Spreads the Russian Regime Under Vladimir Putin19

NO 11. September 2019 T R A N S F O M T I V E R A N S F O M

T I O N ? 3 0 Y E A R S F C H G TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE N O 1

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Transformative Transformation? 30 Years of Change in CEE

Central and Eastern Europe, a home to around 190 m individuals. Each with their own hopes, dreams, and agendas. All of them with a unique set of experiences and access to their sui generis historical past. Most of them, however, shared similar routes on their way to becoming liberal democracies. Whether or not the achievements of the early 1990s have been retained is another story. One thing is certain: the importance of the changes introduced back then has been undeniable.

Thirty years ago, a wind of change swept through the region. The Eastern Bloc experienced a series of structural, political, and social changes that have forever shifted the mindset of its inhabitants. Once the countries long oppressed by the communist regime regained their sovereignty, the hankered-after freedom entered every possible sphere of life.

Let us take Poland, my homeland, as an example. Within the past three decades it has managed to join the ranks of other well-developed Western democracies, with a booming economy and an open society. Has the Polish transformation been truly transformative? Yes. Was it permanent? Well, is any change permanent? Not really. After all, “the world turns and the world changes”, as T.S. Eliot once stated. What matters is that any real transformation needs to progress, never stagnate or be reversed – a phenomenon recently visible in the country that inspired so many other societies.

Sadly, as the phrase goes, plus ça change – even after going through complex stages of transformation, some people in Poland still question the achievements of transformation, trying to bring about a kind of a come-back of the “good old days” from before the democratic changes started. However, any reversal of the said accomplishments in the region is unacceptable.

There is only one way out of the recent conundrums most of the CEE citizens have been facing: keep moving forward. Embracing the positive developments while at the same time trying to simply work out the kinks that still have not been addressed. This is what the 11th issue of 4liberty.eu Review is about. We explore the extent of the transformation processes in a number of CEE countries – from Poland, to Ukraine, the Czech Republic, Slovakia, and Bulgaria. Because we believe that even though “everything changes, nothing perishes”, to quote Ovid.

Enjoy your reading, Olga Łabendowicz Editor-in-Chief of the 4liberty.eu Review Coordinator of 4liberty.eu network Contents Contents

TOMASZ KASPROWICZ / 30 YEARS OF FREEDOM IN CEE: VARIOUS PATHS AND DESTINATIONS / 004

MARTIN REGULI / EU ACCESSION AND REVIVAL OF NATIONALISMS IN CEE / 020

IRYNA FEDETS / 30 YEARS LATER: WILL SOVIET LEGACY STILL SHAPE UKRAINE’S FUTURE? / 034

MATE HAJBA / ORBANIZATION OF THE MAGYAR STATE: HUNGARY IN THE PAST 30 YEARS / 056

JANOS KARPATI / MEDIA UNFREEDOM, HUNGARIAN STYLE: FROM “APO” TO “KESMA” / 072

ROMAN MÁCA / “GOOD OLD TIMES”: FAKE NEWS MACHINE IN THE CZECH REPUBLIC / 084

MIŁOSZ HODUN / THE END OF AN ERA: RANKINGS WILL TELL YOU THE TRUTH ABOUT POLAND / 094

MAREK TATAŁA / IT’S NOT ONLY THE ECONOMY, STUPID: PROGRESS IN POLAND AFTER SOCIALISM / 114

ADRIAN NIKOLOV / BULGARIA ON THE PATH TOWARDS ELECTED AUTOCRACY: HOW FAR HAVE WE GONE? / 128

GÁBOR HORN / THERE WILL BE A LIBERAL EAST-CENTRAL EUROPE AGAIN! / 140

KRASSEN STANCHEV / THE LAST 30 YEARS IN A HISTORIC PERSPECTIVE // AFTERWORD / 148

Contents 004 004 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE TOMASZ KASPROWICZ 005

he division of the world into the first (capitalistic) world and the second (communistic) one for decades seemed very stable. AFTER 30 Years If anything, Communism was THE COLLAPSE, Toften supposed – and even more often advertised – to be more efficient. West- COMMUNISM ern economists were estimating when the second world will surpass the first one. In BECAME ALMOST of Freedom 1961, Nobel Prize winner Paul Samuelson predicted that the Soviet Union would have EXTINCT – higher per capita product than the United States sometime between 1998-19971 and WITH THE NOTABLE he maintained his forecast up to 1980, push- EXCEPTION in CEE: ing the nefarious moment to between 2002 and 2012. Luckily, Nobel Prize winners tend to be very wrong in their anticipations and OF CHINA around 1989 the Communist Block col- AND ITS SATELLITES lapsed – mainly due to economic reasons. Various Paths This turn of events opened a new path to many nations, which were formerly under Soviet rule. ‘just’ had to change the political and eco- THE LANDSCAPE nomic regime, were exceptions. It was a tur- Former socialist countries span most of the bulent time when countries split. Sometimes and Destinations Asian continent, and a good part of Africa it was surprisingly peaceful and efficient – as and Europe [See: Figure 1]. After the col- in the case of Czechoslovakia, which was di- lapse, Communism became almost extinct vided into the Czech Republic and Slovakia. – with the notable exception of China and its satellites. It is hard, however, to call China However, this was not always the case. communist anymore – especially when it One notable example would be Yugosla- comes to the economy. Let us therefore take via. There, the decomposition resulted in a look into the European post-Soviet coun- bloodshed that lasted five years, with “follow tries, as well as the Asian ones that appeared ups” – Kosovo and Macedonia – leading to after the deconstruction of the USSR. almost a decade of genocide, ethnic cleans- ing, and a total of 140,000 deaths2. Yet, such It is important to understand that for most events were not localized to the Balkans and of the countries, the transformation was we need to remember about other conflicts a complete overhaul of politics, economics, – like the one between Azerbaijan and Ar- and mentality. In fact, it was a true reemer- menia, which caused the deaths of over gence after decades of oblivion – and for 17,000 people and further displacement many, the first shot at independence. The of another 750,0003. Even up to today, it is cases of Poland, Bulgaria, Romania, or Hun- gary, which remained in the same shape and 2 International Center for Transitional Justice (2009) Transitional Justice in the Former Yugoslavia, January 1.

TOMASZ 3 1 Samuelson, P. A. and A. Scott (1961) Economics: An In- Popescu, N. (2010) EU Foreign Policy and Post-Soviet KASPROWICZ troductory Analysis, New York: McGraw-Hill. Conflicts: Stealth Intervention, London: Routledge. 006 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE TOMASZ KASPROWICZ 007

Figure 1: Abandoning communism in the world in 2019 [dark gray – former communist (over 20% of population in Kazakhstan, Lat- countries; black –communist countries] via, and Estonia)5. So one of the first tasks of the new nations was to distinguish their own national identity from that of a Rus- IN 1991, AFTER sian identity. This meant the reintroduction THE DISSOLUTION of national languages. They were often not a default language for inhabitants, as Soviet OF THE USSR, politicians tried to make national languages mostly a matter of folklore, while Russian ABOUT 25 MILLION was the language of art and science. Yet, such transitions had to be made carefully ETHNIC RUSSIANS so as not to anger the powerful neighbor and a large part of their own populations WERE LIVING that spoke Russian. Even today, about 30% of the population of Ukraine does not speak OUTSIDE RUSSIA, Ukrainian, and in 2016, only a quarter of all CREATING LARGE magazines and a third of newspapers were printed in Ukrainian6. Source: Sjorskingma // CC BY-SA 3.0 MINORITIES

Nonetheless, most of the post-Soviet coun- reported that there are approximately 200 grabbing in disobedient former republics tries managed to officially raise the rank their sniper casualties per year, despite the cease- creating, Transnistria from the part of Mol- native languages and keep Russian as a se- fire that was signed in May 1994. dova, Abkhazia and South Ossetia from the condary language, despite the fact that some It seems that language, as a matter of iden- part of Georgia, and most recently embark- politicians (eg. Ukrainian President Leonid tity, became an issue of sovereignty. This The time when nations could decide to ing on the annexation of Crimea and the Kuchma in 19947 or Vladimir Voronin in Mol- was confirmed by the case of Belarus – the go their own way did not last long. Russia creation of puppet republics in Donbas and dova in 20018) rose to power on the prom- only country that allowed Russian to be the quickly decided to stop further decomposi- Lugansk. Such state of frozen conflict serves ise of making Russian the official language second official language. As a result, Bela- tion of its empire. One way was tying newly as a means of maintaining pressure on these in their respective countries9. This policy rusian is rarely used and limited mostly to formed countries of ‘near abroad’ in interna- countries, making sure they cannot integrate seems more and more controversial con- ceremonial applications. At the same time, tional organizations like the Commonwealth into the Western institutional system. sidering the idea of ‘ruskij mir’ – a protecto- Belarus is clearly on the path to being incor- of Independent States or the Eurasian Eco- rate proclaimed by Russia extending over all porated by Russia10. nomic Community. Also, an initially peaceful Even when the transition was peaceful, places where Russian is spoken. breakup became far more violent. most of the countries had to face the is- Despite defining their identities in opposition sue of rebuilding their identities in addition to Russia, the post-Soviet countries were not Two Chechen wars cost the life of more to reforming their economies. This was es- anti-Russian. On the contrary – they felt than 200,000 people4 and their sole pur- pecially pronounced in the countries that 5 Greenall, R. (2005) “Russians Left Behind in Central a deep connection with Russia, and most of pose was to keep Chechnya a part of the had very little former experience of being Asia”, [in]: BBC News,, November 23. them gladly entered such organizations as Russian Federation. Soon, Russia went on an independent. In most cases, their nations 6 https://www.bbc.com/ukrainian/rolling_news_rus- the Commonwealth of Independent States sian/2016/11/161108_ru_n_language_rates offensive to rebuild its empire. Border quar- were under heavy Russian influence, and that oversaw most of the former USRR. In 7 rels became the tool of choice to discipline had previously undergone extensive Rus- Bilaniuk, L. (2005) Contested Tongues: Language contrast to Central European countries, Politics and Cultural Correction in Ukraine, Ithaca, New now independent former parts of the USRR sification, as well as active colonization by York: Cornell University Press. the societies of many post-Soviet countries

that decided to adopt a more pro-Western ethnic Russians. 8 Ciscel, M. (2008) “Uneasy Compromise: Language were not condemning communism either. It attitude. This is why Russia is directly or and Education in Moldova”, [in]: International Journal is enough to mention a continued reverence indirectly engaged in invasions and land POST-SOVIET IDENTITIES of Bilingual Education and Bilingualism, Vol. 11(3-4), pp. 373-395. In 1991, after the dissolution of the USSR, 9 Pavlenko, A. (ed.) (2008) “Multilingualism in Post-So- 10 Marples, D. (2006) “Color Revolutions: The Belarus 4 about 25 million ethnic Russians were liv- The Moscow Times (2005) “Death Toll Put at 160,000 viet Countries”, [in]: Multilingual Matters, Vol. 11(3-4), Case”, [in]: Communist and Post-Communist Studies, in Chechnya”, August 16. ing outside Russia, creating large minorities pp. 1-40. p. 39. 008 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE TOMASZ KASPROWICZ 009

to infamous Vladimir Lenin – for instance, in Table 1: GDP per capita PPP constant dollars 2011 dollars in 1990 the main State History Museum of Bishkek, Kirghistan (formerly Lenin Frunze Museum) Country GDP Year other than 1990 World rank is still dedicated chiefly to this leader. Such DESPITE DEFINING sentiments are clearly unfathomable in Eu- Russian Federation $ 20 639 36 rope, where in some countries (eg. Poland) THEIR IDENTITIES the symbols of Communism have been IN OPPOSITION Czech Republic $ 20 023 37 banned along with the symbols of Nazism. TO RUSSIA, Slovenia $ 18 899 38 In contrast, Central European countries became far more anti-Russian and anti- THE POST-SOVIET Hungary $ 15 156 1991 39 communist from the start of the transformation. The political opposition and uprising COUNTRIES WERE Kazakhstan $ 13 050 39 against Soviet domination were frequent in Czechoslovakia, Poland, and Hungary – NOT ANTI-RUSSIAN Slovakia $ 11 633 1992 40 even if brutally extinguished either by local collaborators or by foreign intervention. The Romania $ 11 446 40 political movement of Solidarity under the leadership of Lech Walesa is often credited and the emancipation of Ukraine, which Croatia $ 12 754 1995 41 with toppling Communism, but this time it is evident, for example, with the Ukrain- succeeded only because of a lack of will- ian Orthodox Church gaining autocephaly Estonia $ 10 626 1993 41 power on the side of Soviets. (independence from Russian patriarchs in Moscow)11 despite protest from both the Ukraine $ 10 464 41 The Polish bloodless revolution of 1989 Russian church and authorities. was from the beginning conducted in fear Poland $ 10 277 45 of the reaction to the Russian military. Re- POLITICAL TRANSFORMATION membering the suffering that came at the The changing of the political regime was North Macedonia $ 9 633 48 hands of Russians, the V4 countries (Poland, yet another task. One needs to remember Hungary, Czechia, and Slovakia) along with that Communism in the late 1980s was quite Bulgaria $ 9 297 51 Baltic states (Latvia, Lithuania, and Estonia), different than that in the first half of the 20th Romania and Bulgaria set firmly their alle- century. Since 1953, the regime was slowly Lithuania $ 9 357 1995 51 giance to the Western world by applying for easing from totalitarian to autocratic. Af- membership into NATO and the European ter the fall of the Communism, the newly Montenegro $ 10 531 1997 52 Union (EU). This strategy has proven to be formed states declared to be democracies. successful, which was not obvious in the Still, we need to remember that the USSR Azerbaijan $ 8 790 52 early 1990s, and required careful lobbying also considered itself a form of democracy, mostly in the United States. so this term is quite ambiguous. The Central Latvia $ 8 316 1994 52 European countries, along with the Baltic Strangely, even greater suffering at the hands States, became liberal democracies, at least Belarus $ 8 367 53 of Russians in the form of ‘hlodomor’ (great for the time being. The aspiration to join the hunger that was induced at the order of EU, along with society’s sentiment, forced Turkmenistan $ 8 317 55 Joseph Stalin, which cost the life of 10 mil- such a solution. lion people) did not create the same effect Georgia $ 7 984 62 in Ukraine. This was, however, accomplished by the invasion of Crimea and Donbas. It Albania 66 11 Ecumenical Patriarchate (2018) Announcement seems that these events have permanently (11/10/2018). Available [online]: https://www.patriar- changed public sentiments towards Russia chate.org/-/communiq-1 Serbia $ 7 349 1995 67 010 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE TOMASZ KASPROWICZ 011

Country GDP Year other than 1990 World rank Then there is a rather long list of countries with GDP per capita of over USD 10,000 with a rank over fifty in the global wealth Armenia $ 3 742 67 WITH THE STEADY ranking. This part of the list starts with Hun- gary and ends with Poland. The bottom part Tajikistan $ 3 661 69 GROWTH OF 3.7% contains countries that fit between 50th and 100th in GDP per capita in the world. That Kyrgyz Republic $ 3 475 73 PER YEAR, POLAND part starts with Bulgaria, and ends with Mol- dova. As one may see, second-world coun- Uzbekistan $ 3 089 74 HAS BEEN A CLEAR tries were not that poor even at the time of WINNER the collapse of the economic system. Moldova $ 3 154 1992 95 OF TRANSFORMATION So how has economic transformation Kosovo $ 4 626 2000 103 worked out once the shackles of central planning were removed? Surprisingly bad. Bosnia and Herzegovina $ 1 476 1994 104 There are countries that actually are in kind, and for these nations the fall of USRR worse condition than in 1990. Most notably, Source: World Bank was actually a step-down from the point of Ukraine lost about 1% of its GDP per year The recent rise of illiberalism, especially This is not the case with post-Soviet their freedom. until 2017. Tajikistan is not much better – pronounced in Central Europe, puts these countries. According to Freedom House, oscillating at the level of 0.64% loss per year. achievements at risk. Freedom House Armenia, Georgia (performing very well ECONOMIC TRANSFORMATION Kirghistan is virtually in the same situation downgraded Hungary to “partially free”12. in all other indexes), Kyrgyzstan, Moldova, We need to remember that the fall of Com- as it was thirty years ago, and we have to Poland is heading the same way, albeit at and Ukraine were considered “partially munism was mostly induced by a highly in- keep in mind that the past thirty years were a much slower pace, due to resistance in the free”. Azerbaijan, Belarus, Kazakhstan, Rus- efficient economy. Noteworthy, in 1990, not mostly a time of excellent prosperity – event EU that does not want to allow for the rep- sia, were deemed not free while Tajikistan, all second-world countries were poor and taking into consideration the 2007 global etition of the Hungarian scenario. Luckily, it Turkmenistan and Uzbekistan were on the the picture was rather complicated [See: Ta- financial crisis. seems that these trends have been reversed “worst of the worst list”. ble 1]13. In order to keep the values in Table in Slovakia with the election of a new liberal 1 in perspective, the countries were ordered The mentioned losers of transition actually president, Zuzana Čaputová. The autocracies in these countries are not by the rank they achieved in the World as dropped about 35-55 places in the global necessarily without democratic mandate. measured by their GDP per capita (PPP, con- ranking of GDP per capita. Just to keep the The Balkan states on the other hand, are Dictators like Vladimir Putin, Alexander Lu- stant 2011 dollars). Clearly, we can see the same relative place, these countries had to quite a mixed batch – mostly due to a violent kashenko, or Nursultan Nazarbayev (who situation is far from homogeneous. The top develop at the pace of 2% per year – if they history as wartime promoted authoritarian- has just stepped down after ruling Kazakh- of the list is occupied by a collapsing Rus- were rich to start with. For the poorer ones, ism. According to Freedom House, Croatia stan since the collapse of USSR, as it was sia, which had quite a high standing in the the pace had to be even greater. and Slovenia, also EU members, are con- the political pattern in Soviet successor world (36th) with respect to economic prod- sidered “free”, while the rest of the coun- states of the Central Asia) are extremely uct. The problem was, however, the quality The last three decades were the times that tries of former Yugoslavia remain “partially popular and would win the popular vote in of the production – central planning lead to required “running to stand still”, as many free”. This situation is expected to improve a landslide. Still, they choose to falsify the the situation in which strategic, but mostly countries have been rising from poverty – as these states have aspirations to join the elections in order to present their strength useless, products and technologies were mostly in Asia. Actually, from all of the coun- EU, and must first comply with liberal de- both by proving that they can perform such promoted at the expense of innovation and tries for which we have data since 1990, just mocracy standards. feat with impunity and showing exaggerated entrepreneurship. seven improved their standing, and only one support, which is supposed to justify their (Poland) significantly so. With the steady actions as following the will of the people. When we look at the list in Table 1, we see growth of 3.7% per year, Poland has been This is a kind of benevolent (as long as the Czechia followed by Russia and Slovenia. a clear winner of transformation, surpassing 12 Freedom House (2019) Freedom in the World 2019. approval ratings are high) dictatorship. Yet, Hungary, Russia, Ukraine, Romania, and Ka- Available [online]: https://freedomhouse.org/sites/default/files/Feb2019_FH_FITW_2019_Report_ForWeb- in some cases, it was still the case of deal- 13 The data series start in various years as the countries zakhstan. The Polish result is matched only compressed.pdf ing with bloody dictatorships of the worst emerged. by Albania (which started from a much lower 012 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE TOMASZ KASPROWICZ 013

Table 2: Economic performance after 30 years of transformation Figure 2: GDP per capita during the transition [transition year = 100]

Country GDP 2018 Average growth Improvement in global ranking

Poland $ 28 752 3,74% 22

Albania $ 12 306 3,69% 14

Bulgaria $ 19 321 2,65% 8

Belarus $ 17 742 2,72% 8

Turkmenistan $ 17 129 2,61% 6

Slovenia $ 32 743 1,98% 5

Czech Republic $ 33 414 1,85% 4

Romania $ 24 544 2,76% 0 Source: Shleifer, A. and D. Treisman (2014) “Normal Countries: The East 25 Years After Communism”, [in]: Foreign Affairs, Vol. 93, pp. 92 Kazakhstan $ 24 738 2,31% -2 level of development), and Slovakia14. The living standards comparable to its formerly Azerbaijan $ 16 011 2,16% -2 Polish 1990s reforms authored by Leszek poorer neighbors, it must provide for other Balcerowicz are treated as the template for needs of the nation in order to keep the Armenia $ 9 178 3,26% -2 many other countries with an economy un- power. In this light, the Russian need of na- der transformation. Other winners are Bul- tional pride was chosen as a way to neutral- Uzbekistan $ 6 240 2,54% -8 garia, Belarus, Turkmenistan, Slovenia, and ize frustration coming from weak economic Czechia. Meanwhile, Romania, Kazakhstan, performance. Russian Federation $ 24 791 0,68%* -13 Azerbaijan and Armenia nearly maintained their standing. EXPLAINING VARIOUS OUTCOMES North Macedonia $ 13 483 1,21% -18 This puzzle of very different outcomes of Probably the biggest loser, besides Ukraine, economic transformation begs for an expla- Georgia $ 10 152 0,86% -27 is Russia. With a mere 0.7% yearly growth, it nation. The anecdote says that there were did not only drop thirteen places in the said three models of economic transformation Kyrgyz Republic $ 3 447 -0,03% -34 global ranking, but also fell below Poland, in communist countries: the first was to sell Slovenia, and Czechia. It is clearly a pain- public companies to foreign corporations; Tajikistan $ 3 061 -0,64% -43 ful blow to this proud nation that in many the second was to steal them with friends; aspects used to be on par with the United and the third, to steal them with family. The Ukraine $ 7 907 -1,03%* -54 States. This also explains many aggressive former applied mostly to Central Europe, moves by Russia against its neighbors. If the the second applied to Russia and Ukraine,

* Data for 2017 government cannot provide an increase in whereas the third one to Central Asia. Of Source: World Bank course such a view is a gross oversimplifica- tion, it still holds at least part of the answer. 14 https://www.economist.com/graphic-detail/2016/05/05/comparing-crony-capitalism-around- the-world 014 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE TOMASZ KASPROWICZ 015

Figure 3: Georgia GDP per capita PPP vs major events Figure 4: Percentiles of the population with income growth above/below the G7 [average] (1989-2016)

Source: Based on the World Bank data Source: European Bank for Reconstruction and Development (2016) Transition Report 2016-17

Selling everything to western corporations the 21st place, thus being almost at par with exposed countries to the great instability and approximately 90% of vegetable con- and applying for membership in western Germany, which is 22nd (and last)15. of global commodity markets. This lead to sumption16. The Russian counter-sanctions organizations had profound effects. Firstly, a temporary surge of income during good introduced in 2014 on food from the West it meant the import of Western institutional The same was not true in the case of other times, and a slide into despair when oil caused immediate shortages on the mar- governance, the rule of law, and anti-cor- countries where people that seized state- prices dropped. That is the reality of oil-de- ket. This was presented as the chance to ruption measures. Secondly, for the most owned assets quickly took hold of political pendent countries like Russia, Kazakhstan, rebuild local farming. Indeed, production part it prevented the creation of local oli- power too (or, the other way around – at or Azerbaijan. of some foodstuffs increased, but Russia garchy as inflows from privatization were this point it is hard to determine which came still struggled in many other respects – e.g. spent on supporting heavily underfunded first). These people became entrenched in Reliance on natural resources is another rea- dairy products17. Anyhow, the prices of food state functions. Hence, no local “strong authority and limited any innovation and son for different paths of economic devel- spiked (an increase of 18% in the first year of men” that could easily corrupt politicians entrepreneurship in their country. This opment. Oil extraction and export is a low- the embargo, and 11% in the second year), appeared, and democracy could resume its approach was to make sure their position hanging fruit yielding large profits, hence while the economy was very weak. This normal functions supported by a system of was unchallenged, but, at the same time, it does not seem worthy to pursue other translated into additional hardships for the checks and balances. severely limited economic growth and ben- activities. Because of that, the economy poorer part of the population. efits arising from globalization. becomes too focused on a single industry, Echoes of this situation are clearly visible in while other sectors remain underdeveloped Ironically, the countries devoid of valuable The Economist’s Crony Capitalism Index, This slow-down in many cases meant stag- – even such crucial ones as agriculture. natural resources have fared much bet- which is supposed to measure how much nation, unless a particular country had ac- ter, as they were forced to transform their oligarchs are intermingled with government. cess to natural resources – mainly oil and This was especially visible in the case of Rus- The first place, out of twenty-two countries natural gas. In such a case, the key to power sia, where most foodstuffs were tradition- 16 https://financialobserver.eu/cse-and-cis/banning- measured, went to Russia, while fifth place was controlling this resource. But even this ally imported: about 40% of the domestic food-from-the-west-will-not-bring-success-to-russian-manufacturers/ went to Ukraine. The only other ranked post- did not guarantee constant prosperity, and fruit consumption, approximately 80% of 17 communist country is Poland – it occupies the meat and meat products consumption, https://www.usnews.com/news/best-countries/ articles/2017-08-18/3-years-of-sanctions-changes- 15 Ibid fish and seafood, milk and dairy products, russias-food-market 016 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE TOMASZ KASPROWICZ 017

economy much more rapidly. The pain of (or lack thereof) was distributed quite equally The Central European and Baltic countries transformation was greater, but the yield (apart from a narrow governing caste). The may be considered finished with trans- significantly higher. Apparently, the depth introduction of capitalism and privatization formation, and now they are undergoing of the initial reforms had a direct relation to OUT OF FIFTEEN quickly increased inequality. If state-owned similar processes as the rest of the Western the successful transition to a market econ- COUNTRIES property was seized by local oligarchs, in- world – including facing the troubling rise of omy and so the effects lasted for decades18 equality was much larger than in the case of illiberalism. The host of countries from the [See: Figure 2]. This phenomenon was an WITH THE LOWEST selling it to foreign corporations, where cash Balkans that are far along in the EU member- answer to a debate from the beginning of inflows were redistributed through the state ship negotiations seem to be nearly trans- transformation: should reforms be gradual budget. As a result, the GINI coefficient in formed. There are countries at the begin- to minimize the pain, or should they be FERTILITY Russia is almost twice as big in Slovakia, and ning of their transformation process, but deep while there is still social acceptance IN THE WORLD, 30% higher than in Poland21. who are determined to finish it – at least for for them? Clearly, the first approach leads now (Ukraine, Georgia, and Moldova). Still, to a situation in which the reforms are not SIX ARE POST- Secondly, the effects of the growth were not there are some states that stagnated in their implemented at all. equally distributed in the post-communist oligarchy (Russia, Belarus, or Kazakhstan). COMMUNIST countries. In 2016, in many countries, the ATTEMPTS TO CATCH UP income level for many income deciles was Finally, there are countries that took a step Some countries that used to be slow re- COUNTRIES worse than in 1989. This is true for virtually back from the times of the USSR – like Ta- formers decided to repeat the success sto- anyone in Ukraine, Tajikistan, Georgia, and jikistan, Turkmenistan, and Uzbekistan. It ry of Poland – even asking for direct help the Balkan countries that engaged in warfare seems that after thirty years of grouping from the authors of the reforms. This was in the 1990s: Montenegro, Serbia, Bosnia countries on the basis of the fact that they the case of Georgia under the first presi- It seems that the case of Georgia was and Herzegovina, and Northern Macedonia. used to be communist has, to a large de- dency of Mikheil Saakashvili when he basi- also one of the role models for reforms in gree, lost its merit. cally eliminated corruption, the influence of Ukraine, which was facing stagnation similar The poorest inhabitants of Hungary, Croa- oligarchs, cut red tape, and attracted foreign to the one in Georgia before 2000. However, tia, Russia, Latvia, Estonia, Lithuania, and Even so, there are issues common to all of investment. As a result, Georgia has for years being far larger and having wealthier and Bulgaria still have a lower income than in them. The first one is clearly Russia. It has been among the top friendliest countries to more entrenched oligarchs, the road for 1989. There are very few countries where proven to be a predatory and aggressive start and run a business in19. Ukraine has been much more difficult. This income growth was fast and dispersed state. This arises, among others, from the could be seen, for example, when looking across all income groups – among this elite failure of its own economic transformation. After that, the Georgian economy started at how slowly the anti-corruption measures group we may find Poland, Armenia, Bela- Nonetheless, or even more so, the Russian growing at a much faster pace and became have been introduced20. rus, and Turkmenistan. In other countries, government successfully tries to maintain quite resistant to external shocks. Even the fast income growth was seen only by the popular support in the society by projecting Russian invasion in 2008 gave the economy It remains a great hope for the region that highest income groups – with the curious its military power abroad. only a temporary pause [See: Figure 3]. It they eventually will succeed in their struggle exception of Azerbaijan, where the poor- seems that despite late reforms, Georgia to build a strong and efficient state. Ukraine est are the ones that have seen the fastest Yet, such feats weaken Russia even further – is on its way to developing a modern and is far too important for the region, but has income growth [See: Figure 4]. due to military spending, a need to support vibrant economy that is already quite inte- remained largely unreformed and a hostage puppet states, and international sanctions, grated with the developed world. If it was of its past. WHAT LAYS AHEAD? which leads to a viscous circle. Nevertheless, not for the frozen conflict with Russia, Geor- What lays ahead for post-communist coun- the situation may be even worse. A demo- gia might very well be a member of the EU. INEQUALITY AND TRANSFORMATION tries? One may say that after thirty years, graphic and economic collapse may lead It is also interesting to look at how the effect the transformation is all but complete. Of to positive changes in the country, but in all of transformation was distributed between course, this is not true – or at least not en- likelihood may instead bring an even more 18 Shleifer, A., D. Treisman (2014) “Normal Countries: members of the society. Initially, the wealth tirely so. aggressive regime to power. The East 25 Years after Communism”, [in]: Foreign Af- fairs, Vol. 93, p. 92 20 Lough, J. and V. Dubrovskiy (2018) Are Ukraine’s This threat is a large concern for all neigh- 19 World Bank (2019) Doing Business 2019. Avail- Anti-Corruption Reforms Working?. Available [online]: boring countries – especially the ones that able [online]: https://www.doingbusiness.org/content/ 21 https://www.chathamhouse.org/sites/default/files/ CIA Factbook. Available [online]: https://www. are not members of NATO. But even these dam/doingBusiness/media/Annual-Reports/English/ publications/research/2018-11-19-ukraine-anti-cor- cia.gov/library/publications/the-world-factbook/ DB2019-report_web-version.pdf ruption-reforms-lough-dubrovskiy.pdf rankorder/2172rank.html that are worried feel exposed – as military 018 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE 019

aggression would bring them to their knees induce further waves of emigration to the within hours, or days at most. This is an in- West – which is facing similar kinds of prob- sufficient amount of time to mobilize NATO lems, and only new migrants will help de- forces and create a counterstrike. This is veloped countries to deal with it. precisely why there is a fear in eastern flank of NATO that such a reaction would never The real but frightening perspective for happen – akin to the situation at the start many post-communist countries is be- of World War 2, when western allies aban- coming “a country of old men” – meaning doned Central Europe. These fears are ag- a sizable portion of population is above the gravated by remarks of President Donald productive age. When Poland was joining Trump, who questions Article 5 of the NATO the EU in 2004, at the time it was one of its treaty22. “youngest” members. Now, it is on its way to becoming the oldest one in a mere twenty The second common problem is demo- years25. This is precisely the scale of incom- graphics. The transformation accelerated ing challenges for post-Soviet states. demographic transition in the post-Soviet countries. Nowadays, just three of them In what we know now as Eastern Europe, have a fertility ratio of more than the re- transformation into a market economy was placement rate (Tajikistan, Kyrgyzstan, and fueled mostly by an abundance of cheap, Kazakhstan). Out of fifteen countries with well-educated, and motivated labor. Cur- the lowest fertility in the world, six are post- rently, these countries face a need to sup- communist countries (Bosnia and Herze- port a large population of old people with- govina, Poland, Romania, Slovenia, Croatia, out social disruption; a monumental task and Slovakia)23. about which no politician is ready to talk yet. Let us hope they acknowledge it and take For these countries, at a total fertility ratio any and all necessary precautions before it of about 1.3–1.4, each new generation is is too late. about half the size of the previous one. This trend, coupled with large-scale emigration – especially in the case of the countries that have access to a single European market – will cause significant disturbances in 25 http://www.tokfm.pl/Tokfm/1,103454,10865218, the economy and societal fabric of post- Za_30_lat_bedziemy_najstarszym_spoleczenstwem_ Europy_.html [in Polish] communist countries, especially in pension systems, healthcare, and long-term care. The first cracks in these systems are already visible and require a higher tax burden for younger generations24. This, in turn, may

22 https://www.nytimes.com/2018/07/18/world/europe/trump-nato-self-defense-montenegro.html 23 https://www.cia.gov/library/publications/the-world- TOMASZ factbook/rankorder/2127rank.html KASPROWICZ 24 Kasprowicz T. (2016) ”Polskę czeka twardy emerytalny karambol”, [in]: Obserwator Finansowy. Available Vice-President of Res Publica Foundation. Managing [online]: https://www.obserwatorfinansowy.pl/forma/ partner of Gemini, an IT company specializing in busi- rotator/polske-czeka-twardy-emerytalny-karambol/ ness process automation. Editor at Liberte! and Res [in Polish] Publica Nowa 020 020 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MARTIN REGULI 021

any Westerners have seen the EU and the CEE countries, and a sharp the break-up of the Eastern break with Western Europe with the grow- Bloc as the long-expected ing resentment and the gradual divergence moment of reconnection between the two political blocs. This has EU Accession with the countries of Cen- resulted in the slow-down of the integra- tralM Europe. Formerly, in the interwar years, tion process in terms of the adoption of the these states formed a crucial part of the Euro as a common currency, and later led order within the region. With the conclu- to political animosity for the proposals of sion of USSR domination, there was a natu- the EU. This can be illustrated by the lack of and Revival ral expectation that these countries would cooperation of the V4 countries with the EU use this transition to make a quick transfor- during the migrant crisis. mation into democratic and economically free and open regimes that would reap the While Slovakia has gone the farthest to show benefits in terms of economic and political that it is a reliable partner for the EU, it still liberalization. prefers to respect the unity of the V4 coun- of Nationalisms tries over the full support for the policies The two regions where this expectation was of its main economic partners. With recent the strongest were the Baltic region (which Russian military aggression, the informa- became part of the USSR as a result of the tion warfare deployed through Russian paid Second World War and thus had a reason to channels, as well as the economic integra- in CEE want to become Westernized), and Central tion needed to make the most to the In- and Eastern Europe (CEE) (which found itself dustry 4.0 revolution, the restarting of the at the border between the East and the West convergence process may be crucial to save and comparatively could see their deteriora- the future of the European project for the tion vis-à-vis the capitalist countries located CEE region. just a few kilometers away).

