[Joint House and Senate Hearing, 115 Congress]
[From the U.S. Government Publishing Office]





115 Congress                                                                  Printed for the use of the
1st Session                                              Commission on Security and Cooperation in Europe
___________________________________________________________________________________________________________
                                                       


 
                          DEMOCRACY IN CENTRAL AND EASTERN EUROPE:

                                 RENEWING THE PROMISE

                              OF DEMOCRATIC TRANSITIONS



 



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]






                                       July 26, 2017
                                       
                                       
                                       
                                       
                                       
                               Briefing of the
              Comission on Security and Cooperation in Europe                                      
  ________________________________________________________________________________                                     



                             Washington: 2017





                       Commission on Security and Cooperation in Europe
                                         234 Ford House Office Building
                                                   Washington, DC 20515
                                                           202-225-1901
                                                    [email protected]
                                                    http://www.csce.gov
                                                          @HelsinkiComm
                                                          
                                                          
                                                          
                                                          

                             Legislative Branch Commissioners

              HOUSE                                                   SENATE
CHRISTOPHER H. SMITH, New Jersey                         ROGER WICKER, Mississippi, 
          Co-Chairman                                             Chairman
ALCEE L. HASTINGS, Florida                              BENJAMIN L. CARDIN. Maryland
ROBERT B. ADERHOLT, Alabama                             JOHN BOOZMAN, Arkansas
MICHAEL C. BURGESS, Texas                               CORY GARDNER, Colorado
STEVE COHEN, Tennessee                                  MARCO RUBIO, Florida
RICHARD HUDSON, North Carolina                          JEANNE SHAHEEN, New Hampshire
RANDY HULTGREN, Illinois                                THOM TILLIS, North Carolina
SHEILA JACKSON LEE, Texas                               TOM UDALL, New Mexico
GWEN MOORE, Wisconsin                                   SHELDON WHITEHOUSE, Rhode Island
                        
          


                                Executive Branch Commissioners
                                    
                                    
                                    DEPARTMENT OF STATE
                                    
                                    DEPARTMENT OF DEFENSE
                                    
                                    DEPARTMENT OF COMMERCE

                                             (II)
                                             


ABOUT THE ORGANIZATION FOR SECURITY AND COOPERATION IN EUROPE



    The Helsinki process, formally titled the Conference on Security 
and Cooperation in Europe, traces its origin to the signing of the 
Helsinki Final Act in Finland on August 1, 1975, by the leaders of 33 
European countries, the United States and Canada. As of January 1, 
1995, the Helsinki process was renamed the Organization for Security 
and Cooperation in Europe [OSCE]. The membership of the OSCE has 
expanded to 56 participating States, reflecting the breakup of the 
Soviet Union, Czechoslovakia, and Yugoslavia.
    The OSCE Secretariat is in Vienna, Austria, where weekly meetings 
of the participating States' permanent representatives are held. In 
addition, specialized seminars and meetings are convened in various 
locations. Periodic consultations are held among Senior Officials, 
Ministers and Heads of State or Government.
    Although the OSCE continues to engage in standard setting in the 
fields of military security, economic and environmental cooperation, 
and human rights and humanitarian concerns, the Organization is 
primarily focused on initiatives designed to prevent, manage and 
resolve conflict within and among the participating States. The 
Organization deploys numerous missions and field activities located in 
Southeastern and Eastern Europe, the Caucasus, and Central Asia. The 
website of the OSCE is: .

ABOUT THE COMMISSION ON SECURITY AND COOPERATION IN EUROPE


    The Commission on Security and Cooperation in Europe, also known as 
the Helsinki Commission, is a U.S. Government agency created in 1976 to 
monitor and encourage compliance by the participating States with their 
OSCE commitments, with a particular emphasis on human rights.
    The Commission consists of nine members from the United States 
Senate, nine members from the House of Representatives, and one member 
each from the Departments of State, Defense and Commerce. The positions 
of Chair and Co-Chair rotate between the Senate and House every two 
years, when a new Congress convenes. A professional staff assists the 
Commissioners in their work.
    In fulfilling its mandate, the Commission gathers and disseminates 
relevant information to the U.S. Congress and the public by convening 
hearings, issuing reports that reflect the views of Members of the 
Commission and/or its staff, and providing details about the activities 
of the Helsinki process and developments in OSCE participating States.
    The Commission also contributes to the formulation and execution of 
U.S. policy regarding the OSCE, including through Member and staff 
participation on U.S. Delegations to OSCE meetings. Members of the 
Commission have regular contact with parliamentarians, government 
officials, representatives of non-governmental organizations, and 
private individuals from participating States. The website of the 
Commission is: .

                                 (III)



                     DEMOCRACY IN CENTRAL

                      AND EASTERN EUROPE: 

                     RENEWING THE PROMISE

                   OF DEMOCRATIC TRANSITIONS
                   
                   
                             July 26, 2017


                                                                          Page
                              PARTICIPANTS

    Erika Schlager, Counsel for International Law, Commission for 
Security and Cooperation in Europe .................................... 1

    Andrew Wilson, Managing Director, Center for International Private 
Enterprise ............................................................ 2

    Martina Hrvolova, Central Europe and the Balkans Program Officer, 
Center for International Private Enterprise, The George Washington 
University Law School ................................................. 3

    Peter Golias, Director, Institute for Economic and Social Reforms, 
Slovakia .............................................................  4

   Andras Loke, Chair, Transparency International, Hungary ...........  6

    Marek Tatala, Vice-President, Civil Development Forum, Poland ....  8

    Jan Surotchak, Regional Director for Europe, International 
Republican Institute ................................................. 11

    Jonathan Katz, Senior Resident Fellow, German Marshall Fund ...... 13



                                APPENDIX

    Prepared statement of Andrew Wilson .............................. 27

    Prepared statement of Peter Golias ............................... 29

    Prepared statement of Andras Loke ................................ 33

    Prepared statement of Marek Tatala ............................... 36

    Prepared statement of Jan Surotchak .............................. 41

    Prepared statement of Jonathan Katz .............................. 43







                      DEMOCRACY IN CENTRAL

                      AND EASTERN EUROPE:

