Outlook 2021: Perspectives for the Next Year from the Antall József Knowledge Centre Research Team

ANTALL JÓZSEF RESEARCH CENTRE

OUTLOOK 2021: PERSPECTIVES FOR THE NEXT YEAR FROM THE ANTALL JÓZSEF KNOWLEDGE CENTRE RESEARCH TEAM BENCE KOCSEV — FANNI KORPICS — DALMA BODOLAY — ALESSANDRO D’ONOFRIO — BIANKA RESTÁS — PÉTER DOBROWIECKI — ÁGNES VASS — KRISZTINA ISZÁK — TAMÁS KOZMA — ZSOLT CSEPREGI — LUKÁCS KRAJCSÍR — PÉTER STEPPER — ZSOMBOR PÁL SZABOLCS — NOÉMI SZŐKE ESZTERHAINÉ — NORBERT MIKLÓS — EMESE SCHWARCZ — DR BALÁZS HAMAR — ZSÓFIA GULYÁS — LAURA SZILÁGYI

2 Czuczor Str, 1093 Budapest +36 20 310 8776 ajtk@ajtk.hu | www.ajtk.hu/en

ANTALL JÓZSEF RESEARCH CENTRE

AJRC-Analyses Series of the Antall József Knowledge Centre

Publisher-in-Chief: Péter Antall Managing editor: Péter Dobrowiecki Editorial office: Antall József Knowledge Centre H-1093 Budapest, Czuczor street 2

Contact: H-1093 Budapest, Czuczor street 2 Phone: +36 20 310-87-76 E-mail: ajtk@ajtk.hu Web: ajtk.hu/en

© Bence Kocsev, Fanni Korpics, Dalma Bodolay, Alessandro D’Onofrio, Bianka Restás, Péter Dobrowiecki, Ágnes Vass, Krisztina Iszák, Tamás Kozma, Zsolt Csepregi, Lukács Krajcsír, Péter Stepper, Zsombor Pál Szabolcs, Noémi Szőke Eszterhainé, Norbert Miklós, Emese Schwarcz, Dr Balázs Hamar, Zsófia Gulyás, Laura Szilágyi, 2020 © Antall József Knowledge Centre, 2020 ISSN 2416-1705

2 Czuczor Str, 1093 Budapest +36 20 310 8776 ajtk@ajtk.hu | www.ajtk.hu/en

OUTLOOK 2021: PERSPECTIVES FOR THE NEXT YEAR FROM THE ANTALL JÓZSEF KNOWLEDGE CENTRE RESEARCH TEAM BENCE KOCSEV — FANNI KORPICS — DALMA BODOLAY — ALESSANDRO D’ONOFRIO — BIANKA RESTÁS — PÉTER DOBROWIECKI — ÁGNES VASS — KRISZTINA ISZÁK — TAMÁS KOZMA — ZSOLT CSEPREGI — LUKÁCS KRAJCSÍR — PÉTER STEPPER — ZSOMBOR PÁL SZABOLCS — NOÉMI SZŐKE ESZTERHAINÉ — NORBERT MIKLÓS — EMESE SCHWARCZ — DR BALÁZS HAMAR — ZSÓFIA GULYÁS — LAURA SZILÁGYI

EUROPE BELGIUM—TESTING THE LIMITS OF FEDERALISM? BENCE KOCSEV

In the opening statement of his widely popular book, The Belgian Labyrinth, the Flemish sociologist-journalist, Geert van Istendael, briefly explains why he loves and, for the very same reasons, hates Belgium. One of the decisive characteristics of the country of “one hundred and fifty sorts of beer” that is responsible for his mixed emotions is its ungovernability. In a way, this–for van Istandael charming, yet tiresome–feature of Belgium is also liable for the malaise of the country during the current pandemic. Whereas, like in the Netherlands, the political culture of the country is highly fragmented along centuries long socio-economic, cultural and religious dividing lines, the political system that is fabricated to provide a delicate balance among these centrifugal interests is even more intricate in Belgium than the one of its northern neighbor.

While in the Netherlands the last couple of years have been characterized by political stability, the situation in Belgium turned to be more fragile, as the political leadership was unable to sail smoothly through its major hurdles on the federal level. Quite notoriously, since December 2018, Belgium had been governed by caretaker governments (Michel I and Wilmès I) and, following the 2019 federal elections, the creation of a new cabinet with all the executive powers became, as always, a complicated procedure. Apparently, this political impasse to form a government even hampered the fight against the pandemic. Nevertheless, political stalemate aside, the greatest obstacle to properly response to the challenges of the virus was (and will be) the difficult handling processes between the central and regional governments. The complex structure of interlocking competencies, redistributed rights

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and decision-making power to linguistic communities (Flemish, French, German) and geographic regions (Flanders, Wallonia, Brussels) substantially exacerbated the problems decision makers had to face and made the execution of any comprehensive measure particularly complicated when the pandemic reached the country. While, for instance, issues concerning health are divided in a complex manner between federal and regional bodies (N.B. in total 9 ministers are responsible for health related matters), economic decisionmaking are shared between the federal state and the regional governments, and last, but not least, the jurisdiction on education is in the hands of the communities. Obviously, negotiations and the coordination between the different levels were very time-consuming and the whole system proved to be too fragmented and insufficient in the early weeks of the pandemic. While progress has been reached in this regard, these structural obstacles will potentially determine the defense against the virus in the next year too.

Eventually, however, once the virus started to increasingly spread all over the country and federal political decisions were necessary to alleviate the health and the anticipated economic consequences of the pandemic, ten political parties agreed to give the right to excess emergency powers to the caretaker government led by the French-speaking liberal, Sophie Wilmès. This special consent was granted for a limited, three months’ timeframe and was extended until the government formation process following the federal ballots of 2019 was completed in October 2020 when, after 494 days, the so-called “Vivaldi coalition” led by the Flemish liberal politician, Alexander De Croo has finally been formed by four distinct political forces (Dutch- and French-speaking liberals, socialists, greens, and Flemish Christian democrats). While to a certain extent the fully-fledged government resolved the political uncertainty, the new coalition immediately had to face the second wave of the pandemic, which even surpassed the first one. In order to avoid the overload of the health care system and, by recognizing that partial measures are not effective, the new government imposed a national lockdown at the end of October 2020.

Economically, the Lage Landen (Low Lands) are the prime examples of open economies, therefore, as it is mentioned in the Dutch case study, these economies were hit especially hard by the pandemic. Like in the Netherlands, the health risk posed by the coronavirus was initially underrated by officials. The tardiness of the initial federal measures, and the fact that the expired strategic reserve of the personal protective equipment (FFP2 masks) was destroyed in 2018 and has not been replenished, substantially damaged the reputation of the government and especially of its minister responsible for public health issues, the once popular Maggie De Block. Eventually, the caretaker Wilmès government moved toward stricter measures and–like most of the European countries– imposed a lockdown in mid-March. Since then, the disruptions in supply chains, the fall of consumption and investment, and not to speak about the weak international trade, have been testing the limits of the Belgian economy. To cope with the economic consequences of the pandemic, a number of federal and regional steps were taken. On the federal level, an additional budget was provided to relieve (to a certain extent) public health institutions, and tax and employment measures were introduced in order to mitigate the economic impacts of COVID–19. Additionally, the Belgian regional governments have also provided further tax, financial and other stimulating incentives (like the Welfaartsfond of the Flemish

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government to help businesses in the region). As the restriction will likely be with us also in 2021, the economic growth expectations are rather pessimistic. Therefore, in 2021, the new De Croo administration will definitely be concerned with the effects of the corona crisis. In this regard, the government would also aim to entangle the path to economic recovery with the transition to a more sustainable economic model.

Whereas the new coalition agreement of the De Croo cabinet is primarily focusing on the COVID–19 crisis and it economic and social consequences, on the international level, the new government–though with some shifts–will maintain the traditional foreign policy goals of the country. In light of the current pandemic, the big questions of the coming years will thus concern rather the internal than the external affairs of the country. In this regard, the main issue (and bone of contention among the political stakeholders) will be how the meticulously designed federalist structure of the country will sustain.

As it was briefly touched upon earlier, the pandemic with its many repercussions yet again exposed the structural weaknesses of the current system and “reignited the highly contentious debate about the structure and raison d’etre of the Belgian state itself”. Difficult communication and the blurred boundaries between the regional and federal governments and communities made it clear that the current system is unable to quickly and effectively tackle major vis major situations. In addition, the pandemic further exacerbated the existing cleavages and imposed an increasingly growing challenge to the political system. The fact, however, that the coalition has been formed by seven parties with very different standpoints is not just a potential threat to political stability, but would likely derail any possible reform initiative. In this context, dealing with issues concerned with the structural reform of the federalist system would be a difficult undertaking.

THE NETHERLANDS—CHALLENGES AND PERSPECTIVES BENCE KOCSEV

“Coronavirus has our country in its grip.” With this dramatic statement, aired on the Dutch national television on 16 March 2020, Prime Minister Mark Rutte forecast that the coronavirus pandemic will have severe and long-lasting effects on the country. The fact that the last time a Dutch prime minister addressed the nation in times of exigency was in 1973 when Joop den Uyl informed the citizens about the measures that had been taken in order to mitigate the effects of the oil crisis shows the awareness of the country’s leadership on the anticipated serious ramifications of the pandemic. Den Uyl’s famous remark, stating that the world before this crisis will not return, was also one of the main messages Rutte wanted to convey to the 7 million viewers of the broadcast. Obviously, as the pandemic has massive effects all over the world, the Netherlands is not the only country suffering under

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the current circumstances. Nonetheless, as one of the most internationally integrated economies in the world, the country is especially vulnerable to any changes a crisis like this might cause. Therefore, it is not surprising that initially the country opted for the socalled ‘intelligent lockdown’ focusing more on the self-discipline and the social compliance of the population. This way of crisis management, however, turned out to be unfeasible, and “orthodox” restrictive measures (including the wearing of face masks, which was, for a long time, debated also by the chief virologist of the country, Jaap an Dissel) have been introduced in the course of the pandemic.

Economically, as it was pointed out in a recent study, the lessons of the euro crisis have been learned. Whereas after 2008 the Netherlands opted for and supported austerity policies (on the European level, the country is even a member of the notorious Frugal Four), recently a paradigm shift has occurred and a rather Keynesian fiscal policy has been proposed for the rest of 2020 and for 2021. As it was stated during the so-called Prinsjesdag (the ceremonial opening of the parliamentary session held always on the third Tuesday of September), the financial plans of the government include, among others, the extension of the earlier emergency and stimulus packages for supporting businesses, self-employed people and employees working in heavily exposed sectors. A further support of the economy by planned investments in infrastructure and housing construction is also planned for 2021.

In turn, the national debt is expected to be on the rise (45% to 75%) in a country that was a vocal supporter of austerity policies in the past. In addition, to foster prosperity for future generations, a National Growth Fund (Nationaal Groeifonds) is being established with a five-year budget of around EUR 20 billion for innovation, knowledge and infrastructure, and a new Tax Plan has been framed to stimulate economic growth in the next year. Other burning issues that require long-term thinking–like the housing market, the health system, digitalization, and climate, to name a few–will also be on the priority list of the government in 2021. Furthermore, while the coronavirus crisis has highlighted how closely the country is connected to the world economy and led to a considerable GDP decline, it became more stricking that the country (like many other countries in Europe and elsewhere) is too dependent on other countries in critical areas like energy supply and medical devices. Thus, overcoming this overdependence is yet another goal of the coming years.

Politically, the next year will be shaped by the general elections and the ensuing cabinet formation that, due to the highly fragmented political landscape, will presumably last long. In the recent years, the Netherlands has experienced a period of political stability and it has been 10 years that Mark Rutte and his conservative liberal party, the Party for Freedom and Democracy (VVD), governed the country in various coalitional settings consisting often ideologically disparate parties. Once the pandemic hit the country, Rutte’s popularity has started to further increase and his government’s strategy still has a very high domestic approval rating. Therefore, not surprisingly, polls forecast the wide lead of the VVD in the upcoming general elections, scheduled for March 2021. Traditionally, opinion polls measure high on the list the right-wing party of Geert Wilders (Party for Freedom) too, but this popularity tends to meld until the day of the election. In addition, his party has to share the anti‐establishment political edge with the Forum for Democracy, a young conservative and similarly Eurosceptic party winning the most seats in provincial

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legislative assemblies (Provinciale Staten) last year, but which has witnessed crumbling popularity due to the party’s virus skepticism and the current anti-Semitism scandal that eventually led to the resignation of its leader, Thierry Baudet. The really interesting issue, however, in this regard will be how the center of the political spectrum (and the current coalition partners of the VVD), namely the Christian Democratic Appeal, the Christian Union, and the Democrats 66 will (re-)position themselves to come out from the shadow of the prime minister. Furthermore, cultural and socio-political challenges–such as continuous immigration, the increasingly multicultural society, and hence the stance towards the social integration of ethnic minorities, the different understandings on democracy, and even on heritage and identity, will be constantly and increasingly responsible for political and public debates. In terms of international relations, the current uncertainties , such as the development of the COVID–19 pandemic or the unpredictable effects of Brexit, will in many ways shape the international outlook of the country in 2021. As the UK is the secondlargest trading partner (after Germany) of the country in terms of value added, the potential impacts of Brexit after the transition period could severely affect the Dutch economy.

Moreover, the country will have to reckon with the fact that, with the election of Joe Biden as the next President of the United States, the old transatlantic relationship will not come back. Despite the current extraordinary situation, the foreign policy priorities of the country (defined in the Dutch government coalition agreement of 2017) will, however, be further maintained in the coming year. More particularly, the government will continue focusing on preserving international security, the strengthening of international cooperation, and maintaining the international legal order. On the European level, the Netherlands, with Rutte as the unofficial leader of the already mentioned Frugal Four, is traditionally against the increase in European spending and the relaxation of strict conditions attached to recovery funds, which led to clashes within the European Council with Southern countries heavily impacted by the virus. The question on what criteria the European recovery fund should be based on created further cleavages with countries like Hungary and Poland.

Rutte’s stance, however, should be seen in the light of the coming elections and his endeavor to build political capital from this situation from both sides of the political spectrum. As in the post-Brexit period, Europe will be an even more relevant region for the Netherlands and thus the country would like to have a say in the course of the European politics. It is expected that, for the time being, these fault lines will further shape the positions of the Dutch political leadership. With regard to the enhancement of the joint European economic presence in the world economy, the Netherlands keeps advocating the Frenchled idea for ‘strategic autonomy’ enabling European companies to compete on international markets, while making it harder for foreign companies to acquire European ones.

Uncertainty about the development of the pandemic and its further effects will substantially shape the next year of all countries, including the Netherlands, thus, the right economic and political responses to mitigate the effects of the virus will be of vital importance. Being the most competitive economy in the European Union, the Netherlands has good starting conditions, nevertheless, a quick government formation (which has been very rare in the last decades) will be necessary to maintain its leading position and to cope with international challenges.

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FRANCE—WILL PRESIDENT MACRON CONTINUE HIS ACTIVISM AMID COVID–19 CRISIS? FANNI KORPICS

2020 will not go down in French history as one of the most successful years, at least from the domestic policy’s point of view. France, led by President Emmanuel Macron, did not only have to face the consequences of the global COVID–19 pandemic, but also had to suffer from several terrorist attacks carried out on its national territory. On the other hand, however, that did not stop the ambitious president, Macron, from leading an active foreign policy when it came to challenges regarding France’s –so called– zone of influence. Given the duplicity between domestic failures and diplomatic successes, it is very interesting to look at the country’s possible options for the new year, 2021.