The countries of the former Eastern Bloc managed to switch lanes from the early moves away from the nationalistic and extremist rhetoric, up until the European Union (EU) accession. At that point they opted for THE RESTARTING the Eurosceptic, nationalist, and extremist rhetoric since 2005, has strengthened OF THE through the years of the economic recession. CONVERGENCE

Multiple issues affected this transition and PROCESS MAY the four countries had their specific flavors of nationalism and extremism reflecting the BE CRUCIAL past experiences with an “external enemy” TO SAVE THE FUTURE (as was the mutual case of the Slovak and Hungarian nationalists) of the country and OF THE EUROPEAN the presence of the Roma minority. PROJECT MARTIN Over the past two decades there was at REGULI first, a positive honeymoon period between FOR THE CEE REGION 022 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MARTIN REGULI 023

EARLY PROMISE LEADING TO THE EU In addition, Slovakia closely observed the to guarantee the CEE countries sovereignty, ACCESSION Hungarian minority party entering the gov- and distinctively made them a part of the The years between 1989 to the early 2000s ernment coalition for the second time in Western geopolitical bloc finally detached presented a very positive story for both of 2002, coupled with the split and the failure IN SLOVAKIA, from the previous threat of Russian military these regions. All of the countries within the of the leading nationalist party (SNS). Thus, THE SUPPORT and geopolitical influence. While this issue bloc have put themselves on the clear path was not confirmed through the referenda towards both membership of the European FOR EU ACCESSION (unlike the case of the EU accession), and Union and the North Atlantic Treaty Organi- one can reasonably doubt whether these zation. REACHED NEARLY would pass in a popular plebiscite, these measures did not face serious political op- However, this path was not without hurdles 94%, ALBEIT position that would campaign to stop this – especially in the case of Slovakia, which THE FINAL process. In hindsight, with the current scope has suffered six years of control by the gov- WITH A 52.1% of Russian influence in the region in terms ernments of authoritarian Vladimír Mečiar, ADMISSION of both the political friendships and the who was finally ousted in 1998. TURNOUT cultural influence in mind, NATO accession OF THE FOUR was a relatively smooth process with a broad The final admission of the four Central Eu- spectrum of political parties supporting the ropean countries into the EU in May 2004 CENTRAL EUROPEAN convergence to the West. was supposed to be a recognition of the COUNTRIES there were strong reasons for optimism in working protection of minority rights and numerous countries. A similar story took place with respect to the stabilization of the democratic discourse in INTO THE EU fulfillment of the accession criteria in the the newly re-established free societies. The A similar situation occurred in Hungary and form of Acquis Communautaire. With the reasons for such optimism came from the IN MAY 2004 WAS Poland. In the case of the former, while there exception of some areas, where the liberali- fact that a part of the accession criteria was were nationalist and extremist parties ac- zation of the CEE countries was somewhat directly related to the protection of minori- SUPPOSED TO BE tive at the break of the century within public painful due to the impacts of the economic ties under “the 1990 Copenhagen Docu- life, the 2002 election resulted in the exclu- transformation, this era was very much de- ment, the 1991 Geneva Report, and the 1995 A RECOGNITION sion of the Hungarian Life and Justice Party fined by a lack of the political hurdles pre- Framework Convention for the Protection of (MIEP) – which was the main party represent for the pro-European governments that National Minorities”.1 OF THE WORKING senting the extreme nationalist spectrum have successfully prepared their respective in the late 1990s and early 2000s – from countries for EU accession. Furthermore, accession to the club of West- PROTECTION the Hungarian parliament3. As regards the ern democracies was supposed to bring sta- OF MINORITY latter, the political life stabilized in 2001, The success of this convergence could be bilization and the decrease in the salience of when the main problem was the break-up seen also in the referenda for the accession nationalist/extremist discourse, which were RIGHTS of the Solidarity Electoral Action (AWS) and to the European Union. In Slovakia, the sup- dominant in the 1990s period in some coun- the formation of the numerous new parties port for EU accession reached nearly 94%, tries2. Some authors directly focused on the AND STABILIZATION emerging from its legacy4. albeit with a 52.1% turnout. Hungarian turn- case of the Czech Republic and Slovakia, out was even lower, with a 45.6% turnout pointing to the near disappearance of the OF THE Support for the populist conservative and 83.8% in support for EU membership. nationalist discourse from the Slovak and voices within these countries was mani- The Polish rate of support was only slightly Czech debate in the 2002 elections. DEMOCRATIC fested with the even quicker accession lower – 77.6% support with a 58.9% turnout. DISCOURSE process to NATO as the organization was The Czech referendum had a similar result 1 Tesser, L. M. (2003) “The Geopolitics of Tolerance: – a 77.3% support with a 55.21% turnout. Minority Rights under EU Expansion in East-Central IN THE NEWLY RE- 3 Nikolenyi, C. (2004) “Strategic Coordination in the Europe”, [in]: East European Politics and Societies, Vol. 2002 Hungarian Election”, [in]: Europe-Asia Studies, These results show that, overall, there was 17(3), pp. 483-532. November, Vol. 56(7), pp. 1041-1058. ESTABLISHED FREE a reasonable expectation that this particular 2 4 Henderson, K. (2004) “The Slovak Republic: Explaining Palovský, T. (2006) “Polsko”, [in]: Havlík, V. and Kaniok, region would not pose a serious threat for Defects in Democracy”, [in]: Democratization, Vol. 11(5), P. (eds.) Euroskepticismus a Země Střední a Východní pp. 133-155. SOCIETIES Evropy, Brno: Masaryk University. [in Slovak] the further integration of the countries in 024 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MARTIN REGULI 025

the economic and political bloc supporting with the League of Polish Families further the signing of the Lisbon treaty6. Although the Western values of democracy, political strengthened an already nationalist and the Law and Justice party was pushed out liberalism, and the cultural proximity to- Eurosceptic tone of the Kaczynski brothers, of power between 2007 and 2015 – an era wards modern Western societies. who used these statements in the process of that saw two governments of Donald Tusk, IN 2010, a leader of the Civic Platform party, a pro- THE GOVERNMENT A NOTABLE SPLIT SINCE THE European centre-right bloc – which seemed ACCESSION a very positive sign, this did not mean that PARTIES WERE It was, therefore, all the more surprising the Eurosceptic nationalist bloc would get when CEE started to slide into the sway of any weaker. Quite the contrary, the Euro- DEFEATED RATHER populism, with each of the countries follow- sceptics got back to the forefront. ing the backward direction in one way or an- BADLY. THE PARTY other within the two years of EU accession. FOR THE FIRST In 2015, the Law and Justice party regained OF VLADIMÍR TIME IN THE 21ST power again and has used its influence to Needless to say, the term populism refers undertake a series of perceived illiberal re- MEČIAR WAS to the strategy of the politicians to appeal CENTURY, THE 2005 forms that strengthen the control of the sys- to the conservative and often reactionary tem under the party rule for a considerable KICKED OUT sentiments of the population with respect to PARLIAMENTARY time to come. The main area of criticism has ethnic hatred, Christian values in opposition been the changes introduced in the judicial OF THE PARLIAMENT, to Western liberalism, and the protection of ELECTION branch of the government. The reforms – traditions in the face of the perceived threat including, for instance, the lowering of the WHILE THE SLOVAK from the cosmopolitan societies. CAMPAIGN AND ITS retirement age for the current judges – have given control over replacement of judges NATIONAL PARTY POLAND RESULTS IN POLAND to Law and Justice, allowing the party to In Poland, the populist tendencies started reshape up to two thirds of the Supreme AVOIDED THE SAME anew in 2005 – a year that signalled the PAVED THE WAY Court. Similar control has been exercised change of direction of the entire region. in the area of the public media channels, FATE FOR THE RETURN which has contributed to effectively turning For the first time in the 21st century, the these channels into a propaganda machine7. 2005 parliamentary election campaign and OF THE its results in Poland paved the way for the NATIONALISTIC, The recent period was again character- return of the nationalistic, xenophobic, and ized by a sharp increase in anti-EU rhetoric, According to the 2019 polls, when the strongly Eurosceptic rhetoric, resulting in XENOPHOBIC, which was revived in the aftermath of the next parliamentary election is soon to take the victory of the Law and Justice (PiS) party, Brexit vote in 2016. However, what differ- place (late October or early November), the which formed a coalition government with AND STRONGLY entiates it from the previous era is the fact Law and Justice party might hold around an openly nationalistic, religiously conserva- that these steps no longer mean electoral a 15-percentage-point lead, thus giving the tive, and anti-EU League of Polish Families EUROSCEPTIC troubles for the party conducting itself in party over 40% of stable support. In light (LPR, associated with xenophobic and anti- this way, while in power. of these predictions, it is unlikely that the Semitic claims) and an agrarian protest- RHETORIC, Law and Justice party would be punished party Self-Defence (Samoobrona). for their illiberal tendencies. This phenom- RESULTING enon marks an even sharper shift away from The leading Law and Justice party started IN THE VICTORY the situation that started back in the year adopting a nationalist discourse associated 6 Mulvey, S. (2007) “Poles in War of Words Over Voting”, 2005. The voters seem to accept the policies with a vision of a strong and independ- OF THE LAW [in]: BBC News, June 21. Available [online]: http://news. adopted by the parties with the Eurosceptic ent Poland as one of the main parts of its bbc.co.uk/1/hi/world/europe/6227834.stm and nationalistic rhetoric8. programme5. The forming of the coalition AND JUSTICE (PIS) 7 Zerofsky, E. (2018) “Is Poland Retreating from Democ- racy?”, [in]: The New Yorker, July 23. Available [online]: 8 PTWP (2019) Sondaże poparcia partii politycznych https://www.newyorker.com/magazine/2018/07/30/is- (wybory). Available [onine]: https://www.wnp.pl/parla- 5 Ibid. PARTY poland-retreating-from-democracy mentarny/sondaze/ [in Polish] 026 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MARTIN REGULI 027

pressures, the coalition with the national- Given that the populist and very strong anti- ist and populist forces held full four years media rhetoric is keeping the SMER party and the nationalist and strongly populist at the level of around 20% of voter support, THE FOUR YEARS rhetoric started to define the discourse of THE LEADER with roughly 8% for both the Slovak National OF THE SMER’S its social-democratic leader, Robert Fico, OF THE MAIN Party and the fascist party Our Slovakia and himself. Some of the notorious examples a similar percentage for the populist con- SINGLE-PARTY of this rhetoric included the enactment of OPPOSITION servative party We Are Family, this means the Language Act or the steps taken to deny that, nationally, the conservative nationalist GOVERNMENT WERE the Hungarian president’s entry to Slovakia PARTY (FIDESZ), forces have a hold on over 40% of the vote. during his unofficial visit in August 200910. While this tendency has been countered A COMBINATION VIKTOR ORBÁN, by the growing support for the progressive Moreover, in addition to these established center-left coalition of the two new par- OF POPULIST parties, there was a gradual growth of the RADICALIZED HIS ties – Progressive Slovakia and the Together extremist group Slovenská Pospolitosť (Slo- (Spolu) party – the pool of the voters for SOCIAL-POLICY vak Togetherness) and its main figure Marián ALREADY FIERCE these and similar parties remains low. AND NATIONALIST Kotleba. Along their rising activity against RHETORIC the “Roma criminality”, which gained them HUNGARY MEASURES considerable publicity, in the 2013 election Moving to the developments in Hungary, the for the regional governor Mr. Kotleba man- situation also began with the general elec- aged to gain over 10% (or 13,000 votes) in The last straw was the vote about the Euro- tion, but not quite in the same way as in the his home region of Banská Bystrica11. Sub- pean bailout fund. This was a point which two previous cases. The 2006 election itself sequently, in 2014 he actually won the seat disappointed so many of the voters who ended with a victory for the previous coali- of the regional governor, and after the court have had high hopes of this government tion of the Hungarian Socialist Party (MSzP) had disbanded his original party, he simply and led to a landslide victory of the SMER- and the Alliance of Free Democrats (SzDSz). SLOVAKIA founded a new party to contest the national Social Democracy. As a result, in the 2012 The only other parties to enter parliament Poland provided a blueprint for Slovakia’s election. election it became the first party in history to were the coalition of two right-wing parties story. Having beaten the nationalist popu- form a single-party government in Slovakia under the leadership of Fidesz – Hungarian list government of Vladimír Mečiar in 1998, A similar situation followed in Poland. In after 1989. Civic Union and the Christian Democratic the center-right governments of 1998 and 2010, the government parties were de- People’s Party on the one hand, and the 2002 placed Slovakia on the path of much feated rather badly. The party of Vladimír The four years of the SMER’s single-party Hungarian Democratic Forum (MDF) on the needed reforms. They have, however, lost Mečiar was kicked out of the parliament, government were a combination of populist other. However, the previous state of things the 2006 election badly to the coalition of while the Slovak National Party avoided the social-policy and nationalist measures. Af- only lasted for a very short time. the social democratic SMER party, which same fate (by 0.07 percentage points, or just ter this term, the main party was weakened joined forces with the populist nationalist 2,020 votes). The victory was celebrated by considerably, gathering less than 30% of the The breaking point happened shortly after parties of Mečiar (Movement for a Demo- the center-right bloc, which suffered from total vote. the election, as Prime Minister Ferenc Gy- cratic Slovakia) and Ján Slota’s reunited Slo- internal tensions in the coalition of four di- urcsány was caught on tape saying that the vak National Party9. verse parties. What was shocking in this election was the government lied to win the election, while fact that it saw the fascist People’s Party bringing the country to the brink of bank- This unholy, at least by the European Stand- (Our Slovakia) receive nearly 8% of the votes, ruptcy12. This event resulted in massive ri- 10 Vilikovská, Z. (2009) “Prime Minister Fico Says State ards, coalition for a Social Democratic party Language Act Is Diplomatic Success for Slovakia”, [in]: resulting in their entering the parliament. ots across the country, which lasted several meant that SMER faced the threat of sus- The Slovak Spectator, December 18. Available [online]: Since then, their position has not weakened, weeks. http://spectator.sme.sk/articles/view/37460/10/prime_ pension of the membership of the Party minister_fico_says_state_language_act_is_diplomatic_ meaning that the fascist party defending the of European Socialists (PES). Despite these success_for_slovakia.html puppet regime of the first Slovak Republic

11 Vilikovská, Z. (2009) “VÚC Election Results Mirror Party has become an accepted party of Slovak Sympathies at National Level”, [in]: The Slovak Spectator, politics. 12 Boyes, R. (2006) “Prime Minister Refuses to Stand 9 Bakke, E. and Siter, N. (2005) “Patterns of Stability: November 16. Available [online] http://spectator.sme. Down after Lies and Street Battles”, [in]: Times Online, Party Competition and Strategy in Central Europe since sk/articles/view/37147/10/vuc_election_results_mir- September 20. Available [online]: http://www.timeson- 1989”, [in]: Party Politics, Vol. 11(2), pp. 243-263. ror_party_sympathies_at_national_level.html line.co.uk/tol/news/world/europe/article644751.ece 028 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MARTIN REGULI 029

strong nationalist sentiment14. This process the regime of Viktor Orbán. As a result of this strengthened domestic levels of the crimi- legislative proposal the CEU had to relocate nality against the minority and the creation a considerable majority of its operations and UNLIKE IN THE CASE of the Hungarian Guard. The outcome was HUNGARY HAS educational activities to Vienna, Austria18. OF POLAND the result of the 2009 European Parliament TRAVELED PERHAPS election and a clear victory of Fidesz (with These developments show that Hungary AND SLOVAKIA, more than 50% of all the votes cast) and THE LONGEST ROAD has traveled perhaps the longest road from 14.77% of the votes for the extreme right- the liberal transformation of the 1990s and HUNGARY HAS NOT wing Jobbik party15. FROM THE LIBERAL early 2000s and that, so far, there is no sign of any liberal opposition that could reverse SEEN A MOMENT Unlike in the case of Poland and Slovakia, TRANSFORMATION this trend. Fidesz continues to dominate the Hungary has not seen a moment of moder- polls after winning both the 2014 and 2018 OF MODERATION ation since the crisis in its politics erupted in OF THE 1990S election. His popularity does not face any 2006. The coalition of Fidesz and the KDNP challengers despite numerous illiberal and SINCE THE CRISIS scored 52.73% of all the votes in the 2010 AND EARLY 2000S anti-opposition policies have been intro- IN ITS POLITICS election and decided to use the constitu- AND THAT, SO FAR, duced by the Orbán governments. tional majority to introduce changes in the ERUPTED IN 2006 Constitution to make life easier for itself, or THERE IS NO SIGN THE CZECH REPUBLIC as some media outlets put it, to cement itself The case of the Czech Republic is different in power16. OF ANY LIBERAL from all of the above-discussed cases. While the country remained seemingly stable Similarly to Poland, Hungary went through OPPOSITION THAT throughout the early and late 2000s, there The leader of the main opposition party a series of changes in media legislation, were already some examples of increased (Fidesz), Viktor Orbán, radicalized his al- granting a single public entity the control COULD REVERSE nationalist and populist rhetoric over those ready fierce rhetoric. He went towards mak- over all of the private media. These two years. ing claims concerning the term ‘Felvidék’ goals gradually undermined the system of THIS TREND or ‘Upper Hungary’, which is a historic term checks and balances within the Hungarian Some people have identified the main prob- for Slovakia, and thus called for territorial political system that were supposed to pro- lem as being connected to the persona of autonomy for the Hungarians in the neigh- tect the civil liberties in the country17. President Vaclav Klaus, due to his strong Eu- boring countries (mainly Slovakia, Serbia, rosceptic and later more openly pro-Russian and Romania)13. With the Fidesz party be- Lastly, Viktor Orbán has started using a pub- statements – illustrated, for example, by his ing the likely winner of the 2010 election, lic scarecrow in terms of the Hungarian ex- reluctance to sign the Lisbon Treaty, which as it eventually happened it was preparing 14 Jobbik (2010) Jobbik – The Movement for a Better patriate, George Soros – a billionaire finan- gained significant attention all over Europe. Hungary. Available [online]: http://www.jobbik.com/ the ground for even more radical elements cier, hedge fund manager, political activist, Klaus has been critical of the EU member- 15 within Hungarian public life. Waterflied, B., Samuel, H., and Squires, N. (2009) “Eu- and philanthropist of Jewish descent who ship from the moment that the Czech Re- ropean Elections 2009: Far-Right and Fringe Parties Make Gains Across Europe amid Low Turnout”, [in]: The funded pro-liberal think tanks in Hungary public joined in 2004. His early criticism had The main concern was the success of an Telegraph, June 8. Available [online]: http://www.tele- and other Central European countries. been more constitutionalist and focused graph.co.uk/news/worldnews/europe/eu/5471893/Eu- extreme right party called Jobbik – Move- ropean-elections-2009-far-Right-and-fringe-parties- on the loss of sovereignty. Later, since his ment for a Better Hungary, which rallied make-gains-across-Europe-amid-low-turnout.html The Hungarian Prime Minister has directed standoff against the final signing of the Lis- its support around two main issues – of 16 Verseck, K. (2012) “Orbán Cements His Power With a considerable amount of hatred towards bon treaty, he has moved as a more anti- the Roma minority and the revival of the New Voting Law”, [in]: Spiegel Online, October 30. George Soros based on his political views, Western populist, critical of the migration Available [online]: https://www.spiegel.de/international/ europe/hungarian-parliament-amends-election-law- billionaire status, and his Jewish origins. This a-864349.html push has been strengthened by a law aimed 18 Walker, S. (2018) “‘Dark Day for Freedom’: Soros-Affil- 13 Mesežnikov, G. (2009) “Who Really Won the 2009 Eu- 17 Kingsley, P. (2018) “Orban and His Allies Cement directly at the Central European University iated University Quits Hungary”, [in]: The Guardian, De- ropean Elections in Slovakia?”, [in]: Institute for Public Control of Hungary’s News Media”, [in]: The New York (CEU), which was founded by Soros. The cember 3. Available [online]: https://www.theguardian. Affairs, June 23. Available [online]: http://www.ivo.sk/ Times, November 29. Available [online]: https://www. institution has been seen as the last major com/world/2018/dec/03/dark-day-freedom-george- buxus/docs/publicistika/subor/Mesez_Elect_09_HBF_ nytimes.com/2018/11/29/world/europe/hungary-or- soros-affiliated-central-european-university-quits- Eng.pdf ban-media.html remaining intellectual institution challenging hungary 030 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MARTIN REGULI 031

crisis and becoming more defensive of the needs to be taken positively as it spreads the Russian regime under Vladimir Putin19. issues covered into new aspects of liberal THE POLITICAL policies. ENTERING INTO However, some other important developments started as early as 2005. On the one LANDSCAPE However, the good trend has been more POLITICS HAS hand, several popular and very charismatic than just overshadowed by the negative leaders emerged within the Czech Social IN THE CZECH political developments, mainly through the RADICALIZED Democratic Party (ČSSD), including David growth of two new parties, ANO 2011 and Rath who became the Czech Health Min- REPUBLIC HAS BEEN the Freedom and Direct Democracy (SPD) MR. BABIŠ IN TERMS ister, and subsequently, a regional gover- party. The former, ANO 2011, has been nor of Central Bohemia Region. His rise to RESHAPED dominated by a billionaire businessperson OF HIS RHETORIC, fame and prominence coincided with the from Slovakia, Andrej Babiš. He has created increased nationalist rhetoric by a left-wing BY THE EMERGENCE a catchall populist party claiming to want WHICH STARTED politician arguing against immigrants from to clean up Czech politics, even though his African countries “on the somewhat populist OF A PLETHORA businesses have been associated with the RESEMBLING (not to say racist) grounds that non-Euro- OF NEW PARTIES allegedly corrupt business practices and THE LEADERS pean migrants will bring crime, disease and possible misuse of the European funds. social disorder”20. ON ALL SIDES OF POLAND Entering into politics has radicalized Mr. On the other hand, the second very closely OF THE POLITICAL Babiš in terms of his rhetoric, which started AND HUNGARY related issue within Czech politics – just as resembling the leaders of Poland and Hun- in the case of Slovakia and Hungary – has SPECTRUM gary. His participation in the government been the salience of the social tensions under the leadership of the Social Demo- with the Roma minority. While this topic crats between 2013 and 2017 has made grew in terms of the social importance in Babiš immensely popular, but only thanks the late 2000s, Czech political parties ral- to his ruthlessness and populism. This led which has not dropped below 50,000 until lying against this particular group were kept The development of support for the anti- to the fact that after the 2017 election, there 2013. Since then, the support and member- outside of parliament21. In this particular system elements have accelerated greatly was a general reluctance to enter the gov- ship declined rapidly to 34,000, below 7% decade, only the gradual growth of minor within the last five to eight years due to ernment with the then winner, Mr. Babiš in 2019 EP election. Their electoral support political formations within Czech political a number of political crises surrounding the himself. Eventually, he was forced to form has waned to the ANO party and their tra- discourse was observed. It was perhaps best traditional parties (eg. the Civic Democratic a coalition with the Social Democrats. How- ditional base of voters that remember Com- illustrated by the increased activity of the Party or the Social Democrats) in terms of ever, since they have only had a minority munism is fading away, thus they are likely Workers Party as the main representative of corruption, as well as the lack of charismatic in the government, they rely chiefly on the to continue this decline and fade away from the extreme right in the country since 2007. persons to drive the popular support back support of the Communist Party. the Czech politics. to these traditional parties. The result could not have surprised anyone. The political The Communist Party of the Bohemia and Lastly, with the success of the Freedom and 19 Odkladal, M. (2015) “Václav Klaus: Západ donútil Puti- landscape in the Czech Republic has been Moravia has been the only unreformed com- Direct Democracy party in the parliamen- na obsadiť Krym, Európa je vinná za migračnú krízu”, [in]: Aktuality.sk, November 30. Available [online]: https:// reshaped by the emergence of a plethora munist party in the Eastern bloc countries tary 2017 election, there has been a break- www.aktuality.sk/clanok/309131/rozhovor-s-vacla- of new parties on all sides of the political that have continued in the public sphere, through of an anti-immigrant, anti-Islamic, vom-klausom-zapad-donutil-putina-anektovat-krym- europa-nesie-vinu-za-migracnu-krizu/ [in Slovak] spectrum. and their defense of the life under the previ- anti-European element into the Czech ous regime has translated into the nostal- parliament. The party was founded by half- 20 “Czech Republic: Green Card law opens left-right split on immigration”, [in]: Dr Sean’s Diary, Septem- There has been a diversification of the par- gia among the older part of the population Japanese, half-Czech entrepreneur Tomio ber 1. Available [online]: http://drseansdiary.blogspot. ties on the liberal side, mainly in the form and eventually into the electoral successes Okamura after the split from his previous com/2008/09/czech-republic-green-card-law-opens. of the Pirate party, which has become the in the late 1990s and the 2000s, when the political project – Dawn of Direct Democ- html key representative of progressive liberalism. party attracted between 11% and 18%. This racy. 21 Mudde, C. (2005) “Racist Extremism in Central Eu- rope”, [in]: East European Politics and Societies, Vol. The party has brought new topics and a new has been linked with strong party member- 19(2), pp. 161-184. type of discourse into Czech politics, which ship, which stood at 100,000 until 2003 and 032 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MARTIN REGULI 033

Mr. Okamura has managed to popularize together with the continued 25-30% gains tanks to try to institute changes in the popu- the anti-immigrant, anti-Islamic sentiments of the ANO, 35-40% of the Czech electorate lar demand and help move the discussion within the Czech electorate and capitalized is susceptible to the populism of the nation- back onto a moderate course. on this strategy. Currently, the party is ostra- alist and extremist kind. Such an unfortunate IT IS UP TO LIBERAL cized in the Czech parliament and no other development has brought the Czech Re- THINK TANKS political grouping is willing to cooperate public into the fold of the other V4 countries. with them. However, it now has a platform TO TRY TO INSTITUTE on which it can increase its appeal among CONCLUSIONS the Czech voters, which have previously not In summation, the post-Socialist develop- CHANGES responded to this form of populism. ments within Central and Eastern Europe have demonstrated some very promising IN THE POPULAR Freedom and Direct Democracy continues signs in the early parts of the development, to do well in the election polls, gaining up namely the 1990s. With the exception of DEMAND to 10% of voter support. This shows that Slovakia, there has not been any significant return to authoritarian tendencies and all CEE countries later made quick progress to join both NATO and the European Union. Given that this period has been associated with the impacts of the economic recession The main economic and geopolitical goals from the 2007 financial crisis, the politicians of the transformation have been achieved of the V4 region could see EU sentiments WITH sixteen years after the fall of the Eastern weakening in Central and Eastern Europe, Bloc. Generally speaking, positive changes and that their populism may be seen as po- THE EXCEPTION may have been observed in terms of the litically more justified among the population. democratic transformation, a decrease of In the years following the crisis, there has OF SLOVAKIA, THERE the nationalist and social tensions, and the been a general return to the era of respon- emergence of respect for individual liberties, sibility following the worst moments of the HAS NOT BEEN the rule of law, and the principles champi- crisis in Greece, Portugal, and Ireland. These oned by the European Union. However, in experiences have pushed the population to ANY SIGNIFICANT hindsight, this entire success may have been vote for more moderate parties – mainly in RETURN just a result of implementing the carrot and Poland, Slovakia, and the Czech Republic. stick approach in the EU accession process. TO AUTHORITARIAN However, once the unpopular part of the Once this success was achieved, the EU lost tough job, namely transformation, was TENDENCIES all of its bargaining power vis-à-vis the poli- complete, the aforementioned countries ticians from Central and Eastern Europe. In slid back into a second wave of populism AND ALL CEE the immediate aftermath of such a situation, which has lasted up until now. This recent the politicians in all four countries (Poland, period has been characterized by more di- COUNTRIES Slovakia, Hungary, and the Czech Repub- rect opposition to the EU which has mani- LATER MADE lic) have started using strategies to increase fested as protests against deeper integration MARTIN their general appeal among the population. and certain social measures, including the REGULI QUICK PROGRESS This has been done through the stirring up migrant quotas. of Eurosceptic rhetoric and the abandon- Senior Analyst at the F. A. Hayek Foundation, a leading free-market think tank, focusing primarily on the TO JOIN BOTH NATO ment of certain standards of the rule of law, Unlike in the previous case of the govern- areas of economics, social policy and foreign affairs on which the EU was insisting in the acces- ments immediately after 2004, the support at the level of the Slovak Republic and the European sion process. for the populist governments and national- Union. He is active in the consultations about educa- AND THE EUROPEAN tion policy, as well as the digitalization progress in the ist sentiments persists, even following them V4 region UNION getting into power. It is up to liberal think 034 034 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 035

fter thirty years since the fall of Communism in Europe, Ukraine remains a country with unfinished institutional re- RECOVERING FROM 30 Years Later: forms and significant barriers AN ECONOMIC forA business and trade. The country gained independence when the Soviet Union dis- DOWNTURN solved two years later – in 1991. Since then, the reluctance of the pyearolitical elite to AND WITH Will Soviet embrace market economy rules led to an incomplete transformation exacerbated by OCCUPATION cemented oligarchic influence and rampant corruption. AND A WAR ON ITS TERRITORY, Legacy Still Entrepreneurship was forbidden in Ukraine when the country was a part of the Sovi- UKRAINE IS ONE et Union. Only in the late 1980s, the pe- restroika resulted in legalization of some OF THE POOREST forms of private businesses – such as indi- Shape Ukraine’s vidual entrepreneurship and cooperatives. COUNTRIES Before that, small manufactures and short- age goods traders operated illegally on the IN THE REGION black market. Such businesses often relied on “protection” by racket gangs.

Future? The Ukrainian economy was heavily indus- independence decade. In 1999, Ukraine’s trialized and connected to Russia through GDP reached its lowest point contract- centralized planning. In 1991, industry con- ing down to 41% of its 1990 volume. The tributed almost 55% of Ukrainian GPD – upward trend in the 2000s brought the much more than the current 23%, accord- GDP to its currently highest level over the ing to the 2018 data1. The social context last two decades of almost 75% of the – virtually absent civil society and the lack 1990 benchmark. But the 2009 recession of experience of private ownership and brought it down again. The most recent entrepreneurship – contributed to insuffi- downturn happened after 2014, when the cient public pressure for market economy Russian occupation and the war in the and the rule of law2. eastern Ukraine started. The country’s GDP plunged down to 59% of its 1990 volume The economy of Ukraine took the big- and has grown only to 64% by 2018 [See: gest hit during the country’s first post- Figure 1]3.

1 World Bank (2019) Industry (Including Construction), Now, slowly recovering from an economic Value Added (% of GDP). Ukraine. Available [online]: https://data.worldbank.org/indicator/NV.IND.TOTL. downturn and with occupation and a war ZS?locations=UA on its territory, Ukraine is one of the poorest 2 Kupfer, M. (2018) “Why Poland and Ukraine Took Dif- ferent Post-Communist Paths”, [in]: Kyiv Post. Available IRYNA [online]: https://www.kyivpost.com/world-in-ukraine- 3 World Bank (2019) GDP (constant 2010 US$). Ukraine. poland/why-poland-and-ukraine-took-different-post- Available [online]: https://data.worldbank.org/indicator/ FEDETS communist-paths.html NY.GDP.MKTP.KD?locations=UA 036 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 037

Figure 1: GPD in Ukraine in constant 2010 US dollars [percentage to 1990] PRICE REGULATIONS Ukrainian government reacted to high in- PUBLIC POLICY flation in the 1990s by “manually” regulat- ing prices and salaries, instead of ensur- IN UKRAINE ing the central bank’s independence and sound monetary policy7. Prices for certain DID LITTLE commodities – coal, oil, electric energy and heating, transport services, and others TO ENCOURAGE – were capped, followed by price limits on some types of bread, fruit, and vegetables, SMALL AND MEDIUM as well as gas and running water.

ENTERPRISE Forced to pay much more for gas and coal than households, businesses financed the GROWTH subsidized domestic prices. In mid-1990s, the Ukrainian government eliminated markup restrictions on a wide range of products. Yet, gas prices for households remained heavily subsidized, which created The government subsidized certain sectors opportunities for arbitrage – a corruption at taxpayers’ expense – including under- scheme where regional gas distribution priced energy. These were mainly tradi- companies resell the low-priced gas that Source: World Bank tional industries that relied on cheap raw was allocated for households to industrial materials and, due to global conjuncture, consumers for higher prices8. In addition, countries in the region. The World Bank es- for such a situation may be found in po- did not require diversification and modern- Ukraine’s reliance on relatively cheaper timates that with the current growth rate, litical infighting (the then president, Leonid ization. With favorable conditions for these Russian gas gave Russia political leverage it will take Ukraine more than fifty years to Kuchma, and the parliament opposed each products on foreign markets and the fact over Ukraine, and did not encourage en- reach the income levels of today’s Poland4. other) as well as in the lack of public con- that the enterprises in these sectors were terprises and households to increase their The country’s growth could be accelerated sensus about the necessity of the transition owned by financial groups with political energy efficiency. if it overcame the bureaucracy and corrup- to the market economy. The decision mak- influence, public policy in Ukraine did little tion that restrict doing business and affect ers were unwilling to undertake unpopular to encourage small and medium enterprise Ukraine substantially increased gas prices competitiveness. To achieve this, Ukraine reforms that would bring systemic chang- growth. for private consumers only in 2018 in order needs to conduct institutional reforms that es to the economy and would go against to meet the conditions of the International counter vested interests, while Ukrainian deep-rooted social expectations about The populist policies went hand in hand Monetary Fund (IMF) under the new Stand- society should demand tangible transfor- state control over land and enterprises5. In with restrictions and discretion towards By Agreement9. However, unlike liberal- mations from political leadership. addition, the growing influence of financial businesses. Complicated and limiting ized prices for industrial consumers, the industrial groups that would later transform regulations did not allow businesses to

POPULIST POLICIES into state capture by oligarchs was shaping grow, operate freely, and enter foreign 7 Vox Ukraine (2016) Bad Decisions: How to Build the Unlike in the neighboring EU coun- the distorted economic system with spe- markets, while unequal treatment of busi- Poorest Country in Europe. Available [online]: https:// tries, economic reforms and liberaliza- cial conditions for businesses with political nesses of different sectors or ownership voxukraine.org/longreads/poor-country/index_en.html tion did not take off in Ukraine right after ties6. cultivated corruption and gave rise to an 8 Saha, S. and I. Zaslavskiy (2019) “Cleaning Up Ukraine’s Energy Sector”, [in]: The American Interest. Available regaining independence.. The reasons oligarchic economy. [online]: https://www.the-american-interest.com/2019/ 5 Ishaq, M. (1996) The Ukrainian Economy and the Pro- 01/31/cleaning-up-ukraines-energy-sector/ cess of Reform: An Overview. Available [online]: htt- 4 World Bank (2019) Ukraine. Special Focus Note. 9 ps://www2.hw.ac.uk/sml/downloads/cert/wpa/1996/ Zinets, N. and M. Williams, (2018) “Ukraine Secures Tapping Ukraine’s Growth Potential, May 23. Avail- Relationship between Political Connectedness and Firms’ dp9616.pdf New $3.9 Billion IMF Deal after Gas Price Hike”, [in]: Re- able [online]: http://pubdocs.worldbank.org/en/927141 Performance. Available [online]: http://documents.world uters. Available [online]: https://www.reuters.com/arti- 558601581077/Ukraine-Special-Focus-Note-Spring- 6 Balabushko, O., Betliy, O., Movchan, V., Piontkivsky, R., bank.org/curated/en/494271528822739302/pdf/WPS cle/us-ukraine-imf-gas/ukraine-secures-new-3-9-bil- 2019-en.pdf and M. Ryzhenkov (2018) Crony Capitalism in Ukraine. 8471.pdf lion-imf-deal-after-gas-price-hike-idUSKCN1MT2J6 038 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 039

household gas prices still have not reached import parity and are regulated by the public service obligations adopted by Ukrain- ian government that set a price cap for the TODAY, THE LARGE household price. Should the market gas SOE SECTOR prices rise above the maximum price for households in Ukraine, this again will give REMAINS AN AREA room for illicit trading. OF UNFINISHED In addition, the government of Ukraine had regulated prices for food products since REFORM 1996. A maximum trade margin was set for a range of products, such as flour, bread, AND A SOURCE sugar, beef, milk, cheese, and sour cream, among others. The government also re- OF RENT-SEEKING quired businesses to declare changes in AND STATE CAPTURE their wholesale prices for specific sorts of milk, butter, meat, and other products, and IN UKRAINE. determined upper profit margins for production of flour, “socially important” types of bread10 and baby food.

This policy restricted businesses and dis- PRIVATIZATION PROBLEMS torted market competition. Ukraine’s Min- Another instance of restricted access to istry of Economic Development and Trade capital and limitation of property rights was found that the prices for state-regulated privatization through assets certificates food products had grown by 20% faster setting privileges for specific social groups: from 2003 to 2013 than other, unregu- managers and employees of the enter- lated, products11. This state regulation of prises. They had a primary right to buy out food prices was temporarily discontinued shares13. Meanwhile, owners of the privati- in 2016 and completely abandoned only in zation certificates could not sell them for 201712. cash. Therefore, potential investors were not permitted to buy certificates from citi- 10 Several sorts of bread designated by the gov- zens on the secondary market14. As a result, ernment. For details see: Resolution of the Cabi- the control over previously state-owned net of Ministers of Ukraine #1548 of December 25, 1996 On Establishing the Powers of Executive Bod- enterprises (SOEs) was mostly transferred ies and of City Councils’ Executive Bodies to Regu- to their managers. late Prices (Tariffs). Available [online]: https://zakon. rada.gov.ua/laws/show/1548-96-%D0%BF/ed2017 0617 (the version of June 17, 2017 before the cancella- Today, the large SOE sector remains an tion of price controls) [in Ukrainian] area of unfinished reform and a source of 11 Ministry of Economic Development and Trade of Ukraine (2016) Debureaucratization of Regulation of Food Prices (Amendments to CMU Resolution #1548). 13 CASE Ukraine (2007) Conditions for Finishing Privati- Available [online]: https://issuu.com/mineconomdev/ zation in Ukraine. Available [online]: http://c-e-d.info/ docs/1548_update [in Ukrainian] img/pdf/111_Russian_Full_With_Cover.pdf [in Ukrain- ian] 12 The Cabinet of Ministers of Ukraine (2017) The Gov- ernment Abolished State Regulation of Prices For Food 14 Vox Ukraine (2016) Bad Decisions: How to Build the and Services in The Markets. Available [online]: https:// Poorest Country in Europe. Available [online]: https:// www.kmu.gov.ua/ua/news/250054696 [in Ukrainian] voxukraine.org/longreads/poor-country/index_en.html 040 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 041

rent-seeking and state capture in Ukraine. Ukraine deprived NABU of the authority until the necessary legislative framework In 2019, the country moved up to the 71st The National Anti-Corruption Bureau of to invalidate illegal agreements by SOEs in for the land market was ready21. rank thanks to simplifying key administra- Ukraine (NABU) reports that corruption court18. tive procedures. The government allowed schemes their detectives investigate at According to World Bank estimations22, online business registration, improved the SOEs are mostly implemented by purchas- (UN)FREE ECONOMIC ZONES the Ukrainian economy loses USD 15 bn regulation of limited and additional liabil- ing goods or services at inflated prices, and By the mid-2000s, several free economic of annual output due to reduced agricul- ity companies, giving them more rights to by selling their products at a reduced price. zones were set and operated in Ukraine. tural productivity caused by the prohibition run their own business, canceled several They proved to be inefficient, nontranspar- of land sale. Lifting the moratorium would permits related to construction, and made Ukraine has made steps towards the pri- ent, and distorted economic opportunities increase Ukraine’s annual GDP by about steps towards deregulation in a number of vatization of its remaining 3,000+ SOEs in in favor of selected businesses. Declared 1.5 percentage points, according to the specific sectors (such as oil and gas, trans- 2018 by adopting the law to classify them as instruments for attracting investment World Bank data, and would dramatically port, and telecommunications)25. into large and small ones, and to set clear and boosting economic growth, the zones increase public revenue both from the sale privatization procedures15. However, the brought in about eight times less capital of the state-owned land as well as from Moreover, Ukraine simplified the regis- actual revenues from privatization have than intended and created about three land leases. tration of medicines, which reduced the fallen far short from the projected ones. times fewer jobs than planned. time they enter the Ukrainian market from By mid-2019, the state budget received Currently, the land market legislation has ninety days to just seventeen26. In addition only 1.6% of the proceeds planned for the Most of the invested funds came from do- not been adopted and the ban is still in to registering businesses, it is possible to entirety 2019; in 2018, the proceeds were mestic companies19. In addition to low effi- place, which results in unofficial sales deals pay taxes and obtain different certificates only 2% of the expected revenues16. ciency, special economic zones were ven- and low land prices23. online – for example, those that provide ues for tax evasion and duty free imports. information on taxpayer status and land A key obstacle to SOE privatization is the And, as investment projects were subject BUSINESS CLIMATE ownership. Overall, the number of gov- insufficient demand. Additionally, as the to approval by public officials, such zones AND DEREGULATION ernment services available online exceeds government admits, the lack of an organi- created opportunities for corruption20. Entrepreneurship had been heavily regulat- sixty27. zational capacity of the public administra- ed in Ukraine over the post-Soviet period. tion to prepare the units for sale is another LAND OWNERSHIP: STILL RESTRICTED However, some barriers of doing busi- considerable problem (the preparation Still today, Ukraine prohibits sale of agri- In 2013, due to administrative and trade ness remain unresolved. In regards to requires financial expertise and human re- cultural land, which hinders the country’s barriers, paired with high amounts of time the electricity grid, Ukraine ranks 135th in sources that are not available)17. citizens to use their land as property. It and money needed to comply with regu- the 2019 DBR. When it comes to resolv- also prevents private individuals and busi- latory requirements, Ukraine was placed in ing insolvency, it holds the 145th position. Moreover, due to recent developments, nesses from receiving adequate payment the 137th position in the World Bank’s Doing These procedures remain costly and time- the efforts to combat corruption at SOEs for selling or renting out land plots and to Business Report (DBR)24. consuming for businesses28. The reform of are likely to meet a legal impasse. Specifi- use land as collateral for loans. The mora- labor regulations is overdue in Ukraine as cally, in 2019, the Constitutional Court of torium has been in effect since 2001, when 21 Yaroshchuk, O. (2016) “15 Years of the Moratorium – Will the Land Market Reform Finally Be Completed?”, it was adopted by the Ukrainian parliament [in]: AgroPolit.com. Available [online]: https://agropolit. 25 NGO “Internews-Ukraine” (2017) The Reforms Guide. com/spetsproekty/167-15-rokiv-moratoriyu-chi-zak- Deregulation and Entrepreneurship Development. 15 as a temporary step to prevent land sales Bedratenko, O. (2018) “Ukraine Is Serious about Pri- inchitsya-nareshti-zemelna-reforma [in Ukrainian] Available [online]: http://reformsguide.org.ua/analytics/ vatization This Time”, [in]: Atlantic Council. Available [on- deregulation-and-entrepreneurship-development/ line]: https://www.atlanticcouncil.org/blogs/ukrainealert/ 18 National Anti-Corruption Bureau of Ukraine (2019) 22 Kahkonen, S. (2017) “Ukraine Can Boost Annual Out- ukraine-is-serious-about-privatization-this-time Constitutional Court of Ukraine Eliminated an Effective put by US$15 Billion with Land Reform”, [in]: The World 26 Ministry of Health of Ukraine (2017) Medicines Regis- Tool for Liquidation of Corruption Schemes at State En- Bank. Opinion. Available [online]: https://www.world- tration Procedure Simplified: Effective Drugs Will Arrive 16 Ministry of Finance of Ukraine (2019) Budget in The terprises. Press release. Available [online]: https://nabu. bank.org/en/news/opinion/2017/10/02/ukraine-can- to Ukraine over 17 Days. Press release. Available [online]: First Half of 2019: Challenges and Liquidity Management. gov.ua/en/novyny/constitutional-court-ukraine-elimi- boost-annual-output-us15-billion-with-land-reform http://moz.gov.ua/article/news/efektivni-preparati- Press release. Available [online]: https://www.minfin. nated-effective-tool-liquidation-corruption-schemes- z%60javljatimutsja-v-ukraini-za-17-dniv [in Ukrainian] 23 gov.ua/news/view/biudzhet-v-pershii-polovyni--roku- state CASE Ukraine (2016) “25 Years of Schemes and vyklyky-i-upravlinnia-likvidnistiu?category=novini-ta- Losses. What Land Sales Moratorium Did to Us”, [in]: 27 Nekrasov, V. (2019) “11 Most Popular Electronic Gov- media&fbclid=IwAR0l3b_LUHhEtW-2oyHOwNyBoa3u- 19 Vox Ukraine (2016) Bad Decisions: How to Build the Ekonomichna Pravda. Available [online]: https://www. ernment Services for Business”, [in]: Ekonomichna Prav- ciLPsOBvG9CtttuY320niqOh43x1Jx8 [in Ukrainian] Poorest Country in Europe. Available [online]: https:// epravda.com.ua/publications/2016/07/13/598945/ [in da. Available [online]: https://www.epravda.com.ua/ voxukraine.org/longreads/poor-country/index_en.html Ukrainian] publications/2019/06/26/649088/ [in Ukrainian] 17 Ekonomichna Pravda (2019) Nobody Wants to Take Most of the Big Privatization Objects – Ministry of Eco- 20 The World Bank (2005) The Debate on Elimination 24 The World Bank (2013) Doing Business 2013. Smarter 28 The World Bank (2019) Doing Business 2019. Ukraine nomic Development and Trade. Available [online]: htt- of Free Enterprise Zones in Ukraine. Available [on- Regulations for Small and Medium-Size Enterprises. Economy Profile. Available [online]: https://www.doing- ps://www.epravda.com.ua/news/2019/01/27/644698/ line]: http://siteresources.worldbank.org/INTUKRAI Available [online]: https://www.doingbusiness.org/en/ business.org/content/dam/doingBusiness/country/u/ [in Ukrainian] NE/147271-1089983407712/20757196/FreezonesEng.pdf reports/global-reports/doing-business-2013 ukraine/UKR.pdf 042 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 043

