Europe’s Battle With Its Eastern Rebels Leaves Lasting Damage

(Bloomberg) -- When Viktor Orban spoke on his regular radio slot last week, the Hungarian prime minister offered a thought: Maybe leaving the European Union wasn’t such a bad thing.

Orban was responding to Brexit Britain becoming the first country in the western world to start a vaccination program for coronavirus. The message, though, was clear as Hungary and Poland threatened to veto the EU’s $2.2 trillion spending plan in their own showdown with Brussels.    

“Did the British really fare worse?” Orban said. “The answer is that the country that left—the one that’s on its own path and searches for its own solutions—can defend its citizens and their lives faster than us who stayed.”

The fact that a leader of a country that has gained so much from EU membership should be musing about life outside the bloc may seem astonishing, and there’s little at the moment to suggest Hungary and Poland will follow the U.K.’s path. But the internal political dynamics of the two rebels has put in play what would until recently have been unthinkable.

The two countries agreed on a compromise with Germany on Wednesday to unblock the EU’s budget and pandemic stimulus plan, on the eve of a leaders’ summit where the budget impasse was set to dominate the sidelines. Polish Deputy Prime Minister Jaroslaw Gowin said an accord could be finalized by Friday.

Read More: Poland, Hungary Say Deal Reached on $2.2 Trillion EU Stimulus

The question that remains is whether the leaderships in Budapest and Warsaw made a damaging miscalculation by holding out for so long, one that could resonate beyond the last-minute compromise and cost them politically if not now financially.

Orban and Polish Prime Minister Mateusz Morawiecki balked at oversight over how the money is spent to ensure members adhere to the bloc’s democratic standards on rule of law. They met in Warsaw on Tuesday to discuss the German proposal, though neither immediately made a statement after an end to the impasse was announced.

Indeed, after years of rebellion over everything from control of the courts to gay rights and media freedom, rowing back won’t be easy. In an interview with German weekly Die Zeit last month, Orban said he told Merkel that what he’s being asked to do is “suicide.”

Why Hungary and Poland Are Blocking the EU’s Budget

The two countries have been emboldened by years of EU threats being backed up by little action. Yet they are still reliant on Brussels largesse, and neither Hungary nor bigger Poland can realistically afford to leave the EU. Even Britain, one of the world’s largest economies, would likely head back into recession should 11th-hour talks on a post-Brexit trade deal fail. 

Together, the two nations are supposed to get 180 billion euros ($220 billion) over seven years, or 30% of their combined gross domestic product in 2019, according to Bloomberg calculations. 

Some long-serving Orban officials were uneasy with his position and felt he was going too far, according to a person familiar with the situation.

In Poland, the Law & Justice party boxed itself into a corner and its government now looks less stable. The ruling coalition only has a thin majority in parliament, the upper house is controlled by the opposition and mass protests against an abortion law have been going on for over a month while the government was attacked for its handling of coronavirus.

Justice Minister Zbigniew Ziobro, the leader of a smaller party in government, said a “lack of a veto would imply a complete loss of confidence in the prime minister, with all the consequences.” Gowin, who is allied to Law & Justice’s more moderate wing, meanwhile lobbied for a compromise with Brussels.

“There’s no good way out of this for the ruling party,” Piotr Buras, the head of the Warsaw bureau of the European Council on Foreign Relations, a pro-EU think-tank, said before Wednesday’s announcement of a compromise. 

Gowin said on Wednesday that Ziobro was putting the interests of his party ahead of what’s best for the nation, and warned that a potential consequence of an EU veto could be a snap general election.

“I also want to point out that in case of early elections, opinion polls show that the ruling camp would lose power, probably for many years, and nobody wants that scenario,” he told reporters.

After the fall of communism a little over three decades ago, EU membership became the Holy Grail for the former eastern bloc. Once achieved, billions of euros of aid transformed their economies. For the EU, incorporating the east in 2004 was the defining moment for the political project.

Orban’s vision for what he calls “illiberal democracy” has divided Hungary, though his Fidesz party has as much support among voters as the opposition put together. In Poland, Law & Justice under leader Jaroslaw Kaczynski and Morawiecki, his hand-picked premier, has framed itself as the protector of conservative Catholic values against liberal European elites.

Yet in both countries, the EU —which ushered in freedom to travel and work abroad after decades of isolation—enjoys the kind of popularity that many western states would envy. A poll published this month showed support among Hungarians for membership back at a record high of 85%. 

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The approach by Orban so far has been to press ahead with his unravelling of democratic institutions while paying lip service to EU demands. But what he called a “peacock dance” then turned into a game of chicken with Brussels after pressure mounted within the bloc to attach strings to funding.  

While Orban and Morawiecki said their countries could do without EU funds, the bravado always carried a potentially heavy political price as they put their countries on a collision course where membership was questioned.

“All those who are saying we should take on the EU, that they’re taking advantage of us, that we’ll manage without the bloc’s money—they’re pushing us toward international marginalization if not to ‘Polexit’ itself,” former Polish President Aleksander Kwasniewski told private broadcaster TVN24 on Monday. “What Law & Justice is doing is dangerous for Poland.”

Orban is already preparing for 2022 elections, where he aims to win a fourth straight term in office. He’s depicted the vote as his toughest after the pandemic exposed health care failures and crippled the economic growth fueled by EU money that underpinned his power. 

“A voter today can’t feel that we’re totally committed to upholding the European Union and its future,” Tibor Navracsics, Orban’s former justice minister, who until last year was part of the European Commission, said in comments published on Monday. “Instead, one feels this government is locked in a freedom fight against the EU, as if against a new type of Soviet Union.”

©2020 Bloomberg L.P.