The latest Oeconomus Economic Club, held on 9 October, was about the Visegrad Group. Titled “Revival of the Visegrad Group: Central European Cooperation in Turbulent Times”, it examined the current state and future possibilities of the V4 from political, economic, defence and other perspectives. The event hosted representatives from all four Visegrad countries who shared their views about the group, followed by a discussion that, among other things, saw a number of participants agree that the V4 is overpoliticised.
In his opening remarks, Anton Bendarzsevszkij, Director of the Oeconomus Economic Research Foundation highlighted the centuries of tradition behind the V4. The recent presidential elections in Poland and parliamentary elections in the Czech Republic brought about changes that will bring new dynamics to the V4, therefore a discussion about the group is timely. He pointed out that during turbulent times such as our present age, regional cooperations like those among the Baltic and Nordic countries as well as the V4 are especially important.
The keynote speech was delivered by dr. Balázs Molnár, Deputy State Secretary for European Policy at the Ministry of European Union Affairs. He stressed that the world is experiencing a turbulent time, and so is Central European cooperation. How can the Visegrad Group be revived? – he asked. Hungary currently holds the V4 presidency for the seventh time, which is not only the continuation but a new chapter of the story that began more than three decades ago, when the V4 was born – or rather reemerged, since the cooperation is a historical necessity of the Central European countries. Over time, what started as a strategic response to the challenges of the early 1990s has matured into one of the most effective and successful regional formats within the European Union, matching the levels of Nordic, Baltic or even Benelux cooperation.
The weight of the V4 can also be measured in numbers: the four members’ trade volume in relation to Germany is higher than the French-German trade volume. This underlines why a strong and united Central Europe matters not only for us but for Europe as a whole too. When the V4 countries act together, we can defend our common interests much more effectively. Examples that prove this include the last multiannual financial framework negotiations and preserving the freedom of movement during the Brexit process. As the EU begins to prepare the new multiannual financial framework, it is essential that we once again present a strong and unified V4 position.
The Deputy State Secretary highlighted that one of the Visegrad Group’s strengths is its flexibility, which stems from the fact that it is not institutionalised, except for the Visegrad Fund. The V4 only expresses positions on which there is a common ground. Furthermore, the V4+ format allows for engagement with partners in Central and Eastern Europe, but also with the Baltic and even Nordic countries on a wide range of policy areas including migration, energy, agriculture, defence and tourism. Beyond economics, the four member states are also linked by strong cultural and social similarities.
The dynamics of the V4 are being challenged due to the differences of opinion regarding the handling of the war in Ukraine. Hungary, as the current holder of the presidency, is committed to reviving the Visegrad Cooperation. Based on the results of the Czech elections, we aim to bring the member states closer together and find common ground. We are convinced that the V4 can remain one of the strongest regional groupings in the EU. The Hungarian presidency’s motto is “competitive Visegrad” and our program focuses on three priority areas: competitiveness, security and connectivity. Competitiveness because if we are strong and innovative, Central Europe can remain the driving force behind growth in the EU; security because in uncertain times, protecting our citizens and strengthening the resilience of our region are more important than ever; and connectivity because linking our countries’ infrastructure, energy networks and other forms of networks is key to building a strong and future-oriented region.
David Castek, Co-founder of Patrimonium Sancti Adalberti in the Czech Republic asked what it means that we are living through turbulent times? It means the transition from a unipolar world management to a multipolar one. In the unipolar world, the US was something of a hegemon, while the West was an instrument in this, especially the G7 countries. The most important institutions, like the EU or NATO, were a part of this word management instrument. Now that the world management is changing, these institutions must also be changed or disbanded. The results of the recent Czech elections are very positive for the V4 as they mean that the Czech Republic will play a cooperative role in the group. At the same time, from a Czech point of view, the Visegrad Group is only a part of a much larger Central European cooperation, from Poland to Greece. This project must be realised in a framework based on nation states and national interests, and in David Castek’s view there is an opportunity at present to establish such a cooperation. In terms of the V4, the engine of the group must be the business sector. Infrastructural development has to be started immediately, and it should be financed from state budgets as external financing is problematic.
Łukasz Wojdyga, Director of the Center for Strategic Studies at the Warsaw Enterprise Institute in Poland said that when the V4 was created in 1991, the four member states had one mission: to bring Central Europe back to the West, to join NATO and the EU. Once this was achieved, it had no mission any more. Whereas the cooperation worked well before, it was not very fruitful afterwards. The most visible division within the group currently has to do with the war in Ukraine, in relation to which Hungary and Slovakia take a more pragmatic approach, mainly due to their economic and especially energy ties to Russia. This means that the V4 no longer has the same strategic outlook in relation to our region. However, this division began long before 2022 and the war only made it more visible. There are deeper structural differences, for example relating to the economy: Poland and the Czech Republic have more diversified economies tied to Western Europe than Hungary and Slovakia, who depend more on foreign investment and cheap energy from the East. Another reason for the division is the lack of an institutional background, which in Łukasz Wojdyga’s view is in fact an obstacle to the V4’s development. Moreover, there are many competing regional formats like the Three Seas Initiative, the Bucharest Nine or the Slavkov trilateral, but perhaps we should focus more on the V4 instead of other forums. A product-based cooperation is needed in the Visegrad Group, along with less politics and more pragmatism. In addition, the V4 should be the voice of Central Europe in the EU.