Without doubt 2020’s main challenge for France was COVID–19. France was already very badly hit by the first wave of the disease, however, now we can say that the second wave is much more violent. After the severe lockdown in the spring, Emmanuel Macron announced yet another one at the end of October. As he highlighted, the first wave of the pandemic had serious effects on the economy, and he claimed that the government will do anything in order to avoid that happening again. In order to put French economy back on its feet, the government has announced an extremely generous programme: France Relance that aims to help those enterprises that are most in need, besides it will help to minimise the damage the health crisis caused the economy. On top of all that, the second half of the year saw a surge in terrorist attacks in France which increased insecurity. The main challenge for France in 2021 will be to curb the number of COVID–19 infections, and to prevent further terrorist attacks. As the French political elite emphasises, they will do everything in order to maintain and protect civil liberties and will continue the fight against Islamic separatism. In response to this, many Muslim countries decided to boycott French products as a sign of their protest. We can say that the newly appointed prime minister, Jean Castex, entered in a very delicate political climate, and it is yet to be seen if he will be better at crisis management than his predecessor, Édouard Philippe.

In 2020 France’s position in the EU has been strengthened due to the fact that the United Kingdom left the European integration. This year has brought a slight change in the –socalled– Franco-German axis as Macron and Merkel do not agree on every issue, it is, however, starting to become clear that, in the EU27, Germany will keep on being the main economic power, while France aims to take the lead in EU foreign policy. As for France’s main strategic goal, the priority will remain the maintaining of its already existing zones of influence, with the aim of broadening it besides trying to involve new territories there. The country has always taken significant interest in the Sahel-belt, but in the light of the recent and ever more violent terrorist attacks carried out in France, Macron has strengthened French operations in the region contributing to counter-terrorism. Most probably France will have a

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say in the democratisation process after the Malian coup, as we can also expect Emmanuel Macron to continue his contribution to the stabilisation of the former French colonies in Western Africa in 2021.

When it comes to France’s NATO commitments, we can say that Emmanuel Macron wishes to increase his country’s relevance in the institution, especially when we could witness America’s withdrawal from being a guarantee to European security; as Macron bluntly put it, NATO is in a brain dead position. In addition to this, there are tensions between France and Turkey, as two NATO allies (plus fellow EU member Cyprus), Greece and Turkey, quarrel over disputed waters with Paris supporting the Greek and Cypriot claims. This conflict might give an opportunity for Macron to showcase that France is a relevant actor when it comes to the security of the Mediterranean. Moreover, because of Brexit, Paris can take the opportunity to assume greater leadership in the EU, as it is now, by far, the most powerful member state in terms of military capabilities.

In the Mediterranean, France’s main challenger is Turkey, lead by president Recep Tayyip Erdoğan—especially as both of them differ on which country might have a legal claim over the recently discoverd natural gas fields in the Eastern Mediteranian region. The ongoing dispute might even endanger the inner stability of NATO. In the Eastern Mediterranean, French geopolitical and economic interests collide, this is why it is not probable that Macron will give up the control over the area, especially after establishing an alliance between his country, Greece and Cyprus. In French strategy, the Mediterranean has an utmost importance and serves as a bridge between France and its former colonies, mostly on the African continent, as well as its former mandates, mostly in the Middle East. Furthermore, France has maintained a continuous commitment towards Lebanon, which is best showcased by Macron’s engagement in the Lebanese crisis management. France also aims to contribute to the stabilisation of both the Syrian and Libyan situation.

In the field of multilateral diplomacy under the egis of the UN, France also tries to take a leading role. This is also due to the fact that the United States’ activism in global diplomacy has declined, while Macron is more than ready to step in. As we could see in the case of the international aid conference that France had initiated, President Macron stepped forward as a global coordinator. As for 2021, we might expect that France’s foreign engagement will decrease given that the COVID–19 crisis might draw the attention of the administration to domestic issues.

Even if French foreign policy heavily supports multilateralism, France will most probably maintain close bilateral relations with several partners as well. Many analysts say that France will continue to have an adjacent bilateral relationship with the United Kingdom, despite Brexit. In the question of European Security, Macron clearly wants to take the place of the United States, however, we are yet to see the new American administration’s view on the engagement in the Mediterranean and MENA regions. Franco-Russian relations are quite smooth in spite of the fact that Macron and Putin are both trying to enhance their respective country’s importance on the international stage. Some say that, by building a stronger relationship with the Kremlin, France could liberate itself from an American geopolitical control. In relations with China, France’s main issue is economic dependence.

President Macron highlighted in his interview on Bastille Day that, due to the fight against

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the pandemic, France’s dependence on Chinese medical products has increased, and his goal for the second wave is to reduce this.

As President Macron affirmed in his interview on 14 July, he might have postponed the promised pension reform due to the fight against coronavirus, but he really believes it will be necessary to execute it in the foreseeable future, emphasising that he was elected because of his reform proposals. Even if the health crisis triggered by COVID–19 halted the ambitious domestic reforms Macron had announced earlier, he had certainly not given up on them. Much will depend of course on the state of the economy after the health crisis is over. The so-called yellow vest movement is very closely related to Macron’s reforms.

Even if amid the coronavirus crisis the movement has significantly faded, it is only a symptom of deeply rooted problems in French society, so until those are not resolved, there is little hope that the movement will stop its activity. In addition, there is another Macron reform that divided French society, namely the introduction of a nation-wide 5G network.

The ambitious president does not only work to raise his country’s status in the international arena, but he also wants to make sure that France is a leading power in digitalisation and new technologies. It will, however, still remain a question whether he will be able to do that despite the nation-wide crisis that has emerged this year.

GERMANY—A STRATEGIC OUTLOOK DALMA BODOLAY

On 1 July 2020, the Federal Republic of Germany took over the rotating EU Council presidency with their term expiring on 31 December. The mandate, which is never a simple task even in normal circumstances, came this time for Berlin with greater expectations and heavy responsibilities, due to the growing challenges coming from the ongoing COVID–19 pandemic, the consequent economic crisis which hit Europe and the frustrating budget negotiations deadlock.

Suffice to say that the epidemic had a revealing impact on Germany's role in the European Union: the dreadful health and economic crisis, caused by the pandemic made it clear that a stronger and more active German leadership is the key element to preserve the European Union's growth and success. Berlin is well aware of that and many times Chancellor Angela Merkel affirmed that Germany needs Europe, just as much Europe needs Germany. In her view, the biggest failure in the measures adopted to contain the spread of the pandemic was the lack of coordination at the EU level, since in the vast majority of cases restrictions were taken unilaterally by Member States. Thus, according to the Chancellor, joint action at the European level should be a priority if we want to grant the safety of European citizens, as well as the success of the European project.

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But the challenges for Germany will not be over with the turn of the decade and 2021 will assume particular importance for the EU’s leading economy. In fact, in the autumn Germans will be called to vote for the new Bundestag, and the measures adopted to tackle the coronavirus crisis will be a defining factor for the ruling coalition. Probably, the most important element of the next German federal election will be that they will officially mark the end of the “Merkel era”. After 16 years at the helm of the country, the most powerful woman in Europe, Chancellor Angela Merkel, will retire and leave the question open regarding who her successor will be, not only within the CDU but also as a potential future leader of Germany.

The race for succession in the CDU became very heated, since the election of the new president of Germany’s biggest party had to be postponed due to the national measures adopted to contain the spread of the virus. Even the new selected date of the election, 4 December, is likely to be abandoned, since the second wave of the COVID–19 pandemic hit the country particularly strong. As for now, the party has two main contenders and the selection of the new leader will happen at the beginning of the year at an in-person event or, in the worst scenario, the CDU management will organize a digital congress, where the votes will arrive by post due to the strict law regarding online elections in Germany. This, obviously will take longer than a “normal” voting session and it must not be excluded that it will cause further unsureness and resentment among the candidates.

As a matter of fact, Friedrich Merz, the candidate who currently enjoys the most support, especially from the most conservative wing within the party, fears that the delay of these election might weaken his stand against the more centrist Armin Laschet. Even if Merkel already stepped down as the leader of CDU two years ago, she will undoubtedly retain a strong position in influencing the party’s direction and the outcome of the next general elections. Polls show that the successful, transparent, and well-organised management of the COVID–19 pandemic in Germany—with its effective communication strategy and firm measures to tackle the virus operated by the German government—largely increased the support for CDU inside the country and had a positive effect on its chances in winning the upcoming election. However, everything will depend on the effects that all the measures adopted in the last months will have on the social and economic stability of Germany. If the economy will suffer more than projected and social issues, such as unemployment, will become more politicised as the CDU-CSU alliance will struggle to keep its strong position. As the Chancellor and Health Minister Jens Spahn, both from the CDU, have been the most noticeable actors of the pandemic, possible bad decisions and fruitless management will surely have a direct effect on the popularity of their party.

Surely, a single party government does not belong anymore to the span of possibilities and when political experts are looking for the most likely coalition coming from the next election, it can be assumed that the Green Party will hold the balance of power. Despite the absolute novelty of a CDU-Green government in Germany, the chances to see a coalition as such are becoming stronger due to the steadily growing popularity of Annalena Baerbock and Robert Habeck’s party. According to recent polls, a CDU/CSU and Green coalition would currently secure 54% of the votes, where CDU/CSU would gain 37% of the votes, and the Greens would become the second most popular party with 17%

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of the votes. A coalition like that would most probably preserve the centrist positioning of the German government and keep the executive on track with Merkel’s strategic view.

After almost two decades of Merkel’s rule, Germany and the EU will lose the most influent woman in their history. Surely, she decided to leave the public sphere by offering Europe a last big chance to deepen integration which represents her legacy: the EU recovery fund.

Currently, it is at a standby but if it will be finally adopted, Merkel will always be remembered as the politician who put Germany at the helm of Europe.

TH E U N ITE D K I NG DO M ALESSANDRO D’ONOFRIO

Looking at 2021 from a British perspective, we could assume that the new year will bring along one good thing and one bad thing. The good thing is that Brexit will finally happen. After four and half years, the long British odyssey is inexorably reaching its epilogue. This fact is, from a British voter’s perspective, an utterly positive fact and a sort of liberation. No need to say that, since the Brexit referendum, national politics have been reduced to a petty feud between Brexiteers and Remainers which, in turn, at least until the coronavirus outbreak, has side-lined many other important issues. However, the end of the transition period and the conclusion of the Brexit negotiates are also extremely positive for both the negotiating parties and, most of all, for the EU. Once Brexit will be official, the EU will get rid of a very thorny issue which forced the European institutions and the member states to direct a considerable amount of energies in long and tiresome negotiates, which unfortunately did not bear the desired fruits. It is true that from 1 January the United Kingdom will officially cease to be part of the EU and will have no longer any obligation towards Brussels but the circumstances of this divorce are not completely satisfying. If the fact that Brexit is finally happening is positive in itself, the bad thing is… well… that Brexit is finally happening.

As anyone could observe, in the last few months Prime Minister Boris Johnson did a great job in eating away the already limited number of progresses achieved by his predecessor.

While former PM Theresa May, originally opposed to Brexit, vowed to “make a success of it,” and offered a reasonable solution for the Irish border issue, Johnson, despite his thundering declarations, ended up in a most demeaning situation and badly damaged the UK’s reputation internationally. In fact, not only has Johnson potentially created a border on the Irish sea practically separating Northern Ireland from the rest of the UK, and with this jeopardising the peace process on the island of Ireland, but also disavowed his own word by illegally rewriting the Withdrawal Agreement. This decision, apart from staining British international reputation as a reliable partner, arrived during a period in which the necessity for the UK to find allies and to cooperate globally is more important than ever.

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In fact, the rising global competition, the new American administration, and the coronavirus pandemic, which hit the British economy hard, are only some issues which should convince the UK government to reconsider its movements. However, even if there is still a little time left to find a patchy Brexit agreement—the sides are currently focused on three major sticking points (governance, the level playing field and fishing policies)—the Prime Minister is still determined to carry on his dispute with the EU and proceed towards a no deal.

In the meantime, the UK’s former European partners reached an historical agreement over a EUR 750 billion recovery fund which embodies an important step toward a more united Europe. On the contrary, the United Kingdom is more isolated than ever mostly because the much-vaunted US-UK trade deal seems to be less likely following John Biden’s victory. Closer trading relationship with the Commonwealth, which is a recurring argument of “Global Britain” enthusiasts, does not fit completely in the Brexiteer's picture, since it represents the final destination of just EUR 77 billion of British exports, compared to the EUR 354,3 billion towards the EU in 2019. But most importantly, the United Kingdom will have to struggle to maintain its most favourable connection with the White House, whence the new American Administration will take office. John Biden is expected to be a completely different president from Donald Trump. The former president eendorsed Boris Johnson and Brexit on more occasions and showed his readiness to sign a US-UK trade deal. On the contrary, Biden strongly opposed Brexit and is very suspicious about the current occupant of N.10 Downing Street. Also, the new president, who is a proud IrishAmerican, is also a careful observer of the situation in Northern Ireland and the Prime Minister should not underestimate Biden’s connection with his ancestral homeland. In fact, many within the Conservative party also warned Johnson on several occasions to be careful not to antagonize the new US President by proceeding with his Internal Market Bill—rejected already once in November—which is a blatant break of international law and poised a tangible risk to the fragile peace in Northern Ireland. Suffice to say that Biden has already made clear his position by backing the EU in pursuing legal action against the UK and the Congress—where the American-Irish caucus is very influent—also claimed that the UK Internal Market Bill is a threat to peace in Ireland, because it provides powers to override the Withdrawal Agreement. The next months will be crucial for the British government and for its aspiration to remain a decisive player in the Atlantic world. It is important, therefore, that London will make good use of the few available opportunities to demonstrate that, despite Brexit, its broader foreign policy goals match those of the new American Administration. In fact, the UK will be about to become G7 president, will hold the UN Security Council presidency in February, and will host the COP26 climate conference in December 2021. With Biden vowing to rejoin the Paris Climate Agreement on his first day in office and to put the US on the road to net-zero carbon emissions by 2050, Johnson has an opportunity to show his readiness in supporting the American President and support his ambitions. Making a good impression is, therefore, crucial for the UK and even if the two international agendas won't align on everything, Biden may consider the UK as an ally on several fronts. For example, on the Iran nuclear deal, the unclear international presence in Iraq and Afghanistan, Russia, the strengthening of NATO, seeking a more international approach in order to manage the rise of China

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and, as already mentioned, climate change, trade policy. Pledging an enormous amount of resources to defence—EUR 18,4 billion for the next four years to add to the EUR 46,5 billion disbursed in 2020—makes the UK the first investor in NATO after the US, which is a very promising first step towards this direction that was seemingly appreciated in Washington.

But the easiest way for Britain would be, of course, to strike a last-minute deal with the EU on a free-trade agreement that would avoid the UK’s isolation. In fact, Biden has often pledged that his priority would be to rebuild the US’s political relations with the EU and its member states. Among them, Ireland is ready to play a central role in the next four years or, who knows, maybe an independent Scotland as well.

ITALY—THE CONTEXT OF THE COVID–19 PANDEMIC: IMPACTS AND FUTURE CONSEQUENCES BIANKA RESTÁS

COVID–19 has created an unprecedented situation in Italy, posing significant short, middle, and long-term consequences for the country’s economy, society, public health, and everyday life. During the initial phase of the pandemic, Italy was one of the worst affected countries both in terms of confirmed cases and fatalities and from an economic point of view. As of 14 December, there were 64,520 victims of the pandemic in Italy according to the data published by the Civil Protection Department of the Presidency of the Council of Ministers (Dipartimento della Protezione Civile—Presidenza del Consiglio dei Ministri). The coronavirus crisis provided the second Conte government—that entered into office in September 2019, and took a significantly diverse political direction compared to the previous “green-yellow” governing experiment—an opportunity not only for an increased level of cooperation with the EU, but also to gain greater political power and credibility in Europe.

