EUROPE: CEE PULSE
Central and Eastern Europe (CEE), Russia
As the Covid-19 curve gradually flattens, the Russian government is restarting preparations for the postponed Victory Day parade and the vote on constitutional amendments. Meanwhile, although Hungary is gearing up to end the government's rule by decree, controversial appointment of a new Supreme Court president in Poland, and attempts to weaken civic groups and redistribute public funding to media in Slovenia are raising rule of law concerns. Finally, Lithuania's government is using Covid-19 as a pretext to roll out populist spending measures ahead of the general poll in October.
Today, 26 May, the government is expected to submit for parliament's consideration a bill on eliminating its emergency powers. These have allowed the executive to rule by decree without effective parliamentary oversight since late March. The ruling Fidesz party has framed these controversial emergency powers as essential to respond to the pandemic effectively. However, even without the extensive emergency powers, Fidesz will retain control over all the key state institutions and have few checks on its political dominance. In the meantime, the government has swiftly complied with the European Court of Justice (ECJ) ruling last week to close the infamous "transit zones" for asylum seekers on the Serbian border while maintaining a confrontational political rhetoric towards the European institutions at home. This suggests that domestic political communication – often focused on alleged political adversaries and threats abroad – is just as crucial for Fidesz as the content of its policies.
The parliament is considering President Gitanas Nauseda's (independent) proposal to lower personal income tax for employees. In exchange, several employer associations are pledging to keep the salary levels stable during the period. While this could boost household incomes in the aftermath of the Covid-19 crisis, the coalition government led by the Lithuanian Farmers and Greens Union (LVZS) is skeptical of the measure. The proposal would cost the budget an estimated EUR 500mn and disproportionately benefit higher-paid employees, according to finance minister Vilius Sapoka (independent). Instead, the LVZS-led coalition government will likely increase the non-taxable income threshold and raise spending for families raising children. Earlier this month, the LVZS-led government allocated cash handouts to all senior citizens, which is a popular move ahead of the October parliamentary election. The economic slump and generous spending policies could result in a double-digit budget deficit in 2020 and raise the public sector debt by around 14-15% of GDP, according to the national audit office.
The appointment of Malgorzata Manowska as the new First President of the Supreme Court may expand the ruling Law and Justice (PiS) party's influence over the judiciary. The opposition is challenging Manowska's appointment over the alleged procedural violations as well as ties with the ruling party, as Manowska served as deputy justice minister under Zbigniew Ziobro (current justice minister and chief prosecutor) in the PiS-led government back in 2007. The postponed presidential election remains surrounded in legal uncertainty, too, as the opposition-controlled upper house of parliament postponed the consideration of new electoral rules until next week. The opposition may be playing for time as incumbent Andrzej Duda (supported by PiS) is continuing to lose public support and the main opposition party's candidate Rafal Trzaskowski (Civic Platform) – yet to be officially registered in the upcoming poll – is rapidly gaining popularity. A potential deterioration of the electoral process – which has generally been considered as transparent and fair until now – would mark a further weakening of democratic institutions and the rule of law in Poland.
With the Covid-19 curve gradually flattening, President Vladimir Putin instructed the defense ministry to start preparations for the postponed Victory Day parade on 24 June, while the "Immortal Regiment" march should take place on 26 July. The date of the put off "all Russian vote" on constitutional amendments should be announced soon too, with the head of the central electoral body suggesting that some regions – most notably Moscow – may vote remotely. Meanwhile, the need to stimulate economic growth after the Covid-19 crisis is forcing the government to reconsider some business restrictions. A draft law submitted for parliament's consideration on 20 May proposes removing an import ban on scarce goods or raw materials that are not produced domestically – imposed as a countermeasure to the 2018 US sanctions. The cabinet is also reportedly considering postponing new data storage capacity requirements for telecommunications companies foreseen in the so-called "Yarovaya law." Finally, in early June, the government is expected to present its long-term economic recovery plan, which should boost the country's relatively modest fiscal response to Covid-19 to date.
Despite the effective handling of the Covid-19 pandemic by the government, political tensions are running high. The four-party coalition led by Prime Minister Janez Jansa (Slovenian Democratic Party, SDS) is seeking to limit the role of environmental civil society organizations in the legislative process and introduce changes to media funding rules, potentially in favor of the SDS-related media outlets. These government's actions – together with allegations of corruption – have triggered regular anti-government protests across the country. At the same time, attempts to weaken democratic institutions raise concerns considering the democratic backsliding in Hungary and Poland in recent years. However, the position of Jansa's government is relatively weak as his diverse four-party coalition now holds a one-seat majority in parliament. While there is no immediate risk of political instability, public pressures may further weaken support for the Jansa's cabinet in parliament.