Global Risk Insights

Just what exactly is ‘illiberal democracy’?

Georges Gobet/AFP/Getty Images

How can illiberal democracy exist in the EU?  Is democracy still relevant in Europe,  or is Central European pioneering a new model?

On 23th of May, Alexander Van der Bellen is elected President of Austria with a lead of 31,000 votes outdistancing the favourite far right candidate, Norbert Hofer.

The rise of the far-right mirrors the current state of mind of many central European countries and most of all, constitutes a fearful reaction to the ongoing refugee crisis. Hungary, Poland, Slovakia, Austria are on the road to entrench far-right ideas in their governments.

What is illiberal democracy and how is it different from liberal democracy?

Hungary’s Prime Minister, Viktor Orban calls into question the efficiency of the different forms of state organization. Whether a nation state, liberal state or welfare state, he wonders about the future of state organization. According to him, the era of a state based on work values needs to come; the liberal state must gives way to the rise of a Hungarian illiberal state.

While we are familiar with liberal democracies, illiberal democracies are, according to Fareed Zakaria “democratically elected regimes often re-elected or reinforced by referendums that ignore the constitutional limits of their power and deprive their citizens of basic rights and liberties.”

Illiberal democracies are continuously increasing; however, few of them have become liberal democracies; on the contrary, most of them are strengthening illiberal democracy by creating forms of government that mixes substantial degrees of populist democracy with strong man leadership.

Viktor Orban embodies this turnaround among central European countries. Orban was easily re-elected in 2014, by capitalizing on mounting fears around the refugee crisis. His discourse is especially appealing to small, aging countries who are feeling threatened by demographic downfall and fear the loss their ethnic majority if refugee flows continue.

The axis of illiberalism in Central Europe

Alongside Hungary, three other EU members: Poland, Croatia and Slovakia are governed by political parties with nationalist and authoritarian tendencies.

In both Hungary and Poland, two main events highlight the decline of the rule of law. Firstly, several attacks against institutional courts are calling into question the political neutrality of the administration. Indeed, when the Polish government took power, it entered into an open conflict with the Constitutional Tribunal, the country’s highest judicial authority.

Secondly, the increased stranglehold over the media underlines the decline of democracy. For example, Poland’s government has even attacked main democratic figures from Lech Walesa to Donald Trusk. Furthermore, the principal Croatian party of the governing coalition, imposed several contested measures to strangle media and public institutions.

Destabilized by the refugee crisis, now is the right time for Orban to create an axis of illiberalism in central Europe and challenge the strongest figure of Europe, Angela Merkel. The fear of Muslim refugees following the attacks in Paris and Brussels merely further increases Central European efforts to construct barriers to defend their territory.

Lastly, Orban’s influence is growing. He can can count on powerful support in Brussels, for example the EPP’s president Joseph Daul who supported his re-election in 2014

Nevertheless, the UN reprimanded Orban for weakening democracy by changing voting laws. Moreover, Freedom House recently compared Hungary’s democratic structure to Balkan states such as Albania or Macedonia.

Why illiberal democracy is becoming popular?

Budapest affirms that Hungary’s values are far different from the ones that were behind the creation of the European Union. Hungary’s alternative vision of illiberal democracy comprises of order, press control, family, religion, homeland cults, ‘mythification’ of the past, social beneficiaries’ work, and even the re-establishment of death penalty which Orban considered putting on the agenda in May 2015.

According to Orban, Western values, founded on human rights, respect for minorities, rule of law, and free trade, are now obsolete. In other words he argues that European Christian democracy has been led astray by liberalism.

Illiberal democracy is in total opposition to the Western model that arose at the end of the Second World War. Orban seeks to turn back on Paris, Berlin, and Brussels with the aim of placing Hungary under the authoritarian model used by Russia or Turkey.

Furthermore, hostility towards immigrants leads Orban et al. to refuse the ethnic, religious and cultural heterogeneity of their societies because they see multiculturalism as a failed model.

What’s the impact?

Put simply, Hungary’s competitiveness is terrible, and rising levels of state intervention, centralization do not help the situation.

The Annual Global Competitiveness Report, shows that Hungary’s international competitiveness is getting worse. While the country was ranked 28th in 2011, – a better performance than most of the countries in the region –  this year’s ranking puts Hungary at the 60th place, behind most of the region.

However, in order to solve the problem of competitiveness, Orban is strengthening state intervention in the private sector, but this is in no way the right method to save Hungary from economic slowdown.

In theory, such a strategy might contribute to the successful operation of market economy (think the Asian Tigers), however, the country’s market and state mechanisms are mixed up, triggering ineffective market coordination and thus reducing performance and competitiveness. Orban’s increased state intervention has therefore prevented the normal market from functioning.

Viewing liberal democracies as a failed system; illiberal democracies reject the EU’s founding values. Moreover, strongly hostile towards immigrants, they seek to suggest an alternative to the mismanagement of Europe and the refugee crisis.

However, while it is certain that this populist disease in Europe translates into a deep crisis in European identity that needs to be addressed, the rise of illiberalism has important economic impacts that cannot be ignored.

If Central Europe decides to establish illiberal democracy as the new governance paradigm they will have to face the consequences of lack of competitiveness and isolationism.

Indeed, building fences has never been the right answer, and will definitely never be.