As a result of the quick spread of the disease, on 9 March, a strict nationwide lockdown was introduced in Italy to combat the coronavirus, which, in practice, meant severe restrictions on travel and the free movement of people to limit their contacts with other citizens. With the introduced measures, the government intended to slow down the spread of the coronavirus and reduce the rocketing number of infections that cemented Italy as a global virus hotspot. Prime Minister Giuseppe Conte described the situation that the crisis has created as “the country’s most difficult period since the end of World War II.” As a consequence of COVID–19, the government had to tackle the emergency situation facing not only the frightened Italian public, but also fiscally conservative European leaders.

Despite the initial, severe confrontations on how to tackle the economic consequences of the crisis at the European level, the enhanced level of European solidarity to jointly finance the European Recovery Fund can be considered as a significant achievement towards

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collective solidarity at the European level. As a consequence of its geopolitical position— one of the countries most affected by migratory challenges—and its severe economic challenges, such as huge public debt, high unemployment rates, and weak economic growth, Italy is a strong supporter not only of greater solidarity between EU member states, but also for the modification of the strict and conservative fiscal regulations in the bloc.

During his speech last year, among others, Prime Minister Conte underlined two significant questions concerning the future of Europe. On the one hand, he emphasised that a fundamental precondition for guaranteeing a strong Europe is “to ensure its solidarity and cohesion through the collective responsibility of its Member States.” On the other hand, he highlighted that “there are two emblematic challenges that demonstrate the urgency of restoring trust and solidarity in Europe: migration, and economic and financial governance.”

By mentioning these, Conte pointed out two issues that are of particular importance for the country, areas where Italy has its own, ambivalent experiences. There is no question that solidarity and trust have become even more relevant during the coronavirus emergency in Europe, and the initial resistance and hesitation of the EU to provide a quick response to the crisis has created further tensions in a country where the Eurosceptic mood has also been on the rise in recent months and years. An opinion poll conducted by Termometro Politico highlighted that 42,2% of the Italians would have been ready to leave the EU in May, while the proportion of those Italians who would leave the euro (45,9%) was even higher. This attitude has also been illustrated by the very hard-line reaction of the Prime Minister in April when he emphasised that the European Union risks failing as a project in the coronavirus crisis. Even the grants and loans offered by the recovery fund— or the Next Generation EU, as it is called—provide an opportunity for the country to avoid a deeper economic recession, Italy’s economy has suffered massively and will continue to suffer from the impacts of the COVID–19 in the upcoming years.

Data highlight that the pandemic had a devastating impact on the country’s economy: in the first quarter of the year, the Italian economy shrunk by 5,4%, and by 12,4% in the second quarter. In April, arrivals at tourist accommodations were down to 99% compared to last year, car sales contracted by 98%, retail sales by 29%, industrial production by 47%, and construction production by 68%. Italy is set to receive as much as EUR 209 billion in grants and loans in the framework of the European Union’s recovery fund. According to the draft budget outlook of the Italian government, the measures financed by the fund— in line with the EU fund plans—will target growth, creating jobs, reducing the social and economic impact of the pandemic, and supporting green and digital transition. It is hard to foresee how the pandemic situation will evolve in the upcoming months, in the worst-case scenario—if the coronavirus pandemic worsens significantly globally— the Italian government predicts its gross domestic product dropping by 10,5% in 2020 and expanding only by 1,8% in 2021. Even though the EU recovery fund is a big step forward in the EU’s fiscal coherence and a significant support to Italy, a lot depends on the government’s ability to benefit from such an opportunity. After an enormous health crisis in the spring, the government was able to keep the situation relatively stable in the country, and the Italian Prime Minister reached the highest level of support during the COVID–19 emergency. As of October 2020, the share of respondents who supported

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Giuseppe Conte was 57%. Concerning the domestic political situation in Italy, although there are persistent disagreements within the coalition partners of the government, early elections remain unlikely in the country for the moment. However, rising Eurosceptical mood is a phenomenon that desires attention in the short and long term.

POLAND PÉTER DOBROWIECKI

Whilst 2020 was predicted to be a particularly important year for domestic politics in Poland, now, looking back we might say that it exceeded all previous expectations. With successful parliamentary and European election campaigns behind its back, the ruling right-wing coalition (United Right), and its leading force, Law and Justice (PiS), looked set to achieve another major political victory following a confidential presidential election campaign in 2020 that would have put PiS in a particularly strong political position. In the end, Jarosław Kaczyński’s party managed to succeed, but at a cost that, on the longer run, might have a seriously damaging effect on PiS’s future standing.

Throughout the first months of the campaign, Incumbent President Andrzej Duda maintained a strong lead in the polls with opposition candidates lagging behind. However, as in the case of so many countries and events this year, the COVID–19 pandemic made its effect felt in this regard as well. Following the initial outbreak of the pandemic in Poland, the original dates of the elections—the first round set for 10 May—were postponed, but only at the last moment, following some chaotic political scenes. Internal tensions within the ruling coalition came to the light for the first, but not the last time this year, as senior members of PiS’s junior government partner, Agreement, joined the calls of the opposition demanding the postponement of the elections. In the end citizens, had the chance to cast their votes at the end of June (the first round was held on 28 June, while the second on 12 July)—alas in a completely changed political environment. President Duda’s confident lead gradually wore down, especially with the emerging of a new opposition candidate, Warsaw mayor at Rafał Trzaskowski. Although Andrzej Duda managed to win in the second round of the elections, he did so with a relatively slim majority (less then 450 thousand votes). The controversial lead-up and campaign to the voting was marked by the use of particularly hostile rhetoric that showcased a deep political division not only present in the Polish houses of parliament, but also within society itself. In addition, the emergence of new, centre-right political movements (Trzaskowski’s social and civic movement, "New Solidarity/Shared Poland" and more importantly, third placed Szymon Hołownia’s “Poland 2050 Movement”) plus the relative strong support gained by the fourth placed candidate of the far-right Confederation were all alarming signs for PiS and the ruling coalition.

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Flaring internal tensions within the collation (this time fuelled by Justice Minister Zbigniew Ziobro and members of his United Poland party) led not only to a serious reshuffling of the government, but also to Kaczyński’s return to the government (as deputy prime minister) in September.

The re-resurfacing power struggle between the parties of the ruling coalition is an issue that has to be addressed if PiS wishes to maintain its leading position until the next parliamentary elections in 2023. Currently, only the looming threat of early elections seemingly keeps the United Right together, with Prime Minister Mateusz Morawiecki and Ziobro being once again at loggerheads over the handling of the so-called rule of law dispute between Poland and the European Union.

Deep social and political divisions—all too present during the heated presidential camping—came once again to the forefront following the October ruling of the Polish Constitutional Court that further restricted the legal cases for abortion in Poland. Similarly to 2016, when a proposed legislation aimed to completely outlaw abortion, nation-wide (occasionally violent) protests sprung up country-wide, which continue to this day.

The strong-armed handling of the protests even led to a vote of no confidence against Kaczyński in December. While the vote failed to oust PiS’s leader from the government, it showcased the mounting pressure on the government that also faces wide-spread criticism for the handling of the COVID–19 pandemic—the pandemic already claimed the lives of over 23 thousand people by mid-December.

The court’s ruling was strongly criticised by EU officials as well, adding a further item on the growing list of questions disputed by Brussels and Warsaw. The ongoing debate regarding the state of the rule of law in Poland became the focus of European politics when Poland, together with Hungary, threatened to veto the EU’s budget for 2021–2027, which also includes the planned coronavirus bailout package. In the end a compromise was reached under the auspices of the German Presidency of the EU Council, however, this victory might come at a future cost for Poland, as the threat of the veto could leave Warsaw partially isolated within the EU in the upcoming period. In recent years, the strifetorn relations with Brussels were, in some aspects, foreign politically compensated for by the blooming state of affairs with Washington. Under President Trump, Poland gained support for its flagship foreign policy project, the Three Seas Initiative (TSI), while also securing the priority goal of maintaining an increased permanent US military presence in the country. Throughout his time at the White House President Trump has been a vocal supporter of the current Polish government, publicly endorsing Andrzej Duda just a few days before the first round of the presidential election. American military presence and the purchase of US-supplied liquified natural gas (LNG) are regarded as cornerstones of Polish security, energy and foreign policy concerning Russia. Under President Biden the US will most probably retain its commitment to these ongoing and newer cooperation formats—such as the recently signed nuclear power agreement. Nevertheless, when it comes to more controversial domestic political disputes, Poland might face much stronger US criticism in the years to come.

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CZECHIA ÁGNES VASS

The year 2021 will be determined by two main factors in the Czech Republic: the political, social and economic effects of the pandemic; and, the results of the elections to the parliament’s upper house, most probably to be held in October next year.

Despite the fact that Czechia was one of the most successful countries within the European Union in fighting the first wave of the COVID–19 pandemic in the spring of this year, the second wave hit the country strongly and as a result, it is witnessing record increases in the numbers of infections and deaths in the last months of 2020.

One of the reasons why the country is within the worst-hit EU members can be found, among other factors, in the premature easing of the restrictions, what was later admitted by the Prime Minister Babiš as a wrong decision. The reason behind the government’s decision regarding the easing of the restrictions and obligation of mask wearing in public spaces was most probably to create better atmosphere in the Czech society during the preelection period. In October, local government elections and two rounds of elections to the Senate were held. There results are important, as they can predict the elections to the Chamber of Deputies to be held next autumn.

In October 2020, voters elected 675 members of regional assemblies in 13 regions of the country and one-third of the 81 seats of the Senate.1 The party of the ruling prime minister (PM), ANO, won the regional elections with 21,8% of the votes, but it is important to add that opposition parties, especially the Czech Pirates Party, made important gains against the coalition parties of ANO. This means that, despite of winning in 10 out of 13 regions, ANO will be able to join coalition governments only in a few regions. Due to this, in some regions, ANO will be in coalition with parties, with whom they are in opposition on the national level.2 The elections to the Senate also showed similar tendencies: while the movement of Mayors and Independents (STAN–Starostové a nezávislí) are the winners of this election, the coalition partners of ANO were defeated. Currently, PM Babiš’s party forms a minority government with the Czech Social Democratic Party (CSSD–Česká strana sociálně demokratická), and their support in the lower house highly depends on the Communist Party of Bohemia and Moravia (KSCM–Komunistická strana Čech a Moravy), while, in some cases, they also need the support of the Freedom and Direct Democracy (SPD– Svoboda a přímá demokracie), which is a radical-right movement. With the support of these allies, PM Babiš is able to successfully resist and survive political scandals. Although

The elections to the Senate are held every 2 years in one-third of the constituencies, which makes it possible for the Senate to function continuously.

1

For instance, in the Zlín Region, the coalition of ANO, the Pirates, CSSD and ODS was created.

2

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the senate’s role in the legislative process is not as significant as the role of the lower house, the senate is able to block constitutional changes or it approves the judges of the Constitutional Court. Despite ANO’s performance in the elections to the Senate can be understood as a success, the failure of the party’s coalition partners and the strengthening of the opposition parties are signalling the changing tendencies within Czech politics.

The Social Democrats club in the upper chamber no longer exists, as at least five senators are required to form one and the party has currently only three senators. During the history of the upper chamber, this is going to be the weakest representation of governing parties in the Senate. Other left-wing allies of PM Babiš’s party are also facing serious problems, as both Communists and Social Democrats are balancing on the minimum threshold of electability. Regarding the future, not only the poor performance of the possible coalition parties is important—according to the poll conducted in October 2020, ANO’s support was the weakest since the last elections, and, as the number of COVID–19 cases rises, voter preference for Babiš falls. This, however, does not mean that opposition parties will easily win the elections next year. It is also important to add that generally less people are interested in these elections, therefore, it can happen easily that this time passive voters will be mobilised more by the parties for the national elections in 2021.

Another top priority for PM Babiš in the pre-election period will be the protection of the economy—his whole pandemic narrative is based on this initiative. According to the forecast of the European Commission, Czechia’s GDP will decrease by 6,9% and the government is preparing for a recession. The Future Generation recovery fund of the EU is seen as one of the most important tools to mitigate economic difficulties caused by the pandemic.

When it comes to the European and foreign policy of the Czech Republic, the importance of cooperation with the country’s neighbours has to be mentioned. It seems that, during the pandemic, especially in the second wave, Czechia is turning towards its regional neighbours, and actively participates in cooperation formats such as the V4, the Slavkov Triangle and the Central Five. As the quick accessibility of financial support from the EU is important for the Czech government, PM Babiš’s government does not oppose its link with the rule of law conditionally. In this regard, there is a clear cleavage at this moment between Slovakia and Czechia, and Hungary and Poland, as the latter countries are rejecting efforts to tie the EU budget and recovery fund to the rule of law. This means that other two regional partnerships might be more important in next year than the V4.

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SLOVAKIA ÁGNES VASS

As in many countries worldwide, one of the biggest challenges for Slovakia in 2021 will be a successful recovery from the pandemic. The economic and political effects of the COVID-crisis are already forecasting struggles within the ruling coalition. These already visible cleavages between the governing parties, the newly elected general prosecutor’s future activities, regional elections and continuous arrests of high-profile businessmen connected to politicians from the previous government will definitely bring some surprising news from Bratislava next year.

Everyone could agree that the new government could not have started its work at a tougher time in March 2020. Although it was not the easiest task to succeed with the coalition negotiations and handle the crisis after the outbreak of the pandemic, the new prime minister, Igor Matovič, was able to handle the situation—unlike the second wave in the autumn and winter of 2020. While the first ever mass coronavirus testing (together with strict quarantine rules) in Slovakia this November was evaluated as an effective method to flatten the curve, it has serious political and economic effects, which will undeniably define the year of 2021. The fight against the pandemic is rather chaotic, and, as for Matovič, there are only two options: compulsory mass testing (or quarantine for those who are not participating in it), or total lockdown (causing serious economic problems). This kind of approach towards the situation caused several clashes between the two biggest coalition parties, OĽANO and SAS, but, at the end of the year, even the president criticised the prime minister and suggested that he should charge someone else from the cabinet with managing the crisis. As Čaputová added, with someone else being responsible for the crisis management, the prime minister would have time to deal with other important issues, such as the economic impact of the pandemic, or he could manage coalition relations instead. Matovič refused to consider Čaputová’s suggestion, as he said: the government is not managing the pandemic, but the pandemic is managing the government. He immediately created a political question from this situation and asked the president to make it clear whose sides she stands on. Making advantage from the crisis and clashes between OĽANO-SAS, as well as the prime minister and the president, the biggest opposition party, Smer, wants to have a referendum next year about a snap election. As it is clear that the government, and more precisely the prime minister, does not have a plan how to handle the situation and clear steps are also missing, the support of Matovič’s party, OĽANO is already shrinking dramatically. According to a focus poll made in November 2020, 53,5% of the respondents support the initiative to hold a referendum next year—mainly voters of opposition parties, especially SMER, Hlas and Kotlebovci are in favour of this idea.