compensation, but increases the burden- Over the years, legislation was changed some fines they have to pay. to introduce a risk-based approach to in- ENTREPRENEURSHIP spections. The powers of control authori- WHAT WE NEED STATE INSPECTIONS REVISITED ties were delineated more clearly, their HAD BEEN HEAVILY Sporadic and unwarranted inspections of responsibility was increased, and the risk IS PRO-COMPETITIVE businesses by government control agen- criteria for businesses and institutions were REGULATED cies had been a major business impedi- outlined. The annual plans of inspections LEGISLATION ment. In particular, small and medium en- by a number of state supervision bodies IN UKRAINE OVER terprises (SMEs) spent a significant amount are available online32 so that businesses are THAT WOULD of time being inspected by state officials. informed about the time and purpose of THE POST-SOVIET As the control bodies have the discretion planned inspections. ALLOW MARKET to decide which businesses to inspect and PERIOD what violations to look for, the inspections TAXES REMAIN A PROBLEM FORCES were susceptible to corruption. A significant part of Ukraine’s businesses operated in a shadow economy in the TO OPERATE The Business Ombudsman Council is the 1990s. This is why the tax burden, includ- AND CHALLENGERS consulting and advisory body in Ukraine ing contributions to the underfunded Pen- outdated and inflexible legislation prevents that investigates complaints from busi- sion Fund of Ukraine, was being distributed TO CONTEST businesses from using market instruments nesses regarding violations of their rights among legal tax-paying businesses and like equity-based compensation plans by government institutions and agencies. their employees. THE INCUMBENTS, for employee motivation and limits the One of the Council’s 2018 reports lists key grounds for employee dismissal29. issues related to state supervision that neg- To combat the shadow economy and in- AND NOT SPECIFIC atively affected business climate31. These crease the narrow tax base, Ukraine intro- The government also severely increased issues included: undefined scope of super- duced the simplified tax system in 1999 REGULATIONS fines for labor law violations. In 2019, a fine visory functions of control bodies, which with lower tax rates and less administra- for hiring an employee without a job con- results in duplication of these powers and tion. Businesses using the simplified sys- THAT MAKE tract may reach more than UAH 125,000 dual burden on business, as well as these tem pay only one tax – instead of several (about USD 5,000), while a fine for not al- bodies’ focus on identifying and imposing other taxes, such as corporate income tax, IT UNPROFITABLE lowing a government official to inspect sanctions, rather than preventing offences. personal income tax, and value-added TO EXPAND a business for violations of the labor law tax33. However, similarly to other business- may be as high as UAH 417,000 (about USD In 2014, the new Parliament of Ukraine re- es, those that use the simplified tax system THE SCALE 17,000)30. Noteworthy is the fact that the acted to this problem by enacting a mora- still pay the payroll tax. The simplified tax size of these fines directly depends on min- torium on business inspections that was system was adopted by hundreds of thou- OF OPERATIONS imum wages – i.e. by increasing the size of aimed at decreasing administrative costs sands of the country’s SMEs, most of them the minimum wage, the government not for businesses and corruption. However, being individual entrepreneurs. only affects the decisions of businesses since 2015, more and more government regarding employment and employee agencies were exempted from the mora- In recent years, reforms were implement- rate was decreased almost twofold – from torium and only businesses earning up to ed to reduce tax rates and streamline tax 40% to 22% of the gross earnings, and a flat UAH 20 m per year (about USD 0.8 m) were administration. Since 2016, the payroll tax income tax at 18% was introduced. On the 29 American Chamber of Commerce Ukraine (2019) Ukraine Country Profile 2019. Available [online]: http:// relieved from inspections. other hand, some taxes and duties were chamber.ua/Content/Documents/1247607269Country_ 32 Better Regulation Delivery Office (2019)The Plan of added (real estate tax) or increased (excise Profile_2019_EN.pdf Complex Measures of State Supervision (Control) for 34 2019. Available [online]: https://inspections.gov.ua/pro- duties) . In addition, Ukraine introduced 30 State Service of Ukraine for Labor: Ivano-Frankivsk jects-plans/approve-complex [in Ukrainian] a 1.5% military tax in 2014 intended to Division (2019) Clarification on the Amount of Penal- ties for Violations of Labor and Employment Laws in 31 Business Ombudsman Council (2018) Systemic Re- 33 USAID Leadership in Economic Development Pro- 2019. Available [online]: http://dspif.gov.ua/news/3163- port “Control Over Controllers: Status of Control Bod- gram (2105) Simplified Taxation System in Ukraine: rozyasnennya-schodo-rozmru-shtrafv-za-porushenn- ies Reform Implementation”. Available [online]: https:// Assessment in the Context of Current Reality. Avail- 34 NGO “Internews-Ukraine” (2017) The Reforms Guide. ya-zakonodavstva-pro-pracyu-ta-zaynyatst-naselenn- boi.org.ua/media/uploads/system_jan2018/4_2017_ able [online]: http://www.ier.com.ua/files/publications/ Tax Reform. Available [online]: http://reformsguide.org. ya-u-2019-roc.html [in Ukrainian] sytem_en.pdf Books/SSO_IER.pdf [in Ukrainian] ua/analytics/tax-reform-2/ 044 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 045

Figure 2: Top ten impediments for SMEs in Ukraine deficient for covering the retirement through the ProZorro system became payments, it puts a significant burden on obligatory for all government entities. taxpayers. Therefore, tax rates are unlikely to be reduced soon. In 2017, the Ukrainian Comparison of pre- and post-ProZorro government obliged all registered individ- procurements shows evidence that the ual entrepreneurs to pay payroll tax even if new system resulted in a greater number they do not work and have zero income. of bids, higher savings of public funds, and This means that even those who temporar- greater participation of businesses in pro- ily do not receive any income should pay vision of contracted goods and services: the tax. Clearly, this policy discourages now, there are more unique winners per potential or budding entrepreneurs from tender39. The total amount of public funds official registration. The administration of saved due to transparent tenders on this taxes continues to create difficulties for platform has been estimated at UAH 55 bn Ukrainian businesses. 27% of SMEs sur- (more than USD 2 m) in 201840. veyed by the IER in 2016 said growth was inhibited by the complicated administra- It is still possible to conduct non-transpar- tion of taxes – the fourth worst factor af- ent procurement using the online system fecting business growth, according to this – for example, by creating false competi- survey. As stated in the World Bank’s 2019 tion, entering a tender with fictitious com- Doing Business report, it takes 328 hours panies, splitting a larger procurement into per year to comply with tax regulations38. smaller parts to avoid compliance with the Source: 2016 Annual Business Climate Assessment Survey by the IER as a part of the USAID Leadership for Eco- Ukraine’s general taxation system involves ProZorro procedures, and, again, discrimi- nomic Development (LEV) Program many more procedures and payments than nating and selectively picking tender win- the simplified one, which may be a fac- ners – even with the new digital system in tor preventing a part of small and medium place. These practices are investigated as support the Ukrainian armed forces in the 41.7% in 201936. 35% of small and medium businesses from growing, as in this case violations by government audit authorities, fight against Russian aggression. businesses surveyed by Kyiv-based Insti- they would have to leave the less burden- which may lead to the cancellation of ten- tute for Economic Research and Policy some simplified system. ders41. In 2017, the previous manual VAT refund Consulting (IER) in 2016 said high taxes mechanism that was prone to delays, cor- were an inhibiting-growth factor, the third CURING THE PUBLIC PROCUREMENT RULES OF TRADE ruption, and kickbacks was substituted most important barrier after low demand Reducing corruption and increasing trans- In the early 1990s, the government intro- by an electronic VAT return registry that and unstable political situation in Ukraine parency in the public procurement sec- duced export restrictions – a practice that enabled automatic and transparent VAT [See: Figure 2]37. tor saved Ukraine billions of dollars and led to a special class of the enterprises that refunds. A personal “electronic cabinet” provided competitive access for busi- could sell abroad and, as a result, obtain hosted at Ukraine’s tax authority web- As the ratio of the entrepreneurs and em- nesses to participate in bids for public higher profits than their counterparts that site allows taxpayers to submit tax reports ployees contributing to the Pension Fund tenders. Unlike the former system, where and to communicate with tax inspectors of Ukraine (a solidarity-based system) to tender criteria were frequently set so that 39 Kovalchuk, A., Kenny, C., and M. Snyder (2019) Exam- 35 ining the Impact of E-Procurement in Ukraine. Available online . Alas, several problems related to the number of retired people remains they would fit the designated companies [online]: https://www.cgdev.org/publication/examining- both tax rates and their administration still and thus allowed handpicking winners, the impact-e-procurement-ukraine remain. The total tax and contributions’ 36 PwC (2019) Paying Taxes 2019. Available [online]: htt- online platform, called ProZorro and intro- 40 Interfax Ukraine (2018) ProZorro Saves over UAH 55 rate for Ukraine, as estimated by PwC, is ps://www.pwc.com/gx/en/services/tax/publications/ duced in 2015, digitized the process of pro- bln of Budget Funds in Two Years of Operation. Avail- paying-taxes-2019/overall-ranking-and-data-tables. able [online]: https://en.interfax.com.ua/news/econom- html?WT.mc_id=CT13-PL1300-DM2-TR2-LS1-ND30- curement. Holding an electronic auction ic/522386.html TTA4-CN_payingtaxes-2019-ranking-data-table-button 41 Polishchuk, O. (2018) “ProZorro: Seven Ways to Cir- 35 Shevchenko, P. (2019) “Taxpayer’s Electronic Cabinet 37 Institute for Economic Research and Policy Consulting cumvent It – and Seven Methods to Fight the Circum- – How to Use It. Step-by-Step Instruction”, [in]: Novoye (2017) Annual Business Climate Assessment 2016: Na- ventions”, [in]: Ukrinform. Available [online]: https:// Vremya. Available [online]: https://biz.nv.ua/ukr/markets/ tional and Regional Dimensions. Available [online]: http:// 38 The World Bank (2019) Paying Taxes. Doing Business www.ukrinform.ua/rubric-economy/2543102-prozo- elektronniy-kabinet-platnika-podatkiv-2019-povna-in- www.ier.com.ua/ua/sme_development/ABCA?pid=5789 2019. Available [online]: https://www.doingbusiness. rro-sim-shem-obhodu-sim-metodiv-borotbi-z-tim. strukciya-fop-yesv-50031566.html [in Ukrainian] [in Ukrainian] org/en/data/exploretopics/paying-taxes html [in Ukrainian] 046 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 047

could sell only domestically for a much On the other hand, legally trading busi- Court, and reorganization of the first lower price. The export of the goods of nesses often face the problem of over- instance courts48. However, in spite of the whole sectors – such as iron ore, coal, estimation of customs value of imported objections of the Public Integrity Council, petroleum gas, and crops – was under SMUGGLING, goods. The 2018 Business Ombudsman comprised of civil society activists, the se- restriction unless licensed by the govern- NONTRANSPARENT Council’s special report states that a vast lection process allowed judges who have ment42. majority of criticism about customs au- made unlawful decisions or whose prop- GOODS VALUATION, thorities concerns inefficient and non- erty declarations list unjustified assets to This is an example of market distortion transparent determination of customs keep their offices49. The unreformed judi- where a smaller share of businesses enjoys AND ADDITIONAL value. As a result, businesses have to pay ciary is a systemic problem in Ukraine, as unjustified privileges. The exports were higher import duties46. In addition, customs questionable court decisions can under- liberalized in the mid-1990s. Exporting REQUIREMENTS authorities have been reported to demand mine even successful policy steps. of some types of goods and services still additional documents from businesses, in- requires a license in Ukraine, but these are IMPOSED cluding those that are not foreseen by leg- Corruption in the justice system and civil mostly health and security related ones, islation, which adds an administrative bur- service is one of the reasons why prop- such as medicines, alcoholic beverages, ON BUSINESSES den for entrepreneurs and creates delays in erty rights are not sufficiently protected in firearms, hazardous chemicals, as well as CONTINUE customs clearance. Ukraine50. There is an app on the market transportation and tour operators’ servic- in Ukraine that notifies you if your prop- es43. TO INHIBIT CROSS- JUSTICE VS. CORRUPTION erty is being raided51. Raids are carried out A weak and dependent justice system and by forging documents to change the in- Under the Deep and Comprehensive Free BORDER TRADE widespread corruption and rights abuse formation in property registers, and then Trade Agreement (DCFTA), which is a part in the judiciary and law enforcement pre- seizing a farm or a factory52. The General of the EU-Ukraine Association Agreement FOR UKRAINIAN vents Ukraine from establishing the rule of Prosecutor’s Office reports that approxi- signed in 2014, Ukraine committed to law that would ensure a fair and transpar- mately 400 hostile takeovers take place gradually decreasing tariffs for European BUSINESSES ent environment necessary for its citizens, every year53. Their number had been goods and services and aligning its regula- entrepreneurs, and foreign investors. growing up until 2018 when new legisla- tions and standards in food and consum- tion was adopted, requiring notarizations er safety, customs and trade facilitation, It seems quite ironic that being a country intellectual property rights, and others required for customs clearance. The export with an active military conflict going on, 48 VoxUkraine Editorial Board (2017) “Three Years of Re- of services was simplified. Now, cross-bor- Ukraine scored best on the “order and se- forms. Has Ukraine Reformed Enough for Surviving.”, der contracts can be signed in electronic curity” indicator of the World Justice Pro- [in]: Vox Ukraine. Available [online]: https://voxukraine. org/longreads/three-years-of-reforms/index-en.html with the EU ones44. The “single window” form, while invoices may be used as con- ject’s 2019 Rule of Law Index while receiv- 49 Shtohrin, I. (2019) “44 Judges of the Supreme Court mechanism introduced at the customs tracts and primary accounting documents. ing much lower scores on other factors are Dishonest – Public Integrity Council”, [in]: Ra- contributing to its 77th place overall in the dioFreeEurope/RadioLiberty. Available [online]: https:// allowed importers and exporters to ex- At the same time, smuggling, nontrans- ranking of 126 countries – such as civil and www.radiosvoboda.org/a/29926985.html [in Ukrainian] change invoices, certificates, and other parent goods valuation, and additional criminal justice, constraints on government 50 Kuklin, D. (2017) “Why Ukrainian Agribusiness Can- documents with government agencies in requirements imposed on businesses powers, and absence of corruption47. not Prevent Property Raiding for Now”, [in]: Euromaid- an Press. Available [online]: http://euromaidanpress. an electronic form, which reduces the time continue to inhibit cross-border trade com/2017/11/20/why-ukrainian-agribusiness-cannot- for Ukrainian businesses. An investiga- Justice system reform included steps on prevent-property-attacks-of-raiders/ 42 Vox Ukraine (2016) Bad Decisions: How to Build the tion by Süddeutsche Zeitung showed that introducing more transparency into selec- 51 Liga:Zakon (2019) SMS Beacon. Available [online]: Poorest Country in Europe. Available [online]: https:// Ukraine loses billions of US dollars annu- tion of judges, launching a new Supreme https://smsmayak.ligazakon.net/ [in Ukrainian] vox-ukraine.org/longreads/poor-country/index_en.html ally due to large-scale smuggling schemes 52 Melkozerova, V. (2017) “Activists, Entrepreneurs and 43 The Verkhovna Rada of Ukraine (2019) The Law of Lawmakers Unite to Protect Farm Businesses from Raid- Ukraine “On Licensing of Types of Economic Activity” when the imported goods are intentionally 46 Business Ombudsman Council (2018) Systemic Re- ers”, [in]: Kyiv Post. Available [online]: https://www.kyiv- adopted by the Verkhovna Rada of Ukraine in 2015. The misclassified as cheaper ones45. port “Main Problems Faced by Business in Customs post.com/business/activists-entrepreneurs-lawmakers- latest edition of July 2019. Available [online]: https://za- Sphere”. Available [online]: https://boi.org.ua/media/up- unite-protect-farm-businesses-raiders.html kon.rada.gov.ua/laws/show/222-19 [in Ukrainian] loads/systemic_report_ii_2018/ii_2018_sytem_en.pdf 45 Hassel, F. (2018) “Korruption ruiniert die Ukraine”, [in]: 53 Opendatabot (2019) About Four Hundred Hostile 44 European Commission (2019) Countries and Regions. Süddeutsche Zeitung. Available [online]: https://www. 47 World Justice Project (2019) WJP 2019 Rule of Law Takeovers Take Place in Ukraine Every Year. Available Ukraine. Available [online]: http://ec.europa.eu/trade/ sueddeutsche.de/politik/exklusiv-korruption-ruiniert- Index – Ukraine. Available [online]: http://data.worldjus- [online]: https://opendatabot.ua/blog/336-raiders-2019 policy/countries-and-regions/countries/ukraine/ die-ukraine-1.4081856 [in German] ticeproject.org/#groups/UKR [in Ukrainian] 048 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 049

Another threat for doing business regarding prosecuting corruption, and the National the influence of the state on entrepreneur- justice and the rule of law comes from law Agency for the Prevention of Corruption ship and personal life, most Ukrainians tend enforcement bodies. Ukrainian businesses (NAPC), which should verify whether the to select answers that put them into the IT SEEMS QUITE report being unlawfully searched and their assets listed in public electronic declara- “authoritarian left” corner of the “Political IRONIC THAT BEING assets seized by the police, tax police, and tions by civil servants correspond to their Compass”. The Political Compass60 is a ty- Ukraine’s Security Service. Business Om- incomes. pology of political opinions, which is plot- A COUNTRY budsman Council lists numerous cases of ted on 2 dimensions: economic and social. law enforcement agencies inflicting pres- The newly established infrastructure of It allows classifying those who take the WITH AN ACTIVE sure on businesses by launching ground- corruption prosecution bodies is com- online test into four groups: “authoritarian less criminal proceedings and seizing pleted by the High Anti-Corruption Court, right”, “democratic right”, “democratic left”, MILITARY CONFLICT property and documentation or, vice versa, which is set to start considering corruption and “authoritarian left”. refusing to open criminal proceedings fol- cases in 2019. The existing agencies, how- GOING ON, UKRAINE lowing applications from businesses56. ever, have already been accused of break- A survey of 1,200 respondents was adapt- ing professional ethics and interfering in ed from the Political Compass and carried SCORED BEST Legislation adopted in 2017 and 2018 that cases (SAPO), as well as of selectivity and out in Ukraine in 2019. Participants of the ON THE “ORDER allowed searches only with the presence of political dependence (NAPC58). survey were asked to agree or disagree lawyers, required the law enforcers carry- with such statements as “The government AND SECURITY” ing out searches to video record their ac- PUBLIC OPINION: PATERNALISTIC should take care of the welfare of every tions, and prohibits seizing documents and EXPECTATIONS DECREASING citizen” or “Ukraine needs a strong leader INDICATOR hardware from businesses was intended to When asked to choose between two alter- with unlimited powers”. The answers of protect businesses from unjustified and ille- native views on the role of the government 73% of those surveyed classify them as OF THE WORLD gal searches by law enforcement agencies. – the first one being that the government having leftist and authoritarian views, while But law enforcement agencies still create should bear full responsibility for provid- 17% were grouped into the “democratic JUSTICE PROJECT’S significant problems and delays in business ing each person with everything they need, left”61. Only 2% of the respondents fit into operations by carrying out searches and and the second one being that it should the “democratic right” category, while the 2019 RULE OF LAW opening criminal proceedings57. provide equal “rules of the game”, while the answers of 1% of the respondents put them people themselves should be responsible in the “authoritarian right” field. INDEX In the years following the Euromaidan pro- for using these chances – most Ukrainians tests, which called for eliminating corrup- choose the latter. A recent survey59 shows This indicates that while Ukrainians may be tion, and with demands to reform pros- that the majority of Ukrainians (61%) would becoming more freedom-minded regard- ecution of corruption by the civil society choose fair rules and personal responsibil- ing the role of the government in personal of any changes made to public registers and international lenders such as the IMF, ity over completely relying on the govern- matters, they are likely to support specific of property rights and increases criminal Ukraine created a set of specialized anti- ment. Only a year ago, in 2018, this share policies that allow for more regulation by and administrative responsibility for takeo- corruption bodies from the ground up. was smaller: 45%. the state and give the government (rather vers54. Most recent legislative initiatives aim These include the already mentioned than the citizens) the power to influence to digitize the registers in order to better NABU – investing high-profile corruption However, when answering more specific their welfare. detect risky property transactions55. cases, the Specialized Anti-Corruption questions regarding their attitude about Prosecutor’s Office (SAPO) tasked with 58 Romanenko, M. (2017) “Scandal Casts Light on Cor- ruption in Ukrainian Corruption Prevention Agency”, 56 Business Ombudsman Council (2016) Systemic Re- [in]: Hromadske International. Available [online]: https:// port “Abuse of Powers by the Law Enforcement Authori- en.hromadske.ua/posts/when-ukrainian-anti-corrup- 60 The Political Compass (2019) Available [online]: htt- 54 DLF Attorneys at Law (2016) Law on Anti-Raiding ties on Their Relations with Business”. Available [online]: tion-agencies-fight-each-other-not-corruption ps://www.politicalcompass.org/ Adopted. Available [online]: https://dlf.ua/en/law-on- https://boi.org.ua/media/uploads/sysrep_criminal_ 59 61 anti-raiding-adopted/ eng_final.pdf Democratic Initiatives Foundation (2019) Reforms in Brik, T. and O. Krymeniuk (2019) “From Right to Ukriane: Public Opinion. Press release on the survey Left: What Ukrainians Think about the State Control 55 President of Ukraine Volodymyr Zelensky (2019) Pres- 57 Skryl, O. (2018) “Why Searches of Businesses Con- conducted by the Democratic Initiatives Foundation to- over the Economy and Personal Freedoms?”, [in]: Vox ident of Ukraine signed a decree aimed at countering tinue in Spite of Legislative Changes”, [in]: Delo.ua. gether with the sociological service of Razumkov Cent- Ukraine. Available [online]: https://voxukraine.org/uk/ raiding. Press release. Available [online]: https://www. Available [online]: https://delo.ua/econonomyandpoli- er from 13 to 20 June 2019. Available [online]: https:// sprava-nalivo-shho-dumayut-bilshist-ukrayintsiv-pro- president.gov.ua/en/news/glava-derzhavi-pidpisav- ticsinukraine/chomu-popri-zakonodavchi-zmini-ob- dif.org.ua/article/reformi-v-ukraini-gromadska-dum- derzhavnij-kontrol-ekonomiki-ta-osobistih-svobod/ [in ukaz-spryamovanij-na-protidiyu-rejde-56585 shuki-biznesu-prodovzhujutsja-341938/ [in Ukrainian] ka-naselennya_pyaty [in Ukrainian] Ukrainian] 050 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 051

CONFLICTING ATTITUDES parliament with the majority of votes, both ABOUT CORRUPTION AND MARKET ran on the platform of deregulation and DISTORTIONS fight against corruption. CORRUPTION Public opinion polls repeatedly show that UKRAINIAN IN THE JUSTICE fighting corruption is the most demanded BUSINESSES REPORT Mr. Zelensky’s political program lists the policy step in Ukraine. In a recent socio- promise of ensuring freedom of compe- SYSTEM AND CIVIL logical survey, 63% of the respondents said BEING UNLAWFULLY tition and simple and clear taxation. He that the anti-corruption reform should be made a commitment to work on reduc- SERVICE IS ONE a priority for the government63. In previous SEARCHED ing the shadow sector of the Ukrainian surveys over the last four years, this share economy and to introduce a transparent OF THE REASONS always exceeded 50%. This suggests that AND THEIR land market. In terms of the fight against Ukrainians are aware of the negative im- corruption, the president’s platform in- WHY PROPERTY pact of corruption on institutions and the ASSETS SEIZED cludes such policy steps as more severe situation in the country, and have clear ex- punishment for corruption, protection and RIGHTS ARE NOT pectations about overcoming this problem BY THE POLICE, rewards for whistleblowers, stopping har- SUFFICIENTLY from the government. TAX POLICE, assment of businesses by law enforcement agencies, and support for newly formed PROTECTED Surveys of entrepreneurs clearly indicate AND UKRAINE’S anti-corruption bodies (such as the High that they consider corruption one of the Anti-Corruption Court)68. IN UKRAINE most important problems. In the 2018 For- SECURITY SERVICE eign Investor Survey by a Ukrainian think However, some areas are rather vague in tank and a business association, foreign Volodymyr Zelensky’s platform. The sec- investors doing business in Ukraine placed tion on justice includes promises to reduce Evidence from another survey that was al- widespread corruption on the top of the political dependency of the judicial branch ready cited above illustrates this point well. list of obstacles to investment64. business managers in Ukraine are ready to of the government and restoring trust and A 2019 sociological survey conducted by offer a “cash reward” in exchange for clos- respect for the courts without listing more Ukrainian polling agencies62 shows that Nevertheless, both individual Ukrainians ing or prolonging a contract. Meanwhile, in specific steps. There are also fairly populist compared with the most popular anti-cor- and local businesses demonstrate quite a 2018 survey of Ukrainian exporters and promises in his platform, such as delegat- ruption, healthcare, and pension reforms a substantial degree of tolerance towards importers conducted by the IER, 39% of ing legislative decisions to referendums and that are expected from the government corruption. According to a 2018 survey65 the respondents believed it was necessary distributing the income from the country’s by more than half of the respondents, tax conducted, almost 15% of the respondents to maintain personal relationships with of- natural resources among all citizens. Under reform is not as popular – with only 13% across the country reported having offered ficials of at least one government body in the Constitution, the president’s authority in support. Additionally, a mere 10% of to pay a bribe by their own initiative, while order to do business successfully67. lies mostly in the areas of foreign affairs Ukrainians said they wanted deregula- 17% said they used personal connections and national security, so he needs to co- tion and promoting entrepreneurship to to solve problems. A 2017 survey by con- REFORMS ON POLITICAL AGENDA operate with the parliamentary coalition in be among top government priorities, and sulting company EY66 showed that 37% of The newly elected President of Ukraine, order to implement economic and judicial only 7% supported land market reform as Volodymyr Zelensky, and his Servant of the reforms. The program of the Servant of

a priority policy step. This demonstrates 63 Ibid. People political party, which entered the the People party that secured the major- that there is little demand for pro-market ity of votes in the July 2019 parliamentary 64 European Business Association, Dragon Capital, reforms among the Ukrainian public. Center for Economic Strategy (2018) Third Annual For- Unable to Effectively Shape the Principles Of Business elections echoes the one of Mr. Zelensky. It eign Investor Survey. Available [online]: https://ces.org. Ethics. Available [online]: https://www.ey.com/ua/uk/ contains commitments to reduce the size ua/wp-content/uploads/2018/09/2018_investorsur- newsroom/news-releases/news-ey-senior-managers- of the government and to further decrease veyresults_presentation.pdf failing-to-set-right-tone-on-business-ethics-finds-ey- 62 Democratic Initiatives Foundation (2019) Reforms in fraud-survey [in Ukrainian] payroll tax, digitize tax reporting and cus- Ukriane: Public Opinion. Press release on the survey 65 Ukrinform (2018) Ukrainians Said Where They Encoun- conducted by the Democratic Initiatives Foundation to- ter Corruption Most. Available [online]: https://www. 67 Institute for Economic Research and Policy Consult- gether with the sociological service of Razumkov Cent- ukrinform.ua/rubric-society/2545529-ukrainci-skazali- ing (2019) Trade Facilitation in Ukraine: Business As- er from 13 to 20 June 2019. Available [online]: https:// de-najbilse-stikautsa-z-korupcieu.html [in Ukrainian] sessment and Expectations. Executive Summary. Avail- 68 Presidential Candidate of Ukraine Volodymyr Zelensky dif.org.ua/article/reformi-v-ukraini-gromadska-dum- able [online]: http://www.ier.com.ua/en/publications/ (2019) Election Program. Available [online]: https://pro- 66 ka-naselennya_pyaty [in Ukrainian] EY (2017) According to EY Research, Executives Are reports?pid=6168 gram.ze2019.com/ [in Ukrainian] 052 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 053

toms clearance, ensure independence of businesses are being forced to register anti-corruption bodies, and take away the under the authority of the Russia-led sep- powers of law enforcement and security aratists and to pay taxes to their budgets. agencies that allow them to obstruct busi- UKRAINE After Ukraine prohibited trade across the UNDER RUSSIAN nesses69. CREATED A SET conflict line, the Russia-led separatists took CONTROL, over even more companies that were still With the presidential and legislative powers OF SPECIALIZED operating on the uncontrolled territory, in- THE SITUATION controlled by Mr. Zelensky and his party, cluding coal mines, factories, energy com- they have a chance to improve conditions ANTI-CORRUPTION panies, as well as transport and telecom- IN THESE PARTS for business in Ukraine and remove corrup- munication companies72. tion and distortions that affect competition. BODIES FROM OF UKRAINE If they do implement necessary changes, The war waged by combined Russian-sep- they will benefit from quite a high accept- THE GROUND UP aratist forces cut away the occupied terri- IS SIMILAR ance of unpopular reforms by Ukraine’s tories in the eastern Ukraine from transport citizens. In 2019, Ukrainian public opinion and power infrastructure, while local busi- TO THE REPRESSIONS shows an unprecedented willingness to nesses lost suppliers and buyers from the UNDER deal with temporary difficulties in order to country’s economy, stopping corruption, rest of Ukraine and are compelled to trade improve the situation in the country over- and establishing a fair justice system. with the only available market – Russia. THE SOVIET UNION, all. 59% of the respondents surveyed by Ukrainian polling agencies throughout the OCCUPIED CRIMEA AND EASTERN All Ukrainian and international banks have EXACERBATED country said they were ready to have their UKRAINE: BASIC FREEDOMS TAKEN closed their branches on the occupied ter- standard of living lowered for some time if AWAY ritories, while Russia-led separatists creat- BY TORTURE this meant that the government could car- In the occupied parts of Ukraine (the Au- ed their own bank, which is the only option ry out necessary reforms70. tonomous Republic of Crimea occupied in these areas. Russia has consolidated its AND KILLINGS by Russia and the eastern parts of Donets occupation in the eastern parts of Ukraine This is the highest percentage over the and Luhansk oblasts controlled by com- by financing pensions and public sector OF ACTIVISTS last five years – the previous record share bined Russian-separatist forces), personal salaries73, introducing the Russian currency, of Ukrainians ready to sacrifice personal and economic freedoms have been strictly and issuing Russian passports for Ukrainian AND SHELLING welfare for reforms (44%) was registered in restricted and local residents live in the citizens that live on the occupied territories. OF CIVILIAN HOMES 2014, right after the Euromaidan revolution, environment of security threats and the Active conflict is continuing in this area, so followed by presidential and parliamentary absence of the rule of law. Under Rus- many homes, business properties, schools, AND elections. The high level of willingness to sian control, the situation in these parts of hotels, and other buildings have been hit by face difficulties for the sake of reforms Ukraine is similar to the repressions under shelling or destroyed completely – such as INFRASTRUCTURE lends a lot of trust to the newly elected the Soviet Union, exacerbated by torture the Donetsk airport, which was destroyed president and parliament of Ukraine and and killings of activists and shelling of civil- by combined Russian-separatist forces gives them leeway to take unpopular steps ian homes and infrastructure. back in 2015. that would lead to the liberalization of the In occupied Crimea, which Russia rec- Combined Russian-separatist forces seized ognizes as its territory, the businesses are the companies under Ukrainian jurisdic- forced to register under the Russian law, 69 Servant of the People (2019) Election Program. Avail- tion operating in the occupied territo- while public officials are required to take able [online]: https://sluga-narodu.com/program [in ries. At the beginning of the occupation, 72 Zoria, Y. (2017) “What Assets Did Russia’s Puppet Re- Russian citizenship in order to keep their Ukrainian] publics Seize from Ukraine? Full List”, [in]: Euromaid- half of all companies were closed, de- an Press. Available [online]: http://euromaidanpress. jobs. Minus the war, the situation with civil 70 Democratic Initiatives Foundation (2019) Reforms in stroyed or seized by Russia-backed sepa- com/2017/03/04/stolen-ukrainian-assets-in-donbas/ and political liberties in Crimea is compa- Ukraine: Public Opinion. Press release on the survey 71 conducted by the Democratic Initiatives Foundation to- ratists, according to estimations . Private 73 Zverev, A. (2016) “Moscow Is Bankrolling Ukraine rable to the one in the occupied eastern gether with the sociological service of Razumkov Cent- Rebels: Ex-Separatist Official”, [in]:Reuters . Available territories of Ukraine. As reported by the 71 er from 13 to 20 June 2019. Available [online]: https:// Bird, M., Vdovii, L., and Y. Tkachenko, (2015) “The Great [online]: https://www.reuters.com/article/us-ukraine- United Nations (UN), the Russian authorities dif.org.ua/article/reformi-v-ukraini-gromadska-dum- Looting of Donbass”, [in]: EUobserver. Available [online]: crisis-separatists/moscow-is-bankrolling-ukraine-re- ka-naselennya_pyaty [in Ukrainian] https://euobserver.com/investigations/131428 bels-ex-separatist-official-idUSKCN1251UQ in Crimea commit numerous human rights 054 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE IRYNA FEDETS 055

try by confiscating assets of banks and entrepreneurs, gas prices for businesses Considering the checkered transformation businesses and disrupted trade and busi- and households still have not reached progress so far, it is unlikely that Ukraine will ness links. This forced hundreds of thou- complete import parity, and efforts to reach a significant breakthrough if it keeps FREE SPEECH sands of Ukrainians to move out of the af- combat corruption and reform the judici- current administrative barriers in place and AND MEDIA ARE fected territories due to their pro-Ukrainian ary proved to be rather nominal and did does not make more active efforts to fight political positions, civic activism, or reli- not bring the expected results. Many state- corruption. Without serious steps towards SEVERELY LIMITED gious beliefs. owned enterprises need to be privatized to economic freedom, transparency, and increase their efficiency and prevent rent- competitiveness, Ukraine’s economy will IN CRIMEA, WHILE CONCLUSIONS seeking, whereas selling agricultural land is continue to serve vested interests, while In conclusion, lack of necessary pro- still prohibited. private business will be alienated by bu- SOME RELIGIOUS market reforms on the one hand, and re- reaucracy, corruption, and obstruction by inforcing politically influenced distortions Some policy steps brought about con- government authorities and the law en- ORGANIZATIONS to competitive environment on the other, tradictory results. Businesses have better forcement system. What the country needs have prevented Ukraine from developing access to information about government to do first and foremost is to ensure the rule FACE institutions needed for reaching economic inspections, but are also forced to pay of law, create fair conditions for businesses, freedom and the rule of law in the decades higher sums if fined by these inspections. and eliminate market distortions, as well as PRESSURE FROM following the collapse of the Soviet Un- Payroll tax has been cut, but private en- to simplify doing business and international ion. The recent years after the Euromaidan trepreneurs were required to pay it even if trade. This will make Ukraine an attractive OCCUPATION revolution brought much needed changes they earn no income. place to invest and to do business in, sub- AUTHORITIES. in the areas of deregulation, privatization, sequently boosting economic growth. public procurement, and customs clear- The new president, Volodymyr Zelensky, ance. Government regulation on food and his party, which make up the parlia- prices was finally canceled. More and more mentary majority, were elected in Ukraine government services for businesses are on the platform of creating favorable con- violations – including arbitrary arrests and available online. ditions for businesses and fighting corrup- torture74. The 2019 Freedom House report tion. The window of opportunity in terms on Crimea states that corruption is wide- At the same time, certain regulations of public opinion seems to be open for spread in the territory of the occupied (such as labor law) remain restrictive for them at the moment: a record high per- peninsula, and some representatives of the centage of Ukrainians say they would not Russian-backed leadership are, allegedly, mind facing temporary difficulties for the tied to organized crime75. Free speech and sake of efficient reforms. media are severely limited in Crimea, while some religious organizations face pressure Meanwhile, prosecution of dissidents and from occupation authorities. restrictions for private property on the UKRAINIANS WOULD territories of Ukraine that are occupied by The war and Russian occupation of Crimea Russia not only take their residents back to and the eastern regions of Ukraine dam- NOT MIND FACING the repressive conditions under the Soviet aged the economy of the rest of the coun- Union, but also add a constant threat for TEMPORARY life and physical well being because of the IRYNA 74 Office of the United Nations High Commissioner for ongoing war and unlawful arrests com- FEDETS Human Rights (2018) Report on the Situation of Hu- DIFFICULTIES bined with torture. Entrepreneurship is man Rights in the Temporarily Occupied Autonomous Research and advocacy professional with expertise in Republic of Crimea and the City of Sevastopol, Ukraine, constrained and private property is being business climate, economic freedom, democracy and 13 September 2017 to 30 June 2018. Available [online]: seized and destroyed. Russia cuts business FOR THE SAKE trade. She has provided policy recommendations for https://www.ohchr.org/Documents/Countries/UA/ and trade connections in Crimea and the Ukrainian government based on her analysis of mul- CrimeaThematicReport10Sept2018_EN.pdf OF EFFICIENT occupied eastern regions of Ukraine from tiple nationwide surveys in Ukraine where she studied 75 Freedom House (2019) Freedom in the World 2019. the rest of the country, and integrates these opinion of the country’s entrepreneurs and business Crimea. Available [online]: https://freedomhouse.org/ managers on administrative barriers, corruption, and report/freedom-world/2019/crimea REFORMS parts of Ukraine into its own economy. expectations about reforms 056 056 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MÁTÉ HAJBA 057