                     RENEWING THE PROMISE

                    OF DEMOCRATIC TRANSITIONS
                              ----------                              

                             JULY 26, 2017




    The briefing was held at 2:00 p.m. in room SVC-215, Capitol Visitor 
Center, Washington, DC, Erika B. Schlager, Counsel for International 
Law, Commission for Security and Cooperation in Europe, presiding.
    Panelists present: Erika B. Schlager, Counsel for International 
Law, Commission for Security and Cooperation in Europe; Andrew Wilson, 
Managing Director, Center for International Private Enterprise; Martina 
Hrvolova, Central Europe and the Balkans Program Officer, Center for 
International Private Enterprise, The George Washington University Law 
School; Peter Golias, Director, Institute for Economic and Social 
Reforms, Slovakia; Andras Loke, Chair, Transparency International, 
Hungary; Marek Tatala, Vice-President, Civil Development Forum, Poland; 
Jan Surotchak, Regional Director for Europe, International Republican 
Institute; and Jonathan Katz, Senior Resident Fellow, German Marshall 
Fund.
    Ms. Schlager. Good afternoon. I'm Erika Schlager, counsel for 
international law for the U.S. Helsinki Commission.
    On behalf of Senator Roger Wicker, the chairman of the Helsinki 
Commission, I would like to welcome everyone here today to the Helsinki 
Commission's briefing on ``Democracy in Central and Eastern Europe: 
Renewing the Promise of Democratic Transitions.''
    The Helsinki Commission is an independent agency of the U.S. 
Government chaired by members of Congress. Since its establishment by 
federal law in 1976, the Commission has been deeply engaged promoting 
democracy in Central Europe and Eastern Europe, including efforts to 
counter malign Russian influence and acts in the region. We strive to 
support the transatlantic relationship, promote human rights, advance 
good governance and prosperity, and--in the words of the seminal 1990 
Paris Summit Charter--``We undertake to build, consolidate and 
strengthen democracy as the only system of government of our nations.''
    Since the start of this year's Congress, we have increased our 
focus on Central Europe. We have organized several roundtable 
discussions in our offices for congressional staff with experts focused 
on this region. Last week, issues relating to the Czech Republic were 
raised by Brian Whitmore of Radio Free Europe at our briefing on 
Russian kleptocracy. And in June, Chairman Wicker convened a hearing to 
examine and support effective anticorruption efforts in Romania.
    Today's event is being streamed live on Facebook, and there will be 
a transcript posted to the Helsinki Commission's website at the end of 
the briefing.
    I am heartened by the turnout for this event. Clearly, this 
briefing is fortuitously timely, if not overdue, and I am privileged to 
have such an extraordinary panel with me today. Full biographies of our 
panelists are available on the table as you enter this room, so we 
won't be reading them in detail here. I expect we will have a lively 
question-and-answer session, so I want to be sure we have ample time 
for that.
    I will pass the floor now for introductory remarks from Andrew 
Wilson, the managing director of the Center for International Private 
Enterprise [CIPE]. Thank you very much for being here.
    Mr. Wilson. Thank you, Erika.
    I wish to begin this timely briefing by thanking Erika Schlager of 
the Helsinki Commission for leading this very important initiative. 
Countries across Central and Eastern Europe have made great strides 
since the 1990s building democratic institutions, growing market 
economies, joining the European Union and NATO. And the people of this 
region should be proud of the progress they have made. Thanks to the 
work of committed citizens and visionary leaders, countries have been 
transformed from repressive communist systems to exemplars of political 
freedom and vibrant commerce. In large part, these changes have served 
as a beacon for citizens beyond this region's borders.
    Yet recently, many of Europe's new democracies have faced serious 
stresses, which raise questions about the resilience of new transitions 
and threaten to undo the progress that the region has made during the 
last three decades. Moreover, the political climate in Europe has 
revealed significant risks to the system of European multilateralism.
    The complex challenges of globalization and resurgence of 
authoritarianism have increasingly led to significant 
disenfranchisement and fueled the anti-system feelings. Many of the 
problems in this region and across the globe, however, don't stem from 
the failure of democracy, rather a failure to more actively pursue its 
consolidation, and ensure that the economic and social benefits of 
democracy penetrate throughout societies.
    You know, there's a very large, genuine interest in reinvigorating 
the region's democratic trajectory by addressing homegrown failures of 
governance and following through on promised reforms. And at the same 
time, the citizens of the Central and East European countries want a 
greater say in how their countries and how Europe as a whole is 
governed, and more local control over their affairs, including in the 
business realm.
    Therefore, for the past two years CIPE has therefore been 
supporting local voices in Central and Eastern Europe in their efforts 
to understand the current challenges to freedom, democracy and markets, 
and to pave the way to demonstrate that democracy can meet today's 
challenges and to revive people's faith in it. This would not be 
possible without the generous support from the U.S. Congress and the 
U.S. National Endowment for Democracy, and I would like to recognize 
them for their continued commitment to the region.
    Earlier this year, CIPE, with many of its partners from across 
Central and Eastern Europe, launched a declaration reaffirming our own 
Euro-Atlantic commitments to democracy and private enterprise. The 
purpose of this modest action is to make a broader statement about our 
desire to forge a renewed commitment to regional and global economic 
systems based on the principles of democratic dialogue, free markets, 
and the rule of law that guarantees a level playing field.
    As expressed in the declaration, civil society and business 
representatives from the region are committed to the values of 
democracy and the market economy, and are seeking to take concrete 
steps to address the democratic challenges that our distinguished 
speakers will discuss later today. Their ideas, such as improvement of 
the entrepreneurial environment to foster growth and the encouragement 
of citizens' engagement in democratic decision making, should be 
welcomed. Otherwise, the influence of antidemocratic elements will 
continue to grow.
    Because a free and prosperous Europe is one of the key pillars of 
the lasting relevance of universal values of liberty, democracy, and 
free enterprise in the still-evolving global arena, our transatlantic 
alliance has to remain strong. The U.S.'s enduring commitment to 
supporting healthy democracies and thriving markets, including in 
Europe, runs very deep, and the role that the Helsinki Commission has 
recently been playing is a great proof of that commitment.
    In this respect, business leaders also have a critically important 
role to play. They must become the champions of advancing democratic 
and pro-democratic values. Coordinated and sustained engagement with 
reform-minded business is specifically needed because only in 
functioning democracies can the private market system provide the 
economic opportunity necessary for sustainable democratic stability.
    The lessons we are learning now about how our nations, republics, 
unions, and alliances are managed, and how to balance those 
institutions with the role of the individual in society, will have 
lasting ramifications for whether we succeed in ensuring stability of 
the global architecture and furthering human progress in future. Thus, 
because our alliance is only as strong as we are, we pledge to continue 
to support similar efforts, exchanges of ideas, and mobilization of 
democratic champions across the globe to safeguard democracy that 
delivers also in the interest of future generations free from memories 
of our struggles against totalitarianism.
    And with that, I'll hand it back to you, Erika.
    Ms. Schlager. Thank you, Andrew. I appreciate that help in framing 
the issues that we're going to be discussing today.
    At this point, I'm going to turn the microphone back over to my 
left, to Dr. Martina Hrvolova, to take the role of moderator and 
traffic cop, and to ensure that we are able to hear from everyone on 
this outstanding panel as well as to have ample time for discussion. 
Martina is a program manager at CIPE, and has been invaluable in 
helping put together today's event. So thank you very much, Martina, 
for being here and for the role you're playing.
    Dr. Hrvolova. Thank you, Erika. Thank you for your kind 
introduction, and good afternoon to everyone. Let me start by welcoming 
you all again to this briefing. We could not be more pleased that you 
decided to join us today, both in the Capitol but also online, for this 
important briefing.
    Before I turn to our speakers, our panelists, inviting them to 
provide their opening remarks and comments, let me briefly introduce 
them to you.
    To my left, I have our first speaker, Peter Golias from Slovakia, 
who is director of Institute for Economic and Social Reforms. Peter has 
outstanding experience in research and advocacy that dates back to pre-
accession period of Slovakia.
    Our next speaker is Andras Loke, who has served as chairperson of 
the board of Transparency International in Hungary for the past seven 
years. He's also a founder of the local online media portal that serves 
as a gateway together for more than 20 local websites.
    Following Andras, we then have Marek Tatala, who is a vice 
president and economist at the Civil Development Forum, founded by 
Professor Balcerowicz in Warsaw, Poland. Marek is a graduate of 
multiple programs at the Atlas Network, and he's interested in economic 
and political affairs.
    Because we have speakers from both sides of the Atlantic today with 
us, let me then introduce Jan Surotchak of IRI to you. We will hear 
from Jan about some important work that IRI has been doing in Central 
Europe. But I would also like to stress that Jan is the regional 
director for Europe, which comprises not only Central Europe, but also 
Baltic states, Southern, Eastern Europe, and Turkey. Jan also manages 
IRI's Leadership Institute for Central and Eastern Europe.
    Last but not least, we have Jonathan Katz here with us today, who 
also doesn't need much introduction. Jonathan was the deputy assistant 
administrator at USAID. Previously, he also served as a senior advisor 
to the assistant secretary in the International Organization Affairs 
Bureau at the U.S. Department of State, and he also had several 
leadership roles here on Capitol Hill.
    Today, we are meeting to recognize progress and challenges to 
democracy in Central and Eastern Europe. We will hear, again, from the 
speakers from both sides of the Atlantic. The three European speakers 
join us all the way from Poland, Slovakia and Hungary. Again, but let 
us not forget that there are also other countries in the region that 
are facing very similar challenges and experiencing similar stresses to 
their democracies.
    And with that, let me turn to Peter Golias and invite him to share 
his insights on the state of democracy in Slovakia.
    Mr. Golias. Thank you very much. Good afternoon, ladies and 
gentlemen. Thank you, organizers, for inviting us here. It's a great 
pleasure for me.
    I will be, in my short introduction, explain or give you a short 
overview of current state of democracy in Slovakia, what are our key 
democratic challenges, and what are possible solutions.
    First of all, we have run a project together with CIPE, with Center 
for International Private Enterprise, over the past two years. And in 
2016, in November, we had a public opinion poll, representative public 
opinion poll, where we asked people about what they think about the 
quality of democracy in Slovakia and how it's changed over the past 
five years. And the result was that 40 percent of people said that 
democracy is rather bad in Slovakia, or is rather bad, and 26 percent 
thought that it is rather good. When we asked about the development 
over the past five years, 43 percent answered that it's getting worse 
or it got worse over this period, and just 18 percent answered that it 
got better.
    We asked the same questions just one month earlier, so in October 
2016, the same questions, the opinion leaders in Slovakia, the experts, 
and we received answers from 80 of them. And it proved that they think 
even--they have even more negative views of the democracy. So 50 
percent had the opinion that it's rather bad, the quality; 25 [percent] 
it is rather good. But 71 percent think that the democracy has got 
worse over past five years, and just 13 percent think that it has 
improved.
    So we asked, why is it so? What are the reasons for these negative 
views of the general public, but also of the expert society? And the 
main explanation was, based on this survey, that the main cause of the 
population dissatisfaction is the perception that politicians do not 
work in the public interest, but in the interest of the private 
interest, or interest of some businessmen, oligarchs who are behind and 
have links to these politicians.
    It also proved that people are dissatisfied that the corruption 
cases which are there in Slovakia and were being investigated, and it 
has not been--nobody was punished for these corruption cases. And, last 
but not least, they also complained about the quality of public 
services, especially in health care, education, quality of public 
roads.
    Now, we asked also people about their attitudes to democracy and if 
they see some alternatives to democracy. And it showed up that around 
20 percent of people would be ready to replace democracy with 
dictatorship, which was striking to us. Moreover, almost one-third of 
people would exit from the European Union, and also almost one-third of 
people would return back to socialism which we had before 1989. For 
this returning to socialism, these were mostly older people.
    Of course, these opinions are showing slowly in the political 
landscape in Slovakia. And we had parliamentary elections in March 
2016. And the biggest surprise was that the radical far right fascist 
party entered the parliament, the national parliament, with more than 8 
percent of votes. Another party, which is a populist party led by one 
celebrity, extravagant celebrity, received almost 7 percent, and they 
also entered the parliament. So we see that this popularity of 
nonstandard and anti-systemic, anti-democratic parties is growing in 
Slovakia.
    Now the question is: What is the perspective? What will be the 
future development? And according to my opinion, the most probable is 
that the leftist SMER, social democratic party, which is the strongest 
one in Slovakia, will remain the strongest one, and they will pick up 
the partners from among other smaller parties, and they will form the 
coalition from them. This is not very good for democracy because, as we 
can see now, democracy is getting worse. So I think that this would 
mean further slow deterioration of democracy because of gradual erosion 
of checks and balances, and moreover because dissatisfied people will 
probably more turn toward extremism or these low-standard and anti-
systemic parties.
    So I would summarize, the key issues, the key challenges that we 
have are--in the first place, it's the axis of power and corruption 
which is not being punished. And the second key issue is that we have 
populism spread in Slovakia, which means that politicians prefer very 
often short-time solutions or short-time policies which increase their 
popularity, but they are ignoring long-term problems like, for example, 
segregation and poverty of the Roma community, of the Roma minority, or 
improving the quality of the health care, of judiciary, of the public 
roads, et cetera.
    Moreover, it was surprising that these radical parties and these 
nonstandard parties are very popular among young people. In the 
elections, among first-time voters, these parties were winners. So they 
did not receive just 6 [percent] or 8 percent, but they were winners in 
these elections. This proves or at least hints at some poor quality of 
our education system in explaining to the children why democracy is 
important, why democracy matters for the quality of our life, why the 
European Union is important, and it also fails somehow to teach 
children to think critically. It's another very important challenge.
    Now, the last part of my presentation is about solutions--what 
solutions can we have for this situation? And we asked for solutions 
the experts in our survey, and the answer was that the most important, 
both in the short and in the long term, is to have stronger and more 
independent and accountable institutions, such as police, prosecution, 
judiciary, regulatory institutions and authorities, and oversight 
authorities. This proved to be the most important solutions that we 
need to have in Slovakia.
    In the short term, there are several other solutions. One of them 
is credible investigation of the main corruption cases and scandals. 
The other one is that we need more consistent feedback to politicians 
from civil society. This means mostly fact checking, regular fact 
checking of politicians breaking their promises, if they are fulfilled 
or not. Then we need to watchdog the biggest public tenders, where very 
often the most public money is stolen. And we need to declare or to 
disclose detailed declarations of assets of politicians and officials.
    For the long term, the solutions are, in the first place, the 
improving of the education system to teach children to think more 
critically and to teach them how to understand the link between 
democracy and quality of life. Then the second is enhancing public 
services--again, education, health care, roads, et cetera. And the 
third one is that we need some better opposition parties, so we need 
some more pro-democratic parties which would enter the political scene, 
and which would perhaps sometimes in the future overtake the power.
    So what do we need to implement these solutions? Because, of 
course, it's nice to have solutions, but we need to implement them. I 
think that we are unable to implement these solutions without 
mobilization of civil society. So it's very important--it's crucial 
that the pro-democratic forces in the country are mobilized, and I mean 
these local NGOs, media and businesspeople. And I think that we need 
also some international support for this.
    Thank you for your attention.
    Dr. Hrvolova. Thank you. Thank you, Peter, for that. Also for 
sticking to the time limit. And thank you also for trying to identify 
the solutions, so not only speaking about the problems but also 
solutions.
    With that, let me invite Andras, to my left, to make his 
presentation on the state of democracy in Hungary.
    Mr. Loke. Thank you, Martina. I'm very, very grateful to be able to 
take part in this event. And I will try to sum up the situation of 
democracy in Hungary in seven minutes, which is--[laughter]--not an 
easy task to do, but thank you. But let's try.
    Tusnadfurdo--in Romanian it's Baile Tusnad--is a small resort in 
the Hungarian-populated part of Romania, Transylvania, and Fidesz, the 
governing party, organizes its summer university here every year. Prime 
Minister Viktor Orban generally is there, and he generally introduces 
his newest political and ideological ideas there. His famous vision 
about the ``illiberal state'' was born here three years ago. This was 
his speech, and he mentioned not only Singapore but also Erdogan's 
Turkey and Putin's Russia as examples to follow.
    Last week, Prime Minister Orban took part again in this meeting. So 
it might be interesting for you to bring some of the most interesting 
quotations. Elections in Hungary are due next spring, and Orban has 
already set the tone and the direction of the upcoming campaign. Quote: 
``First of all, we have to confront external power. We have to stand 
our ground against the Soros mafia network and the Brussels 
bureaucrats. And, during the next nine months, we will have to fight 
against the media they operate.'' This is a new quality, so turning 
directly against the media. European Union leaders and George Soros are 
seeking a, quote, ``new, mixed, Muslimized Europe.'' Another quote: 
``Hungary will use every legal possibility in the European Union to be 
in solidarity with the Poles.'' A third one: ``Hungary, since the 
Trianon Treaty''--Trianon Treaty was the treaty closing down the First 
World War, and Hungary lost much of its territories--``Hungary, since 
the Trianon Treaty, hasn't been as close to being a strong and thriving 
country as it is now. If a government comes which again will serve 
global interests, then this historical chance will be wiped out for 
decades.''
    Now let me give you some examples how some influential NGOs see the 
same country, Hungary. Let me begin with Freedom House. Freedom House 
gave an aggregate score of 76 for Hungary out of 100, by which count 
Hungary is a ``free'' country. Let's then see the breakdown. Political 
rights--on a scale of seven where one is the most free and seven is the 
least free, political rights got a three and civil liberties got a two.
    The bad news is that all of the trends are on a downward 
trajectory. Transparency International Corruption Perception Index 
2016: The good news is that Hungary is perceived to be only a 
moderately corrupt country in a worldwide comparison, reaching 48 
points in 2016 on a scale from zero, which is ``very corrupt,'' to 100, 
which is ``clean and non-corrupt.'' The bad news, again, is that the 
trend is downwards. In the region, Hungary is only followed by Romania 
and Bulgaria.
    Then perhaps the most telling is the Global Competitiveness Report 
of the World Economic Forum, where Hungary is coming 69th out of 138, 
and this is the worst position ever Hungary has had. Countries like 
Rwanda, Oman, Jordan, Romania, Botswana, Peru and Macedonia scored 
better. And, back in 2001, Hungary was the 29th most competitive 
economy in the world. In the EU, Hungary takes the 25th place, which 
means that there are only three countries that are less competitive 
than Hungary.
    This survey is based on twelve pillars, and Hungary scored the 
worst under the first pillar, which is institutions. Within this 