According to another poll conducted in late November, when it comes to the pandemic,

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people trust neither the prime minister, nor the health minister (also from OĽANO). What is also a telling information is that 60% of the respondents think that the prime minister did not meet the expectations regarding his style of governing. Participants of this poll consider Richard Sulík, leader of the second biggest coalition party, SAS, and Economy Minister, the most trustworthy politician. These results predict that voters are not satisfied with the situation and it can help opposition parties to gain some advantage.

Taking into consideration the current crisis management of the government, regional elections can put opposition parties into a good position to strengthen themselves on the regional level. Most probably the new opposition party of former Prime Minister Peter Pellegrini will achieve good results and the support of SMER, as well as the farright Kotlebovci will also rise. The regional elections are considered as a high priority for the political representatives of the Hungarian minority community as well. These elections could be used as an opportunity to rethink their strategies and start to create a political unity that can serve as an alternative for Hungarians who voted for Slovak parties this year due to the lack of political alternatives within the Hungarian community. From the Hungarian community’s point of view, next year will be important not only because of the regional elections, but also because of the census, that will be the first in the history of Slovakia, when citizens can choose two nationalities. The results of the census might be of key importance for the Hungarian community (and for other minorities as well), as the results will determine minority language use and other minority rights, while the financial support from the state will also be divided based on the outcomes. There is no consensus within the Hungarian community whether it is a chance or rather a problem that the census allows to indicate two nationalities instead of one, what makes the situation confusing at this moment.

Regarding the foreign policy of the country, a deeper commitment towards the EU and NATO can be expected. The foreign minister did not agree with the Polish-Hungarian veto regarding the EU budget, and it seems that this situation is raising questions regarding the importance of the V4 cooperation for Slovakia. The current image of the V4 within the EU is seen in Slovakia (and Czechia) as rather negative, and it is often understood as a brand often used for representation or protection of individual and national aims—mainly of Hungary. This approach, however, is not supported by the Slovak government—statements of the current government often highlight the importance of multi-format regional cooperation.

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THE EUROPEAN COMMISSION: LOOKING AHEAD— NO REST FOR THE WICKED? KRISZTINA ISZÁK

Although 2020 was certainly arduous for the European Commission, the coming years are not promising a smooth ride either. Ursula von der Leyen, first female President of the Commission, had formulated 6 ambitious priorities to relaunch European integration.

It included making the Union greener, modernized for a digital age and resilient to growing external volatility. However, the original dynamic of the new Commission was rapidly shaken by the COVID–19 pandemic by mid-March 2020. Now, von der Leyen needs to lead the European Union (EU) through a long-term transition to be fit for the changing global environment, while also adapting to the paradigm shift caused by the COVID–19 crisis.

On this journey, rebooting the economy will be the main focus of the Commission in 2021, as the EU experiences a sharp decline in economic growth. Albeit the von der Leyen team outstandingly coordinated immediate EU level responses to the crisis, economic rebound is slow. The Commission also foresees an increase in deficit and public debt in Member States (MS) due to extraordinary fiscal measures introduced to counter the crisis and the decrease in tax revenues. Regarding the EU’s finances, Mrs von der Leyen’s successful cooperation with other institutions resulted in the doubling of the next long-term EU budget.

It is the largest EU stimulus package ever built on green and digital innovation. However, implementation will require immense work from the Commission in the coming years. This includes creating new own resources to support the EU’s finances (e.g. revenues generated from the EU Emission Trading System or based on Financial Transaction Tax and Corporate taxation) and upholding rule of law conditionalities of EU funding. While the former is more of a challenge for the second half of 2021, the latter already causes disturbances in accepting the current long-term budget. If the adoption of the EU’s next Multiannual Financial Framework (MFF) topped up with the Next Generation EU (NGEU)—a EUR 750 billion temporary budgetary reinforcement—is further delayed, the Commission will run into budgetary difficulties starting from January 2021. Besides having severe economic effects, such a scenario would increase social discontent with the EU as well hindering the Commission’s plans to push forward with the social policies.

Strengthening the public policy competences of the EU is not a new phenomenon, but the COVID–19 crisis has given new impetus for the Commission to step in. While unemployment was shielded through emergency support schemes such as SURE, it is likely to rise in 2021 caused by the phaseout of the support measures and with the entry of fresh workforce to the labour market. In connection to this, President von der Leyen advocated for the introduction of minimum wages in MS. Even though, for a truly Single Market, EU intervention could make sense, muddling in domestic social and employment policy will awake strong MS resistance. To avoid this, the Commission might opt for

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stronger coordination to ensure collective bargaining on wages. In addition, the current health crisis revealed a complete lack of competence of the EU in the area of public health.

Beyond complicating emergency management, like in the case of COVID–19, this also undermines the efficiency of the Single Market. Similarly to her intentions in employment affairs, however, von der Leyen’s call for a European Health Union and the transfer of health policy to the EU level will potentially face strong opposition from MS. In contrast, various crisis management steps undertaken by the Commission (e.g. the creation of a biomedical research agency or the reinforcement of the European Centre for Disease Prevention and Control (ECDC) and the European Medicines Agency (EMA)), show that it aims for stronger control in the area of health care as well. On the one hand, the Commission will certainly face some difficulties in pursuing a European Health Union due to current MS approaches to further competence share. On the other, stepping up industrial strategies in health care would prove beneficial for achieving strategic autonomy—a new buzzword in EU politics— as pharma is the key industrial sector of the EU. Beyond public policy intervention, the previously mentioned SURE program also corresponds to the first and successful auction of bonds issued by the Commission to finance the emergency instrument. This is a positive signal for launching the NGEU, also to be financed by issuing bonds in 2021. The NGEU represents a historic moment for the EU, while cautiously opening the door for closer financial integration through collective borrowing. Connected to this, it will be crucial for the Commission to complete the banking union and to deliver on the Capital Markets Union (CMU). The smooth functioning of these two are necessary to successfully channel diversified investments towards a green and digital transition. The new Capital Markets Union Action Plan introduced 16 targeted measures in September 2020. Aiming at deeper financial integration might be challenging for the Commission and will engage MS in lively negotiations. Nevertheless, whether progress will be made in CMU or not will be decisive for economic recovery, as the EU urgently needs both private and public investments.

While the Commission chose to issue social bonds to finance SURE, the NGEU will include green bonds. Assigning climate and biodiversity related spending targets to EU funding aims to support the European Green Deal. President von der Leyen’s flagship project is in the heart of economic recovery. In her first State of the Union speech, Mrs von der Leyen stated that the Commission will revise all climate and energy legislation in 2021. Still, reaching the 55% emission reduction target by 2050 seems ambitious, especially in the light of the current situation. Hence, green and climate related policies are expected to be more targeted and incorporated across sectors in the coming years (e.g. on the increased phasing out of old infrastructure like coal power plants and more support for renewables). The Commission intends to strongly rely on the use of the Just Transition Fund and Mrs von der Leyen floated the idea of creating a new ‘European Bauhaus’ as well. Coined as creative, the project would connect green investments with building renovations and would reduce the EU’s energy dependency, while creating the sense of a common European architectural style. Reaching its climate goals is essential for the EU, as the bloc aspires to achieve global leadership in climate policies. For this, the Commission will likely concentrate on its Carbon Border Adjustment mechanism to bring others to

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the table. As a normative power, regulation is one of the EU’s main tools transposed through its trade deals, but mechanisms such as the one above could also disturb trade relations.

Trade will generally take up a lumpsum of the Commission’s attention in the following years. The UK’s transition period after leaving the EU is set to end with 2020. With or without an agreement, future trade relations between the EU and the UK will likely remain to be settled in 2021. Moreover, changes in US leadership will affect both transatlantic relations and global trade, as Donald Trump leaves the White House. Joe Biden, the incoming Democratic President of the United States, was warmly welcomed by most of the EU leaders. Against this, some suggest Biden to be handled with caution, pointing out a lingering Trump-effect and the interdependence of transatlantic alliance and strategic autonomy. For example, building closer trade relations with the US will require bringing in the topic of agriculture, something the EU has been reluctant to do so. In any case, transatlantic relations will be a hot topic, as the EU needs US cooperation to regulate Big Tech and to better balance its relations with China as well. The latter becomes more and more relevant, as the EU increasingly relies on investments. The Commission launched its framework for the screening of foreign direct investment (FDI), to protect strategic industry, however, the relation of MS with China for instance vary greatly.

Biden’s election also raises another issue for the EU—notably defence. President von der Leyen has had clear views already before taking office in 2019. She stated that the bloc needs to learn the ‘language of power’, though the Commission President considers this within the framework of NATO. While Trump’s communication on a higher European contribution to NATO was rather strong, Biden will likely follow the same path with a more diplomatic approach. Moreover, as the US gradually turns towards China, the EU is left behind to deal with Russia. Tensions in the bloc’s Eastern and Southern neighbourhood are becoming more frequent. In foreign policy decision-making, President von der Leyen is pushing for qualified majority voting (QMV) on issues related to human rights and sanctions in the Council. QMV would certainly lead to more efficient EU foreign policy, while also strengthening its institutions. This, however, targeted at Russia, Turkey and possibly China, will potentially run into difficulties, as even MS like France or Germany have completely different approaches towards these countries. The direction in QMV also resonates with the Commission’s goal to advocate for a ‘just’ globalisation through its economic weight mentioned above. Nevertheless, a stronger and united Union will be indispensable if the EU aims to secure the status of a prominent global player for itself.

While it is true that the von der Leyen Commission rather successfully tackled the year 2020, the institution must get more vigilant in the following years. Along two intertwined themes—achieving strategic autonomy and becoming a more robust global player—the Union must reconnect with its own identity to withstand the growing uncertainty of the future.

The Commission and President von der Leyen will likely play an even more prominent role in steering the EU’s wheel in the coming years.

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TURKEY TAMÁS KOZMA

In 2020, Turkey has maintained a very intense foreign policy course, which was by far free from tensions and conflicts. According to this outlook, this course is expected to continue in 2021. Given the fact that Turkish foreign relations are multifaceted and can be conceptualised along many vectors, this outlook intends to focus on some selected key issues, which should inevitably be highlighted when it comes to forecasting Turkish foreign policy for 2021.

Tensions in the Eastern Mediterranean over disputed maritime borders and territories, as well as over the access to natural gas deposits was a top issue for Turkey in 2020, and this issue will most probably remain on the agenda in 2021, too. It should be highlighted that, without the delimitation of the maritime boundaries in a way that would be acceptable for all parties, the chance for recurring tensions remains present. Although an open conflict is not in the interest of the parties, and the need for a diplomatic solution is obvious, the further escalation of the situation cannot be excluded. Therefore, it is expected that Turkey will keep the Eastern Mediterranean on its foreign policy agenda with high priority. It should be highlighted that the present situation in the Eastern Mediterranean is not only interlinked with Turkey’s regional ambitions and energy interests, but also with its overall relations with the West. Tensions in the Eastern Mediterranean form an issue over which Turkey is at loggerheads with EU member states both within and beyond the region. Furthermore, it should not be left without attention that, with this conflict, internal divisions within the NATO also came to the forefront.

Besides the developments in the Eastern Mediterranean, migration-related tensions also recur regularly and lead to confrontation with the European Union. This further questions the prospects of Turkey’s stalled accession process. Despite the fact that Turkey is a candidate country, and officially it still aims to become an EU member state one day, it seems that the actual foreign policy conduct of the country has shifted away from Europe, and its focus has been turned mostly to the Eastern Mediterranean and to the Middle East.

The volatile security situation in the latter region—especially in Iraq, Libya, and Syria—creates an opportunity for Turkey to intervene, and to pursue its security and economic objectives in the hope of strengthening its regional power position, even if its assertive stance often sparks tensions with other actors. Turkey is determined to not to miss any chance to gain leverage over others in this region, thus, a Middle East-oriented foreign policy course can be expected to continue in 2021.

Religion may presumably become an increasingly accentuated point in Turkey’s foreign policy agenda in the coming year. The recent outcry in the Muslim world over French President Emmanuel Macron’s statement saying that Islam is in crisis has created another opportunity for Turkey to step up as a global advocate of Muslims and the to voice Turkey’s

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prominent role in the entire Muslim world. The latest tensions flaring up between many Muslim countries—including Turkey—and France are developments that definitely have an agenda setting role for 2021.

In the past two decades, Turkey has succeeded to fortify its position as a regional power, and it constantly aims at increasing its wiggle room either by actively seeking cooperation with other countries in the fields of security, economy, trade and culture, or by engaging in conflicts, as we can see it in case of Libya or Syria for instance. In 2021, one should expect the continuation of a multifaceted and multi-vector foreign policy of Ankara, which will presumably not be free from tensions. Crucial attention will be paid to the Middle East— focusing on Iraq, Libya, and Syria, as well as to the close cooperation with Qatar, and also to the Eastern Mediterranean. In line with the recent developments in Nagorno-Karabakh, Turkey will keep an eye on the South Caucasus, and will continue supporting Azerbaijan.

Tensions with the West are expected to remain, since the gap between Turkey and many Western countries is widening, even if Turkey is a NATO member, and even if it maintains its goal to become an EU member state. When it comes to Turkey’s relations with the West, it should be highlighted that all these disputes can push Turkey closer to Russia, even if the latter two countries have a lot of differing interests. Turkey’s acquisition of the Russian S-400 air defence system—that recently underwent live firing tests—is definitely an issue, which can cause further controversies with the West.

Forecasting Turkey’s foreign policy for 2021 is without a doubt a very complex task, but the issues on the agenda (Middle East, Eastern Mediterranean, South Caucasus, Turkey’s role in Muslim world, relations with the West, Turkey-Russia ties) are mostly clear. At the same time, the exact priority order of the certain regions and issues on Ankara’s agenda is difficult to predict, if possible at all, especially if we take it into consideration that 2021 might bring new foreign policy challenges and opportunities for Turkey. Although the primary goal for Turkey is to further strengthen its role and to increase its room for manoeuvre in multiple regions, the domestic implications of its foreign policy should not be overlooked, either.

The rhetoric used by Turkey’s leadership in many issues is not only aimed at the outer world, but is also meant to convey a clear message also for domestic politics. Delivering firm foreign policy messages are important tools in the hand of the government to reach out to and to keep its electorate, as well as for diverting public attention from domestic problems, such as the enduring economic hardships in the country for instance.

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THE WESTERN BALKANS—TASKS AND CHALLENGES IN 2021 PÉTER DOBROWIECKI

2020 was set out to be a year that could witness some real progress in the muchdiscussed Euro Atlantic integration process of the Western Balkan states. In March, North Macedonia officially joined NATO as its 30 th member state after a long accession course that span 15 years and saw the adoption of the country’s current, new name.

Almost in parallel, North Macedonia and Albania were granted formal approval to commence accession talks with the European Union. These historical landmarks were, however, quickly overshadowed by the upsurge of novel coronavirus (COVID–19) cases in Europe and the Western Balkans. The political, economic and social effects of the global pandemic once again brought to the forefront the vulnerability of the EU’s engagement in the region. After an initial setback that saw the upsurge of some anti-European rhetoric in the region, the EU was quick to offer significant support to the deeply affected economies of the Western Balkan states (followed by the adoption of the Commission’s Economic and Investment Plan for the Western Balkans in October 2020). However, in the first months of the pandemic, European support—in the eye of the public—was outshined by the PR-heavy help of China and Russia. While this was merely a symptom of underlying issues, the fact remains that Chinses economic presence and Russian political influence combined with domestic political factors might in some states of the region question the success of the accession process. The all too visible enlargement fatigue of some Western European member states and the lack of a joint European political stance on many questions affecting the Western Balkans, combined with re-resurging regional disputes are additional aspects that will make the accession process—even under the revised enlargement methodology—a prolonged affair.