remember Budapest from the early 1990s. The otherwise beautiful city was clad in gray filth. Dirty concrete and unimaginative buildings cast their THE STULTIFYING Orbanization shadows over boxy smog-spitting POLICIES Icars. This is how I remember it from my early childhood, when my family visited OF THE PAST the Hungarian capital from our home in another town. Yet,a lot has changed since. THREE DECADES of the Magyar I moved to Budapest twelve years ago, and modern glass buildings have sprung up in HAVE FURTHER front of my very eyes, directing sunlight onto the city streets. Not without reason is EXACERBATED it a popular tourist destination. Ruin bars, THE SOCIAL State: en vogue coffee shops, rooftop restau- rants, luxury fashion designers, opulent hotels, and booming businesses attract ENNUI, GRANTING visitors – rich and poor, from far and near, THE GOVERNING for work or leisure. The ostentatious vibe Hungary of the city is now worthy of its beauties; it PARTIES masks, however, the underlying grayness still lurking within. Scratching the fashion- MUCH LEEWAY able surface as this article intends to do, the rotting failures of the past thirty years TO LEGISLATE in the Past become apparent. WITHOUT The gung-ho attitude at the early 1990’s in Hungary has gradually turned into resigna- CONSIDERABLE tion and fatigue over time as a result of the CIVIC OVERSIGHT inertia entrenched by the political elites, as 30 Years? well as society’s lack of willingness to take action. Communism instilled the by-stander effect by developing a dependency upon the state. The stultifying policies of the past – including foreign policy, democratic insti- three decades have further exacerbated the tutions, education, business, economy, free- social ennui, granting the governing parties dom of the press, religion, and tolerance. much leeway to legislate without considerable civic oversight. To delve below the fashionable surface and understand the real Hungary, let us take It would, certainly, be an unjust oversimpli- a short tour of the capital, Budapest. fication to dismiss the efforts of the democratic transition in the country as a com- ALL ABOARD! plete and abject failure. The period of the We begin our journey at Heroes Square, past thirty years is much more nuanced. a popular haunt of tourists, framed by In order to understand it, let us take a tour stately museum buildings. There, on June MÁTÉ through time and space, to examine the key 16, 1989, dwarfed by the towering central HAJBA aspects of this part of the Hungarian history column and the vastly outstretched crowd, 058 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MÁTÉ HAJBA 059

ways to lead his country towards an illiberal We pass the menacing building of the House expressed them, the monument remained, authoritarian regime. The truth is, he could of Terror, a museum established by Viktor and the relationship with Moscow has been SIMPLY PUT, not have done it had the Hungarian society Orbán’s first government in 2002, in a build- rekindled, by the now much older and not been receptive of the nostalgic ways of ing that used to house first the Nazi Arrow world-weary Orbán. VIKTOR ORBÁN, more state control, and of a tough leader Cross Party during the Second World War at the helm. (WW2), then the Hungarian communist se- In 1999, Hungary joined NATO, and in 2004, A DEFINING FIGURE cret police (ÁVH). It is with a heavy heart that it became a member state of the European Simply put, Viktor Orbán, a defining figure I am obliged to tell you here that, despite Union (EU). It seemed that the country’s OF THE PAST of the past thirty years, is a populist. His all the people who lost their lives or were place among the Western states solidified. swaying political directions change with tortured in this building during the commu- Historically, Hungary has been made to THIRTY YEARS, the zeitgeist, reflect the general mood of nist rule, the aforementioned Pew research sit on the fence whether to belong to the the population, occasionally nudging it a bit reveals that in 2009, a year before Orbán’s east or west – though the country usually IS A POPULIST to bring to surface issues that would have second government, 72% of Hungarians re- yearned to belong to Europe. The battered otherwise laid dormant. ported that they thought people are worse relationship with Russia predates WW2. It is off than under communism – as opposed still a point of interest how each government As we start walking away from Heroes to the meager 8% who thought the oppo- conducts business with the United States, stood a young man. Eloquently, he spoke up Square down the quaint Andrássy Avenue, site. This amount of support of the previous other European states, and Russia. against the communist regime, and called let me set the scene again. The date is regime was by far the largest in the region. on the Soviet troops then stationed in Hun- 1991, the Hungarian zeal for democracy, The socialist governments between 2002- gary to go back home. At the time, such for a Western system, is at its zenith. It is FOREIGN POLICY 2010 that bifurcated Viktor Orbán’s rule an open opposition broke to surface the one year after the first free plural elections, With a couple of turns we arrive at Szabad- animosity of the public towards the com- and the country is a budding democracy. ság Tér, or – as nobody calls it – the Liberty munist governments, a strongly nurtured People are over-saturated with a dream of Square, should it warrant a translation. As sentiment which Hungarians were forced to prospects and prosperity. there are many things to point out here, let harbor within themselves secretly, lest the us not hesitate, but turn our attention to an state apparatus took its vengeance. This is the time when Pew Research Center obelisk-like construction, sporting a golden decided to assign numbers to emotions, star at its peak. HISTORICALLY, On that summer day, the seal was broken. and conducted a poll in the region. 74% of The man, standing there with youthful ener- Hungarians approved the change to democ- Do not let its glistening golden varnish de- HUNGARY HAS BEEN gy, represented the beginning of something racy1. Twenty years later, the financial crisis ceive your eyes, it is, in fact, a glorified red MADE TO SIT new. He was a beacon of hope. His dream disrupts the world, and now only 56% of the star of the Soviet Union. This monument of democratizing Hungary, when he was Hungarian population is of the same opin- was erected to commemorate the fallen ON THE FENCE speaking from among the statues of historic ion. Even more prominent is the drop in the troops of the Soviet army, who died “lib- Hungarian leaders, was realized soon there- support of capitalism: In 1991, Hungary was erating” – as the official propaganda put it WHETHER after. Surprisingly, the name of the man was the country with the 3rd highest approval for during communism – Budapest from the Viktor Orbán – an infamous politician now free markets (neck and neck with the Czech Nazis. However, just as the House of Terror TO BELONG serving his 4th term as the prime minister Republic at 80%), by 2009, Hungary saw the changed hands while its function of terror- of Hungary. A leader in his own right who largest drop in the statistics in the region, izing the society did not, Hungary fell from TO THE EAST for the past years has been building a new with only 46% of the population approving the clutches of one horrible regime into regime, which – armed with the technologi- of capitalism. another’s. For a long time, the citizens of OR WEST – THOUGH cal advances of the past thirty years and the Hungary could not appreciate the lack of THE COUNTRY tricks known from the handbooks of darker Nazi occupiers, as they were too busy suf- times – is aspiring to entrench his power in fering under the communists. USUALLY YEARNED the country for the foreseeable future. 1 Pew Research Center (2009) End of Communism Cheered but Now with More Reservations. Available [on- And so, although young Mr. Orbán’s wish- line]: https://www.pewresearch.org/global/2009/11/02/ TO BELONG The media is awash with articles on how end-of-communism-cheered-but-now-with-more- es to see the Soviet troops marching back Mr. Orbán departed from his democratic reservations/ home came true soon after he openly TO EUROPE 060 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MÁTÉ HAJBA 061

were attacked – often by Orbán himself was fake news has been rendered cliché by breaking from under the influence of the personally – for rebuilding a dangerously President Donald Trump. Soviet Union and communism. By joining close relationship with the eastern power, NATO and the EU, the country has set foot when Hungary’s place is clearly among the Speaking of the US leader, he recently host- ALTHOUGH among the nations of the West, but Hungary countries with Trans-Atlantic persuasions. ed PM Orbán, breaking with a longstanding came with a lot of baggage, and a lot of it is diplomatic custom in Washington not to WITH THE LONG- Russia-related. Yet, with Mr. Orbán re-seizing power, he meet with the current Hungarian head of COVETED ORBÁN- introduced a new policy, called “Eastern the government on a high level. The monument for the Soviet troops in Opening”, aiming to strengthen ties with TRUMP MEETING Szabadság Tér serves as a good memento former Soviet states and other Asian coun- Noteworthy, during President’s Barack that Hungary was unable to break with its tries. Since 2015, he has been meeting with Obama’s administration, certain Hungar- RELATIONS SEEMED past completely, and by being accepted to Vladimir Putin at least once a year, even ian officials were banned from traveling to the West, it serves as a Trojan horse for Rus- when other European leaders shunned the United States on account of corruption TO NORMALIZE, sians, whose aim is to undermine Western the Russian strongman for his conduct in charges3. The late Senator John McCain values and spread discord. With Viktor Orbán Ukraine. went as far as calling Viktor Orbán a “neo- THE UNITED STATES spearheading Putin’s strategy, the Hungarian fascist dictator”4. politician plays a dangerous game, balanc- Mr. Putin’s methods seem to be much fa- SHOULD HAVE ing between east and west. Despite a statue vored in Hungary. The Hungarian prime Although with the long-coveted Orbán- of Ronald Reagan standing resolutely at the minister’s strategy also involves attacking Trump meeting relations seemed to nor- STRONG CONCERN square, eyeing the communist remnant with NGOs by using the same excuses as the malize, the United States should have strong OVER HUNGARY’S an austere stare, his figure is overshadowed Russians do (branding them foreign agents), concern over Hungary’s conduct with Rus- by a gilded red star on top of the obelisk. taking over the media, shutting down uni- sia. Recently, the International Investment CONDUCT As long as that Soviet monument stands, versities, intimidating the opposition – all Bank moved its headquarters to Budapest. Hungary will continue to copy Soviet, and these steps – which will be explained further Interestingly, the bank is suspected to be WITH RUSSIA Russian tactics. As long as Hungary does not through our tour – have been copied from a Russian spy hub5, and so Hungary seems side clearly with the Trans-Atlantic alliance in Vladimir Putin’s playbook by the Hungar- to have opened the door to its entry into condemning Putin and supporting Ukraine, ian government. The government, which is the EU. the transformation of Hungary from a War- run by a man who used to demand free- saw Pact country to a fast ally of the West dom and democracy, independence of the Furthermore, foreign policy trends in Hun- the United States at 73, while Russia at 36. will be incomplete. eastern power, and closer ties – culturally gary reflect the attitudes of the society, as In 2018, people give the rates of 54, and 48 and diplomatically – with Europe and the they mutually reinforce each other. In 1992, respectively, showing a downward trend for BUSINESS AND ECONOMY United States. in a Tárki Zrt. questionnaire asking people America and a warming towards Russia6. We continue our tour through Szabadság of their feelings towards certain countries Meanwhile, 57% of Hungarians view the EU Tér, away from the Soviets and Reagan, to Despite Hungary joining both NATO and the (with 0 being the worst and 100 the best), favorably, while 39% unfavorably, compared the opposite side of the square. There, close EU, the relationship with the West is not at all Hungarians rated their sympathy towards to the 63%–37% median among surveyed to each other are the buildings of the Central smooth. Mr. Orbán’s government scattered member states in a Pew Research Center Bank and the stock exchange. It is thus fit- large billboards2 (funded from taxpayer’s poll7. ting to stop here and talk briefly about busi- 3 Székely, T. (2014) “US Embassy: Six Hungarians Got money) throughout Hungary warning citi- Banned”. [in:] Hungary Today. Available [online]: https:// ness and economy in Hungary. zens that EU politicians want to settle mi- hungarytoday.hu/41003-2-us-embassy-six-hungari- Hungary has clearly gone a long way since grants into the country, which I shall call an ans-got-banned-27275/ Hungary has managed to escape com- over-exaggeration only because claiming it 4 Budapest Business Journal (2014) ”U.S. Senator Con- munism relatively well compared to other tinues to Blast Orbán”. Available [online]: https://bbj.hu/ 6 Tárki Zrt. (2019) Social Report. Available [online]: htt- politics/us-senator-continues-to-blast-orban_89164 ps://www.tarki.hu/eng/tarsadalmi-riport countries. Economic liberalization efforts started in the 1980s, when foreign direct 5 American Enterprise Institute (2019) It Is Time for 7 Pew Research Center (2019) Europeans Credit EU With 2 Reuters (2019) Hungary Publishes More Anti-Eu Ads America’s Eastern European Allies to Withdraw from Promoting Peace and Prosperity, but Say Brussels Is Out investments were allowed. Gradually, joint- Despite Pledging Halt. Available [online]: https://www. Putin’s Fake Multilateral Bank. Available [online]: http:// of Touch With Its Citizens. Available [online]: https:// venture western companies started to arrive www.aei.org/publication/it-is-time-for-americas-east- www.pewresearch.org/global/2019/03/19/europeans- reuters.com/article/us-hungary-eu/hungary-publish- in the country, and by the 1990s Hungary es-more-anti-eu-ads-despite-pledging-halt-idUSKBN- ern-european-allies-to-withdraw-from-putins-fake- credit-eu-with-promoting-peace-and-prosperity-but- 1QU1FL multilateral-bank/ say-brussels-is-out-of-touch-with-its-citizens/ had become attractive for car manufacturers 062 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MÁTÉ HAJBA 063

with, Hungary relies heavily on EU funds. 64th place – one place better than a year Both the leaked speech and the atroci- Meanwhile, Hungarians rely heavily on the before. However, the index also revealed ties during the protests were hot topics for state. Moreover, in 2016, Hungary held the that in the EU, only Greece and Bulgaria a long time; the socialist government be- HUNGARY WAS 59th place in the Economic Freedom Index8. were more corrupt. In 2017, Hans Eichel, came unpopular leading to Viktor Orbán’s, In 1990, the country started the process of the co-founder and former chairman of and his party, Fidesz’s victory in 2010, and UNABLE TO BREAK transition in the 78th place, and managed to G20, together with Pascal Lamy, a former two consecutive Fidesz governments – in reach the 32nd position in 2001. When the European Commissioner, wrote an open 2014 and 2018. WITH ITS PAST transformation started, the index put it in letter12 to Jean-Claude Juncker, president COMPLETELY, the 3rd quartile (from 4 categories of “least of the European Commission, asking him to A strong democratic country is marked by free”, “3rd quartile”, “2nd quartile”, and “most temporarily suspend all EU funding to Hun- the strength of its civic institutions, such as AND BY BEING free”). Since then, Hungary has performed gary due to corruption and the fact that the NGOs, and the independent media. News stably in the 2nd quartile – except for the year Hungarian government is using the money outlets can hold governments and politi- ACCEPTED 2011, when it was briefly promoted into the to fund political campaigns, enrich its own cians accountable, and make and break “most--free” bracket. business circles, and furthering the erosion people. Independent media break people TO THE WEST, of the rule of law. Due to Hungary’s over- unfit to govern (as Ferenc Gyurcsány was), In 2019, the Doing Business Index9 ranked reliance on EU funds, such a cut would have while helping aspiring politicians. Clearly, IT SERVES Hungary at 53rd, below the regional average. been a giant blow to the economy. As the the media have a lot of power. The power Despite low corporate and income taxes, letter mentions: “More than 95% of public Viktor Orbán could ill afford to tolerate. AS A TROJAN HORSE Hungary has the highest rate of VAT in the investment projects in Hungary receive EU EU – set at 27%10. co-financing”13. In its first term after 2010, the Fidesz govern- FOR RUSSIANS, ment had a lot of media outlets on its side. Although Hungary has liberalized the The government’s meddling in private busi- The stellar unpopularity of the socialist party WHOSE AIM economy, corruption – an organic part nesses through proxies is especially appar- in power between 2002 and 2010 whipped IS TO UNDERMINE of a socialist-planned economy – has not ent in the media sector, and with that, the up a majority support for the new cabinet. vanished. According to the Corruption Per- tour continues. It also helped that Mr. Orbán’s close friend, WESTERN VALUES ception Index11, in 2018 Hungary was in Lajos Simicska, happened to own a media FREEDOM OF THE PRESS empire. There were concerns over media 8 Fraser Institute (2019) Economic Freedom. Available As we leave Szabadság Tér behind, let us freedom as the government set up a Media AND SPREAD [online]: https://www.fraserinstitute.org/economic- freedom/map?geozone=world&page=map&year=2016 take a fleeting glimpse at a large building Authority, with the power to enforce media DISCORD &countries=HUN located in the square. It used to be the head- laws that regulated content. The independ- 9 The World Bank (2019) Doing Business. Available [on- quarters of MTV, a Hungarian public TV sta- ence of the authorities started being ques- line]: https://www.doingbusiness.org/en/data/explo- tion. In 2006, a large crowd gathered in front tioned. reeconomies/hungary of the building, infuriated by a leaked tape of 10 The Hungarian tax system is based on the opinion that then Prime Minister Ferenc Gyurcsány from It was not, however, until 2014 that red flags low income tax is incentivizing people to save up, while and industry, which to this day is an impor- a low VAT would not have the same effect. Furthermore, the socialist party admitting to thieving, ly- over media freedom were widely raised. It tant part of the economy. this latter tax is the most equitable form of taxation, ing, and cheating to win the parliamentary was then that the government introduced and is an important factor in revenues. The government plans further tax cuts, and decentralization. For election. The mob eventually took over the a progressive tax on advertising revenues of Undoubtedly, with the spread of private further information see: Keszthelyi, C. (2019) “Hungary’s headquarters. The event was detrimental to media ventures. The law was constructed in property and businesses Hungary trans- Tax System Stable but Administration-Heavy”, [in:] Bu- the future of Hungary. such a way as to target specific, independ- dapest Business Journal. Available [online]: https://bbj. formed from a centrally planned economy hu/special-report/hungarys-tax-system-stable-but- ent media. to a more or less Western-style country. administration-heavy_161404; and: Daily News (2019) “Hungarian Audit Office sees room for gradual personal This, however, does not mean that Hungary income tax rate cut” Daily News Hungary. Available [on- The taxes also hit Lajos Simicska’s business would be completely self-reliant, or that the line]: https://dailynewshungary.com/hungarian-audit- interests, which the businessman interpret- 12 business environment would be perfect. office-sees-room-for-gradual-personal-income-tax- Eichel, H. and Lamy, P. (2017) “Open Letter to Jean- ed as backstabbing from the prime minister, rate-cut/ Claude Juncker”. [in:] Hungarian Spectrum. Available [online]: http://hungarianspectrum.org/2017/11/28/ and amid a scandal, the former broke away 11 Despite the economic growth, the coun- Transparency International (2019) Corruption Percep- open-letter-to-jean-claude-juncker/ from his long-time friend. This forced Viktor tion Index 2018. Available [online]: https://www.trans- try still faces some serious issues. To begin parency.org/cpi2018 13 Ibid. Orbán to set up a new media empire, for 064 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MÁTÉ HAJBA 065

Since then, several other news outlets have The government’s takeover of the media, shut down as the pro-government, oligarch- as dire as it may seem, is only half of the owned media had the upper hand on the problem. It is terrifying enough that a party IN ITS FIRST market. The Fidesz government took a leaf THE PRO- with the power of changing laws has control TERM AFTER out of Putin’s book and has been control- GOVERNMENT over the media, but seeing how Fidesz uses ling news outlets through advertising rev- it as a mouthpiece, it is definitely one of the 2010, THE FIDESZ enues. One such newspaper is the left-wing MEDIA ARE strongest arguments against the success of Népszava, which de-jure operates indepen- the transformation. GOVERNMENT HAD dently and is tolerated by the ruling party, SATURATED though it will not attack the government The pro-government media are saturated A LOT OF MEDIA through impactful investigative articles. WITH FAKE with fake news, blatant propaganda, conspiracy theories, and smear campaigns OUTLETS The frightful outreach of the pro-govern- NEWS, BLATANT verging on the quality of the most ludicrous ment media in Hungary was outlined in 2017 communist fabrications of lore19. Facebook ON ITS SIDE in an article of the investigative atlatszo.hu PROPAGANDA, blacklisted all news outlets in the region, as portal16. The results showed that 65% of the CONSPIRACY it was unable to filter out the propaganda daily print national newspapers bought by fake news pieces20. Regardless of the ef- readers were pro-government, including all THEORIES, fectiveness or morality of this measure, it is which he used his newly set-up oligarch, regional newspapers. 90.5% of the weekly rather telling that such drastic policies had Lőrinc Mészáros, who if his spectacular news magazines in circulation were also AND SMEAR to be brought. “success” winning public procurement bids pro-government, as well as 37% of the aver- continues and he amasses wealth in a con- age online readership. Within radio stations CAMPAIGNS RELIGION AND TOLERANCE stant rate, will become the richest person this ratio was 62%, and 55% for the audience Fake news propaganda long precedes the on earth by 202414. of evening TV news programmes. Moreover, VERGING Soviet Union. Russia has used it to whip up 59% of the total reach of news media has anti- Semitism in Europe – for example, in The largest blow to freedom of press was been achieved by pro-government outlets. ON THE QUALITY the form of the Protocols of the Elders of the shutting down of Népszabadság, the Zion. Vladimir Putin used similar methods in largest national daily newspaper back in The situation has only gotten worse since. OF THE MOST spreading discord in Europe by supporting 2016. The media venture was bought by Freedom House puts Hungary into the LUDICROUS far-right groups21. an Austrian businessman, Heinrich Pecina, “partly free” category in media freedom17. who allegedly agreed with Mr. Orbán to later The organization also published a detailed COMMUNIST As we walk down the bank of the Danube resell it to Mészáros. Since then, Mr. Pecina analysis18 citing that by 2019 in the country in our tour of Budapest, away from the has received a suspended prison sentence “nearly 80 percent of the media are owned FABRICATIONS parliament on our way up to the castle, the for embezzlement on a separate case15. The by government allies.” embankment is speckled with metal statues official reason given for suspending the op- OF LORE of shoes. Here we should stop with bowed erations of Népszabadság was its inability to produce profits. Eventually, Heinrich Pecina 19 Medium.com (2018) The Craziest Lies of Hungarian did, indeed, sell the media venture to Mé- 16 Bátorfy, A. (2017) “This Is How Government-Friend- State-Controlled Media. Available [online]: https://me- száros. ly News Outlets Dominate the Hungarian Media” [in:] We now arrive at Kossuth Square, where dium.com/@smalltownhigh/the-craziest-lies-of-hun- Atlatszo.hu. Available [online]: https://english.atlatszo. garian-state-controlled-media-112b5695ff49 hu/2017/11/22/this-is-how-government-friendly- the stately building of the ornate Parliament 14 nd Portfolio.hu (2018) PM Ally Mészáros Already 2 Rich- news-outlets-dominate-the-hungarian-media/ casts its reflections over the lazily streaming 20 Graham-Harrison, E., Walker, S. (2019) “Hungary: the est Person in Hungary. Available [online]: http://www. crucible for faulty efforts by Facebook to banish fake portfolio.hu/en/users/reg.php?redir=/en/economy/ 17 Freedom House (2017) Freedom of the Press 2017. Danube River. The square usually plays host news”. [in:] The Guardian. Available [online]: https:// pm-ally-meszaros-already-2nd-richest-person-in- Available [online]: https://freedomhouse.org/report/ to protests that do not achieve anything, www.theguardian.com/world/2019/may/18/hungary- hungary.36196.html freedom-press/2017/hungary while the building hosts the high-achieving crucible-facebook-attempt-banish-fake-news 15 Portfolio.hu (2017) Heinrich Pecina Gets Suspended 18 Freedom House (2019) Freedom and the Media: super-majority of Fidesz, with which the leg- 21 Political Capital (2015) The Kremlin Connection of Prison Sentence. Available [online]: http://www.portfo- A Downward Spiral. Available [online]: https://freedom- islative body does whatever is necessary to the European Far-Right. Available [online]: https://www. lio.hu/en/economy/heinrich_pecina_gets_sus-pend- house.org/report/freedom-media/freedom-me- politicalcapital.hu/hireink.php?article_read=1&article_ ed_prison_sentence.33977.html dia-2019 sustain that advantage. id=68 066 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MÁTÉ HAJBA 067

heads, looking over the shoes down to the ist or anti-Semitic. It is populist. Mistrust of amendments as unconstitutional. The new waves of the river that swallowed those minorities does, however, lead to fear and amendment not only passed those provi- Jewish victims during the WW2, who were hate, exploited and aggregated by the gov- sions, but also took away the ability of the mercilessly shot down into the river, and ANTI-SEMITIC ernment’s propaganda. During communist Constitutional Court to rule over them. The whose memories the empty shoes preserve. INCIDENTS times, these sentiments were taboo. Ever EU and the United States both expressed since, these issues have not been addressed, their concerns over it26. Despite the said memento of such horrors, HAVE DECLINED which makes it impossible to reconcile just years ago, neo-Nazi groups held march- them. And so, unaddressed, they were used Election laws are rewritten every time they es in Budapest and the countryside wear- IN HUNGARY, by the current government. do not benefit Fidesz, with the obvious result ing uniforms. These paramilitary groups of securing a super-majority all over again, were connected to Jobbik, a then far-right CONTRARY Without openly admitting the problem of despite fewer people casting their ballots party, which has moved closer to the politi- racism, which is by far not unique to Hun- for the party27. cal center since putting an end to the open TO EUROPEAN gary, the country can neither become more displays of racism. By today, Hungary has tolerant, nor truly westernize. In spite of The Prosecutor General of Hungary of- apparently gone a long way. According to TRENDS what the government claims, being more ten refuses to investigate corruption cases the Action and Protection Foundation, anti- tolerant does not mean abandoning one’s making it obvious his office is by no means Semitic incidents have declined in Hungary, culture, or even tolerating those that want independent of Viktor Orbán’s state appa- contrary to European trends22. to destroy Western values. The Hungarian ratus28. This gives corruption free reign, and government poses an even more imminent oligarchs can win public procurement bids Though the number of incidents has indeed 20% of Hungarians openly admit to being danger than nonexistent immigrants in Hun- under suspicious circumstances. dropped, racism is still present in Hungarian anti-Semitic. gary. Any degree of intolerance – be it from society, often exacerbated by the xenopho- groups or countries outside of Europe, or NGOs are often attacked by the govern- bic anti-immigrant fake news campaigns of Racism manifests itself in less specific ways, within – should not be tolerated. ment’s propaganda machine. In 2017, a law the government. The Special Eurobarometer however. This is substantiated by a 2016 was passed forcing them to register as 437 poll23 conducted in 2015 reveals that Pew Research Center25 study researching DEMOCRATIC INSTITUTIONS a foreign-funded organization if a certain 20% of Hungarians would feel uncomfort- more general attitudes towards minorities. It We finish our tour by crossing the Danube amount of their funds came from abroad. able if one of their colleagues happened found that Hungarians have a worse outlook on the famous Chain Bridge, and hiking up This blow on civic society strongly resem- to be Roma, whereas 34% would feel un- on minorities than the EU average. Muslims to the castle. This is a rather presumptuous bles that of the Putin’s technique and – if this comfortable if their child’s partner was from are the most negatively perceived group, place the Office of the Prime Minister moved was not enough – the Hungarian govern- the same minority group. Regarding Jews, with 72% of Hungarians having unfavorable to in 2019. Given how successfully Mr. Orbán ment justified the much criticized measures Hungarians answered the same questions view on them – as opposed to the 43% EU consolidated his authority, it is rather fitting by alluding to the FARA laws in the United with the result of 9% and 16% of respond- average. Additionally, 64% dislike Roma and that he should look down upon the city lay- States, which require the registration of ents feeling uncomfortable with the ethnic 32% Jews – compared to the 48% and 16% ing below his feet from a castle foreign lobbyists. This is the same justifica- group respectively. Muslims and Roma are in the EU, respectively. tion Russia had used, despite no similarity the ethnic groups the citizens of Hungary Hungary’s transformation somewhat resem- clearly feel most uncomfortable with. A poll The Hungarian government, despite a lot bles that of Russia. Old ways were given new conducted by CNN in 2018 reveals24 that of criticism of its xenophobic campaigns, guises; certain measures were modernized 26 BBC (2013) Q&A: Hungary’s Controversial Consti- tutional Changes. Available [online]: https://www.bbc. and its attacks on George Soros, a Jewish and adjusted to the digital age. Viktor Orbán com/news/world-europe-21748878 22 Action and Protection Foundation (2019) Opposite Hungarian-American billionaire, is not rac- began entrenching his power by getting rid 27 The Budapest Beacon (2018) “Electoral Rules Rig Trends in Hungary and Europe: Drop in Number of Anti- of the old constitution and drafting a new Semitic Hate Incidents in Hungary in 2018. Available Results of Hungarian Elections, Warns Princeton’s Kim Available [online]: https://edition.cnn.com/interac- [online]: https://tev.hu/en/opposite-trends-in-hunga- one. Then, whenever his needs desired, his Lane Scheppele”. Available [online]: https://budapest- tive/2018/11/europe/antisemitism-poll-2018-intl/ ry-and-europe-drop-in-number-of-anti-semitic-hate- party, Fidesz, using the super-majority in beacon.com/electoral-rules-rig-results-of-hungarian- incidents-in-hungary-in-2018/ 25 elections-warns-princetons-kim-lane-scheppele/ Pew Research Center (2016) Hungarians Share Eu- parliament, amended it. rope’s Embrace Of Democratic Principles But Are Less 28 23 EU Open Data Portal (2015) Special Eurobarometer The Budapest Beacon (2016) “Hungarian Prosecu- Tolerant of Refugees, Minorities. Available [online]: 437: Discrimination in the EU in 2015. Available [on- tors Unlawfully Refusing to Investigate Embezzlement https://www.pewresearch.org/fact-tank/2016/09/30/ line]: http://data.europa.eu/euodp/en/data/dataset/ One such amendment, for instance, cur- of Central Bank Funds”. Available [online]: https://buda- hungarians-share-europes-embrace-of-democratic- S2077_83_4_437_ENG tailed the powers of the Constitutional Court pestbeacon.com/hungarian-prosecutors-unlawfully- principles-but-are-less-tolerant-of-refugees-minori- refusing-to-investigate-embezzlement-of-central- 24 CNN (2018) CNN Poll: Anti-Semitism in Europe. ties/ after it ruled certain provisions of previous bank-funds/ 068 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MÁTÉ HAJBA 069

One of the points the government used in its Confidence in the political situation in Hun- Then there is Viktor Orbán, who shrewdly communication strategy against CEU was its gary increased between 2011-201635, despite but successfully exploited public attitudes Gender Studies course. Since then, Gender worrisome trends to the state of democracy. without moralizing over them. THE PROSECUTOR Studies cannot be taught in the country31. Freedom House demoted Hungary36 from GENERAL The Academy of Sciences was also recently “free” to “partly free” – the only EU state It is definitely talent that propelled the man forced under government control32. Later, in the category, whereas the Bertelsmann from the Hero’s Square as a young orator up OF HUNGARY in order to complete the monopolization Foundation’s 2018 Sustainable Governance across the city all the way to the castle. His of education, alternative schools have been Indicators report claims Hungary can no actions defined the thirty years of Hungar- OFTEN REFUSES essentially phased out33, forcing children to longer be considered a consolidated de- ian development after the fall of commu- learn under the centralized and dysfunc- mocracy37. Nevertheless, it is not true that nism. However, strange as they might seem TO INVESTIGATE tional state education system. As a result, Hungarians do not support democracy – for a mature Western democracy, these ac- future generations can be conditioned not a 2017 Pew Research Center poll38 revealed tions do not constitute the core issue Hun- CORRUPTION CASES to dissent and not to think critically lest they that 78% of Hungarians deem democracy to gary is now facing, but is merely a symptom. pose a danger to the regime. be good. It is, therefore, not a question of MAKING IT OBVIOUS whether Hungary is a democracy or not, but In a firmly democratic country, where civic HIS OFFICE These measures are just some of the actions rather whether it is an illiberal democracy institutions stand strong and watch over PM Orbán took to consolidate his power for or a liberal one. Unfortunately, the former the authorities, where media hold people IS BY NO MEANS the foreseeable future. He could not have seems truer more and more, evidencing accountable, where checks and balances done it alone, though. Civic oversight and that the transformation is incomplete. All the ensure the rule of law, and where people are INDEPENDENT democratic institutions were not strong to transformation achieved is served merely tolerant and supportive of these democratic begin with, so their erosion was much eas- as a means of sugarcoating the surface, but institutions, Mr. Orbán could not have, and OF VIKTOR ORBÁN’S ier. The process was rendered even easier ignoring – and thus not completely stop- would not have been able to do what he is with the aid of a generous portion of the ping – the rotting inside. now doing in Hungary. STATE APPARATUS population that supports Viktor Orbán in his mission to build an illiberal state34 modelled CONCLUSIONS after Russia or China. Hungary had two kinds of leaders: those who pretended that the country had become a democracy and westernized over- whatsoever with the American law in either night – at the same time failing to address case29. underlying fears and tensions within society https://bbj.hu/news/hungary-will-not-soften-laws-to- that needed to be bottled up during com- allow-ceu-to-stay_164270 Academia fared no better than NGOs. Simi- munism on the off chance that people will THE LAST THREE lar to Russia, Hungary attacks US institutions 31 Day, M. (2018) “Viktor Orban Moves to Ban Gender pretend as well that these issues do not exist. Studies Courses at University in ‘Dangerous Precedent’ of higher education. Central European Uni- for Hungary” [in:] The Telegraph. Available [online]: DECADES OF versity (CEU), one of the best universities https://www.telegraph.co.uk/news/2018/08/13/viktor- 35 in the region, was singled out by the gov- orban-moves-ban-gender-studies-courses-university- Tárki Zrt. (2019) Social Report. Available [online]: htt- dangerous/ ps://www.tarki.hu/eng/tarsadalmi-riport TRANSFORMATION ernment on the grounds that the private 32 Vass, Á. (2019) “Government to Impose Total Control 36 Freedom House (2019) Freedom on the World 2019. HAVE HAD university was founded by George Soros, Over the Science Academy”. [in:] Hungary Today. Avail- Available [online]: https://freedomhouse.org/report/ whom the government designated as public able [online]: https://hungarytoday.hu/government-to- freedom-world/2019/hungary impose-total-control-over-the-science-academy/ THEIR UPS enemy number one. The institution had to 37 Bertelsmann Stiftung (2019) First Signs of Waning leave Hungary30. 33 Hungarian Spectrum (2019) “Closing the Door on an Support for Viktor Orbán. Available [online]: https:// Alternative Education”, Available [online]: https://hun- www.bertelsmann-stiftung.de/en/our-projects/sus- AND DOWNS, BUT garianspectrum.org/2019/07/01/closing-the-door-on- tainable-governance-indicators-sgi/project-news/first- 29 Rohac, D. (2017) “Opinion: Crackdown on Hungary’s an-alternative-education/ signs-of-waning-support-for-viktor-orban/ NGOs: Mirage or Reality? [in:] The Budapest Beacon. HAVE REMAINED Available [online]: https://budapestbeacon.com/op-ed- 34 The Budapest Beacon (2014) “Full Text of Viktor Or- 38 Pew Research Center (2017) Globally, Broad Support crackdown-hungarys-ngos-mirage-reality/ bán’s Speech at Băile Tuşnad (Tusnádfürdő) of 26 July for Representative and Direct Democracy. Available [on- GENERALLY 2014”. Available [online]: https://budapestbeacon.com/ line]: https://www.pewresearch.org/global/2017/10/16/ 30 Budapest Business Journal (2019) “Hungary Will Not full-text-of-viktor-orbans-speech-at-baile-tusnad-tus- globally-broad-support-for-representative-and-direct- Soften Laws to Allow Ceu to Stay”. Available [online]: nadfurdo-of-26-july-2014/ democracy/ INCOMPLETE 070 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MATE HAJBA 071

The last three decades of transformation munist ruling party, and its offshoots failed have had their ups and downs, but have to do so. The opposition is unlikely to win remained generally incomplete. And so, in elections in the future as they find the cur- this sense, the transformation projects have rent situation suitable. They get their money been a failure. However, as it is an ongoing from the state and wages from the Parlia- process, no matter how Sisyphean it might ment, and they do not have to make difficult seem, some accomplishments have oc- decisions to lead the country. It therefore curred. seems that there is no one figure in Hungary that could take the ultimate leadership role Looking down at the city from the castle, to succeed Viktor Orbán. the glistening buildings varnished over the underlying issues would fool anyone tak- The strongman of Hungary is a populist, ing a superficial glance. The stones are there is no doubt about it. In such a capac- scrubbed of their communist grime, tons of ity he will react to the vox populi. True, he new investment flows into the country. Hun- can nudge people to stir up to the surface gary is now part of NATO and the EU; it is certain attitudes that were best left unmen- free to enterprise among relatively favorable tioned before, but now became perfectly corporate tax conditions. On paper, there okay. Xenophobia, support of state capture, is nothing stopping free media ventures a demand for a strong leader, opposition to start operating. Contrary to European to western trends – these sentiments have trends, anti-Semitic atrocities are showing always been present in Hungarian society, a downward trend. Finally, despite all the not even dormant, but waiting for a release. hardship, theoretically, opposition parties might be able to win elections. The unfortunate brilliance of the leadership in Hungary is recognizing and exploiting Below the surface, however, opposition these attitudes, while applying a modern parties are hindered through legislation, shiny varnish to it. As long as the nostalgia the state capture of the media through for an authoritarian regime lingers, there will proxies created a quasi-monopoly, mak- be politicians who will use it. Until there are ing it much more difficult for independent substantial changes in society, transforma- media ventures to strive in the Hungarian tions will remain regretfully unfinished. media scene. Opposition parties are further hindered by their own ineptness to realize society does not work in the idealized way opposition politicians believe. Racist sentiments are very much ubiquitous still, though they no longer manifest in atrocities as often as they used to. True, many of the citizens are nostalgic of the communist era – but this is not really surprising, as these were the times when they were young and possibly happier overall.