pillar, the following areas are the most problematic, and I will give 
you expressions and rankings. Like transparency of government 
policymaking, it's ranking 136 out of 138. Then ethical behavior of 
firms, 136. Favoritism in decisions of government officials, 135. 
Property rights, 134. Burden of government regulation, 123.
    The key challenges of the country, as I see it, are:
    Emigration and demography: About 1 million people have left the 
country since 2000, out of 10 million, so this is a serious challenge. 
And, as mostly economically active people leave, an aging population 
dependent on pensions and social support remain. Doctors and nurses 
continue to leave the country by the thousands, whereas the overly 
stressed health care is underfunded.
    Education: Hungary has never scored extremely well in the 
international student assessment, but recent results are really 
disappointing. Students scored much worse in 2015 than 2012. No CEE 
country shows a similar deterioration, and no CEE country's education 
budget is shrinking faster than Hungary's.
    Press: Pro-government media dominates the media sector, while 
critical voices experience difficulties in reaching audiences and 
securing financial resources.
    Markets: The Orban government significantly has undermined the 
functioning of the markets in many areas through crony capitalism, 
central decision making, unpredictable and erratic regulations. Shortly 
after coming to power, Orban introduced the System of National 
Cooperation, the SNC, which is an informal but very powerful means of 
creating and maintaining parallel economy for the cronies. The losers 
are, amongst others, companies in those sectors in which the government 
introduced punitive taxes--which is banking, retail, and 
telecommunications--and practically all businesses, which have to face 
unfair competition from the cronies.
    GDP growth is not impressive, but acceptable. It measured 2 percent 
last year, and this year and the next two years it's going to even 
better probably. And one good news about the economy is that the 
external debt is coming down from 81 percent in 2011 to 74 percent last 
year.
    The level of investment is quite low. It's not even 18 percent. But 
the really bad news is that if you compare what the state invests and 
what private companies invest, the state invests more than three times 
more than private companies. And that's very bad for the economy, I 
think.
    What's the wider background? In Hungary, there is a genuine lack of 
experience with strong democratic governance, and there is a feudal 
culture. Each government spent a lot of energy on undoing what the 
previous government did. Polarization and enmity between the two elites 
of the country reached such a degree that compromise seems to be 
impossible even on the most basic values. This leads to a general 
inclination to accept short-term solutions, lies, and extreme 
ideologies.
    What are the possible solutions? I can offer no quick fix and no 
general easy solution. So I thought about presenting some ideas what 
NGOs can do step by step in this situation. It is to reassert civil 
society's role in maintaining transparency and accountability in 
governance, as well as facilitating greater public consultations in 
decision making; urge political parties, civil society, and the 
business community to communicate and practice democratic values, so as 
to encourage more inclusive engagement in public affairs and present 
alternatives to extreme messages; and lastly, increase engagement with 
the business community, so as to mobilize resources and know-how in 
reconfirming society's commitment to pluralism and maintaining healthy 
space for civil society.
    And I think I passed my seven minutes, so I'll stop here. Thank you 
very much for your attention.
    Dr. Hrvolova. Thank you, Andras. And I'm sure that we'll have at 
least a few interesting questions from the audience. We'll be able to 
follow the discussion with you on the important challenges that Hungary 
is facing.
    Moving forward, let me turn to my right, to Marek Tatala from 
Poland, inviting him to share hopefully a brighter perspective of the 
future of Poland.
    Mr. Tatala. Thank you, Martina. And thank you for coming today. 
It's a great honor to be here and have a chance to talk to you about 
the assessment of democracy in Poland.
    For many years, Poland has been presented as a success story of 
peaceful economic and political transition. Thanks to the initial free 
market reforms and continuation of the pro-reform path, we observed a 
rapid and stable rate of economic growth in Poland, which led to the 
highest increase of GDP per capita in the region.
    During this period, different political parties from left-wing 
social democrats to right-wing conservatives were present in the 
governments, with a rather smooth transition of power following 
elections. There were no significant legislative attacks on the 
foundations of the 1997 Polish Constitution by the mainstream political 
parties, either. And, overall, institutional framework has 
significantly improved thanks to domestic efforts and external 
incentives, such as accession to the EU and NATO.
    Democracies can be taken advantage of by undemocratic leadership. 
Lukashenko, Putin, Erdogan, as well as a few Latin American leaders, 
all won democratic elections, and later weakened democratic systems or 
abolished democracies completely. Viktor Orban in Hungary won 
constitutional majority, and used the power to limit political 
competition through changes in the electoral system, rule of law, and 
media.
    There is no doubt that the ruling Law and Justice Party in Poland 
won democratic elections, after a very populist electoral campaign. And 
Poland is still a democracy, despite the harsh rhetoric we often hear 
these days. I personally think that these strong words should be 
reserved for more difficult times, which will hopefully never come, as 
exaggerations can sometimes backfire.
    However, instead of strengthening democracy, including rule of law, 
the governing party is pushing Poland in the opposite direction. On 
Monday, President of Poland Andrzej Duda stepped in to announce that he 
plans to veto two out of three controversial legal acts in the area of 
the justice system, which will slow down the process. Nevertheless, 
most of the challenges mentioned in the declaration asserting the 
crucial role of democratic values and free market principles prepared 
by CIPE and its regional partners are currently very present in Poland.
    Many people in Poland now believe that winning elections and having 
a majority, 37 percent of the vote in case of Poland, means that the 
winner can do anything. The ruling party's promises and slogans have 
certainly fed this belief. As a consequence, there is a lack of 
commitment to checks and balances and separation of powers, as well as 
less respect for minority rights among a significant part of the 
society.
    Fortunately, recent protests that led to the presidential vetoes 
show that there is also part of the society committed to democratic 
values, and it should grow in the future. Hopefully, recent events in 
Poland will strengthen the latter.
    I will focus today mostly on rule of law, as it is the key 
challenge, in my opinion, to the future of democracy in Poland. As the 
U.S. Department of State asserted in their most recent press statement, 
quote, ``The Polish Government has continued to pursue legislation that 
appears to undermine judicial independence and weaken the rule of law 
in Poland.'' And we have observed that the following acts contributed 
to this process.
    Firstly, the laws on constitutional tribunal. The ruling party, in 
an unconstitutional way, nominated some judges and took political 
control over the tribunal. This poses a risk for the implementation of 
other unconstitutional legislation supported by the Law and Justice 
Party in the future.
    Then law on organization of courts signed by President Duda today. 
The law would empower the minister of justice, who is at the same time 
the prosecutor general, to dismiss all heads of courts in an arbitrary 
way within six months of its adoptation, and appoint their successors 
without binding consultation with the National Council of Judiciary as 
required in the past.
    The ruling party, Law and Justice, supported two other legal acts 
that were a major threat to independence of judiciary and the rule of 
law, on the National Council of Judiciary and on the Supreme Court. 
These two controversial laws stimulated protests in Poland and prompted 
international reaction, which have pushed the president to announce his 
plan to veto them.
    And then we have problems with very rapid legislative process. Much 
of this recent legislation, but also other laws, have been passed in a 
very rapid manner without any public consultation or debate with 
citizens, experts or NGOs. The government has violated various 
provisions to safeguard the quality of the legislative process in 
Poland.
    So, summing up, the model of judiciary proposed by the ruling party 
so far resembles the model known from the past, in communist Poland, 
when the Communist Party controlled all the legislative, executive, and 
judiciary powers.
    In his recent speech in Warsaw, the President of the United States 
said: ``As long as we know our history, we'll know how to build our 
future.'' We in Poland know where this model of concentration of power, 
lacking any checks and balances, led the Polish society and the Polish 
economy. It is why more and more Poles have been in the streets 
demanding that President Andrzej Duda veto the most recent judiciary 
reform. Two out of three vetoes were a good decision by the president 
and a major success of this part of the Polish civil society committed 
to democratic values.
    And now a few remarks about the possible solutions to these 
challenges, especially to rule of law.
    Firstly, fast fact-checking and watchdog activities by NGOs, media, 
and civil society using efficient communication tools. There are many 
people in Poland who know what is wrong or what is false, but they need 
to improve their communication to reach wider audiences.
    Then, more dialogue and better cooperation of civil society, NGOs, 
business-support organizations and political parties, with NGOs and 
civil society acting as possible mediators.
    Increase engagement of the business community. Business should not 
only support NGOs with resources, but also speak up about the future of 
democracy in Poland.
    Then we should offer alternative proposals for justice reform, 
improving what does not work like lengthy proceedings and excessive 
formalism, while strengthening the system's independence. As the 
President of Poland announced his administration would work on the 
justice system reform after recent vetoes, it is essential to monitor 
this work and to provide high-quality feedback.
    Then we need to improve the quality of the legislative process to 
ensure genuine inclusive public debate and expert assessments of 
proposed laws.
    And finally, education should be focused more on civic engagement 
and economic literacy; for example, practical lessons of democracy that 
delivers, including in economic terms.
    Polish civil society is a key player in advancing democracy in 
Poland. The European Union and our other Western partners should not be 
expected to solve our problems. That, however, does not mean that they 
should remain silent or turn a blind eye to what's happening in the 
country right now. Quite to the contrary. All friends of Poland can 
certainly help by sharing their knowledge, expertise and resources, as 
well as by providing moral support to those committed democrats in 
Poland who found courage to seize the opportunity that the present 
crisis provides.
    I therefore particularly appreciate the role of CIPE here in this 
regard, supporting their local partners, drafting the declaration of 
renewed commitment to democratic values in Central/Eastern Europe 
countries, and hosting us in the U.S. on the occasion of this briefing.
    Finally, Poland has a historic potential to be an inspiration for 
societies east of Vienna and the Balkans looking for higher quality of 
life and greater individual freedom. The strength of Polish democracy 
should continue to serve as an example for the regions. To preserve the 
foundations of international stability, it is therefore our joint 
responsibility to act whenever democracy is in jeopardy.
    Thank you.
    Dr. Hrvolova. Thank you, Marek.
    Next on my list is Jan Surotchak, regional director for Europe of 
the International Republican Institute, who will speak about the 
important work IRI is doing in Europe to be better able to understand 
where exactly the democratic deficiencies in Europe are. The floor is 
yours, Jan.
    Mr. Surotchak. Thanks, Martina. And thanks to Andrew and Mark, and 
Martina, to you, for CIPE for organizing this.
    And thanks to Erika and the Helsinki Commission. Thirty-one years 
ago on this day, in the summer of 1986, I was an intern at the Helsinki 
Commission. And it's an odd thing. I'm not sure whether, frankly, I 
should be happy or depressed by the turnout at this discussion. It 
reminds me a great deal of the mid-1990s, to be honest with you, when 
we were having many of these very same discussions. So I guess I'm 
happy that you're all interested, but worried about the fact that we 
have to be talking about this again.
    So I'm going to go back, maybe, just a little bit to the 1990s. And 
you know, let's maybe help with some framing around where we are and 
where we've come from.
    In Europe, of course, the post-Cold War strategic goal of the 
United States was crystalized by George H. W. Bush in his famous speech 
in Mainz, Germany, where he talked about building and maintaining a 
Europe ``whole and free.'' At that time, of course, the field for 
democracy advocates like us, both European and American, was wide open. 
The people of the newly free, former Warsaw Pact countries were hungry 
for assistance. Those in the field in those days felt the full support 
of the United States Government in the work that we were doing. 
Moscow's influence was declining dramatically as the Soviet Union 
collapsed and Russia turned in to focus on itself. And it appeared, we 
hoped, that the inclusion of the new member states in the European 
Union had both, one, signaled their capacity to succeed as democracies; 
and, two, guaranteed recourse if they once again were to exhibit 
weaknesses.
    Two decades later, the strategic situation has changed radically, 
and unfortunately in some ways has reversed. New fault lines have 
emerged in the societies of the still new democracies, very much along 
the lines that we've just heard laid out here by Peter and Andras and 
Marek in Slovakia, Hungary and Poland, not forgetting our friends in 
the Czech Republic, which is also facing significant anti-democratic 
pressures of its own as it moves toward elections, and potentially even 
something of a coronation, this October. It is precisely these fault 
lines that offer points of entry to a Russian Federation once again 
seeking to destabilize NATO and the European project.
    For this reason, IRI has been undertaking a fairly aggressive 
public opinion research project as part of something that we call the 
Beacon Project, generously funded by our friends at the National 
Endowment for Democracy, in an effort to build coalitions in Europe to 
push back against Russian soft-power meddling in democratic processes 
there. Part of this effort is to help our allies in the region better 
understand exactly where the main democratic deficiencies and 
weaknesses in the various societies are.
    So in late May at the Globsec conference in Bratislava, therefore, 
we released a comparative poll covering the four Visegrad countries, 
and that was done through IRI's Center for Insights in Survey Research. 
This poll reveals a number of disturbing trends in the heart of Europe, 
including waning support for core transatlantic institutions such as 
NATO, tensions over the nature of European identity, and discontent 
with socioeconomic challenges in the region.
    After investing 20 years and hundreds of millions of dollars in 
building a Europe ``whole and free,'' it's clear that there is a 
potential risk that transatlantic peace and security can indeed be 
undermined, that Russian influence in Central and Eastern Europe is 
increasing, and that in some ways challenges to democracy are now fully 
within the European Union's house.
    So what do the data from our poll show? First, with regard to the 
overarching question of security and stability, while NATO and the U.S. 
presence in Europe have, of course, been historically cited as a key 
pillar of peace and security, in Slovakia an alarming 60 percent of 
respondents feel that the U.S. presence actually increases tensions and 
instability in the region. A majority of respondents in all four 
countries either strongly or somewhat support a neutral position for 
their countries between NATO and Russia. In Slovakia, that number was 
73 percent; in the Czech Republic, 61 [percent]; in Hungary, 58 
[percent]; and in Poland--even in Poland--53 percent. Seventy-five 
percent of Slovaks believe that Russia should be a partner in security, 
followed by 59 percent of Czechs, 54 percent of Hungarians, and 35 
percent of Poles.
    A second area of concern is values. Our survey revealed ambivalence 
about the nature of European identity. More than one-third of 
respondents in the Czech Republic--40 percent--and in Slovakia--36 
percent--feel that the European Union is pushing them to abandon 
traditional values, while 41 percent of Slovaks believe that ``Russia 
has taken the side of traditional values.'' In the Czech Republic that 
number was 27 [percent], Hungary and Poland 18 [percent] and 14 
[percent].
    A third area is economics. And I think it was really interesting to 
hear what Andras had to say about the socioeconomic situation in 
Hungary today. Reflecting the dissatisfaction with the state of the 
economy and public services, a significant portion of respondents in 
all four countries feel that their socioeconomic status is so poor that 
it is better to compare it to Russia than to that of Europe. Thirty-
nine percent of Hungarians think that their social benefits have more 
in common with those of Russia than those of Europe, followed by 26 
percent of Slovaks, 24 percent of Poles, and 15 percent of Czechs. 
Similarly, 37 percent of Hungarians say that their economy and standard 
of living is much more akin to Russia's than it is to that of Europe. 
In Slovakia, the number was 22 percent; in Poland, 19 [percent]; and in 
the Czech Republic, relatively more economically successful, 16 
[percent].
    And on the question of Russian interference itself, in addition to 
the widening number of respondents who identify with Russia on key 
issues such as identity, the poll also indicates vulnerability to 
Russian disinformation among respondents who get their news from 
nontraditional media outlets. In Slovakia, a combined 76 percent either 
do not believe that Russia is engaged in efforts to mislead people--38 
percent--or do not care if they do--38 percent there as well.
    So, in summary, these results correspond closely to the data that 
we've gathered from the Beacon Project's >versus< media monitoring 
tool, which has revealed a correlation between socioeconomic 
disparities in the V4 countries and vulnerabilities to Russian 
influence. It is precisely these disparities, as well as the ongoing 
weaknesses in foundational institutions of democracy in the V4 that 
we've heard about here today, which we believe opens a door for Russia 
to proffer a narrative that coldly counters the democratic one upon 
which the entire Helsinki vision is based.
    The next key product of Beacon will be a similar public opinion 
survey in Germany in the run up to the crucial parliamentary elections 
there this September 24th, with a special focus on opinion in the 
Bundeslander that used to comprise the German Democratic Republic--
which we all know, of course, while surely German, was neither 
democratic nor a republic.
    Thank you again for your attention to this important set of issues. 
It is fabulous to be able to sit on this panel and talk about what's 
going on in these countries and try to figure out solutions with you 
all. So thank you.
    Dr. Hrvolova. Thank you.
    And with that, to conclude this first round of initial 
presentations, let me turn it to Jonathan, who is a fellow at the 
German Marshall Fund, and will offer some of his thoughts on how should 
the U.S. and transatlantic allies respond to some of these challenges.
    Mr. Katz. Great. Thank you. And I just wanted to thank the Helsinki 
Commission for this opportunity, as well as CIPE for organizing today's 
event, and for all the panelists, especially colleagues who've come 
across from Europe to speak to this issue today, because it is timely.
    I want to, again, thank everybody for being here today, and this is 
an amazing crowd. As somebody who used to be on the Hill, when you get 
everybody to come over to the Capitol and have a packed room, actually 
standing room only, you know you're doing something right and you know 
it's timely. So that's great.
    Just sort of listening to the panel here today, I wanted to start 
off--make no mistake, I know that you had mentioned, Marek, not to be 
over-dramatic about the challenges, maybe, in the region. But let me be 
a little bit more over-dramatic: I think what we're witnessing in 
Central and Eastern Europe--the rise of illiberal democracies, weakened 
rule of law, attacks on press freedom and media independence, increased 
corruption, and the rise of ethno-nationalism--is a threat to the 
successful democratic transformation of Europe and Euro-Atlantic 
integration that's been underway for the past two decades.
    The external challenge, which was mentioned, exacerbating this 
alarming situation is Russia's hybrid war on targets in this region, 
including a relentless campaign of disinformation, economic corruption, 
and election meddling that we know even here in the United States as 
well. The transatlantic community, led by the United States and the EU, 
must prioritize democracy, human rights, and economic development in 
Eastern and Central Europe to push back against these challenges. This 
does not mean that the United States and Europe should downplay 
regional security challenges--including those posed by Russia, a threat 
that needs constant attention. It means that, in conjunction with 
greater regional security, we must increase our bilateral and joint 
diplomatic engagement and development assistance efforts in the region 
to support continued democratic and economic transition.