The latest setback came in November when Bulgaria opted to block the EU’s talks with North Macedonia, thereby halting the—for now—short-lived accession process of the country.

Sofia cites unresolved historical and cultural disputes as the main source of its veto and demands certain changes in the negotiation framework that are seemingly unacceptable for the current North Macedonian government, thereby bringing the case to an impasse at the moment, as, without a uniformly approved negotiation framework, the next step of the process—the organisation of the first intergovernmental conferences cannot commence.

The hostile tone and lack of will towards a compromise showcased currently by both sides make a compromise by the end of the year unlikely. In its absence, the Portuguese Presidency of the Council of the EU (taking over from Germany from January 2021) and the EU Commission will have a hard task keeping the enlargement process on track.

This is even more so as other EU candidate states from the region made limited amount of progress in 2020. Serbia’s lack of advancement in key reform areas meant that the EU opted against the opening of additional new chapters in membership negotiations, while

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Montenegro’s commitment to the European project will largely depend on the political preferences of the recently formed new government. The EU’s report on Albania was less critical, acknowledging the implementation of some of the required reforms, nevertheless, the need for further throughout changes was also underlined. The same report also highlighted the lack of progress made by Kosovo and Bosnia and Hercegovina, which officially seek to gain EU candidate country status. 25 years after the singing of the Dayton Peace Agreement, Bosnia and Hercegovina is seemingly unable to break the political deadlock imposed by the diverging political will of its two comprising entities, blocking the way for much needed reforms. Domestic political instability will continue to plague almost all of the region’s states in 2021, as political and social division is ripe, easily leading to (often violent) demonstrations.

Kosovo witnessed a particularly turbulent year, with the future of the stalled BelgradePristina dialogue being one of the most strongly disputed points. The situation became even more complicated after the indictment of senior Kosovar political figures by the Hague based Kosovo Specialist Chambers and Specialist Prosecutor's Office in the autumn of 2020—that eventually led to the resignation of president Hashim Thaçi in November.

The when and hows of the potential normalization process did not only divide Kosovar political parties, but also caused a rift between Brussels and Washington, as both the EU and the US increased their efforts—alas favouring different solutions—thorough the year in order to achieve progress. The biggest success in this regard was the lifting of punitive tariffs on Serbian and Bosnian products (introduced in 2018) by Kosovo. Whereas the widely publicised, US brokered, Kosovo and Serbia economic normalization agreements, signed on 4 September 2020 in Washington, can be looked upon—even in the best scenario—as a loosely connected set of points that offers little to nothing that would solve the most pressing disputes hindering the conclusion of the Belgrade-Pristina dialogue. It remains to be seen whether the new US-administration under President—elect Biden will aim to follow-up on the deal itself. Particularly, the point stating to “prohibit the use of 5G from untrusted vendors”—a clear reference to China—might have an effect on Serbian-Chinese relations, should Washington choose to exert pressure on Belgrade. Most probably, a more coordinated approach, or in an ideal scenario, a jointly implemented road-map by the EU and the US could have the highest chance of achieving tangible results.

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THE MIDDLE EAST ISRAEL ZSOLT CSEPREGI

The year 2020 has resulted in the strengthening of Israel’s positions both in the domestic realm and in the international arena. A long political crisis was successfully resolved by setting up a national emergency unity government, normalization deals were signed with the United Arab Emirates and Bahrein, which might be followed by Sudan and other Arab countries, while, during the ongoing COVID–19 crisis, it is mentioned as a potential vaccine supplier also in Hungary. Alongside what has happened, it is also important to highlight what has not, namely an escalation of the low-intensity conflicts into a full scale war with the Hezbollah in Lebanon or with Hamas in Gaza (or even a two front war). Also, the Palestinian National Authority has not crumbled, which would leave the West Bank under complete Israeli administration—a burden that would be hard to manage for the Jewish state. It is important to mention that the annexation of parts of the West Bank, in accordance with the Trump peace plan, has been also postponed. This came as a relief for the Israeli political left and centre and the international community, but created grievances on the Israeli political right. These altogether positive developments are in danger in 2021.

Israel is facing a critical year both from domestic and foreign policy aspects.

The Israeli political actors are positioning themselves expecting early elections in the end of 2020 or the beginning of 2021. Members of the current coalition government, which consists of the Likud led by Benjamin Netanyahu and the Blue and White led by Benny Gantz can hardly agree on any compromise regarding the most important issues.

The concrete trigger for early elections would be the approval of the next budget, but this is just an element of the broader political struggle. The looming transition of the prime ministerial post due in Autumn 2021 from Netanyahu to Gantz means that the parties might prefer elections and try to get a more convenient setup in the Knesset. If Israel went to early elections again, then it would again internally be focused, reinforcing the political trends initiated by the COVID–19 crisis. It will be one of the key issues in 2021 whether the current coalition can last, and if not, what kind of government can be formed, assuming that the parties can form a stabile governing coalition after the elections— something that cannot be taken for granted following the domestic political turmoil in the last years. Considering the ongoing transition in the Israeli political arena, the two probable scenarios are a strong right-wing-religious government led by Netanyahu and joined by a surging Yamina (a religious-Zionist party, standing to the right of Likud) and the ultraorthodox parties, or the current leading opposition force, Yesh Atid-Telem joining forces with Yamina against Netanyahu and creating another rightist-centrist, religioussecularist rainbow coalition. The two scenarios would of course produce a very different

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Israeli political landscape, especially considering that it would have to work in tandem with a Democratic US president, who would be critical to Israeli right-wing steps, especially towards the Palestinians.

Despite the impending domestic turmoil, Israel will remain a calculable foreign policy actor in its region and in world politics. Its prime interest, due to its geographical location, will remain the same: maintaining a firm stance against Iran and its allies and the Sunni terrorist organizations, which is manifested in a defensive strategy executed offensively. In practice, we can expect that Israel will continue to orchestrate reprisals for any provocation, especially from Syria and Gaza. Beyond the immediate frontlines, Israel considers three issues as priorities in 2021: the Iranian nuclear threat, the balance of power in the Eastern Mediterranean and the question of peace and normalization with Arab states. With regards to Iran, Israel supports a policy of maximum pressure, therefore, Joe Biden’s more lax Iranpolicy will be of key importance and a cause for friction with the US, but also a cause for banding together with Sunni Arab states to ensure an opposing force and balance against Iran. Israel does not wish to be in the first row of conflicts in the Mediterranean Sea, it aims to act in unison with the Hellenic states and Egypt against Turkish regional ambitions, but it will try to avoid an Ankara-Jerusalem duel. It will be important to follow its negotiations on maritime borders and EEZ with Lebanon, which, if successful, could redraw the regional patterns of enmity and cooperation. Thirdly, Israel wants to continue the “from outsidein” regional normalization and peace process proposed by Netanyahu, starting with more distant Arab states and finishing with the Palestinians, when regional understandings already openly include Israel. First among the next countries to normalize relations with Israel is Oman, but the most important goal is the regional powerhouse, Saudi Arabia.

The Biden presidency can influence this process both in positive and in negative ways.

First, the Arab countries might want to gain the favour of the incoming president by making peace with Israel. On the other hand, Biden might aim to initiate a new round of the IsraeliPalestinian peace process, thereby breaking with the Trump-administration’s strategy. In my opinion, this has a very low probability, as the new Democratic administration would be ill advised to start with a new, time and energy consuming effort, which would probably end up in another failure either. Finally, what cannot be expected in 2021? The US-Israeli partnership will not weaken fundamentally, but a comprehensive regional peace will not be achieved. Because of Israel’s deterrence capabilities and stature, a conventional war erupting between it and its enemies is also highly unlikely. Parallel to these issues we can expect the further strengthening of Israel’s international prestige, regional and global integration, especially if its medical institutions and companies will achieve, among the first ones, the development of a workable COVID–19 vaccine, which it can offer to its international partners.

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EGYPT—A SEA OF CHALLENGES LUKÁCS KRAJCSÍR

“Egypt’s growing population has reached over 101 million at end of October.” It is hardly surprising that this report, which was issued by the Central Agency for Public Mobilization and Statistics, stunned the Egyptian authorities in 2020. Since the last census in 2017, the country’s population has increased by more than 7 million. But what really frightened the leadership: if this trend continues, then the population could reach 194 million by 2050.

Therefore, it is easily understandable that the Egyptian government started to promote “Two is Enough” campaign and other kinds of “slow down the birth rate” programs. Even Abdel Fattah al-Sisi—the President of Egypt—admitted that the uncontrolled demographic changes are one of the biggest problems for the MENA (Middle East and North Africa) state.

However, the population growth is not the only challenge for Egypt. During the course of 2020, many of the former problems came back, while completely new ones have also arisen—most notably the COVID–19 virus. The “patient zero” was registered on February 14 (a Chinese man at Cairo International Airport) and the first casualty was reported a month later. In the first weeks, Egypt—compared to other regional countries—acted sluggishly, but, by the end of March, the government suspended all flights, banned all public events and praying on the streets, closed the schools and public institutions, as well as strengthened the censorship in the media. The number of patients peaked in June (between 1 400 and 2 000 of new cases daily), nonetheless later slowed down and—when this article was written in November—the number of newly infected fluctuated between 150 and 200 a day.

According to the newest WHO source: there are 109 000 coronavirus cases in the country, while more than 6 300 people has died until now in the pandemic.

Although the economic consequence of COVID–19 on Egypt is a horse of different colour. Despite the number of problems, the Sisi-regime has made some remarkable improvements in Egypt’s economy in the past years. In 2019, the GDP-growth reached 5,6%, which is the highest rate since 2010. Also, that year the Suez Canal made a historically high income—USD 5,8 billion—in revenues, while, after many years, the tourism gained momentum again, generating a USD 12,6 billion income. The unemployment rate decreased from 12,7% to 8,6%. The government could bring even the runaway inflation under control and increased its foreign exchange reserves to USD 45 billion. However, thanks to the COVID–19 pandemic, all former achievements disappeared little by little during 2020. The international monetary organizations are predicting only a 2% economic growth. Due to the slowdown of global trade, the revenues from the Canal fall—they even cut the passage fees down to 75% (for some ships, depending on their type and destination, they even cut the passage fees down 35%-75%). Because all international flights were suspended, the tourism suffered the most. The economists and experts are expecting that despite the government’s USD 6,1 billion rescue package, Egypt’s unemployment rate and

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the inflation will rise, while the exchange reserves and the states subsidies will decrease.

This last one could really hurt the poor as well as members of the lower class, who became too dependent upon subventions. The number who are living under and around the poverty line already rose significantly in Egypt: according to World Bank estimates from 2019, 60% of Egypt’s population is either poor or in the vulnerable category. But, after the implementation of pandemic—related restrictions and the return of nearly 80 000 Egyptian guest workers— who transferred around USD 9 billion back home every year—from abroad, impoverishment may accelerate in society. Moreover, in 2020 another governmental decision makes the situation much worse for them. The Egyptian authorities started a state-wide crack down on illegal construction—these houses often collapse causing many fatalities. Therefore— the new government regulation states—violators should pay for the “reconstruction and/or legalization” of their own homes: this sum can be from EGP 50 to EGP 2 000. If they do not solve the problem, then the Egyptian army will demolish their buildings.

Although al-Sisi promised compensation and new build houses, the President’s words did not calm down the Egyptians—and the leadership had to face (again) large scale protests during the autumn of 2020. Since 2013, this has been second time when the regime had to deal with such a big, countrywide demonstrations. After the declaration of the so-called “Friday Rage” (Ġaḍab aǧ-Ǧumuah) on 25 September 2020, 164 different types of unrest were registered in 14 Egyptian governorate cities—from Alexandria via Cairo and Giza to Aswan. Their goal was not only to achieve the resignation of the president and the releasing of all political prisoners, but also to cut down the prices of bread, eggs, bananas, fuel and abolish the “construction law”. According to Amnesty International, until the beginning of October, 496 people were arrested with two known fatalities (in Giza and Luxor).

Challenges came even from outside the country’s borders too. The relations between Egypt and Ethiopia hit rock bottom because the latter has installed the Grand Ethiopian Renaissance Dam, which could have serious consequences for the Arab country’s economy and environment. In the summer of 2020, the Egyptian leadership declared a “red line” in Libya (Sirte and al-Jufra airport): if the Turkey—backed, Tripoli-based government will cross it, then Cairo will send his own military forces to support its local ally. By the end of 2020, Egyptian troops have still not entered Libya, but this does not mean the end of the “cold war” between Ankara and Cairo. On the contrary, it can become even much “warmer” after Greece, Cyprus and Egypt jointly condemned Turkey and joined their strength to balance Ankara’s presence and to stop Turkish undersea energy explorations in the East and South Mediterranean.

As a conclusion, the events in 2020 can be described as writings on the wall. The year started with hope and optimism—especially in the economic sector—in Egypt, but ended in disappointment, rage and uncertainty. The foreign—related tasks became more decisive, which means that, in 2021, Cairo must focus more attention on solving them. Meanwhile, the problems within the country hurts the regime more painfully. The protests across the country proved to be an alarming sign for the government: those COVID–19 related socio-economic decisions, which affect the price of food, the amount of subsidiaries and/ or the position of the poor can easily destabilize the whole system. Moreover, it should be not forgotten that the 10th anniversary of the so—called “Arab Spring”, an event which has a huge symbolic value among Egyptians, will be in 2021.

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However, to add some optimist remarks in this outlook: it is a historical fact that since, the Egyptian revolution in 1952, the country has always had numerous challenges and problems (foreign and domestic alike) that the former leaders partly solved or at least just survived. Also, there is a saying that Egypt is too big to fail and even when the country is in gruesome shape, it does not jeopardise its leading position among the Arab states.

NORTH AMERICA THE UNITED STATES—THE FUTURE OF TRANSATLANTIC RELATIONS PÉTER STEPPER

THE LEGACY OF TRUMP This year’s presidential elections in the United States of America has been historic, and unusual in many aspects. Attendance at the ballot has never been so big. American society is divided on many questions: how to handle the economy, the health care system, primarily the COVID–19 pandemic, and the rise of China, which is not only a distant foreign policy matter anymore.

The trade wars brought results, but many scholars remained uncertain, if it was a success indeed. As results of the increasing customs tariffs, European companies, like Audi, decided to close manufacturing facilities in the US. This step increased unemployment rate in several states, for example in Tennessee. However, Trump also created new jobs, especially in the rust belt, and reduced the export-import deficit towards China and Germany. Many scholars argue that questioning the transatlantic relations and reforming a traditional bargain resulted in the weakening of NATO. Others, however, highlighted that increasing European defense budgets are essential to preserve the transatlantic alliance in the long run.

Realistically speaking, exceeding the 2% GDP threshold in the case of military budgets is only a symbolic step. It literally makes no difference if small states of the Baltic region or Central Eastern Europe spend 2% of their relatively small GDP on the defense, instead of 1-1,5%, as they did previously. The German military budget, on other hand, can make a difference, but it is also not a game-changer if we look at the battle-ready capabilities of NATO, which is primarily provided by the US alone. Modernization of the German military, however, is long overdue, but such a project needs time and nation-wide support of the society, which cannot be achieved by the toolbox of American foreign policy.

