent novels. There is a kind of “peasant” quality to Šumava mountain range as well as from the urban environ- his writing about the importance of sticking to one’s ancestral ment of Prague or Brno. It has preserved its memories along- land and roots, at the cost of political freedom or, by contrast, side the animosities, grudges held by generations of families, of gaining too much financial freedom. The author has classi- as well as a pure national, peasant pride. The specific nature fied his last three novels (Rustic Baroque, Fish Blood and Rain of this part of the country can often be mentally grasped only Stick) as a loose rural trilogy of “moral anxiety”, addressing the through depiction, something that ultimately renders it nearly injustices of the past, something readers still find quite attrac- incomprehensible to foreign readers, or perhaps comprehen- tive. Many of them have come to rely on Hájíček as an author sible only by being transposed to a similar area in their own presenting protagonists who are undemonstrative yet at the country. This brings to mind the good soldier Švejk, lost in same time, emotionally broken individuals, who are meant the environs of the southern Bohemian town of Putim, his to, and strive to, undergo some kind of inner transformation wanderings from nowhere to nowhere symbolic of the region and renewal. itself, with no beginning and no end, and populated by deliber- A typical feature of Hájíček’s books is the depiction ate and slow people, confident of their lives in a place where of the disintegration of family relations as well as rural co- they have family roots. existence. On the one hand, there is always order and pros- Rain Stick is ultimately a somewhat schematic novel with perity – for example, the protagonist of Rain Stick, Zbyněk a slightly implausible and rather unexpectedly idyllic happy Polecký, is an affluent forty-something, seemingly not lacking ending. The mystery storyline is untangled before it has really in anything. On the other, the prosperity has become tangled, and several characters are a detrimental effect on the characters’ lives: only lightly sketched. Zbyněk’s wife Tereza is Zbyněk suffers from insomnia, his wife is a case in point: a woman from a bourgeois unable to conceive, and the only way he can background, constantly dashing between cope with his growing workload in the office classical concerts, wine drinking, and ob- is to the detriment of his private life. Driven sessing about conceiving, who comes across into situations like these, Hájíček’s protago- as something of a caricature. Against this nists long to “do something” that would backdrop Zbyněk becomes an ever-suffering break up the routine, help them restart their middle-aged man, dragged hither and thith- lives and provide them with a new direction. er by forces outside his control as he tries to Zbyněk longs to go to Spitsbergen and envis- stand up to fate and the world. At times his ages a new life away from the world of people, quest for “something” appears almost comi- surrounded only by ice and silence. His life cal – after all, he is just a bureaucrat rebelling as an office bureaucrat is transformed by an against the world. Hájíček’s novel is built on encounter with his first love, Bohuna, and at dialogue, which is often rather banal, provid- this point the novel turns into a mildly ac- Jiří Hájíček: ing a detached commentary on insignificant tion-packed account of history, time and de- Dešťová hůl (Rain Stick) details, as a result of which most of the char- sire to do the above mentioned “something” Brno (Host 2016) acters act and speak in a similar manner. This – in Zbyněk’s case, fill the apparently endless makes the clash between the petty, everyday tedium of everyday life with a crazy and un- subject of their conversations and major is- expected gesture. Most of Hájíček’s protago- sues such as nation, family, ownership, land nists are aware that this kind of gesture may be the last thing and property the more striking, although sometimes they pass they will manage to accomplish before being forever frozen each other by. Hájíček can be convincing, especially in his in their roles like statues cast in stone, condemned to repeat portrayal of Zbyněk’s introspective escapes into the safe haven their everyday rituals until the end of their unsatisfied, albeit of memories and the past and into his not particularly rich perhaps ultimately rich and meaningful lives. inner life. Jiří Hájíček is a writer of a nostalgic bent searching Rain Stick also includes something akin to a detective for long-lost certainties and fixed reference points in the past. plotline, like Rustic Baroque, in which problems dating back to Although he doesn’t find much fault with present-day life, he the 1950s (communism, snitching in villages, collectivisation) often seems oblivious of the fact that all its injustices and flaws were solved by deductive methods. In Hájíček’s latest novel are rooted in the past he is extolling. an individual again embarks on a quest relating to property, In conclusion, Hájíček’s novels don’t say as much about specifically land, which also played a crucial role in Fish Blood, our world as about the inner worlds of somewhat frustrated a novel that focused on problems caused by the construction individuals longing to do “something” and to live “somehow”. of a power plant and the threat it posed to people living in the At the same time their hopes can’t and won’t ever come true, area. However, Hájíček is less of an environmentalist than a if for no other reason then because it would deprive these pro- tireless local patriot, given to profound nostalgia and eternally tagonists of their – often sole – raison d’être. grounded in the countryside of southern Bohemia, a key topos of Czech culture (including visual art, cinema and literature, Michal Jareš is a Czech poet, editor, literary critic and historian. as well as countryside culture). This “brooding land”, to use a

