CEE in the global spotlight in a ‘crucial year’ for the region

Global and local events will converge to put the spotlight on Central and Eastern European countries this year, delegates heard at Real Asset Media’s European Outlook 2022: Focus on CEE investment briefing, which took place online yesterday on the REALX.Global platform.

“This is a crucial year for CEE,” said Marek Matraszek, chairman, CEC Government Relations, in his keynote address. “Various forces will cause a new political, social and economic dynamic in the region.”

Matraszek identified four major vectors of change that will shape the future in CEE countries.

The first is the US. While Donald Trump focused on the region and had deep bilateral relations and an ideological affinity with Poland and Hungary, his successor Joe Biden has a very different agenda.

“The current US President wants to resuscitate institutions, have direct relations with the EU and reinvigorate NATO, thereby removing Poland and Hungary from that privileged relationship with the US,” said Matraszek. “CEE will be less of a priority”.

However, the recent build-up of Russian forces on the Ukrainian border has made a defence relationship with CEE countries crucial for the US and its allies.

Moscow is the second driver of change in the region, said Matraszek: “Russia’s aggression is not just directed at Ukraine as its main strategic goal is to reverse CEE’s integration with the West and to exercise its soft power using energy and other economic levers.”

Russia could use migrants as a secondary pipeline of influence, manipulating flows of refugees, as Belarus has done recently. CEE could therefore see mass migration from both Belarus and Ukraine.

EU takes harder line on transgressions on range of issues

The third vector of influence is the EU, which has taken a harder line towards transgressions by Poland, Hungary and Bulgaria on issues like rule of law, media freedom and abortion rights and has delayed or blocked the transfer of national recovery funds.  

“A cash crunch is looming for Poland and Hungary, which in turn threaten to veto EU proposals that require unanimity,” said Matraszek.

It is a defining moment for the region’s relationship with the EU, but “amidst security threats from the East, political criticism from Brussels against CEE will have to be toned down,” said Matraszek.

The fourth area of pressure is within CEE itself.

“There has been an erosion of many of the institutions and a fragmentation of the alliances that were holding countries in the region together,” said Matraszek. “The Visegrad 4 is now seen as 2+2, with Poland and Hungary on one side in contrast to Slovakia and the Czech Republic that are strengthening their relations with Brussels.” The Czech presidency of the EU this year will focus on collaboration rather than conflict.

However, the threat from the East makes it likely that weakening cooperation between CEE countries will be strengthened and rekindled in 2022.

“These are resilient countries with a strong desire for freedom, independence and being part of the West,” said Matraszek. “But in the short term let’s keep our seatbelts on and our fingers crossed. This year there will be much more uncertainty, flux and instability.”