Republicans and Democrats struggle to find the common denominator in more and more cases, which weakens the position of the US in world politics. During the election, there has been a fierce battle for the control of US Senate, and it appears, Mitch McConnell could preserve Republican majority in the Upper House. Despite the win of President-elect Biden, the control over the Senate and the reduction of the Democrat majority in the House

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of Representatives can be seen as a beam of light for the post-Trump GOP. The style and rhetoric of Trump may disappear eventually, but the underlying societal and political problems will certainly not. As it was discussed many times, demographics and migration changed American society, there are more and more non-WASP young voters. Republicans traditionally find it hard to open towards the youth and ethnic votes. Lost generation still constitutes 25% of the voters, as well as the number of boomers is quite high, but the future definitely belongs to generation X and the Millennials. However, Trump could win relatively a large number of votes from Hispanic and Afro-American communities, an unusual deed for Republican nominees.

WHAT TO EXPECT FROM BIDEN? Joe Biden, the next president of the United States, has a very difficult task at hand. We can expect a more centrist political credo from Biden, primarily because of his institutionally limited power position. Biden can do a lot of things. He can govern by Presidential decrees, ha can nominate experienced diplomats and economists, who worked in the past for Barack Obama (like Tony Blinken, or John Kerry) and Bill Clinton (like Janet Yellen). However, he cannot put Democrat nominees in Supreme Court seats, as Donald Trump could do, because of the tragic death of Antonin Scalia, Ruth Bader Ginsburg and the retirement of Anthony Kennedy. With the nomination of Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett, six from the nine judges are conservatives. Biden will not be able to make legislation easily, while Republicans have the majority in the US Senate. Even if mid-term elections in Georgia and Pennsylvania could change the ratio, Democrats would still have to deal with a 50-50 situation. Although Biden won the popular vote as well, counting more than 81 million supporters, he also has to reflect upon the will of those people, who voted for Trump, which was around 74 million voters. Further alienation of these voters and even small mistakes in terms of handling the pandemic, the economic crisis and China, could lead to a Red Wave in mid-term elections of 2022, and the return of a Republican president (not necessarily Trump) in 2024.

Foreign policy is a different matter. Biden shall not be cautious about the domestic effects of his steps, because it is traditionally a non-issue for American voters. They might care about military involvement in the Middle East, but Biden is expected to continue the withdrawal of troops from Syria, Afghanistan and Yemen. He already has mentioned how unwinnable these wars are, hence harmful for America. Biden will remain tough on China, and he will expect more actions form European allies on the subject matter. Scott Cullinane argued that NATO shall figure out what to do with these issues, before it is too late. China questions US power positions economically, politically, and in its unique way of combining market capitalism, but maintaining an oppressive communist regime is unacceptable in the sense of Western values. Europeans cannot remain neutral. Even if Biden will use a less confrontational rhetoric on defense spending and trade issues China is going to remain its number one priority. The US foreign policy about European issues will focus more on multilateral level negotiations, rather than a bilateral approach. Washington will negotiate with Brussels, as it would like to strengthen the EU as an institution.

Central Europe has never been in the forefront of US foreign policy, and, with the pivot of

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Asia, it, unfortunately, became less and less significant. However, it is in the interest of Biden to keep the stability of Europe. Therefore, it is important for him to counter Russian and Chinese efforts to gain more influence in our region. Certain Central European projects helped this effort, particularly those which decreased reliance on Russian energy sources and helped infrastructure building without involving China and the Belt and Road Initiative.

Therefore, we can expect that the Three Seas Initiative will have a bipartisan support in the United States House of Representative, which recently adopted a resolution for an additional USD 300 million of financial support for energy and infrastructure projects. As Ian Brzezinski argued, TSI can help to start a process by being able to act as a kick-off tool, but infrastructure business needs much more FDI, thus, it needs to attract private investment companies in the region. The TSI Investment Fund is financed by a growing number of Member States and the United States also made a political pledge to reach a USD 1 billion of federal financial support, if Central Europeans are able to raise their public investment level accordingly.

US-Hungarian relations have been extremely good during the Trump presidency.

Since President Trump's inauguration in 2017, few leaders have enjoyed as close a relationship with the White House as Hungarian Prime Minister Viktor Orbán. Both leaders share a world outlook that is generally opposed to immigration, skeptical of the European Union, and more open to cooperation with Vladimir Putin's Russia than mainstream experts in either Budapest or Washington would advise. Orbán endorsed Trump in 2016 and during his re-election campaign, and visited the White House in May 2019, where Trump praised him for his “tremendous job.” However, the State Department constantly sent clear messages to Hungary that they find certain issues problematic, e.g. wide spread media consolidation at the hands of those loyal to the Prime Minister.

Even the good relations with the president could not change the US plans to recreate Hungarian language services of Radio Free Europe. As Scott Cullinane argues in this oped, Biden emphasized several times that he aims to address backsliding democracies.

Freedom House rankings will be more important indicators to decide who are the friends or foes of the United States. The overarching narrative of Democrats perceives illiberal, or non-liberal way of thinking as a problem, which are dangerous to NATO and European solidarity. Despite of Trump, the new American president will find it important to support a European Union which deepens the cooperation, and goes to a more federal direction.

Considering all of these, there are dark clouds ahead of Hungarian-American political relations in the upcoming years.

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LATIN AMERICA LATIN AMERICA—EMERGING GEOPOLITICAL FRICTIONS? ZSOMBOR SZABOLCS PÁL

Latin America and the Caribbean have perhaps only a few times in history had such a prominent place in world politics as today. A backyard of the US, involved mostly in fighting its own problems, the region used to steer clear from big global turbulences, and other powers rarely wanted to upend this situation—save the USSR for a brief period. This status quo, however, seems to undergo a subtle change. A measured shift started two decades ago, when China first appeared in the region as a trading partner and potential investor.

At the same time, the US seemed to lose interest in its neighbourhood, transferring its attention to other parts of the globe. This strategy, or the lack of thereof, was also prevalent under the resigning Trump administration, whose primary interests in the region were limited to renegotiating NAFTA, uprooting migration, and strong-arming countries like Cuba or Venezuela into political change.

As the global pandemic tarnished China’s reputation this year, the country started an orchestrated humanitarian campaign in many countries across the world to restore its former good record. The scale of this operation in Latin America, hit painfully by the worldwide epidemic, clearly showed Beijing’s regional interests. As a part of its strategic move, often referred to as “mask diplomacy” by the international press, China has donated and sent medical equipment and services to countries in the subcontinent and offered credit for future vaccination, while also starting a vigorous communications campaign. Besides, Russia, another country that evinces some interest in the region, also announced that vaccinating Latin America is a priority for them. The US’s aloofness from the continent stood in stark contrast to these steps.

Although Chinese investment in Latin America slowed down in the last few years, the above suggests that the Asian country continues to prepare the ground for furthering its regional interests amid the unfolding geopolitical friction between the two big powers, the US and China. In the future, Beijing might look to the region to compensate for the resources and commodities it is set to lose because of the geopolitical strife and its consequence, the trade war. Besides, it can also use the region in another aspect of the global contest— where the goal is to have a leading role in setting new worldwide technological standards— by backing its leading tech companies to invest in regional infrastructure.

The countries of the region will likely be open to broadening their economic and trade relations with any party and to having new investments, for they are calculated to face the greatest economic crisis they have ever seen on the heels of the pandemic and the onrushing hardships can easily translate into more intense social tensions in a subcontinent where they have historically been high. Agitation had already started to build

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up before the health crisis, and, while the lockdown put a temporary lid on it, it is now intertwined with discontent over the ways governments handle the pandemic.

We are yet to see, however, how the new president of the US, Joe Biden, will handle the unfurling power game. As a politician who has many times been involved in solving regional problems and dealing with Latin American leaders during his political career, he has experience and vision about the matters of the subcontinent. It is fair to assume that he might strive more for working with the region in partnership, but this can be equally unwelcome news for regional strongmen, pushing them more towards the ideologically neutral China.

The foregoing constellation leads us to different questions. First, if former social problems resurface in the region—especially with several elections coming up next year—there is a big question mark hanging over what political forces may come to the fore: Will they prefer to increase their Chinese engagement, as there are no political or ideological strings attached to money? Are they willing to cooperate with their traditional ally, the US, which is expected to have a more ideology-driven approach but may also lay more stress on local social development? How will regional political leaders like President Jair Bolsonaro, who put almost all their eggs in one basket and bet on Trump, reorient their policies or melt into thin air? Political choices in the region are also essential to observe because many people living there are already disillusioned with the US but they can grow equally disillusioned with China’s not delivering on plenty of its promises. Second, regional politicians are yet to see what the two big interested powers can offer: how attractive will Biden’s proposal be and when will Chinese investments become overstretched, for—as mentioned above—there is a tendency showing that FDI and loans by the Asian power have recently been slowing in the region. Of course, Biden can also decide that the US’s immediate neighbourhood is less pivotal for him, letting China do more business there and help regional countries grow by Asian money. Third, it will be interesting to see if a coalition of the two external parties, Russia and China, can form and if they can coordinate their interests in the region.

We can certainly expect that tensions in Latin America and the Caribbean will mount in the coming period—not only because the region’s unsolved internal problems are coming forth with the health and the subsequent economic crisis but also because this part of the world can become a friction zone between external powers, a phenomenon quite alien to its history.

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ASIA CHINA NOÉMI ESZTERHAINÉ SZŐKE

China's economic, political and social prospects for 2021—like in the case of many countries accross the world—will be decisively affected by the COVID–19 pandemic. In 2020, China’s economy is expected to grow at its weakest pace in over four decades. Although the pandemic hit hard the country’s economy, the overall prognosis for 2021 is much better than for the rest of the world. It seems that strict measures taken by the Chinese government during the first wave of the pandemic to stop the further spreading of the virus, combined with the economic and fiscal policy (e.g. providing substantial liquidity support, cutting policy rates, direct transfers to vulnerable households) have made their positive effect felt. According to the latest World Bank Asia Pacific Region forecast, a 2% growth rate for 2020, and a rebound 7,9% in 2021 is predicted. However, a factor now still unforeseen will make a big impact on next year’s economic outlook. The extent to which the country’s most important export destinations (e.g. the United States or the European Union) are experiencing an economic downturn due to the epidemic.

The impact of the pandemic on the Chinese economy has exacerbated many structural economic reforms previously announced by the CCP: reducing dependence on export markets; increasing domestic consumption; reducing dependency on import food. These goals will continue to play a central role in Chinese economic policy in the following year.

This year, the Central Committee of the Chinese Communist Party met on October 26-29 to lay down the key elements of the country’s next five-year plan. The plan, the final text of which is due for release in 2021 at the National People’s Congress, typically held in March, will strongly form the priorities of the country for the next couple of years. According to the first released information, the government will put emphasis on the following elements: the country’s self-reliance in technology (in producing chips, building blocks for innovations from artificial intelligence to fifth-generation networking and autonomous vehicles); boosting domestic demand and consumption; further opening up the economy; lower carbon emission, allocation of energy resources, more emphasis on green energy; supply chain security; ensuring food security. The plan is in line with strategies that were announced earlier: the “Made in China 2025” that aims to dominate in high-tech and key manufacturing areas; the “China Standards 2035”, the main goal of which is to push domestic firms and experts to be part of the global effort to set standards for next-generation technologies; and the concept of “dual circulation” that refers broadly to two circles of economic activity— internal and external—with greater emphasis than before on business at home.

The 100th anniversary of the foundation of the Chinese Communist Party next year will play a major role. This anniversary is one of the Two Centenaries, an idea, rooted back to

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1997, and later highly promoted by President Xi Jinping. According to the goals of the Two Centenaries, China aims to build a “moderately prosperous society in all respects” by the 100th anniversary of the foundation of CCP (by 2021), and aims to become a "strong, democratic, civilized, harmonious, and modern socialist country” by 2045, centenary of the founding of the People's Republic of China. According to the main indicators (doubling GDP based on its 2010 volume; doubling average household income compared to its 2010 level; and eliminating rural poverty), China will be able to fulfil the first Centenary’s aims by 2021. Would it be so, this combined with the effective handling of the pandemic will contribute to the legitimacy and the domestic support of the central government.

Concerning international relations, as a result of the worldwide economic turmoil generated by the pandemic, the further deepening of economic and trade relations between China and Southeast and East Asia is expected. The visible evidence of this tendency is the recently signed Asian trade pact, the Regional Comprehensive Economic Partnership (RCEP) agreement, which will help to further deepen economic and trade relations between China, the ASEAN member states, Japan, South Korea and New Zeeland, by—among others— eliminating more than 90% of tariff on imports within the next 20 years. The agreement will enhance China’s economic importance in the region at the expense of the US, which had withdrawn from its own similar initiative, the Trans-Pacific Partnership (TPP), in 2017 at the beginning of Donald Trump’s presidency.

As a result of this year’s US presidential elections, a slight change in Chinese-American relations is expected. The Trump administration’s foreign policy was characterized by a very open anti-China attitude, while also taking a number of measures against the strategic rival.

The newly elected US President Joe Biden might bring a more restrained tone into diplomatic relations, however, he will not make a fundamental change. The US will continue to look at China as a strategic rival, and, as such, it will try to take steps to counter its growing influence.

By this, Biden will put more emphasis on tightening the US’s European and East Asian alliance system, but, at the same time, he will remain hard-line in most matters the former administration did, like tariffs on Chinese goods or restrictions on Chinese tech companies.

Also, China-EU relations will highly depend on how capable the Biden administration will be in the efforts of strengthening the US’s European alliance system. The dubious information around the outbreak of the pandemic, followed soon by the failed “mask diplomacy” of China, has already increased mistrust in Brussels towards Beijing during the course of the year.

Closer American-European relations are generally expected to further deepen this mistrust.

China is expected to be the engine of economic recovery from the pandemic in 2021, which—due to commodity exports—will also have a beneficial effect on the economic prospects of developing countries. In addition, China has a good chance to succeed in the international competition in the development and mass marketing (especially in developing countries) of an effective COVID–19 vaccine, which could be key for enhancing the country’s soft power and international image.

To sum up, in 2021 China has every chance to become an even more important player in global economic and political processes.

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INDIA NORBERT MIKLÓS

Even though there are more than just these few main topics in Indian politics, I would like to focus on the following ones in order to emphasize what seems to be the most important set of trends in the following year for the South Asian country.

As the COVID–19 pandemic has spread around the world since the beginning of this year, it has caused most economies to halt their production, due to the nation-wide lockdowns.

This has been the case in India too, just with the additional twitch that the pandemic has exposed and worsened the many vulnerabilities in the Indian economy. The country has become a hotspot for the disease, with almost 10 million cases and 150 000 fatalities reported officially. If this tendency continues India, will soon surpass the United States that currently has 13,5 million active cases and 300 000 fatalities. The reason behind that is that there is no decline in the daily increase of the infections, as India has not even managed to flatten the first curve of the pandemic. Because of the late build-up of the testing capabilities and the weak basic health infrastructure—especially in rural areas—the country severely lacks the required treatment capabilities, which makes it more difficult to stop the spreading of the virus. Facing the rapid spread of COVID–19, Prime Minister Narendra Modi imposed a nationwide lockdown from 24 March, but even then, the numbers kept rising.