Ironically, Fidesz, a formerly vehemently MÁTÉ anti-communist party, realized that this is HAJBA exactly the case, while the Socialist Party, which is the direct descendant of the com- Director of Free Market Foundation in Hungary 072 072 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE JÁNOS KÁRPÁTI 073

he democratic transition in Central and Eastern Europe (CEE) at the very end of the 1980s and the beginning of AFTER THE FALL Media the 1990s resulted in essen- OF COMMUNISM, Ttial social changes. Although analysts may come to different conclusions as regards CERTAINTY HAS their nature, they do share a few common points. One of them is that after the fall of DISAPPEARED Unfreedom, Communism, certainty has disappeared from the everyday life of ordinary people. FROM

In the Hungarian “Goulash Communism” THE EVERYDAY period of the 1970s and 1980s, you did not LIFE OF ORDINARY Hungarian Style: have the freedom of choice, but certainly you could feel secure in a limited environ- PEOPLE ment. Now, freedom has arrived, possibilities have opened up, and you bear much more personal responsibility for your own From “APO” fate – and you will not necessarily belong to the winners. However, if losers do not see This is fertile ground for, among other real prospects to have a better future, they things, creating a media environment where may tend to look back into the past. Why governmental propaganda is predominant. does it happen in one country, while another Opposition media outlets still exist (which country manages to avoid it? Hundreds of differentiates the current system from the to “KESMA” factors should be considered to find the an- communist one), but they play a marginal swer, but now the fact is that a considerable role and their future is permanently uncer- part – though it can be disputed if it is the tain. Let us take a look at how this old-new majority – of the Hungarian population is media landscape was being created in Hun- looking back into the past. gary in the last thirty years.

Looking back into the past – what does it THE SINGLE-PARTY MODEL mean, more precisely? After the third con- Before 1989, in the single-party system, the secutive election victory of Fidesz in 2018, Hungarian Socialist Workers Party was more resulting in a two-thirds majority in parlia- powerful than state institutions. Political de- ment, the hopes of an upcoming change has cisions were made in the Party, and state faded in the minds of those opposing this institutions were only executive offices. This power. Many people have given up and they was true for the media as well. The Informa- say there is no point in trying to influence tion Office of the Council of Ministers was politics any more. They retire to cultivate a big, visible authority but the real power their own gardens, and this is exactly what was in the hands of the Department of Agi- Hungarian Communism – the Kadar era – tation and Propaganda within the Party. This was basically about: “do not bother about department was referred to as APO – a play politics, enjoy what you can achieve in your on the word ‘apó’ (which is nearly identi- private life”. cal to the abbreviation itself), which means JÁNOS ‘dad’ in Hungarian. The message was: Dad KÁRPÁTI will take care of you, tell you what to read, 074 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE JÁNOS KÁRPÁTI 075

nist bloc not to have any censorship office. This was the end of the period when eve- Instead, the editors-in-chief were well aware ry four years a changing of the guards, so of the set expectations. to speak, took place in Hungary. In 2006, HUNGARY FOLLOWING Fidesz could not return to power but the Equally familiar with the imposed limitations, subsequent years were characterized by WAS UNIQUE as regards the published content, were the THE DEMOCRATIC growing antagonisms, aggressive street IN THE COMMUNIST editors-in-chief of the leading dailies in each TRANSITION, demonstrations, and the fast decline of of the nineteen counties of the country. Each leftist power. For the first time in Hungar- BLOC NOT TO HAVE county had a “local” version of the Party’s THE MEDIA ian history, the 2010 elections resulted in centrally run newspaper. The main source of a two-thirds parliamentary majority for the ANY CENSORSHIP information for a relatively high proportion LANDSCAPE Fidesz party. of the population living outside Budapest OFFICE was – instead of the nationwide press – the IN HUNGARY In the media environment, it was the end “county version” of Nepszabadsag. Thanks of a period lasting for two decades when to the organizing skills of APO, key messages CHANGED dominant voices in the public media were of nationwide importance were published in regularly disappearing and reappearing, all of these county papers at the same time, DRAMATICALLY depending on election results. Nonethe- watch, or listen to, so do not be bothered even in identical layout. less, the Hungarian private media sector to think for yourself. was flourishing and the existence of diver- TWO DECADES OF FREEDOM sity in information sources was undisputed, There existed no private television or radio AFTER THE TRANSITION irrespective of the color (or rather “politi- channels at that time. The four daily news- Following the democratic transition, the ity journalists were dismissed, with liberal cal affiliation or party-composition”) of the papers with nationwide circulation were media landscape in Hungary changed dra- and leftist voices being silenced in the public government. profiled and organized according to the matically. Private investments created new media. For the clarity of these changes, let needs of the ruling elite. The “leading” daily outlets in the print media, with private tel- us call the leftist, liberal journalists “Group NEW MEDIA LAW was Nepszabadsag, the central mouthpiece evision and radio channels also being cre- A”, and conservative, nationalist journalists Prime Minister Viktor Orbán, having gained of the Party. Magyar Hirlap was the official ated. Nevertheless, the 1990s witnessed “Group B”. In this case, Group A was dis- a constitutional majority in 2010, right after newspaper of the government (not to be several waves of the so-called media war missed by Group B. the election victory, started to consolidate confused with the Official Journal, publish- in the country. This war basically fought for his power by weakening checks and bal- ing new laws and various legal documents). the control over the public media – first of The 1994 elections brought sweeping suc- ances – not only with regard to the constitu- Apart from these, there was Nepszava – all, over Hungarian Television, but also over cess to the leftist opposition, which con- tional regulation of the relationship between published by the National Council of Trade Hungarian Radio and the national news sisted of the Socialist Party (the successor of power branches, but also with a reformed Unions; and Magyar Nemzet – published agency MTI. the Hungarian Socialist Workers Party from media regulation. The new Media Act (Act by the Patriotic People’s Front, which was the previous system) and of a liberal party. 185 of 2010 on Media Services and Mass Me- an umbrella organization of different or- In the second half of the 1980s, public These two formed a coalition. The politi- dia), having entered into force on January 1, ganizations loyal to the communist system broadcasting institutions were strongly de- cal changes were also reflected in personal 2011, was, in fact, the first important build- (churches, peace movements, etc.). termined by, originally leftist, but increas- changes in the public media. Group B was ing block of a new system, which was later ingly reform-minded journalists open to the dismissed largely by Group A. baptized by Orbán as “illiberal democracy”. The news editors-in-chief of the state-run world trends, with growing liberal attitudes. television, the state-run radio, and the afore- The staff was confronted with the results of Then, in 1998, Fidesz was the winner of the Laszlo Majtenyi, a professor of constitutional mentioned dailies, plus the editor-in-chief of the first free elections in 1990, helping a co- elections. Group A was dismissed by a re- law and a former Hungarian ombudsman, the Hungarian News Agency MTI, regularly alition of conservative, nationalist parties to freshed version of Group B. had several objections to this law, including, met every Monday morning in the office of power. The new government (composed among others: the head of the APO, the “agitprop boss”, of the Hungarian Democratic Forum, the In the year 2002, the socialists and the liber- who briefed them about the current require- Christian Democratic People’s Party, and the als came back to power. The new version of • the undemocratic nature of the archi- ments concerning the coverage of various Smallholders Party) declared war upon this Group B was dismissed by a younger gen- tecture of supervision as enacted; topics. Hungary was unique in the commu- “liberal media branch” and several high qual- eration of Group A. 076 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE JÁNOS KÁRPÁTI 077

• the Media Act’s transgression of gen- Even though the ruling party and the op- of frequency as a limited resource, and later erally accepted liberal and democratic position may delegate the equal number citing the unmatched power of these me- principles by extending the govern- of candidates to the Board of Trustees of dia to shape public opinion. Since the press ment’s powers of oversight to the THE MEDIA ACT the Public Service Media Foundation (three won the fight for the abolition of censorship printed press and the new media, in- each), the predominance of the ruling par- in the 19th century, legal action has served cluding online news publication in its MARKED THE END ty is once again assured, since the Media as the only basic means to guard against entirety and a significant portion of OF THE ECONOMIC Council is entitled to nominate the chairman rights violations committed in the print me- blogs; and an additional member. dia. These days, the Internet is certainly the INDEPENDENCE freest medium of all. • the unprecedented scope of powers Without a proper tender procedure and by conferred, the nebulous definition of OF CERTAIN the unanimous vote of delegates exclusively The Hungarian media law seeks to regulate the legal grounds for imposing sanc- from the ranks of the ruler party, it was this communications in diverse media – online, tions, and the threat of arbitrary appli- PUBLIC PROGRAM body that elected the general directors of print, and electronic – based on the same cation1. public broadcasters, who must therefore be standardized criteria. Indeed, there has been PROVIDERS, regarded as political appointees. no official explanation whatsoever for em- Regarding the first objection, Mr. Majte- powering the new Authority to monitor nyi pointed out that the President of the INCLUDING Both in its scope and the philosophy of its and severely sanction the printed press. It National Media and Infocommunications HUNGARIAN RADIO, conception, the new media regulations is equally difficult to grasp why the Authority Authority – with vastly augmented powers transgress the boundaries of European should have the right to monitor and sanc- of supervision over the converged techno- MTV (HUNGARIAN constitutional democracy. The European tion news portals and blogs, provided that logical aspects of the media and content legislative tradition is to respect the differ- they also post-edit commercial advertising. regulation – is since then to be appointed TELEVISION), ence between the legal restrictions imposed for a term of nine years (more than two par- on respective types of media. The deepest The new scheme of bidding for frequency liamentary cycles) at the discretion of the AND DANUBE intervention has been deemed acceptable in allocations lacks transparency and does not prime minister, and may be appointed to the the regulation of the electronic media (radio rule out the possibility of arbitrary decisions. office more than once. TELEVISION and television), initially because of the nature If the Media Council is dissatisfied with the bids – for instance, due to “considerations The director general of the Broadcast of media policy,” – it may choose not to Support and Property Management Fund announce a winner at all, or wait until it (MTVA), which has discretionary rights over organization. Public service media no longer happens to receive a bid that is to its liking. the assets of public media and the allocation create their own programs, but commis- It has the authority to scrutinize all radio, of various support funds, is appointed and sion them from the Fund. News reporting television, and other audio-visual content, recalled by the president. As Laszlo Majtenyi is centralized. On the pretext of frugality, and put it to the test of what the law calls envisioned, the Media Act marked the end events deemed newsworthy are featured in THE RULING FIDESZ “balanced nature.” of the economic independence of certain programs created by the same single crew public program providers, including Hun- and then distributed among all the public PARTY HAS MADE Moreover, the new professional “self-regula- garian Radio, MTV (Hungarian Television), channels. tory” bodies remain at the mercy of the new and Danube Television, whose entire assets SURE THAT NO ONE Authority in terms of discretionary powers, were transferred to the Fund overseen by The President of the Authority also presides operation, and information. the president. over the Media Council, the body that pass- OTHER THAN THEIR es the most important material decisions. OWN CANDIDATES Finally the grounds for imposing fines, which Thousands of journalists and programmers Taking advantage of its two-thirds majority are so severe as to be fit to ruin a media en- were reassigned to the same umbrella in parliament and the abolition of the former ARE DELEGATED terprise, are vague and described in general parity-based mechanism, the ruling Fidesz legal terms, such as offense to any public party has made sure that no one other than TO THE MEDIA interest, any majority or minority, consti- 1 http://ekint.org/en/media-and-press-freedom/2011- their own candidates are delegated to the tutional law and order, and human dignity. 01-11/a-criticism-of-the-hungarian-act-on-media- services-and-mass-media-effective-january-1st-2011 Media Council. COUNCIL On the suspicion that an individual right 078 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE JÁNOS KÁRPÁTI 079

has been violated, the Council may bring At the top of this media “management” is is more and more obviously influencing me- a process even if the subjects themselves Antal Rogan, the propaganda minister in the dia content. have not objected to or even been aware prime minister’s office, and a close ally of of the alleged violation. Media enterprises Viktor Orbán. He is the “agitprop boss” of THE MEDIA LAW All in all, it is fair to state that a consider- found to be in repeated grave infringement the new times. CREATED BY able part of the Hungarian public consumes of the new rules may be simply struck from nearly exclusively pro-governmental propa- the register by the Council, in a blatant in- The audience of public broadcasting is not FIDESZ RESHAPED ganda instead of independent news. Having fringement of the freedom of the press. All too high, but in this respect there is a big said that, prevailing trends concerning the the while, the Media Act neglects to define difference between Budapest (of 2 million THE WHOLE MEDIA circulation of the printed media segment what such a “grave infringement” consists of, inhabitants) and the rest of the country (8 show that real predominance of pro-gov- other than the default on broadcasting fees. million). The popularity of public broadcast- PLAYING FIELD ernment propaganda is slowly but steadily ing is usually stronger in smaller settlements diminishing, at least in the non-tabloid seg- CONCENTRATED OWNERSHIP – in certain geographic areas it is not even IN HUNGARY ment. The figures of circulation are visibly AND “LEADERSHIP” about dominance, but rather exclusiveness. going down. Consequently, revenues result- The media law created by Fidesz reshaped People in many households do not watch ing purely from selling the newspapers are the whole media playing field in Hungary, practically anything else other than public more and more dramatically lagging behind but beyond the legal environment, media television programs. the national and international content is the costs. In order to keep up the balance, ownership relations have also changed dra- identical and produced in Budapest. papers need higher income from advertis- matically during the Fidesz government. Noteworthy, outside Budapest, a certain pro- ing. portion of the residents regularly read only Business circles in the “moonbow” of Fidesz There has been a permanently ongoing ver- the “local” (hence government-controlled) have acquired most of the private radio and In the Hungarian “illiberal” system, the gov- bal war between the government and the newspaper2. This category was mentioned television stations in the country. However, ernment has an unusually large influence pro-government media on the one hand, in the overview of the communist media en- there are two big, nationwide private televi- upon the advertising market, since every- and the media critical towards the govern- vironment. Business circles close to Fidesz sion channels with outstanding an audience: body in business circles knows very well ment on the other, concerning the question bought these leading papers in each and Bertelsmann-owned RTL Klub and TV2. So that being on good terms with the govern- of predominance. The pro-government nar- every county. The big new owner became far so good – only the latter one is consid- ment has a real market value, especially if rative is that the opposition, leftist media is Lorinc Meszaros, another good friend of ered to belong to the Fidesz media empire you would like to be the winner of public still predominant, while those critical of the Viktor Orbán. Originally, he was a plumber at the present time. procurement tenders. Moreover, the big- government claim the opposite. In order in the village where the prime minister was gest advertiser is the public sector itself, to determine the truth, it would be highly born. Now, he is one of the richest people As for printed political dailies with national and public money spent on advertising misleading to only compare the number of in Hungary, the owner of a whole empire of circulation, after the unexpected and scan- goes mainly to government-friendly media. media outlets. It is necessary to look deeper companies. The county newspapers – being dalous closing of liberal-leftist Nepszabad- Lately, Nepszava, too, has had somewhat into the real scope of the different kinds of practically in one hand – are prepared day sag in October 2016, there still exists Nep- more revenues from state or government media outlets. by day with a centralized working method: szava, critical towards the government. The advertising. There is some local content, of course, but two other outlets are the pro-government First of all, public broadcasting is under the Magyar Nemzet and Magyar Hirlap. But In the first quarter of 2019, the figures of total control of the government. In recent these newspapers altogether reach much circulation of nearly all dailies were lower years, new, thematic channels have been 2 There are no exact figures indicating the media con- less people than several tabloids, which are than one year earlier. The only exception sumption habits of the population. The number of sold launched by the public television. A well- dailies is generally very low everywhere in the country, nearly exclusively in the pro-government was Nepszava, the sole nationwide daily, orchestrated propaganda scheme is ap- and as such it covers only a limited percentage of the hands. critical towards the government. Its circu- plied on all channels, e.g. even the televi- residents. But while in Budapest residents read differ- lation was 21,000 – somewhat higher than ent dailies with national circulation and the most popu- sion coverage of high-profile sports events lar daily is Népszava, critical towards the government, When Fidesz tries to prove the predomi- in the previous year, and nearly double that is regularly intermitted by short news which everywhere else in the country the pro-government nance of the opposition media, it may find of the 2016 data. This phenomenon shows local daily sells better than the dailies with national – in accordance with governmental policy circulation. Moreover, in small towns and villages, where some arguments looking at the number of that many former readers of Nepszabadsag, – usually consist of dramatic stories about human relations are more personal, the importance of titles in online media. Alas, the truth is that which closed in 2016, have become readers the dangers of migration. local “opinion leaders” is outstanding and the majority even in this relatively independent area, the of Nepszava. of these key figures of the local society read the local pro-government daily on a daily basis. money of pro-government businesspersons 080 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE JÁNOS KÁRPÁTI 081

Nevertheless, circulation of the leading pro- a decree stating this move to be of “national government daily newspapers in the coun- strategic importance”, thus ensuring that no ties is clearly decreasing: the data from the concern can be raised on the basis of com- REAL first quarter of 2019 were lower by approxi- petition law. EVERYBODY PREDOMINANCE mately 10–11% when compared to one year IN BUSINESS earlier. Freedom House determined that the deal OF PRO- had placed most leading private Hungar- CIRCLES KNOWS On the market of the tabloid dailies, there ian outlets under the control of a single, GOVERNMENT is also a clearly visible decreasing tendency state-friendly entity, in a move that is un- VERY WELL – still, on a much higher niveau than in the precedented within the European Union. PROPAGANDA “more serious” segment. Blikk went down The New York Times quoted Zselyke Csaky, THAT BEING from 200,000 (2010) to 80,000 (2018) and the research director for Europe and Eurasia IS SLOWLY Bors from 80-90,000 (2010) to 50,000 at Freedom House, saying it was a change ON GOOD TERMS (2018)4. mainly about symbolism. The Hungarian BUT STEADILY media is now “beginning to resemble state WITH DIMINISHING, THE BIRTH OF KESMA media under Communism because of the THE GOVERNMENT The building of the whole media architec- level of control and consolidation”5, she AT LEAST ture was finalized on December 5, 2018; added. As regards the possible reasons be- HAS A REAL MARKET a few days after nearly five hundred private hind this move, Dániel Szalay, a journalist IN THE NON- Hungarian news outlets were simultane- covering media matters for various Hungar- VALUE ously donated by their owners to a central ian publications, was quoted by the Interna- TABLOID SEGMENT holding company run by the people close tional Press Institute, stating the decentral- to Prime Minister Viktor Orbán. ized media model that they tried in the past few years “was leaking too much money”. In coordinated announcements, me- swiftness and cynicism of the operation In fact, one cannot compare this figure to dia owners declared the transfer of news “Some of the people running pro-gov- took most people by surprise. In just a few the two nationwide pro-government dai- websites, newspapers, television channels, ernment media companies put their own days in late November and early December lies – Magyar Nemzet and Magyar Hirlap, and radio stations to the Central European personal interests above the central po- 2018, the entire Hungarian media landscape since there exist no new audited circulation Press and Media Foundation (abbreviated litical will, and sometimes even publicly was turned on its head. data from these two papers. The latest fig- in Hungarian as KESMA), a group founded quarreled with one other. Despite win- ures regarding Magyar Hirlap is available for a few months earlier. The chairman of the ning the elections in April, Orbán was CONCLUSIONS 2014: the circulation in that year was 8,000, foundation is a former lawmaker from Mr. disappointed with them”6. While authoritarian regimes are character- compared to 15,000 in the year 2010. Mean- Orbán’s party. Its two other board members ized by, among other things, by strict con- while, the circulation of Magyar Nemzet was are the prime minister’s personal lawyer and Mr. Szalay’s assessment of the deal was that trol over the media, in democracies the 50,000 in 2010 and 13,000 in April 2018. the head of a research group that strongly after eight years of legal maneuvering and independence of media is basically guar- Then it was closed and later reopened3. supports Viktor Orbán. Most of the own- many small steps toward building a central- anteed. In democracies, too, there exists ers, pro-government business moguls, said ized propaganda machine, Hungary’s gov- a certain kind of political control over the 3 The closure and reopening of Magyar Nemzet was they would receive no compensation for the ernment has put all its cards on the table and public media, in the sense that it is the task the consequence of the change of the ownership. The longtime owner of the paper had been Lajos Simicska, properties. As a kind of enthronement of created a media behemoth of an unheard of of a multi-party mechanism to ensure the a close friend of Viktor Orbán and the key figure behind this settlement, the prime minister signed size. And, to pave the way, the government factual, impartial, and balanced reporting in the financial empire supporting Fidesz, built up mainly has exempted its creation from almost all public media. Governing political forces are after 2002. After the 2014 elections, the personal relationship between Mr. Orban and Mr. Simicska deterio- brand reopened the paper, with a clear pro-government legal scrutiny and competition rules. The always in a more or less privileged position rated dramatically. The reasons are not totally clear. The affiliation. to influence media, compared to opposition, media controlled by Mr. Simicska – not only Magyar 4 but in a well-established democracy it can- Nemzet but also HirTV, a television news channel – be- See: https://hvg.hu/kkv/20190509_Menekulnek_az_ 5 https://www.nytimes.com/2018/11/29/world/europe/ came strongly critical of the government. After Viktor olvasok_a_NERkozelive_valt_megyei_lapoktol; and hungary-orban-media.html not hurt the integrity and stable financing of Orban’s repeated election victory in 2018, Mr. Simicska https://hvg.hu/gazdasag/20190208_Hiaba_jonnek_al- public media. closed Magyar Nemzet, sold practically all of his as- lami_hirdetesek_egyre_tobb_olvaso_partol_el_a_ko- 6 https://ipi.media/one-hungarian-media-monster-to- sets, and retired. The new owner of the Magyar Nemzet rmany_kedvenc_ujsagjaitol rule-them-all/ 082 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE JANOS KARPATI 083

formation technology. Flourishing online media – and, lately, social media – make it even more difficult to exert political control IN JUST A FEW DAYS over the media landscape. Total control was always impossible. In Communism, a kind of IN LATE NOVEMBER “last-resort” manifestation of this phenom- AND EARLY enon was listening to Radio Free Europe. Currently, also in Hungary, there are many DECEMBER 2018, more “last resorts” available, as the Internet THE ENTIRE gives endless possibilities to enjoy free media. But it is a question of penetration as well: HUNGARIAN MEDIA many people still watch public television, listen to public radio, or read “the” local news- LANDSCAPE WAS paper – and these sources in Hungary are exclusively governmental propaganda units. TURNED ON ITS APO may have disappeared, but the APO of our times, KESMA, seems to be equally HEAD efficient in brainwashing average citizens.

During recent years, however, Viktor Orbán’s government, having built an “illiberal” and increasingly authoritarian system, started with the fundamental changes in the field of the media only a few months after Fidesz’s first big election victory. The adoption of the new Media Law presented the framework for the total governmental control over public broadcasting. It was followed by extending “government-friendly” ownership in the private media sector during the subsequent years. The whole process was finalized at the end of 2018 when hundreds of private media outlets were massed into one single foundation, which serves as the working framework of coordinating governmental propaganda activities outside the public sphere. JÁNOS The fall of Communism resulted, among KÁRPÁTI others, in the birth of a colorful private media world, which makes it more difficult to Journalist at the foreign policy desk of Hungarian inde- exert political control over the media than pendent daily Nepszava and contributor to programs in KLUBRADIO, an independent talk radio station in Buda- in the previous system. Times have also pest. Former correspondent of Hungarian News Agency brought about fundamental changes in in- MTI in Prague, Washington D.C., and Brussels 084 084 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ROMAN MÁCA 085

ith the dissolution of the Eastern Bloc in 1989, transformation has started. The countries such as NOT EVERYONE “Good Old Poland, Czechoslovakia, FROM WHungary, Romania, and Bulgaria changed their political vector from the East to the THE COUNTRIES West. Political and economic changes were done fast – to a greater or less suc- GOING THROUGH Times”: cessful degree. THE PROCESS The system was changed, but the people remained. The same inhabitants with their OF views on life and work, with their values, TRANSFORMATION Fake News hopes, and worries. The new arrangement also brought new responsibilities. Not everyone from the countries going through the WAS READY process of transformation was ready to take responsibility of their supposedly brighter TO TAKE future. The disappointment came, followed RESPONSIBILITY Machine in the by such statements as: “Before 1989, I had a flat from the state, I had a guaranteed job, OF THEIR my life was easier.” SUPPOSEDLY Selective memory and simply remember- Czech Republic ing the years of your youth followed by dis- BRIGHTER FUTURE appointment and challenges of a new and globalized world raised a level of nostalgia for the so-called “good old times”. This nostalgia can be understood in the current digitization. Earlier, the world online was Russia as a successor of the Soviet Union, accessible mostly for academics and pro- but is rather difficult to grasp in Central and fessionals. The price for the connection Eastern European countries – the former was also high, and the speed very limited. vassals of the USSR. Nowadays, the Internet is the cheapest way for entertainment, information, and orienta- This kind of nostalgia can be also seen in the tion. For a few Euros a month, one can find Czech Republic, which translates well into everything they need at the very moment a case study of relevant subjects, narratives, in time. Needless to say, the Internet’s role and mechanisms used for efforts for a revi- as a primary source of news is becoming sion of the political direction after 1989. increasingly significant every year.

INTERNET NOVICES AND EXPANSION Interestingly, having gained popularity OF PRO-KREMLIN NEWS WEBSITES among elderly people, the Internet and so- Some fifteen years ago, when the reori- cial network users have been getting older entation to the West was somewhat com- too. The number of Czech Internet users in ROMAN plete, we stepped into the Fourth Industrial the category 65+ jumped from 6% in 2008 to MÁCA Revolution, the era of Internet, and mass 38% in 2018. The number of users of social 086 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ROMAN MÁCA 087

networks in the category 65+ became four Such narratives have thus been exploited to posefully cut some trees, leaving them on times higher between 2013 and 20181. promote the idea of returning to the past, the railway tracks, as a result of which pas- connected to the authoritarian regime sub- senger trains were almost derailed. If this The year 2014 may be considered a mile- THE YEAR 2014 missive to the Kremlin. Unsurprisingly, this was not shocking enough, next to the crime stone for the Czech media space, when MAY BE phenomenon has been clearly visible in on- scene, he left leaflets claiming that this was dozens of so-called “pro-Russian news line resources (alternative media, blogs, and a terrorist attack organized by Muslims. websites” spread in the Czech Republic2. CONSIDERED social networks), which are often anony- Their agenda has also become replicated mous, but present themselves as news. During the investigation, the police found and amplified by various politicians (far- A MILESTONE his computer full content relating to disin- right, or far-left), often admiring a mindset CZECHS, KREMLIN-AFFILIATED formation. Apparently, Mr. Balda was a big of the Russian leaders. FOR THE CZECH supporter of Tomio Okamura – a semi- “The European Union is worse than the Czech-Japanese leader of the right-wing The elderly, as Internet novices, during the MEDIA SPACE, USSR, the EU wants to destroy us and re- populist and nationalist Freedom and Direct last several years entered a world full of place us with Islamists”5. Democracy party and his party. As a conse- hoaxes, disinformation, conspiracy theo- WHEN DOZENS quence of his vicious actions, Mr. Balda was ries, and hate speech. Such problematic Such a slogan (or, rather, a proclamation) sentenced to four years in prison and he has content is commonly produced and spread OF SO-CALLED may be quite commonly encountered in to go through psychiatric treatment. by domestic and foreign subjects to pro- “PRO-RUSSIAN NEWS the public debate online and in relevant mote political goals – or, simply, to generate so-called media outlets. During the last few People of the likes of Jaromir Balda live clicks and thus earn money. The older users WEBSITES” SPREAD years, the topic of the migration/refugee cri- chiefly in virtual reality, and as such, they thus entered the world of manipulation that sis has become number one. As a conse- are at times potentially dangerous. They play on their emotions, especially fear and IN THE CZECH quence, Czechs rejected the idea of quotas navigate their lives in an information bubble hate. They gained access to a kind of artifi- put forward by the European Union, which created by fake news resources and radi- cially created and manipulated virtual reality, REPUBLIC was aimed at remedying the challenges re- cal or extremist political subjects. They are where millions of “terrorists” are said to be lated to mass migration to Europe. bombarded with visions of the approaching on the way to their small villages or where Apocalypse of sorts. According to such dis- NATO wants to provoke a nuclear war with Migration policies and their reforms have torted messaging, only “patriotic” politicians Russia. often have ample free time, and as a result no impact on disinformation resources and (often collaborating or supported by Krem- of their engagement, they are more likely their readers living in an alternative real- lin) together with Russia can save humanity. As is visible in the Czech TV polls3, mostly to consider themselves useful, popular, and ity. They are still repeating that the EU, by The European Union is thus described as older people are one of the groups with admired4. cultivating the “new world order”, wants to pure evil, which is far worse than the USSR a lower level of media literacy. They are of- destroy national states and their popula- – a force that, in 1968, together with other ten lonely, socially excluded, weak, vulner- These Internet novices, who come most- tion and replace them with one super state Soviet vassal states, invaded Czechoslovakia. able, and the Internet gives them a chance ly from vulnerable groups, have entered with populations from Africa and the Middle An event that led to more than twenty years to escape their everyday reality. Many of a world that is very different from the real East – including Muslims, who will kill or of military occupation in the country. them also became very active in creating one. They feel scared and angry, calling for Islamize the local population. These types and sharing hoaxes and fake news. They strong leaders and demanding easy solu- of conspiracy theories, along with others, 1968 WAS A GOOD YEAR...WAIT, tions. They remember the “good old times” have recently been running rampant in the WHAT? 1 Czech Statistical Office (2019) Jednotlivci. Avail- behind the iron curtain, with lower respon- Czech Republic. able [online]: https://www.czso.cz/documents/1018 sibilities, an apparent feeling of safety, and “Invasion of the Warsaw Pact to Czecho- 0/90577061/06100419c.pdf/3f2e4e4e-cbdb-4e6c- 8904-c21160ddaea8?version=1.2 [in Czech] better living standards. Jaromir Balda, a 71-year-old man from the slovakia in August 1968 was ‘brotherly

2 https://www.bbc.com/news/world-europe-32070184 Central Bohemian region, faced similar help’ which saved us against NATO inva- fears. In June and July 2017, Mr. Balda pur- sion and provided peace and stability for 3 Czech TV (2018) Mediálně negramotná v Česku je 6 čtvrtina lidí, před svobodou upřednostňují bezpečí. 4 iRozhlas.cz (2019) Dokázal, že Rusko na nás útočí dez- more than 20 years” . Available [online]: https://ct24.ceskatelevize.cz/ informacemi. ‚Klíčovou roli hrají Zeman a Facebook,‘ domaci/2664323-medialne-negramotnych-v-cesku- říká analytik. Available [online]: https://www.irozhlas. 5 https://www.eportal.cz/Articles/8639-evropska-unie- je-ctvrtina-lidi-pred-svobodou-uprednostnuji-bezpeci cz/zpravy-domov/frantisek-vrabel-dezinformace-fake- je-horsi-nez-sovetsky-svaz-neverite-tady-to-mate- 6 https://acton.org/publications/transatlantic/2018/ [in Czech] news-rusko-facebook_1903130001_ogo [in Czech] cerne-na-bilem.aspx [in Czech] 08/21/prague-spring-50-years-later 088 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ROMAN MÁCA 089

Petr Michalu is a former communist prison From the Editors security challenges, presumably in- warden. He was sentenced for fraud and stigated by the government in Mos- escaped to Spain. From Spain his path led RUSSIAN INFLUENCE IN CEE cow. The CEPA reports are available SOMETIMES to Russia, where he (unsuccessfully) applied at: https://www.cepa.org/reports IT LOOKS FUNNY for political asylum. He is a strong believer The subject of relations between ex- in Communism, the Soviet Union, and loves communist countries and the influence • FNF East and South Eastern Europe WHEN GROUPS Vladimir Putin’s Russia. After his arrival to the Russian Federation is attempting to Bureau give firsthand information Russia he became a star of the Russian me- exercise abroad, has been touched upon and analysis of the current affairs in OF “ADULT MEN” dia, and was described as “an independent by several of our authors of this volume. Russia, former USSR and the West- journalist who was forced by the govern- ern Balkans, which one can follow ARE PLAYING WAR ment to leave his own country and now he Those interested in monitoring these at: https://esee.fnst.org/content/ is looking for asylum in Russia”7. subjects may find it interesting to fol- fnf-east-and-southeast-europe . GAMES AGAINST low reputable international initiatives Mr. Michalu is one of many strange person- and reports that professionally trace the • Kremlin Watch is “a strategic IMPERIALISTS ages who are presented as someone im- developments in this area: program of the European Values IN THE WOODS, portant by the Russians. Through Russian Think-Tank which aims to expose media, he speaks to the Russian audience as • Free Russia Foundation is a non- and confront instruments of Rus- BUT THE GROUPS a Czech on how Czechs are grateful for the profit, nonpartisan, U.S.-based sian influence and disinformation Russian 1968 intervention. He labels Czechs NGO, with the mission to inform operations focused against West- WITH CLOSER TIES as “slaves” of the West, but he is regularly U.S. policy makers on events in Rus- ern democracies”. Its idea is to lead asking them for money to support his life sia in real time and to support the interested scholars, political activist, TO THE RUSSIAN in Russia. formulation of an effective and sus- and policy makers into everything tainable Russia policy in the U.S. Its they need to know about Russia’s REGIME CELEBRATION AND REAWAKENING latest report is Misrule of Law: How interference. A relatively recent OF MEMBERS OF SECURITY Kremlin Uses Western Institutions guide on The Prague Manual: How AND ITS PROXIES AND DEFENSE INSTITUTIONS to Undermine the West, available to Tailor National Strategy Using With the changing of climate in the society at: https://www.4freerussia.org/ Lessons Learned from Counter- ARE CONSIDERED since 2014 (migration crisis, the war in Don- misrule-of-law/ ing Kremlin’s Hostile Subversive A THREAT BY CZECH bass) many members of the Czechoslovak Operations in Central and Eastern People’s Army, Border Guards, Secret Police, • The Center for European Policy Europe is availabe at: https://www. SECURITY SERVICES and other communist bodies were waking Analysis (CEPA) is a similar or- kremlinwatch.eu/userfiles/prague- up. Their mindset was, however, still orient- ganization, which recruits leading manual.pdf. All Kremlin Watch re- ed towards the past. Such proclamations as: experts on Central-East Europe, sources may be found at: https:// “We promised to be loyal to the Czechoslo- Russia, and its neighbors to review www.kremlinwatch.eu/our-reports/ vak Socialist Republic to defend the country and analyze current economic and “Maidan”. The invasion is thus justified as an and its allies against imperialists”, may thus adequate reaction at the time. have been observed.

“Those (Russians), who already saved During recent years, since and because of Recently, we could bear witness to various at- While various apocalyptic scenarios are us twice! Our country, our republic, our Russian aggression against Ukraine – in- tempts for rehabilitation of the 1968 invasion being introduced into the public debate state, our sovereignty, our nations. I ap- cluding a massive disinformation campaign of Czechoslovakia and the occupation that (caused by migrants, Islamization, or by preciate it and thank you. Russians are against Western countries, – these people followed. The narratives recalling “brotherly a provocation of war against Russia), the nar- our best friends, brothers, allies”, wrote have been forming paramilitary groups called help” and “saving from NATO invasion” are rative about “peace and stability” under So- Czech citizen Petr Michalu on his Face- also regularly featured in Russian pro-Krem- viet protection is supported by often quoted book profile and added a photo featuring 7 REN TV (2016) ) Чешский блогер: США превратили Европу lin media. Their sole purpose is to advocate opinions that it was the Soviet intervention tanks in Prague with a description: “Thank в американскую колонию. Available [online]: http://ren.tv/ novosti/2016-04-27/cheshskiy-bloger-ssha-prevratili- st for Russian aggression against Ukraine. that saved the citizens from a Czechoslovak you for the August 21 , 1968.” evropu-v-amerikanskuyu-koloniyu [in Russian] 090 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ROMAN MÁCA 091

tional Militia, and is led by Nela Liskova, who communist regimes. As such, they were is very popular in pro-Kremlin media too. responsible for killing hundreds of people. Ms. Liskova also established a fake consulate DISINFORMATION of the so-called Donetsk Peoples Republic These border guards’ members are, nowa- THUS, OR MANIPULATIVE (DPR) and named herself as honorary consul days, organizing various events, which could THE ECONOMIC of the DPR to the Czech Republic. be difficult to imagine after the collapse of NARRATIVES the Iron Curtain. They typically wear old uni- DIFFERENCE Sometimes it looks funny when groups of forms or simply t-shirts with the likeness of ARE NOT ONLY “adult men” are playing war games against Vladimir Putin and Russia. BETWEEN THE TWO imperialists in the woods, but the groups CONNECTED with closer ties to the Russian regime and The activities of the Club of Czech Border- COUNTRIES its proxies are considered a threat by Czech lands are also monitored by Czech Intel- WITH THE ISSUES security services. Their members are also ligence, and by the Ministry of the Interior. DECREASED travelling to Eastern Ukraine, where they join However, Czech President Zeman sent to OF POLITICS Russian-backed separatist forces. the club a thank you letter for their work and AROUND THREE for the “historical truth” they help promote9. TIMES SINCE 1989 AND SECURITY, “To the Czech Republic I will return only BUT ALSO WITH on Russian tank or as a partisan”8, said CENSORSHIP WORSE UNTIL TODAY Alojz Polak formerly active as a Czecho- THAN BEFORE 1989 THE NOSTALGIA slovak Soldier in Reserve”, who joined The infamous individuals and groups men- the “army” of so-called Donetsk Peoples tioned above are also very active online, EXHIBITED BY THOSE Republic. where they are trying to promote their agenda. As it was already emphasized, WHO REMEMBER Mr. Polak also believes in various conspira- they are often of retirement age and have Currently, the word ‘censorship’ has already cy theories - including chemtrails and the enough time to become engaged. They also devaluated. In the heads of persuaded activ- THE “SUCCESSES” new world order. Before he left the country, adopt, create, and share fake news and hate ists it means that if a private company erases he co-organized rallies supporting Czech speech. As their agenda and content is often a post that includes hate speech, then cen- OF THE SOCIALIST President Milos Zeman, and he claimed he also full of hate speech and threatening, so- sorship is worse than before 1989. They are ECONOMY is a voter of Tomio Okamura’s party. cial networks are deleting their profiles and sending their content to mainstream media pages. Unsurprisingly, they consider these and if these media are not broadcasting it, Others who are trying to be perceived as acts as “censorship, which is worse than activists exploring “the truth” on conspiracy “patriots defending the country” are the before 1989”10. websites think that this information is be- members of former communist border ing censored. They see it as the current re- “self-defense” forces. Curiously enough, one guards, forming the Club of Czech Border- Nevertheless, before 1989, the Czechoslo- gime wanting to hide issues like chemtrails, of them was the “Czechoslovak Soldiers in lands. Together with their supporters they vak media space was fully controlled by the HAARP, or prophecies about the “almighty” Reserve against War Planned by the NATO claim to defend the borders against out- communist regime. Foreign radio and TV Vladimir Putin from the public. Command”. Later, the group changed the side enemies. Now, apparently, they are stations were technically interfered (trans- name to “Czechoslovak Soldiers in Reserve needed again to protect the borders against mitters on the border area) and the authors WE WERE SELF-SUFFICIENT for Peace”. The organization is chaired by migrants and refugees. But, in fact, in the of articles, books, and other publications AND WE PRODUCED EVERYTHING a former lieutenant colonel of the Czecho- past, they “defended” the borders against that were banned by communists, were Disinformation or manipulative narratives slovak People’s Army, Ivan Kratochvil. Mr. their own citizens and citizens of Eastern prosecuted (including, for instance, Vaclav are not only connected with the issues of Kratochvil is also often interviewed by Rus- Bloc countries who wanted to escape from Havel). politics and security, but also with the nos- sian news outlet Sputnik, and he is travelling talgia exhibited by those who remember the 9 https://zpravy.aktualne.cz/domaci/jsou-v-hledacku- to Russia or to Russian-occupied territories 8 “successes” of the socialist economy. The https://www.securitymagazin.cz/defence/do-ceska- bis-varuje-pred-nimi-vnitro-zeman-ale-dekuje/r~440f (Crimea and Donbass). se-vratim-jedine-na-ruskem-tanku-nebo-jako-partyz- 6f044cea11e7886d002590604f2e/ [in Czech] economic approach, let us state it clearly, an-rika-v-rozhovoru-pro-sm-zoldner-v-armade-do- ruined the earlier prospering country. By the necke-narodni-republiky-aloisem-polak-1404057267. 10 http://www.bezpolitickekorektnosti.cz/?p=92735 [in Another paramilitary group is called the Na- html [in Czech] Czech] end of the communist regime, the nominal 092 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ROMAN MÁCA 093

Figure 1: Life expectancy at birth in Austria and the Czech Republic [total; in years] queues – even though, oftentimes, they did countries after the dissolution of the Eastern not even know what they were waiting for. Bloc, and mostly have become a target of “I do not know, I will buy what they have”, domestic and foreign authoritarian and ex- was an answer of one lady when she was tremist forces who employ fake news and approached by a Czechoslovak TV reporter manipulation. Even though these forces in the 1980s in one such queues. Some- consider themselves patriotic, they are often times, it seems that at the moment the topic affiliated with the Kremlin. What make these of empty shelves has been forgotten and ties evident are the calls for a revision of that people remembering “good old times” pro-Western course and a shift backwards have created their own reality instead. to “motherland Russia“.