    So how should the United States and our transatlantic allies 
respond to these challenges? I'll offer four core strategies to answer 
this question and guide policymaking in Washington and Europe in this 
space.
    First, the U.S. and transatlantic partners must resist the idea of 
retrenchment. Now is a critical moment for the United States and our 
European partners to be vocal and clear about our support for democracy 
and human rights, particularly in this region. Ignoring the spreading 
cancer of illiberal democracies in Central and Eastern Europe is not an 
option. Over time it will impact U.S. and European interests if left 
unchecked.
    As many of you know, the United States relies heavily--heavily--on 
allies in the region for political support, security support--including 
in the fight against terror--to promote democracy and human rights, and 
to serve as important trade and economic partners. The less democratic 
and more corrupt that Central and Eastern European nations become, the 
less reliable they are as allies, and more likely they are to be 
influenced by Russia or other actors.
    This will also have a profound impact on the EU, as we're seeing. 
And it shouldn't be lost on anyone that as democracy backslides and 
erodes in certain EU countries, how that impacts the internal debate 
within the EU and the future course of the EU as well. And it's 
something important to recognize as we have this discussion.
    The other impact, as was mentioned, is this knockoff effect or 
knock-on effect, which is countries in the region, including those who 
are transitioning, like Ukraine, looking at their neighbors--in fact, 
the neighbors that they look to as the model of transition in the 
region--and seeing some of the efforts, including targeting NGOs and 
NGO laws, weakening the ability for civil society to operate and to 
support continued democratic transition. This is happening, so there's 
a knock-on effect as well.
    A second way in which the United States and Europe should respond 
to challenges in Europe is not to try and reinvent the wheel. 
Transatlantic partners, including many of the people in this room, know 
what needs to be done. It was mentioned that this is a similar 
conversation as you had in the 1990s. We know what needs to be done, 
both on the ground working with partners and governments, to address 
illiberal democracies and strengthen resiliency--which was something 
that I focused on greatly while at USAID and with the U.S. Government, 
was to support strengthening resiliency--the ability to handle both 
internal and external challenges, including Russia. We can draw on 70 
years of experience, from the implementation of the Marshall Plan 
following the end of World War II, to the creation of multilateral 
institutions including NATO, the EU, and the OSCE, to the U.S. and EU 
support that came following the collapse of the Soviet Union, which was 
discussed earlier. That was critical.
    And I think it's so important that we're having this conversation 
on the Hill today, because it was here in the Capitol that the Freedom 
Support Act and SEED Act in the late 1980s and early 1990s, signed into 
law by President Bush, was a catalyst in supporting the democratic 
transition in this region, which then led to a number of the countries 
that received assistance transitioning to become EU member states and 
NATO member states that have fought side by side with the United States 
in Iraq and Afghanistan, and have lost troops as well.
    So we know. We have this past experience. We know what to do. We 
have roadmaps. But we need to do it. This continued support is really 
necessary to continue to move. When I think about Slovakia, Hungary and 
Poland, they were really shining examples of this transition.
    A third strategy for a transatlantic response to challenges in this 
region is to keep U.S. leadership central. The U.S. must play a bigger 
role in addressing the backsliding in democracy and governance in 
Central and Eastern Europe as a full partner with the EU. I mentioned 
the 1990s and into the 2000s that the U.S. led this effort, providing 
billions in bilateral and multilateral development assistance for 
democratic and market reforms, and Euro-Atlantic integration of many of 
the countries that we're talking about today. Keeping that moving 
forward, keeping that front and center, is really critical.
    And in addition to that, it's not enough alone, from my 
perspective, to have just the State Department make a statement in the 
eleventh hour of a conversation with the Polish Government. I think 
it's critical that they did it. I know many of my colleagues over there 
care deeply about judicial reform and the importance of maintaining 
democracy in governance, rule of law in Poland and the region. But we 
also need to have that message coming from the highest level of the 
U.S. Government. And I think it's not lost on anyone in the room that a 
few weeks earlier the president of the United States was sitting in a 
room with Polish leaders. It would have been important to be sending a 
strong message on these issues directly from the President of the 
United States. So this is really important.
    And the other aspect is on U.S. assistance. Now, U.S. assistance 
and attention over the past decade--and I want to speak specifically to 
Central Europe and Eastern Europe, and I want to exclude the Ukraine, 
Moldova and Georgia--this has atrophied. And the U.S. Government, 
because of the success of the region and because of the transition in 
the 1990s and 2000s, closed USAID missions, and it was part of a 
process of graduation. I believe that graduation was premature, and 
that by doing so the U.S. withdrew its resources to support NGOs and 
civil society, and we took our eye off the ball, even though some of 
the indexes that you mentioned--a number of the colleagues on the panel 
mentioned today were showing backsliding a couple years into the EU 
transition process itself. And that, you know, if you look at these 
indices--which some people, even within the U.S. Government, have 
called to defund, because several of the indices receive U.S. funding--
showed this backsliding continued to occur, and yet we didn't recognize 
the need to address these challenges, both diplomatically and with 
resources.
    So it's my real hope that we will find the opportunity with this 
administration, with congressional support, to provide the right mix of 
bilateral assistance and diplomatic support. This must include 
increasing support for an independent media, civil society, combatting 
corruption, and student exchanges. GMF, where I work right now, has 
been at the center of supporting civil society in the region, working 
with--in fact, I think we have a Marshall Memorial Fellow sitting here 
at the table as well, which I'd like to point out. But working through 
the Black Sea Trust, working through the Balkans Trust for Democracy, 
the Fund for Belarus Democracy--and recently we launched something 
called the Alliance for Securing Democracy--all of this is meant to 
support and strengthen civil society's ability to address some of the 
challenges that we're facing in the region today, but also to find ways 
to support governments in their efforts to be resilient when it comes 
to Russia.
    So, instead of these deep cuts, it's important that we find an 
opportunity to strengthen our resources and be very clear about our 
signals. We need to balance this. And I understand that for the U.S. 
Government it's difficult in the region sometimes to balance politics, 
security and other issues. But if we only look at security without 
addressing the backsliding in democracy, I think we're missing the 
point.
    A fourth strategy to respond to these challenges is for 
transatlantic partners to establish mechanisms, real mechanisms to 
strengthen development cooperation. Over the past quarter century, 
development cooperation and coordination in Europe and Eurasia and 
between the United States and the EU has not been as strong as it needs 
to be, and it is in need today of a makeover. Unlike NATO, there is not 
a set mechanism for coordination. There's no North Atlantic Development 
Organization for development assistance cooperation and coordination 
amongst allies. Just as we want to maximize collective transatlantic 
defense cooperation via NATO, we also want to maximize the impact and 
effectiveness of transatlantic development assistance.
    USAID has an ongoing dialogue with its EU counterparts to 
strengthen development cooperation in Europe and Eurasia, and globally. 
And I think it's time for that dialogue to transition to a 
comprehensive MOU to lay out a joint U.S.-EU development assistance 
strategy, and institutionalize and sustain this coordination. The U.S. 
and the EU are the number one and two largest development providers in 
Europe and Eurasia, and we should be working together and coordinating 
together to be able to address the challenges that we're seeing today.
    I'm going to end there, and I look forward to your questions. And I 
just want to thank the Helsinki Commission and CIPE again for this 
opportunity.
    Dr. Hrvolova. Thank you, Jonathan.
    And, with that, I think we have enough of food for thought to move 
to the Q&A phase. I'm tempted to refrain from using my moderator's 
privilege of asking the first question, but only in case the audience 
is ready to start asking questions you may have for our panelists. So 
let me see if I will get any hands. In case you have a question, please 
raise your hands. And before asking any questions, I will ask you to 
kindly introduce yourself first, and the mic is coming.
    Questioner. Thank you. I'm Nate Schenkkan. I'm the project director 
for Nations in Transit at Freedom House, so we focus on this exact 
region. And thank you for organizing the panel. It's an excellent 
discussion and an excellent opportunity.
    I actually would love to hear what some of our panelists from the 
region had to say to Jonathan's remarks, especially concerning this 
issue of assistance. And what kind of assistance would be welcome? What 
kind of assistance would be necessary? And what lessons should we learn 
from the last 20 years, particularly regarding civil society, think 
tanks, and how that development agenda could be advanced? I'd just love 
to hear all of your thoughts about that.
    Thank you.
    Dr. Hrvolova. Do we have a volunteer who wants to start? Peter, 
maybe? Marek?
    Mr. Golias. Yes, so among solutions that I mentioned, there were 
some which relate directly to the work of NGOs and to the civil 
society. And I think that this is really the place where this 
assistance would be very useful.
    I will repeat some of them. This feedback to politicians, this 
fact-checking and tracking of the promises. The improving of the 
education system, so discussions with students. Also, the exchanges of 
students, I think it's also very important. And simply supporting NGOs 
to watchdog the efficiency of the public tenders and the projects where 
enormous amounts of money are spent, and it's wasted very often. I 
think these are the areas. I'm sure that you would find many more if we 
discuss more in that.
    Dr. Hrvolova. Perhaps next Marek could share some of his stats? I 
remember that you mentioned some of the assistance that could be used 
in Poland in your concluding remarks.
    Mr. Tatala. Thank you.
    Firstly, I would like to use this opportunity to respond to 
Jonathan's initial comment before he started his speech, because my 
intention was not to over-dramatize in terms of language, and you did 
not use this language, of course. But you sometimes hear, even here in 
the United States, about dictatorship in the region or single-party 
government.
    It's still not there. We should work hard to prevent these things 
in Central and Eastern Europe. But when these words are used abroad, 
here but also by some members of the European Parliament, for example, 
they are then used by the Polish public media, especially, manipulated, 
and then they try to ridicule, for example, some media outlets or some 
experts. So I think the situation in Poland is very serious. It is 
probably that we haven't faced such huge challenges since 1989. But I 
just wanted to make this remark about the--in terms of language we are 
using.
    Speaking about assistance, I agree with Jonathan that the voice 
here also from the United States in terms of public administration 
could be stronger, and I think the meeting in Warsaw where--during the 
visit of the President of the United States was the opportunity to 
emphasize some of these issues, but it did not happen. I hope it will 
happen in the future, not only in the public sphere, but also in 
private conversations between the Polish Government and the U.S. 
administration.
    I also think the assistance in terms of resources is necessary in 
Poland and in the region where still the culture of fundraising, like 
donations from business is not so strong as in the United States. But I 
think it should be treated as investment. So we see many, for example, 
grants for research projects. But I think all these grants should focus 
more on communication. I think there are many smart people in Poland 
who know what is wrong, who know what should be done. But I think the 
challenges among NGOs, civil society is how to communicate these ideas 
to the wider audience.
    And we saw in the electoral campaign that, for example, Law and 
Justice Party was very efficient in the internet. And I would like to 
see many civil society organizations to be as efficient in social 
media, in the internet. And you need the resources to do this. You 
can't do this for free. It does not mean paying comments or some people 
active in the social media. It means to have very professional media 
campaigns, communication campaigns. So I think any type of assistance 
should consider this element of promoting also the results of research 
or the results of activities that they are supporting.
    Dr. Hrvolova. Thank you, Marek.
    This question is also somehow connected to the question of how 
difficult is it to make your case on the ground. And that's why I would 
like to maybe ask Andras to comment on this, to get your take on how 
difficult it is for you, for Transparency International, Hungary, to 
make the case, to get the support from the local entrepreneurs, and 
even average citizens.
    Mr. Loke. Yes. Transparency International, Hungary, is financed 
partly from abroad, partly by Hungarian companies who are brave enough 
to give some money for us. And the braveness is, to tell you the truth, 
diminishing. So companies either have a connection to the state by 
ownership or by regulation. And they are increasingly afraid to donate. 
We feel that on our budget.
    Getting back to your question, what areas are there to help, I 
think any areas where resiliency has to be kept up and strengthening 
basic democratic values in a nonpartisan way.
    Let me give you some areas which I think are especially useful to 
support. And those are freedom of information, transparency, legal 
support, investigative journalism, and media reach.
    Dr. Hrvolova. Thank you.
    If Jan and Jonathan don't have any more comments, then I'm going to 
give the floor to the lady at the front, if we have a mic.
    Questioner. Hi. Thank you for being here.
    In the last briefing put on by the Helsinki Commission, the 
discussion was about kleptocracy in Russia and how that undermines 
democracy. I was just wondering if in these Central and Eastern 
European countries this problem also exists, and if this is another 
factor that's playing a role in the backsliding that's occurring there.
    Thank you.
    Dr. Hrvolova. Who wants to have a crack at that?
    Mr. Loke. It indeed plays a big role in Hungary. And most 
Hungarians really cannot decide whether Fidesz, the governing party, 
has a genuine ideology or it is there to accumulate power and wealth 
only. And the conquering of the markets is--no one bribes anymore. So 
it's not kickbacks or such a simple type of corruption. It is rather 
dominating whole areas of the industry or the economy. It is vastly 
present there.
    Mr. Golias. If I may comment, I mentioned in my introduction that a 
key reason for dissatisfaction of people is that people do not trust 
politicians, that they work in the public interest, but that they work 
in the interest of some oligarchs behind the scenes. So this problem--
kleptocracy problem, and the oligarchs who are somewhere behind, is 
really crucial, very important also in Slovakia.
    Mr. Tatala. First of all, I think it's important to emphasize--and 
we had these discussions yesterday as well--that in Poland I think the 
word ``oligarch'' is not used so often as even in Hungary or Slovakia 
or in Russia. And it was a big success of Polish transformation that we 
did not develop this kind of business people very closely associated to 
the ruling party politicians, who were in power. And this division 
between business and politics was much stronger in Poland than, for 
example, in Ukraine and Russia.
    What I think is a big threat is use of state resources, especially 
in state-owned companies, to support some of the political or 
ideological causes of the ruling party. When you look at the OECD data 
regarding regulations and concentration in terms of state-owned 
companies, in Poland we are in the top of the rankings. So the role of 
the state-owned companies is quite big in the economy. And it will be 
stronger, because government is talking about something called re-
Polandization, which is really re-nationalization of some of the 
industries. They recently bought some foreign banks through state-owned 
banks.
    So we are increasing state ownership in the banking sector, which 
is not only risky from the perspective of using these resources to 
support some of the attacks on democracy, but also it's dangerous in 
terms of stability of the financial system. But these companies have 
huge resources. We see, for example, at some events which are not 
critical to the government but rather supporting government in terms of 
civil societies or historical education, that they are sponsoring 
certain events only, and they are not sponsoring events that can be 
critical to the government.
    So here I see the biggest threat of using actually state resources 
to support private activities of one political party. And the solution 
is here very simple. The next government, or whoever will be the power, 
should finally complete privatization in Poland, and make sure that 
politicians are not at the same time responsible for management of the 
big state-owned companies.
    Dr. Hrvolova. Thank you, Marek.
    Now we have another--we have two more questions--three more 
questions--four. [Laughs.] So let's try maybe to collect two together. 
I'll start with the gentleman at the back and then maybe another 
gentleman, in the middle on the right. We'll take two questions at the 
same time.
    Questioner. Thank you. Joshua Russell, Open Society Foundations.
    I was wondering if you think there are practical steps that 
Congress should take to limit the closing of civil society space, 
particularly in Hungary. Right now there's two resolutions in the 
House, one condemning Viktor Orban for attempting to close Central 
European University, and another condemning the latest NGO law that was 
recently passed, which put severe limitations on foreign NGOs. Do you 
have opinions on these resolutions or other steps that the Congress 
could take to push back against the closing space for civil society?
    Dr. Hrvolova. Yes, I would probably like Andras to answer, because 
this is very specifically related to the Hungary. Why don't you give us 
your views on the resolution?
    Questioner. Sure. Do you want another question from me, or----
    Mr. Loke. I read the text of the resolutions, and I agree with 
them. And practically, I don't have any other idea what the Congress 
could do with any further resolutions.
    Dr. Hrvolova. Which is a good sign. That means that Congress is 
doing something well, right? I guess.
    Mr. Katz. Can I just add to that? I think there's--obviously a 
passage of resolutions completely, not just in the subcommittee, full 
committee, but also by the full bodies is really important as well. But 
also, taking a message with--you know, congressional message directly 
to Hungary would be important as well. And it seems to me, when you 
talk--if you were listening earlier, one of the things that Orban looks 
at, he focuses on Soros or he focuses on the EU, but he doesn't 
necessarily scapegoat the United States. And I think that's--I think he 
believes that he has a--he's simpatico with the current President of 
the United States in terms of what he is doing. And I think a strong 
message from Congress--resolutions being introduced are one thing, but 
passing them is another. And having a significant number of members 
supporting it in passage, both in the House and Senate, would be 
helpful.
    The other, as I mentioned before, which is the resources. You know, 
there is no--the resources right now--very small amounts of resources 
for diplomatic and which types of assistance engagement in Central and 
Eastern Europe, and particularly in Hungary as well. But to really, as 
USAID closed its mission in Hungary several years ago, I really believe 
it's time to look at whether or not USAID should put assets back on the 
ground. I'm not saying necessarily in Hungary, but also resources. 
Maybe open a mission for Central Europe that will focus on the region. 
But also, the congressional side is important because the resources 
have to come from Congress. And what we've seen over the last two years 
is Congress coming back in and putting resources back in the budget for 
Eastern Europe, for the Balkans. But none of those resources are 
directed towards Central Europe. And I think it's time that--and it 
could come in the form of an authorization bill that focuses on, you 
know, providing a certain level of funding and then appropriators 
stepping in as well.
    But I think part of it is the education that you're seeing here 
today, which is not everybody is aware of exactly what is happening. 
But if you build up that support, I've had enough conversations on the 
Hill to know that people are really concerned and interested in making 
sure that this backsliding doesn't continue, and that the U.S. sends as 
strong a message as possible. And lastly, it's just Congress lobbying 
the administration to play that role, to push much harder in its 
messaging with Mr. Orban and with others in the region. I don't think 
that push has been clear enough and strong enough. And if it is, it 
could be helpful. I'm not saying that's necessarily going to move this 
administration or President Trump, but the louder the voice is coming 
