October 15, 2020

Europe

EUROPE: CEE PULSE

BY Andrius Tursa

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The Czech Republic and Poland are tightening restrictions to cope with the rapidly deteriorating epidemiological situation. EU sanctions on several Russian individuals linked to the suspected poisoning of Alexei Navalny could deflect attention from Nord Stream 2 and put off calls in some EU member states for rapprochement with Moscow. A surprise ruling by Romania’s Constitutional Court has thrown the date of the general election into uncertainty. Results of the first round of parliamentary election in Lithuania suggest that the center-right opposition Homeland Union – Lithuanian Christian Democrats holds the best chances to form the next government.

Czech Republic

The country maintains the highest rate of Covid-19 infections in Europe (and one of the highest in the world), with the rolling seven-day average of new cases per 1mn people reaching around 590. The number of hospitalized patients, severe cases and deaths from Covid-19 is also rising. To mitigate the worsening epidemic, the government has mandated the closure of restaurants, bars and night clubs across the country between 14 October and 3 November. All schools are shifting to distance education, while gatherings of more than six are prohibited. According to the Minister of Health Roman Prymula (Action of Dissatisfied People, ANO), restrictions will be removed once the reproduction rate declines to 0.8, down from the current figure of around 1.5. However, a full lockdown cannot be ruled out if the epidemiological situation continues to deteriorate.

In parallel to restrictions, the cabinet extended the “Anti-Virus A” job support (furlough) scheme and deferred payment of VAT, income and road taxes until the end of the year. Additional subsidies for sports venues, cultural institutions and artists were introduced too.

Lithuania

After a strong performance in the first round of the parliamentary election on 11 October, the opposition center-right Homeland Union-Lithuanian Christian Democrats (TS-LKD) has emerged as the favorite to form the next government. Out of the 70 mandates elected on a proportional basis from national party lists in the first round, TS-LKD won 23 seats, the ruling Lithuanian Farmers and Greens Union (LVZS) secured 16 mandates, populist Labor Party (DP) got nine seats, liberal newcomer Freedom Party (LP) and the center-left Lithuanian Social Democratic Party (LSDP) secured eight seats each and the Liberal Movement (LM) got six seats. The second-round runoff in single-mandate districts will take place on 25 October, when the remaining 71 seats will be allocated under a majoritarian system. The opposition TS-LKD is a favorite as 54 of its candidates will compete in the runoff, compared to 32 contenders from the ruling LVZS. In general terms, a TS-LKD-led government would be a positive outcome for governance and reforms.

Poland

The epidemiological situation is worsening rapidly. The average number of new daily infections has more than doubled during the past 7 days and is approaching 5,000. The death count is soaring too, and the health care system is increasingly strained. In terms of containment measures, the government has introduced dedicated hours (10am to 12pm) for senior citizens (aged 60+) in supermarkets, grocery stores, pharmacies and post offices during weekdays. Additional measures will likely include stricter requirements for weddings and tighter mask regime, while dozens of counties, including most major cities, are expected to be declared as epidemiological “red zones” with the toughest restrictions in place. For now, Prime Minister Mateusz Morawiecki (Law and Justice, PiS) rules out the possibility of a complete lockdown, calling it “detrimental” for the economy. However, a partial lockdown of selected economic activities might be expected if the situation continues to worsen.

Romania

The Constitutional Court (CCR) has thrown the date of the general election into uncertainty. The CCR ruled that a law allowing parliament to set the date of the general election is constitutional and, in the motivation of its decision announced yesterday, 14 October, it surprisingly annulled the government’s earlier decision to hold the parliamentary election on 6 December. Now President Klaus Iohannis has ten days to promulgate the law or send it back for parliament’s reconsideration. If the bill is sent back to parliament and approved for the second time, Iohannis would have no other option but to promulgate it. So far, none of the major parties have clarified their position on the topic. If postponed, the election would be held in the second half of February or the first half of March. This would increase the probability of a 40% pension hike coming into effect before the election, unless the CCR upholds the government’s appeal over the constitutionality of the pension bill.

Russia/EU

EU leaders are expected to approve sanctions on Russia during the European Council summit on 15-16 October. The sanctions are expected to entail a one-year entry ban and an asset freeze on five Russian citizens linked to “the assassination attempt of the Russian opposition politician Alexei Navalny using a prohibited chemical nerve agent”. The Russian side has pledged to respond with mirror measures, while criticizing the EU for acting without presenting any formal evidence in Navalny case. These largely symbolic sanctions – initiated by Germany – are unlikely to have any effect on the Kremlin’s future actions but could help Berlin at least partly deflect calls to drop its support for the contentious Nord Stream 2 pipeline. Meanwhile, the alleged Navalny’s poisoning has somewhat cooled off French President Emmanuel Macron’s enthusiasm for a rapprochement with Russia.

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