Another narrative used in public debate As the saying goes:: “Who sleeps during de- is that before 1989, Czechoslovakia was mocracy, wakes up in a dictatorship”. It is a self-sufficient, prosperous country that precisely not falling asleep that still remains produced everything its citizens needed, one the biggest tasks for sensitive democra- which is clearly not true. Let us illustrate this cies in Central and Eastern Europe. imaginary self-sufficiency with two rather telling examples from the 1980s mentioned in Czechoslovak TV.

Source: World Bank (2019) Life expectancy at birth, total (years)/ Available [online]: https://data.worldbank.org/ indicator/SP.DYN.LE00.IN?locations=AT-CZ “– Why is there not enough ketchup in our market?

GDP per capita was about six times lower mindset, or they simply refuse to take We produced enough of ketchup, but than that of Austria. responsibility for their own future. we have no tops for the bottles. Supplier promised to produce more tops next In 2018, according to the World Bank data, The new system brought new challenges, year”. the difference between Austria and the which most Czechs did not want to accept. Czech Republic has decreased to a ratio As a result, some of them either failed to “– What can you offer to young tennis of 2.25:111. Thus, the economic difference adapt, or became the victims of the situa- players? (nominal GDP per capita) between the two tion – for instance, if a factory where they countries decreased around three times worked for their whole life closed due to – We can offer tennis rackets, but we have since 1989 until today. transformation. Disillusion and disappoint- no balls”12. ment resurfaced, stemming from the false Due to better social and economic stand- memories of the past and the imagined CONCLUSIONS ards, life expectancy also increased faster stability of communist times – which were With the fall of Communism, Central and after the stagnation before 1989 [See: Fig- clearly a very effective illusion created by European countries regained democracy ure 1]. Soviet rule. and many freedoms, which were banned before. The process of transformation and However, as it was said at the beginning, The frustration also helped (and still does) integration to the European Union and NATO for many people a convergence with the create an imaginary world where everything was also followed by economic growth and Western economies either has not been is “free of charge” and accessible, but the improvement of living standards. ROMAN MÁCA fast enough, they still have a communist reality was completely different. Nowadays, we may quite often encounter “arguments” However, there are still people unsatis- Project Manager at the Institute for Politics and Society, that in the “good old days” people used to be fied with the path of development of their a political think tank based in the Czech Republic. He is nicer and maintained closer relationships, as responsible for realization of projects for the Institute 11 https://data.worldbank.org/indicator/ny.gdp.pcap. for Politics and Society. At the same time he works as cd?most_recent_value_desc=true they spent a big part of their life standing in 12 https://www.youtube.com/watch?v=OyvJ3CaY3Yc an analyst for security and media and ICT issues 094 094 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MIŁOSZ HODUN 095

his year it was Tuesday. A terri- ble heat wave had been affect- ing Warsaw for over a week. SOME The End Temperatures were above 30 degrees and everybody was COMMENTATORS Tlooking for some shade. Those who could, spent their afternoons in parks, and many SAY THAT THE PIS’S people voluntarily stayed overtime in offices to enjoy the AC. At the same time, we REGIME HAS ENDED of an Era: started to gather on Constitution Square – a windless and shade-less spot downtown AN ERA OF POLISH Warsaw. Just like last year, and the year before. We couldn’t imagine not being there. TRANSFORMATION Rankings Will It was the 4th of June. PROBLEMATIC ANNIVERSARY June 4th is the anniversary of the first Pol- described as nationalistic, illiberal, anti- ish free elections in 1989. Or rather, partly democratic, and anti-European – the Law free, to be precise – only 35% of the seats and Justice (PiS) party. Tell You the Truth in the Sejm would be open to all comers. A newly created Senate was elected freely. It Some commentators say that the PiS’s re- was turned into a ballot on communist rule. gime has ended an era of Polish transfor- As a result, the democratic opposition won mation. A conservative commentator Paweł all of the available seats in the Sejm and 99 Musiałek wrote that PiS’s success is based out of the 100 Senate seats. on the negation of the “transformation about Poland thinking”2. One of the reasons why PiS won For us, for my friends from Projekt: Polska, the 2015 elections was its narrative about June 4th has always been a happy holiday. the transformation. It was so different than This is why for many years we have organ- the consensus of all other political forces – ized the Toast for Freedom, held on the from post-communists, to conservatives, Constitution Square in the capital of Poland, to liberals – who did not contend the Pol- where the democrats had their headquar- ish success story that had started back in ters before the 1989 elections. Every year, 19893. PiS not only wanted to symbolically hundreds of people join us – average Var- build a new Fourth Republic, once and for sovians, some of who still remember the all cutting the connections of the interim struggle against the communist regime, to- period of Polish history from its communist gether with those who later became minis- roots, but also its entire platform was built ters or presidents of Poland1. on criticism of the transformation.

However, for the last four years, these meet- ings have been very different; less happy, 2 https://klubjagiellonski.pl/2019/05/28/koniec-polsk- more reflexive. During this time, Poland iej-transformacji/ [in Polish] has been governed by a party that can be 3 There were some radical and/or anti-establishment parties that criticized Polish transformation, including Samoobrona (Self-Defence) or Razem, (Together) mostly for its economic consequences, but PiS was the MIŁOSZ 1 http://warszawa.wyborcza.pl/warszawa/7,54420, first major party who questioned the transformation 24864213,toast-za-wolnosc-z-bronislawem-ko- in general, making this approach the basis of its pro- HODUN morowskim-tradycyjne-spotkanie.html [in Polish] gramme. 096 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MIŁOSZ HODUN 097

stance. Just like Prime Minister Mateusz Figure 1: Self-estimation of health in Poland Figure 2: Life expectancy in Poland (1989 Morawiecki who talked about cities that won (1990: 9% versus 2017: 19%) versus 2017) and cities that lost, “there are cities that have PIS HAS PRESENTED been on the peripheries of transformation. ITSELF AS A SAVIOR There are cities that used to develop very well but in the transition their chances were THAT IS GOING stolen, they lost their social and economic meaning”5, – he claimed. And he emotion- TO PROTECT ally described the losers’ situation as “apathy, passivity, and inactivity”. In this view, the new THE PEOPLE FROM republic can be established only as an outcome of a conflict between these cities, and TRANSFORMATION. the underdeveloped cities must prevail. PiS Source: PGSS, ESS has presented itself as a savior that is going Source: GUS JUST LIKE PUTIN to protect the people from transformation. IN RUSSIA Just like Putin in Russia. and only after that may we form a judgment The later ones could draw positive conclu- whether it was a swuccess or not. sions looking only at the Human Develop- The narrative about the Polish transforma- ment Report by the United Nations, which tion has clearly changed with the Law and STARTING POINT: SUCCESSFUL measures long-term progress in three basic Justice government in power. Even the BEGINNINGS OF TRANSFORMATION dimensions of human development: a long opinion leaders, who have their roots in the IN POLAND and healthy life, access to knowledge and Jarosław Kaczyński, the party leader, has anti-communist opposition, have modified Let us forget economic data for a moment. a decent standard of living7. talked a lot about conflict of interests be- the way they talk about the phenomenon of If we wanted to identify the key economic tween beneficiaries of the transformation Poland’s development since 1989, shifting measurements, we might mention that Pol- Poland’s HDI value for 2017 is 0.865— which and those who were not able to succeed. towards a more biased and less “to be proud ish GDP grew 826.96% between 1989 and put the country in the very high human de- According to Kaczyński, this consensus of” approach. Just like Krzysztof Mazur put 2018, translating into the highest growth in velopment category – positioning it at 33 about the transformation present in politi- it, “The transformation is like politics. It’s not Europe. Additionally, Polish exports grew out of 189 countries and territories. Between cal discourse is a fight for the interests of black or white. It’s gray and prosaic”6. 4.4 times, family households’ income is now 1990 and 2017, Poland’s HDI value increased those who could – sometimes fairly, but twice as big as it was thirty years ago, and from 0.712 to 0.865, thus amounting to sometimes not – benefit from the trans- But is it really? Do we indeed face such so on, and so forth. Instead, however, let a significant increase of 21.5%8. formation and want to keep their position, a huge dilemma when we want to keep on us focus on the socio-cultural factors that and those whose situation has been getting calling Poland’s transformation a success are of vital importance when discussing the constantly worse. “Vast majority of Poles is story? How about moving away for a mo- Polish transformation. paying for conserving the system”4, the PiS’s ment from political fights, from everyday 7 A long and healthy life is measured by life expectancy. Knowledge level is measured by mean years of educa- leader stressed. In Mr. Kaczyński’s opinion, conflict between parties and their spins, and When taking a look at the data related to tion among the adult population, which is the average this fight is about Poland’s development and look at the transition from a more objective self-estimation of health in Poland, average number of years of education received in a life-time by people aged 25 years and older; and access to learn- whether will it be for everybody or only for angle? This is precisely why we should ex- life expectancy, death rate, and number of ing and knowledge by expected years of schooling for select groups. amine available data to see how the situation people going on holidays [See: Figures 1-4], children of school-entry age, which is the total number in Poland has changed in the last thirty year, comparing the years directly after the trans- of years of schooling a child of school-entry age can expect to receive if prevailing patterns of age-specific What Mr. Kaczyński serves his followers in formation with the latest data, the presented enrollment rates stay the same throughout the child’s generalized terms, providing historical un- evidence may be that Poland became a dif- life. Standard of living is measured by Gross National 5 https://www.portalsamorzadowy.pl/polityka-i- Income (GNI) per capita, expressed in constant 2011 derpinnings of the new regime, his militant spoleczenstwo/mateusz-morawiecki-miasta-ktore- ferent country. In less than three decades international dollars converted using purchasing power acolytes translate into a more pragmatic znalazly-sie-na-uboczu-transformacji-wymagaja-in- Poles have relocated from a communist parity (PPP) conversion rates. westycji,114814.html [in Polish] state, to the center of Europe. It is visible 8 Between 1990 and 2017, Poland’s life expectancy at 6 Krzysztof Mazur is a conservative commentator as- for Poles themselves and for independent birth increased by seven years, mean years of schooling 4 https://wiadomosci.onet.pl/kraj/kaczynski-w- sociated with Klub Jagielloński¸ a PiS-connected think observers. increased by 2.6 years and expected years of school- polsce-panuje-spor-o-zyski-z-transformacji-o- tank. See: https://krytykapolityczna.pl/kultura/historia/ ing increased by 4.2 years. Poland’s GNI per capita in- wartosci/5qwnk [in Polish] spiecie-okragly-stol-klub-jagielonski/ [in Polish] creased by app. 163.2% between 1990 and 2017. 098 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MIŁOSZ HODUN 099

Figure 3: Deaths per 100,000 people caused Figure 4: Percentage of Polish people going Figure 5: Poland’s score in three main cathegories of the Freedom in the World Index by air pollution [1990: 55 versus 2017: 30] on holidays [1990 versus 2017] (1999-2019)

Source: IHME Source: GUS

LET’S INDEX IT! Depending on the ratings, nations are now- The modern world loves numbers and in- adays classified as “Free”, “Partly Free”, or dexes! Rankings are great click baits and “Not Free”. There is no doubt that Poland Source: Freedom in the World data (1999-2019) media outlets produce more of them every entered the 1990s belonging to the last year, but some of the international rankings category, just like Russia or Belarus today. a deep divide between liberal, pro-Eu- spotlight in this regard – as the only Euro- are definitely more than that. There are in- The heritage of the People’s Republic of Po- ropean parties and those purporting to pean state, next to China, Armenia, or Iraq11. dexes that are outcomes of months-long land was everything but liberties and rights. defend national interests and “tradition- studies and analysis that gather data that is Thus seeing Poland’s debut in the Freedom al” Polish Catholic values. Since taking Similar findings come from the analysis of difficult and costly to gather and are done of the World index in 1999, scoring already power in late 2015, the populist, socially the Global Peace Index (GPI)12, which meas- by top researchers and experts. Such rank- in the highest class of free nations, proves conservative Law and Justice (PiS) party ures the relative position of nations’ peace- ings are a great comparative tool that helps how much had been done in the first dec- has enacted numerous measures that fulness. Poland has debuted in the 33rd place us to understand the world today and place ade after the peaceful revolution. Currently, increase political influence over state in the first ranking and has always been our country in the network of global de- Poland belongs to the same group as all EU institutions—notably the judiciary—and among the very pacific states of the world. It pendencies. member states (except Hungary), Canada, threaten Polish democracy”10. was improving for seven years and reached and Australia. its best position ever in 2015. With that, Po- FREEDOM AND PEACE In other words, under the PiS administra- land joined the world’s top 20 most peace- Freedom seems to be the broadest category FREEDOM IN THE WORLD tion, Poland became less of a free country; ful countries, ahead of the Netherlands that could be measured (it’s so abstract and After years of consequent improvement of deep political divisions may only get deeper, or Spain. Unfortunately, the country left capacious), and Freedom House9 has pre- Poland’s position in the Freedom House’s changing Poland into a semi-authoritarian pared a multi-faceted and extensive index index, clearly visible between the years 2005 state.

successfully for many years. The survey was and 2016, Poland has started to lose its po- 11 Ibid. created in the 1970s, but data that can be sition [See: Figure 5]. In the 2018 edition, In recent years, the key category responsible 12 Global Peace Index is a report produced by the Insti- used for a comparative picture may only be the overview of the situation in Poland was for Poland’s drop are civil liberties, especially tute for Economics and Peace (IEP) and developed in easily gathered from 1999 onward. summarized as follows: the “Rule of Law” sub-category. The authors consultation with an international panel of peace ex- expressed their concerns about the inde- perts. The Index was first launched in May 2007. In 2017, twenty three indicators were used to establish each “Poland’s democratic institutions took pendence of courts and adherence to the country’s peacefulness score. The indicators were origi- 9 Freedom in the World is a yearly survey and a report root at the start of its transition from EU’s values. In the 2019 edition, Poland was nally selected with the assistance of an expert panel in launched in 1973 by a U.S.-based non-governmental 2007 and are reviewed by the expert panel on an annual organization, Freedom House, which measures the de- communist rule in 1989. Rapid economic singled out as one of the countries in the basis. The scores for each indicator are normalized on gree of civil liberties and political rights in every country. growth and other societal changes have a scale of 1–5, whereby qualitative indicators are band- The Index produces annual scores representing the lev- benefited some segments of the popu- ed into five groupings and quantitative ones are scored els of political rights and civil liberties in each state and 10 https://freedomhouse.org/report/freedom- from 1–5, to the third decimal point. Iceland has been territory, on a scale from 1 (most free) to 7 (least free). lation more than others, contributing to world/2018/poland the winner since 2008. 100 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MIŁOSZ HODUN 101

the top 20 really quickly, and in 2017, it came and party-dependency of state-owned en- back to its starting position (the lowest ever). terprises (SOEs) pushed Poland further away from the most exemplary democracies. Looking at the full stats of the 2019 edi- THE CHANGES IN POLAND, tion of the GPI index, it may be observed IN THE JUDICIARY FUNDAMENTAL According to the Berthelsmann Founda- that Poland is doing poorly in the “Violent tion’s data, one key variable that decides the Demonstrations” and “Incarceration” cat- SYSTEM, MEDIA, DEMOCRATIC democratic success of a country is its capa- egories. The current government’s silent bility of reaching a consensus on the most support towards the far-right groups and CIVIL SERVICE, VALUES ARE NOT important issues for the society. In Poland, hooligans responsible for organizing hateful we can now observe something diametri- and sometimes violent marches, together AND PARTY- SUFFICIENTLY cally different. It is an extreme polarization with the latest reform of the penal code13 between PiS and all other parties17. The lack will likely further negatively impact Poland’s DEPENDENCY ANCHORED of agreement between two fighting political position in the ranking next year. blocks stops virtually all relevant reforms and OF STATE-OWNED IN THE POLITICAL spins the spiral of populism. Polish govern- DEMOCRACY ENTERPRISES (SOES) DNA OF A LARGE ment is deliberately stoking social tensions Democracy is another broad category that rather than seeking consensus in an effort to is not easy to measure, but which must be PUSHED POLAND PART OF THE SOCIETY negotiate forward-thinking solutions. taken into account when evaluating the Polish transition. There are several valuable FURTHER AWAY QUALITY OF DEMOCRACY and recognized indexes that can be used in (SUSTAINABLE GOVERNANCE this regard. Once again, however, none of FROM THE MOST country was already a member of the Eu- INDICATORS) them provide records from the beginning of ropean Union, respecting the Copenhagen What is more, the support for national- the 1990ss, since they were all launched in EXEMPLARY criteria, and its democratic reforms became ist populists from PiS who are responsible the 21st century. Regardless, they still pro- a benchmark exported with support of the for the recent regress in Poland is still very vide a useful tool to comment on the lat- DEMOCRACIES then government to Ukraine, Georgia, other high18. This phenomenon illustrates the fact est developments and trends, after having states of the Eastern Partnership, and else- that in Poland, fundamental democratic val- where in the world15. ues are not sufficiently anchored in the analyzed the path the country had gone through since 1989. countries since 200914. Poland’s debut in it In the ranking, Poland has been climbing, political DNA of a large part of the society. proved a success story of its transition. The being placed just after such leading states as This, in turn, could explain why the process The point of departure is not controversial Scandinavia, Switzerland, and Germany. But of a deeper societal transformation has not at all. Poland entered the 1990s as a single- in 2018, Poland moved 29 steps down on yet been completed. 14 The Sustainable Governance Indicators (SGI), first 16 party authoritarian regime with democratic published in spring 2009 and updated in 2011, analyze the ladder, from number 8 to 37 . Currently, centralism as the state’s official practice, and compare the need for reform in OECD member there are only four other countries behind Similar conclusions may be drawn from grotesque elections, and only a façade of countries, as well as each country’s ability to respond Poland: Romania, Mexico, Hungary, and the Democracy Index19, published by the to current social and political challenges. Status Index democratic institutions emulated from the scores are composite measures, based on numerous Turkey. This radical drop is explained chiefly quantitative and qualitative assessments. The “Democ- West. by the fact that Poland moved from being 17 racy” category counts for half of the index score, while Law and Justice calls opposition parties “total opposi- the four policy-specific categories collectively provide a regional champion in 2015, dramatically tion”. Only the anti-establishment Kukiz’15 party, which The Bertelsmann Foundation has been the remainder. The first dimension of the index maps towards authoritarian regime. The changes often supports PiS is not labeled this way. measuring the state of democracy in OECD the quality of democracy within a country and exam- in the judiciary system, media, civil service, 18 PiS won the 2019 EP elections with spectacular ines four criteria: “Electoral Process”, “Access to Infor- 45.38% of voter support. mation”, “Civil Rights”, and “Rule of Law”. The second 19 dimension corresponds to the OECD states’ competen- 15 It is visible with initiatives like Warsaw Dialogue for The Democracy Index is compiled by the Economist 13 In May 2019, the Polish parliament (Sejm) approved cies in policy fields that are highly relevant for future vi- Democracy, Lech Walesa Solidarity Prize, and European Intelligence Unit (EIU), a UK-based company. Its inten- a package of criminal justice reforms condemned as too ability. The index examines fields such as “Economy and Solidarity Center. tion is to measure the state of democracy in 167 coun- tough by legal experts, who also accused PiS of rush- Employment”, ”Social Affairs”, “Security”, and “Resourc- tries. The index is based on sixty indicators grouped in ing through important legislative changes in violation of es”, which include fifteen different policy areas. The SGI 16 https://www.bertelsmann-stiftung.de/fileadmin/files/ five different categories, measuring pluralism, civil liber- democratic principles, in particular the introduction of are updated every two or three years. See: https://www. BSt/Publikationen/GrauePublikationen/SGI_2018_Eng- ties, and political culture. In addition to a numeric score life sentences without parole. sgi-network.org/2018/ lisch_komprimiert.pdf and a ranking, the index categorizes each country in 102 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MIŁOSZ HODUN 103

Figure 6: Women in Sejm (1991 – 12% versus The BTI reports have praised the Polish Figure 7: Number of NGOs in Poland 2017 – 27%) transformation embodied in a series of political reforms after 1989, and in the country’s THE LARGER ambition to join international organizations THE SIZE – aspirations which led to Poland’s EU accession in 2004. “Poland experienced rela- OF THE ENTERPRISE, tively calm years from the time of the 2005 elections. However, domestic politics have THE MORE TIME become more confrontational again,” the 2018 executive summary acknowledges24. MANAGERS SPEND In the latest report, however, Poland is criti- ON INTERACTING cized for the judicial reforms, the recurrent Source: PKW assemblies law, and politicization of national WITH GOVERNMENT media25. Economist Intelligence Unit (EIU). For the OFFICIALS The conclusions, as regards Poland’s ju- past twelve years – since the data has been dicial system, are also confirmed by the available, – Poland has been in the group World Justice Project Rule of Law Index26. of “flawed democracies”20. Its first score in ON THE INTER- The Index presents a portrait of the rule of 2006 was 7.3 points out of 10. In 2014, Po- PRETATION law by providing scores and rankings based land reached its peak and started a fast ride on eight factors: Constraints on Govern- down the index. In 2018, it scored only 6.67 AND APPLICATION ment Powers, Absence of Corruption, Open points and became democracy number 54 Government, Fundamental Rights, Order in the world, sharing this position with Guy- OF LAWS and Security, Regulatory Enforcement, Civil ana, just below the Philippines, Malaysia, and Justice, and Criminal Justice. Poland’s most Colombia. It is fourteen positions lower than it was in 2014. 24 https://www.bti-project.org/en/reports/country-reports/detail/itc/pol/ity/2018/itr/ecse/ One more interesting index provided towards democracy and market liberalism of 25 Poland, which the BTI 2014 still certified as demon- by the Bertelsmann Foundation is the the analyzed countries, and the Governance strating “very good” governance, offers a particularly Transformation Index (BTI)21, which analyz- striking example of the polarization of political competition. This has been precipitated not only by protest es and evaluates the quality of democracy Index – which ranks the countries according parties, but also by established parties that have adopted and political management in 129 develop- to their leadership’s political management23. populist mobilization strategies and modes of argumen- ing and transition countries22. Two applied tation. For example, the conflict between the Polish Source: ngo.pl government and the opposition escalated in Decem- measurements relevant for this inquiry are For sixteen years, Poland has been among ber 2016, when the opposition stormed the speaker’s the Status Index, which examines progress the world leaders in the BTI’s main rank- podium in parliament after the parliamentary president recent results27 indicate a decline in adher- ejected an opposition legislator from the hall for pro- ing, reaching its highest position in 2005, testing the governing majority’s exclusion of journalists ence to the rule of law. The largest decline one of four regime types: full democracies, flawed de- then maintaining its position since 2006 for from parliamentary sessions. Legislators from the ruling in the factor of “Constraints on Government mocracies, hybrid regimes, and authoritarian regimes. a decade, with a visible fall in 2016. This fall party then left the chamber and passed the state budget Powers” has also been noted. In the 2019 See: https://www.eiu.com/topic/democracy-index without participation from the opposition lawmakers, is even more evident in correlation with the edition of the Index, Poland took the lead 20 Ibid. who protested by blockading parliament for several Governance Index, in which the country weeks. Ibid. in the shameful report titled A Sign of Au- 21 The Bertelsmann Stiftung’s Transformation Index (BTI) 26 analyzes and evaluates whether and how developing observed a step down between the years The World Justice Project’s (WJP) Rule of Law Index is thoritarianism. countries and countries in transition are steering so- 2015 and 2018. the world’s leading source for original data on the rule cial change toward democracy and a market economy. of law. The 2019 edition covers 126 countries and juris- Country experts assess the extent to which a total of dictions, relying on more than 120,000 household sur- seventeen criteria have been met for each of the 129 veys and 3,800 expert surveys to measure how the rule 27 countries. See: https://www.bti-project.org/en/home/ of law is experienced in practical, everyday situations by The data from 2008-2011 is also available but at that 23 https://www.bti-project.org/en/data/rankings/gov- the general public worldwide. See: https://worldjustice- time less than seventy countries were analyzed, com- 22 Ibid. ernance-index/ project.org/ pared to today’s 126. 104 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MIŁOSZ HODUN 105

assessments and opinion surveys”29. Cur- winner, called for a “moral revolution”31, rently, the Index evaluates 180 countries claiming that the Third Polish Republic (the on a scale between 100 (which means very result of the 1989 transformation) should SINCE clean) to 0 (hence highly corrupt). At this be completely replaced with a Fourth Pol- THE SITUATION THE BEGINNING moment, Poland holds the 36th position on ish Republic, a “strong and moral state”32. the list. Having this in mind, it may be surprising that FOR LGBT+ PEOPLE OF THE TRANSITION under the current PiS government, Poland It is difficult to compare Poland’s 2019 re- is losing in the CPI index. This is mostly due IN POLAND HAS IN POLAND, sults with its first score in 1996, when it to the cronyism of PiS protégées, who are NEVER BEEN EASY debuted on the 24th location. Back then given jobs in SOEs, regardless of their com- CORRUPTION WAS the Index covered only about fifty states, petences33. compared to one hundred and eighty today. SEEN AS A PROBLEM Modern Poland inherited systematic Soviet- MINORITY RIGHTS style corruption. Since the beginning of the While the state of democracy is usually re- FOR PEOPLE transition in Poland, corruption was seen flected in conditions of the protection of made at a national level country-by-country AND BUSINESSES as a problem for people and businesses human rights, minority rights tend to be in twelve months. Noteworthy, Poland has operating in Poland, and in the 1990s not the litmus paper of human rights in general. always been in the bottom of the ranking. much was possible to do with the public ad- Therefore, it would be helpful to look at the ministration without “a gift in an envelope”. position of Poland in LGBT+ rights rankings. The country started in 36th place in 2010, Political corruption posed a challenge to fair reached its best score in 2014, only to drop On a slightly more optimistic note, how- business as politicians used their position to The situation for LGBT+ people in Poland again to the 39th position (out of 49 in total) ever, it is worth emphasizing that the NGO gain benefits. The practices of nepotism and has never been easy. Similarly to the whole in 2018 and 201936. In the EU, only Latvia sector has changed radically in Poland in cronyism were widespread. Much has been region of Eastern Europe, the fight for is performing worse. The most dramatic the last 30 years – for the better. Currently, done to improve the situation. The Criminal LGBT+ people’s rights did not start with the downslide happened in 2016, when Poland all kinds of foundations, associations, and Code in Poland now criminalizes bribery, Stonewall movement in 1969, but only after dropped from 28% to 18%37. This sudden groups constitute one of the pillars of Polish extortion, cronyism, patronage, abuse of 1989. Nevertheless, legally, not much has decrease was due to the changes in the democracy and civil activism, supporting public functions, influence peddling, gifts, been done in the last thirty years. Gender Accordance Act and the fact that the state and controlling officials. The ac- and money laundering. As a consequence, homophobic and transphobic statements tive part these institutions have had in Polish the Central Anti-Corruption Bureau was cre- Some progress could be observed in the were once again made by public figures. society [See: Figure 7] translates directly into ated to address these issues. areas of LGBT+ anti-discrimination in At the same time, judges working on court support for them, with over 50% of Poles employment and housing. Nothing, howev- cases involving violent attacks continued to trusting NGOs28. The pick in the Corruption Perception Index er, has been achieved in terms of civil part- was most probably connected to a corrup- nerships, hate speech crimes, or banning On the other hand, the democracy indexes tion scandal known as the Rywin Gate30, conversion therapies34. The Annual Review could be supplemented by the Corruption which toppled in 2004 with the Democratic by ILGA-Europe35 examines the advances situation and assesses what life is like for LGBTI people in every European country, covering discrimination, family Perception Index (CPI), which offers a re- Left Alliance (SLD) government – the party recognition, hate speech/crimes, gender recognition, freedom of assembly, association and express, and asy- flection on the stage of the democracy (or has never rebuilt its position. At the same 31 https://www.old.pis.org.pl/download. lum laws. See: https://www.rainbow-europe.org/ its deficits), as perceived by citizens. time, the scandal gave political fuel to PiS, php?g=mmedia&f=program_2005_skrot.pdf [in Polish] 36 https://www.ilga-europe.org/sites/default/files/At- which presented itself as a brand new, anti- 32 Ibid. tachments/rainbowindex2019online_0_0.pdf

CPI has been published annually by Trans- corruption, and anti-establishment party. 33 http://4liberty.eu/wp-content/uploads/2017/10/06_ 37 parency International since 1995 and ranks PiS presidential candidate for the 2005 The score is organized in a way that each country REPOLONIZATION-AND-STATE-PATRONAGE-CUR- can get per cents in six categories: Equality and non- countries “by their perceived levels of public election, Lech Kaczyński, and an eventual RENT-CHALLENGES_ADAM-SZ%C5%81APKA.pdf discrimination (totally responsible for up to 25% of the sector corruption, as determined by expert 34 The Nowoczesna party has prepared bills on these overall score), Family (20%), Hate crime and hate speech three issues but the Speaker of the Sejm is currently (20%), Legal gender recognition and bodily integrity 29 https://www.transparency.org/cpi2018 blocking any progress in the parliamentary procedure. (20%), Civil society space (8%), Asylum (7%). In 2018 edition Poland scored 18%, only 13% of the available points 28 https://publicystyka.ngo.pl/30-lat-wolnos- 30 https://www.independent.co.uk/news/world/eu- 35 Each May, ILGA-Europe releases its Rainbow Europe in the Equality category, null in Famil and Hate crime, ci-1989-2019-jak-zmienial-sie-sektor-pozar- rope/producer-of-the-pianist-is-jailed-for-corrup- review, to mark the International Day Against Homo- 27% of Legal gender recognition and bodily integrity, zadowy-infografika [in Polish] tion-561390.html phobia and Transphobia. It reviews the human rights 17% of Asylum points and full score in the Civil society. 106 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MIŁOSZ HODUN 107

ignore the bias motivation in their sentenc- saw and in front of regional branches. The number of kindergartens has grown, so ing38. has the number of kids attending them, thus TO THOSE WHO The increase in harassment of independent making pre-school education almost uni- Nevertheless, it must be stressed that the media in recent months is looking more and versal. The important issue is still the lack of general situation of LGBT+ in Polish society URGE MODERATION, more like full-blown judicial persecution. kindergartens in the countryside and nurser- is slowly improving. The acceptance towards As it already was before, the government’s ies all over the country. the LGBT+ community and of same-sex civil THE PIS leading target has been the daily Gazeta unions is growing39. More and more public Wyborcza, which is now in the personal Additionally, the number of schools that personalities come out, including politi- GOVERNMENT sights of Jarosław Kaczyński. To those who provide higher education45 has grown signif- cians40. In 2019, twenty equality marches urge moderation, the PiS government al- icantly. Although many of them are private (pride parades) were, or are, yet to be or- ALWAYS RESPONDS ways responds with the same arguments and often provide educational services of ganized in Poland – from Warsaw to small based on an ideology that tolerates no dis- rather low quality, some of the top universi- towns like Gniezno. WITH THE SAME sent44. ties as well as technical, medical, and arts academies are climbing up in international MEDIA FREEDOM ARGUMENTS BASED EDUCATION rankings and attract more and more foreign Freedom of media is a derivative of general ON AN IDEOLOGY Education is an aspect that may be a great students46. freedom and democracy, which is why it is indicator of overall success of a given coun- appropriate to also look at the World Press THAT TOLERATES try. Mature democracies with future-orient- An interesting international ranking that Freedom Index by Reporters Without Bor- ed political class, which believe in devel- confirms Poland’s success in education is ders (RWB)41. NO DISSENT opment of the entire community and look the OECD’s Programme for International rather for a consensus for big projects than Student Assessment, known as PISA [See: Poland has started building its strong po- pointless fights that can bring only short- Figure 8]. No other European country sition in the ranking since 2009, when it term gains, tend to invest in an educational climbed PISA so consistently as Poland. joined the group of the countries with free system that will benefit the next generations. Polish students improved their results in all media. However, in 2016, a dramatic down- and the Dominican Republic, and thus ties three competence fields tested: mathemat- grade was observed, and ever since Poland Poland with its record-low score of 2006. In The data on education shows that Poland ics, science, and reading and interpreting. has continued its decline in the RWB index, a scathing justification of Poland’s position has improved all basic indicators [See: Table The results of Polish students were below coming in 59th out of 180 countries in the titled Blinded by Ideology, Reporters With- 1]. The general educational structure of the the OECD average in 2003 and in subse- 2019 report. This sandwiches it between Fiji out Borders cited the tightening of control country is closer to the Western democra- quent surveys in 2006 and 2009 – at the by the ruling party over public media42. cies, fitting better modern societies build- OECD-average level, while in 2012 Polish 38 https://www.ilga-europe.org/sites/default/files/At- ing their economies on services and their students achieved results significantly above tachments/annual_review_2016-for_web.pdf, p. 13. Press freedom is one of the main victims growth on innovation [See: Table 2]. the OECD average. 2015 placed Poland 5th in th 47 39 https://oko.press/rekordowe-poparcie-dla-zwiaz- of the Law and Justice government, RWB Europe and 11 in the world . This steep in- kow-partnerskich-i-rownosci-malzenskiej-sondaz/ [in claims. “The public media have been re- crease has been due to reforms introduced Polish] named ‘national media’ and have been in the early 1990s, accompanied by cutting 40 For instance, Robert Biedroń and his newly emerged transformed into ‘government propaganda off the ideological content of the old Soviet- Wiosna party scored 6% in the EP elections. Addition- ally, Paweł Rabiej of the Nowoczesna party is now the mouthpieces’. Their new directors toler- influenced curricula. The most important 44 deputy mayor of Warsaw. ate neither opposition nor neutrality from Gazeta Wyborcza has been for PiS and Kaczyński change of the 1999 education reform was a symbol of a post-1989 success of the old elites. 41 The Press Freedom Index is an annual ranking of employees and fire those who refuse to Kaczyński sees in Wyborcza a tube of this part of the an extension of comprehensive education countries compiled and published by Reporters Without comply”43. Many blamed state-owned TV anti-communist opposition that negotiated and found Borders, based upon the organization’s own assessment compromise with the communists. He cannot accept 45 of the countries’ press freedom records in the previous broadcaster TVP’s “hate propaganda” for that Wyborcza is spreading the version of the new- In the Polish system occur universities, academies, year. It intends to reflect the degree of freedom that Gdańsk mayor Paweł Adamowicz’s murder est history where Polish transition is a big success and and higher schools. journalists, news organizations, and netizens have in in January 2019 – frequent demonstrations Lech Wałęsa (not Lech Kaczyński) is the biggest hero 46 Eg. https://serwisy.gazetaprawna.pl/edukacja/artykuly each country, and the efforts made by authorities to re- of “Solidarność”. To promote his alternative version of were held outside its headquarters in War- /1192832,polskie-uczelnie-w-rankingu-szang- spect this freedom. The report is partly based on a ques- history PiS-connected business people and journalists hajskim-2018.html, https://www.wprost.pl/edukacja/10 tionnaire, which asks questions about pluralism, media invested heavily in a network of right-wing media that 227185/szesnascie-polskich-uczelni-w-prestizowym- independence, environment, and self-censorship, legis- 42 https://rsf.org/en/poland were niche before 2015 and now are heavily subsidized qs-world-university-ranking.html [in Polish] lative framework, transparency, and infrastructure. See: by the state and work as PiS’s propaganda tube. Avail- https://rsf.org/en 43 Ibid. able [online]: https://rsf.org/en/poland 47 https://data.oecd.org/poland.htm 108 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MIŁOSZ HODUN 109

Table 1: Dynamics of the level of education in Poland) Table 2: Most popular groups of higher education areas among students:

1990 2019 Group of areas In Number of higher education institutions 98 394 Year general First Second Third

Spots in kindergartens in the countryside 230,000 286,000 Name % Name % Name %

1990/9150 100 Technical 16.9 Pedagogical 14.2 Business and 13.2 Spots in kindergartens in cities 680,000 881,000 management

Number of 3-5-year-olds in kindergartens per 1,000 citizens 318 847 (2018) 2016/1751 100 Business and 18.7 Engineering 10.6 Social 10.5 administration and technical Source: GUS Number of foreigners studying in Poland 4,100 72,000 (2017)

Figure 9: Female and foreign students in Poland (1990-2017) Source: GUS

Figure 8: Poland’s PISA results in Reading, Maths & Science (overall)

Source: GUS

Source: OECD Unfortunately, there is no reliable ranking Table 3 and Table 4 prove that Polish culture by one year (from 8 to 9 years) and introduc- 2019, which assumes a return to the pre- that would show Poland’s cultural position managed to develop in the market without ing a modern curriculum48. 1999 school system and a change in the vis-à-vis other countries and its change in full state subsidies, like it was during the old curricula, which significantly limits natural the last three decades. There is, however, times. Not all the titles and institutions sur- This positive trend will, however, most science, civil education, critical thinking, and no doubt that Polish arts and culture have vived the transition, especially the case of likely be stopped by the so-called deform soft skills development49.50 51 been successful in the world and are now local newspapers and cultural organizations of education run by PiS in the years 2015- prominent. Polish artists continue to receive in smaller locations. But on the national prestigious international awards (e.g. recent level the number of magazines published 49 Ibid. international recognition of Polish writer has doubled and the number of books have 48 http://4liberty.eu/wp-content/uploads/2017/04/ 50 According to ISCED, UNESCO standards. Olga Tokarczuk or film director Paweł Paw- almost quadrupled. There are more seats in Mi%C5%82osz-Hodun_Education-in-Poland-at-the- Service-of-the-Ruling-Party_Review-6.pdf 51 According to UNSECO-F2013. likowski). theaters, opera houses and philharmonic 110 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MIŁOSZ HODUN 111