from the Hill, more likely you're going to gain recognition in state 
and other national security agencies that this is a problem and a 
challenge.
    Dr. Hrvolova. Marek?
    Mr. Tatala. I would also like to have a comment about this topic, 
because I think the next step in Poland might be Hungarian/Russian-
style laws on nongovernmental organizations. We already have a draft in 
the parliament of legislation on something called national center for 
civil society development, which will consolidate some of the budgetary 
funds going to NGO sector. And I am afraid only friendly NGOS--friendly 
to the government--will be able to use these funds, or the NGOs who are 
not involved in politics, who are not criticizing what is going on in 
Poland. But there are already some statements by members of the Polish 
parliament that--also other laws regarding NGO financing should be 
implemented, especially in the area of foreign involvement in terms of 
donations.
    So I think Hungarian solutions might be used here also. We should 
remember about the close relations between Polish and Hungarian 
governments nowadays. And then, similar resolution might be also 
important in case of Poland. And I think the strong voice from 
different bodies in the United States is very important nowadays in 
Poland, because we are criticized--or, the European Union, the 
institutions, almost every week because of the Polish Government, 
because of their activities in the justice system, rule of law, and so 
on. This is our also very important critique. But because it's so 
frequent, I think it's--it doesn't make any change in attitude of the 
Polish Government.
    While, especially after visit of Donald Trump in Warsaw and all 
this media campaign showing how important an ally Poland is for the 
United States, it's much harder for Polish public media, which were 
captured by the ruling party, and for the politicians of the ruling 
party themselves to criticize voices from the United States, because 
they've built this image of a stronger connection. And so I hope that 
if there are attempts to attack NGOs, there will be a much stronger 
voice from the United States than even we heard now in terms of the 
justice system crisis. And you have to remember that the justice reform 
will come. It will be now drafted in the presidential palace. We don't 
know how it will look like. But if threats to independence of judiciary 
are as serious as they were with the previous legislation, I also hope 
for a stronger voice of different American institutions.
    Dr. Hrvolova. Thank you, Marek.
    I think we have time for more questions. Thank you, gentleman on 
the right. Thank you for being patient with me.
    Questioner. Yes, hi. Paul Kamenar with the American Hungarian 
Federation. We've been around since 1906, and we're a nonprofit 
organization that strives to improve relations between Hungary and the 
United States.
    In light of that, Andras, in terms of your particular organization, 
Transparency International, one would think that you would be in favor 
of the NGO law in Hungary that proposes to disclose where the funds are 
coming from, from a foreign government. We have similar type laws here 
in the United States--the Foreign Agents Registration Act, IRS, laws 
for nonprofits. But I also want to call your attention to your report 
here, where you cite Freedom House in terms of civil liberties for 
Hungary. I've got the Freedom House reports for both--for Hungary. And 
in terms of association and organizational rights, they got a score 
from Freedom House, which is nonpartisan, 11 points out of 12, 12 being 
the highest. The United States got 10 out of 12 in terms of NGO 
association rights. And there are other things like that.
    And the point I'm getting at is, people in Hungary--and I'm sure in 
Poland and otherwise--they kind of feel that when you're calling for 
the United States to lecture them on how their democracy should work, 
that it may have--may backfire, and have a backlash. So I wonder 
whether there's a better way, a more--a quiet diplomacy, rather than 
getting on your soapbox and criticizing others how they should run 
their country.
    Thank you.
    Mr. Loke. This is a very good question. And Mr. Surotchak said that 
in the whole region 60 percent of the people think that a bigger U.S. 
presence in the region would increase the tensions. So I'm thinking 
about the possibility, if the messages are too political, too strong, 
that might even backfire. I don't know if the association law in the 
U.S. or the situation here would serve as a bad example, because the 
basic understanding is that the U.S. has a strong democracy, whereas 
everyone who follows Hungarian politics about the difficulties of NGOs, 
which are huge--I mean--what do you--speak about direct intimidation of 
NGOs.
    Although there is one action which is really intimidating, there 
was in recent years the strife about the Norwegian monies. The 
Norwegian money is what Norway and Lichtenstein pay into the EU for 
certain countries, because they are not in the EU but they access the 
EU markets. So they have to give some money to underdeveloped 
countries. And most of it goes to the government, but about 10 percent 
of that goes to civil societies. And Hungarian Government in 2014 and 
2017 interfered in this seriously. It's the money of the Norwegians, 
but the Hungarian tax agency--sorry, it was not the tax agency. It was 
an anti-corruption agency from the government, which started to 
investigate. And in one instance, there was an office search against 
the Okotars Foundation, which even the courts later said that that was 
illegal.
    Other than that, now we have the foreign funding law, which is 
about every NGO who receives more than about $25,000 a year from abroad 
should put it in all their communications that we are foreign funded, 
which is a kind of a stamp that means that you are not with us 
Hungarians, you are with foreign powers. And this is still on. And NGOs 
are--it's basically uncomfortable for them. I shouldn't call this 
intimidating again, but uncomfortable, yes, because this is a stamp on 
them. And they are reacting in different ways. Like, some of them, 
accepting the new law. Some of them--and bringing their own messages to 
these compulsory messages. And some of them decided to break the law.
    Dr. Hrvolova. Jan, do you want to make a comment?
    OK, so why don't we take a few more questions? We still have time 
for a few more. Lady here in the middle. Can we get the mic for her? 
And then gentleman at the back, in the second row from the back.
    Questioner. Thank you very much. My name is Beata Martin-
Rozumilowicz. And I'm from the International Foundation for Electoral 
Systems, IFES.
    We heard from a number on the panel of the importance of robust 
institutions and how crucial they are to further democratic 
development. And of course, judicial independence and separation of 
powers is key. But I wanted to ask about the independence of election 
commissions, and particularly in Poland, where after the courts there 
is now talk about restructuring the National Election Commission and 
introducing a different appointment process for that body. And as one 
of the speakers mentioned, the margin of minority or majority of the 
government is very tight. Once you start playing with the rules of the 
game in terms of how elections are processed, that can change the 
outcomes of that process. And, whether that is also an issue in Hungary 
and in Slovakia in terms of institutional independence of those 
election commissions.
    Thank you.
    Dr. Hrvolova. Marek, do you want to start?
    Mr. Tatala. I am not aware of any current legislative work on 
changes in the electoral commission in Poland. What is important is 
that in Poland the supreme court is accepting the final results of 
elections. So here, we see how dangerous the law on the supreme court 
was. Fortunately, it was vetoed by President Duda. But he will draft 
the new one and we will see how the legislation will look then.
    I think what is a serious threat is the electoral system. We 
already had some attempts to change electoral system in terms of local 
elections. And I think this was a huge problem in Hungary when, after 
changes of the electoral system in terms of electing local and 
national-level politicians, it is much harder now in Hungary for 
opposition to fight with the ruling party. For example, I think, by 
removing the second round in local election. So everyone has to unite 
to fight with Fidesz candidate. And if we have something similar in 
Poland, it will be also very supportive for the ruling party, which 
consolidated some of the right-wing conservative groups now in Poland.
    And another attempt that was also so far blocked was term limits 
for local politicians. I am in favor of term limits, but starting from 
today. So today we announce: You guys have two terms and then you can't 
be mayor of the city or member of the local council. But if you use all 
these terms that were in the past, it's not a fair competition because 
they were not aware of these rules when they were then candidates. So I 
think if the government decided to abandon this change, but the 
elections are coming. And I am sure that with weakening of the 
independence of judiciary, there are many threats to playing with the 
electoral system to make it more favorable just to the ruling party.
    Mr. Loke. Yes, when Fidesz came to power, it practically changed 
the personnel of the electoral committee. I'm not aware of any acts 
that were done by the new committee pro-Fidesz. And Marek is very right 
to point out the fact that the election systems changed, which brings 
the differences to an even bigger scale, like if you have a 30 percent 
vote proportionally in the elections, then in the parliament it might 
turn to 50-plus percent. So it's not proportional. It's a mixture of 
proportional and winner-takes-all. And the old system used to be like 
this, but the amplifying factor was by far less than in this system. 
And even if you reach only 45 percent proportionally in the elections, 
then you have a supermajority. Supermajority in Hungary is two-thirds 
of the votes. But that, you can change the constitution, which we just 
did. And in several years it amended it seven times.
    Mr. Golias. Just briefly that as far as I know the independence of 
election committee is not the issue in Slovakia. We have now the 
regional elections coming up in this autumn, where we for the first 
time will have just one round of elections. Before we used to have two 
rounds. So they changed the legislation just recently. And there's been 
some criticism about this, but this was result not of antidemocratic 
efforts but of political trade among government commission parties, 
because one of them has higher probability to have winners in 
particular regions. So they agreed with the other ones who have--so it 
was a political deal. It was not, I think, an anti-democratic effort.
    Dr. Hrvolova. Thank you.
    I think I forgot to give the floor to the lady at the front. So if 
they could get a mic to her, here all the way at the front to my right.
    Thank you.
    Questioner. Thank you. My name's Christina [sp]. I'm from Senator 
Gillibrand's office.
    I'd like you to please discuss how the U.S. and EU can engage in a 
productive dialogue and cooperation during this time, under our 
administration, along with the disparities among the EU, including the 
effects of Brexit, the rise of populism, economic instability, and the 
lack of strong political leadership among the EU states.
    Dr. Hrvolova. So the question is how can the EU and the U.S. engage 
in countering populism, right, lack of leadership, economic 
instability.
    Jan, if you want to take a crack of it?
    Thank you.
    Mr. Surotchak. A tall order, but I'll give it a shot.
    So, you know, I think I'll go back to Jonathan's comment when he 
opened. In my experience in Central and Eastern Europe, the way to 
accomplish the most in facilitating positive change in what are now the 
new member states is when the EU and the member states, and the United 
States, send the same message. In any country at any given time, the 
relationship will be better or worse with various member states or with 
the United States or with the Union. So if the most effective message 
this day, as Marek suggests, can come from the United States and 
Poland, then that's excellent. In another country in a different time, 
in a different place, it might be more effective for a message to be 
communicated by the EU or by an individual member state.
    The question is whether or not those messages are coordinated. 
There are many mechanisms for doing that that are already in existence. 
I think, frankly, the Helsinki Commission serves a vital role in making 
sure that messages are founded on data and can be effectively 
communicated by the governments. So I think it's a question of who 
should do what when.
    With regard to populism, you know, I'm a political party guy, 
right? And in my mind, if populism emerges, one of the mainstream 
political parties failed to do their jobs. And to me, that is the 
chronic problem in Central and Eastern Europe today. And I think it's 
incumbent upon us, people who do political party assistance, to ask 
ourselves, why has this all gone so desperately wrong after 20 years of 
engagement? I think there are good answers to that question. And I 
think we're attempting to enumerate them and to adjust to dealing with 
the situation that's happened. But the fact is that the political party 
organizations in this region that we believed would carry democratic 
practice over time simply have not been able to do that.
    And I would say, though, that that's not just a question in the 
countries that are represented at the table here, right? It's a 
question that we see just west of here--or just west of there, in 
Austria. We saw it in France. We have seen it in the U.K. We've seen it 
all over Europe. So the bigger question to me is what is the ultimate 
fate of the mainline center-right and center-left political party 
establishments? And how can we collectively--the U.S. and the EU--seek 
to and effectively strengthen them, because that, to me, is the 
greatest protection against the populist message. If the mainline 
political parties are delivering what they're supposed to deliver, then 
the populists simply just don't get any traction. Or, they get traction 
at 5 percent, or 6 percent, or 8 percent--which a system that's healthy 
and democratic can manage.
    Mr. Tatala. Can I have a comment? Because you also mentioned Brexit 
in your question. And I think there are two interesting impacts of 
Brexit on the developments in Poland. Firstly, the Law and Justice 
Party is member of the group in the European Parliament which is the 
group where also the British conservatives are. So this group will 
either disappear or be very, very weak without British conservatives. 
And it will mean that political position of Law and Justice, which is 
now very weak in the European Parliament, will be even weaker, because 
they will have less and less allies in the European Union.
    And then there is the huge question how--what will be the 
contribution of the Polish Government to the negotiation process of 
Brexit. Of course, each country has their own interests in this 
process. And I think from the Polish perspective, the biggest challenge 
is to what solution United Kingdom will offer to the Polish community 
in the United Kingdom. We are the biggest minority there, with almost 1 
million Polish people in the United Kingdom. And we will see how strong 
the Law and Justice government will be in these negotiations regarding 
guarantees for these people to stay there, to have similar rights as 
British people have.
    But I think the Law and Justice made the mistake in the beginning 
of their term, because they treated also Britain as the biggest ally. 
It was still before Brexit referendum. And then now they will be weaker 
in the European Union without British presence.
    Dr. Hrvolova. Thank you. Thank you for that.
    Let's give the mic to the gentleman at the back.
    Questioner. Can you hear me? OK. Thank you for being here. And I'm 
an intern here.
    And my question is: When the U.S. or Congress sends funds to 
Eastern Europe, what kind of mechanisms are there in place so as to 
make sure that these funds are used for what they are meant for, and 
not so bad the--I would call them slightly authoritarian politicians 
take a chunk of the money and lie on the transparency sheet, if there 
is any transparency sheet?
    Dr. Hrvolova. I don't know if any of our speakers will be in a 
position to give you the answer, but let's ask Andras direct if he 
wants to----
    Mr. Loke. This, I think, is a very good question. And one bad 
example is what the European Union did. And the European Union 
practically sent money under two titles to Central Europe to the new EU 
members, and didn't control the spending. Then, when the whole money 
flow began, first it was not used. And then, as soon as the politicians 
and business leaders found out how to steal them, there was movement. 
And what the European Union failed to do was to follow the money and to 
check the spending. So I think any money sent to the region has to be 
thoroughly checked.
    Dr. Hrvolova. Thank you. It would be maybe also better if you would 
address the question to some folks here on the Hill, if you're seeking 
the answers as to what can be done better on the U.S. side.
    But let me see if we have any other questions----
    Mr. Katz. Can I just weigh in on that too?
    Dr. Hrvolova. Go ahead.
    Mr. Katz. This issue of transparency and assistance is a really 
important one. We're actually engaged, I know, with this 
administration, with Congress in looking at assistance and overall U.S. 
foreign assistance and reforms right now, and monitoring and evaluating 
and planning. And following the resources from the appropriations in 
Congress all the way to the implementation of projects is really an 
important question. And Congress does play a critical role in providing 
oversight over these assistance programs. But within each one of the 
departments and agencies that engages on the U.S. side in assistance, 
there's a whole mechanism in place in terms of monitoring and 
evaluating.
    We work with--in fact, there's several implementers of assistance 
programs here in this room as well, that have to follow very strict 
guidelines--probably sometimes maybe, from their end, too onerous, and 
at times difficult. But it's also because we understand the importance 
of protecting taxpayer funding, but also making sure that at the policy 
end and the development end that we're carrying out the objectives of 
the U.S. Government. So it's a really an important and a serious 
question. But it's not one in which all of us are thinking about how to 
do better. And it doesn't mean that there hasn't been cases where 
resources have fallen into the wrong hands or projects have not gone as 
they should have. And I know even during my days at USAID there were a 
number of projects started, particularly in Ukraine, that ended early 
because we didn't like the direction it was going. It wasn't achieving 
the objectives or there was mismanagement.
    And so that oversight is in place within U.S. departments and 
agencies. Implementers also on their end have their own mechanisms to 
make sure that the projects they're carrying out are watched quite 
closely. There are these mechanism and layers. But if you have any 
specific project you're talking about, please raise that. But it's 
something that we think about. We could always do better at monitoring 
and making sure the resources are spent well. It's an incredibly 
important question. And when I was sitting on the other side in the 
U.S. Government and was asking for resources, we had to provide the 
results of where these resources were being spent, and were on the 
receiving end of criticism when the process didn't work in the way that 
Congress wanted, or the way that we wanted it to as well. So I've been 
on the receiving end of some pretty harsh questions and had to deal 
with difficult issues that didn't always end in the way that we hoped 
they would.
    Dr. Hrvolova. Thank you, Jonathan. I'm sure your remarks are highly 
appreciated by many in this room.
    Do we have more questions from the audience? Because if not, then I 
will probably have to turn to Erika, because she still has some more 
words to say. Before I do that, let me thank you again, but also to the 
speakers for their interventions, great questions from the audience, 
and everyone for your attention.
    Thank you, again.
    Ms. Schlager. Thank you. I want to close this session this 
afternoon with a couple of words of thanks. First of all, for everyone 
up here at the panel with me--Jonathan, Marek, Andrew, Martina, Peter, 
Andras and Jan--thank you all. It's been a privilege to be here with 
you and to hear the insights that each of you brings to these issues. I 
am really grateful for that. And especially for my colleagues who have 
come such a long distance to be here, very much appreciated. Also, 
thanks to everyone who came to this event today. I am really 
overwhelmed and grateful that so many people came out to hear this 
event, and including that so many of you are really experts in these 
issues in your own right. So thank all of you for being here today as 
well.
    I had started today's session by making a reference to the Charter 
of Paris for a New Europe, which was agreed in 1990 and was really a 
breakthrough document. And right about the same time there was one 
other set of agreements that is, I think, not as well known, but really 
extraordinary for what it achieved at the time. In 1990 in Bonn, just 
as countries that had been under decades of communism were just 
beginning to make that transition, there was agreement by those 
countries--by the Soviet Union and the countries of COMECON--that 
recognized the relationship between market economies and political 
pluralism, and that committed to the rule of law. And I think goes to 
what Andrew was saying at the beginning, the understanding that the 
rule of law provides an absolutely critical level playing field.
    So I am really grateful that you were able to talk about the 
declaration that people have worked on. I think there are copies of 
that on the desk out front where you came in, if you want to take a 
look at that and use that for food for thought, because I hope that 
this will not be the last time we are thinking about how to address 
these issues.
    And, again, I thank everyone for being here on the panel in here, 
and those that are watching. And with that, this briefing is closed.
    Thank you. [Applause.]
    [Whereupon, at 3:46 p.m., the briefing ended.]