The complete lack of preparation and coordination worsened the already fragile Indian health care system, as virtually everywhere in the country new cases started appearing en masse, since the lockdown led to many migrant workers traveling home, thus spreading the disease to the most remote places across the country. The economic blow, however, might have even been worse. India’s economy shrunk by almost 24% between April and June, which is the worst decline in GDP statistics since India keeps an official record. This is also the worst contraction worldwide. However, according to this trend, there can still be worse times ahead. Even though the government imposed some relief packages, these steps did not start a faster recovery, since the direct government spending remains quite low. The banking sector suffered the most, because of its nonperforming loans, alongside with the infrastructure investments and small and medium enterprises. Despite all this, there can be a couple of ways out of this dark tunnel of economic recession. One option would be to seek grants and loans from bilateral and multilateral development agencies and financial institutions, so that India can meet the rising health and social protection expenditures. Another solution could be to issue rupee-denominated government bonds, to help out the most hardly hit sectors. All in all, the speediness of economic recovery solely depends on how quickly the pandemic is dealt with, and whether the Indian healthcare infrastructure can be reshaped into something that actually works and can respond to the pandemic. The millions of jobs lost because of the lockdown also need to be dealt with, since without money to spend, the domestic consumption will remain low, thus

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the economic recovery will only occur in a very long time. For this reason, there needs to be some sort of urban employment scheme introduced for those who live below the poverty line, so that they can reappear as consumers in their country’s economy, thus speeding up the recovery. The vaccination of India, also remains an open question, since no one knows how or when the cure will be available, or who will supply it, and even how it will be distributed—especially in rural areas. If the nosedive of the Indian economy continues in this pace, however, Bangladesh—the country, which is hastily closing in on India in terms of GDP/capita—will surely overtake India in this regard in the coming years. Even though some people and firms have already projected the Indian economic recovery to take place in the middle of 2021, it will still be a question of how effectively the government allocated funds will be used, alongside with the central coordination. All this leads to the fact, that the economic mess of the Asian country puts a dent in its strategic posture, which, by itself, is quite dangerous already, but now that the more and more assertive Chinese foreign policy is stepping up to India at its borders, it can cause even harder setbacks for New Delhi.

Another one of the most important developments for India in 2020 must have been the resurfaced border dispute with China. The calmer and more trade-based win-win cooperation between the two Asian giants managed to mitigate the opposition between them for the past couple of decades, but as the military forces of the two sides engaged in a brutal conflict, leading to more than 20 deaths just before the summer of 2020, the bottled up tensions resurfaced between India and China yet again in the form of a series of clashes near the de facto border. Even though both countries’ foreign ministers agreed to deescalate the situation quickly, besides a ceasing of hostilities, nothing else of greater significance happened. This tension also led to the Indian ban on more than 100 Chinese apps and software, which made the Chinese side issue a complaint against India for unfair trade practices. The Modi government also banned Huawei from taking part in the building of the 5G network in the country, which was also met with harsh words by the Chinese officials in their speeches. All these events formulated a more serious question: Can India decouple itself from China?, meaning that India needs to find a way to mitigate its dependence on Chinese manufactured goods and resources, which they consider as critical imports.

On the other hand, there is the relationship with the United States, which has started to evolve into a multi-layered and deepening friendship, not just on governmental levels, but on personal too. Since the illiberal turn of India followed the international trend of majoritarianism in the world, Donald Trump and Narendra Modi managed to understand each other on multiple levels. This led to the refashioning of the US-India relationship, but there were other pieces of this puzzle as well. The most important piece was the notion of the China threat, which steered America and India into each other’s arms. In the end of it all, as the partnership strengthened, the ties between the two countries have been in many ways evolved even further. The establishing of closer ties also resulted in India becoming the 9th largest trading partner of the US, while in 2019 the US became India’s largest trading partner.

However, what will happen after the Trump era? What can we expect from the BidenHarris administration? Well, for the most part, steady continuity in the relationship, since the Democratic Party will most likely be distracted by the domestic problems of their own in America. All in all, Biden will inherit a deepened and more institutionalized US-India

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relationship, which is likely going to develop further, while improving on the global security and trade focused goals. Security cooperation in the Indo-Pacific region will most probably deepen as well. Notably so, as a strong presence in the region became a much more important part of the Indian foreign policy, especially since India quit the RCEP discussions in late 2019, a bold step from Modi, which may do more harm than good in the long run.

The next important topic to look forward during next year is the improving role of the Quadrilateral Security Dialogue (QUAD) in the Indo-Pacific region. The QUAD, which contains the US, Japan, Australia and India, has become much more important during 2020, which gave a boost to a more serious security cooperation between the included countries. Even though this is a multilateral security arrangement, the countries taking part are encouraged to improve relations and cooperation in bilateral or trilateral agreements too, thus improving the capacities of each member country. One example can be the Acquisition and Cross-Servicing Agreement (ASCA) between Japan and India, that has been concluded in September, that helps the two countries’ armies to be more interoperable, thus enhancing their security capabilities, which ultimately leads to a deepened Indo-Japanese cooperation. Another interesting improvement, now involving Australia and India, is the signing of the “Framework Arrangement on Cyber and CyberEnabled Critical Technologies Cooperation”, which is a serious support for the intention of a defence cooperation which was include further collaboration on 5G technologies, the AI sector and logistics (Mutual Logistics Support Agreement), leading the two countries into a new kind of partnership. The changing international environment will more than likely give a boost to the Australia-Japan-India Trilateral (AJI Trilateral) Cooperation too, which aims to create a much more resilient supply chain in the growing fear of Chinese influence. Of course, the dependence on Chinese goods will not stop overnight, but it will be interesting to see what comes out of such an ambitious cooperation.

A recent think tank report also highlights the need for an improved security relation in order to counter China. The writers of the report hope that this is the beginning of a tendency of enhanced security cooperation between Australia and India. This also comes after the realization that India needs a digital lawfare strategy to counter China in order to stop the dependence on Chinese computers and programs (or apps). For this reason, and the increasing "China threat" perceived by the members, the Quadrilateral Security Dialogue is beginning to spur an effective strategic forum based on shared interest and the willingness to ensure a free and open Indo-Pacific. This ultimately led to the US increasing its foreign military sales and intelligence sharing with India, thus making the bilateral round complete for India on all sides of the QUAD. With the more formal cooperation against Chinese pressure, the QUAD has been given a new lease on life, which was highlighted by the Ministerial meeting in early October. The main discussion points included the pandemic, the changing geopolitical circumstances and supply chain resilience. In the end, Mike Pompeo suggested the QUAD to be institutionalized in order for it to start building a “true security framework”.

This raises the question whether India can pursue the strategic encirclement of China, which would serve India more than ever, in the face of the current Chinese-Indian opposition. Of course, in order for that to happen, many aspects of the previously mentioned cooperation must be deepened and hardened. Nevertheless, the Chinese perspective has shifted from

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calling the QUAD “sea-foam” into calling it an Indo-Pacific NATO, which causes a “big underlying security risk” for China. Thus, the sharpening competition between India and its adversary might even shift into harsher narratives and more serious border conflicts too. With all that in mind, the strategic competition between China and India does not stop at the shared border, it spreads much further, namely to the Indian Ocean region, where the Sino-Indian competition keeps intensifying, mostly thanks to the Belt and Road Initiative’s infrastructural developments.

From a domestic point of view, the result of the 2020 and 2021 assembly elections of the Upper and Lower Chamber will be of high importance, as the Bharatiya Janata Party’s (BJP) national coalition partners keeps on shrinking, while the BJP itself is gaining even more momentum.

Another important event to look out for will be how the Farm Bills and Labour Law takes effect the in the pandemic struck economy of India.

JAPAN EMESE SCHWARCZ

After an incredibly turbulent year, the country of Japan closes the year 2020 with more or less the right foot forward, but this year brought an uncomfortable dowry to the next year nonetheless. There are four sources of political anxiety which I will elaborate on: the future of the US-Japan security alliance, the Tokyo Olympic Games, the ongoing coronavirus (COVID–19) pandemic, and the next House of Representatives elections in September.

First and foremost, the US presidential elections resulted in Joe Biden’s victory, and a new president means a possibly different atmosphere in US-Japan relations. Compared to a considerably strict Donald Trump, who wished to quadruple the amount Japan should pay to the US for keeping troops on Japanese soil, future president Joe Biden might be less keen on squeezing the country’s already nearly empty piggy bank, but more interested in enhancing the strategic, economic, and security ties. His true intentions will be revealed in March, when the fifth years-long period of the special measures agreement will expire. But the question is not only how Biden’s approach to the long-time ally will look like, but also concerns the plans of the newly elected Prime Minister Suga Yoshihide. As (ex-)Defense Minister Kōnō Tarō had cancelled the implementation of the long-awaited Aegis Ashore ballistic missile system, and the country is noticeably becoming friendlier to Australia and India from a defense perspective, an interesting new situation might unfold in 2021, where Japan might shift its 70-year-old defense policy. This policy being the outsourcing of national defense to the US, and the US alone. With reinvigorating the Quadrilateral Security Dialogue, other regional options can become accessible.

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The special measures agreement is not only important for its impact on international relations, but for the country’s budget, as the topic of economy will be in the forefront of 2021 as well. Undoubtedly, the greatest influence on Japan’s economy will be the Tokyo Olympic Games―once delayed, twice unwanted. There is a reason why ex-Prime Minister Abe Shinzō and the International Olympic Committee were reluctant on postponing the event to 2021, and why the situation is still cloudy: COVID–19 pandemic aside, much depends on the success of the Olympics economically. The Japanese economy has been lagging for a long time, even before the pandemic, but should the Olympics-related investments go to waste, the country would descend into a catastrophic state, reinforced by the ageing and dwindling population the lack of tourism, and the unused female labour force.

These are problems that the new prime minister, Suga Yoshihide, has to solve in his barely one year in office. After Abe Shinzō stepped down due to his illness (or, more likely because of his declining support and the backlash for his many scandals), the governing Liberal Democratic Party had to opt for stability and continuity, therefore, they put Abe’s right-hand and enforcer into power. His time is limited, for he is only filling in for the duration of Abe’s last year, but either way, a House of Representatives election is scheduled for September 2021, where a new leader must be chosen. The candidates will have a tough time, first in grabbing the attention of the voter base, then upon winning, stabilising the country politically, economically, socially, while carrying on a strong international presence.

Technically, PM Suga could win this election, thereby solidifying his ad hoc takeover, but he inherited Abe’s failure in keeping the COVID–19 pandemic under control. Many criticize him for being indecisive when it comes to countermeasures, backing counterproductive programs, and avoiding lockdowns when needed. Similarly to ex-PM Abe’s time, prefectural governors are now left alone to make decisions in either requesting bars and restaurants to close early (Tōkyō), or raising the alert level (Sapporo). Making ineffective decisions, or lacking the ability to make any, might primarily disenchant the voter base, which kept Suga’s support rate relatively high, but it also endangers the plan to open up the country for foreigners in April, which would essentially boost the economy, something that Japan currently desperately needs. Of course, opening up the borders is closely linked to the Tokyo Olympic Games, as the way to deal with a large number of attendees is still undecided in respect of the coronavirus.

To sum up, 2021 for Japan will be no less challenging for the country, as security, economic, and public health conundrums must be resolved, preferably with strong leadership that can stabilize its power for the long run.

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SOUTH KOREA DR BALÁZS HAMAR

2020 will be remembered as the year of the COVID–19 pandemic outbreak all over the world.

The Republic of Korea (ROK) was one of the first countries to be hit. They had an explosive growth in the number of cases in late February, latter part of August and November.

The Korean Government was able to flatten the curve, without closing-down the economy and with measures, which were approved democratically by an overwhelmingly large part of the population. ROK became the good example for the rest of the world. ROK rightly builds its soft diplomacy partly on this success. The government widely propagated its experience of best practices on COVID–19. Since the virus is not defeated yet, this success will play a role in ROK’s diplomacy in the first half of 2021 as well.

After 9 years of drafting, on 15 November 2020 the agreement to form the Regional Comprehensive Economic Partnership (RCEP) between the 10 members of the Association of Southeast Asian Nations (ASEAN) and Australia, China, Japan, Korea and New Zealand was signed. The signatories of RCEP have been seeking to create a mega free trade agreement, which could create an economic bloc accounting for one-third of the world's gross domestic product and a third of the global population. The RCEP agreement will work alongside and support an open, inclusive, and rules-based multilateral trading system.

Rebuilding multilateralism and overcoming protectionism have been some of the most urgent tasks facing South Korea, which is heavily reliant on exports for its economy, amid the trade war between the United States and China along with an unprecedented pandemic.

The agreement helps to ensure ROK is in a very good position to recover from the impacts of COVID–19 and grab new opportunities for export and investment.

The ROK-Japan relationship is and always has been a decisive issue for South Korea.

In 2019, the relations reached the lowest level in decades when Japan removed ROK from its whitelist of favoured trading partners, endangering the import of three chemical materials essential for making semiconductors, and ROK threatened Japan to withdraw from the General Security of Military Information Agreement (GSOMIA). Now with a new Japanese prime minister, Yoshihide Suga and a new US president, there are some hopes, that these relations slowly could be improved. Although Suga has made it clear that he will inherit his predecessor Shinzo Abe’s policy line, and ROK president Moon Jae-in did not change his track on the forced labour issue, they could move on with less contagious issues. It is clear that when they are rowing in different directions, both are weaker against China, North Korea (DPRK), and Russia. Both of them are close allies of the US. The US should be a careful leader, bringing the parties on a common platform.

Joe Biden, the newly elected US president, in his first telephone call with president Moon Jae-in, reaffirmed Washington's firm security commitment to South Korea and said that he would closely cooperate for a resolution to the North Korean nuclear issue. After Trump's

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television-show meetings with North Korean leader Kim Jong-un, Biden will probably return to a much harder stance on DPRK. There is a need to reinforce diplomatic efforts to achieve the goal of completely denuclearising the Korean peninsula given the urgency of the North Korean nuclear issue. Biden has said that he will not meet Kim Jong-un, without preconditions such as denuclearisation. The financing of the 28 500 strong US contingent present in ROK was a hot issue with the Trump administration, but Biden would likely deescalate the ongoing dispute over the shared cost of hosting US troops in Korea.

In mid-March 2020, South Korea, in response to the global economic crises, announced its recovery strategy, which also includes its climate strategy, the so-called Green New Deal.

According to this proposal, the country will use the crisis to kick-start an environmentally sustainable economic growth. The aim is to achieve a carbon zero society by 2050. ROK now is one of the top seven CO2 emitting countries in the world. The Korean population is well aware of the domestic environmental issues, especially because of the “suffocating” and annually increasing level of air pollution. Air pollution is linked to the death of nearly 17 000 people each year in South Korea. The government had to respond on the call of its people. ROK is hosting the headquarters of two major UN organisations related to green economy, the Green Climate Fund (GCF) and the Global Green Growth Institute (GGGI). Now is the time and the momentum to implement the vast knowledge already present in the country.

ASEAN 2021—A GENERAL OUTLOOK ZSÓFIA GULYÁS

2020 definitely has been a significant year for the whole world in terms of economy, politics and society. The unexpected outbreak of the global coronavirus (COVID–19) pandemic at the beginning of the year and the awaited result of the presidential election in the United States in November are probably the two most remarkable factors which will shape the international space both in the long and the short term. As Southeast Asian countries are becoming more and more “visible” on the world stage and integrated into the global processes, mostly due to the aspects of population and market growth, they are more and more affected by global events at the same time.

The ongoing COVID–19 pandemic has hit the countries of Southeast Asia hard in all respects, therefore, it is not surprising that they will be influenced heavily by the consequences of the global health crisis in the year of 2021, too. The pandemic situation affects not only the region as a whole, but also every single member state of the primary regional intergovernmental organization, the Association of Southeast Asian Nations (ASEAN). From an economic point of view, the global market have suffered a huge setback due to the lockdowns and restrictions introduced by the individual governments

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all over the world to control the spread of the virus, and economic recession has resulted in a significant decline in world trade volume generally. The restrictions on activities have weakened domestic demand and decreased private consumption in ASEAN member states, and the globally perceptible uncertainty has resulted in the fall-off of business dynamism and the decline in foreign trade in point of both export and import. Since ASEAN plays an increasingly important role in the interregional and global economy lately, a proper economic crisis management is, therefore, inevitable in the Southeast Asian countries also from a global perspective.