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WEALTH BOOKS IVANA TARANENKOVÁ ON Som Paula (My Name Is Paula) by Ondrej Štefánik

The mirage of a fully-fledged life

Having sneaked onto Slovakia’s literary scene in an unchar- to keep playing their allotted roles and become fixated on a acteristically quiet way, Ondrej Štefánik is now regarded as desire that something should “happen”, to go back to someone of its most interesting personalities, with a collection of thing that is “real”, a “full-bodied” life. They take a conscious short stories (Pštrosí muž /Ostrich Man 2011) and two novels decision to dislocate themselves from what those around them under his belt. His first novel, Bezprsté mesto (Fingerless City), regard as “normal” and gradually disconnect themselves from published in 2012, was shortlisted for the Anasoft Litera prize their established existence. After a series of eccentric incidents for the best work of fiction and his latest novel, Som Paula (My and escapades that exacerbate her disagreements with her Name is Paula, 2016) is on the award’s shortlist for this year. estranged husband, as well as with her colleagues and boss, Štefánik is an author who doesn’t shun inject- Paula leaves her marriage and her job and, for ing elements of genre fiction (crime story or a moment, tastes freedom: “Not being needed sci-fi) into “high” literature, but neither does feels liberating” (p. 150). The “writer”, whose he ignore contemporary problems, treating wife leaves him because of his adultery, takes them with subtle irony. My Name is Paula time off work to devote himself to his great tells the story of a family falling apart and novel and to “create something”. “First I had asks questions about how one can remain to find faith in something within my own story true to oneself in this day and age, dominated and get rid of the cynicism, which switched by pseudo-communication on hypertrophied from being focused on those around me to my- social media. The answers Štefánik comes up self” (p. 38). with are rather sceptical and disillusioned. When the two protagonists’ paths ac- The novel’s two affluent protagonists cidentally cross, it seems for a while that this – Paula, a frustrated woman in her prime offers them a chance to experience genuine who works as a PR manager, and a nameless human contact and that they will find fulfil- marketing executive who has decided to em- ment in one another. They decide to stay to- bark on a writing career after a divorce – are Ondrej Štefánik: gether, enjoying doing nothing and achieving portrayed in a crisis situation, at the point Som Paula (My Name Is Paula) a kind of meditative understanding. But they when they suddenly realise that their seem- Bratislava: Tatran, 2016 are too much of their time, and spontaneous ingly prosperous private and professional emotions and something akin to authentic lives have lost their meaning, leaving them existence remain an unattainable mirage. stuck in a repetitive rut. They both function Ultimately, their desire to reach their “deep- in a kind of detached mode, finding other people identical, te- est depth” is only a sign of narcissism. As Štefánik shows with dious and mannered, and every relationship perfunctory. They an ironic panache, especially in the closing part of the book have lost their own selves somewhere along the line and now – a fictitious novel written by Paula that presents a hyperbolic experience the present as a constant struggle towards a future version of the symptoms of our age – our individuality and they have never actually aspired to: “Rather than being part of intimacy is too much in thrall to, and curtailed by, the latest a generation capable of shaping its own future assuredly and communication technologies, especially social media. heading for it with confidence she had turned into someone who Štefánik’s characters give up. Neither Paula nor the went through the motions of her pre-ordained future with res- “writer” accomplish their plans and opt for a pragmatic deci- ignation and without pride” (p. 43). The only characters who sion to return to their empty former lives. She goes back to stand out in the absurd world inhabited by Štefánik’s protago- her unfaithful husband, while he returns to the job he finds nists are Paula’s young son Dávid and her father, the two peo- unfulfilling but which enables him to lead a comfortable life. ple who are capable of sensing the “magic” around them and Needless to say, he never writes the novel that was meant to of imbuing the world with their imagination. bring him fulfilment. Neither are they fulfilled by their rela- As Paula’s and the “writer’s” frustration mounts, making tionship, which for both of them represented a kind of mirage them almost physically sickened by everything, they refuse of a “full-bodied life”. The crisis turns out to have been just a