A P P E N D I X

    =======================================================================




    Chairman Wicker and Co-Chairman Smith, Distinguished Members of the 
Committee, Senate and the House of Representatives,
    I wish to begin by welcoming this timely briefing and thank Erika 
Schlager of the Helsinki Commission for leading this very important 
initiative.
    Countries across Central and Eastern Europe have made great strides 
since the 1990s, building democratic institutions, growing market 
economies, and joining the European Union and NATO and the people of 
this region should be proud of the progress they have made.
    Thanks to the work of committed citizens and visionary leaders, 
countries have been transformed from repressive communist systems to 
exemplars of political freedom and vibrant commerce. In large part, 
these changes have served as a beacon for citizens also beyond this 
region's borders.
    Yet, recently, many of Europe's new democracies have faced serious 
stresses, which raise questions about the resilience of new 
transitions, and threaten to undo the progress that the region has made 
during the last three decades. Moreover, the political climate in 
Europe has revealed significant risks to the system of European 
multilateralism.
    The complex challenges of globalization and resurgence of 
authoritarianism have increasingly led to significant 
disenfranchisement and fueled the anti-system feelings. Many of the 
problems in this region and across the globe however don't stem from 
the failure of democracy, rather a failure to more actively pursue its 
consolidation, and ensure that the economic and social benefits of 
democracy penetrated throughout societies.
    There is very clearly genuine interest in reinvigorating the 
region's democratic trajectory by addressing home-grown failures of 
governance and following through on promised reforms. At the same time, 
the citizens of the Central and Eastern European countries want a 
greater say in how their countries, and how Europe as a whole, is 
governed, and more local control over their affairs, including in the 
business realm.
    For the past two years, CIPE has therefore been supporting local 
voices in Central and Eastern Europe in their efforts to understand the 
current challenges to freedom, democracy and markets, pave their own 
way to demonstrate that democracy can meet today's challenges and to 
revive people's faith in it. This would not be possible without a 
generous support of the U.S. Congress and the U.S. National Endowment 
for Democracy and I would like to recognize them for their continued 
commitment to the region.
    Earlier this year, CIPE with many of its partners from across 
Central and Eastern Europe therefore launched a declaration reaffirming 
our own Euro-Atlantic commitment to democracy and private enterprise. 
The purpose of this modest action is to make a broader statement about 
our desire to forge a renewed commitment to regional and global 
economic systems based on the principles of democratic dialogue, free 
markets, and rule of law that guarantees a level playing field.
    As expressed in the Declaration, civil society and business 
representatives from the region are committed to the values of 
democracy and the market economy, and are seeking to take concrete 
steps to address the democratic challenges that the other distinguished 
speakers will discuss later today. Their ideas such as improvement of 
the entrepreneurial environment to foster growth and encouragement of 
citizens' engagement in democratic decision-making should be welcomed; 
otherwise the influence of antidemocratic elements will continue to 
grow.
    Because a free and prosperous Europe is one of the key pillars of 
the lasting relevance of universal values of liberty, democracy and 
free enterprise in the still-evolving global arena, our Transatlantic 
alliance has to remain strong. The U.S. enduring commitment to support 
healthy democracies and thriving markets including in Europe runs very 
deep and the role that Helsinki Commission has recently been playing is 
a great proof of that commitment.
    In this respect business leaders also have a critically important 
role to play. They must become the champions of advancing democratic 
and pro-democratic values. Coordinated and sustained engagement with 
reform-minded business is specifically needed because only in 
functioning democracies the private market system provides the economic 
opportunity necessary for sustainable democratic stability.
    The lessons we are learning now about how our nations, republics, 
unions and alliances are managed, and how to balance those institutions 
with the role of the individual in society, will have lasting 
ramifications for whether we succeed in ensuring stability of the 
global architecture and furthering human progress in the future. Thus, 
because our alliance is only as strong as we are, we pledge to continue 
to support similar efforts, exchange of ideas and mobilization of 
democratic champions across the globe to safeguard democracy that 
delivers also in the interest of future generations free from memories 
of our struggles against totalitarianism.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



Transparency International, Hungary (transparency.hu) is a non-
governmental, non-profit anti-corruption organization.

Hungary: Assessment of democracy and future predictions

    Tusnadfurdo(Romanian: Baile Tusnad) is a small resort in 
Transylvania, Romania, where Fidesz, the Hungarian governing party, 
organizes its ``summer university'' every year.
    PM Viktor Orban uses these occasions to introduce his political and 
ideological ideas. His vision about an ``illiberal state'' was 
presented here three years ago, bringing up not only Singapore, but 
also Erdogan's Turkey and Putin's Russia as examples.
    Last week PM Orban, as every year in the past two decades, took 
part in the ``summer university.'' Let me quote some of his most 
important messages.
    ``Hungary will use every legal possibility in the European Union to 
be in solidarity with the Poles.''
    Elections in Hungary are due next spring and Orban has already set 
the tone and the direction of the ``upcoming campaign.'' ``First of 
all, we have to confront external power. We have to stand our ground 
against the Soros mafia network and the Brussels bureaucrats. And, 
during the next nine months, we will have to fight against the media 
they operate.'' European Union leaders and George Soros are seeking a 
``new, mixed, Muslimized Europe.''
    ``Hungary, since the Trianon Treaty, hasn't been as close to being 
a strong and thriving country, as it is now. If a government comes, 
which, again, will serve global interests, then this historical chance 
will be wiped out for decades.''