Lukáš Parízek, Founder of the Visegrad 4 Business Conference, Founder and Chairman of the Council of Slovak Exporters, Member of the Supervisory Board in Slovak Eximbank, and former State Secretary of the Ministry of Foreign and European Affairs of the Slovak Republic said in relation to the lack of V4 institutions that if we focus on deficiencies or points where we don’t agree, we won’t move forward. A major problem is that the Visegrad Group has been overpoliticised in the recent decade. In light of the euphoria surrounding Andrej Babiš’s return to power in the Czech Republic, it’s important to note that politics is cyclical, so while it’s certainly good to have political alignment within the V4, we have to keep in mind that in terms of politics, there will be better times as well as worse times. What we really should focus on is all the other aspects of life and cooperation in the region, such as infrastructure, services, business, culture, tourism, education – all the areas the Visegrad Fund was also established for. If we don’t overpoliticise the V4 cooperation, everything will be even more effective when there’s also political alignment between the members, but when we don’t have that, we’ll still be able to work together.
Szabolcs Pásztor, Director of Research at the Oeconomus Economic Research Foundation approached the forum’s topic from the perspective of trade. He pointed out that many tend to say the V4 countries are one-sidedly tied to the German economy and there is little trade between them. However, that’s no longer true: almost every country in this region exports and imports more and more globally, around 7-8%. When it comes to trade within our region, countries also export and import more, around 11-12%. What this shows is that trade and business ties are stronger than before, and while these countries continue to trade with Germany, they trade more and more with each other. There are large companies in all V4 countries and our region is a good testing ground for them. They follow the so-called Uppsala model: when they want to internationalise, they experiment on the other side of the border because there are culturally similar customers there. These companies open branches in the V4 countries and if they’re successful, they go further. As Szabolcs Pásztor put it, international trade is alive and kicking, and let us hope that politics will support these processes.
István Loránd Szakáli, Strategic Director at the Oeconomus Economic Research Foundation stressed that the V4 was created from the participating countries’ own initiative, not from external pressure. Pragmatism and flexibility are key to its operation; we work together where our interests align. However, while the V4 has achieved much in politics and culture, economic cooperation has always lagged behind. Together the four countries represent the EU’s fourth largest economy; their economies are deeply integrated into the EU market and contribute a share of European exports that exceeds their relative weight in GDP. Still, these achievements are not due to a common economic policy. Today we are living through a historic economic transformation, driven by technology through digitalisation and artificial intelligence. If we want the Visegrad Group to benefit from this transformation, we must build our own Central European economic profile and reduce our exposure to external shocks. How can we move forward? Loránd Szakáli highlighted six drivers: build regional value chains and increase intra-V4 trade; deepen energy cooperation; strengthen research and innovation; promote financial integration; enhance labour market cooperation and demographic resilience; and improve connectivity.
During the discussion, a number of participants agreed that the Visegrad Group is overpoliticised. Indeed, there was no shortage of ideas and suggestions in areas not related to politics. Several participants mentioned the importance of energy policy. Hungary has to import between 10 and 20% of its electricity. We export electricity as well, but there are bottlenecks in capacity, therefore the infrastructure needs to be developed. An economist participant highlighted the fact that Hungary is a net importer of electricity, even though the installation of solar panels is going well. The problem is the storage of electricity, which could be an area of pragmatic cooperation among the V4 countries.
Defence cooperation was also discussed. The representative of a defence company said the SAFE (Security Action for Europe) program can serve as the basis of further V4 cooperation in this field. In addition, the V4 can receive significant funding in the framework of SAFE. A former deputy state secretary at the Ministry of Defence said that while there have been ups and downs in the military cooperation within the Visegrad Group, they rarely depended on who was in power in which country. When there was no substance to the cooperation, it was due to either external factors or specific industrial and economic circumstances of various V4 countries. He was also optimistic about the future in this area as there will be much more money available for defence industrial cooperation.
The importance of transport – especially railway – infrastructure was emphasised by several participants. Building a north-south railway and highway network between Poland and Hungary is crucial, and it would also enhance our competitiveness in the EU. A participant pointed out the dependency of three Visegrad countries (Hungary, Slovakia and the Czech Republic) on the automotive sector; he stressed that we need to figure out how to diversify our economies as well as how to deal with the current challenges of this sector.
An economist talked about an aspect of the V4 that he felt was always forgotten; namely that these countries are economic competitors. They have to compete with each other for German opportunities as well as global investment. It’s hard to set aside competing in order to cooperate, but politics can set out goals and strategies that can overcome the “bad blood” resulting from economic competition
