Why Hungary and Poland Rattle Europe's Liberal Order: QuickTake

(Bloomberg) -- Three decades after the fall of the Iron Curtain, tensions again threaten to divide Europe. Populist movements have roiled politics from Britain to Italy and, most recently, Sweden, setting the stage for elections next year that may decide the direction of the EU. Populism has made its greatest gains in Hungary and Poland, where leaders such as Hungarian Prime Minister Viktor Orban are challenging what seemed like settled norms of democracy in the European Union. The EU is now fighting back.

Update: Hungary’s government responded to this article on June 5, 2018. 

1. What is the EU doing?

The European Parliament voted to trigger Article 7 of the EU Treaty, the so-called nuclear option, opening the way for possible sanctions against Hungary for perceived violations of the rule of law. The European Commission, the EU’s regulatory arm in Brussels, triggered Article 7 against Poland in December. Under Article 7, Hungary and Poland could potentially be stripped of their voting rights in the bloc. But the two nations have vowed to use their veto powers to protect one another, effectively eliminating the threat of sanctions.

2. Then what’s the point of going through the motions?

In the EU, processes can be as important as ultimate decisions because there is a political cost in the bloc to being a pariah. Article 7 is a mechanism of last resort but even so, there are plenty of exit ramps before the ultimate penalty may be applied. The aim is not to reach the end of the road but to convince member states along the way to reach a compromise that’s in line with the EU’s core values.

3. What’s the concern about Hungary under Orban?

He’s on a mission to galvanize populist support across the continent with the aim of wresting control over the EU’s direction following elections for European Parliament next year. The 55 year old won a third consecutive term in April after capitalizing on years of anti-immigrant rhetoric that’s helped make him a poster child for surging nationalist movements in Europe. To protect what he calls “Christian Europe,” he’s built a fence on Hungary’s southern border and forced asylum-seekers into detention camps when a flood of Middle East refugees arrived in 2015. He’s called Muslim immigrants “invaders.”

4. How has he changed Hungary?

After his election in 2010, Orban pushed through a new constitution over opposition protests, curtailed the power of courts, appointed allies to head institutions and changed the electoral system in ways that helped him keep power. In 2014, he said he’d end liberal democracy and create an “illiberal state” modeled on countries like Russia and Turkey where there are few checks on powerful leaders. This year, Orban widened a crackdown against non-governmental organizations and moved to silence dissent by undercutting the media, judiciary and universities.

5. Who’s following his lead?

In Poland, the Law & Justice Party has led a similar assault against courts, the media and other fixtures of democratic governance since taking power in 2015. Other former communist nations such as the Czech Republic and Slovakia have strayed from the EU mainstream on issues such as the treatment of refugees, while Romania has weakened anti-corruption laws. In western Europe, nationalists of all stripes have cited Orban as an inspiration, including Italian Deputy Prime Minister Matteo Salvini, who’s seeking to create a populist front for the upcoming European elections. Stephen Bannon, former chief strategist to U.S. President Donald Trump, called Orban a “great hero.”

6. What are their goals?

Orban portrays himself as a counterpoint to Europe’s liberal democratic model, which he said reacted weakly to global financial turmoil and was destined to lose its competitive edge to more centralized states like China. Poland’s de-facto leader, Jaroslaw Kaczynski, is seeking a return to Europe’s Christian roots from the liberal, multicultural values enshrined in the EU. Others, including Czech Prime Minister Andrej Babis and the populist leaders in Italy, are resisting deeper EU integration.

7. Why is eastern Europe a hotbed of populism?

Populist leaders have tapped into a rich vein of frustration among people who feel left behind by the post-communist transformation. Many of the countries have short histories as functional democracies and most adults grew up with limited rights. There is also disillusionment with the economic system that produced the 2008 global financial crisis, which hit countries like Hungary hard. But populism isn’t constrained to eastern Europe. The divisive issue of immigration produced similar nationalist forces elsewhere, pushing Britain to decide to quit the EU, toppling establishment parties in Italy and leading to a surge in nationalist support even in Sweden, one the wealthiest countries of Europe.

8. What do critics say?

That the rhetoric is contrary to the values the EU has been built upon. European Commission President Jean-Claude Juncker, in his last state of the union speech in September, decried “knee-jerk nationalism, which attacks others and seeks scapegoats.” French President Emmanuel Macron has said he wants to take on the mantle of leading the fight against populists in next year’s vote, comparing ideological divisions to a “civil war.”

9. What can the EU do?

Short of Article 7 actions, EU leaders are debating whether subsidies in its budget for poorer countries should be linked to the rule of law, possibly denying them billions of euros of financing.

10. How will European elections influence all this?

Next year’s elections to the European Parliament are shaping up to be a showdown between centrists -- whether green, liberal, socialist or conservative -- and populist forces. The stakes are high because lawmakers elected to the EU legislature will end up picking the next head of the European Commission, who will set the agenda and direction of the EU going forward.

The Reference Shelf

• The European Parliament’s unprecedented rebuke of Hungary, and how it could backfire.
• QuickTake explainers on populism’s rise, Poland’s populist turn and Orban’s battles.
• Orban’s 2014 speech in which he argued for the need to end liberal democracy.
• How Russia’s old stomping grounds spawned Europe’s problems with populism and nationalism.

To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net, Laurence Arnold

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