Let me give you a few examples how international NGOs see the same 
country.

Freedom House--Freedom in the World Scores

Aggregate Score
76/100--Hungary is a free country
(0= Least Free, 100= Most Free)

Political Rights 3/7
Civil Liberties 2/7
(1=Most Free, 7=Least Free)

The bad news is that all of the trends are on a downward trajectory.

World Press Freedom (Reporters Without Borders), 2016: Hungary ranks 
67th on its 2016 Index which is a steep decline compared to 23rd 
position reached in 2010.

Transparency International Corruption Perception Index (TI CPI), 2016: 
The good news is that Hungary is perceived to be only moderately 
corrupt in a worldwide comparison, reaching 48 points in 2016 on a 
scale from 0 (`very corrupt') to 100 (`clean and non-corrupt'). The bad 
news is that the trend, again, is downwards. In the region, Hungary is 
only followed by Bulgaria and Romania now.

Global Competitiveness Report (World Economic Forum), 2016-2017: 
Hungary coming 69th out of 138, worst position ever. Countries like 
Rwanda, Oman, Jordan, Romania, Botswana, Peru and Macedonia scored 
better. In 2001 Hungary was the 28th most competitive economy in the 
world! In the EU, Hungary takes the 25th place, which means that there 
are only three countries that are less competitive in the Union.

The survey is based on twelve pillars; Hungary scored the worst under 
the first pillar, i.e. institutions. Within that pillar, the following 
areas are the most problematic (with ranking):

      Transparency of government policymaking 136
      Ethical behavior of firms 136
      Favoritism in decisions of government officials 135
      Property rights 134
      Burden of government regulation 123
      Efficiency of legal framework in settling disputes 114
      Efficacy of corporate boards 111
      Strength of auditing and reporting standards 110
      Efficiency of legal framework 108
      Diversion of public funds 108
      Judicial independence 102

Key challenges for the country

Emigration, demography: About one million people have left the country 
since 2000. As mostly economically active people leave the country, an 
aging population dependent on pensions and social support remain.

Health care: Doctors and nurses continue to leave the country by the 
thousands. Health care is underfunded.

Education: Hungary has never scored extremely well in the international 
student assessment, but recent results are really disappointing: 
students scored much worse in 2015 than 2012. No CEE country shows a 
similar deterioration and no CEE country's education budget is 
shrinking faster than Hungary's.

Press: Pro-government media dominates the media sector while critical 
voices experience difficulties in reaching audiences and securing 
financial resources.

Markets: The Orban government significantly has undermined the 
functioning of the markets in many areas through crony capitalism, 
central decision making, unpredictable and erratic regulations. Shortly 
after coming to power, Orban introduced the System of National 
Cooperation (SNC). SNC is an informal but very powerful means of 
creating and maintaining a parallel economy for cronies. The losers 
are, amongst others, companies in those sectors, in which the 
government introduced punitive taxes (telecommunications, retail, and 
banking) and practically all businesses, which have to face unfair 
competition from the cronies.

The economy at first glance

GDP growth is not impressive but acceptable, measuring 2% last year, 3, 
6% and 3, 5% projected for this year and 2018. The level of external 
debt is down from 81% of the GDP in 2011 to 74% last year.

The level of investment is quite low, not even 18% of the GDP, but the 
really bad news is that the level of government investments exceeds the 
level of private investments by at least three times.

FDI stock decreased in 2015 (-15bn USD) and 2016 (-5bn USD) but 2017 
may see a comeback. The amplitude of FDI transfers is growing, perhaps 
meaning that investors either agree with the government or are 
intimidated by its policies.

Wider background

Lack of genuine experience with strong democratic governance, feudal 
culture. Each government spent a lot of energy on undoing what the 
previous government did. Polarization reached such a degree that 
compromise seems to be impossible on even the most basic values. This 
led to a general inclination to accept short term solutions, lies, and 
extreme ideologies.

      PM Ferenc Gyurcsany 11 years ago: ``We lied in the 
morning, we lied in the evening and we lied at night.''
      If the data of the London based Tax Justice Network are 
correct, in the three decades before 2010 more than 240bn USD found 
ways from Hungary to tax havens.

Possible solutions:

There is probably no easy solution, no quick fix. Here are a few ideas 
of what could be done:

      Reassert civil society's role in maintaining transparency 
and accountability in governance, as well as facilitating greater 
public consultation in decision making.
      Urge political parties, civil society and the business 
community to communicate and practice democratic values, so as to 
encourage more inclusive engagement in public affairs and present 
alternatives to extreme messages.
      Increase engagement with the business community, so as to 
mobilize resources and knowhow in reconfirming society's commitment to 
pluralism and maintaining healthy space for civil society.


FOR (www.for.org.pl ) is a non-profit think tank based in Poland 
promoting and, if necessary, defending economic freedom, rule of law, 
individual liberties, private property, entrepreneurial activities, and 
the idea of limited government. FOR was founded in 2007 by Professor 
Leszek Balcerowicz.

1. Assessment of democracy in Poland:

    For many years Poland has been presented as a success story of 
peaceful economic and political transition. Thanks to the initial free 
market reforms and continuation of the pro-reform path we observed a 
rapid and stable rate of economic growth in Poland which led to the 
highest increase of GDP per capita in the region. Ukraine had a 
slightly higher GDP per capita in 1990 than Poland but we see today how 
the lack of successful economic and political transition has led to a 
huge divergence between these two countries.
    During this period, different political parties from left-wing 
social democrats to right-wing conservatives were present in the 
governments with a rather smooth and peaceful transition of power 
following elections. There were no significant legislative attacks on 
the foundations of the 1997 Polish Constitution by the mainstream 
political parties either. And overall, institutional framework has 
significantly improved thanks to domestic efforts and external 
incentives such as EU and NATO admissions. As I will later focus mostly 
on rule of law and the judiciary it is important to emphasize that 
independence of judges from politics was also an important 
institutional improvement achieved after the fall of communism.
    Past progress is not a guarantee of future success. From history we 
know many examples of institutional reversals or bad transitions: from 
democracy, rule of law, and economic freedom, to the importance of 
entrepreneurial activity, and the quality of other institutions.
    Democracies can be taken advantage of by undemocratic leadership. 
A. Lukashenko, V. Putin, R. Erdogan as well as a few Latin American 
leaders all won democratic elections and later weakened democratic 
systems or abolished democracy completely. V. Orban in Hungary won 
constitutional majority and used his powers to limit political 
competition through changes in the electoral system, media, and rule of 
law. Moreover, Orban famously announced the formation of ``illiberal 
democracy'' in Hungary in 2014. Jaroslaw Kaczynski, the leader of the 
ruling Law and Justice party in Poland, stated already in 2011 the 
following: ``I am deeply convinced that the day of success will come 
and we will have Budapest in Warsaw.'' We now observe many similarities 
between policies in Hungary and Poland, though the Polish government 
does not have a constitutional majority. Nevertheless, the government 
seems to act as if it does.
    There is no doubt that the ruling Law and Justice party won 
democratic elections (after a very populist electoral campaign) and 
Poland is still a democracy, despite the harsh rhetoric we often hear 
these days. Personally, I think it should be reserved for more 
difficult times--which will hopefully never come--as exaggerations can 
sometimes backfire. However, instead of strengthening democracy, 
including rule of law, the governing party is pushing Poland in the 
opposite direction. 
    On Monday, President of Poland Andrzej Duda stepped in to announce 
that he plans to veto two out of three controversial legal acts in the 
area of the justice system which will slow down this process. 
Nevertheless, most of the challenges mentioned in the Declaration 
asserting the crucial role of democratic values and free market 
principles prepared by CIPE and its regional partners are currently 
very present in Poland.
    Many people in Poland now believe that winning elections and having 
a majority (37% of the vote in case of Poland) means that the winner 
can do anything. The ruling party's promises and slogans have certainly 
fed this belief. As a consequence, there is a lack of commitment to 
checks and balances and separation of powers as well as less respect 
for minority rights among a significant part of the society. This is 
not a healthy democracy and there may be some serious long-term 
consequences to the current state of affairs as a result. Fortunately, 
recent protests that led to the presidential vetoes show that there is 
also part of the society committed to democratic values and it should 
grow in the future. Hopefully, recent events in Poland will strengthen 
the latter.

2. Stating the problems/democratic challenges--future of rule of law as 
a key challenge in Poland:

    The ruling Law and Justice party has not yet addressed many of the 
country's challenges, including many key economic concerns. Quite to 
the contrary, they have actually made some of these concerns even 
worse, for example through expanding unsustainable welfare spending and 
decreasing the retirement age despite Poland's rapidly aging 
population. While major concerns, what is now a key challenge in Poland 
is the future of the rule of law.
    As the U.S. Department of State asserted in their most recent press 
statement ``the Polish government has continued to pursue legislation 
that appears to undermine judicial independence and weaken the rule of 
law in Poland.'' We have observed that the following acts contributed 
to this process the most:
      Constitutional Tribunal: The ruling party nominated some 
judges in an unconstitutional way and took political control over the 
Tribunal. This poses a risk for the implementation of other 
unconstitutional legislation supported by the Law and Justice Party in 
the future.
       Law on organization of courts: The law would empower the 
Minister of Justice (who is at the same time the Prosecutor General) to 
dismiss all heads of courts in an arbitrary way within six months of 
its adoption and appoint their successors without binding consultation 
with the National Council of Judiciary as required in the past.
      The ruling party supported two other legal acts that were 
a major threat to independence of judiciary and the rule of law: on the 
National Council of Judiciary and on the Supreme Court. These two 
controversial laws stimulated protests in Poland and prompted 
international reaction which have pushed the President to announce his 
plan to veto them. 
      Professor Marcin Matczak, University of Warsaw warned, 
before presidential vetoes, ``If the mechanism to use the 
Constitutional Tribunal as a tool in the political battle is repeated 
in the case of the Supreme Court and common courts, the outlook will be 
bleak for justice in Poland.'' 
      Rapid legislative process: Much of this recent 
legislation has been passed in a very rapid manner, without any public 
consultation or debate with citizens, experts or NGOs. The government 
has thus violated various provisions to safeguard the quality of the 
legislative process in Poland.

    Summing up, the model of the judiciary proposed by the ruling party 
resembles the model known from the past when the communist party of 
Poland controlled all the legislative, executive, and judiciary powers. 
In his recent speech in Warsaw, even the President of the United States 
said: ``As long as we know our history, we will know how to build our 
future.'' We in Poland know where this model of concentration of power 
lacking any checks and balances led the Polish society and economy. It 
is why more and more Poles have been in the streets demanding that 
President Andrzej Duda vetoes the most recent judiciary reform. Two out 
of three vetoes were good decision by the President and a major success 
of this part of the Polish civil society committed to democratic 
values.

What else?

       Media: The government is already debating the limitation 
of foreign ownership in the media sector--which carries a risk of 
nationalization and greater political control over some media outlets 
(after taking control of public media right after the latest 
elections).
      NGOs: Parliament is discussing the law on the ``National 
Center for Civil Society Development''--which carries the risk of 
directing state funds to ``friendly NGOs'' and cutting access to grants 
for NGOs critical of the government. There is also a risk of possible 
adoption of Hungarian or Russian style of foreign agent laws on NGOs.
      Economy: Without a functioning Constitutional Tribunal 
and independent judiciary (prosecution is already under direct control 
of Justice Minister) there are risks to long-term investments and also 
business owners' freedom to disagree with the government.
      Justice system: President Andrzej Duda announced his 
administration will work on the reform.

3. Solutions:

Short-term:

      Fact-checking and watchdog activities by NGOs, media, and 
civil society using efficient communication tools. There are many who 
know what is wrong or what is false but they need to improve their 
communication to reach wider audiences.
      More dialogue and better cooperation of civil society, 
NGOs, business-support organizations and political parties--with NGOs 
and civil society acting as mediators.
      Increased engagement of the business community--business 
should not only support NGOs with resources but also speak up about the 
future of democracy in Poland.

Long-term:

      Offer alternative proposals for justice reform--improving 
what does not work (e.g. lengthy proceedings, excessive formalism) 
while strengthening the system's independence. The latest reforms 
however need to be reversed first. This may require another 
constitutional reform for which a constitutional majority would need to 
be secured.
      As the President of Poland announced his administration 
would work on the justice system reform after recent vetoes it is 
essential to monitor this work and provide high quality feedback.
       Improving the quality of the legislative process to 
ensure genuine inclusive public debate and expert assessment of 
proposed laws.
      Education focused more on civic engagement and economic 
literacy, e.g. practical lessons of democracy that delivers, including 
in economic terms.

4. Conclusions:

    Polish civil society is a key player in advancing democracy in 
Poland. The European Union and our other Western partners should not be 
expected to solve our problems. That, however, does not mean that they 
should remain silent or turn a blind eye to what's happening in the 
country right now. Quite to the contrary. All friends of Poland can 
certainly help by sharing their knowledge, expertise and resources as 
well as by providing moral support to those committed democrats in 
Poland who found courage to seize the opportunity that the present 
crisis provides. I therefore particularly appreciate the role of CIPE 
in this regard, supporting their local partners, drafting the 
Declaration of renewed commitment to democratic values in the CEE 
countries and hosting us in the U.S. on the occasion of this briefing.
    Last but not least, it needs to be reiterated that democracy and 
economic prosperity in Poland and other CEE countries are essential to 
the mutually beneficial transatlantic partnership. Additionally, Poland 
has a historic potential to be an inspiration for societies east of 
Vienna (e.g. Belarus, Ukraine, and Russia) and the Balkans looking for 
higher quality of life and greater individual freedom. The strength of 
Polish democracy should continue to serve as an example for the 
regions. To preserve the foundations of international stability, it is 
therefore our joint responsibility to act whenever democracy is in 
jeopardy.

5. Additional information in English:

Two laws vetoed by the President of Poland:

      Law on the National Council of Judiciary: This Council 
appoints and promotes judges and was previously appointed by the 
Judiciary. The new law would end the terms of a majority of its 
members. The parliament would now have the power to directly appoint 
the members and politicians would have a much stronger voice in the 
Council contrary to the expert opinion of the Council of Europe, 
according to which: ``These institutions are often composed of a 
majority of members of the judiciary which is an essential guarantee of 
their independence.'' By the introduction of this new law, the ruling 
party would create tools to weaken this independence through political 
appointments.
      Law on the Supreme Court: It would enable all the judges 
to retire, except those accepted by the current government and would 
change the organizational structure of the Court.