According to surveys, despite this year’s sharp contraction in its economic activity, ASEAN member states are forecast to see a relatively good recovery in 2021. The reports of OECD and IMF foresee an approximately 3% decline in real GDP growth for the end of this year in the Southeast Asian countries compared to 2019, which is slightly better than the expected global decline average. However, data for next year already project the “ordinary” economic growth or even better for ASEAN member states. In general, countries that can maintain the golden principle balance in these hard times between resuming economic activity and restraining the spread of the coronavirus will be able to regain their previous position in the field of international economy faster than the rest. Focusing on the five emerging economies from the ASEAN region; that is, Indonesia, the Philippines, Malaysia, Vietnam and Thailand (ASEAN-5), with the latter of two being the countries, which have been so far able to keep the pandemic under control most effectively since the confirmation of their first COVID–19 cases. This kind of relatively secure environment and soothing atmosphere has an incentive effect on business sentiment, therefore, Vietnam and Thailand are likely to have better chances to fully recover their domestic market in time. Unfavourable trends in international tourism have had harsh consequences, especially in the case of Thailand, where the measures taken to deal with the crisis are leading to a significant decline in real GDP growth of around 6,5-7% for the year of 2020 indirectly. However, as soon as the globally introduced restrictions are lifted, the two countries will be able to recover from the current health and economic crisis, and they are expected to produce outstanding growth next year. In contrast, the other three ASEAN-5 member states, the Philippines, Indonesia and Malaysia have definitely lost control over the pandemic. In addition to the high-level vulnerability due to the situation of the public health infrastructure, the economies of these countries are extremely consumer–driven compared to others in the Southeast Asian region, which implies that the impacts of domestic, regional and global market contraction are hitting the economies of these countries harder. The weakening of private consumption and investment along with the severe decline of international tourism is bringing about the first recession of Indonesian and Philippine economy since the Asian Financial Crisis at the end of the 1990s. Due to the declining global demand, the exportdriven Malaysian economy is also struggling with the current situation, but the serious shrinkage of global growth this year will be followed by economic expansion in 2021, with real GDP growth of approximately 6-8% in the country.

In 2021, the controversial human rights situation will most probably continue to intensify in some ASEAN member states, like the Philippines and Myanmar. From a foreign policy point of view, in the midst of the US—China great power rivalry, it is of particular significance

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that Joe Biden won the US presidential election against Donald Trump in November. As for the Biden administration’s most likely China policy, it will remain substantially unchanged from the present line and will continue to treat China as a strategic competitor. This is an outstandingly important determining factor in the development of the attitude of the new presidency towards the ASEAN member states, since countries in the region are potential strategic partners for the US against China. Accordingly, the style and implementation of Biden’s Southeast Asia policy is expected to be more coherent in the future than that of its predecessor and will be based on principles, at least in its rhetoric. At the same time, on the substance, regarding the ASEAN region, the Biden administration's priorities will move from ideology and values to strategic interests. As countries that are located in the “heart” of the strategically important battlefield, the Indo-Pacific, Southeast Asian countries will have the hard and challenging task not to behold to either China or the US, while maintaining relatively good relations with both. From the perspective of the ASEAN member states, their bilateral relations with the US does not seem to change significantly after the presidential election this year. However, China’s increasingly assertive behaviour and expansive aspirations on the international stage, represented by the so–called “wolf warrior” diplomacy, especially in terms of the territorial claims on the South China Sea, affect most ASEAN member states to some degree. These tensions easily can endanger the status quo and may lead to the strengthen of the region’s engagement with the US in the near future at the expense of the prosperous ASEAN—China economic relations.

The more so, as the pandemic has made it uncertain to finalize the “Code of Conduct on the South China Sea” between ASEAN member states and China by 2021.

AFGHANISTAN—A CHANCE FOR PEACE? LAURA SZILÁGYI

This year was a milestone in the history of Afghanistan. In February 2020, the US and the Taliban signed a peace deal, which committed the Americans to a complete militarily withdrawal from the country by May 2021. The deal also required the start of peace negotiations between the Taliban and the Afghan government. The launching of intraAfghan talks encountered many obstacles, inter alia, the parallel inauguration of two Afghan presidents in March (Ashraf Ghani and Abdullah Abdullah), and the disagreement about the release of Taliban prisoners. Finally, the intra-Afghan talks have started in September 2020, but the parties could not achieve a breakthrough, so far.

There are several external and internal challenges, which Afghanistan has to face in 2021.

To begin with, the US withdrawal raises certain concerns, and many future challenges are rooted in it. This process and the US approach towards Afghanistan have been affected by

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the American elections. Former US President Donald Trump genuinely urged the withdrawal.

In November 2020, he tweeted that the number of American troops will be reduced to 2,500 personnel by Christmas. In contrast, the Biden administration is likely to conduct a review of the US's Afghanistan policy and apply more pressure on the Taliban in order to compel them to a reduction of violence in the country, as—in spite of the US–Taliban deal—the level of violence is still high in Afghanistan. Some experts believe that President-elect Biden might keep a small contingent of counterterrorism forces in the country to ensure that terrorist groups (like ISIL and al-Qaeda) will not threaten American security interests, while also making the Taliban more accountable to fulfil their commitments.

Connected to this, the second concern is the composition of a future Afghan government.

Many scholars and politicians have expressed doubts about the reliability of the Taliban leadership and are afraid that the Taliban will try to take over the power and introduce an Islamic order-based governance. A very similar incident happened in the end of the 1980s, when the President of Afghanistan started to negotiate and gave a share in power to the Afghan freedom fighters against the Soviet occupation, the Mujahidin. The Mujahidin made an agreement with the Soviet Union, too, and promised that they will not attack the government forces, but when the Soviets left the country, they overthrew the regime.

Are we witnessing the repetition of history?—is the question raised by many Afghanis and foreign actors. A religious part of the Taliban wishes to continue waging war and exert efforts to achieve the implementation of Islamic rule in Afghanistan.

The withdrawal of the American troops and a potential Taliban takeover could once again result in Afghanistan becoming a safe haven for terrorist groups. This potential scenario distresses the international community and regional actors. The Afghan National Defence and Security Forces have increased their capabilities and have become stronger over the past years; however, they still require assistance from international stakeholders, especially financial ones. The North Atlantic Treaty Organisation is a prominent actor within the country, which provided support to the ANDSF, and is committed to continuing to provide it in the near future. Secretary General Jens Stoltenberg expressed his opinion that the Alliance cannot risk Afghanistan becoming a platform for international terrorism.

In order to prevent this unwanted outcome, the eventual withdrawal of the international contingents should happen in a deliberate and well-coordinated way. Furthermore, NATO’s activity has not only repelled terrorism, but helped to make enormous progress in the improvement of the social status of women as well. Therefore, leaving Afghanistan too early and hastily threatens the position of Afghan women.

In conclusion, the chance to maintain peace and relative stability in Afghanistan lies in the hands of the Afghan people. The US–Taliban deal gave an initial push to the intra-Afghan talks but it cannot solve alone the country’s internal political problems.

The Afghans themselves need to establish a mutually acceptable political consensus that might offer a chance for lasting peace (or ceasefire) through bilateral negotiations. If this will not happen by May 2021, and the US (and other international) forces leave its territory, it is possible that the conflict between the Taliban and government forces will renew and intensify, pushing Afghanistan back into a state of civil-war.

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CENTRAL ASIA TAMÁS KOZMA

Post-Soviet Central Asia encompassing Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan is a geographically isolated, and often overlooked region. However, countries in this region face a myriad of challenges—both domestic and external ones—which unquestionably affect their stability and development, as well as the entire region’s position in the broader Eurasian geopolitical architecture. Accordingly, when it comes to forecasting expected trends concerning this region, a complex set of domestic and regional issues has to be assessed. Given length constraints, this outlook on Central Asia for 2021 aims to focus on specific, selected issues. First, it revolves around the consequences of the recent protests and overthrow of President Jeenbekov in Kyrgyzstan, including the upcoming parliamentary and presidential elections in 2021, which is of key topicality in the region. Second, the analysis aims to shed light on the present situation of the region’s more or less stable, yet oscillating position on the Russia-China axis, and its expected trends for 2021.

While in the rest of the five Central Asian countries, stability of the regimes and the relative predictability of domestic politics are among the key characteristics of the prevailing political systems, Kyrgyzstan is definitely an exception. Kyrgyzstan is often referred to as the most advanced democracy in the region, however, in parallel it should be highlighted that it is more prone to tensions and instability stemming from the volatility of domestic politics than the other countries in the region. The country had gone through revolutions in 2005, 2010, and most recently, following the parliamentary elections on 4 October 2020, another major wave of political unrest shook up the country. Allegations of election fraud, vote buying, as well as other reasons, such as the worsening corruption in the country, sparked tensions, and resulted in mass protests and political unrest, which lasted for approximately ten days. In consequence of the turbulent events, on 6 October the results of the elections were officially annulled, and the developments led to the resignation of President Sooronbay Jeenbekov, as well as Prime Minister Kubatbek Boronov, among others. Since 15 October, ex-convict Sadyr Japarov has been holding the position of Acting President, while a couple of days earlier, he was appointed as prime minister. Japarov, a nationalist politician, and a former member of parliament, has been active in Kyrgyz domestic politics for one and a half decades now, however, since 2017 he had been serving a prison sentence for taking a state official hostage in 2013. Amid an escalating turmoil in Bishkek, he was freed from prison by his supporters. The presidential election is set for 10 January 2021, while the parliamentary election were planned to be held on 20 December 2020, however, according to recent developments, most probably it will be postponed to 2021. It is a crucial question what the new elections might bring for Kyrgyzstan, since consolidating power and maintaining stability in domestic politics have long been a major challenge for the country. The bare fact that Kyrgyzstan has had ten prime

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ministers (without acting ones) since late 2010 is a sign itself that volatility is highly present in the system, and this lays a burden on the development of the financially strained country.

With regard to the upcoming elections, experts’ lay crucial emphasis on the question of whether Kyrgyzstan would continue its running experiment with a parliamentary system, or it would shift back to its former presidential system. Although it is premature to judge this matter, it seems that potential candidates would support a constitutional change, which can give impetus (again) to a shifting distribution of power on the president—parliament— prime minister axis. Similarly, it is an open question which clans’ position the results of the upcoming elections would strengthen. Regional clans are important actors in Kyrgyz domestic politics, and any new election can reshuffle their power positions. Regardless of the outcome of the upcoming elections, maintaining stability is not the only task left for the next government and president. The fight against corruption and the interconnectedness of politics and organised crime, as well as the government’s ability to cope with economic hardships are also key areas, the management of which will determine the popularity and, thus, the stability of any future president or government. In early November 2020, it seems that the number of potential candidates for the 10 January 2021 presidential election is growing, while the list already includes, among others, the acting president and Prime Minister Sadyr Japarov, who stated that he would issue his resignation in order to run for the presidency, as well as the speaker of the Kyrgyz Parliament Kanatbek Isaev, who also projected stepping down from his position for the same reason. Furthermore, it should be noted that an important change might redraw the composition of the new parliament to be elected in 2021. The previously very high electoral threshold of 7% has been decreased to 3%, which will presumably enable more parties to win seats in the parliament. During the previous parliamentary elections on 4 October 2020, out of 16 parties, only 4 passed this threshold. Parliament’s vote on abolishing the use of the so-called Form-2—which can be considered as a tool to gerrymander the vote—is also an important technical change, which can help to decrease the chances of an electoral fraud. All in all, the beginning of the next year will be crucial for Kyrgyzstan. Among many other questions, it remains to be seen whether the upcoming elections will be fairer and can thus promote domestic stability in Kyrgyzstan, or they would lead to the deepening of existing fault lines in the country.

For Central Asia, a region being located in-between Russia and China, it is an inevitable question how these two powers perceive the region and what kind of policies they do follow in this direction. In line with this, from the perspective of this outlook, it is of particular importance what developments are expected in their relations in the upcoming year.

The point of departure is that in political, security, military, and in societal aspects Russia plays the most important role in Central Asia, while China has emerged as a key investor and foreign trade partner for most regional states. However, as time goes by, this simplistic approach requires regular re-examination. In the summer of 2020, China held its first meeting with the foreign ministers of the five post-Soviet Central Asian states in the ‘5+1’ format.

Experts highlight that previously China preferred either bilateral meetings, or the frameworks provided by regional organisations, such as the Shanghai Cooperation Organization (SCO) to negotiate with the countries of the region. This change can be conceptualised as part of a shift in China’s approach to the region, which includes also the partial move from a

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mainly economy-focused approach to a more political and even security-oriented one. This tendency can be expected to continue not only in the upcoming year, but also in the longer run. The establishment of a Chinese military facility in Tajikistan, as well as China’s increasing arms sales to the countries in Russia’s traditional strategic backyard are also non-negligible steps in this regard. Although Tajikistan is the poorest country in the region, its position demands increasing attention, since it is a geostrategically important location, where Russian and Chinese security and military interests directly meet, as both of them have military facilities in the country. Moreover, in 2021 Dushanbe will host the jubilee summit of the Shanghai Cooperation Organization, which will mark the 20 th anniversary of the establishment of the China and Russia-led alliance. With regard to the recent turmoil in Kyrgyzstan, it should be underlined that both Russia and China were cautiously following the events. Acting President and Prime Minister Sadyr Japarov stated that the recent upheaval changes nothing in Kyrgyzstan’s strategic relations with Russia, still, it remains to be seen whether the results of the upcoming elections would change anything in this regard. Most probably, the answer is no, since Kyrgyzstan is part of the Eurasian Economic Union (EAEU), it is a member of the Collective Security Treaty Organization (CSTO), the country hosts Russian military facilities, as well as thousands of business and societal connections link it with Russia. From the others’ perspective, the outcome of the upcoming elections is not expected to cause major shifts neither in Russia’s, nor in China’s approach towards the country. Concerning Tajikistan, Emomali Rahmon’s reelection for another seven-year-term following the 11 October 2020 presidential elections is another factor that will contribute to the continuity and predictability of the country’s foreign policy course, which helps both Russia and China in defining their stance towards Dushanbe. It should also be highlighted that, in 2020, Uzbekistan, the most populated country in the region, has decided to apply for observer status in the EAEU, which can be considered as an important step towards the country’s opening to Russia, which is a major shift compared to former policies highlighted by strong distancing from Moscow during the Karimov era. It is an important question for 2021 whether there would be further arrangements aiming at Uzbekistan’s full membership in this integration, and also whether Uzbekistan’s overtures towards EAEU would be followed by Tajikistan, for whom remaining absent from the same organisation could lead to isolation. At the same time, it should be added that Uzbekistan recently resumed its negotiations with the world Trade Organization, while neighbouring Turkmenistan gained observer status in it. Finally, it is worth sheding light on the economic interconnectedness of Central Asia with both Russia and China, which came to the forefront in light of the pandemic in a painful way.

The declining natural gas demand in China has unfavourably affected the gas exports of Turkmenistan, Uzbekistan, and Kazakhstan as well, which results in a decrease in their respective budget incomes. Besides that, the economic consequences of the pandemic negatively impact remittances, a key source of income for a vast number of families of Central Asian migrants mostly working in Russia. Given their economic dependence on Russia and China, Central Asian states and societies will continue to be badly hit by these tendencies, since both of the aforementioned issues will have a lingering effect in 2021, and probably even beyond.

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