Key Political Risks Facing Central & Eastern Europe and the South Caucasus
Implications for International Investors

January 29, 2024
Russia’s enduring war against Ukraine dominates Aretera’s 2024 Annual Risk Forecast for the CEE region. With the second anniversary of the invasion fast approaching, the sustainability of Kyiv’s defence capabilities, as well as the unity of support from its allies, are both coming under increasing pressure. Much will depend on whether the EU and US can maintain political, military and financial support to Kyiv in 2024 and beyond. Ukraine will look to be seen focusing on resolving its internal challenges to secure this support, but with cracks already appearing in the West’s response to the war, and a pivotal US election looming, there are certainly no guarantees.

The US election in November, likely to be another showdown between Joe Biden and Donald Trump, will prove pivotal to stability in the region. With a second Trump presidency looking increasingly possible, the risk of US disengagement from Ukraine, and indeed from ensuring wider European security, particularly on NATO’s eastern flank, has become a major concern. If Trump is re-elected, EU leaders, most of whom have committed to supporting Kyiv in the long run, will face an uphill battle to secure ongoing US financial support for Ukraine.

The majority of CEE governments feature ideologically diverse, multi-party alliances, meaning political stability will be a key issue for international businesses to monitor in 2024. Among those less stable countries this year could be the Czech Republic, Bulgaria and Central Europe’s largest economy, Poland. Led by returning PM Donald Tusk, the new government in Warsaw, also a highly experimental coalition cabinet, faces fierce opposition from the former ruling Law and Justice party (PiS) over its reversal of a range of PiS policies, including the rapid but controversial replacing of the leadership of the country’s public media outlets. Tension has also escalated over the arrest of two former PiS government figures, with continuous clashes expected in the run-up to April’s local elections. In Bulgaria, tension within the country’s ruling bloc may accelerate as Sofia approaches a major government reshuffle expected in March. Politically more stable countries include Hungary, Romania, Slovakia and Croatia. Hungary’s ruling Fidesz party faces no credible opposition, while Slovakia’s recently elected governing coalition seems to be bedding in following years of instability under previous, centre-right governments. In Croatia and Romania, no major interruptions of government are expected as both countries head towards crucial electoral contests.

Already dubbed as the largest election year on record, 2024 will bring a packed election season to the CEE region, kicking off in Slovakia with the presidential election in March. Six other CEE countries will hold presidential elections, four of which will also organize parliamentary elections. These include Croatia, Georgia and Lithuania, while Romania is braced for a full election cycle across EU, presidential, parliamentary and local elections. War-torn Ukraine is unlikely to hold elections this year, while neighbouring Moldova, also preparing for presidential elections, could head for a snap parliamentary
election that would define the country’s European path. The same applies to Georgia where high-stakes parliamentary elections will take place in the autumn. The upcoming EU elections will also be a major popularity test for most CEE governments, with opposition parties likely to make big gains in a number of regional countries.

For years, internal EU politics have been shaped by Brussels’ long-running disputes with Hungary and Poland over alleged rule-of-law concerns. In the case of Warsaw, this eased after Poland’s new government vowed to repair ties with the EU. For Hungary, relations with Brussels will remain tense, however there could be a silent rapprochement coming up, as Prime Minister Viktor Orbán looks to unblock all of Hungary’s EU cohesion and recovery funds before Hungary’s Presidency of the Council of the EU begins in July. The fissure between Budapest and the rest of the bloc over Ukraine, however,
represents a fundamental disagreement among European leaders, capable of deepening political and policy debates at the EU negotiating table for years to come

These are the main takeaways from Aretera's Annual Forecast for 2024, in which we unpack the key political and geopolitical risks facing Central & Eastern Europe, the Western Balkans, Türkiye, Central Asia and the South Caucasus.

If you would like to receive a copy of the full report or schedule a discussion of our Annual Forecast, please contact:
Dominik Istrate, Research Director for Central & Eastern Europe at