Democratic deficit will lead to economic deficit

Hungary and Poland, the two main “illiberal democracies” in the European Union, have recently faced economic crises. In Hungary, inflation reached about 24%, more than twice the average in the EU countries, while in Poland, the inflation rate is only slightly lower. Europe as a whole is dealing with multiple crises: the fallout from the war in Ukraine, the aftermath of COVID-19 and other global causes, but the situation in Hungary and Poland is considerably worse than that of their neighbors. This situation results, among others, from actions taken by the Hungarian and Polish governments to weaken the power of the courts, curb independent media, limit freedom of speech, and generally weaken democratic principles.

The European Union has for some time withheld monetary support in the number of billions of euros, which were originally allotted to Hungary and Poland as EU members, either as part of the Corona recovery package, or as part of the Horizon and Erasmus programs in support of academic research, education and sports. The leaders of the European Union do not look favorably on the distancing of the two countries from democratic principles, the weakening of the legal systems and the government’s takeover of the media. As a result, they are applying economic pressure to stop or backtrack from these anti-democratic actions.

Faced with growing economic hardship, voices from Poland and, to a lesser extent, from Hungary, are amenable to discontinuing legislative procedures and amending others. The bottom line: governments of leading “illiberal” democracies realize that the forceful changes they insist on making end up hurting their economies and, without an economy, there is no government except by force of arms.

The Netanyahu government, which seeks to follow the political path of Hungary and Poland, may end up like Turkey or Russia, which do not have the restraining mechanisms of the European Union and are involved in a national conflict. Netanyahu’s government would do well to observe these weakened democracies and understand how deep is the hole that it is digging for us all. How quickly the democratic deficit can also turn into an economic deficit, caused not only by a private sector reluctant to operate under conditions of uncertainty brought on by an undemocratic regime, but also because the State of Israel is financially dependent on both the European Union and the US government, two critical factors that do not look kindly on the anti-democratic fervor that has gripped the current government.

During the Bennett-Lapid government, Israel strengthened its ties with the European Union. In December 2021, Israel joined the Horizon Europe program for scientific and industrial cooperation with a total budget of approximately 100 billion euros (to be used within the Green Line). In July 2022, after a lengthy period of expulsion, the European Union renewed Israel’s membership in the Association Council, the senior European body charged with promoting the set of political, economic and technological relations between its member states and neighboring countries, making it easier for Israel to participate in various union-based collaborations. These activities are now endangered if the Israeli government insists on following the path of Hungary and Poland. This stands true regarding both the European Union and the United States, whose support for Israel, neither political nor economic, should not be taken for granted. To clarify the picture, US support for Israel stands at 3.8 billion dollars a year as part of the security assistance agreement, in addition to many collaborations in the field of R&D.

The readiness of the ruling party in Poland, and also to some extent in Hungary, to comply with some of the European Union’s demands, shows the extent of international pressure brought to bear on countries that are gnawing at their democratic mechanisms, and is a warning that should not be ignored. The judicial coup that is being promoted these days in the Knesset’s Constitution Committee endangers not only Israeli democracy, but also our economy and foreign relations. A coup that, if it goes through, will leave us in a situation akin to countries like Hungary and Poland whose economies are deteriorating, claim among the lowest quality of life indicators in Europe, and face a series of economic sanctions that make it increasingly difficult for them to provide a decent quality of life for their residents. However, this will not stop there, Israel will deteriorate further to become a Turkey or Russia that, like us, are trying to divert the public’s attention from the decline in civil rights by seeking out enemies and encouraging unnecessary wars.

About the Author
Nadav Tamir is the executive director of J Street Israel, a member of the board of the Mitvim think-tank, adviser for international affairs at the Peres Center for Peace and Innovation, and member of the steering committee of the Geneva Initiative. He was an adviser of President Shimon Peres and served in the Israel embassy in Washington and as consul general to New England.
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