October 7, 2020

Europe

EUROPE: CEE PULSE

BY Andrius Tursa

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The preliminary results of the regional and senate elections in the Czech Republic suggest growing political competition for the ruling Action of Dissatisfied Citizens ahead of the general election in 2021. Poland‘s reshuffled government faces a challenging agenda in the near term. Incumbent Prime Minister Ana Brnabic will lead Serbia‘s new government. Calls by the opposition to postpone the December general elections in Romaniaare unlikely to materialize. Finally, the surging number of Covid-19 cases has prompted a wave of new restrictions in Russia‘s capital, Moscow.

Czech Republic

In the 2-3 October regional elections, the ruling Action of Dissatisfied Citizens (ANO) won the most seats in regional councils and received 21.8% of votes nationwide, which a similar performance compared to the 2016 poll. However, both left-wing parties supporting the current government led by Andrej Babis (ANO) – the Czech Social Democratic Party (CSSD) and the Communist Party of Bohemia and Moravia (KSCM) – underperformed and lost most of their mandates at the regional level. After such poor performance, introspection and potential leadership changes may prompt the CSSD and KSCM to review their cooperation with the ruling party. Meanwhile, the opposition Czech Pirate Party and the Civic Democratic Party made considerable gains in the poll. Moreover, ANO’s performance in the election of one-third (27/81) of deputies to the upper house of parliament (Senate) was disappointing. None of ANO’s candidates claimed victory in the first round on 2-3 October, and only eight have advanced to the second-round run-off on 9-10 October. All of this might suggest tightening political competition for ANO ahead of the parliamentary election in the autumn of 2021.

Poland

A reshuffled cabinet led by Prime Minister Mateusz Morawiecki (Law and Justice, PiS) was sworn in yesterday, 6 October. Out of 22 members in the updated cabinet, six are new, including the leader of the ruling PiS party Jaroslaw Kaczynski serving as a deputy prime minister. Having averted the United Right coalition’s potential collapse over the past few weeks, the government faces multiple immediate challenges. Thousands of farmers are protesting the proposed ban on fur farming, a lucrative agricultural business. The contentious amendments – promoted by Kaczynski – will be considered in the upper house of parliament on 13 October. In the meantime, new daily Covid-19 cases and deaths are continuing to surge even as testing rates remain largely stable. Out of 380 county-level districts, 17 are in the “red zone” with the toughest restrictions in place, and 34 are in the “yellow zone” with slightly milder limitations. The number of counties in these zones is expected to rise considerably in the coming week. While a nationwide lockdown is unlikely, tighter restrictions in the most affected areas should be expected. Finally, Poland faces tough negotiations at the EU level over linking the recovery funds (including the Next Generation EU fund) to the rule of law situation. The issue will be on the agenda of the upcoming EU summit on 15-16 October.

Romania

The opposition Social Democratic Party (PSD) suggested the possibility of postponing the 6 December parliamentary election until March 2021 due to Covid-19. However, this is unlikely as the opposition-led parliament would need to pass two bills on the matter, the enactment of which could be delayed beyond the current election date by President Klaus Iohannis. The president could delay the election by introducing the state of emergency if the epidemiological situation significantly deteriorates. With the incidence rate in Budapest reaching nearly 1.9, the capital is closing indoor restaurants, bars, night-clubs, and gambling parlors and tightening the mask regime as of today, 7 October.

Russia

The number of new daily Covid-19 infections has returned to the peak levels seen in mid-May. Moscow remains the epicenter of the pandemic accounting for around one-third of all new cases. As a result, the city’s authorities have reintroduced a mandatory self-isolation regime for the elderly and those with chronic diseases. Businesses in the capital city must transfer at least 30% of their office-based workforce to remote work during 5-28 October. All public schools in Russia will be on extended holiday during 5-18 October, while universities are shifting to remote education. While Moscow’s mayor Sergei Sobyanin contends that the best economic support for businesses would be to avoid lockdowns and strict new measures, public debates about the possibility of a new lockdown are picking up. For now, authorities in Moscow will likely focus on enforcing the existing measures. Still, if the epidemiological situation continues to deteriorate, tougher restrictions on non-essential businesses (restaurants, bars, entertainment services, etc.) will become likely. In terms of economic support, the government has extended a moratorium on credit repayments for three months until 7 January 2021 and expanded the list of economic support services available for the self-employed.

Serbia

President Alexander Vucic (Serbian Progressive Party, SNS) has appointed the incumbent Prime Minister Ana Brnabic (SNS) to head the new cabinet following the 21 June parliamentary election. The composition of the new cabinet and the governing coalition is expected to be revealed in the next two weeks. While several cabinet members are likely to be replaced, Brnabic’s appointment suggests a high degree of policy continuity. Large infrastructure projects will remain one of the top priorities for the government, and the EU’s recently adopted EUR 9bn Economic and Investment Plan for the Western Balkans is expected to become an important source of funding.

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