Eastern Europe’s GDP Rises Despite the Political Corruption

While a few events in the European Union (EU) garner the attention of the American media – and, by extension, the American people–most of the economic and political happenings of its constituent countries do not make headlines across the Atlantic. International investors and political aficionados excluded, most residents of the United States do not connect power struggles so far away with their own lives. An illustrative example is the swirl of corruption charges surrounding Czech prime minister Andrej Babiš. The circumstances leading up to the potential scandal, as well as its resolution, poses consequences for the EU and, therefore, the entire world economy.

Nation-states of the former Warsaw Pact are notorious for their uneasy adaptation to freedom. This includes the Czech Republic (as reported here https://echo24.cz/a/SanqD/kauza-okd-papalasi-do-teplaku-a-sesuv-pravniho-statu). With a population exceeding 10 million, this country is in the throes of political acrimony because of the activities and associations of Babiš, a media titan and the republic’s second wealthiest individual. The decades-long stretch of Communist rigidity conditioned the republic and its neighbours to a kind of learned helplessness.

Times change

Eastern Europe has, in recent years, experienced strong economic growth, more robust than its sister states to the west. Not only has the Czech Republic enjoyed this prosperity and low unemployment, but Poland, Hungary and especially Romania – with 6.4 GDP growth registered in 2018. Historically, these countries were seen as junior partners in EU governance. New economic clout is changing that perception and changing the political dynamics. A case can be made that EU economic growth would be trivial were it not for the eastern and central states.

Still, this expansion-fuelled confidence is not received warmly in other quarters. Poland, for example, is under threat of censure by the European Commission for that government’s alleged interference in Polish courts and jurisprudence. If the charges are affirmed, Poland could temporarily lose its voting rights in EU decision-making. Hungary is facing similar discipline for impeding academic freedom and unjustly turning away refugees. Meanwhile, France and Germany voiced criticisms of their eastern sister governments. These disapproving sentiments have a tinge of irony since western EU countries find the central and eastern states welcoming (and cheaper) to their factories and other investments.

As Europe’s “eastern tigers” gain in commercial and industrial power, those across the Atlantic might scratch their heads over the concern from EU authorities and the western European governments. Hungary is a telling illustration. Admitted to the EU in 2004, the country now chafes under the organization’s prerogatives. Questioning the EU’s moral authority, Prime Minister Viktor Orban loudly refers to the supra-national federation as a hostile empire and promotes the national interests of Hungary over and above the European Union.

Such nationalistic currents are running strong in places like Poland, Hungary and the Czech Republic. While “cohesion” funds from Brussels have assisted these countries with infrastructure, education and quality of life, the rules set down by the EU stoke resentment among some, a fact evident in the United Kingdom’s Brexit referendum. Having come later into the European political family, these former eastern bloc states view the EU more as a fortress against Russia than a set of political and cultural values.

Welcoming refugees, fostering pluralism and promoting a secular society represent EU (and western European) priorities. Nationalism, strict border control and religious faith are matters of more importance in the east. Former Soviet bloc patrons will point to Brexit, Paris riots and the fall of Angela Merkel as evidence that EU values need to change. At the same time, those who champion the EU can point to Orban’s authoritarianism and Babiš’ corruption as proof of the importance of the EU model.