Table 3: Publications in Poland (1990 versus Table 4: Cultural institutions in Poland (per 1000 citizens) 2017)

1990 2017 POLAND HAS USED 1990 2017 THE LAST Books 10,242 36,260 Books in libraries 3589.0 3340.0 30 YEARS WELL, Newspapers 130 46 Library users 195.0 157.0 AND THUS Magazines 3,007 6,939 MANAGED Seats in theaters and music halls 1.6 2.5 Source: GUS Number of 3-5-year-olds in kindergartens per 1,000 citizens 338.0 345.0 halls than ever before, and every year Poles TO BUILD spend more and more money on culture. A PROSPEROUS Seats in cinemas 9.8 7.5 Noteworthy, the successes of Polish culture Spectators in cinemas 862.0 1480.0 may be partly connected with long-term AND DEMOCRATIC

plans and strategies developed by newly Source: GUS created institutions, for instance Polish Film COUNTRY Institute (PISF)52. PISF created a systemic so- AND A FREE SOCIETY Law and Justice was able to easily push “correction” in transformation, Poland will lution to support the film industry (engaging backwards many of the crucial reforms in shake it off, recover, and get back on the public and private money) and became the OF ACTIVE CITIZENS the field of democracy, and especially the path towards real development, thus regain- nation’s key funding and international net- judiciary, free media, and protection of hu- ing the position of a European champion. working hub for cinema production. The man rights. People gave up their rights al- I am positive about that because Polish peo- institute has helped scores of films achieve most without a fight and put in danger their ple perceive the transformation and its fruits international success and changed the im- future in Europe and the Western World for as something positive for the country, for age of Polish films abroad. There is a lot to be proud of. Of course, there nationalistic promises of greatness and the people in general, and for themselves. is still a lot to do – especially in the area blurry visions of social solidarity. This can They certainly do not want to go back to the CONCLUSIONS of protection of human rights, in particu- still be repaired, but only with constructive pre-revolution era. All the data presented above proves that Po- lar minority rights. The last four years have and far-sighted policies, responsible politics, land has used the last 30 years well, and thus shown that the transition has not been deep and a long-term and far-reaching education. managed to build a prosperous and demo- enough, and that newly established democratic country and a free society of active cit- cratic institutions and liberal values are not The recent illiberal revolution in Poland is izens. Poland’s position in all discussed rank- fully internalized. not something unique, it is a part of a uni- ings, although clearly not perfect, places the versal trend that is contrary to the para- country in the European and world’s top. Po- Moreover, the process of building the new digm of development Poland followed for land’s success was prized with membership state went perhaps faster than the process 25 years. It is visible in most of the indexes in the most important international of building the new society. There has not that show that it is not only Poland that is organizations53 and the European Union, the been enough (civic) education in schools, less free and less democratic, it is true for the MIŁOSZ most elite club of developed states54. and permanent evaluation of the actual whole world. As if the world started mov- HODUN transition within the society. This, in turn, ing the other way around and Poland was 52 http://en.pisf.pl/ [in Polish] resulted in the victory of a populist party getting closer to what it was back in 1989. International Officer of Projekt: Polska Association and international advisor at Nowoczesna, Polish liberal 53 After 1989, Poland became a member of (among (PiS) that demolished the fragile achieve- Such a state of affairs simply cannot be ac- party. Member of the Board of Directors of the Euro- others): Council of Europe (1991), WTO (1995), OSCE ments of last three decades of transition. cepted. In summation, liberals must view pean Liberal Forum, think tank of the ALDE Party. Part- (1995), OECD (1996), and NATO (1999). Currently, Po- time teacher at Reykjavik University School of Law. He land is a non-permanent member of the UN Security this trend towards illiberalism as a huge ob- focuses on comparative constitutional law and feder- Council (UNSC) and has chances to join G20 in 2029. ment (2009-2012), whereas Donald Tusk was the Presi- stacle that must be overcome. Still, it is my alism. Formerly he worked as an expert at the Chancel- 54 Jerzy Buzek was the President of the European Parlia- dent of the European Council (2014-2019). belief that after this troublesome period of lery of the President of the Republic of Poland 112 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE 114 114 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MAREK TATAŁA 115

any people are familiar with President Bill Clinton’s “It’s the economy, stupid” campaign slogan. The econom- DISTINGUISHING It’s Not Only ic success of Poland since BETWEEN 1989M is indisputable. Nevertheless, defend- ers of Poland’s success story may some- ECONOMIC times hear that they focus too much on economic advances, prosperity, and GPD AND NON- the Economy, growth instead of thinking about the actual lives of “average people” and the “social ECONOMIC costs” of Poland’s transformation. CHANGES IS There are many myths connected with the concept of “social costs” and its understand- OFTEN FUTILE Stupid: ing by the opponents of Poland’s path towards a free-market economy. Critics of the transformation usually ignore “social costs” of no reforms and root causes of many Poland’s transformation, including a virtual negative developments that can be linked to “Museum 1989”. Progress over 40 years of socialism. The transformation is closely linked to the idea of progress It is also important to emphasize that distin- and its impact on human beings – not only guishing between economic and non-eco- elites but also “ordinary people”. Various ex- nomic changes is often futile. Economics is ternal and internal forces made it difficult not only a study of consumption, produc- in Poland for Poles to reap the full benefits of the in- tion, or money – although it is often associ- tellectual revolution of the Enlightenment, ated only with these measures, – but mostly industrialization and globalization. of human choices and behavior in the world of incentives and constraints. One of the key barriers to prosperity was the lack of individual freedom. Only in 1989 did From this perspective, it does not really mat- after Socialism Poland become a full member of the club of ter if we say that “It’s the economy, stupid” or progress, which gave the country an oppor- “It’s not only the economy, stupid”, as many tunity to catch up with the more prosperous areas can be associated with the economy West. Various measures – from life expec- and prosperity anyway. While GDP is not tancy to some environmental and political a perfect indicator (such a perfect meas- indicators – show how life has been improv- ure has not yet been identified), it is a good ing since 1989. Special attention is devoted proxy of standard of living and essential (but to the topic of nature because the disastrous not the only) condition for human progress. environmental impact of socialism is often Moreover, many other qualitative aspects of forgotten. In the end of the article the nos- human lives are correlated with GDP and talgia towards socialism is discussed and income. how, in a free market economy, even this type of nostalgia can be…profitable. Fur- The celebrations of the 30th anniversary of thermore, Civil Development Forum (FOR) the transformation in Poland and elsewhere MAREK is active in educating young people about should be forward-looking. Remembrance TATAŁA 116 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MAREK TATAŁA 117

stress. There was no rat race” – wrote Sla- we tell incurs a debt to the truth”, and then womir Sierakowski1, a founder of one of the adds that “sooner or later, that debt is paid”. leading left-wing NGOs that frequently pub- Some of the phenomena branded as “social THE REFORMS lishes articles in which the transformation is THE RATE costs” of transformation were, in fact, repay- FREEING blamed for its “social costs”. OF PROGRESS ments of this debt to the truth. THE ECONOMY It is true that people who understand and WAS NOT EVEN Finally, we should also remember all the appreciate Poland’s success story after 1989 benefits that appeared after 1989. If the AND INDIVIDUALS should talk more about measures other ALL AROUND word ‘social’ is added to the word ‘costs’ to than GPD and its spectacular growth which emphasize that costs are paid by the soci- ONLY REVEALED enabled Poland’s economic miracle2. It is, THE WORLD ety, one can even talk about social benefits. however, mostly a question of better com- But adjectives here are meaningless. What MANY FAILURES munication, but “social costs” propagators is needed is better awareness that the list are wrong on various levels and they spread of benefits enabled by a successful trans- OF THE PREVIOUS many myths and manipulations that should Even when we speak about Slawomir Siera- formation in Poland (with similar situations SYSTEM be exposed. kowski’s nostalgia towards the Polish Peo- in some other CEE countries like the Baltic ple’s Republic and its “very safe police state”, states or Slovakia) is long and goes beyond Firstly, people speaking about “social costs” we should ask ourselves, what kind of stress typical economic measures like GPD per usually ignore the benefits of transforma- is worse? One stemming from a competition capita and income, although many positive tion and the potential costs of alternative in a liberalized labor market and free market developments correlate with these indica- about failures and the costs of socialism is reform paths. As Leszek Balcerowicz ex- economy? One that is caused by a threat of tors. If we want to use a broader category needed so people do not repeat mistakes plained, “People associate social cost with an arbitrary arrest or killing? Or being unable associated not only with money and value from the past. Post-transformation achieve- reforms, while delaying reforms brings to buy some basic consumer goods for you of goods and services that we have in our ments are also an important lesson and about much larger social costs”3. The father and your family? And is this “rat race” (which wallets, households, or economy, we shall inspiration for another wave of necessary of the economic transformation in Poland obviously did also exist under socialism) to talk about progress. reforms in the future. And awareness of also claimed “those who talk of the social get a better job or higher salary worse than progress in Poland after socialism matters costs of reforms omit the far higher social a race to buy necessities after several hours JOINING THE CLUB as excessive pessimism is a fertile ground costs of failing to reform”4. How delays and of queuing? When analyzing the history of progress, we for various radical demagogues in politics failures in reforming the economy and the can easily notice that it is a rather short peri- – people who are willing to sacrifice catch- socio-political system can generate enor- Secondly, many economic developments od in comparison to the history of mankind. ing up with the Western standard of living in mous costs one can learn from the post- that happened in the early years of transition For a long time, the majority of the global Poland for their short-term political gains. 1989 history of Russia, Belarus, Ukraine, and had root causes not even in transformation population was poor and died young (from some other post-Soviet republics5. itself, but in over forty years of socialism. today’s perspective) and after a short life in THE MYTH OF “SOCIAL COSTS” The reforms freeing the economy and in- very bad conditions. This is why the graphs OF TRANSFORMATION 1 https://www.theguardian.com/commentisfree/2019/ dividuals only revealed many failures of the of GDP since the year 0 to 2019 resemble Debates about transformation in Poland jun/04/communism-poland-democracy-pepsi previous system. Hidden unemployment a hockey stick6. usually fall into a rather familiar pattern: One 2 In June 2019, FOR Foundation launched a special and over-employment or huge inefficien- side is rightly showing enormous economic website dedicate to Poland’s economic miracle. Avail- cies, driven by mass state ownership and “Serious growth happened only after 1800 able [online]: http://cud.for.org.pl/ success of Poland, visible in comparative central planning, were extremely costly. The – at first in north-western Europe, 2% per 3 An interview with Leszek Balcerowicz conducted by analyses of GDP per capita since 1989 in the IMF, see: https://www.imf.org/external/pubs/ft/ system was, in fact, dominated by economic capita in PPP conventionally adjusted for Central and Eastern Europe (CEE). The other fandd/2017/06/trenches.htm lies. Valery Legasov, one of the characters inflation, as in the USA 1800–present, and side usually responds with “social costs” of 4 https://www.obserwatorfinansowy.pl/tematyka/in- of a popular 2019 TV-series “Chernobyl”, now the world”, explained one of the ex- transformation, a vague term meaning usu- english/we-can-avoid-the-slowdown/ points out in the last episode that “Every lie perts on progress, Deirdre McCloskey, au- ally everything people dislike – unemploy- 5 For comparison of Poland and Ukraine see: Hartwell, ment, poverty, insecurity, and even stress. “It Ch. A. (2016) Two Roads Diverge : The Transition Experi- 6 See also a nomination for “most important graph in ence of Poland and Ukraine, New York: Cambridge Uni- was very safe in our police state. We didn’t Capitalism Was Built: The Transformation of Central and the world” by Jonathan Haidt. Available [online]: https:// versity Press; for comparative analysis of post-socialist Eastern Europe, Russia, the Caucasus, and Central Asia, www.humansandnature.org/culture-how-capitalism- have competition, or the accompanying economies see, for example : Aslund, A. (2012) How Cambridge: Cambridge University Press. changes-conscience 118 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MAREK TATAŁA 119

thor of The Bourgeois Virtues: Ethics for an Figure 1: Poland’s level of economic development relative to the United States Age of Commerce and other books about the Bourgeois Era7. The Enlightenment and Industrial Revolution “were enough to liber- ONLY AFTER ate a large part of humanity from the harsh living conditions it had always lived under”, 1989, THANKS – Johan Norbreg reminded us in his book TO THE TRANSITION Progress: Ten Reasons to Look Forward to the Future. Another acceleration happened FROM due to post-Second World War globaliza- tion8. The Enlightenment is also a leading AUTHORITARIAN theme in a work by Steven Pinker, the au- thor of the book Enlightenment Now: The SOCIALISM Case for Reason, Science, Humanism and Progress, who also appreciates “longer, TOWARDS healthier, safer, freer, richer[,] and wiser lives” of people thanks to the processes initiated CONSTITUTIONAL in the late 18th century9. DEMOCRACY Nevertheless, the rate of progress was not WITH A FREE even all around the world. In the 19th century, during the partitions of Poland, the MARKET ECONOMY, possibilities to reap the benefits of the intellectual revolution of the Enlightenment WAS POLAND and industrialization period were limited. Source: Trzeciakowski, R. (2018) “Poland’s Independence and Standard of Living in Poland”, [in]: 4liberty.eu. Avail- Then, as concluded by Piotr Korys, “in the ABLE TO GET able [online]: http://4liberty.eu/polands-independence-and-standard-of-living-in-poland/ interwar period, Poland did not manage to achieve developmental success”10. The post- A FULL MEMBERSHIP some progress, the ceiling was reached, based on a free market economy, open- war socialism, with its state-led industriali- and Poland was unable to break through it ness for trade, enhanced by the accession zation and central planning, failed to close IN THE CLUB due to various forces – the main thing miss- to the European Union, and advancement a huge gap between the standard of living OF HUMAN ing was individual freedom. Only after 1989, of democratic institutions (including the of the West and Poland. In all these peri- thanks to the transition from authoritarian rule of law), finally enabled Poland to close ods “we tried to industrialize in a way that socialism towards constitutional democracy a substantial part of the gap between the was led and financed by the state” but since PROGRESS with a free market economy, was Poland country and much more developed Western the transformation, as indicated by Rafal able to get a full membership in the club of economies. What is even more important is Trzeciakowski at the special Civil Develop- human progress. that all income groups benefited from the ment Forum’s website on Polish economic of the West: we allowed the Poles to act, transition as demonstrated by the EBRD’s miracle, “we decided to follow the example developing the market and reforming state POLAND’S TRANSITION calculations from 1989 to 2016 [See: Figure institutions”11. TOWARDS A BETTER LIFE 2]. Since the transformation the pie has been 7 https://www.deirdremccloskey.com/docs/pdf/Mc- What was this ceiling for Poland? For many growing, almost everyone has benefited Closkey_HowGrowthHappens.pdf This observation does not, of course, mean years Poland [See: Figure 1] was unable from the growing pie, and even the gov- 8 https://www.asiatimes.com/2016/12/article/abstract- that in certain areas there was no progress to permanently break a barrier of around ernment has had more money for various book-progress-johan-norberg/ at all before the transformation, because 20% of the standard of living in the United public services.13 9 https://www.wsj.com/articles/the-enlightenment-is- there was. Nonetheless, after achieving States12. The transformation of 1989 and the working-1518191343 continuation of the reform-path afterwards, 10 Korys, P. (2018) Poland from Partitions to EU Acces- sion: A Modern Economic History, 1772–2004, Palgrave 11 https://for.org.pl/pl/a/6846,komunikat-21/2019-pol- 13 G7 countries: Canada, France, Germany, Italy, Japan, Macmillan, p. 245. ski-cud-gospodarczy-droga-na-zachod [in Polish] 12 GDP per capita is used as a proxy. the United Kingdom, and the United States. 120 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MAREK TATAŁA 121

Figure 2: Percentiles of the population with income growth above/below the G713 [average, Figure 3: Life expectancy in Poland (1950-2017) 1989-2016]

Source: EBRD (2016) Transition Report 2016-17. Available [online]: https://www.ebrd.com/news/publications/transition-report/transition-report-201617.html Source: Statistics Poland (GUS) Source: EBRD (2016) Transition Report 2016- a full member of the club of progress. 17. Available [online]: https://www.ebrd. Infant mortality is currently also more than When we look in greater detail into envi- com/news/publications/transition-report/ In some areas, progress in Poland was re- three times lower than it was at the begin- ronmental protection, one may see how it transition-report-201617.html launched after reaching a certain ceiling ning of the transformation. It is true that it has changed thanks to the transformation. during the socialist times, whereas in oth- has been falling for decades in many places Clearly, environmental factors matter for the Steven Pinker wrote about “longer lives” as ers – it accelerated. These changes enabled around the world, including various politi- quality of life. Moreover, when economic one of the aspects of progress. In Figure 3 Poland to catch up with the wealthier coun- cal and economic systems, but this trend well being grows, people care more about we can see how life expectancy in Poland tries of the West not only in terms of GDP should not be taken for granted. Policy fail- nature, whereas governments have more re- became stagnant from the mid-1960s for per capita, but also in other areas that affect ures in countries like Venezuela can easily sources to protect environmental heritage. males and the mid-1970s for women. Only the standard of living [See: Table 1]. Much move the infant mortality rate in the op- after reforming the economy in 1989 did bigger shops are beneficial for consumers as posite direction. The history of Poland under socialism shows both genders observe a steady improve- they mean access to supermarkets with their a significant disregard for the quality of wa- ment of a perspective of longer lives. The “services (…) indispensable to making qual- Noteworthy, better environmental protec- ter, air, land, and other important parts of ceiling was broken when Poland became ity food available to consumers, when and tions have contributed to a smaller number nature. In an interview with Ilona Jedrasik we where they need it, at a reasonable price. of deaths related to air pollution. Finally, can read that “Balcerowicz was the greenest The institution of the supermarket testifies access to education in Poland has also politician”16 during the transition, for which to their usefulness” – as concluded by Pierre improved, which enables people to learn, he was responsible as the Deputy Prime Desrochers and Kevin Brookes in their report acquire new skills, and have better profes- Minister and Minister of Finance. Under his The Miracle of Supermarkets14. Higher life sional careers – which translates into higher term, many inefficient state-owned factories expectancy is, of course, good news – es- incomes. and heavy polluters ceased to exist. They ENVIRONMENTAL pecially when combined with the fact that were not only inefficient and costly from FACTORS MATTER more people are satisfied with their health15. a budgetary perspective, but also disastrous predisposition to complaining, it is not surprising that to the nature and health of Poland. FOR THE QUALITY 14 https://www.iedm.org/sites/default/files/web/pub_ this measure is still not very high. Meanwhile, the cur- files/cahier0418_en.pdf rent quality and opinions about the healthcare system may also be a contributing factor in the evaluation pro- 16 https://kulturaliberalna.pl/2019/07/02/jedrasik-eko- OF LIFE 15 Since the Polish people are known for their cess. logia-wywiad-polska/ [in Polish] 122 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MAREK TATAŁA 123

Table 1: Selected positive changes in Poland after 1989 Figure 4: Industrial and municipal wastewater requiring treatment discharged into waters or into the ground

Average size of a shop 45 m2 (1990) 105 m2 (2018)

Satisfaction with health 9% of people (1990) 19% of people (2017)

Infant mortality 15 per 100,000 births (1990) 2.9 per 100,000 births (2016)

Deaths due to air pollution 55 per 100,000 people (1990) 30 per 100,000 people (2017)

Secondary or higher 28% of people (1990) 53% of people (2017) education

Source: Polish Economic Institute (2019) 30 lat transformacji gospodarczej: Polska gospodarka zbliża się do stand- ardów zachodnich. Available [online]: http://pie.net.pl/30-lat-transformacji-gospodarczej-polska-gospodarka- zbliza-sie-do-standardow-zachodnich/ [in Polish]

Only after the fall of socialism, discharging inhabitants. “In the early 1980s the Statistics Source: Statistics Poland (GUS) of industrial and municipal wastewater re- Poland (GUS) distinguished 27 areas of eco- quiring treatment into waters, or into the logical threats, covering 10% of the county ground, diminished. Moreover, the untreat- with 1/3 of Poland’s population”18, with the even if they existed, were illusionary. Moreo- factor to its special edition of the contest ed part of wastewater fell from above 40% worst conditions in the Upper Silesia. Poles ver, ownership supervision of state-owned for economic comic books devoted to the to less than 5% [See: Figure 4]. had to wait until 1980 for comprehensive enterprises was transferred to the Ministry Polish transformation. We truly believe this legislation on environmental protection – of Ownership Transformation (later the Min- positive aspect of the post-1989 transition What about CO2 emissions before and after hence, it is not surprising that the environ- istry of Treasury), which weakened influ- shall also be promoted and acknowledged the transformation in Poland? We can see ment was an important element in the anti- ences of various ministries, responsible for by the public opinion in Poland. how emissions were growing in the 1960s communist opposition agenda. In the 1989 regulations in their areas of specialization, and early 1970s [See: Figure 4]. Despite a mi- Roundtable Talks, one working group was on public sector companies. It was another Another area which should not be neglected nor fall due to various economic failures17, strictly devoted to ecology and managed to important step to at least minimize potential is constituted by political rights and civil lib- the level still exceeded 11 metric tons per work out twenty-seven postulates. conflicts between the ownership and regu- erties – freedom of speech, assembly, or capita in the late 1980s. The transforma- latory activities. association. On the Internet, one can eas- tion changed this picture significantly and Thanks to the transformation, the activity ily find many stories about President Ron- in less than ten years the emissions reached of the most poisonous heavy industry was Legal changes introduced higher standards ald Reagan telling Soviet-era jokes19. One around 8 metric tons per capita. Also, there significantly reduced due to moderniza- of environmental protection, awareness of of them is about an American and a Rus- is a growing efficiency of business, as less tion or liquidation. Privatization enabled consumers raised, and – especially with the sian arguing about their two countries. The and less kilograms of CO2 were emitted per the government to focus on its regulatory growth of personal income – people have American says: “I can walk into the Oval Of- steadily growing GDP [See: Figure 5]. activities and not on the ownership. When become more active in the field of ecology fice, I can pound the president’s desk, and government was both the owner and regu- without the threat of harsh repercussions I can say, Mr. President, I don’t like the way Under socialism, especially in the 1980s, lator of enterprises, conflicts of interest were by the authorities. So, even though “it’s not you’re running our country.” And the Soviet the pollution in many parts of Poland evident and enforcing certain standards, only the economy, stupid”, economic and citizen responds, “I can do that”. And, to the posed a threat to the lives and health of the political transition definitely helped achieve surprise of the American, he explains that: environmental progress in Poland. This is 18 https://for.org.pl/pliki/podstrony/5404_5-korzysci-z- 17 why in 2018, the Civil Development Forum E.g. economic crisis after foreign-credit financed transformacji-poprawa-ochrony-i-stanu-srodowiska- 19 https://www.upi.com/Archives/1987/11/18/Reagans- boom under the 1970s. naturalnego-w-polsce-po-1989-r.pdf [in Polish] (FOR) decided to include the ecological jokes-draw-Soviet-frown/2291564210000/ 124 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MAREK TATAŁA 125

Figure 5: CO2 emissions in Poland in metric tons per capita (left axis) and CO2 emissions in various civil liberties (which may explain kg per 2011 PPP USD of GDP (right axis) the deterioration of Poland’s score in the Freedom House dataset), we should appreciate what was achieved after 1989 thanks UNDER SOCIALISM, to a successful transformation. Additionally, ESPECIALLY any attempts to push the Polish institutional system, which guarantees and secures our IN THE 1980s, rights and liberties, into the gloomy socialist past should be sternly opposed. THE POLLUTION

Still, despite the numerous examples of how IN MANY PARTS the lives of Poles have improved after the transformation and enabled a full member- OF POLAND ship in the club progress, some nostalgia towards the socialist past may be observed POSED A THREAT in the society. TO THE LIVES UNDERSTANDING RECENT HISTORY AND HEALTH AND BIASED NOSTALGIA The last available opinion poll from 2014 OF THE INHABITANTS shows that 44% of Poles had positive, or rather a positive attitude, towards socialist Poland; whereas 46% exhibited a negative or rather a negative attitude. When asked FOR decided to become more active in the about their main associations with the Pol- field of education about transformation. Source: World Bank Open Data. Available [online]: https://data.worldbank.org/ ish People’s Republic, 19% indicated “lack After an analysis of almost all Polish his- of unemployment/full employment”. The tory textbooks for the secondary schools, “I can go into the Kremlin to the general that “we don’t like the way you’re running next connotations on the list were nega- we learnt that they either ignore the trans- secretary’s office, I can pound his desk and our country”, as in the joke, but Polish citi- tive – “queues in the shops” (18%), “empty formation completely, or present a much say, Mr. General Secretary, I don’t like the zens are free to do it in public – from major shops and shortages” (17%%), and “rationing manipulated and excessively critical picture way President Reagan’s running his country.” squares and streets to the Internet. of food and other consumer goods” (17%). of this period. Of course, entering the Oval Office or the Apart from this, 10% indicated association Polish prime minister’s office is not an easy Moreover, Poles now have access to vari- of the socialist period with “better life/senti- This is why in June 2019, FOR opened thing to do, but the joke is about possibility ous media outlets that are not controlled by ment towards the past”. When only people “Museum 1989” – a virtual museum of the to question the authorities. the government – the media environment above forty years old were taken into con- transformation22. In various “rooms” of this is more vibrant overall. Freedom of religion sideration, the positive attitude towards the online museum, visitors may learn about the The transformation in Poland led to enor- is much higher and believers are not con- socialist past was even higher21. Therefore, gloomy days of the 1980s and the elections mous progress in the fields of political rights trolled nor repressed by the government and to some extent, it may not be so much about of June 4, 1989, which led to the successful and civil liberties, as measured by Freedom its agencies. “nostalgia towards socialism” but rather Polish transformation – the event that had House [See: Figure 6]. Poles were finally people’s youth. But will these proportions a significant contribution to the fall of the able to enjoy free elections, create or join The transformation converted the system change over time? Berlin Wall and the collapse of the Soviet Un- various political parties, and challenge the of the rule of a single party into the system ion. In September and December 2019, new incumbents without the threat of intimi- of the rule of law. While due to the ruling rooms of the virtual museum connected dation. A much higher level of freedom of party Law and Justice’s policies we observe Defend the Rule of Law in Poland”, [in]: 4Liberty.eu Re- with the first non-communist government view, No. 8. Available [online]: http://4liberty.eu/review- 20 expression has also been enjoyed. Still, it some challenges to the rule of law and 8-freedom-loving-people-should-defend-the-rule-of- in Poland of Tadeusz Mazowiecki and the may be extremely difficult to visit the prime law-in-poland/ minister’s office, pound on the desk, and say 20 Tatala, M. (2018) “Freedom-Loving People Should 21 https://cbos.pl/SPISKOM.POL/2014/K_061_14.PDF 22 https://muzeum1989.pl/ 126 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE MAREK TATAŁA 127

Figure 6: Political Rights and Civil Liberties in Poland in 1972-2017 [1 – highest level; 7 – leaders before 2015 elections – “Poland in lowest] ruins”, we should respond with facts (in an attractive way, as facts still require true and LET US NOT FORGET emotional narratives). THAT IT WAS In 1989, Poland finally broke the ceiling, and PRECISELY through enabling people to utilize their individual freedom we have been improving our THE TRANS- lives as the full member of the club of progress. Higher life expectancy, much better FORMATION access to consumer goods, a better natural environment, and various political rights and THAT ENABLED civil liberties have all been conducive to im- TO RUN ALL THESE proving the lives of Polish citizens. Nevertheless, in many areas we still observe NOSTALGIA-BASED a substantial gap between Poland and the more prosperous West. We should not al- BUSINESSES low nostalgia towards socialism, ignorance towards facts about Poland’s successes, and bad policies restricting various forms of individual freedom to restrain or halt progress PREACH THE GOOD NEWS when we finally live in the times when we Why does spreading information about posi- can reap the full benefits of the world of tive economic and socio-political aspects of ideas, entrepreneurship, technology, trade, the transformation in Poland and elsewhere and globalization. Source: World Bank Open Data. Available [online]: https://data.worldbank.org/ matter? Steven Pinker noticed that “indis- criminate pessimism can lead to fatalism: to “Balcerowicz Plan” – a foundation of Polish the history and everyday life in the Polish wondering why we should throw time and economic transition – will be opened. Note- People’s Republic – even some brands, money at a hopeless cause. And it can lead worthy, the main target group of the “Mu- popular under socialism, have their second to radicalism: to calls to smash the machine, seum 1989” is young people, in hopes that life nowadays. drain the swamp or empower a charismatic nostalgia towards the socialist past is not tyrant”23. We can observe these types of be- re-born in the new generations of voters. There is, of course, nothing wrong in pro- haviors in Poland. viding goods and services to people willing What is an interesting paradox is that nostal- to voluntarily exchange money for them. In I am convinced that strong pessimism about gia towards socialism can generate… prof- 2019, it might be fun to pay for a little experi- progress after 1989 and inaccuracies about its. In various cities in Poland, one can find ence with real socialism, but let us not forget Polish achievements, so clear especially museums of the Polish People’s Republic that it was precisely the transformation that from a comparative perspective, create (many of them are private initiatives), join enabled to run all these nostalgia-based a fertile ground for authoritarian populists MAREK a guided tour around socialist relics, or have businesses. At the same time, it is neces- and other radical demagogues. Therefore, TATAŁA a ride in one of the achievements of the pre- sary to raise awareness that the life of Poles when we hear again and again about the 1989 automobile sector. Although some of is better under constitutional democracy “social costs” of the transformation or – Vice-President and Economist at the Civil Develop- ment Forum (FOR), a think tank from Poland founded these activities remind us about hardships of with a free market economy, thanks to the what was told by the Law and Justice party’s by Professor Leszek Balcerowicz. Graduate of the Uni- this period, they are also fun for locals and economic success after the transition and versity of Bristol, Warsaw School of Economics and At- las Leadership Academy. His research interests include foreigners. Moreover, you can find shops all interrelated aspects of progress. 23 https://www.wsj.com/articles/the-enlightenment-is- law and economics, rule of law, justice system reforms, with souvenirs and gadgets connected with working-1518191343 populism and economic freedom 128 128 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ADRIAN NIKOLOV 129

uring the transition towards liberal democracy and a market economy, some countries from the former Eastern ELECTORAL Bulgaria Bloc managed to success- AUTHORITARIANISM, fullyD mimic the model that had already been proven to be successful in the West – IS PRESENT a multiparty democratic system, combined on the Path with mostly free market capitalism. TO A DEGREE Some, however, were less successful – es- IN A NUMBER pecially in the democracy department – and several decades later ended up with a form OF POST-SOVIET of a façade democracy, which in reality con- COUNTRIES towards ceals a type of oligarchic rule that shares little of the characteristics of a genuine liberal democracy.

Political science has dubbed this concept democratization into hybrid regimes, and electoral authoritarianism, and it is present the failure of some of them to develop fully Elected to a degree in a number of post-Soviet functional democratic institutions1. While countries. A quite telling thing of its pres- those types of definitions often also include ence is the de-ideologization of real politics, assessments on the quality of markets and while maintaining an outside stance – usu- economic competition in the studied coun- ally a populist and nationalist one – accom- tries, here we focus primarily on the political Autocracy: panied by the consolidation of the party sys- side of the matter. tem and marginalization of the opposition. Such a phenomenon occurred also in Bul- Contrary to the cold-war clear-cut distinc- garia, which is why it is worth examining the tion between democracies and dictatorial development of the Bulgarian party system regimes, Bogaards points out that in the How Far Have and government ideological lean through wave of transition after the 1990s, many the lens of the concept of electoral authori- countries now exist in a “gray area” between tarianism and tracing how far towards the the two. These typically have façade demo- establishment of this model of government cratic institutions modelled after the fully Bulgaria has gone in the past three decades. functional Western democracies, particu- We Gone? larly when it comes to holding elections, but ELECTORAL AUTHORITARIANISM: in practice have entrenched political elites WHAT IS THAT? that capture all the institutions and political Before we proceed to the specifics of the power that are pitted against puppet oppo- Bulgarian case, it is necessary to define sition as well as compromised civil liberties. the concept of electoral authoritarianism, as it is the starting point of this evaluation Moreover, Bogaards points out that there of the development of electoral politics are quite a few terms coined for this type in the country. A very popular definition comes from Bogaards (2009), whose work 1 Bogaards, M. (2009) “How to Classify Hybrid Regimes? ADRIAN focuses particularly on the transformation Defective Democracy and Electoral Authoritarianism”, NIKOLOV of the countries from the third wave of [in]: Democratization, Vol. 16(2), pp. 399-423. 130 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ADRIAN NIKOLOV 131

of regime – “semi-authoritarianism”, “illib- fraud and active targeting and suppression often than not, truly democratic country’s eral democracy”, “liberalized autocracy” to of the opposition, from the more recent party systems include ideologically diverse name just a few, each with its own specif- years. While Gel’man stresses that the parties, which are actually divided along ics and differences. In short, he provides AMONG THE THIRD country is far from a completely captured the lines of ideological differences, while a spectrum, from functioning democracy WAVE OF DEMOC- authoritarian state, it still appears that true authoritarian ones (especially in more eco- to full-blown totalitarianism, with electoral liberalization of political life and genuine nomically developed countries) only pro- authoritarianism in the middle of it. RATIZATION competition are far off. vide an ideological façade, while the dividing lines between the parties are focused on Bogaard’s two-pronged approach to the COUNTRIES, RUSSIA The phenomenon is also present among the obtaining and maintaining political power – definition of the concept also points to the countries which managed to become mem- especially for currently ruling parties. primary indicators to be taken into consid- IS OFTEN POINTED bers of the European Union (EU) – most eration when identifying the regime – the notably Hungary, as demonstrated by Ágh As is typical for the post-socialist space, freedom of elections, political participation, TO AS AN EXAMPLE (2015), among others5. The scholar clearly the traditional cleavage for the Bulgarian civil rights, horizontal accountability, and demonstrates how the ruling elite infiltrated party system is the socialism versus liberal effective government. Apart from that, he OF WORKING the institutions, changed key “rules of the democracy divide. The past three decades emphasizes that the concept of electoral game”, and marginalized the opposition. An have brought about the deterioration of this authoritarianism focuses chiefly on the role ELECTORAL important note on the role of the EU insti- cleavage, and while its dampening over time of the electoral process. Here, however, tutions in constraining the expansion and is quite typical for post-socialist systems, it let us use a less strict definition, borrow- AUTHORITARIANISM full capture of the Hungarian state by the has not been replaced by some of the other ing somewhat from the broader concept of currently present hybrid regime, however, is cleavages characteristic of mature demo- defective democracy. made by Bozóki and Hegedűs (2018)6. Ac- cratic systems – such as urban versus rural cording to them, the EU has a dual role in or working versus capitalist class, as exem- The need to go beyond the electoral process this case, as it also serves as a source for plified by Whitefield (2002) in relation to the and study institutions in a broader sense in of opposition and their ability to leverage external legitimacy for the regime. Parallels post-socialist space7. Therefore, the current order to properly classify regimes is also elections as an instrument and overall lib- with Hungary will thus be quite common as party system is shaped primarily by power stressed by Snyder (2006)2. He views regime eralization. Howard and Roessler’s findings, it is the country with the closest conditions distribution and struggles, not by ideologi- classification not as clearly defined groups, however, are more relevant to slowly de- to Bulgaria, both historical and present, in- cal clashes. but as a spectrum. In his view, it is possible mocratizing authoritarian regimes than to ternally and relative to the EU. to have competitive democracy from the former full democracies declining towards The most value-driven parliaments in mod- legal perspective, combined with captured electoral authoritarianism. TOWARDS DE-IDEOLOGIZATION: ern Bulgarian history were the two at the be- institutions and lack of real opposition. DEVELOPMENT OF THE BULGARIAN ginning and end of the 1990s. The first one This brings us to the cases of electoral au- PARTY SYSTEM marked the most intensive debates on the Meanwhile, Howard and Roessler (2006) thoritarianism in the former Eastern Bloc. In any study of the de facto (as opposed formation of the new political and economic offer a more traditional approach to the Among the third wave of democratization to de jure) nature of a democratic politi- systems of the country, while the second matter, focusing on the electoral process countries, Russia is often pointed to as an cal system, it is necessary to pay very close confirmed the geopolitical path towards the itself, and the presence of true pluralism and example of working electoral authoritari- attention to the development of the party country’s integration in the Western world, the rule of law in truly democratic regimes, anism. Gel’man (2013) enumerates all the system, its chief ideological cleavages, and through its accession in the EU and NATO. with electoral authoritarianism retaining characteristics that rank it among those the makeup and ideological lean of the gov- the electoral process, but lacking those regimes: widespread abuses of power, full ernments. The reason for this is that, more One could argue that the 1995 government, two features3. They stress the importance control of the media by the ruling elite, mar- led by the former communist party, is also ginalized and weak opposition, and almost Post-Communism, Vol. 60(2), pp. 3-10. quite ideologically-driven as many of its 2 Snyder, R. (2006) “Beyond Electoral Authoritarianism: complete capture of the institutions by the 5 Ágh, A. (2015) “De-Europeanization and De-Democra- policies were attempts to restore the fea- The Spectrum of Nondemocratic Regimes”, [in]: Elec- ruling party.4 To this we may add electoral tization Trends in ECE: From the Potemkin Democracy tures of the planned economy of the previ- toral Authoritarianism: The Dynamics of Unfree Com- to the Elected Autocracy in Hungary”, [in]: Journal of petition, pp. 219-231. Comparative Politics, Vol. 8(2), pp. 4-26 50(2), pp. 365-381. 3 Howard, M. M., & Roessler, P. G. (2006) “Liberalizing 6 Bozóki, A., & Hegedűs, D. (2018) “An Externally Con- 7 Whitefield, S. (2002) “Political Cleavages and Post- Electoral Outcomes in Competitive Authoritarian Re- 4 Gel’man, V. (2013) “Cracks in the Wall: Challenges to strained Hybrid Regime: Hungary in the European Un- Communist Politics”, [in]: Annual Review of Political Sci- gimes”, [in]: American Journal of Political Science, Vol. Electoral Authoritarianism in Russia”, [in]: Problems of ion”, [in]: Democratization, Vol. 25(7), pp. 1173-1189. ence, Vol. 5(1), pp. 181-200. 132 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ADRIAN NIKOLOV 133