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temporary blip, a brief episode rather than a chance to trans- is no future, everything already happened a long time ago.” form their future. Štefánik depicts a world which, though ruled (p. 80) by the constant imperative of actualization and innovation, At one point the “writer” decides to write a “dystopian makes change impossible. Paula and the “writer” are stuck in family drama” and although he doesn’t succeed, Štefánik him- a superficial world of forgetting, a simulated reality of unreli- self can be said to have succeeded in doing just that. He has able memories and relationships: “I had hoped that being fully captured our contemporaries “stuck in a void”, in an existence engaged in social life would stop me from being so destructively devoid of future prospects – symptomatically, Paula’s futuris- focused on myself, on my individuality, that it will mesmerise tic idea of her own future arrests and inflates her present, and me, perhaps even inspire me to feel good about myself. That it eventually escapes into the past. Whether or not by conscious would enable me to exist rather than just be plagued by self- design, Štefánik’s novel actualizes the paradigms of the pre- doubt. That I would make an appearance, that I would be seen. sent that have preoccupied theorists of culture such as Fredric That I would stand out from others. That I would create my Jameson, Slavoj Žižek or the late Mark Fisher. By doing so, he own image without any claims on myself and that our era, that has managed to introduce themes and motifs into contem- hyper-motivated, hypertrophied bastard, would itself mould porary Slovak literature that speak to the present day. At the me like a kitsch sculptor who breathes personality into a lifeless same time, the social implications of his writing are unforced piece of stone.” (p. 189). and natural and, given the state of Slovak literature today, very The only reality that remains is the present, which works much welcome. by inertia without ever bringing fulfilment. Vanda, the “writer’s” pragmatic girlfriend, has a clear view on this: “The main Ivana Taranenková is a literature scholar, critic and editor. She works at thing is for you to make a move, any move, to stop constantly the Institute of Slovak Literature of the Academy of Sciences and co-edits wondering what will happen, what will it be like, because there the online literature platform PLAV.sk

ANNA BLASIAK ON Jak pokochać centra handlowe (How To Fall In Love With Shopping Malls) by Natalia Fiedorczuk

Getting fixed in a garage for broken women

Jak pokochać centra handlowe (How To Fall In Love With Shop- when confronted with cultural taboos, with sudden changes ping Malls) is Natalia Fiedorczuk’s debut: a strong, uncompro- in her own body turning into a sluggish and tired piece of meat, mising description of one woman’s experience of motherhood, with losing her pre-pregnancy freedom, with feeling trapped of struggling with raising children, with feeling alienated and at home with a baby (and then two babies), with her responsi- guilty. This hybrid of novel and reportage received the prestig- bilities as a mother and wife. And we are not just talking about ious Paszport Polityki award in January 2017. your standard version of post-natal baby blues here, there are The main character, Lucyna, is a young wife and mother- thoughts of abandoning the family, suicide or even infanti- to-be, a woman with depressive tendencies living in a string of cide. But Lucyna is not a bad mother, she is just frustrated rented flats in the suburbs of Warsaw and a victim of the trans- and not ready and willing to conform to the Polish model of a formations of the employment market in Poland, frequent- mother as somebody who gives up absolutely everything for ly forced to switch jobs. As if her life was not complicated her offspring, who completely forgets about herself, her own enough, this is a woman who finds the reality of motherhood needs and aspirations. That’s what Matka Polka (Mother Pole) shocking and hugely challenging, who struggles immensely is. According to this stereotype, pregnancy is a blessed state,

