We Love You, We Love You Not? Foreign Investment Policy and the New Right in Post-Communism

In countries across post-communist Europe, new or transformed political parties have come to power since 2010 explicitly addressing popular frustrations with foreign investors as a central part of their political platform. Their concern with foreigners “buying up” the economy – having benefitted from allegedly improper privatizations, disadvantaging domestic business while exploiting workers –  has become a new rallying cry. It features not just in campaign rhetoric but also when policy programs are elaborated.

For example, then Polish Deputy PM and current PM Matuesz Morawiecki told an audience of businesspeople in May 2017 that, “[c]urrently, 95 percent of wholesale and retail trade belongs to foreign capital, until recently over 70 percent of the banking sector belonged to foreign banks. Repolonization is, thus, necessary”. Similarly, Hungarian Prime Minister Viktor Orban said in a November 2014 radio interview, “I believe there is no national sovereignty without a national financial system.”

This attention to foreign business, which has even been used to argue for renationalization, is a factor that distinguishes post-communist from West European nationalist and populist party rhetoric. And yet, all of the post-communist countries are deeply dependent on foreign investment and trade. This dependence and simultaneous rejection puts the governments of Eastern Europe in a difficult position. On the one hand, their post-communist growth has depended on a model of welcoming foreign investment and trade. On the other hand, governments are also facing increasing amounts of popular dissatisfaction with the status quo.

This places governing parties between a rock and a hard place: if they turn away from the strategy of the last 25 years, they risk unsettling mobile sources of foreign direct investment. If they continue to embrace a globalized and liberalization-based vision of economic growth, they risk incurring the wrath of voters who elected them in part on the basis of their anti-globalization stance.

This paper explores how new parties have navigated the dual pressures of attracting FDI and keeping their anti-business and anti-FDI promises in six countries: Hungary, Poland, Romania, The Czech Republic, The Slovak Republic, and Bulgaria. The paper focuses specifically on investment policy and related areas (such as Hungary’s bank tax) because these are the policy spaces where, in the context of the European Union, moves against foreign capital can be made. As this paper will show, the Polish Law and Justice Party (PiS), Hungary’s Fidesz, Slovakia’s Social Democrats under Robert Fico and Bulgaria’s GERB government developed quite different stances with regard to FDI and foreign business as they have attempted to refashion the economic models developed during an earlier period of post-communist development.

About the Speaker:

Roger Schoenman is an Associate Professor of Politics at UC Santa Cruz. Prof. Schoenman’s work explores three related topics: 1) the varieties of capitalism in the post-socialist countries, 2) the role of networks in political organization and 3) the conditions under which large and long-term political projects become possible.

Recent publications investigate the impact of party-competition on the politicization of the economy and institutional development. He has recently published a book titled Networks and Uncertainty in Europe’s Emerging Markets (Cambridge University Press 2014), that examines the impact of party systems and cleavages, business-elite origins, and the structure of business networks on institutional development in the evolving market democracies of the post-socialist area.

Current research examines the development of post-communist party systems after the financial crisis, the role of new media in mass protest and the politics of renewable energy across the European Union. Using computer assisted text analysis, he has also explored patterns of political debate in post-communist Europe.