October 14, 2021

Europe

EUROPE: CEE PULSE

BY Andrius Tursa

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( 5 mins)

Bulgaria‘s National Recovery and Resilience Plan is ready for submission to the European Commission. In the Czech Republic, the newly elected Chamber of Deputies is scheduled to hold its first sitting on 8 November. On 16 October, Hungary‘s opposition will conclude primary elections to select its leader for the 2022 parliamentary elections. In Romania, Dacian Ciolos is unlikely to secure parliament’s support for his new government. The pandemic is raging in Russia as the government focuses on strategic development initiatives to 2024.

Bulgaria

A caretaker cabinet led by Stefan Yanev (independent) is expected to submit the country’s National Recovery and Resilience Plan to the European Commission (EC) on 15 October. The country is eligible for EUR 6.2bn in grants and EUR 4.5bn in loans from the EU’s Recovery and Resilience Facility. Approval of the plan is likely subject to negotiations on judiciary reform and the phase-out of coal-fired thermal power plants, which generate around 40-50% of the country’s electricity generation and employ thousands across the country. There are already disagreements between the caretaker government and President Rumen Radev about the target closure date of coal-fired power plants; the country’s position might change again after the parliamentary and presidential elections scheduled for 14 November.

Czech Republic

No quick progress on government formation is expected as President Milos Zeman remains hospitalized and needs more time to recover according to a statement made by his wife earlier today. The newly elected Chamber of Deputies will hold its first sitting on 8 November, which is the latest possible date according to the constitution. By this date, the Together coalition, which won last week’s legislative election, plans to finalize a coalition agreement with the liberal Pirates-Mayors alliance. This will put pressure on Zeman to nominate his prime ministerial candidate Petr Fiala in order to form the next government. Earlier this week, the president’s spokesperson confirmed that Zeman will hold a meeting with Fiala at a later date without providing further detail.

Hungary

On 16 October, the opposition will conclude its primary elections to select its joint prime ministerial candidate for the 2022 parliamentary elections. The second-round runoff is taking place between Klara Dobrev, representing the liberal Democratic Coalition (DK), and Peter Marki-Zay, a conservative mayor of a small town in south-east Hungary. The latter is supported by the Budapest mayor Gergely Karacsony, who unexpectedly pulled out from the race last week. The outcome is difficult to predict at this juncture owing to divergent polling data, very high voter turnout, and ongoing debates between the two contenders this week. In general, Dobrev might be better positioned to keep the six diverse opposition parties united, but could also struggle to attract independent and right-leaning voters in the general election. Meanwhile, Marki-Zay could be better positioned to challenge incumbent Viktor Orban, but his relatively low profile and limited political experience might make it difficult to keep opposition parties united behind his candidacy.

Romania

On 11 October, President Klaus Iohannis nominated Dacian Ciolos, the leader of the reformist USR-PLUS party, to form the next government. Ciolos failed to make progress in negotiations with former coalition partners the center-right National Liberal Party (PNL) and the Democratic Alliance of Hungarians in Romania (UDMR) during the first round of talks on 13 October. The second round of talks is scheduled for tomorrow, 15 October. However, it appears unlikely that Ciolos will be able to secure parliament’s support for his cabinet. In this case, Iohannis would have to nominate a new prime ministerial candidate. Given the president’s close links to the center-right PNL, a candidate from this party would have the greatest chance of leading the next round of government formation. If two rounds of government formation fail within a period of 60 days, the president holds a constitutional right (but not an obligation) to dissolve parliament and call an early general election. However, such a scenario is unlikely as snap polls would likely benefit the center-left Social Democratic Party. Until the new cabinet is formed, a caretaker cabinet with limited powers will have to deal with an extremely challenging epidemiological situation in the country.

Russia

Covid-19 infections (31,299) and deaths (986) reached new, all-time highs today. In response, dozens of regions are tightening restrictions on non- immunized and vulnerable groups by limiting their access to non-essential services and venues. Moscow has launched a free express testing campaign across the city, while a growing number of regions are rolling out mandatory vaccination schemes for various occupational groups. To date, around 31% of the population has been fully vaccinated. As an additional measure to boost the sluggish vaccination campaign, the Ministry of Health is considering allowing limited imports of non-Russian Covid-19 vaccines. Despite the rapidly deteriorating situation, federal authorities have ruled out a nationwide lockdown and discouraged similar, regional initiatives likely due to economic and political implications.

On the economic front, the government on 6 October approved plans to invest RUB 4.6trn (USD 62.8bn) into 42 strategic initiatives aimed at improving the quality of life by 2024 and bolstering development objectives set out in the National Projects scheme until 2030. The initiatives are spread across six areas, including the social sphere (10 projects), construction (7), ecology (4), digital transformation (5), technological breakthrough (15), and state for citizens (1). Most of the allocations – which are set to come from the national budget, the National Welfare Fund, and the private sector – have already been budgeted, with additional government spending on these initiatives estimated at RUB 500bn (USD 7bn) until 2024. While the government’s renewed push to boost living standards until 2024 could be linked to the presidential elections scheduled for that year, it is questionable whether any significant breakthroughs can be achieved in such a short time frame, especially given the country’s track record of missing previous targets set out in the flagship National Projects scheme.

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EUROPE: CEE PULSE

( 5 mins) Bulgaria‘s National Recovery and Resilience Plan is ready for submission to the European Commission. In the Czech Republic, the newly elected Chamber of Deputies is scheduled to hold its first sitting on 8 November. On

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