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the only way a woman can find fulfilment in life is through visit on Sundays, Meccas for parents with young children, motherhood and therefore every woman should strive to be a perfect places to observe the world go by over a coffee served mother. And not just any mother, but Matka Polka indeed! A in a paper cup (while your children play in the playground). woman’s life is supposed to be defined and measured not by As such, a shopping mall is also a very powerful portrait of her image, career and/or wellbeing, but by the level of dedica- contemporary Poland through the eyes of a young person en- tion to her children and her ability to sacrifice herself for the tering adulthood and parenthood, of Poland’s suburbia, eve- sake of the family. The pressure of Polish society can be so ryday life and responsibilities, which are so mundane that we strong, the expectations for a mother to be a Matka Polka so often dismiss them. A shopping mall becomes a metaphor of widespread, that every mother who is different is in danger of our times, not just as a place of abundance, but a place giving being stigmatised. Lucyna loves her children peace, a place that is soothing and comfort- and wants what is best for them, but she also ing. This is where young mothers come with wants what is best for her. Society, however, their children seeking some contact with the does not grant her the right to even think outside world. And this is where they hide about herself. from their families left at home, looking So what does Lucyna do to cope with for some kind of suspended existence away such pressures? She tries medication (pills from all responsibilities. The sheer intensity are accompanied by high bills from her of intimacy and privacy can be dangerous shrink). She compulsively cleans and shops. and scary, so coming to a shopping mall can She searches the Internet forums for stories have a calming effect on a shaken psyche. of other struggling mothers, finding some You can blend into their surroundings and twisted comfort in reading their stories: They that brings some consolation. tell it as it is. You are on your own, nobody How To Fall In Love With Shopping will help you, you are responsible for your own Malls can also be read as a book about de- state. I am so happy that these worms crawled pression, and not just its post-natal vari- all over somebody else, not me. I watch in fas- Natalia Fiedorczuk: ety, an illness still often dismissed by people cination from my hideout how they chew and Jak pokochać centra handlowe (“How around us or treated as something to be spit. It’s like a female ballet dancers’ changing to fall in love with shopping malls”) ashamed of. In the afterword to the book, room, like an anthill where a wounded chick Wielka Litera (2016) Fiedorczuk openly admits that she has ex- has landed. “It’s not me, not me!” I want to yell perienced depression, both before and after happily, reading those harsh, unpleasant, juicy having children. She describes it honestly, words. She is simply ready to try everything and anything: Find without any unnecessary embellishments. She shows how dif- a nanny for a few hours a day. Find a nursery. Go to the gym. ficult life with depression can be, portraying Lucyna’s attempts Take part in a self-improvement workshop, go to therapy, see a at getting better. shrink, a coach, a priest, ask him to expel this dissatisfaction Is this an autobiographical book? Not quite. These are with yourself, to exorcise and stifle this longing for a wide open not all my experiences. If I went through it all, I think I would window in a car, for the pleasure of not thinking. Get quickly die. This is one story made of several dozens of stories told by fixed in a garage for broken women. Go, go and act. Now. women, of snippets of sentences, of key words, of night-time The protagonist keeps asking the questions that are more Messenger chats or browsing Internet forums, the writer said and more often voiced by new mothers: “Why didn’t anybody in an interview for “Wysokie Obcasy”. Together with my own tell me how hard and gory it’s going to be?” There are also experiences, they really messed up my head and I wanted to other frequently silenced questions: “Are there good and bad deal with each of those emotions, each of the states, each of the mothers?” “Whose decision is it, which mother is considered moments, to work through them for good. I didn’t want this to a good one and which – a bad one?” be Natalia Fiedorczuk’s memoir, although, of course, I identify Raw emotions that Fiedorczuk describes can be mirrored with my character, she added. by emotions of the reader. The highest levels of emotions are This novel, though very important and offering a refresh- expressed in a very simple, streamlined language that is almost ing, even if somewhat harsh view of motherhood, is not the technical, yet at moments poetic too. first recent Polish book analysing this subject. Think Sylwia The book offers a stark, almost hypnotic vision of eve- Chutnik’s Dzidzia and Justyna Bargielska’s Obsoletki, to ryday reality filled with frenzied pottering around – cooking, name just a few… And Fiedorczuk’s How To Fall In Love With cleaning, doing the laundry, washing up, choosing clothes to Shopping Malls definitely adds another voice to the discussion wear, driving back and forth, shopping. It is raw, almost surgi- about motherhood started by Chutnik and Bargielska. cal. The main filter and the focal point for the whole story are the titular shopping malls, those signs of our times. For many Anna Blasiak is an art historian, poet and translator. She runs the Euro- they have become contemporary temples and churches they pean Literature Network.

99 Get rich or die trying in Central Europe The art- ists presented in the “Money to Burn” exhibition at Zachęta National Gallery of Art in Warsaw channeled the ambitions and frustrations of a region busily trying to catch up with the historically more prosperous parts of the world. Playing with symbols of wealth, the exhibition aimed at turning gold, diamonds and broken champagne bottles into tongue-in-cheek political commentary on common perceptions of success and prosperity. In the words of one of the contributing art- ists, Maurycy Gomulicki: “I’m interested in diamonds as shining and, at the same time, as dark objects of desire. The symbols of perfection and purity, which convey vanity, power and fatality.”

x Maria Toboła: Amber Kebab, Warsaw, 2016. Photo by Marek Krzyżanek, courtesy of Zachęta National Gallery of Art

c Maurycy Gomulicki: Diamonds Are Forever, The National Library of Poland, Warsaw, 2011. Photo courtesy of the artist.

100 VISEGRAD INSIGHT 1 (10) | 2017 WOJCIECH PRZYBYLSKI MARTA POŚLAD Res Publica, Chairman, Google, Head of CEE Public Policy Visegrad Insight, Editor-in-chief @MartaPoslad @wprzybylski Teams and individuals listed Today is already tomorrow – on New Europe 100 are the best New Europe 100 challengers are examples how digital empowerment the proof that the future can be helps social and economic growth driven by great people

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