Recommended additional reading materials:

      Marek Tatala--Which of Orban's policies in Hungary are 
inspiring Kaczynski in Poland?, http://www.epicenternetwork.eu/blog/
which-of-orbans-policies-in-hungary-are-inspiringkaczynski- in-poland/
      Marcin Matczak, Professor of Law from University of 
Warsaw--Who's next? On the Future of the Rule of Law in Poland, and why 
President Duda will not save it, http://verfassungsblog.de/whos-next-
on-the-future-of-the-rule-of-law-in-poland-and-why-president-duda-will-
not-save-it/
      Dalibor Rohac, American Enterprise Institute--What just 
happened in Poland?, http://www.aei.org/publication/what-did-just-
happen-in-poland/
      US Department of State--Poland: Independence of the 
Judiciary, https://www.state.gov/r/pa/prs/ps/2017/07/272791.htm


The Regional Challenge

    In Europe, the post-Cold war strategic goal of the United States 
was crystalized by George H. W. Bush in May 1989: to build and maintain 
a Europe ``whole and free.'' At that time, the field for democracy 
advocates--both European and American--was wide open. The people of the 
newly free, former Warsaw Pact countries were hungry for assistance; 
those in the field felt the full support of the United States 
government; Moscow's influence was declining dramatically following the 
collapse of the Soviet Union; and it appeared that inclusion of the new 
Member States in the European Union both signaled their capacity to 
succeed as democracies and guaranteed recourse if they once again were 
to exhibit weaknesses.
    Two decades later, the strategic situation has changed radically, 
and in some ways has reversed. New fault lines have emerged in the 
societies of the still new democracies--very much along the lines we've 
just heard laid out by Peter, Andras and Marek in Slovakia, Hungary and 
Poland (not forgetting our friends in the Czech Republic, which is also 
facing significant anti-democratic pressures of its own as it moves 
toward elections, and perhaps even a bit of a coronation this October). 
These fault lines offer points of entry to a Russian Federation seeking 
to destabilize the European project. For this reason, IRI has been 
undertaking a fairly aggressive public-opinion research as part of our 
Beacon Project, in an effort to help our allies in the region better 
understand exactly where the main democratic deficiencies or weaknesses 
in the various societies are.
    In late May at the Globsec conference in Bratislava, therefore, we 
released a comparative poll covering the four Visegrad countries 
through IRI's Center for Insights in Survey Research. This poll reveals 
a number of disturbing trends in the heart of Europe, including waning 
support for core transatlantic institutions like NATO, tensions over 
the nature of European identity, and discontent with socioeconomic 
challenges.
    After investing twenty years and hundreds of millions of dollars in 
building a `Europe Whole and Free,' it is clear that there is a 
potential risk that transatlantic peace and security can be undermined, 
that Russian influence in Central Europe is increasing, and that, in 
some ways, challenges to democracy are now fully within the European 
Union's house.
    What do the data show?
    First, with regard to the overarching question of security and 
stability, while NATO and the U.S. presence in Europe have historically 
been cited as a key pillar of European peace and security, in Slovakia 
an alarming 60 percent of respondents feel that the U.S. presence 
actually increases tensions and insecurity. A majority of respondents 
in all four countries either strongly or somewhat support neutrality 
towards both NATO and Russia (Slovakia: 73 percent; Czech Republic: 61 
percent; Hungary: 58 percent; Poland: 53 percent). Seventy-five percent 
of Slovaks believe that Russia should be a security partner, followed 
by 59 percent of Czechs, 54 percent of Hungarians, and 35 percent of 
Poles.
    A second area of concern is values. Our survey revealed ambivalence 
about the nature of European identity. More than one-third of 
respondents in the Czech Republic (40 percent) and Slovakia (36 
percent) feel that the European Union is pushing them to abandon 
traditional values, while 41 percent of Slovaks believe that ``Russia 
has taken the side of traditional values'' (Czech Republic: 27 percent; 
Hungary: 18 percent; Poland: 14 percent).
    A third area is economics. Reflecting dissatisfaction with the 
state of the economy and public services, a significant portion of 
respondents feel that their socioeconomic status is so poor that it is 
closer to that of Russia than Europe. Thirty-nine percent of Hungarians 
think that their social benefits have more in common with Russia than 
Europe, followed by 26 percent in Slovakia, 24 percent in Poland and 15 
percent in the Czech Republic. Similarly, 37 percent of Hungarians say 
that their economy and standard of living is more akin to Russia's than 
Europe (Slovakia: 22 percent; Poland: 19 percent; Czech Republic: 16 
percent).
    And on the question of Russian interference itself, in addition to 
the widening number of respondents who identify with Russia on key 
issues such as identity, the poll also indicates vulnerability to 
Russian disinformation among respondents who get their news from 
nontraditional media outlets. In Slovakia, a combined 76 percent either 
do not believe that Russia is engaged in efforts to mislead people (38 
percent), or do not care if Russia funds these outlets (38 percent).
    In summary, these results correspond closely with data from the 
Beacon Project's >versus< media monitoring tool, which has revealed a 
correlation between socio-economic disparities within the V4 countries 
and vulnerabilities to Russian influence. It is precisely these 
disparities, as well as the ongoing weaknesses in foundational 
institutions of democracy in the V4 that we've heard about here today, 
which we believe open a door for Russia to proffer a narrative that 
coldly counters the democratic one upon which the entire Helsinki 
vision is based.
    The next key product of Beacon will be a similar public-opinion 
survey in Germany in the run-up to the crucial parliamentary elections 
there this September 24, with a special focus on opinion in the 
Bundeslander that used to comprise the German Democratic Republic, 
while surely German, was neither democratic nor a republic.
    Thank you again for your attention to this important set of issues.


    Chairman Wicker and Co-Chairman Smith, I want to thank the Helsinki 
Commission and its members for the opportunity to participate in this 
timely briefing on the state of democracy, human rights, and overall 
progress in Central and Eastern Europe.
    Make no mistake, what we are witnessing in Central and Eastern 
Europe, the rise of illiberal democracies, weakened rule of law, 
attacks on press freedom and media independence, increased corruption, 
and the rise of ethno-nationalism, is a threat to the successful 
democratic transition of Europe and Euro-Atlantic integration that has 
been underway for over two decades.
    The external challenge exacerbating this alarming situation is 
Russia's hybrid war on targets in this region, including a relentless 
campaign of disinformation, economic corruption, and election meddling. 
These campaigns exacerbate instability and undermine democracy.
    The challenges to democracy in this region were highlighted in 
Freedom House's Freedom of the World 2017 Index. The report points out, 
``While in past years the declines in freedom were generally 
concentrated among autocracies and dictatorships that simply went from 
bad to worse, in 2016 it was established democracies--countries rated 
Free in the report's ranking system--that dominated the list of 
countries suffering setbacks. In fact, Free countries accounted for a 
larger share of the countries with declines than at any time in the 
past decade, and nearly one-quarter of the countries registering 
declines in 2016 were in Europe.''
    The Transatlantic community, led by the United States and the EU, 
must prioritize democracy, human rights, and economic development in 
Eastern and Central Europe to push back against these challenges. This 
does not mean the United States and Europe should downplay regional 
security challenges, including those posed by Russia, a threat that 
needs constant attention. It means that in conjunction with greater 
regional security we must increase our bilateral and joint diplomatic 
engagement and development assistance efforts in the region to support 
continued democratic and economic transition.
    How should the United States and our transatlantic allies respond 
to these challenges? I will offer four core strategies to answer this 
question and guide policymaking in this space.
    First, transatlantic partners must resist the idea of retrenchment. 
Now is a critical moment for the United States and our European 
partners to be vocal and clear about our support for democracy and 
human rights particularly in this region. Ignoring the spreading cancer 
of illiberal democracies in Central and Eastern Europe is not an 
option. Over time it will impact U.S. and European interests if left 
unchecked.
    The United States counts on allies in the region for security, 
including in the fight against terror, to promote democracy, human 
rights, and trade. The less democratic and more corrupt that Central 
and Eastern European nations become the less reliable they are as 
allies and more likely they are to be influenced by Russia or other 
actors.
    Moreover, there is a disturbing, intra-European demonstration 
effect undermining democratic transformation. The United States and 
Western European leaders seek to see countries in the region such as 
Ukraine, Moldova, and Georgia continue down a path of Euro-Atlantic 
integration. These countries look to EU neighbors like Poland for 
democratic inspiration and development support. Unfortunately, instead 
of modeling the democratic transformation of their neighbors, what we 
are seeing across the region is a disturbing trend of governments 
copying undemocratic action occurring in their neighborhood.
    A second way in which the United States and Europe should respond 
to challenges in Europe is not to try and reinvent the wheel. 
Transatlantic partners know what needs to be done to address illiberal 
democracies and strengthen resiliency to address internal and external 
challenges. We can draw on 70 years of experience from the 
implementation of the Marshall Plan following the end of World War II 
to the creation of multilateral institutions including NATO, the 
European Union, and the Organization for Security and Co-operation in 
Europe (OSCE).
    After the Soviet Union collapsed, and for the last two and a half 
decades, the EU and the United States have learned from their work to 
provide far-reaching assistance and support to Central and Eastern 
European nations. The U.S. Congress played a pivotal role by 
introducing and passing the bipartisan Support for Eastern European 
Democracy Act in 1989 and the Freedom Support Act in 1992. This support 
contributed to successful democratic and economic transition in the 
region and resulted in new NATO and EU allies, including Hungary, 
Poland and Slovakia.
    The support provided by the U.S. and EU for democratic transition, 
and a vibrant civil society and independent media, are still evident. 
Just last week there were protests in over 100 Polish cities in 
response to concerns about moves by the government to curb judicial 
independence. The German Marshall Fund through its Black Sea Trust, 
Balkans Trust for Democracy, Fund for Belarus Democracy, and recently-
launched Alliance for Securing Democracy, has been on the front lines 
in ramping up U.S. efforts to support civil society, independent media, 
and sustainable democratic institutions and address Russia's malign 
efforts to undermine democracy in Europe.
    A third strategy for transatlantic response to challenges in Europe 
is to keep U.S. leadership central. The U.S. must play a bigger role in 
addressing the backsliding in democracy and governance in Central and 
Eastern Europe as a full partner with the EU. In the 1990's and the 
first decade of the 2000's the United States led this effort, providing 
billions in bilateral and multilateral development assistance for 
democratic and market reforms, and Euro-Atlantic integration of several 
European countries including Poland, Slovakia, and Hungary. Not only 
was this assistance essential as part of a U.S. effort to support a 
Europe ``Whole, Free and at Peace,'' but it was U.S. diplomatic, 
technical assistance, and leadership and implementation support, that 
helped nascent democracies in the region transition.
    U.S. assistance and attention over the past decade has atrophied, 
demonstrated by the closure of USAID missions across Central and 
Eastern Europe. The U.S. prematurely withdrew USAID and its resources 
from the region and wrongly concluded that EU institutional support 
alone could further advance democracy and human rights in these 
countries. To be sure, challenges of Brexit, Grexit, migration, the 
Eurozone crisis, and Russia, among others, hinder the EU's focus and 
response to democratic backsliding from within.
    Instead of deep cuts to U.S. assistance in this region and tepid 
diplomacy, which sends the wrong signal and opens the door for Russian 
meddling, it is critical that the Trump administration and Congress 
provide the right mix of bilateral assistance and diplomatic support. 
This must include increasing support for an independent media, civil 
society, combatting corruption, and student exchanges.
    While the United States needs to balance interests in the region 
carefully, the White House must offer a clearer and more definitive 
response to illiberal challenges in Europe such as judicial backsliding 
in Poland and Hungary's closing space for NGOs. Furthermore, it is time 
for USAID and the administration to review options to place development 
professionals on the ground in Central and Eastern Europe and provide 
greater technical assistance and support to bolster democracy, rule of 
law, and to combat corruption.
    A fourth strategy to respond to European challenges is for 
transatlantic partners to establish mechanisms to strengthen 
development cooperation. Over the past quarter century, this 
development cooperation in Central and Eastern Europe has not been as 
strong as it needs to be; it is in need of makeover. Unlike NATO, there 
is not a set mechanism for coordination, a North Atlantic Development 
Organization, for development assistance cooperation and coordination 
among allies. In Eastern Europe, the U.S. and EU assistance rank first 
and second in overall assistance. However, despite sharing many of the 
same objectives, coordination between the partners is weak. There is 
programmatic overlap that could lead to the waste of scarce resources 
or the U.S. and EU working at cross-purposes.
    Just as we want to maximize collective transatlantic defense 
cooperation via NATO we also want to maximize the impact and 
effectiveness of transatlantic development assistance. USAID has 
ongoing dialogue with its EU counterparts to strengthen cooperation in 
Europe, Eurasia, and globally. It is time for that dialogue to 
transition into a comprehensive MOU to lay out a joint U.S.-EU 
development assistance strategy and institutionalize and sustain this 
coordination.
    Mr. Chairman, we all recognize the historic democratic 
transformation that has taken place in Europe from the end of World War 
II to the present. This region is far better off now than it was when 
President Bush signed the Freedom Support Act into law in October 1992. 
The United States has greatly benefitted from this transformation and 
from our partnership with our European allies, including our Central 
and Eastern European allies. Their support and partnership in advancing 
a world order based on democratic values, human rights, and freedom has 
been nothing short of fundamental in importance to the advancement of 
our own political objectives and way of life.
    For Eastern and Central European countries to continue to be 
reliable allies and partners we, along with our EU partners, need to 
recognize the geopolitical challenges washing across this region. The 
United States and the EU need to act immediately, coordinate 
development assistance, prioritize continued democratic development, 
assist civil society, and marshal the expertise, resources, and 
experiences of the past seventy years. Only then can we successfully 
address the growing internal and external challenges in Europe.





  

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