The Visegrad Group Needs the European Union for the Sake of Its Own Modernization

For the Visegrad Four countries, or 2+2 as they are sometimes known (i.e. Slovakia, Czech Republic, Poland, and Hungary), the European Union represents a modernization framework similar to one that the Austro-Hungarian Empire had once provided.

A hundred years ago, 52 million people inhabited the Dual Monarchy. The 28 states comprising the present-day European Union have a total of 500 million inhabitants. We know that history repeats itself but the only question is: What have we learned from it? From the economic point of view, the countries of Central and Eastern Europe need the West for its markets, capital, and know-how, although they have always regarded themselves as being a part of it. As Samuel Huntington put it: Europe stretches as far as we have Gothic cathedrals

The V4 countries represent the eastern periphery of the European Union, the economic “backyard” of the reunified Germany. To the displeasure of Paris and London, the center of gravity of the European integration processes, symbolized by the German metropolis, shifted eastwards following the 2004 EU enlargement. In terms of NATO, the V4 countries, Poland especially, are very close to the Russian-Ukrainian conflict.

The V4 countries represent the eastern periphery of the European Union, the economic “backyard” of the reunified Germany.

Starting from this premise and with a view to the most burning issues of the day, I would like to focus, from Hungary’s perspective, on the strategies the V4 countries are pursuing within the European Union, both as a group and in terms of the four countries individually.

Strategy

“If you are not at the table, you are on the menu,” goes the old geopolitical ad age, which has led all V4 countries into NATO and the EU. This is the reason why they have not become a part of the buffer zone stretching from Ukraine, Moldavia, and Georgia through Turkey and Syria all the way to Iraq, whose allegiance is being so fiercely contested at the moment.

Turkey has become a deterrent example for many. President Recep Tayyip Erdoğan lacks a forward-looking strategy. Even though his country is a member of NATO and a privileged EU partner, Turkey has embarked on its own, national path taking it away from its Western partners and into uncertainty. In addition, this path is strewn with conflict, incurring vast political, social, and material expenditures. Under these circumstances, it is difficult to be a regional player.

Poland is keen to play a similarly important role. Warsaw does have a clearly defined strategy and is searching for allies to implement it. The Polish concept of “Intermarium” is striving to link countries located between the Baltic, Adriatic, and Black Seas and take on a leading role in this grouping. Such a unit, with its 180 million inhabitants, could, theoretically, provide a counterweight to Germany in the West and Russia in the East in the long term. It could ally itself against Russia with the Scandinavian countries and, in particular, with the United States under Donald Trump. During his Warsaw visit, the US president welcomed this plan; it would weaken Germany and open up new markets for American arms industry. However, Berlin and Brussels are making an effort to attract the Poles, Hungarians, and Czechs into the eurozone as their allies and additional partners against the southern eurozone periphery (known as the ClubMed), led by France.

Poland’s Rights and Justice Party (PiS) government lacks the majority required to change the constitution, which is why it has been under pressure from Brussels not only about the refugee issue but also when the EU launched infringement proceedings against Poland for breaches of democracy. In this respect, Warsaw can count on support from Budapest. Poland and Hungary have enjoyed friendly neighborly relations for a thousand years, whereas the European Union has been around for a mere sixty years. Empires come and go, nations remain. At least for the time being.

Illiberal State

Hungary has been trying to forge its own way, acting as a “political laboratory.” As a consensus between the country’s pro-Western political parties on the one hand and the nationally-oriented ones on the other appears unlikely, a single dominant ruling party is about to emerge in the system of party politics, something that has happened frequently over the past 150 years. Over the course of several terms in office, it aims to attain national modernization goals, echoing the success that Hungary achieved following the Austro-Hungarian Compromise of 1867, which lasted until the outbreak of World War I.

While preserving the overall framework of the market economy, four key strategic sectors of the economy—energy, finance, media, and trade—will be placed under the state’s majority control. Boosting investors with close links to the government, not least by using EU funds, is seen not as corruption but rather as the natural accumulation of capital.

Prime Minister Viktor Orbán can rely on the European People’s Party which, despite growing criticism, is still betting on dialogue with Fidesz instead of expelling the country from its ranks. Fidesz continues to support key EU policies, including decisions that are rather unpopular in Hungary, such as economic sanctions against Russia. Brussels has not been able to prevent Hungary’s ruling party, which has enjoyed a constitutional majority since the 2010 election, from remaking the country.

Between Confrontation and Cooperation

Being a small country, Hungary has been able to get away with things that would have provoked a crisis in the case of larger EU members. Just one example: both Marine Le Pen and Italy’s Five Star Movement have wanted to leave the eurozone, reinstating the national currency and thereby devaluing it, as Great Britain did in 1945 on John Maynard Keynes’s advice, and as the Fidesz government did in late 2010. Until then the interest rate set by Hungary’s central bank had been 8 percent. At a time of stable exchange rates this was advantageous for many Western investors. They could convert the profit from the interest into dollars and euros using the same exchange rate, and take the money out of the country. The devaluation of the national currency by 10 percent in late 2010 wiped out the profit on interest.

Prime Minister Viktor Orbán can rely on the European People’s Party which, despite growing criticism, is still betting on dialogue with Fidesz instead of expelling the country from its ranks.

Since withdrawing money would have resulted in a loss, investors preferred to bide their time. In this way money continued to circulate and the existing loans were reinvested in forints. After a change in the leadership of the National Bank it was possible to continuously lower interest rates, enabling the state to finance the budget from the money in circulation, under very favorable conditions and without having to resort to unpopular austeritymeasures. As a result, Budapest was able to manage without the aid of the International Monetary Fund.

Viktor Orbán is forging a middle way between confrontation and cooperation, maneuvering around the EU law. By placing the burden of evidence on Hungary, the European Commission has tried to prove alleged breaches of European law, but the Hungarian government has always responded by promptly eliminating any specific issues that gave grounds for complaint. In case of the much-criticized media law, this concerned precisely the four problem issues Brussels was able to raise.

Future Prospects

The Czech and Slovak Republics, on the other hand, prefer cooperation with the European Union to confrontation. In doing so, Slovakia’s ruling social democratic party Smer can also rely on the support of a large European party, as can ANO, the potential winner in the Czech general election. Berlin and Brussels have repeatedly tried to force the Czech Republic and Slovakia to splinter off from the Visegrad Group. However, the V4 have closed ranks around the migration issue and the European Union has had to acknowledge the group’s power.

The number of things uniting these four countries exceeds by far the number of those that might separate them. Their unity can be further sealed by other key issues.

The number of things uniting these four countries exceeds by far the number of those that might separate them. Their unity can be further sealed by other key issues, such as the fight against the differences in the quality of foods in the East compared to the same sold in the West and fair conditions for EU citizens following Britain’s exit from the European Union.

Budapest, which currently holds the V4 presidency, sees the grouping as the core of a coalition that could take ad hoc joint action, for example in negotiating the future EU budget and future funds earmarked for cohesion and the agriculture policy. The V4 group is thus seeking its future prospects within the European Union