CEE countries could feel chill of political winds of change

The world could be very different for CEE as the political landscape changes in 2021, Marek Matraszek, chairman, CEC Government Relations, told delegates at Real Asset Media’s European Outlook 2021 – CEE investment briefing, which was held online yesterday.

Some big issues which affect everyone are of particular interest to CEE countries. The change of administration in the US, is a notable example because Poland and Hungary had close relationships with outgoing president Donald Trump, who distanced Brussels but was keen on bilateral deals.

New president Joe Biden, on the contrary, has said he wants to repair relations with the EU, Paris and Berlin and has a multilateral, rather than a bilateral, approach.

“EU criticism towards Poland and Hungary will gain a more ready hearing in Washington, but it remains to be seen whether it will influence policy,” said Matraszek. “Senior figures in the Biden administration have been very critical of Poland and Hungary on rule-of-law issues, so there could be a cooling of bilateral relations ahead.”

However, “Biden will not disrupt the gains made in the stronger Poland-US commercial relationship over defence sales, energy and digital or cooperation over Covid-19,” he said. Poland remains a frontline Nato member state so, “overall, the strategic impact on CEE will be relative.”

The EU, like the new US administration, will have noted that these countries “hitched their horses to Trump’s bandwagon, and this won’t do them any favours,” said Matraszek. “Another problem is that Angela Merkel has been a consistent mediator between CEE and the EU, so the change of leader in a crucial player like Germany could also have an impact.”

Brexit has also removed the UK, a great ally of CEE countries within the EU, he said.

Looking ahead, the Three Seas Initiatives, a forum of 12 countries in Central, Eastern and South-Eastern Europe, “has the potential to become an infrastructure-driven framework to promote development, security and integration in the region.”

Another positive is that within the EU the CEE region remains economically robust with significant productivity, infrastructure and supply chain advantages.

“Poland had the lowest relative fall in GDP in 2020 and is in a strong position to have an upward trajectory in 2021,” said Matraszek. “There is a sense of renewed optimism, but the Covid-19 vaccine must be rolled out more quickly or the recovery will be sabotaged.”