May 20, 2021

Europe

EUROPE: CEE PULSE

BY Andrius Tursa

Share on twitter
Share on whatsapp
Share on facebook
Share on linkedin
Share on email
Share on reddit

Report Contents

Listen to our reports with a personalized podcasts through your Amazon Alexa or Apple devices audio translated into several languages

( 5 mins)

A summit between the US and Russian presidents in mid-June seems increasingly likely. Local elections in Croatia reaffirm the ruling party’s strength. A cabinet reshuffle in Latvia may take place after the municipal elections scheduled for 5 June. Meanwhile, in Ukraine, recent cabinet replacements align with President Volodymyr Zelensky’s attempts to recover public support and enhance ties with the US administration.

Croatia

The results of the first round of local elections held on 16 May show that the ruling center-right Croatian Democratic Union (HDZ) remains the most popular party in the country. While it remains unclear whether HDZ will manage to achieve better results compared to the 2017 local vote, the party is set to have the most county prefects, mayors, and municipal heads. However, HDZ failed to gain control of the capital Zagreb, which comprises around 20% of the country’s population and is the main economic center. The Green-Left Coalition consisting of five parties won most seats in Zagreb’s city council, while its mayoral candidate Tomislav Tomasevic is a clear favorite to win the second-round run-off on 30 May. Tomasevic’s victory would fit a wider trend of liberal left-leaning politicians gaining control of capital cities across CEE, but his reformist agenda could strain relations with the HDZ-led government.

Latvia

The continuing disintegration of the Who Owns the State? (KPV LV) party could lead to wider changes in the five-party governing coalition. Having won the second place and 16 mandates in the 2018 parliamentary election, the KPV LV caucus in parliament has been gradually splintering and currently comprises only five deputies. In April, KPV LV took another hit as Minister of Economics Janis Vitenbergs left the party and joined the ranks of another coalition member, the National Alliance. As a result, KPV LV recalled Vitenbergs from the cabinet and is considering other candidates for the economy portfolio. The declining KPV LV’s influence has prompted calls from the largest coalition member, the New Conservative Party (JKP), for a wider redistribution of ministerial portfolios in the government. Prime Minister Krisjanis Karins (New Unity) now faces a delicate task of reconciling the coalition members’ interests while keeping the government intact. Official negotiations on the redistribution of ministerial portfolios will take place after local elections scheduled for 5 June, whose result will likely reaffirm the KPV LV’s decline. Historically, none of Latvia’s coalition governments have lasted a full term since the country regained independence in the early 1990’s.

US/Russia

A seemingly constructive meeting between foreign ministers Antony Blinken and Sergei Lavrov, as well as the US decision to waive sanctions against Nord Stream 2 AG and its CEO on 19 May, make a bilateral summit in June increasingly likely. Before then, a meeting between Russia’s Secretary of the Security Council Nikolai Patrushev and Biden’s National Security Advisor Jake Sullivan is expected to take place as well. To keep the summit on track, Washington will likely abstain from imposing second-round sanctions on Russia under the Chemical and Biological Weapons Act.

Meanwhile, the Russian side aims to complete the construction of the contentious Nord Stream 2 pipeline until September/October. However, the operation of the pipeline could face regulatory constraints under EU law, while political support for the pipeline in Berlin could weaken after the German federal election in September, particularly if the Greens enter the next government. In this context, the transatlantic talks on how to minimize the negative effects of the pipeline on CEE, particularly Ukraine, will likely continue.

Ukraine

Today, 20 May, parliament approved three new cabinet members: former head of state of the roads agency Oleksandr Kubrakov (Servant of the People, SN) as the infrastructure minister; former deputy health minister and head sanitary doctor Viktor Lyashko (independent) as the new health minister; and former chief of the state tax service Oleksiy Liubchenko (independent) as first deputy prime minister and minister of economy. The head of the ruling SN faction, Davyd Arakhamia, does not foresee any further changes in the cabinet at least until the autumn, but Prime Minister Denys Shmyhal’s cabinet has already seen more than ten cabinet replacements since taking office in March 2020, which raises questions about policy stability and continuity. The new health minister is tasked with reviving Ukraine’s sluggish Covid-19 vaccination campaign, while the new economy and infrastructure ministers are expected to focus on economic recovery as the pandemic recedes.

More generally, the cabinet reshuffle aligns with President Volodymyr Zelensky’s recent attempts to recover public support and step-up cooperation with the Biden administration. These objectives likely underpin Zelensky’s recent “de-oligarchization drive” as well as efforts to advance judicial reforms in parliament. But as with the previous reform attempts, the Zelensky administration has yet to prove its commitment to carry out comprehensive and genuine changes. In this context, it is important to watch whether Zelensky seeks to curtail the influence of other oligarchs beyond his key political rival Viktor Medvedchuk and whether he manages to advance the judicial reform through parliament that is consistent with the recommendations from the International Monetary Fund (IMF) or the Council of Europe’s Venice Commission.

More by Andrius Tursa