changed names to the Bulgarian Socialist control rampant inflation and stabilize the enough to significantly impact important Party (BSP) at the beginning of the transi- economy, and continuing privatization. At policies. THE TRADITIONAL tion, but retained many of its members. Ad- the same time, the country formally joined ditionally, some key leaders insisted on the NATO and worked on fulfilling its conditions THE BULGARIAN SOCIALIST PARTY CLEAVAGE retention of a largely state-run economy, for joining the EU. The longest-surviving political party in Bul- albeit combined with a competitive electoral garian history is the direct successor of the FOR THE BULGARIAN democracy. After losing the 2001 elections, the UDF communist party, and for a significant part movement – in an attempt to unite – split of its post-socialist history it has maintained PARTY SYSTEM This heterogeneity is in a large part the rea- into several factions, all positioned center- political inertia, slowing down the transition son why the union did not last very long right on the Bulgarian political spectrum, – and, in some cases, even reversing the IS THE SOCIALISM in its original form, and did not manage to with none of them ever holding a dominant liberalization policies. This was especially retain many of its original member organi- position over the landscape. Some of them true for the 1990s, when the country’s ori- VERSUS LIBERAL zations. A major breakup came as early as did join ruling coalitions during the follow- entation and international stance was being the discussion of the new, post-communist ing two decades, but were never influential decided, and its economic model was under DEMOCRACY DIVIDE constitution of the country. development becoming less prominent after the country became and a EU member. Soon after, the first free National Assembly election saw four separate anti-communist The most telling period for the original ide- ous regime (resulting in the worst economic parties, former members of the UDF com- ological lean of the BSP is the 1995-1997 crisis in the contemporary history of the peting. One of them, considered to be the Videnov government, which, in practice, country). From this point onward, ideologi- successor of the original anti-communism UDF, MANAGED halted the entire transition of the country cal concerns gave way to more “practical” movement called UDF, managed to win the for two years, and even reversed some of ones. elections and steer the first few years of lib- TO WIN the previous progress. Officially, the reversal eral democracy towards the establishment was marketed as socially-oriented market THE UDF AND ITS SUCCESSOR of free market institutions, land restitution, THE ELECTIONS economics, but instead proved to be an at- PARTIES and privatization of the vast state property. tempt to return to central planning by in- Fundamentally, the right-wing alliance of On the international scene the country’s AND STEER troducing price controls on more than half the Union of Democratic Forces (UDF) was lean is evident in its accession to the Council of the goods sold, while heavily subsidizing built as an opposition to the communist of Europe, demonstrating its intent to join THE FIRST FEW state-run industries – even though those party – not as a monolithic political entity, the family of Western democratic countries. operated at heavy losses. Meanwhile, privat- but rather as a loose alliance of small or- YEARS OF LIBERAL ization was basically halted, and as a result of ganizations united as an opposition to the The party had its most important time dur- DEMOCRACY these policies, inflation ran rampant, savings previous socialist regime8. Its founding or- ing the third parliament, when it formed were destroyed, the country hit a record in ganizations come from the entire political a government led by its most emblematic TOWARDS terms of most costly banking crisis in transi- spectrum – from labor unions and greens, leader, Ivan Kostov. His government was tion countries (of about 42% of GDP)9, and through agrarian parties and social demo- tasked with fixing the major economic and THE ESTABLISHMENT the winter of 1996-1997 is remembered for cratic organizations, all the way to conserva- social damage done by the Videnov govern- its lack of basic goods, including food. tive politicians and business circles. Its only ment in the 1995-1997 period, and confirm- OF FREE MARKET uniting principle was the opposition of the ing the European and Atlantic orientation of However, the leanings towards planned previous regime and the successor party the country. INSTITUTIONS, economy were fairly short-lived. The of the Bulgarian communist party, which Stanishev government in the late 2000s is This was also the time the UDF managed to LAND RESTITUTION, remembered for its introduction of a flat, solidify its party structure, if only for a short 10% corporate and income tax, and it was 8 The section on the history of the party system is based AND PRIVATIZATION on the seminal work on Bulgarian parties, Karasimenov while. The key measure during this gov- (2006) and newer editions, as well as data from the ernment was the introduction of currency Manifesto project on the party’s ideological leans. See: OF THE VAST STATE 9 boards, pegging the Bulgarian lev first to the Tang, H., Zoli, E., and I. Klytchnikova (2000) “Banking Karasimenov. G (2006). The Bulgarian Party System, Go- Crises in Transition Countries: Fiscal Costs and Related rex Press. German mark, then to the euro, aiming to PROPERTY Issues”, [in]: World Bank Working Paper 2484. 134 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ADRIAN NIKOLOV 135

then that the accession to the EU was final- It is very hard to pin down the ideology driv- The party has played the role of a junior coa- ized. Even more importantly, the traditional ing GERB. While the party is nominally a part lition partner in a number of governments, stance of left-wing parties to favor workers’ of the conservative family in the European and has proven to be quite an effective op- rights and fight for increased social spending GERB HAS RUN parliament, the only constant in its policies position in blocking government initiatives and redistribution was mostly relegated to BULGARIA is the pro-EU position. In the past few years, when put in that position. Apart from GERB, the large trade unions. Where some ideo- the Borisov government has relied heavily it is the one constant factor in Bulgarian logical traces remain, it is in the party’s in- FOR THE PAST on the EU as a source of legitimacy. It has politics that appears unlikely to diminish in ternational lean and its preference towards also used anti-Communist rhetoric, but this importance in the coming years, as its popu- maintaining good relations with Russia and DECADE, MINUS comes only when convenient and is used larity among its tight electoral base remains its favor to large Russian infrastructure pro- as a tool for confrontation with chief op- virtually unchallenged. jects, particularly in the energy sector. A YEARLONG position. The role that the party of the last Bulgarian It must be noted, however, that lately the HIATUS WHEN Apart from this, GERB can only be defined king’s heir Simeon II played is also note- socialist BSP party has been facing decreas- as a populist party; its policies are hardly worthy. It was instrumental for the removal ing electoral support and significant internal THE SOCIALISTS based on any inherent values, but rather re- from power of the UDF, and, while relying tension, which has resulted in its ongoing TOOK POWER actions to changes in the current political on a populist platform, attempted to govern marginalization. While this process is by no conditions. These vary from holding back in a pronounced technocratic fashion. This means finished or irreversible, it appears energy prices as a tool for reducing social was, however, short-lived, as this approach more and more likely that the BSP will be pressure, to committing to no tax raises for was not appropriate for the time period. a less important factor in Bulgarian politics an entire period in government. Notable are Nevertheless, it was later adopted by GERB, in the coming years. the party’s many changes to the Electoral which largely applies the same policy to- based on Euro-skepticism and a strong em- Code, the conditions of which change con- wards appointing officials and members of ASSORTED NATIONALISTS phasis on national interest combined with stantly in order to adapt to the current politi- the administration. An array of smaller nationalist parties has populist positions on minority rights. Also cal landscape and maximize election results. been a mainstay in Bulgarian politics in notable are their close relations and lean A more modern phenomenon is the inter- the past two decades, usually playing the towards Russia and the Putin regime, widely Additionally, in the past few years, GERB has mittent appearance on the political scene of role of a junior coalition partner to one of considered to be the archetype of the elec- attempted to foster an image of a “true” con- small parties, which attempt to mimic Boyko the primary political forces, or as a minor toral authoritarianism government type. This servative party, chiefly by supporting (both Borissov’s populist rhetoric and behavior, member of the opposition. Two of them are is particularly true for Ataka, which is the pa- officially and unofficially) conservative cir- most often led by businessmen or media particularly notable – the Inner Macedo- tron of many pro-Russian organizations and cles and organizations, which in turn pro- personalities. Although none of them has nian Revolutionary Organization (IMRO) and benefits heavily from the pro-Russian vote. vide legitimizing positions and arguments to so far managed to emulate his unparalleled Ataka (Attack), mostly due to their resilience. government policies. success, the fact that such “clones” exist is The former has played a role in the anti- GERB – THE POPULIST CATCH-ALL a testament to the attractiveness of such communist coalition, and has overall pre- GERB has run Bulgaria for the past decade, SOME OTHER PLAYERS an approach. sented more moderate nationalist policies, minus a yearlong hiatus when the socialists It is impossible to consider the develop- while the latter came to prominence at the took power, but were ousted by sweeping ment of the Bulgarian party system without CHANGES IN POPULAR SUPPORT, beginning of the 21st century, on the back protests, which lasted for the better part of mentioning its most resilient member – the PARLIAMENT, AND GOVERNMENT of more radical nationalism and opposition a year. The party is centered on its leader, Movement for Rights and Freedoms (MRF), MAKEUP to Bulgaria’s EU membership. a former Sofia mayor and chief internal af- which has taken part in every single parlia- The dynamics of government and parlia- fairs secretary, Boyko Borisov, and owes ment since the beginning of the transition. ment makeup and the electoral support In the past decade, these forces have been most of its success to his charisma and While formally recognized as a liberal party, for the parties in Bulgaria are undoubtedly riding the nationalist wave that has risen popularity. Apart from him, no one member in practice, the MRF represents the interest worth analyzing. As may be seen quite clear- throughout Europe. However, at the same of the party appears to be a mainstay, and so of the Turkish minority, and has always relied ly in Figure 1, it would be pretty difficult to time, ideologically they have converged far it has failed to produce other significant on the electoral support of compact Turkish claim that party diversity has changed signif- more toward the political center. As far as political figures, especially ones that stay in (and some Roma) communities. icantly over the 30-year period. If anything, the stance of the nationalists is concerned, politics long-term. today there are more parties in the Bulgar- much like their European counterparts, it is ian parliament compared to the 1990s. This 136 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ADRIAN NIKOLOV 137

Figure 1: Parliament composition and government makeup (1990-2019) consolidated, akin to those of some other the continued rule of the dominant party. post-socialist countries, particularly Hun- Even if it desires it, GERB has not been able gary. At this point, it is worthwhile to return to amend election rules to such an extent to the conditions that define the concept of that it would be clearly favored in the elec- electoral authoritarianism, as it is clear that toral process (i.e. the Hungarian reform add- ten years of rule of Mr. Borisov and his party ing bonus seats to the largest party). have set the country down this path. The key conditions that allow classifying the country 2) Media freedom – the state of media free- among the hybrid regimes include: dom in Bulgaria has lately been deteriorating significantly, as can be seen in the devel- 1) Free and fair elections – while in the past opment of the country’s score in the RSF’s years there have been numerous changes to World Press Freedom Index. electoral rules (and even more proposals for radical changes such as introducing a com- Particularly worrying is the trend towards pletely majoritarian system), the electoral consolidation of media (online, paper, and process has remained largely unchanged. television) in the hands of groups with ties to various political parties. While the largest Usually, amendments to the Electoral Code media conglomerate is tied to the MRF, lately become a full-flagged struggle between all GERB has also been expanding its influence the parties in parliament, and much of them in the media space, particularly in television. get reversed in quite a short order. Vote Some disconcerting tendencies might also purchasing remains a significant problem, be seen in the persecution of investigative however, but as it does not benefit one par- journalists and trials of journalists from op- Source: Central Electoral Committee data, IME calculations ty or the other specifically, it can hardly be position media. claimed that it is used as a tool for ensuring being said, the parties in the lead are far less very high levels of support that the party has ideology-driven than the ones from the first maintained over the past decade have been few democratic governments. almost unparalleled. Figure 2: Change in popular support over time for the largest parties and groups (1990-2017, % of the vote at legislative elections) The distribution, however, must also to be At the same time, although both the BSP put into the context of the popular sup- and the UDF have enjoyed higher levels of port for those parties. While the makeup of popular support in the 1990s, their rivalry government and opposition usually ends up never allowed one of the parties to stay similar, Figure 2 presents the vastly different on top for long. This is, of course, partially popular support shared as obtained on leg- a result of the significant drop in turnout – islative elections by those parties. from 84% to 54% in the last election in 2017 – allowing a lower number of votes being The “nationalists” group takes together converted into more support. The long un- several formations. Newer data on the UDF disputed support for GERB, however, does group together its significant successor par- indicate a significant decrease in the com- ties. petitiveness of Bulgarian elections.

This figure provides more context to the CHECKING THE CONDITIONS – dynamics of the support and position in HOW FAR HAVE WE GONE? the party system of the various parties, es- Bulgaria’s party system started the transi- pecially when it comes to the success of tion as a quite diverse and ideology-driven GERB. Here, it becomes quite clear that the one, but has more recently become rather Source: Central Electoral Committee data, IME calculations 138 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE ADRIAN NIKOLOV 139

only credible and vocal opposition, uniting by a decade of (almost) continuous rule of façade democracy, concealing an autocratic the remains of the original anti-communist GERB – while there is some evidence for regime of the party’s leader, with Russian- coalition and groups of civil activists gath- centralization and merger of party and gov- style dependence of the judiciary. Thus, the THE INDEPENDENCE ered around the fight against government ernment in authoritarian style, those devel- viability of the opposition is key. This can OF THE JUDICIARY, corruption, has fringe support and at best opments have not gone as far as in some come as a return of the socialists to their doubtful ability to influence the political other former post-socialist states. former stability, or as a consolidation of the MOSTLY DUE process, even if it makes it to the parliament opposition parties on the right. At the same after the next legislature elections. CONCLUSIONS time, the country can benefit greatly from TO THE It is not inconceivable to consider a future heavier involvement of civil society in the 4) Rule of law – there have been numer- for Bulgaria in which the country slides policy-making process, as an additional bal- UNCONTROLLED ous voices putting the rule of law in Bul- down the path towards electoral authori- ance against the expansion of government garia into question, including reports from tarianism, or a similar form of imperfect de- and party power. PROSECUTOR the European Commission. Overall, the mocracy. This appears to be an ever-present independence of the judiciary, mostly due threat in many post-communist countries, CHIEF’S ROLE to the uncontrolled Prosecutor Chief’s role and some of them have already wandered (ENSHRINED (enshrined in the constitution), is among too far down this road. the weakest points of the Bulgarian sys- IN THE tem of governance, and there are reports Considering the Bulgarian case, however, on cases of state capture with prosecutors, only the first symptoms are present – the CONSTITUTION), law enforcement officer, and even some key political system appears to have become judges. devoid of ideology, and in the past decade, IS AMONG there has been a clear domination of a sin- This phenomenon goes hand in hand with gle political party, which has managed to THE WEAKEST POINTS rampant corruption, and there has hardly entrench itself in a number of institutions. been much improvement in this regard in OF THE BULGARIAN the past decade – on the contrary, observers The real danger today is that opposition par- point to deterioration, which can be exem- ties become more and more marginalized, SYSTEM plified by the Freedom House downgrading with no party left or right of the center po- OF GOVERNANCE the country to a semi-consolidated democ- litical party to oppose the control of GERB racy last year. should the party attempt to legislate its way into complete control and establish a true 5) Freedom of expression and civil rights – 3) State of opposition – among the more among the indicators taken into considera- worrying factors is the state of the opposition, this is the one where Bulgaria performs tion, particularly that of the BSP. Its contin- best. There is little resistance against civil ued loss of support and internal conflicts society, and no active persecution for criti- mean that GERB is left without its most sig- cism of state policy (of course, this would, nificant and credible political rival. At the in general, be rare in a European country). THE REAL same time, the MRF has demonstrated that However, while there are no active attempts DANGER TODAY if its economic interests and electoral con- to suppress civil society, its influence on po- trol are not disputed, it would prefer not to litical decision-making is also quite limited. IS THAT OPPOSITION ADRIAN present significant opposition. NIKOLOV This list can be continued with such mat- PARTIES BECOME It is also notable that in the past years smaller ters as personal freedoms and government Researcher at the Institute for Market Economics in parties (the nationalist ones, and the GERB- efficiency and effectiveness. The above, MORE AND MORE Sofia, Bulgaria, focusing primarily on the economics of education, inequality and poverty. He holds an MA clones) have flocked around the government however, appear to be sufficient to demon- in Democracy and Governance from the University of party, and support most of its initiatives. The strate the conditions of government created MARGINALIZED Tartu, Estonia 140 140 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE GÁBOR HORN 141

fter the collapse of the Soviet degree – in Brussels, illiberal politics have Union, there was a distinct a scenic appeal, social-psychological re- need for the achievements of searches prove that in moral questions liberalism. The parties that em- central-European citizens decide based on braced the rights, freedoms, liberal values. Without question, among the There Will Be andA the values of a market economy en- young population, the desire of freedom is joyed more significant voter support, while the guiding principle. the non-liberal parties viewed some liberalized basic values as self-evident. At the end of the 1980s, the unbearability of the communist system became clear Living in Prague, Berlin or Budapest in 1989 in every country of the Eastern Block. The a Liberal was liberating and intoxicating. Neither my helpless indulgence of the Soviet Union generation, nor the one before us believed strengthened this phenomenon – for ex- that the Soviet soldiers would leave the ample, in certain countries (Czechoslovakia, country and that the communist nightmare Hungary, East Germany, Poland), the Soviet would come to an end. Just like for Buda- soldiers were strictly prohibited to inter- pest, called at that time the “Happiest Bar- vene. A few years earlier, this would have East-Central rack” in the Soviet Bloc, the same disbelief been unimaginable. The sudden freedom was felt in Honecker’s DDR or Ceausescu’s was unexpected to those who did not live Romania, a country suffering from even among active oppositionists or those who greater atrocities than the rest of the region. were proficient in international politics. The In all these states, even if to different de- accelerating disintegration of state socialism grees, communism made freedom and the was smooth to varying degrees in different Europe Again! hope of a western life impossible. countries.

On the one hand, the popularity of basic In Poland, in the summer of 1988, Lech liberal values in the post-communist states Wałęsa, the founder of Solidarity, was invited is related to the fact that most countries of the region actually had liberal opposition (except the Polish movements, which had a rather complex identity) so the voters also viewed them as the strongest anti-communist forces. IN DIFFERENT On the other hand, there was an unwavering consensus about basic liberal values – ex- NATIONAL cept the extremist parties, as well as regards the fact that belonging to the European Un- PARLIAMENTS AND – ion is gratifying and valuable with all its opportunities and obligations. TO A LESSER DEGREE – IN BRUSSELS, All of this ended with the worldwide economic crisis in 2008, in the aftermath of ILLIBERAL POLITICS which the popularity of far-right parties rose and certain central-European conserva- HAVE A SCENIC GÁBOR tive parties radicalized. Although in differ- HORN ent national parliaments and – to a lesser APPEAL 142 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE GÁBOR HORN 143

In Bulgaria, Czechoslovakia, Hungary, and Young Democrats) obtained seats in parlia- the German Democratic Republic, the one- ment, while in Czechoslovakia liberals had party system degraded gradually, and more the majority in both regions of the country IN BULGARIA, or less without violence. While the forma- (Civic Forum in Czechia and Public Against WITH CZECHOSLOVAKIA, tion of a new political system needed many Violence in Slovakia). In the once eastern- THE TRANSITION closed-door negotiations, the general pub- German provinces, the conservative-liberal HUNGARY, lic remembers the change of the regime as parties won without exception. In Poland, FROM COMMUNISM, a symbolic event, which embodied the de- in the Lower House of parliament (Sejm), AND THE GERMAN sire of freedom. liberal-Christian-democratic and social- THE LIBERAL WORLD democratic parties received the most votes, DEMOCRATIC Irrespective of how the liberal parties per- while Solidarity became the second most AND ITS ATTACHMENTS formed in the first democratic elections in powerful force in the Senate. REPUBLIC, respective countries of the post-Soviet bloc, BECAME A PART the fall of the Berlin Wall, the reburial of Imre With the transition from communism, the THE ONE-PARTY Nagy and other martyrs, or the Velvet Rev- liberal world and its attachments became OF EVERYDAY LIFE SYSTEM DEGRADED olution meant an unimaginable liberation a part of everyday life for the citizens of the FOR THE CITIZENS from the oppression or national terror. So, former Eastern Bloc. The basic rights, free- GRADUALLY, regardless of who voted for which party, the dom of speech and assembly, all parts of the OF THE FORMER freedom – which the previously mentioned democratic life became undeniable. Private AND MORE OR LESS events stood for – was one of the most im- property – apart from the obvious finan- EASTERN BLOC portant and inalienable basic values for the cial value – gained an intellectual meaning. WITHOUT VIOLENCE whole region. In Hungary, for instance, most Entrepreneurs’ success in the market was of the society greeted the change of a re- now driven solely by their talent and endur- gime with euphoria, which showed in the ance. Finally, trust in capitalism emerged, At the time of accession, the EU enjoyed – still unprecedented – civil and political creating chiefly positive connotations in the widespread popularity in Central European to negotiate with the communist leaders, activity. Numerous civil organizations and minds of most of Eastern European society. societies. The majority supported these at- which was followed by the inauguration of trade unions were formed. Many people In the 1990s, far-right parties reappeared tempts even in those countries where po- the first anti-communist prime ministership joined the newfound democratic parties. – only now they identified their main en- litical parties regarded as problematic from of Tadeusz Mazowiecki in the spring of 1989. The appealing status of political presence emy as globalism instead of communism. the Brussels’ perspective were the most While this process was not free of political showed in the high numbers of voter turn- The normative liberal forces – reflecting on successful. or street conflict, it showed conspicuous out throughout the region. the political turn of the last ten years – did differences compared to the 1970s. not give the most effective answer to the However, recently, the spread of illiberalism, Those who had earlier been important fig- appearance of emotional and economi- a phenomenon frequently discussed in rela- At the same time, in Romania, dictator Nico- ures of the opposition became the lead- cal anti-Westernism, anti-Semitism, and tion to Hungary, may now be observed in lae Ceaușescu won yet another election and ers of the new political systems. In 1989 xenophobia. Although parties with a far- other countries (including Poland). continued on his path of the exploitation of in Czechoslovakia, Václav Hável, who was right agenda entered parliament, they were police forces – including the arrest of László formerly banned from writing in his own not a significant force. Wanting to catch up DISRUPTING THE LIBERAL Tőkés, a Hungarian ethnic dissident pastor. country, was elected president. In 1990, in with the West, the newly formed national CONSENSUS The communist regime tried to deaden the Poland, so was Lech Wałęsa. That same year governments were working hard to get the The Great Recession in 2008 wrecked rebellion (which started in Timisoara) at first in Hungary, Árpád Göncz, the hero of the countries of the Eastern Block to join NATO Hungary’s economy, which – among other to obey Mr. Ceaușescu’s commands. Then, 1956 revolution, also took the helm as the and the European Union (EU) as soon as reasons – caused the socialist-liberal coa- on the sixth day of the demonstration, the head of state. possible, which happened soon thereafter. lition government to lose the trust of the police forces stopped following orders after In addition to economic recovery and new people1. The referendum of 2008, which the suicide of the defense minister, Vasile During the first free elections in all former opportunities for all post-Soviet states and Milea. Eventually, Nicolae Ceaușescu and Soviet states, liberal parties were very popu- their citizens, these developments further 1 his wife were executed. lar. In Hungary, two parties (SZDSZ, Alliance strengthened the fundamental importance Nevertheless, the 2008 financial crisis cannot be compared to the loss in human capital and economic pros- of Free Democrats and Fidesz, Allience of of freedom among public opinion. perity caused by the communist regimes in the region. 144 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE GÁBOR HORN 145

had become a keystone of the then gov- Since 2010, the continuously changing po- According to János Kis, a former leader of ernment’s downfall, proved that in regards litical system under the rule of Prime Minister the democratic opposition and an influential to certain questions, people were reluctant Viktor Orbán and his acolytes has less and contemporary philosopher: to approve of reforms and a capitalist at- WITHOUT REALIZING less liberal elements. While during the sec- titude, and instead required the assistance IT OR REFLECTING ond election term of the Fidesz-government “In a democracy based on the competition and intervention of a strong state2. the familiar, moderate, conservative figures of parties, the party that casts the majority IT IN THEIR still played significant roles, they gradu- in the elections will become the govern- Those who lost the most in the crisis became ally disappeared from the political scene. ment; the minority will be the opposition severely vulnerable, which greatly contrib- VOTES, MOST In 2014, Viktor Orbán himself described his of the government. Although the opposi- uted to the 2010 success of the Fidesz party regime as ‘illiberal’. However, many people tion doesn’t have a part in governing, it can and its moderate, catch-all promises, along HUNGARIANS ENJOY in the European People’s Party are still, even hold the government accountable. They are with the far-right Jobbik party with its anti- today, reluctant to recognize the real nature the public power factor that can force the bank rhetoric. THE ACHIEVEMENTS of Mr. Orbán’s system. government to defend its decisions in public debate; they can push the government to Meanwhile, one of the most important OF THE FREE According to Viktor Orbán himself, the main a certain degree of self-restraint. But wheth- Hungarian parties of the regime change of WORLD reason behind the conflict is the different er or not to withhold unprotected decisions, 1989-90 – the Alliance of Free Democrats attitudes towards immigrants and refugees. they can make it easier for voters to make – had lost its political weight and was dis- The successful fight against immigration in informed decisions in the next elections”5. solved. The aforementioned 2010 election the 2014 election shows that Hungarian brought about the crisis of liberalism in Hun- The second Fidesz-government had a very society has no need for a liberal approach We cannot see anything from this system gary. Noteworthy, it was not only because popular slogan: “The last eight years”, which toward certain human rights issues. today – on the national and local level, of its winner – the populist Fidesz party, but was not only a generalized condensation, the government’s overt power is not con- also because it was symptomatic – the me- but also the onset of the politics revolving At the same time, it is spectacular that, if strained by democratic competition de- dia wrote about the voters of green parties around attacking the banking sector and in- the concept is not conscious – not only as scribed above. Just like it was not granted in and LMP (which is a globalization- and EU- ternational institutions, like the IMF. These regards moral issues, but also in day-to-day the three decades after 1956, during the dic- critical party) as the orphans of voters of the kinds of attacks became more forthright politics – the majority of voters represent tatorship of János Kádár, when there were Alliance of Free Democrats. This diagnosis and frequent as Viktor Orbán’s government a liberal standpoint, regardless of party sym- also sham elections. The Hungarian system was a rather good reflection of the liberal moved toward a more manifest nationalism pathies, as evidenced by the response to the is increasingly moving towards a ‘state capi- voters’ options at the time. during and after the 2015 refugee crisis. One idea of the internet tax and the closure of talist’ model, where the power of state mar- of the most infamous ones was the gov- shops on Sundays3. ket distortion rivals the socialist era. In the campaigns of the right-wing parties, ernment’s poster-campaign against George banks or the International Monetary Fund Soros and Brussels. Without realizing it or reflecting it in their FAILED POPULIST REVOLUTION were made to represent the real fight for votes, most Hungarians enjoy the achieve- AND LIBERAL CHALLENGERS people’s hearts and minds.. To Fidesz (Al- Later, the Fidesz party further disrupted ments of the free world – from the sacred- OF ILLIBERALISM liance of Young Democrats), Jobbik (For liberalism and the authority of the West in ness of privacy, to the variety of goods in This temporary disillusionment could be an a Better Hungary), and part of their voters, the eyes of Hungarian citizens. Meanwhile, the shops. Due to the fact that they do not important learning period for those who un- the banks, the EU, and the international through its economic relations, the govern- want to give up the rights they fought to gain dertake the task of making freedom a po- funds were deemed as the institutionaliza- ment got the idea of opening the country thirty years ago, we can trust in the recovery litical asset. The liberal Momentum party, tion of liberal views and their financial col- and thus started emphasizing the impor- of liberalism4. well represented in the 2019 European Par- lapse. tance of a friendly relationship with Rus- liament election, devotes great energy to sia. With the so-called ‘Eastern Opening’ 3 The 2014 Internet tax proposal triggered massive pro- building a nation-wide base, trying to out- tests in Budapest. As a result, the government withdrew the government tried to expand Hungary’s the proposal. Apart from this, the socialist party initiated perform the Alliance of Free Democrats, 2 According to a 2010 Pew Research Study, in 2010, 72% economic opportunities, but at the same a referendum against the mandatory closure of shops of Hungarians siad that the country was worse off eco- time relativized Western values and liberal on Sundays – the government revoked that plan as well. – instead of the nationalist, far-right Jobbik (For a Better nomically as under Communism:. See: Wike, R. (2010) Hungary), or the anti-capitalist, anti-globalist LMP (An- 4 Hungary Dissatisfied with Democracy but Not Its Ideals. civic liberties. The results of the 2019 European Parliamentry elec- other Politics is Possible). Available [online]: https://www.pewresearch.org/glob- tions confirm this phenomenon, as the left-liberal al/2010/04/07/hungary-dissatisfied-with-democracy- Democratic Coalition and the liberal Momentum Move- 5 Kis, J. (2013) “Gondolatok a demokráciáról”, [in]: Élet és but-not-its-ideals/ ment parties became the major forces of the opposition Irodalom, Vol. 57(19), p. 5. [in Hungarian] 146 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE GÁBOR HORN 147

the EU, the Western values, and experiences of the Hungarian voters, give hope to the THE HUNGARIAN liberal advocates of Hungary. SYSTEM All in all, we can trust – and that is what we need to work towards – that the European IS INCREASINGLY community, which has been protecting its members for more than seven decades MOVING TOWARDS since the Second World War, has made human rights declared and preserved. Despite A ‘STATE CAPITALIST’ the unnecessary administrative regulations, the European Union also let the market live MODEL, WHERE and has an appeal to citizens who lost their freedom. These dissatisfied people can THE POWER herd their country to a self-correcting path OF STATE MARKET as soon as they have an opportunity and a liberal European institutional framework DISTORTION RIVALS is granted. THE SOCIALIST ERA With the loss of liberalism, Hungary has wasted some valuable time that is yet to come. It will take years of hard work to rebuild a stable liberal democracy again. Nev- whose voters – after 2002 – have been ertheless, as Western values and individual mainly residents of Budapest. The party’s freedoms are still respected by major soci- promising presence (which was founded etal groups in Hungary, it is my unshakable by intellectuals who studied in the west) faith that it is going to happen. shows that for university students and young workers, freedom, the European Union, and Western values are still unquestionable.

While the Austrian, Italian, and Polish allies of Viktor Orbán still had electoral support in the last elections, the year of the rebellion did not fully come true in 2017, nor since then. Following the French and Austrian presi- GÁBOR dential elections and Dutch parliamentary HORN elections, the 2019 European Parliament

elections also demonstrated the failure of Chairman of the Board at Republikon Foundation a right-wing populist takeover. Whereas in since 2010. At the time of the regime change, he was Hungary, Fidesz achieved great success, a prominent figure of the union movements. After that he joined the SZDSZ (the Alliance of Free Democrats) in Poland, the main opposition party, Civil and became an MP in 1994 and the campaign direc- Platform (which is somewhat critical of PM tor of the party. Between 2002 and 2008 he worked as under-secretary for coordination in the Hungarian Orbán) defeated the ruling Law and Justice Prime Minister’s office as well. For 10 years, he was party, which was becoming more and more teaching economics and finance and then took part in extremist. The failed populist electoral re- the founding of the Economic Polytechnic Foundation School, where he worked as director of the curriculum bellion, as well as the ongoing migration in until 2002 148 148 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE AFTERWORD 149

hese years are already forgotten: hardly any political activist or commentator of current economic and political affairs IN ORDER takes into account the enor- TO UNDERSTAND The Last Tmous advance of the 2004-2007 members of the EU in terms of prosperity, way THE REGIMES of life, and political and economic liberties. This volume compensates for this lack of OF 1944-1989, ONE historic memory. But why is it important 30 Years to realize and remember the significance SHOULD ALSO TAKE of the last thirty years in the CEE region? There are several reasons. INTO ACCOUNT

WHAT WE DO NOT TALK ABOUT THAT THEY WERE A year ago, while working on a short com- ESTABLISHED in a Historic mentary on the Warsaw Pact invasion of Czechoslovakia1, I was surprised to learn EVERYWHERE that many young people in former War- saw Pact nations – including every fourth2 AGAINST THE WILL young Czech and Slovak – have little to no Perspective idea what caused it and what the lessons OF THE PEOPLE were of that Czechoslovak summer invasion. This was the largest military deploy- ment in the history of post-war Europe, and was recognized as a crime by international I am proud to be a representative of a gen- law. It was also the beginning of a new tra- eration of individuals who contributed to dition, in a sense, which was cultivated by the effort. means of the 1956 crackdown of the Hun- garian Revolution, or armed suppression of The articles in the 11th issue of 4liberty.eu the 1953 Berlin strikes and riots. Review often deal with the challenges encountered by the new generation of “new The invasion was a technical “success” of Europe” societies. Challenges habitually the Soviet army, which held the command imposed by the politicians of the last fif- of over 80% of the troops. The real victor, teen years. however, was the generation of the 1960s, which dismantled central planning and the In order to understand the regimes of one-party dictatorial regimes in Europe – 1944-1989, one should also take into ac- in short, dismissed the Warsaw Pact itself. count that they were established everywhere against the will of the people. 1 Stanchev, K. (2019) “Prague Summer: The Invasion of As Anne Applebaum has demonstrated3, Czechoslovakia in a Historical Detail”, [in]: Public Policy, Vol. 10(2), March. Availble [online]: http://ejpp.eu/index. a foreign power appointed the regime ap- php/ejpp/article/viewFile/311/312 paratchiks (most often functionaries of the

2 Kenety, B. (2018) “Poll Shows Most Czech Know Lit- tle about Their Country’s Modern History”, [in]: Radio KRASSEN Praha, July 26. Available [online]: https://www.radio.cz/ 3 See: Applebaum, A. (2012) Iron Curtain: The Crushing en/section/curraffrs/poll-shows-most-czechs-know- of Eastern Europe, 1944-1956, New York: Knopf Dou- STANCHEV little-about-their-countrys-modern-history bleday Publishing Group, pp. 43-63. 150 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE AFTERWORD 151

Highwaymen, as people called them in The 1989 revolutions were first of all anti- appreciation of their heroic deeds; even- totalitarian. The reforms were a restoration tually crushed in 1962), the Polish “Cursed of pre-communist ways of public gov- AT THE ADVENT Soldiers”(who organized at least nine gue- ernance, a “Return-to-Normality”. A term IN 1989, ALL OF THE OCTOBER rilla-warfare divisions, the last of which was “New Europe” was coined, a misnomer re- THE V4 COUNTRIES, destroyed as late as 1963), the anti-Soviet ferring to the post-Soviet countries. After REVOLUTION revolution in Hungary (October 1956), the all, these states had always been European, ROMANIA, partisan movements of Croatia (known and so the launch of the 1989 reforms was IN 1917 RUSSIA, as “Crusaders”), Serbian “Chetniks” or supposed to simply bring them back home. AND THE BALTIC “Četnici”, the Albanian National Front (a na- PRACTICALLY tionalist, anti-communist, and republican The constitution-making processes of the STATES WERE organization), the Moldovan resistance of early 1990s in virtually all formerly com- ALL INDUSTRIAL Soviet occupation of Bessarabia and Buko- munist countries confirms that this was AT LEAST THREE vina, and resistance movements in Belorus a common strategy adopted by all po- WORKERS WENT and Slovenia (which were all defeated by litical leaders of the period – from Vaclav TIMES POORER ON STRIKE AGAINST the end of the 1940s and the early 1950s). Havel in Czechoslovakia to Zhelyo Zhelev THAN THEIR in Bulgaria. Recent analytical recounts of THE BOLSHEVIK Such resistance was nothing new – at the the 1980-1990s, the newly opened ar- EUROPEAN advent of the October Revolution in 1917 chives, and contemporary reading of Mr. RULE Russia, practically all industrial workers Havel, Georgy Markov, Josif Brodsky, Milan NEIGHBORS went on strike against the Bolshevik rule, Kundera, Toams Veclova, Alexander Solz- and in the next four-five years historians henizyn, Paul Goma, and a plead of Polish counted about 5,000 peasants’ rebellions4. and Hungarian artists, writers and movie Communist International in Moscow, Jo- REFORMERS AND THE WIND makers confirm that public anticipation of seph Stalin’s henchmen), dismantled and OF CHANGE normality was one of the key driving dis- moved to the USSR virtually all function- The imposition of the communist regime contents with the former regime5. ing industrial facilities (even from invaded and the associated loss of human life led to THE IMPOSITION countries like Poland and Czechoslovakia), unprecedented destruction of wealth and In response to this expectation, the re- and installed KGB advisers to eradicate the prosperity. On the eve of the World War II, OF THE COMMUNIST formist politicians of the 1968 generation rule of law, civic and religious liberties, today’s Visegrad countries (V4) were richer provided for a political pluralism and com- counting dissidents and their relatives as or on par with Austria. Not to speak about REGIME petition between parties and ideas, a state enemies of the state. Germany – we in Bulgaria still have a saying power friendly to market and private prop- “as miserable as a German”, a remnant of AND THE erty, a prevailing role private property and Against all this oppression, people not the 1920-1930s, when Germans immigrat- enterprise in the economy, a market coor- only rebelled, but also rose to oppose the ed to Bulgaria in search of jobs and a better ASSOCIATED LOSS dination and buyers’ market, hard budget Soviet-style reforms with arms. One of the life (the country was developing fast, and constraints and temporary shortages, un- longest lasting movements of this kind was was twice as rich as Greece). In 1989, all OF HUMAN LIFE employment, typical business (not politi- the Bulgarian Goryani Movement (from the the V4 countries, Romania, and the Baltic LED TO cal) cycles. I repeat here Jonos Kornai’s6 list Bulgarian word “goryani”, meaning “for- states were at least three times poorer than est dwellers” or “forest men”). Similarly, in their European neighbors (in terms of real 5 This too was nothing new. Recently, Icelandic econo- UNPRECEDENTED mist Hannes H. Gissurarson published a thought-pro- other countries in the region, there were GDP per capita). voking account on the matter. See: Gissurarson (2018) the anti-Communist partisans: the Ukrain- DESTRUCTION Voices of the Victims: Notes towards a Historiography ian Insurgent Army (defeated in 1956), of Anti-Communist Literature. the “Forest Brothers” in the Baltic states OF WEALTH 6 Kornai, J. (2000) “What the Change of System from Socialism to Capitalism Does and Does Not Mean“, [in]: (extinguished in the early 1960s), the Ro- 4 See: Figes, O. (1996) A People’s Tragedy: The Russian The Journal of Economic Perspectives, Vol. 14(1), Win- manian Resistance Groups of Haiduks (or Revolution: 1891-1924, New York: Penguin, p. 627. AND PROSPERITY ter, pp. 27-42. 152 TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE

of reforms, but he, in fact, repeats Ludwig von Mises’ critique of socialism that dates back to 1922.

THE SUCCESS The success of what has been achieved has been clearly visible [See: Figure 1]. First, the post-Soviet countries had never been performing better in terms of economic well- being. Second, in the first years of the reforms, the newly introduced changes paid for the central planning, whereas the state- owned sectors were producing nothing but losses. As a result, in the early 1990s, the average GDP per capita of state-owned enterprises decreased to about 30% below the world average. By contrast, now, they are much more prosperous.

Third, even though all formerly communist states are still not as rich as the United States or Western Europe, the picture is changing – slowly but surely.

Currently, the political reformers of 1968 have stepped aside, replaced by others who promise quick fixes of everything. Never- theless, the normality and the achievements ought to be presented to the voters as an unsatisfactory state of affairs. At least, this is the hypothesis. The authors of this volume provided their own explanations.

KRASSEN STANCHEV

Professor in Public Choice and Macroeconomic Analy- sis of Politics at Sofia University in Bulgaria. A board chairman, founder, and former executive director of IME, Bulgaria’s first independent, free-market think thank NO 11. September 2019 T R A N S F O M T I V E R A N S F O M

T I O N ? 3 0 Y E A R S F C H G TRANSFORMATIVE TRANSFORMATION? 30 YEARS OF CHANGE IN CEE N O 1

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