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Lecture: Populists and Coalitional Bonding

How do illiberal governments in Europe navigate the structural constraints posed by EU governance and bond markets as well as by the imperatives of the domestic growth model? This issue was discussed by Cornel Ban, associate professor of International Political economy at Copenhagen Business School, in a lecture delivered on September 15, 2023 at the CEU Democracy Institute in Budapest. David Karas from the CEU Democracy Institute was the discussant at the event.

The paper presented, co-authored with Dana Domsodi, looked at Hungarian and Italian illiberals in office, showing that the constraints posed by the growth model are not airtight and illiberals in office can politically adjust them. Specifically, despite their very different growth models, both Hungary and Italy had populist governments that attempted to be responsive to their electorate by enlarging preexisting growth coalitions. Still, the extent to which they were able to design policies that benefited labor was strongly limited by the ideological cohesiveness of the illiberal cabinet and the structures of the growth model, with the FDI-led exportist growth and cohesive government (Hungary) limiting pro-labor measures more than consumption-led growth with divided government (Italy). The fact that the Hungarian version of anti-system politics was systematic in the institutional dismantling of checks and balances and harshly limited the institutional bases of political pluralism vastly amplified this divergence. Next, the illiberal government’s capacity to dodge EU pressures through the interventions of the central bank in the government debt market (Hungary) was of essence as well. Where this was not possible (Italy), illiberal government responsiveness was more limited. This did not mean, however, that EU collective sovereignty and authority was powerless in Hungary. Eventually, as demonstrated during the energy and inflation crisis of 2022-2023, the Orban government’s grip over a rearranged growth coalition was weakened by its loss of the capacity to politically maneuver at the EU level and secure fiscal transfers enabling economic stimulus for the domestic growth coalition and present the state as fiscally attractive to creditors. Whether it is through the ECB or through its budget, the EU can put limits to the political agency of illiberals.

Watch the recording of the event:

Image courtesy of Gergő Medve-Bálint